Underground Mine Development Into Hard Rock at Fruta Del Norte

VANCOUVER - Lundin Gold Inc. reported that soft tunneling was completed in December 2017 and mine development is now into hard rock at its Fruta del Norte gold project in Ecuador. "Tunneling through soft clay was a significant risk factor to underground mine development due to the potential for ground failure. We were able to get through this challenging task, and the mine development is now advancing at a quicker pace," said Ron Hochstein, President and CEO. "We are also ramping up other major projects, including the process plant and powerline."

The Company transitioned from soft tunneling to hard rock tunneling in December 2017, working through 77 meters of saprolite (soft clay) in the first decline and 69 meters in the second. Drilling and blasting in hard rock commenced on December 7th in the first decline and December 17th in the second, and currently the advance in hard rock reached 100 meters and 78 meters, in the first and second declines, respectively.

In October 2017, Lundin Gold awarded the long-lead time grinding equipment packages, including the SAG and ball mills (complete with motors) and the flotation and filtration packages to Outotec Chile S.A. The gravity mill, CIL and detox tanks, and ADR plant and gold room packages were recently awarded to FLSmidth USA Inc. TelSmith Inc. will provide the crushing packages for both the process plant and aggregate quarry crushers. ABB Inc. has been awarded switchgear and substation equipment and transformers packages.

The EIA for the powerline received final approval at the end of 2017. Easement agreements have been reached with 91% of affected landholders, and the Company expects the remaining easements to be obtained this quarter. Detailed engineering and procurement is well underway, and the engineering, procurement and construction contractor is on track to begin building the powerline this quarter.

Regardless of difficult ground conditions, site earthworks are on schedule. Earthworks on the process plant is 13% complete with concrete mill foundations planned to start this quarter. The North Access Road is progressing well, and 32% of the road has been built. A second earthworks contractor was mobilized at El Pindal, where the North Access Road will link to the national highway system. Approximately six kilometers needs to be built to connect the North Access Road from either side.

All other construction disciplines are actively working on the 1,000-person construction camp which is nearing completion, with over 60% of the units currently available for occupancy. Combined with the existing camp, there are more than 1,200 beds available. During the last month, approximately 800 people were at site, including contractors.