Name and Location
Fruta del Norte (FDN) gold project.

Location
Ecuador.

Client
Lundin Gold.

Project Description
FDN has mineral reserves totalling 15.5-million tonnes at 9.67 g/t of gold and 12.7 g/t of silver.

A feasibility study on the project envisions a mine with production estimated at 4.4-million ounces of gold and 5.2-million ounces of silver over an initial 13-year mine life, and an average gold recovery of 91.7% and average silver recovery of 81.5%.

Average gold production is estimated at 340 000 oz/y at an average life-of-mine (LoM) total cash cost of 553/oz and a LoM all-in sustaining cash cost of $623/oz, placing FDN in the lowest cash cost quartile globally.

Twin declines will be built using a spiral to gain depth to maximise the distance from the surface, so that a vertical distance of about 155 m below the Machinaza river can be obtained.

The mine ramp will be located centrally and will be offset by about 50 m from the main workings to the east of the deposit.

The ramp configuration will enable haulage trucks to achieve higher-average haul speeds and maintain safety standards.

The ramp will be developed at an estimated 15% gradient.

FDN ore will be processed using a gravity, flotation and leaching (GFL) flowsheet.

The GFL process is best suited to recovery of FDN gold because of the manner in which the gold is contained in the ore.

Following a conventional semiautogenous/ball mill grinding circuit, the gravity circuit will recover the coarse free gold, and small amounts of fine free gold and gold contained in sulphides.

The flotation circuit can recover the gold associated with sulphides (pyrite). The flotation tailings will be treated in a carbon-in-leach circuit that will recover the fine gold.

The final tailings will be either filtered and sent to the mine as paste backfill or deposited in a conventional tailings storage facility.

Over the life of the mine, about 70% of the gold will be produced in concentrate and the remainder in doré.

Silver production is estimated at 82% in concentrate and 18% in doré.

The concentrate is expected to have an average gold grade of 149.3 g/t and will be a marketable concentrate with no significant penalty elements.

The doré is expected to contain more than 98% of precious metals.

The precious metal portion is expected to contain about 60% of gold and 40% of silver.

Jobs to be Created
Not stated.

Net Present Value/Internal Rate of Return
The project has a pretax net present value, at a 5% discount rate, of 1.28-billion and an internal rate of return of 23.8%, with a payback of 3.7 years.

Value
The cost of the project, including contingency, is estimated at $669-million.

Duration
Construction is expected to start in mid-2017, with first gold production expected in the first quarter of 2020 and the first full year of production in 2021.

Latest Developments
Lundin Gold is preparing to advance its FDN gold/silver project into the next phase, progressing the operation a step closer to construction.

During the quarter to June 30, the company completed a positive feasibility study and closed the first tranche of a C$82.5-million equity financing and, post-period, secured approval from the Ecuador government to take its FDN project into the exploitation phase.

Lundin expects to complete an early works programme, which started in June, by the end of the second quarter of 2017.

This programme aims to provide the access, infrastructure, services and facilities to support the start of construction of the mine's twin declines, while the data collection undertaken in specific technical disciplines will support basic engineering and refine the capital cost estimates.

Over the next 12 months, Lundin will focus on evaluating and putting in place the financing for the construction of FDN, which is expected to start July 1, 2017.

Meanwhile, the exploration drilling campaign will continue to test high-priority concessions near the project, after 15 drill holes were completed on the Emperador, Robles, Chanchito and El Arco targets during the quarter under review and 5 672 m were drilled as at June 30.

“After completing the first pass of drilling, up to an additional 3 000 m may be drilled as follow-up where results justify,” Hochstein has explained.
Lundin also plans to undertake a geophysical programme in the fourth quarter to target new areas of interest identified from the recently completed geochemical survey.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Lundin Gold, tel +1 604 689 7842, fax +1 604 689 4250 or email info@lundingold.com.