Executive Summary / Key Takeaways

• Loncor Gold Inc. ($LONCF) is strategically positioned in the Democratic Republic of Congo (DRC) with its 84.68% owned Adumbi gold project, which boasts a significant 3.66 million ounce resource and promising high-grade underground exploration targets.
• The company is actively advancing its deep drilling program at Adumbi, with recent results from boreholes LADD029 and LADD030 indicating substantial gold intersections, reinforcing the potential for resource expansion and a "Tier 1" project designation.
• A recent C$9.4 million private placement underscores investor confidence and provides crucial capital for ongoing exploration, while a Preliminary Economic Assessment (PEA) highlights robust project economics with low projected operating costs, particularly with a hydroelectric power solution.
• An unsolicited, confidential non-binding offer for a potential transaction has prompted the formation of a Special Committee, signaling potential strategic shifts and a re-evaluation of the company's future amidst a bullish gold market.
• Despite being an exploration-stage company with consistent historical losses, Loncor's focused operational strategy, proximity to a world-class mine, and potential for high-grade discoveries present a high-risk, high-reward investment proposition in a region undergoing positive political transformation.

The Heart of Africa's Gold Potential: Loncor Gold's Strategic Focus

Loncor Gold Inc. ($LONCF) is a Canadian gold exploration company with a singular, compelling focus: unlocking the vast gold potential within the Democratic Republic of Congo (DRC). The company's strategic commitment to precious metal projects in this mineral-rich region was solidified in June 2021 with its rebranding from Loncor Resources Inc. to Loncor Gold Inc., signaling a sharpened emphasis on gold exploration and development. At the core of this strategy lies the 84.68% owned Adumbi project, a significant asset encompassing 122 square kilometers within the highly prospective Ngayu Archaean Greenstone Belt in northeastern Congo.

The Ngayu Greenstone Belt is a geological analogue to some of Africa's most prolific gold-producing regions, sharing similarities with the belts hosting the world-class Kibali mine in the DRC and the Geita mine in Tanzania. This geological kinship is a cornerstone of Loncor's investment thesis, as the Adumbi deposit is situated approximately 220 kilometers southwest of the Kibali gold mine, a substantial operation managed by Barrick Gold Corporation . The successful, long-term operation of Kibali, which produced 814,000 ounces of gold in 2019, provides a compelling precedent for large-scale gold production in the DRC, demonstrating the region's viability despite historical complexities.

The broader gold mining industry is currently experiencing a bullish market, with gold prices surging by approximately 30% year-to-date in 2025, trading above the historic $3,000-per-ounce threshold. This environment is intensifying investor interest in the sector, particularly for companies with high-potential assets. Concurrently, the industry is witnessing a push for advanced data management, the integration of AI for exploration and process optimization, and a growing emphasis on sustainability. These trends highlight a shift towards more efficient and technologically driven exploration, areas where Loncor's focused approach could yield significant advantages.

Unearthing Value: Operational Prowess and Resource Expansion

Loncor's operational strategy is centered on aggressive exploration and resource expansion at its flagship Adumbi project. The company employs a deep drilling program, a critical operational differentiator aimed at delineating and extending the known gold mineralization. An additional core rig, a multipurpose PRD Multi Star capable of coring down to 1,500 meters and offering reverse circulation drilling capabilities, was mobilized to Adumbi in August 2025 to accelerate this approximately 11,000-meter program. This enhanced drilling capacity is a direct response to management's assessment that earlier 2025 meterage had not met expectations, underscoring a proactive approach to resource development.

The Adumbi deposit currently holds an indicated mineral resource of 1.88 million ounces of gold (28.185 million tonnes grading 2.08 g/t Au) and an inferred mineral resource of 1.78 million ounces of gold (20.83 million tonnes grading 2.65 g/t Au), all delineated within a USD1,600/oz open pit shell. Recent drilling results have been highly encouraging, demonstrating the project's high-grade potential. Borehole LADD029, the deepest drilled at Adumbi to date, intersected multiple zones of gold mineralization, including 22.31 meters grading 3.05 g/t gold (with a section of 4.64 meters grading 5.83 g/t gold), 14.50 meters grading 4.24 g/t gold (including 10.17 meters grading 5.23 g/t gold), and 28.72 meters grading 2.55 g/t gold (including 16.48 meters grading 3.35 g/t gold). Similarly, borehole LADD030 reported intersections of 11.43 meters grading 1.77 g/t gold, 6.61 meters grading 4.56 g/t gold (including 5.61 meters grading 5.24 g/t gold), and 7.73 meters grading 2.26 g/t gold. These results confirm the continuity of mineralization at depth, extending the gold zones to 805 meters below Adumbi Hill.

Beyond the existing open pit, Loncor has identified a significant underground exploration target below the USD1,600/oz pit shell, estimated to contain between 8.9 million tonnes and 9.6 million tonnes grading 4.7 g/t Au to 4.9 g/t Au to a depth of 800 meters. This potential for high-grade underground ore is a critical "so what" for investors, as it could substantially increase the overall resource base and enhance project economics. Loncor's CEO, John Barker, has articulated an ambitious goal of expanding the Adumbi deposit to 5 million ounces by the end of 2025, aiming to elevate it to a "Tier 1 project."

A Preliminary Economic Assessment (PEA) for Adumbi, published in December 2021, further underscores the project's robust potential. The PEA indicated an average annual production of 303,000 ounces of gold over a 10.3-year life of mine within the proposed pit shell. Critically, the study projected low average total cash costs of US$852 per ounce and All-in Sustaining Costs (AISC) of US$950 per ounce for the Hydroelectric Power (HEP) Hybrid case. Loncor is actively exploring hydroelectric schemes for power generation at Adumbi, which could significantly reduce unit costs and environmental impact, while also investigating financing options for these facilities to manage capital expenditures. This focus on sustainable and cost-effective power generation represents a key operational advantage, potentially enhancing the project's long-term profitability.

