Location: BURKINA FASO
Operator: Endeavour Mining Corporation
Stream: Fixed gold deliveries / 4.875% gold stream
In August 2014, Franco-Nevada and Sandstorm Gold Inc. (“Sandstorm”) committed to provide up to $120 million in stream financing to assist the construction of the Karma Project in Burkina Faso, West Africa, the first ever syndicated stream transaction. Franco-Nevada committed 75% of the funding and Sandstorm committed the remaining 25%. Franco-Nevada ultimately contributed $78.75 million (minimum commitment of $75 million and $3.75 million as part of the increase option). The Karma Project was constructed by True Gold Mining Inc. which was acquired by Endeavour Mining Corporation in March 2016.
Under the terms of the agreement, Endeavour Mining will deliver to Franco-Nevada 15,000 ounces of gold per year which started March 31, 2016 and will continue until 75,000 ounces have been paid. Once reached, Endeavour Mining shall then deliver to Franco-Nevada an amount of refined gold equal to 4.875% of the equivalent amount of gold produced at Karma over the life of the mine in exchange for ongoing payments equal to 20% of the spot price of gold. The increase option is repayable in eight quarterly deliveries totaling 5,625 ounces of gold, starting 18 months from when the first tranche under the increase option was drawn down. Sandstorm will receive deliveries for its 25% interest from Endeavour Mining directly.
The Karma project poured first gold on April 11, 2016 and reached commercial production on October 1, 2016. The operation produced 62,000 ounces in 2016 with production expected to increase to 100,000-110,000 ounces in 2017. Endeavour announced in February 2017 that it has extended the mine life to over 10 years as infill drilling at the North Kao deposit added 262,000 ounces to Mineral Reserves. The agreement covers all of the concessions within the 856 km2 Karma project and also includes a defined area of interest of 5 km surrounding the borders of the Karma project. Endeavour’s 2017 exploration program will focus on other near-mill targets, including Rambo West and Yabonsgo in an effort to add further to Mineral Reserves and Mineral Resources.
|Total Revenue to FNV ($ million)