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Fortuna raises $60m to complete Lindero construction

11th May 2020

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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NYSE- and TSX-listed Fortuna Silver Mines on Monday announced that it would raise $60-million to fund the remaining construction and preproduction-related expenditures at its Lindero project, in Argentina.

The company entered into an agreement with a syndicate of underwriters, led by Scotiabank and BMO Capital Markets, which have agreed to purchase, on a “bought deal” basis, 20-million shares at $3 each.

Fortuna Silver closed at $3.28 a share on the NYSE and C$4.56 a share on the TSX on Friday.

Total capital expenditure for Lindero’s construction is estimated to be $314-million to $320-million, which is 28% more than the feasibility estimate of September 2017.

Fortuna Silver said on Friday that it needed $75-million to $80-million to complete construction and fund the project to the start of commercial production in the first quarter of 2021.

Before construction teams at Lindero were demobilised on March 19 – in line with Argentina’s Covid-19 mandatory isolation – the project was 94% complete.

Argentina has approved Fortuna’s plans to resume construction activities with a reduced on-site workforce in support of physical distancing measures. Mobilisation to the project site would take place in the second half of May.

Fortuna has modified its construction and commissioning plans to mitigate risks to the timeline and budget associated with a reduced workforce, limited foreign vendor support, and limitations on local travel.

The new construction and commissioning plans prioritise the completion of solution handling, ADR and SART plants with the objective of producing first doré in the third quarter of 2020. With the advanced stage of commissioning of the primary and secondary crushing circuits, crushed coarse ore is scheduled to be placed on the leach pad for cyanide irrigation starting in July. This plan contemplates bypassing the tertiary high-pressure grinding rolls (HPGR) crushing and agglomeration circuits temporarily, for a period of four months, until the fourth quarter of 2020.

Although HPGR precommissioning has been successfully completed, commissioning will take longer because it will be using remote assistance from the foreign vendor. 

The crushed coarse ore from the primary and secondary crushers to be placed on the leach pad during the ramp-up phase represents 12% of the projected ore scheduled to be placed on the leach pad in a standard year of full production.

Preliminary metallurgical column test results for coarse ore indicate gold recoveries of 45% to 50%, compared with the feasibility study projections of 78% recovery for tertiary crushed ore over a 90-day period.

Openpit mining is planned to gradually resume in July 2020.  During the period from July to December 2020, an estimated 1.7-million to 1.9-million tonnes of ore are scheduled to be placed on the leach pad with an average gold grade of 1.00 g/t to 1.10 g/t.

Fortuna said it would produce between 25 000 oz and 28 000 oz of gold doré between September to December.

Commercial production of 145 000 oz/y to 160 000 oz/y is expected to start in the first quarter of 2021, achieving an all-in sustaining cost of $520/oz to $620/oz.

Edited by Creamer Media Reporter

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