Resource World Magazine

A P R I L / M A Y 2 0 1 6 www.resourceworld.com 13 TSF4 ROM PAD PLANT PORTAL ASX CODE: HRR. TSX CODE: HER. www.heronresources.com.au WOODLAWN ZINC-COPPER PROJECT Near-Term Production from High-Grade Zinc-Copper Project Preliminary Economic Assessment delivered compelling case with annual production target 112 Mlb Zn, 22 Mlb Cu, 35 Mlb Pb, 1.1Moz Ag, 9koz Au and post tax IRR 46%, NPV8.3% A$291m, payback 2 yrs Feasibility Study due mid-2016 Target construction commencement late 2016, first production early 2018 said Marin Katusa, the Vancouver author and portfolio manager. Lukas oversees a mining group that was started by his father, Adolf Lundin, in the 1970s and now includes nGex Resources Inc. [NGQ-TSX; Sweden], Lucara Diamond Corp. [LUC-TSX; Botswana; Sweden], Lundin Mining Corp. [LUN- TSX; LUMI-Sweden], Lundin Gold Inc. and Denison Mines Corp. [DML-TSX; DNN-NYSE MKT]. Following the death of Adolf Lundin in 2006, Ian runs the energy side of the business. In the past two years, Lukas's companies have been on an acquisition spree that net- ted Freeport McMoRan Inc.'s Candelaria copper mine in Chile for US $1.8 billion, Rio Tinto's Eagle nickel and copper mine in Michigan for $325 million and Kinross Gold's Fruta Del Norte gold project in Ecuador for $240 million. In October 2014, Lundin was able to acquire Fruta Del Norte for a fraction of the $1.2 billion that Kinross paid for the asset after Kinross was hit with a 70% rev- enue-based windfall profits tax and halted development after spending US $225 mil- lion on drilling and engineering studies. Confident that he could secure more favourable terms, Lundin negotiated the right to produce gold at Fruta del Norte for 25 years under an (potentially renew- able) exploitation agreement that allows Ecuador to tax the difference between net smelter revenue and what the revenue would be using a base price at a 70% rate. The base price, to be determined on a monthly basis, will equal the trailing 10-year average of the daily price of gold and silver plus one standard deviation. The agreement gives Lundin Gold the right to recoup its cumulative costs before the tax kicks in. "Kinross went pretty far. We just went a bit further and got the agreements that Kinross couldn't get," Lundin said. Indeed, the acquisition appears to be a clear sign of the Lundin family's philoso- phy that if the asset is good enough, it is worth the risk of doing business in a place like Ecuador, which has lagged behind other Latin American countries in taking advantage of its impressive geology. "We are very pleased. It's a great ore- body. It is going to be a very low cost producer, sub US $500 an ounce. It will go ahead in any kind of gold environment," Lundin said. Lundin said he expects the mine to cost around $700 million to develop and will produce between 300,000 ounces and 350,000 ounces of gold annually. The launching of Lundin Gold follows a recent spike in the value of the yellow metal. During the interview, Lundin said he believes gold will continue to rally from US $1,250 on March 11, 2016. "I think gold is going to stay here and get stronger. I don't see it going to US $800 or US $900," he said. Meanwhile the company plans to get the feasibility study out by May or June. "The next step will to finance and build it.'' With negotiations in Ecuador now com- plete, Lundin said he can focus on making acquisitions for other companies in the group, including Lundin Mining which had over $900 million in liquid assets at the end of 2015, including $557 million in cash at the end of 2015. He delivered on that promise in early March by striking a deal to purchase Freeport McMoRan's stake in the Timok copper-gold project in Serbia for up to US $262.5 million. Timok is a high-grade, copper-gold porphyry, located 6 km south of the Bor copper-gold mining and smelt- ing complex that has been operating for over a century. Timok contains an inferred resource of 65 million tonnes, grading 2.6% copper and 1.5% gold. Following staged payments of the full $262.5 million, Lundin's interest in Timok would reach 75% with Vancouver junior Reservoir Minerals Inc. [RMC- TSXV; RVTLF-OTC; 9RE-Berlin] holding 25%. Assuming that Reservoir does not exercise its right of first refusal to buy Freeport's interest, the acquisition could

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