OPERATOR: KGHM INTERNATIONAL LTD.
STREAM: 50% PRECIOUS METAL STREAM
Franco-Nevada acquired three precious metals streams in the Sudbury basin of Ontario with its acquisition of Gold Wheaton Gold Corp. (“Gold Wheaton”) in March 2011. Franco-Nevada is entitled to purchase 50% of the precious metals contained in ore produced from the footwall portions of three separate mines and makes ongoing payments equal to the lesser of $424 per ounce of payable gold (subject to an inflation adjustment of 1% per year which commenced July 2011) and the spot price for gold. At the time of acquisition by Franco-Nevada, the mines were operated by Quadra FNX Mining Ltd. (“Quadra FNX”) which was acquired by KGHM International Ltd. (“KGHM”) in March 2012. The three mines are the operating Levack (Morrison deposit) mine and the Podolsky and McCreedy West mines which are both currently on care and maintenance. The footwall deposits are primarily rich in palladium followed by platinum and gold. KGHM does not have processing facilities in Sudbury and sells the ore to third parties for processing. The stream is calculated based on contained precious metals in the delivered ore rather than payable metals.
Levack (Morrison deposit): This mine has been in production since 2007 and is currently the only source of production from the Sudbury stream agreements. In late 2011, Quadra FNX and Xstrata Nickel entered into a life of mine agreement which allowed Quadra FNX to utilize the neighbouring underground infrastructure of Xstrata Nickel’s Craig mine. A new ramp driven from the 4900 foot level of the Craig shaft allowed access to the 5040 foot level for diamond drilling and potential Mineral Reserve and Mineral Resource expansion.
McCreedy West Mine: The stream agreement applies to the PM and 700 deposits at the McCreedy West mine. McCreedy West ceased mining of the precious metal-rich ores in the PM deposit in 2011. Glencore plc (“Glencore”) cancelled its off-take contract for nickel ores in 2014 and the mine was placed on care and maintenance.
Podolsky Mine: The stream agreement applies to the 2000 and North deposits at the Podolsky mine which started production in 2008. Podolsky was put on care and maintenance in the third quarter of 2013.
|PGM Revenue to Franco-Nevada ($ milion)
|Gold Revenue to Franco-Nevada ($ million)