Lundin Gold (TSX: LUG) has produced its first doré bar at the Fruta del Norte (FDN) mine in southeastern Ecuador.
The first export of concentrate and dore is anticipated by mid-December and the company is on track for commercial production in the second quarter of 2020. Lundin Gold expects the mine will produce 290,000 oz. gold next year.
Otto Sonnenholzner, Ecuador’s vice president, Minister of Energy and Non-Renewable Natural Resources Carlos Pérez, and Vice Minister of Mining Fernando Benalcázar, were among those in attendance at an inauguration ceremony on Nov. 14.
“The opening of FDN is a turning point for the mining industry in Ecuador,” Keith Barron, chairman and CEO of Aurania Resources (TSXV: ARU; US-OTC: AUIAF) said in a press release.
“Perceptions in this country have always been that gold mining is polluting, destructive to the environment and offers little to no benefit to the people or the state. For the first time in Ecuador’s history, gold mining will be carried out in a responsible, technically safe and sustainable way, offering unimagined benefits to stakeholders and the people of Ecuador.”
Barron and his team are credited with the discovery of the Fruta del Norte deposit in 2006. Barron, who founded Aurania Resources, sold Fruta del Norte to Kinross Gold (TSX: K; NYSE: KGC) in 2008 for US$1.2 billion. Kinross sold the project to Lundin Gold in 2014 for US$240 million.
Kerry Smith, an analyst with Haywood Securities, describes Fruta del Norte as “one of the largest and highest grade undeveloped gold projects in the world,” and notes that with gold prices moving higher, the “timing is looking good for this new producer to start production next year.”
The analyst also points out in a research note to clients that “with liquidity of US$375 million, Lundin Gold is adequately funded to complete construction and commissioning.”
At press time, Lundin was trading at $7.67 per share with a 52-week range of $4.57 to $9.04. The company has 223 million common shares outstanding for a $1.7-billion market capitalization.
Smith has a buy rating on the stock and a target price of $9.25 per share.