Luna Gold Corp. Reports Operational and Financial Results for the Three Months Ended March 31, 2012

Luna Gold Corp. (TSX VENTURE:LGC)(OTCQX:LGCUF)(LMA:LGC) ("Luna" or the
"Company") today announces its results for the three months ended March 31,
2012. The complete financial statements and management discussion and analysis
are available for review at www.lunagold.com and should be read in conjunction
with this news release.


FIRST QUARTER 2012 HIGHLIGHTS



--  Record quarterly gold production of 16,063 ounces was achieved in the
    quarter; 
--  Average unit cash cost of production was $771(2) per ounce; 
--  Gross profit at the Aurizona operation for the quarter was $6.5 million;
--  Net loss for quarter was $0.5 million; and 
--  Operating cash inflow before working capital movements for the quarter
    was $4.1 million. 



OUTLOOK AND STRATEGY

Aurizona operations and expansion project development 

The Company remains on target to deliver on its 2012 goals and strategy which
were outlined in the December 31, 2011 Management Discussion and Analysis report
dated March 1, 2012.


The Company remains on target to achieve 60,000 ounces of gold production at an
average unit cash cost of $750(1) per ounce.


The Phase I expansion scoping study is progressing well with SNC Lavalin Inc.,
Vancouver. The base study is almost complete and the capital costs are being
verified prior to release. The results of the scoping study will be used to
complete a basic engineering and an EPCM estimate. Upon approval by the Board of
Directors, the Company will mobilize a construction team to site and commence
construction. The details of the construction, costs and timing will be released
upon completion of the Phase I expansion scoping study, basic engineering and
EPCM estimate.


Luna Greenfields exploration project

The Company will continue its exploration programs that include ground
geophysical surveys, structural mapping, auger drilling and some trenching prior
to drilling the three most advanced gold targets identified to date in this
region. The potential drill targets will be rate ranked in priority and the top
three targets will be drilled commencing in the third quarter of 2012. At the
same time, the Company will continue to focus on identifying new gold targets
through field geochemical, geophysical and geological surveys.


Aurizona brownfield exploration

The Company will continue to drill for high grade ore zones through the second
quarter of 2012. Any discovery of high-grade mineralization within the large
Piaba deposit will then be assessed for the possibility of developing an
underground mine and improving feed grade. Finally, the Company will continue
with surface exploration programs focused on the area to the east of Piaba to
deliver new drill targets in 2013.


AURIZONA GOLD MINE - MARANHAO STATE, BRAZIL



Segmented operating results                                                 
                                                                            
----------------------------------------------------------------------------
                                                 Three months ended March 31
----------------------------------------------------------------------------
(tabled amounts are expressed in thousands of                               
 US dollars)                                             2012           2011
----------------------------------------------------------------------------
Mined waste - tonnes                                  891,142        348,036
Mined ore - tonnes                                    402,507        111,609
Ratio of waste to ore                                     2.2            3.1
Ore grade mined - g/t                                    1.32           1.79
----------------------------------------------------------------------------
Processed ore - tonnes                                439,820        293,393
Average grade processed - g/t                            1.25           1.19
Average recovery rate %                                   84%            83%
Gold produced (ounces)                                 16,063          9,209
----------------------------------------------------------------------------
Gold sold (ounces)                                     13,431          8,358
Cash costs of production (USD per ounce) (1)                                
 Mining                                                   161            279
 Processing                                               394            563
 Administration                                           185            232
 Refining and transportation                               31             54
Total cash costs of production (per ounce)               $771         $1,128
Gross profit (loss)                                  $6,454.3         $726.4
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Cash cost is a non IFRS measure. See "Non IFRS Measures" in the full    
MD&A.                                                                       



Mining production

During the quarter, waste removal and ore mined increased by 156% and 261%,
respectively, over the comparative quarter of 2011. These increases were due to
the implementation of the Company's new management and mining team and the
Company's decision to become owner-operator of mining activities during the 2011
year. With the new mine team in place, starting in Q3 2011, proper planning was
completed to address the seasonal impacts related to the rain season. Improved
road design, drainage improvements, laterite surfacing and other improvements in
mine related activities were completed prior to the rain season which began in
January. Mine operations were significantly impacted in the comparative quarter
due to improper preparation for the heavy rains, which resulted in reliance on
production from the ore stockpiles. In addition, the 2012 rain season was drier
than the comparative quarter with approximately 30% less rain measured.


