Operator: Newmont Mining Corporation
Royalty: NSR: 2%
Franco-Nevada has a 2% NSR royalty which covers a 78 km2 area of Newmont’s Ahafo project in Ghana (shown in the schematic). Franco-Nevada’s royalty is believed to cover most, if not all, of the Subika open-pit as well as a majority of the Subika underground mineralization identified to date. The royalty first became payable to Franco-Nevada in third quarter of 2012. Ahafo production has steadily declined in recent years from 570,000 ounces in 2013 to an anticipated range of 330,000-360,000 ounces in 2016. The year over year decrease was due to lower grades and a higher strip ratio.
Newmont continues to study both a mill expansion at Ahafo as well as potential underground development at the Subika pit. The mill expansion would help offset the impact of harder ore as well as lower grades in addition to providing synergies with the Subika underground project. The mill expansion would add an additional 100,000-125,000 ounces of gold (first five year average) at a capital cost of $140-$160 million. The Subika underground would help in smoothing production and contribute 100,000-150,000 ounces (first five year average) to coincide with and supply the mill expansion. A decision for both the mill expansion and the Subika underground is expected in the second half of 2016.
|Total Revenue to FNV ($ million)