Location: BURKINA FASO
Operator: True Gold Mining Inc.
Stream: Fixed gold deliveries / 4.875% gold stream
In August 2014, Franco-Nevada committed to provide True Gold Mining Inc. (“True Gold”) with up to $90 million in stream financing to assist in funding the construction of True Gold’s Karma Project in Burkina Faso, West Africa. Franco-Nevada’s minimum commitment is $75 million and True Gold has an option until mid-2016 (extended from February 2016) for an additional $15 million. Unique to the transaction and an industry first was that Franco-Nevada partnered with another royalty/streaming company, Sandstorm Gold Inc. (“Sandstorm”), which has committed an additional $25 million with an option for an additional $5 million of financing. As of January 2016, True Gold has drawn the full $100 million minimum commitment ($75 million Franco-Nevada / $25 million Sandstorm) as well as $5 million ($3.75 million Franco-Nevada / $1.25 million Sandstorm) of the increase option.
Under the terms of the agreement, True Gold will deliver to Franco-Nevada 15,000 ounces of gold per year beginning March 31, 2016 and until 75,000 ounces have been paid. Once reached, True Gold shall then deliver an amount of refined gold equal to 4.875% of the equivalent amount of gold produced at Karma over the life of the mine in exchange for ongoing payments equal to 20% of the prevailing spot price of gold. The increase option is repayable in eight quarterly deliveries totaling up to 30,000 ounces of gold based on the pro-rata portion of the amount drawn thereunder, starting 18 months from when the first tranche under the increase option is drawn down.
As of February 2016, True Gold reported that construction at Karmais approximately 94% complete and the first ore was being stacked onto the leach pads. Over 500,000 tonnes of stockpiled ore will provide the initial feed to the fully commissioned soft rock crusher, agglomeration and stacking circuit. The agreement covers all of the concessions within the 856 km2 Karma project and also includes a defined area of interest of 5 km surrounding the borders of the Karma project. According to the feasibility study announced by True Gold on December 17, 2013, True Gold expects to produce on average 97,000 ounces of gold per year over an initial 8.5 year mine life. True Gold announced on March 4, 2016 plans to combine with Endeavour Mining Corporation (“Endeavour Mining”). The combined company would form an intermediate gold producer focused on West Africa with one of the largest land packages in the region.
|Total Revenue to FNV ($ million)