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 the mine life at 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. Midas was discovered and constructed by Franco-Nevada’s predecessor company prior to its combination with Newmont. 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.
Franco-Nevada paid $35 million for a prepaid gold purchase arrangement totaling 38,250 ounces of gold to be delivered by December 31, 2018 and a 2.5% NSR royalty on the Fire Creek and Midas properties commencing in 2019. Under the terms of the agreement, prepaid gold purchase deliveries began in June 2014 and will be made at the end of each month until 38,250 ounces have been delivered. The remaining deliveries based on the prepaid gold purchase arrangement is 8,000 ounces in 2017 and 8,000 ounces in 2018.
Klondex produced 131,110 ounces of gold (101,286 ounces from Fire Creek and 29,824 ounces from Midas) and 1.427 million ounces of silver (0.081 million ounces from Fire Creek and 1.346 million from Midas) in 2016. On a gold equivalent basis, Klondex produced 150,099 gold equivalent ounces in 2016 which was higher than guidance. For 2017, Klondex expects to produce between 42,000-45,000 gold equivalent ounces from Midas and between 97,000-100,000 gold equivalent ounces from Fire Creek.
In September 2016, Klondex announced increased Mineral Reserves and Mineral Resources for Fire Creek and Midas net of depletion. Klondex continues to actively drill both properties and in February 2017 released encouraging results expected to extend high grade veins at Fire Creek.
|Total Revenue to FNV ($ million)