Good morning. My name is Lara, and I will be your conference operator today. At this time, I would like to welcome everyone to Lundin Gold's 4th quarter and year-end 2023 results call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by the number two. Thank you. Mr. Hochstein, you may begin your conference.
Thank you, Lara, and good morning, everyone. Thank you all for joining us on this conference call today, where Terry Smith, Chief Operating Officer, and Chris Kololian, Chief Financial Officer, and I are going to take you through our results for the 4th quarter and full year 2023. Please note Lundin Gold's disclaimers on this slide. This discussion includes forward-looking information. Actual future results may differ from expected results for a variety of reasons described in the caution regarding forward-looking information and statements section of our press release. Lundin Gold is a U.S. dollar reporting entity, and all amounts in this presentation refer to U.S. dollars unless otherwise indicated. 2023 was another strong year for Lundin Gold.
Improving on the previous year's performance, the company achieved annual production of 481,274 ounces, in line with the high end of our upwardly revised guidance range of 450,000-485,000 ounces, at an all-in sustaining cost of $860 per ounce sold, also in line with improved 2023 guidance. With a strong cash balance of $363 million to start the year, which was further bolstered by a sizable $500 million of cash generated from operating activities in 2023, we cleaned up our balance sheet. First, in Q1, we elected to repay in full the 10 remaining quarterly installments of the Gold Prepay Facility for $208 million. Next, in the 4th quarter, we fully repaid the remaining balance under the Senior Debt Facility of $72 million.
The only debt that remains on our balance sheet is the Stream Facility, for which we have the option to buy back 50% in June for $150 million. These debt reduction activities resulted in Free Cash Flow of $263 million in 2023, which is after one-time interest and finance charges of $129 million from the early repayment of the Gold Prepay Facility. In addition to cleaning up the balance sheet, Lundin Gold significantly increased its 2023 exploration programs with 55,000 m drilled. Approximately 11,000 m were drilled on our conversion program. The results of this program will form the basis for another update to mineral resources and reserves to be completed this quarter, that I'm confident will be well received.
Just over 35,000 m of near-mine drilling were also completed during the year, the results of which have identified significant mineralization at two primary targets: FDNS or Fruta del Norte South or FDNS, and Bonza Sur, which will be the focal points of our 2024 near-mine drilling. About 8,500 m of regional drilling was completed in 2023. I'm really proud of the team for their hard work throughout the year, but I know we can continue to improve, and as such, I'm so excited for what is to come in 2024. We have already commenced a $36 million process plant expansion project to increase plant throughput to 5,000 tons per day and improve gold recoveries by approximately 3% with the addition of the Jameson Cell technology.
By the end of 2024, I'm confident that we'll be running at 5,000 tons a day, and we will see a clear improvement in recoveries. This year, we will also be conducting the largest drill program ever on the land package that hosts FDN. Based on the results to date, the upcoming resource and reserve update, and the upcoming 2024 exploration program, I'm really excited about the potential to grow our world-class mineral endowment. As I touched upon earlier, deleveraging our balance sheet was a key focus last year. This year, we have the option to buy back 50% of the Stream Facility for $150 million, which makes good sense at current price forecasts. By this time next year, I expect Lundin Gold shareholders will reap the benefits of more high-margin gold ounces. A really exciting time.
As I say time and again, none of this would be possible without a strong approach to ESG. We continue our sustainability efforts on all fronts, including publishing our second TCFD-aligned climate change report and seventh annual finance sustainability report in May. Based on publicly available data from 152 gold mines that reported their Scope 1 and Scope 2 greenhouse gas emissions in 2021 and on Lundin Gold's 2022 emissions performance, the emissions intensity of Fruta del Norte was among the lowest in the industry. We have set a target to be carbon neutral by 2030 and have begun the steps to meet this important milestone. Before handing the call over to Terry to talk about our operating results in more detail, I want to quickly touch upon the current situation in Ecuador.
