Luna Gold Announces Results for the First Quarter 2014

Luna Gold Corp. (TSX: LGC) (LMA: LGC) (OTCQX: LGCUF) ("Luna" or the "Company")
today announced its operational and financial results for the three-month period
ending March 31, 2014.


FIRST QUARTER 2014 RESULTS HIGHLIGHTS



--  Revenue of $25.9 million, including sales to Sandstorm;
--  Gold sales and production of 23,002 ounces and 19,414 ounces
    respectively;
--  Total cash cost of production of $705, All-in sustaining cost of
    production of $787, All-in cost of $921 per ounce of gold produced;
--  Cash flow from operating activities before changes in non-cash working
    capital of $7.6 million ($0.07 per share);
--  Net income of $7.5 million ($0.07 per share); and
--  Cash balance and finished gold inventory at April 30th, 2014 of
    approximately $31 million and 4,500 ounces respectively.



First Quarter 2014 Highlights



----------------------------------------------------------------------------
                                                                     Q1 2014
----------------------------------------------------------------------------
Gold production (ounces)                                              19,414
Gold sales, including sales to Sandstorm (ounces)                     23,002
Finished gold inventory at March 31, 2014 (ounces)                     5,449
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Net realized gold price received, including gold sales to                   
 Sandstorm (USD per ounce)                                     $       1,123
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Total cash cost of production (USD per ounce)                  $         705
All-in sustaining cost of production (USD per ounce)           $         787
All-in cost (USD per ounce)                                    $         921
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Gross profit (USD millions)                                    $         8.9
Net income (USD millions)                                      $         7.5
Earnings per share - basic and fully diluted (USD)             $        0.07
----------------------------------------------------------------------------
Cash flow per share from operating activities before changes                
 in non-cash working capital (USD)                             $        0.07
Cash flow from operating activities before changes in working               
 capital (USD millions)                                        $         7.6
Cash flow from operating activities after changes in working                
 capital (USD millions)                                        $         4.4
Cash flow from financing activities (USD millions)             $        16.2
Cash payments on Phase I Expansion (USD millions)              $         2.2
Cash payments on sustaining capital (USD millions)             $         0.2
Cash payments for mineral property development (USD millions)  $         1.0
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Cash balance at March 31, 2014 (USD millions)                  $        23.5
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Company Developments



--  Q1 2014 gold production was 19,414 ounces, representing a record first
    quarter for the Company. 2014 gold production remains on target at
    85,000 to 95,000 ounces at an average annual cash cost of production of
    US$690 to US$740 per ounce of gold. The gold production target is based
    on a mine plan designed to feed the existing plant with saprolite ore
    and is not reliant on the Phase I Expansion upgrades to achieve
    production targets;
--  The Aurizona Phase I Expansion is progressing and continued to trend on
    budget as at April 30, 2014. The overall engineering, including detailed
    site engineering, reached 98% completion, procurement awarded reached
    98% completion (on planned material and equipment packages) and
    construction reached 43% completion. This is less than reported in Q4
    2013 because one of the Carbon-In-Leach ("CIL") tank shells was
    defectively installed, requiring removal and reinstallation. Mechanical
    completion of Phase 1 Expansion remains on target for the second half of
    2014;
--  In April 2014, the Company announced a brownfield exploration program.
    The objective of this 3 to 5 year drilling program is to expand
    resources and reserves, specifically targeting new saprolite
    mineralization, to better understand high grade mineralization controls
    and to sterilize footprints for future plant expansion, tailings and
    waste storage areas. The brownfield exploration program will initially
    be funded by drawing down the final $10.0 million from its previously
    announced secured debt facility (the "Sandstorm Debt Facility") with
    Sandstorm Gold Ltd ("Sandstorm"). The Company plans to spend $6.0
    million of this $10.0 million in 2014;
--  On February 25, 2014, the Company successfully completed a public
    offering of 16,950,000 common shares at a price of C$1.18 per share for
    gross proceeds to the Company of approximately C$20.0 million, to be
    used for general corporate purposes. As a result of this financing, the
    $10.0 million loan from Sandstorm and cash inflows from operations
    during the first quarter of 2014, the Company has greater balance sheet
    support in a downside gold price environment and an opportunity to fund
    projects to increase mining and plant blend flexibility. The Company had
    approximately $31.0 million in cash and 4,500 ounces of finished gold
    bullion on hand at April 30, 2014;
--  The Company announced the retirement of John Blake from the positions of
    President and CEO effective March 20, 2014 and the Board of Directors
    concurrently announced the appointment of Geoff Chater as President and
    CEO; and
--  The Company announced the appointment of Federico Schwalb as a Director
    of the Company.



