OPERATOR: BARRICK GOLD CORPORATION
ROYALTY: NSR: 2-4% / NPI: 2.4-6%
Franco-Nevada holds royalties covering the majority of the Goldstrike complex operated by Barrick which remains one of Barrick’s core mines. The Goldstrike complex is located on the Carlin Trend, about 60 km northwest of the town of Elko, Nevada. The Goldstrike complex includes the open-pit Betze-Post mine, as well as the underground operations of Meikle and Rodeo immediately to the north. Mining activity commenced on the property in 1976 and, since 1987, has been operated by Barrick. Franco-Nevada holds NSR (2-4%) and NPI (2.4-6%) royalties at Goldstrike covering the majority of the reported Mineral Reserves and Mineral Resources. These estimates include low grade ore that has been stockpiled. The royalties vary depending on the claim blocks, as shown in the figure. As a result, royalty payments can vary substantially on a quarterly basis, depending on mine sequencing and waste stripping. The timing of capital investments can also impact the timing of the payment of profit royalties.
Production at the Goldstrike complex increased to 1,096,000 ounces in 2016 from 1,053,000 ounces in 2015. However, this included production from the nearby South Arturo deposit (Franco-Nevada has a separate royalty on this property discussed on page 37) so production from the Goldstrike open-pit and underground operations actually decreased year-over-year. The decrease in production negatively impacted the NSR royalty payments which was largely offset by the increase in NPI royalty payments due to the completion of the thiosulfate processing method (“TCM”). With the completion of the TCM, NPI payments were positively impacted due to the reduction in capital spending. For 2017, Barrick expects to produce between 910,000-950,000 ounces at an AISC of $910/oz-$980/oz. The majority of production is expected from the Goldstrike operations as Phase 2 mining of the South Arturo deposit is expected to be completed during 2017 (described on page 37).
|Total Revenue to FNV ($ million)