As many of you know, Ecuador was in the world spotlight earlier this year due to criminal activity throughout several cities, in particular the city of Guayaquil. As a result of the domestic terrorist situation, President Noboa who only took office in November of 2023 enacted a state of emergency and mobilized police and military personnel to take control of the situation. This has been very effective, and since then, the situation in Ecuador has improved significantly. This new government has taken quick and firm action, which has proved to be quite effective. I was in Quito and Loja just a few weeks ago, and it felt normal. It is business as usual at FDN, and we continue to see no impacts on operations. With that, I'd now like to turn this call over to Terry.
Thanks, Ron, and hello all. 2023 was my first calendar year at Lundin Gold, and it's fun to be part of something special. I've come to understand how truly FDN is truly a special asset, perhaps the best asset outside of a major, that has helped change people's lives in the community in which we operate. I've also come to know the wonderful team we have that makes working here so rewarding. I'll now talk about health and safety for a moment, which continues to be our top priority. We are proud that at year-end, we had over 7.6 million hours worked, or about a year and a half, in operations without an LTI, which is an incredible achievement in our industry.
Unfortunately, early in 2024, a hand injury led to an LTI, and I should note that the employee is fine, having missed only a couple of shifts. While the clock is now reset, I'm proud of the team's commitment to safe production and confident we'll continue to demonstrate great safety performance in the future. Switching to our Q4 results, quarterly gold production totaled approximately 99,000 ounces, comprised of 65,000 ounces of concentrate and 34,000 ounces of doré. Gold sales totaled around 98,000 ounces. For the full year, gold production and sales totaled roughly 481,000 and 474,000 ounces, respectively, in line with the upwardly revised 2023 guidance range of 450,000-485,000 ounces. The increase in production compared to last year was the result of higher throughput offset by slightly lower grade and recoveries.
Mine production was close to 406,000 tons in Q4, while the mill processed just under 428,000 tons at an average throughput of 4,649 tons per day, a quarterly record for our plant operations team. I should note that the surface stockpiling is the primary reason for the difference between ore mined and processed. The mill averaged 4,533 tons per day in 2023, in line with the throughput target set at the start of the year of 4,500 tons per day. Similar to last period, strong mill throughput was offset by lower head grades and recoveries. As we've highlighted previously, finely disseminated sulfide minerals in the ore continue to impact flotation during the quarter, resulting in average recoveries of 88.1%.
As Ron mentioned earlier, we have commenced the process plant expansion project to increase plant throughput to 5,000 tons per day and improve recoveries by approximately 3% by the end of 2024. This project includes upgrades to the concentrate dewatering, new tailings and reclaim lines, the addition of three Jameson cells, and other ancillary works. We were busy with projects in the 4th quarter, and sustaining capital expenditures accounted for $147 per ounce sold in the 4th quarter, another increase compared to recent periods, and $101 per ounce sold for the full year. A total of $49.9 million was spent during the year, of which $14.5 million was spent during the 4th quarter. This capital allowed us to complete some major important projects during 2023, not the least of which was the 4th raise of the tailings facility.
I'd also like to highlight some improvement projects from 2023, including the completion of our new warehouse, a newly commissioned underground mine maintenance facility, and a mine dispatch system which is nearly finished. These projects will help improve our supply and inventory management and increase the availability of our mining fleet, both of which will help improve our bottom line. For the full year, Lundin Gold achieved an All-in Sustaining Cost of $860 per ounce sold, in line with our improved guidance range of $820-$870 per ounce sold. Cash operating costs in and All-in Sustaining Costs in the 4th quarter were $832 and $1,062 per ounce sold per ounce of gold sold, respectively, which are both higher than previous periods.
Both metrics were impacted by a decrease in ounces sold compared to previous quarters, and in particular, All-In Sustaining Costs was impacted by the timing of higher sustaining capital expenditures I mentioned earlier. Looking to the future, 2024 gold production at FDN is projected to be between 450,000-500,000 ounces, based on an average throughput rate of 4,500 tons per day, average recoveries of 89%, and average head grade of 9.9 grams per ton, with variations expected during the year. As mentioned earlier, completion of the process plant expansion project is expected by the end of 2024, resulting in higher throughputs and improved recoveries incorporated within our guidance for 2025 and 2026.