For complete details on the first quarter 2014 results, please refer to the
Financial Statements, and Management Discussion and Analysis on SEDAR,
www.sedar.com or on the Financial Statements page of the Company's website.
First quarter 2014 results have been incorporated into the Luna's latest
Corporate Presentation. Recent Aurizona Phase I expansion construction photos
are available to view at Phase I Photo Gallery.


OUTLOOK AND STRATEGY

The Company remains on target to deliver on its 2014 strategy and guidance which
were outlined in the December 31, 2013 Management Discussion and Analysis report
dated March 17, 2014. Improving operational excellence, completion of the
Aurizona Phase I Expansion on time and on budget, as well as, maintaining
financial flexibility, are top priorities for the Company.


In Q1 2014, despite challenges related to a week-long temporary suspension of
mining operations resulting from community demonstrations against the local
government, the Company produced 19,414 ounces of gold. This was a first quarter
production record. 2014 gold production guidance remains unchanged at 85,000 to
95,000 ounces, at an average annual cash cost of production estimated at $690 to
$740 per ounce of gold. The gold production target is based on a mine plan
designed to feed the existing plant with saprolite ore and is not reliant on the
Phase I Expansion upgrades to achieve production targets.


The Aurizona Phase I Expansion continued to trend on budget as at April 30,
2014. The overall engineering, including detailed site engineering, reached 98%
completion, procurement awarded reached 98% completion (on planned material and
equipment packages) and construction is approximately 43% complete. This is less
than reported in


Q4 2013 because one of the CIL tank shells was defectively installed, requiring
removal and reinstallation. Activities since December 2013 have included
substantial completion of two of the CIL tanks, completion of thickener ring
foundations and concrete pillars rebar, completion and hydro testing of the
barren solution tank and substantial completion of the electrical room
structural steel. Mechanical completion of the Phase I Expansion is targeted for
the second half of 2014. Subsequent to mechanical completion, the Company
requires operating permits to be updated and issued from the Brazilian mining
and environmental authorities.


In April 2014, the Company announced a brownfield exploration program. The
objective of this 3 to 5 year drilling program is to expand resources and
reserves, specifically targeting new saprolite mineralization, to better
understand high grade mineralization controls and to sterilize footprints for
future plant expansion, tailings and waste storage areas. In April 2014, the
Company drew down the final $10.0 million from the previously announced
Sandstorm Debt Facility in order to purchase three multi-purpose drill rigs and
commence exploration and condemnation drill programs in the second half of 2014.
The Company plans to spend $6.0 million of this $10.0 million in 2014.


With the C$20.0 million gross proceeds equity financing, the additional $10.0
million loan from Sandstorm, and cash inflows from operations during the first
quarter of 2014, the Company has greater balance sheet support in a downside
gold price environment and an opportunity to fund projects to deliver on its
2014 operating guidance and progress on its strategy to develop and grow the
business.


The Aurizona Phase II Expansion prefeasibility study, as well as the Aurizona
Resource and Reserve update, are progressing well and are on target for
completion and release in the second half of 2014. In addition, the Company has
commenced trade-off studies to determine the lowest cost ore-waste material
handling options, comparing contractor equipment, owner equipment and in-pit
crushing-conveying.


The Company is considering a new initiative to advance waste stripping during
the second half of the 2014 dry season to prepare for inventory stockpiling
ahead of the first half of the 2015 wet season and higher throughput capacity
upon completion of Phase I Expansion.


