ECUADOR – Lundin Gold of Vancouver has begun construction of the mine development support facilities at its Fruta del Norte gold project in the Cordillera del Condor region. The feasibility study filed in June 2016 has been updated to include a revised mine plan, updated cost estimates, and a new execution plan to be executed by the company.
The Las Penas exploration camp at Lundin’s Fruta del Norte gold project in Ecuador. Credit: Lundin Gold.
The life of the $684-million project has been extended to 15 years from 13 years with total production expected to be approximately 4.5 million oz. of gold and 5.5 million oz. of silver. The after tax net present value at a 5% discount is now $717 million (all figures in U.S. dollars), the internal rate of return is 16.3%, and the capital payback period is 4.0 years.
The date of the first gold production has been moved up to Q4 2019 rather than the first quarter of 2020. Production ramp-up will take only 12 months to reach a rate of 3,500 t/d until 2022, when the mining rate will increase to 3,600 t/d. Average annual gold production will be 300,000 oz. at an average life of mine cash cost of $561/oz. and an all-in sustaining cost of $609/oz.
To pay for development, Lundin has arranged a project financing package of between $400 million and $450 million with the Orion Mine Finance Group and Blackstone Tactical Opportunities. The financing is comprised of a gold prepay credit facility of $150 million, a loan against streaming of $150 million, and committed participation of $100 million to $150 million in future equity financings. Orion and Blackstone have been granted the right to purchase 50% of the Fruta del Norte gold production up to a maximum of 2.5 million oz. The price will be determined on monthly delivery dates and a defined quotational period.
The Fruta del Norte feasibility study is posted at www.LundinGold.com.