Franco-Nevada

Guadalupe-Palmarejo (Au)

Palmarejo

Location: Mexico, Central America & Mexico
Operator: Coeur Mining, Inc.
Stream: 50% Gold Stream

Since January 2009, Franco-Nevada has received 50% of the gold produced from the Palmarejo operation located in Chihuahua Province, Mexico which is owned and operated by Coeur Mining, Inc. (“Coeur”). Palmarejo is a silver project with a considerable gold by-product.

In June 2014, a subsidiary of Franco-Nevada entered into a new 50% gold stream with Coeur on the Palmarejo project with ongoing payments equal to the lesser of $800 per ounce (no inflation provision) and the then prevailing spot price for gold for each ounce delivered under the new gold stream agreement. The new agreement improved mine economics for Coeur and helped extend the mine life of the entire Palmarejo operation. The agreement applies to a land position totaling over 1,200 km2. Franco-Nevada provided an upfront $22 million deposit which was used to partially fund the development of the Guadalupe underground mine on the Palmarejo property. In the third quarter of 2016, the original stream agreement terminated once Coeur delivered the minimum ounce obligation of 400,000 ounces under that agreement.

Franco-Nevada sold 44,696 ounces of gold from the mine in 2020, compared with 35,031 ounces of gold in 2019. Franco-Nevada estimates that over 80% of the existing Mineral Reserves and Mineral Resources are covered by the stream agreement. Production from the La Nación deposit, which straddles the stream ground border and is located between the Independencia and Guadalupe underground mines, started in early Q3 2019 with the majority of Mineral Reserves from La Nación falling on stream ground.

Coeur drilled approximately 68,850 meters at the Palmarejo property in 2020, conducting infill drilling at Guadalupe and Independencia as well as targeting zones of mineralization near both mine complexes.

ASSET HIGHLIGHTS

  • Exploration success has grown Mineral Reserves and Mineral Resources
  • Mineral Reserves growing by approximately 22% in 2020 versus previous 2019 estimate

2020 2019 2018
Revenue to Franco-Nevada ($ million) $ 79.0 $ 49.7 $ 45.3

Guadalupe-Palmarejo