AURIZONA GOLD MINE - MARANHAO STATE, BRAZIL
Phase I Expansion Update
The Phase I Expansion is designed to expand, improve efficiencies and
debottleneck the existing Aurizona process plant in order to increase gold
production through low capital cost improvements, with minimal impact to the
current plant foot print and operations. The 2014 gold production target is
based on a mine plan designed to feed the existing plant with saprolite ore and
is not reliant on the Phase I Expansion upgrades to achieve production targets.


The expansion consists of four projects designed to increase the Aurizona
process plant nameplate throughput to 10,000 tonnes per day ("tpd") of saprolite
ore. In addition, the expansion has been designed to allow flexibility for
further upgrades to maintain the 10,000 tpd throughput as the Company develops
the harder primary ore body. These four projects consist of (1) intensive
cyanidation reactor ("ICR") with dedicated electro-winning cells ("EW"); (2)
carbon regeneration kiln, and new elution and acid wash columns; (3) feed and
tailings high rate thickeners and three additional CIL tanks; and (4) triple
deck wet screen, additional cyclones, pumps and trash screen.


The expansion continues to progress towards mechanical completion in the second
half of 2014 and continued to trend on budget at April 30, 2014. Subsequent to
mechanical completion, the Company requires operating permits to be updated and
issued from the Brazilian mining and environmental authorities. The pace of
construction activities in Q1 2014 was slowed due to the temporary halt of
mining operations as community members demonstrated against the local
government, heavy rains, changes to strengthen the project management team,
delays related to construction deficiencies of the third CIL tank shell and
receipt of approval from the insurers to proceed with the plan to reconstruct
the defective CIL tank shell. The approval to reconstruct the CIL tank shell was
received in late April and materials for the new tank shell have been ordered.
The overall engineering, including detailed site engineering, reached 98%
completion, procurement awarded reached 98% completion (on planned material and
equipment packages) and construction reached 43% completion. This is less than
reported in Q4 2013 because one of the CIL tank shells was defectively
installed, requiring removal and reinstallation. The status of each project is
as follows:


(1) This project is designed to improve gravity gold recovery efficiency through
the elimination of the inefficient shaking tables. The ICR is an intense
cyanidation process delivering gold in pregnant solution directly to one new
dedicated stainless steel electro-winning cell. Three additional electro-winning
cells, bringing the total to four, will increase the efficiency of the gold room
through higher capacity and improved controls. The ICR building is structurally
complete and block walls will be installed around the first three levels of the
secure area of the building. The ICR and EW cells have been rough set. Bulk
piping and electrical materials have been received on site and are awaiting
installation. The pipe assembly shop was set up, crews hired and training
commenced. This project is approximately 67% complete.


(2) This project is designed to increase the efficiency of the CIL circuit,
reduce carbon replacement costs and increase capacity of the elution circuit.
The elution and acid wash columns are designed to improve the overall capacity
and efficiency of the elution process. The carbon regeneration kiln building is
structurally complete. The new kiln, dewatering screen, feed hopper and quench
tank have been rough set. Bulk piping and electrical materials have been
received on site and are awaiting installation. The construction of the barren
solution tank, hydrostatic testing and final inspection were completed.
Pre-assembly of the acid wash structural steel commenced. This project is
approximately 65% complete.


(3) The high rate thickeners provide increased throughput and optimal
water/solids slurry control for consistent delivery of both ore in solution to
the CIL tanks and recovering of cyanide in solution prior to cyanide destruction
and tailings disposal. The three CIL tanks will provide increased ore retention
time and throughput to the CIL process. The two above ground, steel, high rate
thickeners have been received on site. Foundations for the center columns are
complete and main ring foundations for the thickener support steel are 60%
complete with backfilling started. Four CIL tank foundations have been completed
along with one foundation for a future fourth tank, and two tank shells have
been completed with bottom welding and baffle installation started inside the
tanks. The third tank shell was under construction but will have to be
dismantled due to a construction deficiency. The cost of dismantling and
reconstructing this tank, including any new materials, are the responsibility of
the contractor and covered by the Company's insurance. With the exception of the
third tank, all major materials and equipment associated with the thickeners and
CIL circuit have been received on site. The materials required to reconstruct
the third tank are currently being procured. The feed and tailings high rate
thickeners are approximately 40% complete and the CIL tanks are approximately
30% complete. This is less than reported in Q4 2013 because one of the CIL tank
shells was defectively installed, requiring removal and reinstallation.


