Construction Well Under Way at Fruta del Norte in Ecuador
Fruta del Norte is one of the largest and highest-grade undeveloped gold projects in the world. Probable reserves currently stand at 16.8 million metric tons (mt) at a grade of 9.16 grams/mt for 4.94 million ounces (oz) of contained gold. Gold production is forecast to exceed 300,000 oz per year (oz/y) for more than 15 years at average life-of-mine total cash costs of $561/oz and all-in sustaining cash costs of $609/oz.
Lundin recently completed work to improve its June 2016 Fruta del Norte feasibility study, including a revised mine plan, updated capital and operating costs, and a new execution plan based on self-perform mining rather than EPCM contracting. Expected first gold production has moved from the first quarter of 2020 to the fourth quarter 2019. The mining rate is expected to ramp up to 3,500 mt/d over a 12-month period.
The revised mine plan has a more even distribution of transverse stoping and drift and fill over the entire mine life. Lundin believes that the extraction sequence is now geotechnically more stable and carries less risk than the sequence contemplated in the feasibility study.
There have been no changes to the proposed flowsheet, which is based on gravity separation, flotation and leaching. However, optimization of the process plant layout has resulted in significant reductions in earthwork, concrete and piping quantities.
Estimated project capital costs, including contingency and preproduction costs and revenues, now total $684 million, net of taxes, compared to $669 million in the feasibility study. The revised estimate includes the cost of mining equipment and the paste plant, estimated at $58 million, previously included in sustaining capital. Capital payback is estimated at four years.
The capital cost estimate includes all direct and indirect costs to be expended throughout project execution, starting July 1 and ending when the plant production reaches commercial production, defined as 70% of the nominal nameplate capacity for three consecutive months, estimated to occur by mid-2020. Sustaining capital is estimated at $169 million, and reclamation and closure costs are projected at $44 million.
Lundin has also announced a project finance package of $400 million to $450 million from the Orion Mine Finance Group and Blackstone Tactical Opportunities. “We are very pleased with the financial commitments that Orion and Blackstone have made toward the development of the Fruta del Norte project and Ecuador,” Lundin President and CEO Ron Hochstein said. “It confirms the strength of this project and gives us the ability to move full speed ahead with construction.”