The ore grade mined decreased from the comparative quarter of 2011, however,
remained in line with the overall life of mine ore grade. The comparative
quarter's mining activities required mining operations to focus on obtaining
high grade ore due to the shortfall in ore tonnage mined related to the heavy
rains. This strategy was not necessary in 2012 due to the proper preparation of
the mine in Q4 2011.


The Company continued to operate in the quarter with mostly rental equipment.
The new equipment, which consists of twelve (12) CAT 740 articulated dump
trucks, three (3) CAT 374 excavators and ancillary support equipment, was
received in country and is currently being transported from the port to the mine
site and should be commissioned in the latter part of the second quarter. The
overall change to larger, articulated dump trucks and matching fleet is expected
to result in additional year round mining efficiencies and increased production
in upcoming periods.


Mill Processing

During the quarter, gold production was 74% higher than the comparative quarter
of 2011. This was the result of a 50% increase in ore feed to the mill, a 5%
increase in the ore grade processed and a slight increase in recoveries. In
addition, the operational team reduced the gold in circuit inventory from
December 31 by approximately 1,200 ounces.


Ore fed to the mill of approximately 440 thousand tonnes was a quarterly record
for the Company. This was achieved through plant improvements completed during
the latter half of 2011, better maintenance planning, and a stronger management
and operational team, which all led to an increase in operating hours in Q1
2012. The comparative quarter of 2011 was hampered by significant plant downtime
related to poor construction, which led to planned plant shutdowns near the end
of Q1 2011 to upgrade the facility.


The ore grade processed was slightly higher than the comparative quarter of
2011, which was the result of the improvements in the mining operations. The
gold recovery percentage remained relatively similar to the comparative quarter.
The Company expects to improve the gold recovery rate with the implementation of
a carbon regeneration kiln, an intense leach reactor and further plant upgrades
with a target of achieving a 90% recovery rate before year end.


The mine produced approximately 6,200 ounces of gold in April.

Cash Costs(2)

The average unit cash cost of production for Q1 was a quarterly record low for
the Company and is trending downward as expected with increased gold production
levels. The significant reduction in the average unit cash of cost production
versus the comparative quarter of 2011 was due to the increase in gold
production, lower mining costs and the strengthening of the US dollar against
the Brazilian currency.


The increase in gold production allowed for fixed operating costs to be spread
over a larger number of gold ounces produced, thus lowering the average unit
cash cost of production. Ore costs were lower due to improvements in the mining
team, mining operations and lower waste stripping in Q1 2012. Refining and
transport costs were lower due to fewer shipments at higher volumes. Overall,
the strengthening of the US dollar against the Brazilian currency, by about 6%
quarter versus quarter, provided a positive impact to the average unit cash cost
of production.


The Company remains on target to achieve its forecast average unit cash cost of
production for 2012 of $750 per ounce. Further improvements in the average unit
cash cost of production are expected through improvements in mining costs upon
mobilization of the new mine fleet and production efficiencies which are
expected to be achieved upon the onset of the dry season in the second half of
the year.


AURIZONA EXPLORATION

The Company's exploration team delivered a major resource update in early
December 2011. Six drill rigs were demobilized from the project and two rigs
remain and completed exploration drill holes at the Boa Esperanca, Ferradura and
Conceicao near mine targets in this first quarter. Geologic modeling for these
targets is well advanced. The Phase 1 deep drill program commenced at the Piaba
deposit in late February. The mine licence application for the Tatajuba deposit
was submitted to the DNPM in March.


Deep Diamond Drilling - Piaba Deposit

The Piaba deep drill program commenced in late February. The Phase 1 deep
program consists of 6 diamond holes targeting three interpreted high-grade
plunging structures that cross-cut the main orebody. The drilling is designed to
intersect these structures at vertical depths of between -550 metres right to
left and -650 metres right to left thus extending the plunge. Two holes have
been completed and two are in progress. Detailed geotechnical studies are being
carried out on the core.


