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REGIONAL NEWS - LATIN AMERICA 14 E&MJ; • JULY 2017 www.e-mj.com Construction Well Under Way at Fruta del Norte in Ecuador Lundin Gold has reported that construction of its Fruta del Norte underground gold project in southeast Ecuador is well under way. The mine development contractor mo- bilized to the site in April, and work on the mine portals began on May 1. Construction of mine development support facilities by Lundin began later in the month. Fruta del Norte is one of the largest and highest-grade undeveloped gold projects in the world. Probable reserves currently stand at 16.8 million metric tons (mt) at a grade of 9.16 grams/mt for 4.94 million ounces (oz) of contained gold. Gold production is forecast to ex- ceed 300,000 oz per year (oz/y) for more than 15 years at average life-of-mine total cash costs of $561/oz and all-in sustain- ing cash costs of $609/oz. Lundin recently completed work to improve its June 2016 Fruta del Norte feasibility study, including a revised mine plan, updated capital and operating costs, and a new execution plan based on self-perform mining rather than EPCM contracting. Expected first gold produc- tion has moved from the first quarter of 2020 to the fourth quarter 2019. The mining rate is expected to ramp up to 3,500 mt/d over a 12-month period. The revised mine plan has a more even distribution of transverse stoping and drift and fill over the entire mine life. Lundin believes that the extraction se- quence is now geotechnically more stable and carries less risk than the sequence contemplated in the feasibility study. There have been no changes to the proposed flowsheet, which is based on gravity separation, flotation and leach- ing. However, optimization of the process plant layout has resulted in significant re- ductions in earthwork, concrete and pip- ing quantities. Estimated project capital costs, in- cluding contingency and preproduction costs and revenues, now total $684 mil- lion, net of taxes, compared to $669 mil - lion in the feasibility study. The revised estimate includes the cost of mining equipment and the paste plant, estimat- ed at $58 million, previously included in sustaining capital. Capital payback is es- timated at four years. The capital cost estimate includes all direct and indirect costs to be expended throughout project execution, starting July 1 and ending when the plant produc- tion reaches commercial production, de- fined as 70% of the nominal nameplate capacity for three consecutive months, estimated to occur by mid-2020. Sustaining capital is estimated at $169 million, and reclamation and clo- sure costs are projected at $44 million. Lundin has also announced a project finance package of $400 million to $450 million from the Orion Mine Finance Group and Blackstone Tactical Oppor- tunities. "We are very pleased with the financial commitments that Orion and Blackstone have made toward the devel- opment of the Fruta del Norte project and Ecuador," Lundin President and CEO Ron Hochstein said. "It confirms the strength of this project and gives us the ability to move full speed ahead with construction." State-owned Company is Created in Nicaragua In June, the Nicaraguan National Assem- bly (parliament) approved the creation of the Nicaraguan Mining Co. (Eniminas), which will be in charge of the explora- tion and exploitation of mining resources. Eniminas will be a decentralized public company of the state under the recto- ry of the Ministry of Energy and Mines, and will be subject to the Special Law on the Exploration and Exploitation of Mines (2001), explained the official Deputy Jenny Martinez, in the plenary. According to the law, in mining con- cessions located in the Autonomous Re- gions of the Caribbean Coast, 30% of the profits must be delivered directly to the municipalities in the mining concession district, proportionate to the respective area of each municipality. Another 20% will be granted to the respective Regional Council of the Autonomous Regions of the Caribbean Coast, in whose territory the exploration and exploitation activities are carried out; 25% will be allocated to the National Treasury; 10% to a mining su- pervision and supervision fund; and 15% to the so-called Mining Development and Promotion Fund, according to the project. As for the mining concessions located in the rest of the country, 30% will be delivered directly to the municipalities in the mining concession district, 45% to the National Treasury, 10% to the min- Lundin Gold forecasts gold production to exceed 300,000 oz/y for more than 15 years.