PRECIOUS METALS

Fruta del Norte mothballed as coronavirus concerns mount

A month after declaring commercial production at Fruta del Norte in Ecuador, Lundin Gold (TSX: LUG) is temporarily suspending the massive operation amid growing concerns about the spread of COVID-19.

Staff reporter
 Lundin Gold had declared commercial production at Fruta del Norte, ahead of schedule, in February

Lundin Gold had declared commercial production at Fruta del Norte, ahead of schedule, in February

The company had said last week it was continuing to manage and respond to the risks and said the government had exempted the mining industry and other strategic sectors from restrictions on transportation and the movement and supply of services.

"The situation in Ecuador has changed rapidly over the last few days," president and CEO Ron Hochstein said yesterday.

"In consultation with both local officials and the government of Ecuador, we have made the decision to temporarily suspend operations in order to reduce the risk to our workforce and to local communities."

Ecuador's other new major operation - the Mirador copper mine operated by a Chinese consortium - would also be scaled back, the country's deputy mines minister Fernando Benalcázar told Reuters.

Hochstein said Lundin Gold could not indicate the length of Fruta del Norte's suspension nor its full impact on operations due to the dynamic situation.

The company would maintain a workforce to conduct care and maintenance activities and special projects to minimise the impact of the shutdown, he said.

Fruta del Norte had produced 28,678 ounces of gold in 2019 and was expected to ramp up to nameplate capacity this year.

Lundin Gold has said it was expected to produce an average annual 325,000oz over about 14 years.

Lundin's shares have ranged form C$5.02-$13.49 over the past year and closed up 8.1% on Friday to $8, capitalising it at $1.8 billion (US$1.2 billion).

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