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 2015, Hemlo generated $3.6 million in NPI payments compared with $7.4 million in 2014.
Hemlo produced 219,000 ounces of gold in 2015, a 6% increase from 2014. All-in sustaining costs decreased $164 per ounce to $651 per ounce compared to 2014 primarily due to capital optimization and favourable exchange rates. In 2016, gold production is expected to be 200,000-220,000 ounces at all-in sustaining costs of $790-$870 per ounce. The NPI royalty should benefit from the combination of lower costs, capital optimization and favourable exchange rates.
|Total Revenue to FNV ($ million)