ECUADOR – Lundin Gold of Vancouver has entered into a bought deal with a syndicate of underwriters, led by GMP Securities, that has agreed to purchase on a bought deal basis 15 million common shares of the company at $5.50 per share. Gross proceeds will be $82.5 million. The underwriters have also been given a 15% over-allotment which, if exercised, would bring the gross amount to nearly $95 million.
Lundin Gold plans to use the net proceeds to fund development of the Fruta Del Norte gold project 80 km east of the city of Loja. The reserves contain 4.82 million oz of gold and 6.34 million oz of silver in 15.5 million tonnes of material with an average grade of 9.67 g/t Au and 12.7 g/t Ag.
The feasibility study put the Fruta Del Norte pre-tax net present value (5% discount) at $1.3 billion and the internal rate of return at 23.8%. Even after taxes the economics are good: an NPV of $676 million and an IRR of 15.7%.
The company is currently de-risking the project. More information is posted at www.LundinGold.com.