(4) This project is designed to improve crushing and grinding circuit
efficiencies through optimized feed particle sizing and distribution. The triple
deck screen engineering is being completed onsite and procurement and delivery
of the screen and main conveyors are 100% complete. The remaining engineering
design has been reviewed and released to finalize detailed engineering and
procurement of materials for secondary equipment. Conveyor and wet screen
foundation excavations, concrete piles and formwork started. Hydrocyclone
materials and equipment have been delivered to site with the exception of the
medium voltage variable frequency drive for the new cyclone feed pump, which is
expected in June 2014. This project is approximately 25% complete.


From an approved budget of $49.8 million, the Company has committed
approximately $41.0 million, of which approximately $39.0 million has been
incurred to the end of April 2014. The Company expects to fund the remaining
portion of the Phase I Expansion, which is estimated at approximately $11.0
million (approximately $9.0 million, net of approximately $2.0 million
contribution from Sandstorm), utilizing the existing cash balance, operating
cash flow and funds from Sandstorm for their remaining 17% contribution to
expansion capital.


Operating results



                                                                            
----------------------------------------------------------------------------
                                                Three months ended March 31 
----------------------------------------------------------------------------
                                                         2014           2013
----------------------------------------------------------------------------
Mined waste - tonnes                                  960,010      2,089,416
Mined ore - tonnes                                    336,242        511,473
Ratio of waste to ore                                     2.9            4.1
Ore grade mined - g/t                                    1.85           1.43
Cost per tonne mined (USD)                     $         3.93 $         1.80
----------------------------------------------------------------------------
Processed ore - tonnes                                486,839        447,990
Average grade processed - g/t                            1.40           1.40
Average recovery rate %                                   89%            90%
Gold produced (ounces)                                 19,414         17,203
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Gold sales (ounces)                                    23,002         13,017
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----------------------------------------------------------------------------
                                         USD per  USD per  USD per  USD per 
Cash costs of production:                 ounce    tonne    ounce    tonne  
                                                 processed         processed
                                         -----------------------------------
  Mining                                 $   276 $      12 $   244 $      10
  Processing                                 326        12     374        14
  Administration                              70         3     117         5
  Refining and transportation                 20         1      22         1
  Royalties                                   13         1      16         1
----------------------------------------------------------------------------
 Total cash costs of production          $   705 $      29 $   773 $      31
                                                                            
  Sustaining capital                          31               221          
  Brownfields exploration expenditure         51                21          
----------------------------------------------------------------------------
 All-in sustaining costs                 $   787           $ 1,015          
----------------------------------------------------------------------------
                                                                            



Mining production
During the three months ended March 31, 2014, total material mined (ore and
waste) decreased from the comparative quarter of 2013 by 50% due to wet
conditions, temporary suspension of mining operations (including delays to
re-access the pit), training of new operators and lower than planned equipment
utilization and availability. In Q1 2013, the mine experienced a drought which
allowed for an opportunity to increase mine production during a period which
normally has heavy rainfall. In Q1 2014, the seasonal rains returned and were
above average, resulting in lower mine production. The wet conditions resulted
in lower utilization and productivity compared to the same period last year.
Equipment availability and productivity were negatively impacted due to delays
in receiving equipment maintenance parts from suppliers and allocating more
equipment for stockpile re-handling. In addition, there was a week-long
temporary suspension of mining operations as community members demonstrated
against the local government. During this time, access could not be safely
maintained to manage the pit dewatering system, resulting in flooding of the
Piaba pit and haul road erosion. Additional pumping and road rehabilitation were
required to regain access to the mine. As a result, ore, waste and total tonnes
mined were lower in Q1 2014 compared to Q1 2013.


