Fortress Minerals is purchasing a 100% interest in the troubled Fruta del Norte gold project from Kinross Gold (NYSE:KGC) for US$240 million.
Reports surfaced in May that Kinross, which took a $720 million write-down when it halted its $1.3bn Fruta del Norte gold-silver project in Ecuador last year, was looking for a buyer to recover part of its investment.
Fruta del Norte, discovered in 2006, is one of the world’s biggest gold discoveries, containing about 6.7 million ounces of proven and probable gold reserves and 9 million ounces of proven and probable silver reserves.
Fortress Mineals says it plans a brokered placement to raise the $250 million for the Fruta del Norte acquisition and capitalize a new company entity. Fortress Minerals, which is part of the Lundin group of companies, will change its name to Lundin Gold Inc.
In a press release, Fortress Minerals said the new company will become a “. . . gold vehicle of the companies controlled by the Lundin family, with FDN being the flagship asset upon which it will build its gold business.”
Fortress says the Government of Ecuador supports for the transaction.
“[Fruta del Norte] is one of the most significant gold discoveries in the last 15 years and we believe tremendous value can be generated through its development,” said Lukas Lundin, President, CEO & Director of Fortress commented in a statement.
“The value created will benefit not only Fortress shareholders but also the Government and people of Ecuador, who are our most important partners in the project.
“Our team is very enthusiastic about working on FDN and we are confident in our ability to rapidly advance the project to a construction decision and obtain the required permits to build this world-class gold asset. This acquisition is the first step in the building of our gold company, Lundin Gold, to carry on our previous successes in the gold industry which included the Alumbrera and Veladero gold deposit discoveries in Argentina in the 1990s.”
Pity they can’t get away from the Lundin name which sounds so much like the name of the recent London iron ore fiasco in Africa.
This would be a great acquisition if they could convince the Ecuadorean goverment to ever let them make more than 15% profit, after paying for 100% of the project. Good luck.
WILSON BONILLA GUEVARA
That is a good decision for the development of FDN. Lundin family:
Welcome to Ecuador