Lundin advancing Ecuador's Fruta del Norte

Canadian miner Lundin Gold made a breakthrough at its US$669mn Fruta del Norte gold-copper mine, Ecuador's most advanced mining project, with the completion of a tunneling stage.

Work was completed on 146m of soft tunneling and the miner has pushed a total of 178m into hard rock areas at the property in Zamora Chinchipe province, the Vancouver-based company said.

"Tunneling through soft clay was a significant risk factor to underground mine development due to the potential for ground failure. We were able to get through this challenging task, and the mine development is now advancing at a quicker pace," CEO Ron Hochstein said in a statement. "We are also ramping up other major projects including the process plant and power line."

The company said it awarded a contract for the mine's grinding facilities to Outotec, milling and other packages to FLSmidth, crushing facilities to TelSmith and electrical installations to ABB. Caterpillar will provide underground equipment, with orders for jumbos and bolters to be awarded in Q1, Lundin said.

The company, which secured approval of an environmental impact assessment for a power line, has reached property accords with 91% of landholders and aims to start building the line this quarter. Earthworks are on schedule, with work for the processing plant 13% complete and 32% of an access road completed. Work on a 1,000-bed construction camp is also nearly complete.

The creation of 2,000 jobs and advance royalty payments are helping to develop the surrounding area, mining minister Javier Córdova said at the inauguration of the project's access tunnels. Royalties from the project will finance a potable water project in the nearby town of Yantzaza, Córdova said in a statement.

Local construction firms Semaica and Maz Erruiz are handling mineworks including tunnels, according to the mining ministry.

Fruta del Norte has probable mineral reserves of 15.5Mt grading 9.67g/t gold and 12.7g/t silver containing 4.82Moz gold and 6.34Moz silver. The mine, scheduled to start production in the fourth quarter of 2019, will produce an estimated 340,000oz/y gold at all-in sustaining costs of US$623/oz.

PROJECTS

President Lenín Moreno, who took office last May, seeks to drum up US$4.6bn in investment over the next four years in large-scale mining projects by companies including Lundin, EcuaCorriente, EcuaGold Mining, INV Metals, Cornerstone Capital Resources, BHP Billiton and China Explorcobres.

Ecuador has awarded 300 copper-gold-silver mining concessions to companies including BHP Billiton, Newcrest Mining and Hancock Prospecting as the government seeks US$488mnn in investment in exploration.

Mining investment in Ecuador, which rose fivefold from 2013-16, is expected to quadruple through 2020, according to the ministry. The investment will quadruple employment in the industry through 2022, according to UK consultancy firm Wood Mackenzie.

Mining exploration companies have requested almost half the 24 mining exploration areas promoted by geological bureau Inigemm, the mining ministry said in a separate statement.

Inigemm has also prepared 1:100,000 scale geological maps of mineral resources in Cariamanga, Gonzanamá, Huaquillas, Las Aradas, Loja, Paquisha, Puyango, Sigsig, Tenguel and Zamora, in addition to 1:50,000 maps of Carolina, Jijón, Caamaño, La Merced de Buenos Aires and Otavalo and a 1:1mn scale geological map of Ecuador, according to the ministry.

The agency also implemented mining and metallurgical research laboratories, provided technical support for local governments and worked on an emergency plan to help solve cave-ins caused by illegal mining in Zaruma, it said.

Ecuador, which depends on crude oil for half of its national budget, is seeking to attract more foreign investment after an oil price slump slashed government revenue through 2016. The government in 2015 created the mining ministry and announced plans to promote 36 mining projects to produce gold, copper and molybdenum estimated to be worth US$200bn.