The average ore grade mined in the three months ended March 31, 2014 was higher
than comparative quarter of 2013, as the Company targeted higher grade ore areas
of the Piaba pit in an effort to offset lower mine production.


After adjusting for a foreign exchange gain of $0.72 per tonne, mining costs
were significantly higher per tonne mined in the three months ended March 31,
2014 compared to the same quarter of 2013, primarily due to lower volume of
material mined.


Mill processing
Gold production during the three months ended March 31, 2014 was 13% higher than
the comparable quarter of 2013. The increase was due to higher ore volumes
processed through the mill.


Ore throughput in Q1 2014 was higher than the comparable quarter of 2013 due to
an increase in plant availability. The drought conditions that positively
impacted mine operations in Q1 2013 had the opposite impact on processing ore
due to a lack of water available for plant production. There were no water
shortage issues in Q1 2014 resulting in the increase in process plant
availability. In addition, the ore stockpile was processed to increase ore
throughput in the plant.


The average ore grade processed in Q1 2014 was comparable to the same quarter in
2013. Recoveries were slightly lower due to a higher percentage of laterite and
transitional ore blend in Q1 2014. This resulted in additional lime requirements
in the production process, which lowered the recovery.


Cash costs of production
The Company's results are subject to seasonal variation, in particular the wet
season in Northeastern Brazil. The wet season generally starts in January and
continues through June, with the heaviest rainfall normally experienced in the
months of March to May. As a result of the wet season, pit access and the
ability to mine ore will be lower in this period than other periods of the year
and the unit cost of production will also be higher. To address this issue, the
Company mines ore and waste at higher levels than processing rates in the dry
season, resulting in a build-up of ore stockpiles to be used during the wet
season, and also pre-strip waste ahead of future ore mining.


The total cash cost of production was 9% lower for the three months ended March
31, 2014 compared to the same quarter in 2013. The strengthening of the US
dollar in relation to the Brazilian Real had a positive impact on the total cash
costs for the first quarter of 2014 of approximately $129 per ounce compared to
2013.


After adjusting for positive foreign exchange movements, the mining costs per
ounce produced in the first quarter of 2014 were approximately 33% higher than
the comparative quarter of 2013. This was due to the higher cost per tonne
mined.


After adjusting for positive foreign exchange movements, processing costs were
approximately 3% higher than the comparative quarter of 2013. The increase in
the average process cost per ounce produced was due to higher leaching costs
related to the increase in laterite and transitional ore processed.


The administration cost per ounce produced was lower than the comparative
quarter of 2013 due to higher gold production, a reduction in administration
projects that were completed in 2013 and cost saving initiatives that were
enacted in the Company's sustainable cost reduction programs.


Refining and transportation costs were lower due to a change in gold refineries
in 2014.


Royalty costs are a function of gross sales and were lower due to a lower gold
price in Q1 2014 versus Q1 2013.


The total all-in sustaining cost ("AISC") of production was lower by 23% for the
three months ended March 31, 2014, as compared with the same quarter of 2013.
The lower AISC for Q1 2014 was the result of a $144 per ounce gain in foreign
exchange and deferring all non-essential sustaining capital projects to the
future on an as needed basis. This was partially offset by higher capitalized
mine activities related to the clearing and preparation of a new mining area on
the west side of the Piaba pit.


After adjusting for a foreign exchange gain of $5 per tonne, total cost per
tonne processed was 13% higher in the three months ended March 31, 2014 compared
to the same quarter of 2013. This was generally due to the higher mining costs
associated with low mine production and higher processing costs associated with
lower gold recovery and higher leaching costs, which was partially offset by
lower administration costs and a higher volume of ore tonnes processed through
the mill.


Exploration
Exploration expenditure during the first quarter of 2014 was related to Aurizona
resource geology planning programs to be executed in 2014.