Diamond and Reverse Circulation Drilling - Boa Esperanca

Eight diamond drill holes totalling 1,949 metres were completed at Boa
Esperanca, testing a target strike length of 1,000 metres. Fourteen RC drill
holes totalling 1,548 metres were also completed testing a strike length of
1,000 metres. Geological and structural modeling of the Boa Esperanca target is
well underway. In late April, an infill RC program commenced at Boa Esperanca at
50 metre spacing targeting near surface oxide mineralization. Core geology is
dominated by tonalites interbedded with metavolcanics and weak to moderate
hydrothermal alteration.


Diamond Drilling - Ferradura

Eight diamond drill holes totalling 1,283 metres were completed at Ferradura
testing a target strike length of 500 metres. Geological and structural modeling
of the Ferradura target is well underway. An infill RC program will commence
targeting near surface oxide mineralization on completion of the Boa Esperanca
infill program. Core geology is dominated by tonalites and gabbros.


Diamond Drilling - Conceicao

Three diamond drill holes totalling 400 metres were completed at Conceicao,
testing a strike length of 300 metres. Geological and structural modeling of the
Conceicao target is well underway. An infill RC program will commence targeting
near surface oxide mineralization on completion of the Ferradura infill RC
program. Core geology is dominated by tonalites and gabbros.


Permitting

The process of converting the Tatajuba exploration licence, which hosts the
Tatajuba deposit, to a mining license advanced during the quarter with submittal
of the complete mine licence application to the DNPM in March.


CACHOEIRA GOLD PROJECT

All activities during Q1 were related to social and community development within
the Cachoeira project.


LUNA GREENFIELDS EXPLORATION PROPERTY - MARANHAO STATE, BRAZIL

Areal Gold Target

Assay results were received for the Areal target auger drill program (382 holes
totaling 2,223 meters). This program essentially sterilized a large part of the
soil anomaly and identified two sub-parallel, mineralized structures located to
the southwest of the main Areal pit.


Ceara-Arete Targets (PC Grid)

Positive exploration results for the Ceara Arete target were announced in March.
Ceara and Arete are two separate gold targets hosted by a southwest trending
shear zone located 16 kilometres along strike from the Aurizona mine.
Geochemical and geophysical data combined with geological mapping indicate that
these new targets are located in the same structural corridor that hosts the
Aurizona gold deposits. Highlights included:




--  Ceara - gold in soil anomaly measuring 0.55 km x 0.25 km at a 50 ppb Au
    cut-off with maximum values of 1.32 g/t Au associated with sulfidization
    and quartz veining in tonalites 
--  Ceara - reconaissance rock grab sampling program (38 samples) returned
    gold values up to 20.30 g/t Au 
--  Arete - Gold in soil anomaly measuring 1.00 km x 0.10 km at a 50 ppb Au
    cut-off with maximum value of 0.79 g/t Au 
--  Arete - Reconaissance rock grab sampling program (04 samples) returned
    gold values up to 3.31 g/t Au 
--  Arete - Auger drill program defined 0.50 km long subcropping mineralized
    zone with best intersection of 5.00 m @ 1.96 g/t Au from surface (Auger
    hole T2684) 



Nova Vida Target

No exploration work was conducted at Nova Vida in the quarter.

Jiboia, Santarem, Tatu Targets (JST Grid)

No exploration work was conducted at JST in the quarter.

CPB, PJP, BML, SDP, C-MAG Grids

Work continued at these targets in the quarter and assay data are being uploaded
to the databases. All grids were finalized with the exception of the C-MAG grid
which is still being opened and sampled. The Company is aggressively exploring
its extensive and prospective landholding at Luna Greenfields to deliver drill
targets on 100% owned mineral rights in 2012.


Artisanal Workings Reconnaissance Program

The artisanal workings reconnaissance mapping program is progressing. 90 garimpo
occurrences have been registered to date. This program is discovering numerous
new primary and alluvial artisanal workings.




