We hope you have enjoyed a restful and healthy holiday period. The new year is a good time for us to provide an update of onsite activities, as well as share some commentary about our current valuation and how we view the project. If you have any specific questions, please feel free to reach out to Scott Hicks (email link).
Site Activity Update
We believe the project and company continue to offer a compelling valuation at these price levels, both versus our Ecuador peers (Table 1) and the broader development peer set (Chart 1). Our market capitalization and P/NAV multiple do not currently reflect the quality of the Cangrejos project.
Table 1 – Ecuador Mining Landscape
Chart 1 – Gold Developer P/NAV Valuations
Project Perspectives from Management
Cangrejos continues to be one of the largest undeveloped gold and copper projects in the world. We are working to further optimize and enhance the project through the Pre-feasibility work. We expect to complete the study in early 2023.
Potential areas for optimization:
The consulting engineering team is in place and optimization work has been initiated with the 2020 PEA as the baseline. The following value engineering or trade-off studies are expected to be undertaken over the next several months as Phase 1 of the PFS. The engineering consultant team in conjunction with Lumina will evaluating at a minimum the following tradeoffs:
The biggest factors that we contend with when marketing the project are comments around grade, initial capex and jurisdiction. The reality of large-scale projects such as Cangrejos that produce almost 400koz of gold per year is that they are typically lower grade and, owing to the inherent fact that they are large, have a greater capex than smaller mines.
Grade in Perspective:
Chart 2 – Open Pit Milling Gold Project Comparables
2021 Developments in Ecuador and 2022 Outlook:
We would ask our fellow shareholders to help spread the word about Lumina Gold. Network effects and word of mouth are very important, and it would be great if all our shareholders help champion the company. You can find the latest version of our investor deck at this LINK.
We wish you much success in your investing in 2022 and hope the year treats you well.
Cautionary Note Regarding Forward-Looking Information
Certain statements and information herein, including all statements that are not historical facts, contain forward-looking statements and forward-looking information within the meaning of applicable securities laws. Such forward-looking statements or information include but are not limited to statements or information with respect to the drill program, timing of results, PFS work and the timing of PFS completion. Often, but not always, forward-looking statements or information can be identified by the use of words such as "will" or "projected" or variations of those words or statements that certain actions, events or results "will", "could", "are proposed to", "are planned to", "are expected to" or "are anticipated to" be taken, occur or be achieved.
With respect to forward-looking statements and information contained herein, the Company has made numerous assumptions including among other things, assumptions about general business and economic conditions, the prices of gold and copper, and anticipated costs and expenditures. The foregoing list of assumptions is not exhaustive.
Although management of the Company believes that the assumptions made and the expectations represented by such statements or information are reasonable, there can be no assurance that a forward-looking statement or information herein will prove to be accurate. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. These factors include, but are not limited to: risks associated with the business of the Company; business and economic conditions in the mining industry generally; the supply and demand for labour and other project inputs; changes in commodity prices; changes in interest and currency exchange rates; risks relating to inaccurate geological and engineering assumptions (including with respect to the tonnage, grade and recoverability of reserves and resources); risks relating to unanticipated operational difficulties (including failure of equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of materials and equipment, government action or delays in the receipt of government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters); risks relating to adverse weather conditions; political risk and social unrest; changes in general economic conditions or conditions in the financial markets; and other risk factors as detailed from time to time in the Company's continuous disclosure documents filed with Canadian securities administrators. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.