Goldstrike - Nevada
| Royalty: | 2%-4% NSR 2.4%-6% NPI |
|---|---|
| 2009 Revenue: | $21.478M $20.468M |
| Operator: | Barrick Gold Corporation |
Franco-Nevada holds multiple royalties at the Goldstrike operation that cover the majority of the resources and reserves at the open-pit Betze-Post mine as well as the underground operations of Meikle and Rodeo immediately to the north. Depending on the claim block, we own revenue-based royalties that range from 2% to 4% and profit-based royalties that range from 2.4% to 6%. The profit-based royalties are more leveraged to the gold price than the revenue-based royalties.
Barrick is the operator of Goldstrike and the mines share common milling, autoclave and roasting processing facilities. Barrick has invested over $2 billion in developing one of the most technologically advanced mining and processing facilities in the world and one of the largest primary gold operations in the world. Franco-Nevada does not have the obligation to fund any portion of the costs associated with the operation. Goldstrike has been a dependable royalty generator for over 20 years.
In 2009, Franco-Nevada realized $41.9 million in royalties from Goldstrike down from $49.7 million in 2008. This mostly reflected lower production at the operation with production in 2009 declining to 1.35 million ounces compared to 1.71 million ounces in 2008. Cash costs remained relatively stable at $464 an ounce in 2009 compared to $452 an ounce in 2008. Goldstrike is a mature operation but still has a long life with 12.16 million ounces in reserve at the end of 2009. Barrick has mined and stockpiled a substantial amount of low grade ore on which Franco-Nevada’s royalties will apply. Goldstrike is expected to continue to generate royalties to Franco-Nevada for more than 15 years but production will step down over time. Royalty receipts can be variable on a quarterly basis as the operation phases between mining and waste removal, toll processing of non-royalty ore and the processing of stockpiles.