Financial Foundations and Capital Infusion

As an exploration-stage company, Loncor Gold's financial statements consistently reflect investments in asset development rather than revenue generation. The company has reported negative net income and operating income over the past decade, with a TTM (trailing twelve months) net income of -$3.96 million, operating cash flow of -$3.01 million, and free cash flow of -$3.05 million. This financial profile is typical for a company focused on proving up its resource base before transitioning to production.

To fund its ambitious exploration and development initiatives, Loncor successfully executed a brokered private placement in May 2025. Initially targeting C$5.0 million, the offering was upsized to C$8.0 million due to strong investor demand and ultimately closed at C$9.4 million. Under this offering, Loncor sold 17,090,910 units at C$0.55 per unit, with each unit comprising one common share and one-half of one common share purchase warrant. These warrants entitle holders to purchase an additional common share at C$0.80 until May 23, 2028. This capital infusion provides essential liquidity for the continued exploration and advancement of the Imbo Project and for general corporate purposes, demonstrating the market's willingness to support Loncor's growth strategy.

A Shifting Landscape: Competitive Dynamics and Strategic Pathways

Loncor Gold operates in a competitive landscape dominated by much larger, established gold producers like Barrick Gold Corporation (GOLD), AngloGold Ashanti (AU), and Newmont Corporation (NEM). While these majors benefit from economies of scale, diversified global operations, and robust cash flow generation, Loncor carves out a niche through its concentrated focus and deep regional expertise in the DRC. Loncor's team possesses over two decades of operational experience in the DRC, providing a qualitative advantage in navigating the local regulatory and operational environment.

The geological similarities between Loncor's Ngayu Greenstone Belt and Barrick's Kibali mine are a significant competitive point. While Kibali extracts underground ore at around 5.20 g/t, Loncor's PEA suggests mining in its pit at approximately 2.2 g/t, with deeper holes at Adumbi showing grades and widths that could exceed those mined by Barrick underground, albeit in early stages. This suggests a potential for Loncor to develop a high-grade underground operation that could rival the efficiency of established producers in the region. The proximity to Kibali also offers potential for infrastructure sharing, which could reduce Loncor's capital burden and operational costs.

A pivotal development in July 2025 was the receipt of an unsolicited, confidential non-binding offer for a potential transaction. In response, Loncor's Board of Directors established a Special Committee of independent directors to evaluate the proposal and consider alternative transactions. This event, occurring amidst a surging gold market, could be transformational for Loncor, potentially leading to an acquisition, merger, or strategic partnership that validates the inherent value of the Adumbi project and offers a clear path to monetization. The after-tax NPV of the Adumbi project was estimated at US$624 million at a US$1,600 gold price in the 2021 PEA, and potentially "a billion dollars after tax" at an $1840 gold price, or even "$2 billion" when extrapolated to current gold prices. This contrasts sharply with Loncor's current market capitalization, highlighting a significant valuation gap that an external offer seeks to address.

Risks and the Road Ahead

Investing in an exploration-stage company like Loncor Gold carries inherent risks. Geopolitical instability in the Democratic Republic of Congo, despite recent reforms aimed at attracting foreign investment, remains a significant consideration. While the DRC government holds a 10% direct stake in the Adumbi project, regulatory shifts could still impact operations. Exploration success is never guaranteed, and drilling results, while promising, could fall short of expectations, delaying the transition to production.

The capital intensity of mine development is substantial, with the Adumbi PEA outlining an initial investment of $392 million. Securing financing for such a large-scale project will be critical and could lead to further shareholder dilution. Commodity price volatility also poses a risk, as fluctuations in gold prices directly impact project economics and profitability. Finally, the outcome of the unsolicited offer and the Special Committee's review introduces an element of uncertainty, though it also presents a significant opportunity for value realization.

Loncor Gold stands at a pivotal juncture. With a robust and expanding resource base at Adumbi, compelling PEA economics, and strategic operational advantages, the company is well-positioned to capitalize on a favorable gold market. The ongoing deep drilling program and the evaluation of a potential transaction underscore a dynamic period for Loncor, where strategic decisions will shape its trajectory from a promising explorer to a potential gold producer in one of Africa's most prospective regions.

Conclusion

Loncor Gold Inc. ($LONCF) presents a compelling investment narrative rooted in the significant, high-grade potential of its Adumbi project within the geologically analogous Ngayu Greenstone Belt of the DRC. The company's focused operational strategy, highlighted by its accelerated deep drilling program and encouraging assay results from boreholes like LADD029 and LADD030, is systematically expanding its resource base and delineating a substantial underground exploration target. This commitment to proving up its assets, coupled with the robust economics outlined in the Adumbi PEA, positions Loncor for transformational growth. The recent C$9.4 million private placement demonstrates strong market confidence in this vision, providing the necessary capital to advance its strategic objectives.

The current bullish gold market and the unsolicited offer for a potential transaction underscore the inherent value of Loncor's assets, suggesting a potential re-rating of the company's valuation. While the inherent risks of an exploration-stage company in a developing region persist, Loncor's proximity to the successful Kibali mine and its strategic pursuit of cost-reducing hydroelectric power solutions provide a distinct competitive edge. For discerning investors with an appetite for growth in the precious metals sector, Loncor Gold offers a unique opportunity to participate in the potential emergence of a significant gold producer, driven by operational excellence and strategic optionality.