Engineering & Mining Journal

APR 2017

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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REGIONAL NEWS - LATIN AMERICA 12 E&MJ • APRIL 2017 Lundin Gold Awards Fruta del Norte Mine Development Contract Lundin Gold's wholly-owned subsidiary Au- relian Ecuador S.A. has awarded the mine development contract for its Fruta del Norte gold project in Ecuador to a 50:50 consor- tium of Ingenieria y Construcciones Mas Er- razuriz of Chile and Sevilla y Martinez Inge- nieros C.A. Semaica of Ecuador. The two companies are partnering as Lundin's key contractor for development of the portals and twin declines to access the mine and for preparation of the mine for operations. With the award of the mine development contract, the project remains on schedule as planned in the feasibility study complet- ed in June 2016. The feasibility study calls for development of an underground mine producing an average of 340,000 oz per year (oz/y) of gold over a mine life of 13 years. Life-of-mine production is estimated at approximately 4.4 million oz of gold and 5.2 million oz of silver. Life-of-mine total cash costs of production are estimated at $553/oz, and all-in sustaining cash costs are estimated at $623/oz of gold. The Fruta del Norte project has cur- rent mineral reserves totaling 4.82 million oz of gold and 6.34 million oz of silver in 15.5 million metric tons (mt) grading 9.67 grams (g)/mt gold and 12.7 g/mt silver. Fruta del Norte is one of the largest and highest-grade undeveloped gold pro- jects in the world. Lundin signed an ex- ploitation agreement with the government of Ecuador for the Fruta del Norte project in mid-December 2016. The agreement grants Lundin the right to develop and produce gold from Fruta del Norte for 25 years and may be renewed. The agreement provides for royalty payments equal to 5% of net smelter revenues on Fruta del Norte production, payable by Lundin to the government. Ad- vance royalty payments totaling $65 mil- lion are required, of which $25 million has been paid. The balance will be due in two equal disbursements of $20 mil- lion on the first and second anniversaries of the signing of the agreement. The ad- vance royalty payments will be deductible against future royalties. Production Advances at the Martha Mine in Argentina After eight months of recommissioning of the Martha mine, located in Argenti- na's Santa Cruz Province of Argentina, the property is now accelerating Hunt Mining's transition from an exploration company to a full-fledged mining compa- ny. They recently announced their second shipment of silver-gold concentrate. While Hunt Mining may be Argentina's newest silver and gold producer, this is hardly an overnight success story. The company's operating experience in the region dates back more than a decade, to 2006. For more than 10 years, Hunt Mining has been an active, aggressive explorer and developer of gold and silver in Santa Cruz. Hunt Mining has invested more than $55 million in developing the province's second-largest mining package — with 670 square miles, or 173,775 hectares, in mining concessions. "Hunt staff have been directly respon- sible for the discovery of five precious metal deposits and our people are expe- rienced in grassroots discoveries, project development and mine production," said Tim Hunt, president, CEO and founder of Hunt Mining. Hunt Mining purchased the Martha mine from Coeur in May 2016. Hunt entered into an offtake agree- ment with Ocean Partners USA Inc. during December for the delivery for the Martha mine's gold-silver concen- trate. Under the terms of this agreement, Hunt will deliver concentrate with a gold range of 30 to 70 grams per metric ton (g/mt) dry and a silver range of 30,000 to 100,000 g/mt dry to Ocean Partners' smelter customers overseas. Horizonte Awards Feasibility Study Contracts for Araguaia Horizonte Minerals has awarded contracts for a feasibility study of its 100% owned Araguaia nickel laterite project in Pará state, northeastern Brazil. The goal of the study is to deliver the most economical- ly robust production scenario to produce 14,500 metric tons per year (mt/y) of nickel in ferronickel using rotary kiln elec- tric furnace technology. The study is tar- geted for completion by the end of 2017 and is fully funded through to completion. "The company's aim is to build a best-in-class ferronickel operation, and to achieve this, we need to deliver a robust feasibility study with capital and opex costs within 10% and a high level of en- gineering that will allow a direct flow into the implementation phase," said Jeremy Martin, CEO, Horizonte Minerals. Contracts for the Araguaia feasibility study went to the WorleyParsons Group to undertake process engineering, Snowden Mining Industry Consultants to undertake mine planning and mineral resource and reserve estimates, and Environmental Re- sources Management (ERM) to undertake the hydrogeology and environmental and social permitting. The feasibility study will build on a prefeasibility study (PFS) completed in early October 2016. The PFS was based on open pit mining, with run-of-mine production drawn from eight open pits to supply a targeted 900,000 mt/y of ore to a processing and smelter facility. Ore grade to the plant is forecast at 1.96% nickel for the first 10 years of production. Mine life is forecast at 28 years. The Araguaia project has good region- al infrastructure, including a network of federal highways and roads, with access to low-tariff hydroelectric power. The recommissioned Martha mine in Argentina is shipping silver-gold concentrate.

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