Lundin closes $400-million financing to complete Ecuador gold project
Canada’s Lundin Gold (TSX:LUG) has closed a $400-million financing that will help it complete the construction of its flagship Fruta del Norte gold project in Ecuador, expected to begin production in late 2019.
The Vancouver-based company, which last month secured a $250-million investment from Newcrest Mining, which is part of the total announced today, said the Australian miner now owned 27.1% of Lundin’s outstanding shares. Zebra Holdings and Investments S.à.r.l. and Lorito Holdings S.à.r.l. (the Lundin Family Trusts) collectively own 22.3%; and Orion holds an 11.4% stake, Lundin said.
Lundin has been developing Fruta del Norte for over a year, following an agreement with Ecuador’s government.
“This investment significantly reduces risks around the funding of the project and represents a strong endorsement for Fruta del Norte and our management team,” the company’s President and CEO, Ron Hochstein, said in the statement.
Shares in the company soared 3.9% in early trading after the news and were still up, though only 1.35% to Cdn$5.24 at 1:08PM ET.
Lundin has been developing Fruta del Norte for over a year, following an agreement with Ecuador’s government allowing the miner to move ahead with the project.
It acquired the halted project in 2015 for $240 million from fellow Canadian miner Kinross Gold (TSX:K) (NYSE:KGC), which had to suspend work on the venture after it could not reach an agreement with authorities regarding the terms for developing the asset.
The Fruta del Norte asset, discovered in 2006, contains about 7.3 million ounces of gold. Lundin predicts eventual average annual production of about 340,000 ounces.
The underground gold mine will be Ecuador’s largest and it’s expected to operate for 15 years. It encompasses six of Lundin's 29 mining concessions, which cover 70,000 hectares of land.