SUMMARY OF OPERATING RESULTS                                                
                                                                            
----------------------------------------------------------------------------
                                                Three months ended March 31,
----------------------------------------------------------------------------
(tabled amounts are expressed in                                            
 thousands of US dollars)                       2012        2011        2010
----------------------------------------------------------------------------
Gold sales (ounces)                           11,148       6,937           -
Gold delivered to Sandstorm                    2,283       1,421            
----------------------------------------------------------------------------
Revenue                                     19,113.0    10,357.4           -
Operating expense                          (9,863.3)   (8,728.9)           -
Depreciation and amortization              (2,795.4)     (902.1)           -
----------------------------------------------------------------------------
Gross profit (loss)                          6,454.3       726.4           -
General & administration(3)                (3,198.8)   (1,062.0)   (1,019.1)
Exploration expense                        (2,668.0)   (1,398.7)      (63.2)
Financing (cost) income, net                 (590.4)     (355.6)        30.8
Unrealized gains from derivatives            1,168.3     1,628.3           -
Foreign exchange and other                     476.7       650.4         4.6
Income taxes                               (2,158.2)           -           -
----------------------------------------------------------------------------
Net (loss) income                            (516.1)       188.8   (1,046.9)
----------------------------------------------------------------------------
Basic/diluted loss per share                  (0.00)        0.00      (0.00)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total assets                               159,128.5   113,058.1    85,115.8
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total liabilities                           59,475.2    49,606.5    48,564.9
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(3) General and administration ("G&A") consists of general and              
administrative expenses, professional fees and stock based compensation     
charges.                                                                    



Revenue increased over the comparative period of 2011 due to the increase in
gold production and the increase in the price of gold. The Company's average
realized price of gold received was $1,714 per ounce for the first quarter of
2012, a 25% increase over the realized price of gold received in the comparative
quarter of 2011 (excluding Sandstorm proceeds).


Sandstorm gold proceeds of $400 per ounce (per the Sandstorm Agreement) were
recorded as a recovery of operating expenses in Q1 2012, but were recorded as
revenue in the comparative quarter of 2011. This difference in accounting
treatment was due to a change in the accounting treatment of the Sandstorm
Agreement effective July 1, 2011.


Operating expense was higher than the comparative quarter due to the 61%
increase in the net ounces sold and delivered to Sandstorm. However, operating
expense was positively impacted by the lower average unit cash cost of
production in first quarter of 2012 compared to the same period of 2011. The
change in the accounting treatment for the delivery of gold to Sandstorm
resulted in operating expenses in Q1 2012 decreasing by approximately $0.9
million.


Depreciation and amortization was higher than the comparative quarter in 2011
due to the increased gold ounces sold and delivered.


General and administrative expense was significantly higher than comparative
period of 2011 due to increases in salaries, non-cash stock based compensation
expense, investor relation activities and professional fees. Salaries accounted
for approximately 30% of the increase and were higher due to an increase in the
number of corporate employees, increases in employee salaries and the payment of
bonuses related to the 2011 year. Non-cash stock based compensation was
approximately $0.9 million of the general and administration expense and
accounted for about 24% of the increase. Stock based compensation was higher due
to the Black Scholes value of the stock options granted. Investor relations
costs accounted for approximately 14% of the increase as the Company increased
its marketing efforts with the successful turnaround of the Company at the end
of 2011. Professional fees accounted for approximately 18% of the increase due
to higher audit fees, consulting costs and legal costs.


Exploration expense increased over the comparative quarter of 2011 due to a
change in exploration strategy for the Company. The Company's exploration
activities are now targeted on the Luna Greenfields area with the goal of
discovering a new gold resource. Expenditures during the first quarter of 2012
were focused on defining drill targets with the goal of commencing drilling in
the third quarter of this year. In addition, the Company spent approximately $2
million on deep drill holes and further resource definition work at Aurizona,
which was capitalized as mineral properties. The comparative quarter of 2011
expenditures were mainly on the Aurizona resource expansion and less funds were
allocated to the Luna Greenfields project.


Net financing cost was higher due to an increase in the outstanding debt balance
quarter on quarter.


Unrealized gains (losses) from derivative liabilities were related
mark-to-market adjustments on foreign exchange forward contracts, interest rate
swap contracts and the warrant derivative liability. A gain was recognized on
the forward contracts and the warrant liability of approximately $0.6 million
and $0.9 million, respectively, which was offset by a loss of approximately $0.3
million on the interest rate swaps. The comparative quarter of 2011 included a
gain on the warrant liability.


Foreign exchange gains were related to the strengthening of the US dollar
against the Brazilian currency. The change between the comparative quarters was
due to variances in the foreign exchange rate.


An income tax provision was recognized in the first quarter of 2012 as the
operation generated profit. The operation recognized a loss during the
comparative quarter of 2011, thus no income tax provision was recognized.


