Lundin Gold (TSX:LUG) inventory rose 34% final month on the heels of document second-quarter earnings. The 34% soar in a month is a continuation of its two-year-long rally. The inventory value doubled in 2024 and jumped 193% up to now in 2025. There appears to be no slowing down. Is it an industry-wide development as a result of rise within the gold value or is Lundin Gold outperforming the sector?

The reply is each.

Lundin outperformed Canada’s largest gold mining inventory, Barrick Gold, which fell 9.4% in 2024 however surged 79% year-to-date.

Three components driving Lundin Gold inventory

Mining shares are cyclical and pushed by commodity costs, that are decided by the market forces of demand and provide. A mining firm can not management the worth, however it might management manufacturing and prices. Lundin Gold has completed simply that, which helped it outperform Barrick Gold within the present development cycle by which gold costs are surging.

Rise in gold value

The gold value has been on the rise over the previous three years as world central banks have been build up their gold reserves amid geopolitical tensions. Gold is taken into account a secure haven and nonetheless has an trade worth worldwide. Thus, when the US greenback weakens, rising inflation devalues the paper forex and financial development slows or falls, so buyers shift their cash from fairness and debt to gold.

The greenback worth weakens when America’s financial development slows. The expansion slows when inflation rises, making the whole lot unaffordable. Another excuse development slows is that if there may be enterprise uncertainty, akin to provide shortages, tariffs, pandemics, and geopolitical tensions. At such instances, customers and companies scale back spending and spend money on gold.

An analogous state of affairs has been taking part in out since 2023. First, post-pandemic consumption boosted demand and costs, resulting in inflation as excessive as 8.2% in September 2022. To manage inflation, the Financial institution of Canada elevated rates of interest from 0.25% to five% between April 2022 and October 2023, making borrowing costly and slowing consumption. In July 2024, when rate of interest cuts started, companies waited for extra price cuts, which stalled the rise in consumption. In 2025, when financial development was anticipated to extend, Trump’s tariffs disrupted commerce and affected the expansion of export-led nations like Canada.

All this boosted the worth of gold. An additional rise is probably going as commerce tensions warmth up and set off a worldwide shift within the provide chain. Gold demand from central banks worldwide will proceed to drive the gold value over the following 12 months or two.

Lundin Gold’s common realized gold value was $3,361 per ounce within the second quarter of 2025 in comparison with $2,379 per ounce a 12 months in the past. The document excessive gold value transformed into 50% income development within the second quarter.

Lundin Gold will increase manufacturing and working effectivity

Lundin Gold controls its mining exercise relying on the gold value. It has been cashing in on this cyclical development by rising its manufacturing. Exploration discovered high-grade zones, which elevated the typical restoration price to 90.9% from 89% a 12 months in the past.

Greater gold costs resulted in greater royalty funds, which partially offset the price financial savings from working effectivity. Nonetheless, the widening hole between all-in sustaining prices (AISC) of $927 per ounce and the typical realized gold value of $3,361 per ounce turned adverse free money circulation (FCF) optimistic.

As per the corporate’s dividend coverage, it handed on windfall positive factors to shareholders via a variable quarterly dividend of $0.49 per share along with the fastened dividend of $0.30 per share.

Lundin Gold turned debt-free

Lundin Gold used these windfall positive factors to repay its long-term debt and construct a money reserve. This lowered finance prices to zero and elevated its finance revenue to $5.2 million from $4.8 million a 12 months in the past.

Strengthening fundamentals and a particular dividend have made Lundin Gold inventory overvalued, with an 11 instances price-to-sales ratio and 26.8 instances price-to-earnings ratio. That is greater than Barrick Gold’s 3.6 instances and 18 instances, respectively.

Does the inventory have extra upside?

Regardless of excessive valuations, Lundin Gold inventory can develop if the gold value continues to rise. The value improve will usher in windfall positive factors. Nonetheless, it’s higher to attend for a correction to purchase the inventory. For those who already personal it, think about holding it because the tariff scenario stays escalated.