1. Hi Lukas, thanks for taking the time to chat with us. Can you give a quick intro into the Lundin Group and the mining companies that make up the Group?
Thanks for having me. The Lundin Group operates in 25 countries around the world and in virtually every commodity. We are best known for discovering and developing large resources and building world-class operations, including Lucara Diamond’s (refer to page 26) Karowe Mine in Botswana, which unearthed the 1,100 carat Lesedi La Rona in 2017, and currently produces 50% of the worlds diamonds over 100 carats.
With Lundin Gold (refer to page 30), we are currently building the first major gold mine in Ecuador called Fruta Del Norte, which is one ofthe highest-grade and largest gold projects currently under construction. It is fully financed and scheduled to start production in Q4 of this year.
There are currently 12 companies in oil and gas and mining that fall under our management, and our focus is always on creating shareholder value by building solid mid-tiers and beyond, while maintaining a roster of strategically focused exploration companies around the globe.
2. You have been in the mining industry since the 80’s. What is your view of the mining sector now versus when you first got started?
It has definitely matured and consolidated. It has improved through the increased focus on Environment, Sustainability and Governance. We try to be industry leaders in these matters at all our projects and we are very proud of the work we have done in Botswana and Ecuador to improve the livelihoods of local stakeholders around our mines now and for years to come, and long after our projects have ended. I think this is a major focus of all Canadian mining companies. I do believe we still need to educate the public on the importance of mining.
3. The Lundin Group is quite a resource-diverse group of companies. When you look at a project/company for potential investment, what are the main things that stand out for you?
We always want to create shareholder value, so we focus on projects with low operating costs which allow our companies to do well throughout the entire commodity cycle. At the end of the day, cost is pretty much the only thing you can control. We like copper and base metals, gold, oil and gas, and we have been very successful with diamonds as well.
4. In terms of making an investment, can you point to a specific example or case study that ticked all the boxes for you?
Fruta Del Norte. Lundin Gold purchased the asset in 2014 for US$240 million. It is a large, high-grade gold deposit with probable reserves of 5.02 million ounces of gold grading at 8.74 grams per tonne. Fruta del Norte will process 3,500 tonnes of ore per day and produce on average 310,000 ounces of gold per year during the first 13 years, with an AISC of US$583 per ounce.
5. Do you have further ambitions to expand the group into new regions and/or commodities? Besides mining and oil & gas, are there other industries that the Lundin Group would look to move in to?
We are always looking for good opportunities, however, I think we will always remain primarily focused on the resource sector.
Lucara Diamonds recently launched Clara, which is digital sales platform that uses proprietary analytics with cloud and blockchain technologies to modernize the existing diamond supply chain and driving efficiencies. This is an exciting new realm for us and a potentially high-value growth opportunity for Lucara.
6. What are the main strengths to being involved in such a varied group of companies with such diverse resources?
We have been able to attract an impressive team of skilled management and technical personnel with the same entrepreneurial drive and ability to seek out, acquire and manage high growth, high potential projects.
In relation to the 121 Conference we are focusing on Lucara and Lundin Gold, so take Eira Thomas, CEO of Lucara, for example, she has over 25 years of experience in the diamond industry with many great achievements, and she continues to lead her teams forward with cutting-edge ideas like Clara.
Ron Hochstein, President and CEO of Lundin Gold has been with me for 25 years, starting out with one of our uranium companies and is now running the construction and development of the world’s next major gold mine.
It is this agility and entrepreneurial spirit along with discipline and a cohesive outlook that has afforded us so many successes to date.
7. What are the main challenges to this approach?
The challenge is always to stay ahead of the game, keep current and learn from mistakes. You are always going to make a wrong decision here and there, but if you can learn from your mistakes in the end you’ll be much further ahead.
8. Can you comment on how the TSX is a beneficial platform to list for junior miners? How does it compare with the ASX?
The TSX and TSXV have traditionally been the main source of venture capital for the resource industry. From when my father was just starting out, the Canadian exchanges gave him and many other young pioneers a platform to raise capital and build their businesses, creating what is the resource industry today.
9. What advice would you give junior miners today seeking to raise capital for their projects?
It’s not always easy. It can be hard work, but keep at it. Keep telling your story, following up and building the trust of investors.
10. Finally, what are your thoughts on the recent M&A activity involving Newmont- Goldcorp and Barrick-Randgold? Is this part of a wider trend towards consolidation across the industry? What does it mean for where we are in the cycle?
I think these big mergers are a sign of the bottom of market, and that we are heading toward the upcycle.