TORONTO (miningweekly.com) – TSX-V-listed Fortress Minerals has agreed to buy the stalled Fruta del Norte (FDN) gold/silver project, in Ecuador, for $240-million in cash and scrip from TSX- and NYSE-listed Kinross Gold.

Kinross last year booked a $720-million charge related to the discontinued FDN. Kinross shelved the project after it and the Ecuador government could not agree on a 70% windfall tax.

Discovered in 2006, FDN is one of the largest and highest-grade, undeveloped gold projects in the world with an indicated resource of about 23.5-million tonnes at an average grade of 9.59 g/t gold, containing 7.26-million ounces of gold. The project's inferred resource is about 14.5-million tonnes at an average grade of 5.46 g/t gold, containing 2.55-million ounces with additional significant resource upside potential.

Fortress pointed out that it planned a brokered placement to raise the $250-million for the acquisition and to capitalise a new company. Part of the Lundin group of companies, Fortress Minerals would change its name to Lundin Gold, which would become the main gold vehicle of the companies controlled by the Lundin family. Fortress said FDN would be the flagship asset upon which it would build its gold business.

“FDN is one of the most significant gold discoveries in the last 15 years and we believe tremendous value can be generated through its development. The value created will benefit not only Fortress shareholders but also the government and people of Ecuador, who are our most important partners in the project.

“Our team is very enthusiastic about working on FDN and we are confident in our ability to rapidly advance the project to a construction decision and obtain the required permits to build this world-class gold asset," Fortress president, CEO and director Lukas Lundin said.

He explained that the acquisition was the first step in the building of Lundin's gold company, Lundin Gold, to carry on the group's previous successes in the gold industry, which included the Alumbrera and Veladero gold deposit discoveries in Argentina in the 1990s.

Kinross would receive between $100-million and $190-million in cash, depending on the net proceeds from Fortress's equity financing, of which affiliates of the Lundin Family Trust had committed up to $100-million.

The balance of the purchase price would be paid in Fortress equity.

The transaction was subject to certain conditions, including Fortress shareholder and stock exchange approval.

Fortress said the Ecuador government had indicated its support for the transaction and Kinross and Fortress had inked bilateral agreements with the State. These agreements were subject to the approval of the Ecuadorian attorney general, which was another condition of the transaction.