Operator: Glencore PLC
Royalty: Precious Metals Stream
In February 2016, Franco-Nevada acquired a precious metals stream with reference to production from the Antapaccay mine for $500 million from Glencore and its subsidiaries. Antapaccay is located within the province of Espinar in Southern Peru – a district with a long mining history. The property hosts the historic Tintaya open pit mine and related infrastructure which began operating in 1984. Glencore (Xstrata) invested in excess of $1.5 billion of initial capital to build and commission the Antapaccay open pit
mine and plant, which commenced operations in 2012.
The stream is referenced to production from the Antapaccay open pit mine which has been expanding throughput rates and production since late 2012. Franco-Nevada is expecting 60,000 to 70,000 gold equivalent ounces (“GEOs”) applicable to deliveries from the stream in 2016. Due to the timing of concentrate shipments, Franco-Nevada expects 11 months of deliveries to contribute to revenues in 2016. Full year contributions to Franco-Nevada from the stream are expected to average 70,000 to 80,000 GEOs per year over the next 5 years. Under the streaming agreement, precious metal deliveries are initially referenced to copper in concentrate shipped. Franco-Nevada will receive 300 ounces of gold and 4,700 ounces of silver for each 1,000 tonnes of copper in concentrate shipped, until 630,000 ounces of gold and 10 million ounces of silver have been delivered. Thereafter, Franco-Nevada will receive 30% of the gold and silver shipped. Franco-Nevada will initially pay an on-going price of 20% of the spot price of gold and silver until 750,000 ounces of refined gold and 12.8 million ounces of refined silver have been delivered. Thereafter, the on-going price will increase to 30% of the spot price of gold and silver.
The stream is referenced to the entire Antapaccay concession covering approximately 997 km2. The Coroccohuayco deposit is located within 10 km of the Antapaccay plant and is not included in the current mine plan. Coroccohuayco hosts 256 million tonnes of M&I Resources, at approximately twice the copper grade of Antapaccay Mineral Reserves, and could potentially provide supplementary high grade ore later in the mine life. In addition, there are a number of large-scale regional targets and prospects on the Antapaccay concessions.