Lundin Gold (TSX: LUG) has restarted operations at its Fruta del Norte (FDN) gold mine in Ecuador and expects to resume concentrate shipments in the next few days.
Operations at the site were suspended in March due to the Covid-19 pandemic. Based on a projected mill ramp-up to 3,500 tonnes per day over the next two months, FDN is expected to generate 150,000-170,000 oz. gold in the second half of this year, for an expected total of 200,000-220,000 oz. in 2020.
The company previously announced that the mine achieved commercial production on Feb. 20, 2020.
The underground mine is now once again producing ore with a production ramp-up expected over the next three months. Lundin has Covid-19 protocols at the site to minimize risks to staff and communities.
In the second half of this year, the mill throughput is expected to average 3,200 tonnes per day at a head grade of 10 grams gold per tonne. All-in sustaining costs (AISCs) are anticipated to range between US$770 and US$850 per oz. in the second half of 2020, which includes additional costs due to Covid-19 and the associated production ramp-up.
In a note to investors, Brian Quast of BMO Capital Markets noted that this is a positive development for the company and removed his ‘speculative’ designation on the stock. Quast maintains an unchanged $14.50 target price of $14.50 per share and his ‘outperform’ rating for the shares.
Over a 13-year mine life, the operation is expected to produce an average of 325,000 gold oz. a year at life-of-mine AISCs of US$621 per ounce.
FDN sits within the 38-sq.-km Suarez pull-apart basin, with drill-ready targets nearby.
Current probable mineral reserves for the operation stand at 15.5 million tonnes grading 9.67 grams gold, containing a total of 4.8 million oz. gold. The reserves are estimated using cut-off grades between 4.7 grams gold and 6.8 grams gold.
— This article first appeared in the Canadian Mining Journal. The Northern Miner and Canadian Mining Journal are part of Glacier Resource Innovation Group.
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