In mid-June, Lundin submitted a “Phase Change Application” to the government of Ecuador for the La Zarza concession, which hosts to the Fruta del Norte project, to permit the company to proceed with its development plans. Under the country’s mining law, the term of a concession is divided into an exploration phase and exploitation phase. When Lundin Gold acquired Fruta del Norte at the end of 2014, the La Zarza concession had only 18 months remaining in its exploration phase, after which the concession had to either advance to exploitation or be subject to forfeiture. Completion of the feasibility study in early June enabled Lundin Gold to meet the phase change deadline.

Lundin continues to work with the government on obtaining key environmental permits. Basic engineering and early works are planned to start in the third quarter of 2016 to keep Fruta del Norte on track for first production in early 2020.

Fruta del Norte’s current mineral reserves total 4.82 million oz of gold and 6.34 million oz of silver in 15.5 million mt grading 9.67 g/mt gold and 12.7 g/mt silver. Life-of-mine production is estimated at approximately 4.4 million oz of gold and 5.2 million oz of silver, based on an average gold recovery of 91.7% and an average silver recovery of 81.5%.

Life-of-mine total cash costs of production are estimated at $553/oz of gold, and all-in sustaining cash costs are estimated at $623/oz, placing the project in the lowest-cash-cost quartile among the world’s gold mines. Project capital cost is estimated at $669 million, including contingency. Start of construction is targeted for mid-2017.

The Fruta del Norte ore contains gold as fine free gold, coarse free gold, refractory gold contained in sulphides, and gold contained in other forms, such as silicates. Over the life of the mine, approximately 70% of the gold will be produced in concentrate and 30% in doré. Silver production will be approximately 82% in concentrate and 18% in doré.

The concentrate will have an estimated average gold grade of 149.3 g/mt, with no significant penalty elements. The doré is forecast to contain above 98% precious metals.

Lundin is reviewing the Fruta del Norte mine plan for potential improvements in production ramp-up scheduling and optimization of mining methods to increase the use of transverse longhole stoping over higher-cost, lower-productivity drift-and fill methods. The company is also looking for ways to extend mine life through the inclusion of significant additional mineral resources not included in the initial mine plan and through the identification of additional mineralization.