Lundin Gold Inc. [LUG-TSX, Sweden; FTMNF-OTC] has closed the previously announced bought deal equity offering. A total of 4,772,500 common shares were issued at a price of C$12.05 per share for gross proceeds of approximately C$57.5 million, which includes the exercise, in full, of the underwriter’s over-allotment option of an additional 622,500 shares.
The offering was conducted by BMO Capital Markets. The offering remains subject to the final approval of the Toronto Stock Exchange.
Net proceeds of the offering are planned to be used to study increased throughput, resource expansion potential at the 100%-owned Fruta del Norte underground mine in southeast Ecuador, as well as for potential COVID-19 related costs and for general working capital purposes.
Fruta del Norte is among the largest and highest-grade gold deposits in the world. The Fruta del Norte gold deposit was discovered in 2006. Lundin Gold purchased the asset in late 2014 for US$240 million. Since acquiring the asset, Lundin Gold completed a feasibility study, signed all major agreements with the Ecuadorian Government providing for the fiscal and regulatory regime and economic stability, and subsequently financed and constructed the mine and infrastructure on time and on schedule in five years. First gold production was reached in November 2019 and commercial production was achieved in February 2020.
Probable reserves stand at 5.02 million ounces of gold grading at 8.74 g/t. Life-of-Mine is expected to be ~14 years. Capex is $692 million. Future production will be 3,500 tonnes per day for an average 325,000 ounces of gold per year. AISC is US$621/oz. A 21-km road and 42-km powerline connect Fruta del Norte to Ecuador’s national highway system and power grid.