TORONTO (Reuters) - Lundin Gold Inc has a hearty appetite for growth even as the Canadian miner focuses on building its first mine in Ecuador on time and budget, Chief Executive Ron Hochstein said on Sunday.
“We want to grow to be an at least 1-million-ounce-a-year producer with three to four operations,” Hochstein said in an interview with Reuters at the Prospectors and Developers Association of Canada mining show in Toronto.
“Our appetite is a good one. We’ve got great opportunities to grow organically and obviously we’ll look at other places as well,” he said. The company would focus on North and Latin America for future growth.
The Vancouver-based miner is first focused on building Fruta del Norte, which will be Ecuador’s biggest gold mine, after raising $1 million in financing over the past year.
The start of production is targeted by the end of 2019. The underground mine is expected to operate for 15 years and produce over 325,000 ounces of gold annually, and encompasses six of the company’s 29 mining concessions, which cover 70,000 hectares of land.
“We see this as a company-builder,” Hochstein said, flagging exploration potential and the mine’s low production costs.
Lying along Latin America’s mineral-rich Andean mountain range, Ecuador is drawing interest from dozens of global miners such as BHP and Rio Tinto, Hochstein said.
Fruta del Norte was sold for $240 million in 2014 by Kinross Gold, which halted development in 2013 amid falling gold prices and government plans to increase taxes.
Last week, Australia’s Newcrest Mining said it would pay $250 million to buy a 27.1 percent stake in Lundin Gold. Newcrest spent $40 million last year on a 14.5 stake in Ecuadorean miner SolGold.
Newcrest was part of a $400 million equity raise including investments by the Lundin Family Trusts, which holds 22.3 percent, and streaming partner Orion Mine Finance Group, which holds 11.4 percent.
To avoid additional debt or shareholder dilution to finance its mine, management discussed partnership options with eight gold companies over the past year, Hochstein said.
“This wasn’t a case of bringing in a strategic investor as a take-over. This is a partnership to grow Lundin Gold,” he said.
In an exploration joint venture, Newcrest could operate and earn 50 percent in eight of Lundin Gold’s concessions by spending $20 million over five years.
For now, Lundin Gold’s priority is to show shareholders it can build its mine on time and budget. “We can’t stumble now,” Hochstein said.
Reporting by Susan Taylor; Editing by Paul Simao