Lundin Gold, a Canadian gold mining company, has secured a US$300mn project finance package for a gold resource in Ecuador.
The Fruta del Norte project will start producing in 2019 and is described by the company as “one of the largest, highest-grade gold projects currently under construction”.
The lenders are ING, Société Générale, Caterpillar Financial Services, Bank of Nova Scotia and KfW-Ipex Bank. There are two tranches, one of US$100mn to be guaranteed by an unnamed export credit agency, and another of US$200mn. The package has an 8.5-year tenor. Law firms Norton Rose Fulbright and Lexim Abogados advised on the project.
“Together with the project financing package from Orion Mine Finance Group and Blackstone Tactical Opportunities, this facility further reflects a strong endorsement of the project and confidence in the Lundin Gold team,” says Ron Hochstein, president and CEO of Lundin Gold.
He adds: “We look forward to working with this supportive group of lenders as we continue to develop Fruta del Norte. The project remains on schedule and on budget to achieve first gold production by the end of 2019.”
While usually associated with energy resources, namely oil and gas, the precious metals sector in Ecuador has substantial potential. In recent years, foreign mining companies have been discovering gold, silver and copper resources in the country.
A report by BMI Research last year predicted that the mining sector would grow from US$1.1bn in value in 2017 to US$7.9bn in 2021. The increase is attributed to a change in the regulatory environment as well as the increase in exploration.
“While left-wing candidate Lenin Moreno won the April presidential election over the traditionally more business-friendly centre-right candidate Guillermo Lasso, we expect the incoming administration to continue to support mining development, as initiated by Moreno’s leftist predecessor Rafael Correa,” read the report.