Operator: Coeur Mining, Inc.
Stream: 50% Gold Stream
Since January 2009, Franco-Nevada has received 50% of the gold produced from the Palmarejo gold and silver operation located in Chihuahua Province, Mexico which is owned and operated by Coeur Mining, Inc. (“Coeur”) as part of a stream agreement. In June 2014, Franco-Nevada agreed to terminate the existing stream agreement once Coeur has delivered the minimum 400,000 ounce obligation set as part of the original stream agreement. As of December 31, 2015, Coeur had delivered 370,672 ounces (51,420 ounces in 2015) and it is expected that the minimum obligation will be satisfied in mid-2016. Franco-Nevada will pay approximately $416 per ounce for the remaining ounces owed under the minimum obligation.
As part of the agreement to terminate the original stream agreement, Franco-Nevada entered into a new 50% gold stream with Coeur on the Palmarejo project. Franco-Nevada believes the restructured agreement improves mine economics for Coeur and extends the mine life of the entire Palmarejo operation. This agreement continues to apply to the extensive land position totaling over 1,200 km2. Franco-Nevada provided an upfront $22.0 million deposit to be used to partially fund the development of the Guadalupe underground mine on the Palmarejo property. Ongoing payments will be equal to the lesser of $800 per ounce (no inflation provision) and the then prevailing spot price for gold for each ounce delivered under the new gold stream agreement.
In 2014, Coeur acquired Paramount Gold and Silver Corp. that controlled the neighbouring Independencia deposit. Coeur plans to process Independencia ore through the Palmarejo plant which is not subject to the stream agreement. Coeur reported that the transition to higher-grade underground ore sources at Guadalupe (as well as Independencia) remains on track. The operation achieved mining rates of 2,000 tons per day from the Guadalupe deposit in early January 2016. Coeur predicts that the Guadalupe and Independencia deposits have the potential to produce 4,000 metric tonnes per day of high-grade silver and gold for 7 years. In addition, the two deposits remain open at depth and along strike with additional exploration potential within the Guadalupe mining district.
|Total Revenue to FNV ($ million)