In April 2014, the Company announced a brownfield exploration program at the
Aurizona Gold Mine. Under this initiative, the Company plans to continue
exploration and condemnation drilling in the second half of 2014. The objective
of this 3 to 5 year drilling program is to expand resources and reserves,
specifically targeting new saprolite mineralization, to better understand high
grade mineralization controls and to sterilize footprints for future plant
expansion, tailings and waste storage areas. Results of the drilling program
will assist in the determination of the next steps for the Phase I and Phase II
expansion scenarios. The Company targets to spend $6.0 million on this
brownfields exploration program in 2014, which includes the procurement of three
new multi-purpose drill rigs.


The Brownfield Exploration drilling program will target new mineralization in
several near mine areas as well as an expansion of resources and reserves
through step-out drilling at the Piaba, Boa Esperança, Conceição and
Ferradura gold deposits. The drilling program will focus on saprolite
mineralization along strike from these deposits and new saprolite mineralization
east-southeast of Piaba within the Micote-São Lourenço trend and basin area.


Permitting
The mine licence application for the Tatajuba claim was submitted in March 2012
and remains under review by the Brazilian Mining Department. The Company is
currently progressing the Environmental Impact Assessment ("EIA- RIMA") and is
targeting to receive the mine licence in the second half of 2014.


CONFERENCE CALL DETAILS
The Company will also host a conference call at 11:00 a.m. Eastern Time on
Friday 16th May 2014, where Management will both review the financial results
and discuss the 2014 outlook.


Conference Call Dial-In Details      
Toll Free (North America): [phone]  
Toronto Local and International: [phone]  
Webcast: www.gowebcasting.com/5454  

A replay of the call will be available on Luna's website, www.lunagold.com.

About Luna Gold Corp.
Luna is a gold production company engaged in the operation, expansion, and
exploration of gold projects in Brazil.


On behalf of the Board of Directors

LUNA GOLD CORP.
Geoff Chater - President and CEO

Website: www.lunagold.com

Forward-Looking Statements

This release contains certain "forward looking statements" and certain "forward
looking information" as defined under applicable Canadian and U.S. securities
laws. Forward-looking statements can generally be identified by the use of
forward-looking terminology such as "may", "will", "expect", "intend",
"estimate", "anticipate", "believe", "continue", "plans" or similar terminology.
Forward-looking statements include, but are not limited to, statements with
respect to future gold production and/or the results of analysis on gold
production. Forward-looking statements are based on forecasts of future results,
estimates of amounts not yet determinable and assumptions that while believed by
management to be reasonable, are inherently subject to significant business,
economic and competitive uncertainties and contingencies. Forward-looking
statements are subject to various risks and uncertainties concerning the
specific factors identified in Luna Gold Corp.'s periodic filings with Canadian
Securities Regulators. These factors include the inherent risks involved in the
mechanical completion and commissioning of the Aurizona Phase I expansion,
preparation and delivery of the Aurizona Phase II expansion prefeasibility
study, exploration and development of mineral properties, the uncertainties
involved in interpreting drill results and other exploration data, the potential
for delays in exploration or development activities, the geology, grade and
continuity of mineral deposits, the possibility that future exploration,
development or mining results will not be consistent with the Company's
expectations, accidents, equipment breakdowns, title matters, labor disputes or
other unanticipated difficulties with or interruptions in production and
operations, fluctuating metal prices, unanticipated costs and expenses,
uncertainties relating to the availability and costs of financing needed in the
future, the inherent uncertainty of production and cost estimates and the
potential for unexpected costs and expenses, commodity price fluctuations,
currency fluctuations, regulatory restrictions, including environmental
regulatory restrictions and liability, competition, loss of key employees, and
other related risks and uncertainties. The Company undertakes no obligation to
update forward-looking information except as required by applicable law. Such
forward-looking information represents management's best judgment based on
information currently available. No forward-looking statement can be guaranteed
and actual future results may vary materially. Accordingly, readers are advised
not to place undue reliance on forward-looking statements or information.



FOR FURTHER INFORMATION PLEASE CONTACT: 

For further information contact

Patrick Balit
Investor Relations Manager
[phone]