To view the Consolidated profit and loss - 2 year historic trend table, visit
the following link:
http://media3.marketwire.com/docs/Profit_and_Loss_2YearTrend.jpg 


Revenues increased over the past 2 years, which have been driven by increases in
production and the rising gold price. However, the increase in production during
the first quarter of 2012 was not reflected in revenue due to timing differences
resulting in an increase in finished good inventory at the end of Q1 2012.


Operating expenses were driven by the average unit cash cost of production each
quarter. The average unit cash cost of production has trended downwards since
achieving gold production in Q2 2010. A record low average unit cash cost of
production was achieved in Q1 2012 and is reflected in the operating expense.


Depreciation expense is based on units of production and was in line with
production.


General and administration expense increased quarter over quarter. This has been
the result of strengthening the corporate function with the growth of the
Company and increasing its marketing expenditure while the Company's results
improve.


Financing costs were related to debt facilities outstanding each quarter. The
significant variance in Q4 2011 and Q3 2011 were due to refinancings that took
place during those quarters and the recognition of interest accretion.


Unrealized gains (losses) from derivative liabilities were related to the
warrant liability throughout each quarter and the foreign exchange contracts and
interest rate swaps which were assumed in Q4 2011.


Foreign exchange gains and losses have been driven by the variance in the
USD:BRL exchange rate quarter on quarter.


An income tax recovery was recognized in Q4 2011 to recognize loss carry
forwards that the Company can use against future income. In Q1 2012, an income
tax provision was recognized on the operational income for the quarter.


LIQUIDITY AND CAPITAL RESOURCES



----------------------------------------------------------------------------
                                                Three months ended March 31,
----------------------------------------------------------------------------
(tabled amounts are expressed in                                            
 thousands of US dollars)                       2012        2011        2010
----------------------------------------------------------------------------
Cash flows from operating activities                                        
 - Before working capital items              4,082.7     (801.7)     (385.4)
 - After working capital items               3,809.3       425.7   (1,650.0)
Cash flows from financing activities         (123.2)   (1,143.2)    13,910.1
Cash flows from investing activities      (13,495.1)   (5,955.6)  (15,858.7)
Effect of exchange rates on cash             (221.1)        58.2      (41.9)
Net cash flows                             (9,809.0)   (6,673.1)   (3,598.6)
Cash balance                                25,622.9     4,088.7     8,925.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------



At March 31, 2012, the Company had cash and cash equivalents of $25.6 million
and finished gold bullion inventory of approximately 5,400 ounces. Since
December 31, 2011, the cash balance increased from operations producing positive
cash inflow, which was then used mainly to purchase mining equipment and make
payments for further resource expansions and deep drilling at Aurizona. The
Company has adequate funds available to meet its working capital requirements,
debt payments, and execute its planned capital upgrades and exploration
activities in 2012.


In the first quarter of 2012, the Company generated record operating cash
inflows after working capital movements of $3.8 million. This was the direct
result of the operational improvements leading to an increase in gold production
and a reduction in the average unit cash cost of production and was the reason
for the increase compared to the same quarter in 2011.


Cash outflow from financing activities in the first quarter of 2012 consisted of
payments on the Finame equipment financing. The comparative quarter of 2011
included a debt payment of $1.7 million, which was offset by stock option
proceeds.


Cash outflow from investing activities in the first quarter of 2012 consisted of
$11.5 million on capital equipment at the Aurizona operation and $2.0 million on
deep drilling and other costs to further define the Aurizona resource. The
majority of the equipment purchases were for mining equipment, including the
articulated dump trucks, excavators and ancillary equipment. There were also
some minor security improvements and costs associated with raising the tailings
dam to accommodate future production levels. Cash outflow from the comparative
quarter of 2011 was related to costs to upgrade the plant to meet feasibility
study production levels and amounts spent on the Aurizona resource expansion.


SHAREHOLDERS' EQUITY

Shareholders' equity decreased from the prior period due to the Company's net
loss during the quarter.


As at the date of this report the Company had 104,580,179 common shares
outstanding, options to purchase 6,928,000 common shares and warrants to
purchase 9,491,901 common shares outstanding.




Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)    
For the three months ended March 31,                                        
(expressed in thousands of U.S. dollars, except where indicated)            
----------------------------------------------------------------------------
                                          Note           2012           2011
----------------------------------------------------------------------------
Revenue                                                                     
 Gold sales                                    $     19,113.0 $     10,357.4
Operating expenses                                                          
 Cost of goods sold                                 (9,863.3)      (8,728.9)
 Depletion and amortization                         (2,795.4)        (902.1)
----------------------------------------------------------------------------
Gross Profit                                          6,454.3          726.4
----------------------------------------------------------------------------
 Exploration                                        (2,668.0)      (1,398.7)
 General and administrative                         (2,309.7)        (717.6)
 Stock-based compensation                             (889.1)        (344.4)
 Foreign exchange gain                                  513.7          619.1
 Derivative instrument gain                           1,168.3        1,628.3
 Finance income                                          78.3          117.2
 Finance expense                                      (668.7)        (472.8)
 Other (expense) income                                (37.0)           31.3
----------------------------------------------------------------------------
Income before income taxes                            1,642.1          188.8
 Income tax expense                                 (2,158.2)              -
----------------------------------------------------------------------------
Net (loss) income and comprehensive                                         
 (loss) income                                 $      (516.1) $        188.8
----------------------------------------------------------------------------
Income per common share                                                     
 Basic                                                 (0.00)           0.00
 Fully diluted                                         (0.00)           0.00
                                                                            
Weighted average shares outstanding                                         
 (000's)                                                                    
 Basic                                                104,534         87,128
 Fully diluted                                        105,111         88,391
                                                                            
----------------------------------------------------------------------------
Total shares issued and outstanding                                         
 (000's)                                              104,580         87,243
----------------------------------------------------------------------------


Consolidated Balance Sheets                                                 
(expressed in thousands of U.S. dollars, except where indicated)            
----------------------------------------------------------------------------
                                                    March 31,   December 31,
                                          Note           2012           2011
----------------------------------------------------------------------------
Assets                                                                      
Current assets                                                              
Cash and cash equivalents                      $     25,622.9 $     35,653.0
Accounts receivable and prepaid expenses              2,936.8        5,029.7
Derivative asset                                            -          106.0
Inventory                                            12,932.5        8,710.3
----------------------------------------------------------------------------
                                                     41,492.2       49,499.0
Property, plant and equipment                       108,042.5       97,862.4
Derivative asset                                            -           58.9
Deferred tax asset                                    6,699.3        8,122.4
Other assets                                          2,894.5        2,659.1
----------------------------------------------------------------------------
Total assets                                   $    159,128.5 $    158,201.8
----------------------------------------------------------------------------
Liabilities                                                                 
Current liabilities                                                         
Accounts payable and accrued liabilities              6,838.6        6,854.7
Income taxes payable                                  2,461.8        1,323.8
Current portion of long-term debt                     5,363.2        3,098.2
Current portion of other liabilities                    907.8          576.3
----------------------------------------------------------------------------
                                                     15,571.4       11,853.0
Long-term debt                                       24,034.2       25,937.8
Derivative liability                                  8,084.9        9,435.8
Other liabilities                                     9,466.4        9,676.6
Restoration provision                                 2,318.3        2,187.6
----------------------------------------------------------------------------
Total liabilities                                    59,475.2       59,090.8
----------------------------------------------------------------------------
Shareholders' equity                                                        
Share capital                                       150,047.4      148,989.0
Deficit                                            (50,394.1)     (49,878.0)
----------------------------------------------------------------------------
Total shareholders' equity                           99,653.3       99,111.0
----------------------------------------------------------------------------
Total liabilities and shareholders'                                         
 equity                                        $    159,128.5 $    158,201.8
----------------------------------------------------------------------------


Consolidated Statements of Changes in Shareholders' Equity and Deficit
(expressed in thousands of U.S. dollars, except where indicated)    
----------------------------------------------------------------------------
                               Attributable to equity holders of the Company
----------------------------------------------------------------------------
                      Shares       Share Contributed                        
               Notes  ('000)     capital     surplus     Deficit       Total
----------------------------------------------------------------------------
Balance at 
 December 31,
 2010                 86,908 $  99,912.3 $   7,321.0 $(44,988.5) $  62,244.8
Net income
 for the period            -           -           -       188.8       188.8
Stock options
 exercised               335     1,083.8     (410.3)           -       673.5
Stock-based
 compensation
 charges                   -           -       344.4           -       344.4
----------------------------------------------------------------------------
Balance at
 March 31, 2011       87,243 $ 100,996.1 $   7,255.1 $(44,799.7) $  63,451.5
----------------------------------------------------------------------------
                                                                       
