Lundin Gold Inc. has secured a US$250-million investment from Australia’s Newcrest Mining Ltd. as the Vancouver-based junior gold miner looks to kickstart production at a key mine in Ecuador.
Newcrest’s move to take a 27-per-cent stake in the company is part of a larger US$400-million financing – including money from Orion Mine Finance Group and the Lundin family – that will help Lundin Gold complete the construction of its Fruta del Norte gold mine, which is on track to begin production late next year.
The investment by Newcrest is further evidence of an emerging trend in the sector as senior companies invest in juniors via so-called strategic investments instead of staging full-scale takeovers.
These types of investments have become an important funding source for juniors in a difficult market for raising equity capital as demand from traditional institutional fund managers has fallen.
Canadian companies raised $3.3-billion through secondary mining financings from public investors in 2017, down 44 per cent from $5.9-billion in 2016, according to data from Thomson Reuters.