Days after releasing a COVID-19 update noting that it was carefully monitoring the situation, Lundin Gold is temporarily halting operations in Ecuador.
Just four days after releasing a COVID-19 press release noting it was carefully monitoring the situation, Lundin Gold (TSX:LUG,OTC Pink:FTMNF) has announced it will temporarily suspend operations at Fruta del Norte in Ecuador.
With the number of confirmed COVID-19 cases worldwide continuing to grow on a daily basis, the gold producer has decided to halt production.
“The situation in Ecuador has changed rapidly over the last few days,” said Ron Hochstein, Lundin Gold’s president and CEO, in a press release on Sunday (March 22).
“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.”
It’s been a tense week in the South American nation. Last Monday (March 16), a state of emergency was declared, barring travelers from entering the country and levying a nighttime curfew for residents.
In last week’s announcement, Lundin Gold noted that the government had exempted the mining industry, along with other strategic sectors, from restrictions introduced during the state of emergency.
However, cases of the virus spiked in the country over the weekend, prompting the health minister to resign on Saturday (March 21).
There is no word at this time how long operations at Lundin Gold’s Fruta del Norte will be suspended or what the long-term impact of the production halt will be.
“During the suspension, the company will maintain a workforce at Fruta del Norte to conduct care and maintenance activities and special projects in order to minimize the impacts of this temporary shutdown,” added Hochstein.
The gold mine, located in Southeastern Ecuador, achieved its first gold production in November 2019, then reached commercial production in February 2020.
According to Lundin Gold’s 2019 year-end report, released in February, Fruta del Norte produced 28,678 ounces of gold last year.
Despite the news that the mine will shift to care and maintenance status, a CIBC equity research report forecasts that Lundin Gold will perform well in the long term.
“We expect near-term volatility in the stock, but maintain our 12 to 18 month price target of C$13, as well as our outperformer rating,” reads a note from the firm.
Shares of Lundin Gold were down 3 percent as of midday on Monday (March 23), trading for C$7.71.
Don’t forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.