----------------------------------------------------------------------------
Balance at
 December 31,
 2010                 86,908 $  99,912.3 $   7,321.0 $(44,988.5) $  62,244.8
Net loss for
 the year                  -           -           -   (4,889.5)   (4,889.5)
Stock options
 exercised               495     1,583.6     (596.3)           -       987.3
Stock-based
 compensation
 charges                   -           -     3,257.6           -     3,257.6
Issue of share
 capital, net         17,107    37,510.8           -           -    37,510.8
----------------------------------------------------------------------------
Balance at
 December 31,
 2011                104,510 $ 139,006.7 $   9,982.3 $(49,878.0) $  99,111.0
----------------------------------------------------------------------------
Net loss for
 the period                -           -           -     (516.1) $   (516.1)
Stock options
 exercised                70       269.0      (99.7)           -       169.3
Share-based
 compensation
 charges                   -           -       889.1           -       889.1
----------------------------------------------------------------------------
Balance at
 March 31, 2012      104,580 $ 139,275.7 $  10,771.7 $(50,394.1) $  99,653.3
----------------------------------------------------------------------------


Consolidated Statements of Cash Flows                                       
For the three months ended March 31,                                        
(expressed in thousands of U.S. dollars, except where indicated)            
----------------------------------------------------------------------------
                                          Note           2012           2011
----------------------------------------------------------------------------
Cash flows from operating activities                                        
Net (loss) income for the period               $      (516.1) $        188.8
Items not affecting cash                                                    
 Deferred income tax provision                        1,423.1              -
 Depletion and amortization                           2,795.4          919.3
 Accretion of other liabilities                       (208.0)        (253.3)
 Unrealized foreign exchange gains                                          
  (losses)                                              536.3        (584.8)
 Unrealized gains from derivative                   (1,185.9)      (1,628.3)
 Shareeebased compensation charges                      889.1          344.4
 Accretion of restoration provision                      68.2           65.8
 Accretion of interest                                  280.6          146.4
----------------------------------------------------------------------------
                                                      4,082.7        (801.7)
Change in nonnncash operating working                                       
 capital                                                                    
 Increase in accounts receivable and                                        
  prepaid expense                                     1,857.4          932.2
 Increase in inventory                              (3,702.5)      (1,895.0)
 Increase in accounts payable and                                           
  accruals                                            1,571.7        2,190.2
----------------------------------------------------------------------------
                                                      3,809.3          425.7
----------------------------------------------------------------------------
Cash flows from financing activities                                        
Payment of debt financing fees                              -        (150.0)
Repayment to principal of debt financing              (292.5)      (1,666.7)
Proceeds on issuance of common shares                   169.3          673.5
----------------------------------------------------------------------------
                                                      (123.2)      (1,143.2)
----------------------------------------------------------------------------
Cash flows from investing activities                                        
Payments for mineral properties                     (1,975.3)      (2,362.3)
Payments for property, plant and                                            
 equipment                                         (11,519.8)      (3,593.3)
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                                                   (13,495.1)      (5,955.6)
----------------------------------------------------------------------------
Effect of exchange rate changes on cash               (221.1)           58.2
Decrease in cash and cash equivalents               (9,809.0)      (6,673.1)
Cash and cash equivalents - beginning of                                    
 period                                              35,653.0       10,703.6
----------------------------------------------------------------------------
Cash and cash equivalents - end of                                          
 period                                        $     25,622.9 $      4,088.7
----------------------------------------------------------------------------



On behalf of the Board of Directors,

LUNA GOLD CORP.