Cash operating costs are estimated to average between $680-$740 per ounce of gold sold in 2024, and All-in Sustaining Costs is expected to average between $820-$890 per ounce of gold sold, based on an assumed gold price of $1,900 per ounce and a silver price of $2,250 per ounce. Both cash operating costs and All-in Sustaining Costs will vary throughout the year. Total sustaining capital in 2024 is expected to range between $35-$45 million and includes conversion drilling, preliminary works for a future TSF expansion, implementation of a mine dispatch system, upgrade of camp facilities, replacement of mobile equipment, and a few projects carried over from 2023. The increase in sustaining capital expected in 2025 is largely a result of construction of the fifth TSF raise. With that, I'll turn the call back to Ron now to discuss our exploration programs.
Thanks, Terry. During the 4th quarter, the conversion drill program continued to advance in distinct sectors of the FDN deposit, focusing on the northern, central, and southern portions of the resource envelope. A total of 11,200 m of underground drilling from 79 drill holes were completed as part of the 2023 conversion program. 51 drill holes completed in the southern sector of FDN mostly intercepted mineralized zones associated with manganoan carbonate, chalcedonic veins, and sulfides. In the north-central sector, 28 drill holes were completed and positive assay results are associated with zones of hydrothermal breccias along the down-dip extension and the north limit of FDN. Results are currently being incorporated into the geological model and will form the basis of an updated mineral resources and reserve estimate to be completed during the first quarter of this year.
Just over 35,000 m were completed across 68 holes from surface and underground for the near-mine program, of which approximately 13,400 m across 31 holes were drilled in the fourth quarter. This exciting program continues to explore distinct sectors located along trend of the FDN deposit and within extensions of its major controlling structures. Drilling from underground explored to the east and at depth of the FDN deposit, while drilling from surface continued to test along the extensions of the controlling structures of FDN. The surface drilling program continues along the south extension of the East Fault , where the Bonza Sur and FDNS targets were discovered. During the fourth quarter, 14 surface drill holes were completed, mostly at Bonza Sur, where the drilling program continues to indicate continuity of mineralization.
Mineralization at Bonza Sur has already been identified for more than 1.1 km along the north-south strike and for at least 500 m along the down dip and remains open in all directions. Exploration holes were also completed along the north and south extensions of FDN and at FDN East. Five surface rigs are currently drilling, two of them are at Bonza Sur, two along the south and north extensions of FDN, and one to the east of FDN. The underground drilling program continues to explore the continuity of the FDN deposit at depth and beyond the major East and West Faults . During the fourth quarter, a total of 17 drill holes were completed. At depth in the north sector of the FDN deposit, the drilling program confirmed hydrothermal alteration zones and gold mineralization below the current mineral envelope of FDN.
In the southern sector, the drill holes intercepted hydrothermal alteration zones with narrow intervals of gold mineralization. The drill program also explored the continuity of the FDN mineral envelope beyond the East Faul t, and one drill hole intercepted narrow zones of hydrothermal alteration. The regional program continues to advance in identifying important indicators that point toward the presence of buried epithermal deposits in the southern basin. The 2023 program focused on distinct sectors along the southeastern and southwestern borders of the Suarez Basin, and a total of 3,120 m across five drill holes were completed in the fourth quarter, resulting in about 8,500 m completed under the 2023 program across 12 drill holes. Regional drilling focused on the Crisbel, Barbasco Southeast, and Carmela targets. I also want to quickly provide an update on the Newcrest earn-in agreement.
At the end of the fourth quarter, Newcrest, now a subsidiary of Newmont, elected not to exercise this option to proceed to earn 25% interest in Surnort e, which holds eight exploration concessions located to the north and south of FDN. As a result, the earn-in agreement has been terminated. We are now assessing various options for some or all of these concessions. Lundin Gold's exploration programs are continuing to demonstrate the significant untapped exploration potential near the current FDN deposit and on our extensive land package. In 2024, we will carry out the largest exploration program ever conducted on the extensive and highly prospective land package that hosts FDN. The 2024 near-mine program is estimated to cost $30 million and intends to drill 46,000 m.
Underground drilling will continue exploring below the current FDN resource envelope, while surface drilling in 2024 will primarily focus on the FDNS and Bonza Sur targets, as well as other targets to the north and east of FDN. The regional program will focus on several targets located in the 16-km-long Suarez Basin, with the objective of identifying new epithermal systems. The 2024 regional program is estimated to cost $12 million and will drill 10,000 m. I'll now turn the call over to C.K. to provide a more detailed look at the financial results.
