ECUADOR – Vancouver’s Lundin Gold and the government of Ecuador have agreed upon the terms of the exploitation licence for Lundin’s Fruta del Norte gold project near the village of San Antonio. Lundin said the deal was six months in the making.
The Fruta mining licence gives Lundin the right to develop and produce gold from the project for 25 years. An advance royalty payment of $65 million will be made by Lundin, and the government will receive a 5% net smelter return. A windfall tax will apply should the price of gold and silver rise above predetermined levels, but only after Lundin has recouped its development investment. The government of Ecuador cumulative benefit from the project will be at least 50%, including all taxes, royalties, and labour profit sharing.
Lundin has until the middle of June this year to change the project status to exploitation rather than exploration. The company must also submit a general work and investment plan that will be approved by the Ecuadorian government.
Details of the Fruta del Norte licence agreement can be found at LundinGold.com. The latest technical reports are also posted.