John Blake - President and CEO

Forward Looking Statements

This MD&A includes certain statements that constitute "forward-looking
statements", and "forward-looking information" within the meaning of applicable
securities laws ("forward-looking statements" and "forward-looking information"
are collectively referred to as "forward-looking statements", unless otherwise
stated). These statements appear in a number of places in this MD&A and include
statements regarding our intent, or the beliefs or current expectations of our
officers and directors. Such forward-looking statements involve known and
unknown risks and uncertainties that may cause our actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. When
used in this MD&A, words such as "believe", "anticipate", "estimate", "project",
"intend", "expect", "may", "will", "plan", "should", "would", "contemplate",
"possible", "attempts", "seeks", "goals", "targets" and similar expressions are
intended to identify these forward-looking statements. Forward-looking
statements may relate to the Company's future outlook and anticipated events or
results and may include statements regarding the Aurizona property (including
amount of production, cost of production, future potential) and other
development projects of the Company, the Company's future financial position,
business strategy, budgets, litigation, projected costs, financial results,
taxes, plans and objectives. We have based these forward-looking statements
largely on our current expectations and projections about future events and
financial trends affecting the financial condition of our business. These
forward-looking statements were derived utilizing numerous assumptions regarding
expected growth, results of operations, performance and business prospects and
opportunities, general business and economic conditions, interest rates, the
supply and demand for, deliveries of, and the level and volatility of prices of
gold and related products, the timing of the receipt of regulatory and
governmental approvals of our projects and other operations, our costs of
production and production and productivity levels, as well as those of our
competitors, power prices, continuing availability of water and power resources
for our operations, market competition, the accuracy of our resource and reserve
estimates (including with respect to size, grade and recoverability) and the
geological, operational and price assumptions on which these are based,
conditions in financial markets, the future financial performance of the
Company, 

our ability to attract and retain skilled staff, our ability to procure
equipment and operating supplies, positive results from the studies on our
projects, our gold inventories, our ability to secure adequate transportation
for our products, our ability to obtain permits for our operations and
expansions, and our ongoing relations with our employees and business partners
that could cause our actual results to differ materially from those in the
forward-looking statements. While the Company considers these assumptions to be
reasonable, based on information currently available, they may prove to be
incorrect. Accordingly, you are cautioned not to put undue reliance on these
forward-looking statements. Forward-looking statements should not be read as a
guarantee of future performance or results. To the extent any forward-looking
statements constitute future-oriented financial information or financial
outlooks, as those terms are defined under applicable Canadian securities laws,
such statements are being provided to describe the current anticipated potential
of the Company and readers are cautioned that these statements may not be
appropriate for any other purpose, including investment decisions.


Forward-looking statements are subject to risks and uncertainties that could
cause actual performance or results to differ materially from those expressed in
or suggested by the forward-looking statements. Risks and uncertainties that may
cause actual results to vary materially include, but are not limited to, changes
in gold prices, changes in interest and currency exchange rates, acts of foreign
governments, inaccurate geological and metallurgical assumptions (including with
respect to the size, grade and recoverability of mineral reserves and
resources), unanticipated operational difficulties (including failure of plant,
equipment or processes to operate in accordance with specifications or
expectations, cost escalation, unavailability of materials and equipment,
government action or delays in the receipt of government approvals, adverse
weather conditions and unanticipated events related to health, safety and
environmental matters), labour disputes, political risk, social unrest, failure
of counterparties to perform their contractual obligations, changes in our
credit ratings and changes or further deterioration in general economic
conditions, uncertainties with respect to operating in Brazil, including
political unrest, theft, uncertainties with respect to the rule of law,
corruption and uncertain court systems and other risks discussed elsewhere in
this MD&A and our latest AIF filed on SEDAR at www.sedar.com.


Forward-looking statements speak only as of the date those statements are made.
Except as required by applicable law, we assume no obligation to update or to
publicly announce the results of any change to any forward-looking statement
contained or incorporated by reference herein to reflect actual results, future
events or developments, changes in assumptions or changes in other factors
affecting the forward-looking statements. If we update any one or more
forward-looking statements, no inference should be drawn that we will make
additional updates with respect to those or other forward-looking statements.
You should not place undue importance on forward-looking statements and should
not rely upon these statements as of any other date. All forward-looking
statements contained in this MD&A are expressly qualified in their entirety by
this cautionary statement.


Other Technical Information

Peter Mah, P.Eng., Certified Mining Engineer, the Company's Vice President
Operations is the Qualified Person as defined under National Instrument 43-101
responsible for the scientific and technical work on the development programs
and has reviewed and approved the corresponding technical disclosure throughout
this MD&A. Titus Haggan Ph.D., EurGeol Certified Professional Geologist #746,
the Company's Vice President of Exploration, is the Qualified Person as defined
under National Instrument 43-101 responsible for the scientific and technical
work on the exploration programs and has reviewed and approved the corresponding
technical disclosure throughout this MD&A.