Operator: KLONDEX MINES LTD.
Royalty: FIXED GOLD DELIVERIES / NSR: 2.5%
In February 2014, Franco-Nevada assisted Klondex Mines Ltd. (“Klondex”) in the acquisition of the Midas mine and milling facility located in Nevada from Newmont. Klondex purchased the Midas mill to provide it with processing capacity for its Fire Creek ores, which are located 180 km south (via highway and roadways) of Midas, while providing the option to potentially extend mine life at Midas.
Franco-Nevada paid $35 million for a prepaid gold purchase arrangement for 38,250 ounces of gold to be delivered by December 31, 2018 and a 2.5% NSR royalty on the Fire Creek and Midas properties commencing in 2019. Under the terms of the agreement, prepaid gold purchase deliveries began in June 2014 and will be made at the end of each month until 38,250 ounces have been delivered. The remaining deliveries based on the prepaid gold purchased arrangement is 8,000 ounces in each of 2016, 2017 and 2018.
Klondex produced 105,893 ounces of gold and 1.605 million ounces of silver in 2015, an increase of 23% and 17.5% respectively over 2014. For 2016, Klondex expects to increase production to a range of 145,000-150,000 gold equivalent ounces with approximately two thirds expected from Fire Creek and one third from Midas.
The Fire Creek property is located in north central Nevada, at the cross-section of the Northern Nevada Rift and the Battle Mountain Trend and is a high-grade epithermal gold deposit. The property consists of a combination of private fee land and U.S. Bureau of Land Management (“BLM”) land for a total area of approximately 45 km2 plus an area of interest in adjacent townships along strike with mineralization. In February 2016, Klondex announced that it had received BLM approval for the Environmental Assessment at Fire Creek. The approval by the BLM will allow Klondex to construct a new waste rock storage facility and expand other infrastructure. Midas was discovered and constructed by Franco-Nevada’s predecessor company prior to its combination with Newmont. Midas has remaining Mineral Resources with numerous targets for Mineral Resource expansion. The property position extends over private fee land and BLM land for a total area of 137 km2 with an area of interest surrounding the property.
|Total Revenue to FNV ($ million)