Operator: Teck Resources Limited (owns 22.5%)
Royalty: Silver Stream
In October 2015, Franco-Nevada provided a deposit of $610 million for a silver stream on production from the Antamina mine in Peru from Teck Resources Limited (“Teck”). Teck has a 22.50% interest in Compania Miñera Antamina S.A. (“CMA”), the Antamina joint venture company, along with partners BHP Billiton Plc (33.75%), Glencore (33.75%) and Mitsubishi Corporation (10.00%). Antamina is an established mine that commenced operations in 2001 with over $6.5 billion spent to date in constructing and expanding the mine and its infrastructure by the CMA partners. Antamina is the 8th largest copper mine in the world and is one of the lowest cost copper operations globally. The low costs are facilitated by the wholly-owned mining infrastructure including a concentrate pipeline and port facilities.
Annual silver stream contributions to Franco-Nevada are expected to average 2.8-3.2 million ounces going forward. Silver deliveries for 2016 were 4.4 million ounces, exceeding expected deliveries. For 2017, silver deliveries are expected to also exceed the longer term range. The stream is based on all recovered silver from Teck’s attributable 22.50% interest in the Antamina mine, subject to a fixed silver payability of 90%. Franco-Nevada pays 5% of the spot silver price for each ounce of silver delivered under the stream. The stream will reduce by one-third after 86 million ounces have been delivered, estimated at the current throughput rate of 54 Mt per year to be in approximately 30 years.
The mine contains total M&I Mineral Resources of 1.1 billion tonnes of ore and Inferred Mineral Resources of 1.25 billion tonnes of ore. Within the Mineral Resource envelope, total Mineral Reserves are 553 million tonnes of ore, which are currently constrained by tailings disposal capacity. CMA is currently considering options for storing additional tailings and alternative mine plans that could result in significant mine life extensions. Current M&I Mineral Resources are sufficient to support over 20 years of open pit mining. Historically, a high level of Inferred Mineral Resources have converted to M&I Mineral Resources and ultimately to Mineral Reserves. Beyond the known Mineral Reserves and Mineral Resources, Antamina hosts additional potential open pit and bulk/selective underground targets. There is also regional exploration potential over a large, prospective land package greater than 700 km2.
|Total Revenue to FNV ($ million)