OPERATOR: BARRICK GOLD CORPORATION
ROYALTY: NSR: 3% / NPI: 50%
The Hemlo gold camp has been producing gold for over 25 years and is located just off the Trans-Canada highway near Marathon, Ontario. Barrick is the operator and manages both the open-pit and underground operations. Franco-Nevada has both a 3% NSR royalty and a 50% NPI royalty on a portion of the western down-dip underground extension of the Hemlo ore-body as shown in the longitudinal schematic.
Initial mining on the royalty property began in late 2008, but revenues were limited to the 3% NSR royalty. The 50% NPI portion of the royalty began paying in third quarter of 2012 after the upfront capital costs had been recovered by Barrick. In 2016, Hemlo generated $10.8 million in NPI payments compared with $3.6 million in 2015. Hemlo produced 235,000 ounces of gold in 2016 compared with 219,000 ounces of gold in 2015. All-in sustaining costs increased to $839 per ounce in 2016 versus $651 per ounce in 2015. For 2017, gold production is expected to be 205,000-220,000 ounces at an all-in sustaining cost of $880-$980 per ounce.
Hemlo’s Mineral Resources increased significantly year-over-year although these Mineral Resources are not entirely covered by the royalty. Through drilling and cost improvements, Hemlo added 920,000 ounces to Mineral Reserves.
|Total Revenue to FNV ($ million)