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Newcrest Mining adds to gold bounty through Ecuador investment

Published: 03:20 26 Feb 2018 GMT

Aerial view of Fruta del Norte
First production is expected from the Fruta del Norte project by the end of 2019

Newcrest Mining Limited (ASX:NCM) has expanded its gold bounty by investing in TSX-listed Lundin Gold Inc (TSE:LUG), which has exploration and development concessions in Ecuador.

Australia’s largest gold miner has taken a 21.7% stake in Lundin Gold by investing US$250 million in a private placement, which raised a total of US$400 million.

These funds will be used to develop Fruta del Norte Gold Project from which the first production is expected by the end of 2019.

Right to appoint two directors

Newcrest has the right to appoint two directors to the Lundin Gold board, subject to maintaining certain ownership thresholds.

It also has the right to appoint one of its nominated directors to the Project Advisory Committee, which will oversee the development of the gold mine.

Exploration agreement

Lundin Gold has also signed a binding exploration heads of agreement with Newcrest.

This will enable Newcrest to earn up to 50% direct interest in eight separate exploration concessions in Ecuador by spending up to US$20 million over five years.

The project is in Ecuador’s south, near the Peruvian border.

Newcrest will manage the exploration activities and the joint venture company when it is formed.

Sandeep Biswas, Newcrest managing director, said: “The Fruta del Norte epithermal ore body has many similarities with our Gosowong operation in Indonesia.

“We look forward to sharing our experience with Lundin Gold to further develop this high-quality deposit.

“This equity investment aligns with our aspiration of being exposed to five tier-1 ore bodies by 2020.”

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