Thanks, Ron, and good morning, everyone. In the fourth quarter of 2023, Lundin Gold recognized revenues of $191 million from the sale of approximately 98,000 ounces of gold at an average realized gold price of $2,021 per ounce. Income from mining operations was $78 million compared to $92 million a year earlier, primarily a result of the lower gold ounces sold during this quarter. From this, Lundin Gold generated Adjusted Earnings, which exclude the derivative gain and related deferred income tax expense included in net income, of $33 million or $0.14 per share this quarter, compared to $34 million or $0.14 per share a year earlier. For the full year, Lundin Gold recognized revenues of $903 million and income from mining operations of $435 million.
The company generated adjusted earnings of $204 million or $0.86 per share. Adjusted EBITDA was $96 million in the fourth quarter and $526 million for the full year. The company continues to generate significant cash flow, and the fourth quarter was no different. During Q4, Lundin Gold generated net cash from operating activities of $93 million and free cash flow of $62 million or $0.26 per share, compared to $91 million or $0.39 per share a year earlier. Once again, the lower gold ounces produced in the fourth quarter is the primary driving force for the difference compared to the same period a year ago. For the full year, Lundin Gold generated free cash flow of $263 million.
We expect to continue generating significant free cash flow in the future based on our production and all-in sustaining cost guidance, especially given increased exposure to strong gold prices with the benefit of the full repayment of the gold prepay and senior debt. Lundin Gold ended 2023 with a very strong cash balance. As at December 31, the company had cash of $268 million and a working capital balance of $347 million, compared to cash of $363 million and a working capital balance of $195 million, as at December 31, 2022.
The change in cash during the year was primarily due to the full repayment of the Gold Prepay Facility of $208 million, the full repayment of the Senior Debt Facility totaling $193 million, principal repayments, interest and finance charges including associated taxes under the Stream Facility totaling $80 million, dividends of $95 million, and cash outflows of $52 million relating to investing activities. This is offset by cash generated from operating activities of $519 million, which is net of the $25 million voluntary advance tax payment to the government of Ecuador during the fourth quarter that will reduce the company's corporate income tax payment due in April 2024, and proceeds from the exercises of stock options and anti-dilution rights of $14 million.
The Stream is the last remaining debt on Lundin Gold's balance sheet following the full repayment of both the Gold Prepay Facility and Senior Facility during 2023. The company has the option to buy back 50% of the stream for $150 million in June this year and the other 50% for $225 million in June 2026. We continue to evaluate these options, and in the absence of other more attractive capital allocation opportunities, we expect exercising the first option will make sense for our shareholders. Free cash flow is fundamental to Lundin Gold's growth story, and we have generated a lot of it in 2023. I can't talk about cash flow without mentioning Lundin Gold's dividend policy of $0.10 per share declared on a quarterly basis.
The fourth dividend of 2023 was paid at the end of Q4, bringing 2023 dividends paid to a total of $95 million. The company anticipates continuing to declare quarterly dividends of at least $0.10 per share, which is equivalent to approximately $100 million annually. We made significant headway in our debt reduction strategy last year, which will drive increased free cash flow in 2024. The process plant expansion project and further deleveraging opportunities will lead to another step up in free cash flow generation going forward, which enables significant capital allocation flexibility to consider M&A and increased shareholder returns in the future. Very exciting times indeed. For a more detailed discussion of our financial results, I encourage you to turn to our MD&A. Now I'd like to turn the call back over to Ron for his concluding remarks.
Thanks, C.K. 2023 was another strong year for Lundin Gold, but I'm certain that 2024 will be even better. We are outperforming expectations by continuing to focus on operational excellence, reducing our debt, and showing just how prospective the exploration potential is around FDN. But we can be even better. The results of the 2023 conversion drill program will be incorporated into a revised resource reserve statement. The process plant expansion project will help us to further improve our operating results by increasing throughput and improving recoveries. Exploration will largely focus on Bonza Sur and FDNS, two targets I'm confident we will have significantly advanced our understanding of by the end of 2024. We are in a great financial position. We continue to generate significant cash, and we are now strongly focused on growth.
