Nov. 25, 2019

Ron Hochstein


Ron Hochstein

President & CEO, Lundin Gold

“The geological potential is unquestionable.”


Ron Hochstein has a wealth of experience in the mining industry. He has worked for the Lundin family directly and as a consultant for over twenty years. Prior to becoming President and CEO of Lundin Gold, he served as President and CEO of Denison Mines Corp. (TSX, NYSE MKT) for seven years, having joined a predecessor company to Denison in 1999. Earlier in his career he was a Project Manager with Simons Mining Group and worked at Noranda Minerals as a metallurgical engineer. He has a B.Sc. in metallurgical engineering and an MBA. He became President and Chief Executive Officer in 2014 and was instrumental in the acquisition of Fruta del Norte.

After its arrival in Ecuador in 2014, Lundin Gold has started gold production from its Fruta del Norte project in record time. What were the contributing factors to this success and the main highlights over this journey?

Lundin Gold was able to take its Fruta del Norte project from the start of a feasibility study to construction in five years, with 4Q2019 marking the start of the production phase. A five-year cycle is not typical in the mining industry, as projects tend to take a longer time to reach the production phase from the start of a feasibility study. Our ability to bring stakeholders together was key to this achievement. Lundin Gold found efficient and constructive ways to work not only internally, but also with the government, communities, local suppliers, academia, and industry peers. We were also pleased with the skills of the Ecuadorian workforce and our ability to source a significant amount of materials for the project in Ecuador. This is also considered a great highlight in Ecuador's history, because it is a strategic project in a country where there was no large-scale mining before. Ecuador has had mixed experience with small-scale and illegal mining that has not brought any significant benefits to the country or its people. Over the past five years, Lundin Gold has been able to demonstrate that responsible mining can happen in Ecuador with great benefits in terms of development and the highest standards in social and environmental responsibility. Moreover, the project has been able to move forward following a project financing structure, being one of the few cases in the country and serving as an example to other large projects that can take place in Ecuador in the mining industry or other strategic sectors.

To what extent will Fruta del Norte open the door for an increasing number of industrial mining projects in Ecuador?

Miners have to follow the highest standards of human rights, economic development and environmental protection. Lundin Gold is fully aware everyone would look at Fruta del Norte and that it could serve as a preliminary step to build a mining industry in Ecuador. We are at the forefront of this building experience, and transparency has been our mantra over the years. For example, we opened our doors to inspection of all potential candidates running in Ecuador's latest local elections. After this experience, Ecuador definitely has the capacity to increase the number of large mining projects as long as they abide by the highest standards, and this should be done in order to maximize the benefits that mining can have on the country's development.

How would you assess the economic impact of mining compared to that of the oil industry?

When we arrived in Ecuador in 2014, the government had one approach for all natural resources, especially when it comes to the fiscal regime; however, oil and minerals are extremely different. Oil needs large capital; however, once in operation, the taxes to the national government are significant; however, there are not a significant number of local jobs or local procurement opportunities created. Mining generates wealth at the national level, though not at the same levels as oil, and it also generates wealth at the provincial and local levels. This is through taxes as well as employment. We currently have over 2,000 people onsite, with a total employment figure of 4,000 during peak construction. Once in operations the Company will maintain a workforce of 800-900 people on the payroll for 15 years. We have focused on local procurement and hiring as one of our key sustainability responsible mining strategies. All these have contributed to the government realizing that mining is distinct in terms of the economic impact. Oil has a significant economic impact, albeit focused in terms of revenues to the national government. Mining is much broader. While we expect to operate for 15 years, I am confident there will still be operations in that part of Ecuador for 30-40 years from now, expanding the level of opportunities locally.

Given the concerns about water availability, what is Lundin Gold's approach to a responsible management of this resource?

Water is vital for mining around the world, and the management of water, minimal use, and recycling is a fundamental principle of modern mining. Ecuador is to some extent a special case. There are concerns that mining has an impact on water, which is primarily related to artisanal mining. There is, therefore, a tendency to think that large-scale mining magnifies the need of water. However, protection of water sources and minimize use of water is a fundamental principle of responsible mining around the world.

The Fruta del Norte deposit is one of the largest highest grade undeveloped gold deposit in the world. How is the level of production of gold expected to evolve over the project life span?

Having started operations in 4Q2019, 2020 will be a ramp-up year where we will produce about 250,000-270,000 ounces of gold in 2020. The subsequent two years will have production levels closer to 400,000 ounces per year. The life of the mine averages 310,000 ounces of gold per year over 15 years. Our costs will be very low because of the mining and processing methods and the high grade of the deposit.

How will the future of large-scale mining take shape in Ecuador?

Ecuador has the potential to have similar—if not higher—percentages of government intake and GDP as neighboring Chile and Peru. The geological potential is unquestionable. However, the key is to get the permits in place in order to stimulate more exploration activity. Ecuador is blessed to have excellent infrastructure already in place, and it is now the onus of the government to manage responsible mining for the benefit of all.