Gold Quarry, Nevada
| Royalty: | 7.29% NSR |
|---|---|
| 2009 Revenue: | $13.845M |
| Operator: | Newmont Mining Corporation |
Franco-Nevada has a 7.29% revenue-based royalty on a 522 acre portion of the Gold Quarry operation. The royalty contains a minimum payment obligation tied to reserves and stockpiles applicable to the royalty. In 2009, Franco-Nevada was paid on approximately 14,431 net attributable royalty ounces. In February 2010, Newmont reported a geotechnical event that would defer approximately 150,000 production ounces per annum into the future. The minimum annual royalty provisions are expected to mitigate the impact to Franco-Nevada and for 2010, Franco-Nevada issued initial guidance for an increase in the minimum payment obligation to 16,500 net attributable ounces. Longer-term, Franco-Nevada expects to continue to receive, on average, between 11,200 and 16,500 gold royalty ounces per annum. Gold Quarry is operated by Newmont and is located in the Carlin District of north-central Nevada. The royalty is on private land rather than government owned land. As such, this royalty is expected to be substantially insulated from the risk of new public land royalties and regulations.
The Gold Quarry operation has been in production since 1985 and continues to be an important contributor to Newmont’s Carlin Trend Complex, which operates as an integrated unit with different mines supplying variable ore types and grades to a variety of processing facilities situated throughout the Complex. Newmont currently reports reserves and production numbers by area and does not publicly quote separate Gold Quarry numbers, however for 2009, Newmont has announced reserve additions at Gold Quarry from the conversion of the West Wall Layback resources announced last year. This is expected to add to the mine life of the Gold Quarry Mine, as well as to the Gold Quarry royalty. In addition to the reserve additions at Gold Quarry through the West Wall Layback, Newmont, in their May, 2010 Investor Presentation, spoke about further potential upside for the operation in the form of a “Greater Gold Quarry” expansion, shown on the map below.
