OPERATOR: KIRKLAND LAKE GOLD INC. / Yamana Gold Inc. / Agnico Eagle Mines Limited
ROYALTY: NSR: 1.5-5.5%; NPI: 20%
Franco-Nevada has various royalties covering approximately 170 km2 of the Larder Lake and Main Breaks in the historic Kirkland Lake gold camp of Ontario. KLG has the main interests in the area and operates the Macassa mine which includes production from the Main Break, ’04 Break and the high-grade South Mine Complex (“SMC”).
Franco-Nevada’s royalty interests with KLG include:
- An overlying 1.5% NSR on all of KLG’s properties (including the Macassa mine) which was acquired in 2013 for $50 million. In 2016, KLG exercised its option to buyback 1% of the overlying 2.5% for aggregate cash consideration of approximately $30.3 million ($36 million less royalty proceeds attributable to the buyback).
- An underlying 20% profit-based royalty immediately to the south-west of the SMC as shown in the inset of the schematic.
- An underlying 2-3% NSR on claims to the west of current operations.
- An underlying 2% NSR royalty on claims that KLG purchased from Queenston Mining Inc. in July 2012.
Macassa produced a record 175,167 ounces of gold in 2016 which was at the high end of guidance range of 160,000-180,000 ounces. For 2017, KLG expects to produce 180,000-185,000 ounces from Macassa. Development of the 5400’ Level, 5600’ Level and 5700’ Level in the lower SMC continues to be advanced. The main decline development is ongoing and is currently below the 5700’ Level. Regional exploration drilling to the east of the SMC is progressing which may advance the SMC onto the Amalgamated Kirkland claims shown in the schematic below (area D). Franco-Nevada believes that there will be continued exploration success on its royalty lands with an updated Mineral Reserve and Mineral Resource estimate expected during the first quarter of 2017.
Franco-Nevada also has a 2% NSR royalty covering the majority of claims held in the Kirkland Lake gold camp by Yamana Gold Inc. (“Yamana”) and Agnico Eagle Mines Limited (“Agnico Eagle”) from their acquisition of Osisko Mining Corporation (“Osisko”) in April 2014. Franco-Nevada’s royalties cover the Upper Canada, Anoki-McBean and Canadian Kirkland deposits.
|Total Revenue to FNV ($ million)