CONSTRUCTION ON SCHEDULE AND ON BUDGET FOR FIRST GOLD IN FOURTH QUARTER OF THIS YEAR.
VANCOUVER, Aug. 9, 2019 /CNW/ - Lundin Gold Inc. ("Lundin Gold" or the "Company") (TSX: LUG, Nasdaq Stockholm: LUG) is pleased to announce its results for the three and six months ended June 30, 2019. All amounts are in U.S. dollars unless otherwise indicated.
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"Fruta del Norte continues to progress on schedule and on budget. Contractor underground development is nearing completion with owner's crews ramping up, and production stopes are now being mined," said Ron Hochstein, Lundin Gold's President and CEO. "During the third quarter, we expect the three major surface projects - process plant, powerline and tailings storage facility – to be completed and undergo commissioning, and first gold pour is anticipated in the fourth quarter of this year."
Fruta del Norte Gold Project ("Fruta del Norte" or the "Project")
•Detailed engineering was completed with only construction support engineering ongoing.
•Approximately 92% of the total projected capital expenditure has been committed.
•Overall construction progress was 78% complete.
•Underground development continued ahead of projections, including access to the South Vent Raise.
•Owner's crews started mining the first production stope and owner mining is ramping up with additional crews being added as more production stopes become available.
•Construction of the process plant continued with all trades active in order to facilitate wet commissioning starting early in the third quarter.
•Powerline construction from the Bomboiza substation to site is 90% complete overall.
•Work on the Bomboiza substation for the connection to the national power grid is 40% complete.
•Construction of the tailings dam is progressing on schedule.
•Training and hiring for operations progressing with the key positions substantially filled.
•Completed an initial ($159 million) and a second drawdown ($142 million) under the senior secured project finance debt facility (the "Facility").
•On August 9, 2019, Michael Nossal of Newcrest Mining Limited ("Newcrest") resigned from the board and was replaced on the board by Tamara Brown as Newcrest's nominee. Ms. Brown is a mining industry professional with over 20 years of experience in the mining and financial sectors. She is currently Vice President, Investor Relations and Corporate Development (Americas) for Newcrest.
•Mapping and sampling continued at several targets around (both inside and outside) the Suarez pull-apart basin, while drill permitting is in progress for Fruta del Norte-type epithermal gold-silver priority targets in the central and southern Suarez pull-apart basin.
Fruta del Norte Gold Project
Development of the Project remains on track and on budget to deliver first gold production in the fourth quarter of this year and achieve commercial production in the second quarter of 2020. During the first six months of 2019 progress continued to ramp up as Fruta del Norte reached peak construction during the second quarter of this year.
As at June 30, 2019 a total of 8.0 kilometres ("km") of underground mine development had been completed, of which 2,067 metres was accomplished during the quarter. Underground development continued ahead of projections, including access to the South Vent Raise.
Owner's mine crews started mining the first transverse long hole production stope on June 16, 2019 and owner mining is planned to continue to ramp up with additional crews being added as more production stopes become available.
Pump testing was completed on the two surface mine dewatering wells with indications of low pumping levels from the testing period to date. These results are consistent with the lower than anticipated water flow rates encountered in the underground mine.
The second cohort of 110 operations trainees completed their training and is being incorporated into mining and process plant operations teams.
As of quarter end, earthworks was 87% complete, concrete 96%, steel 83%, mechanical 73%, piping 59%, electrical 82% and instrumentation 65%. Process plant construction is on track for commissioning of systems beginning in the third quarter of 2019.
The laboratory, reagent storage building, plant security building, and plant dry and lunchroom facilities are nearing completion pending delivery and installation of equipment.
The on-site electrical distribution network is substantially complete, and the first power distribution lines were energized. Work progresses on the main Fruta del Norte power substation and emergency power generation system.
Construction of the 42 km powerline connecting the Project to Ecuador's national power grid is progressing well with 93% of the towers completed and only eight towers remaining to be erected and all easements in place. Powerline cable stringing was 65% complete and the Bomboiza substation connection construction work advanced to 40% complete. The powerline is expected to be connected to the national grid in the third quarter of 2019.
Tailing Storage Facility
Construction of the tailings storage facility progressed significantly with dam earthworks 72% complete and dam liner installation commencing during the quarter.
Health and Safety
The Total Recordable Incident Rate for the Project at the end of the quarter was 0.63 per 200,000 hours worked.
Environment and Permitting
Lundin Gold successfully completed the bi-annual environmental compliance audit for the 42 km powerline with no impact on the license or operations. The Company also received the hazardous chemicals permit for importation of cyanide.
As of quarter end, the Company estimates that 45% of its employees were from the Province of Zamora Chinchipe. Lundin Gold's procurement programs resulted in the purchase of on average $2.0 million per month in goods and services from the local communities in the first half of 2019.
Additional mapping and sampling have been completed southwest of the Suarez pull-apart basin. Permitting in preparation for scout drill testing continues with the plan to mobilize a drill rig to the Barbasco epithermal gold-silver target as soon as permits are received.
The Company is focused on advancing the Project on schedule through to first gold production in the fourth quarter of 2019. Peak workforce will continue into the third quarter and begin ramping down as we approach the fourth quarter of 2019. The following activities are planned going forward:
•Completing process plant construction.
•Completing wet and hot commissioning.
•Development of production areas and mining ore from the stopes and store in stockpiles until mill startup.
•Completion of mine development contractor scope.
•Commencement of the south ventilation raise and installation of permanent ventilation fans.
•Bringing into service the laboratory, reagent storage and plant ancillary buildings.
•Completing construction and energization of the Bomboiza substation and powerline to site.
•Completing the tailing storage facility to level for commencement of operations.
•Advancing paste plant construction.
•Starting construction of the Zamora River bridge.
•Obtaining remaining permits required for operations.
Preparation and permitting for exploration drilling continue with the objective of scout drill testing the Barbasco epithermal gold-silver target later this year. Additional mapping and sampling of selected targets is ongoing.
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