LUGDF - Lundin Gold: Record Margins In Q1 But Higher Costs On Deck

2023-05-22 05:00:09 ET

Summary

• Lundin Gold released its Q1 results earlier this month, reporting record quarterly production of ~140,000 ounces of gold, a 15% increase from the year-ago period.
• This impressive performance resulted in industry-leading unit costs and margins, with all-in-sustaining costs of $728/oz and AISC margins of $1,308/oz, a 12% increase in margins year-over-year.
• However, Q1 was an abnormally strong quarter for the company, and while AISC margins will remain above $1,000/oz, I would expect margins to normalize relative to Q1 levels.
• So, with Lundin Gold looking to be close to fully valued at ~1.1x P/NAV as it heads into a weaker quarter from a margin/output standpoint in Q2, I continue to see far more attractive opportunities elsewhere in the sector.

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