Lundin Gold Awards Fruta del Norte Mine Development Contract

The recommissioned Martha mine in Argentina is shipping silver-gold concentrate.
Lundin Goldís wholly-owned subsidiary Aurelian Ecuador S.A. has awarded the mine development contract for its Fruta del Norte gold project in Ecuador to a 50:50 consortium of Ingenieria y Construcciones Mas Errazuriz of Chile and Sevilla y Martinez Ingenieros C.A. Semaica of Ecuador. The two companies are partnering as Lundinís key contractor for development of the portals and twin declines to access the mine and for preparation of the mine for operations.

With the award of the mine development contract, the project remains on schedule as planned in the feasibility study completed in June 2016. The feasibility study calls for development of an underground mine producing an average of 340,000 oz per year (oz/y) of gold over a mine life of 13 years. Life-of-mine production is estimated at approximately 4.4 million oz of gold and 5.2 million oz of silver. Life-of-mine total cash costs of production are estimated at $553/oz, and all-in sustaining cash costs are estimated at $623/oz of gold.

The Fruta del Norte project has current mineral reserves totaling 4.82 million oz of gold and 6.34 million oz of silver in 15.5 million metric tons (mt) grading 9.67 grams (g)/mt gold and 12.7 g/mt silver.

Fruta del Norte is one of the largest and highest-grade undeveloped gold projects in the world. Lundin signed an exploitation agreement with the government of Ecuador for the Fruta del Norte project in mid-December 2016. The agreement grants Lundin the right to develop and produce gold from Fruta del Norte for 25 years and may be renewed.

The agreement provides for royalty payments equal to 5% of net smelter revenues on Fruta del Norte production, payable by Lundin to the government. Advance royalty payments totaling $65 million are required, of which $25 million has been paid. The balance will be due in two equal disbursements of $20 million on the first and second anniversaries of the signing of the agreement. The advance royalty payments will be deductible against future royalties.

As featured in Womp 2017 Vol 04 -