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Lundin expects Fruta Del Norte output months earlier, secures US$450M of funding

Lundin Gold Inc. now expects first gold from its wholly owned Fruta del Norte gold project in Ecuador in the fourth quarter of 2019, from the previously scheduled first quarter of 2020, based on an improved mine design, it said May 30.

In a separate, same-day release, the company said it signed a US$400 million to US$450 million funding deal with Orion Mine Finance Group and Blackstone Tactical Opportunities.

The deal comprises two gold-linked loans and a promise by Orion and Blackstone to participate in a US$100 million to US$150 million equity financing.

Lundin described the funding as the financial foundation needed to develop Fruta del Norte.

The project's capital cost, including contingency and preproduction costs and revenues, are estimated at US$684 million, compared with US$669 million in the June 2016 feasibility study.

The posttax net present value, discounted at 5%, was estimated at US$717 million, with a 16.3% internal rate of return and a four-year capital payback period.

The mining rate is now expected to ramp-up faster, over 12 months, to an extraction rate of 3,500 tonnes per day until 2022, when the extraction rate is planned to reach 3,600 tpd.

Average annual gold production is anticipated to exceed 300,000 ounces over 15 years at an average life-of-mine total cash cost of US$561 per ounce and a life-of-mine all-in sustaining cash cost of US$609 per ounce.

The total life-of-mine output is expected at about 4.5 million ounces of gold and 5.5 million ounces of silver.