ECUADOR – Lundin Gold of Vancouver says it has signed the exploitation agreement covering its Fruta del Norte (FDN) gold project. The signing followed the approval of the FDN environmental impact study and the issuance of an environmental licence in October.
“I’m very happy to be in Ecuador for the execution of this important agreement. In just under two years, working co-operatively with the government of Ecuador, we have negotiated this key agreement and completed the feasibility study for FDN, paving the way for the development of this world-class asset,” stated chairman Lukas Lundin.
The agreement includes the right to develop and produce gold at FDN for 25 years, and it is renewable. Advanced royalty payment of US$65 million will be made to the government of Ecuador over the next two years. A royalty of 5% of net smelter revenues has been negotiated.
Lundin plans to build a mine and processing facility with expected production to begin in Q1 2020. Average annual output will be 340,000 oz of gold over the life of the mine with an all-in sustaining cash cost of US$623/oz. Reserves total 15.5 million tonnes at 9.67 g/t Au and 12.7 g/t Au, sufficient for an initial 13-year mine life. The project has an estimated net present value after tax of US$676 million and an internal rate of return of 15.7%. Capital payback should take 4.5 years.
All the details of the FDN project are available at www.LundinGold.com/s/projects.asp.