I'm so excited for what 2024 has in store for us and so very proud of the team for their achievements this year. Thank you all once again for your continued support, and with that, I will now open the call to questions. Over to you, Lara.
Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touch-tone phone. Again, that's star followed by the number one. You will hear a three-tone prompt acknowledging your request. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speakerphone, please lift your handset before pressing any keys. Our first question comes from the line of Bryce Adams from CIBC. Please go ahead.
Good morning, Ron and team. I wanted to jump in with a question on the expansion plans, so this one might be for Terry. In 2025, once the mill is that little bit hungrier, where will the overall bottleneck become, or at least does the underground mining rates become more of a critical issue? And then maybe a quick follow-on from that: what are your expected improvements from the mine dispatch system, and without that, do you reckon the underground would hit 5,000 per day reliably? So is it a must-have or a nice-to-have?
Thanks for the questions and good questions. The mill throughput expansion, really, we start to limit that overall process plant capacity at the grinding circuit in and around that throughput range. So I expect that once we've completed the debottlenecking exercise, we'll really find what that upper limit is, which is probably something north of 5,000 tons per day. From an underground perspective, we've pressure tested the mine, and the mine's been able to deliver 5,000 tons a day consistently for periods of time in 2023, so we don't see any challenges from a mine perspective to deliver into this higher throughput that we're looking at. And the mine dispatch system is a nice-to-have. It's going to improve our equipment utilization and sort of space out the equipment haulage and all the things that you would expect from a dispatch system.
We'll see that reflected in our costs ultimately, but it's not a component of the expansion in terms of delivering more tonnage.
I think Terry's being a bit conservative, Bryce. The mill is going to continue to be the bottleneck. The mine, that team at the mine just keeps continuing to push the tons, and the dispatch system's going to help that to be more effective and efficient.
Okay, thanks. So I've got one more if I can.
Absolutely.
Maybe you can comment on it. But the gold stream option, the first one, that's fast approaching, and there is a relatively new owner. What is the new owner saying about the 2026 option? I'm asking because I've heard a bit of chatter suggesting that they might allow that option to be brought forward. So is there any truth to that, or is there anything you can add to that discussion?
The discussions we've had to date are just around, it's early days, and obviously our new owner has a lot on their plate. We're focusing on the $150 million. But it's something that we're looking at internally, Bryce, as to whether there may be options to do something in addition to the $150 million, but it's just internal right now.
All right. That's it from me. Thanks a lot, and congrats on a really good year.
Thanks, Bryce.
Thank you. Ladies and gentlemen, just a reminder: should you have a question, please press star, followed by the number one on your touch-tone phone. We have our next question coming from the line of Cole McGill from TD Securities.
Cole?
Please go ahead.
Hello? Hello? Hey, can you hear me?
Yep.
Yep.
Hello. Can you hear me?
Yep.
Sorry, just a couple quick ones for me. Maybe this is for Terry or for you, Ron. Could you provide some guidance as to the grade profile for the year? I understood you previously said there's going to be some grade variability. Is it going to be more H1-weighted or H2-weighted?
Hey, Cole. It's Terry here. Yeah, as we said, the grade for the year will be 9.9 grams. We expect that the latter half of the year will be stronger.
Okay. That's great. And then also just on the mill, do you think that it can go past the 5 KT per day, or is it the bottleneck you mentioned earlier? It's kind of capped there.
I expect that, to be honest, the mill can reach 5,000 tons a day periodically without any expansion work today. But what we're doing is we're going to make it easier for the process plant to get there, and I expect that there'll be days where we're well in excess of 5,000 tons per day. But we're targeting sort of that nominal 5,000 ton per day number. So until we get through the project and really see what we have, it's tough to commit to anything higher than that.
Okay. Great. Thank you.
Thank you. There seems to be no further questions at this time. I'd now like to turn the call back over to Mr. Hochstein for final closing.
Great. Thank you, Lara. Thank you, everybody, for taking the time to attend this call this morning and for the support in 2023. As we've said earlier, the whole team is really excited about 2024 and what the future looks for Fruta del Norte and Lundin Gold and our shareholders. Thank you, everybody.
Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.