Lundin reopening Fruta del Norte mine in Ecuador

Aerial view of Fruta del Norte gold project. (Image courtesy of Lundin Gold)

Canada’s Lundin Gold (TSX:LUG) has begun taking the first steps to resume operations at its Fruta del Norte gold-silver mine in Ecuador, the country’s largest, as the government eases coronavirus-related restrictions to keep the floundering economy afloat.

The Vancouver-based miner has already shipped all of the concentrate and doré that had been stored at site since the suspension of operations on March 22. 

In addition, reagents, spare parts and other supplies, which were stockpiled at the port of Guayaquil, are being transported to the mine site, Lundin said.

Ecuador’s government issued covid-19 health and safety guidelines for the mining industry on May 15, so operations could resume. The government also established logistics corridors that facilitate transportation for the mining industry.

Lundin says a seven-day quarantine period followed by a negative test for the virus is required before an employee or contractor is allowed to enter Fruta del Norte

“The reestablishment of transportation corridors was an important first step in our plan to restart operations at the Mine,” Lundin Gold’s president and chief executive, Ron Hochstein, said.

“We are in the last stages of finalizing the restart of our operations, which is expected to occur early in the third quarter of this year.”

The miner noted it has put a strict screening protocol for staff movement. This includes a seven-day quarantine period followed by a Polymerase Chain Reaction (PCR) test. “Provided the results are negative, the employee or contractor will be allowed to enter Fruta del Norte,” Lundin said. 

The company’s initiatives also include increasing the lengths of work rotations in order to reduce the number of them, implementing regular health controls, social and physical distancing, the use of personal protective equipment (PPE) when distancing is not possible, disinfection of work areas and requiring the timely communication of symptoms.  

Lundin said that in the more than two months Fruta del Norte was halted, workers carried out several projects and maintenance work in preparation for the restart of operations. 

The SAG mill was relined, maintenance of underground dewatering equipment took place and infrastructure and mill modifications to improve mill recoveries were implemented. 

The company said it would release further details regarding the start of production in the coming weeks.

Four months in production

Lundin officially opened Fruta del Norte in November 2019, and the first doré bar was produced on November 16. Production kicked off just two days later.

Lundin, worth almost C$4.7 billion, worked on developing the asset for almost two years, following a 2016 agreement with Ecuador’s government. That deal allowed it to move ahead with the project, located in the southeastern Amazon province of Zamora Chinchipe.

The underground gold and silver mine contains six of Lundin’s 29 mining concessions and covers 70,000 hectares of land

The company acquired Fruta del Norte in 2014 for $240 million from fellow Canadian miner Kinross Gold (TSX:K) (NYSE:KGC), which had to halt operations after being unable to reach an agreement with authorities regarding the terms for developing the asset.

The underground gold and silver mine contains six of Lundin’s 29 mining concessions and covers 70,000 hectares of land. Discovered in 2006, Fruta del Norte is expected to produce almost 4.7 million ounces of gold over a 15-year mine life.

Shaky ground

Ecuador has gained ground as a mining investment destination over the past two years, with top miners entering into joint ventures or investing in juniors to gain exposure to projects in the country.

The Andean nation, however, has been severely hit by the ongoing pandemic. Its number of deaths, at 3,358, is by far the worst per capita in Latin America.

President Lenín Moreno said last month that Ecuador was suffering a crisis worse than “all the wars and natural disasters the country has suffered throughout its history put together.”

The country’s finances, however, were shaky even before covid-19, and it has been struggling to put them in order. 

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