Lundin Gold (TSX: LUG) has announced significant updates to the mineral resource and reserve estimates for its Fruta del Norte mine in Ecuador following the success of its conversion drilling program. This update builds from the company’s previously reported estimates back in April 2016.
Measured and indicated resources are reported at 23 million tonnes with an average grade of 9.20 grams per tonne, containing 6.8 million ounces of gold. A total of 9.3 million tonnes with an average grade of 12.09 g/t containing 3.6 million ounces of gold are now categorized as measured resources due to an improved understanding of the deposit geology. The company reported no measured resources in the 2016 estimate.
“These results demonstrate the exceptional value we have added through our conversion drilling program. Importantly, there are still 1.7 million ounces of inferred resources at FDN, which we believe will play a significant role in continuing to replace production in the future,” Lundin Gold CEO Ron Hochstein said in a news release.
Proven and probable reserves for Fruta del Norte are reported at 18 million tonnes with an average grade of 8.68 g/t containing 5 million ounces of gold. With this update, Lundin has effectively replaced all reserves mined (1.38 million ounces) from the beginning of operations in late 2019 while adding additional reserves (1.58 million ounces).
The new estimate includes reserves in the proven category, which demonstrates greater confidence in the updated reserves. The conversion drilling program have contributed to an improved understanding of the geological and grade continuity at FDN, allowing for the inclusion of 3.4 million ounces in this category. No proven reserves were shown in the 2016 estimate.
Expansion of proven and probable reserves into the southern portion of the deposit underlines the significant potential for further reserve replacement from additional drilling in this sector, Lundin said in the release.
“We expect that this updated resource and reserve estimate is only the first step in continuing to expand the total minable ounces of gold, allowing Fruta del Norte to continue production for many years to come,” Hochstein added.
The company is planning to carry out additional conversion drilling in 2023 and 2024 targeting the remaining 1.7 million ounces of inferred resources.
Shares of Lundin Gold gained 3.3% by 11:40 a.m. ET following the latest update on FDN. The company has a market capitalization of approximately C$3.2 billion ($2.4bn).