Operator: First Quantum Minerals Ltd.
Stream: Gold and Silver Stream
In October 2015, Franco-Nevada and First Quantum Minerals Ltd. (“First Quantum”) finalized terms of a replacement precious metals stream agreement on the Cobre Panama project. The changes from the original agreement, signed with a predecessor company to First Quantum in 2012, relate to streamlining reporting arrangements and providing First Quantum with greater flexibility to finance the project while maintaining Franco-Nevada’s security package. The principal commercial terms of the replacement agreement remain the same as the original agreement.
Cobre Panama is one of the world’s largest copper-gold-silver porphyry deposits currently being constructed. The concession covers an area of 136 km2. Under the terms of the precious metals purchase agreement, Franco-Nevada will provide a maximum of $1 billion deposit pro-rata on a 1:3 ratio of First Quantum’s share of the capital costs (First Quantum owns 80% of the project) commencing after First Quantum’s funding reached $1 billion. Franco-Nevada provided initial funding of $337.9 million in 2015 and expects to provide additional funding of approximately $130-$150 million in 2016. The amount of precious metals deliverable under the precious metals purchase agreement is indexed to the copper in concentrate produced from the entire project and approximates 86% of the expected payable precious metals attributable to First Quantum. Beyond the initial contemplated mine life, the precious metals deliverable under the agreement will be based on a fixed percentage of the precious metals in concentrate.
First Quantum continued to make good development progress in all areas of the project in 2015. A detailed review of the capital budget was performed in the third quarter of 2015, and again in early 2016, which resulted in a revised capital cost estimate of $5.48 billion from the previous estimate of $5.95 billion, leading to a total reduction of 15% from the original estimate of $6.42 billon. Phased commissioning and ramp-up is expected during 2018 which commercial production throughput levels expected by end of 2018. The January 2014 mine plan envisions a 34 year mine life with potential for further expansion.
|Total Revenue to FNV ($ million)