Newcrest Investing in Lundin Gold, Fruta del Norte Project

Newcrest Mining has entered into agreements with Lundin Gold to invest $250 million in Lundin to acquire a 27.1% interest in the company and, separately, to farm-in to a selection of Lundin’s exploration concessions in Ecuador.

Lundin Gold is building the Fruta del Norte gold mine in southeast Ecuador, where the company is targeting first production by the end of 2019. Fruta del Norte is one of the largest and highest- grade developing gold projects in the world, with gold production forecast to exceed 300,000 ounces per year (oz/y) for more than 15 years at average all-in sustaining cash costs of $609/oz.

Newcrest Mining is a large Australian gold producer, headquartered in Melbourne, with operations in Australia, Papua New Guinea, Côte d’Ivoire, and Indonesia. The company’s total production for its 2018 fiscal year is forecast in the range of 2.4 million to 2.7 million oz.

Newcrest’s investment in Lundin Gold is part of a total $400 million equity private placement financing by Lundin to complete funding requirements for Fruta del Norte. “We see this equity investment and the exploration farm-in as a strategic partnership with Lundin Gold and consistent with our strategy of securing exposure to high-potential orebodies,” said Newcrest Managing Director and CEO Sandeep Biswas. “The Fruta del Norte epithermal orebody has many similarities with our Gosowong operation in Indonesia, and we look forward to sharing our experience with Lundin Gold to further develop this high-quality deposit.”

Regarding the exploration farm-in, Lundin and Newcrest have signed a binding heads of agreement to form a joint-venture company to explore eight early-stage concessions held by Lundin in Ecuador. These concessions are to the north and south of Fruta del Norte and exclude the large block of concessions surrounding the Fruta del Norte deposit.

Newcrest can earn up to a 50% interest in the joint-venture company by spending $20 million over a five-year period, including a minimum of $4 million over the next two years. The company will then have the option to spend a further $6 million over the following 18-month period to earn an initial 25% interest. By spending an additional $10 million within five years, the company can earn a further 25% interest. Newcrest will manage the exploration activities and be the manager of the joint-venture company. Lundin Gold is headquartered in Vancouver, British Columbia, Canada.

As featured in Womp 2018 Vol 04 -