Franco-Nevada

Golden Highway (Au)

Golden-Highwy

LOCATION: Ontario, Canada
OPERATOR: Kirkland Lake Gold Ltd.
ROYALTY: NSR: 0.25-10%

Franco-Nevada has multiple NSR royalties ranging from 0.25 to 10% over the Destor-Porcupine mineral trend just east of Timmins, Ontario spread over more than 120 km and estimated to cover over 340 km2. Kirkland Lake Gold (“KLG”) (see pages 56 and 59 for additional assets operated by KLG) acquired St Andrew Goldfields (“St Andrew”) in January 2016 which previously owned and operated most of the properties along the trend on which Franco-Nevada has royalties. Franco-Nevada has royalties on the following key properties in the trend:

Holt: The Holt mine has been the main producing asset that KLG acquired as part of the St Andrew transaction and includes the Holt mill complex. Franco-Nevada has a sliding scale NSR royalty beginning at 2% when the gold price is less than or equal to $500/ounce and increasing in 1% increments for each $100/ounce increase in the gold price, to a maximum of 10%. The Holt mine was built in the late 1980’s by Barrick.

Taylor: The Taylor mine (1% NSR) achieved commercial production in November 2015. Exploration potential at Taylor exists along strike and at depth of current Mineral Resources.

Holloway: The Holloway mine is located immediately north of the Holt property with ore historically processed at the Holt mill. The Holloway mine was placed on care and maintenance at the end of 2016 due to limited economic viability. In an effort to improve the economics of the operation, in 2019, Franco-Nevada agreed to reduce the royalty at Holloway to a flat 3% NSR from the previous sliding scale royalty. The mine resumed operations in early 2019, prior to the current suspension.

Hislop: Franco-Nevada has a 4% NSR on the Hislop mine which is located approximately 50 km to the west of the Holt mill. The open-pit Mineral Reserves for the Hislop open-pit were fully depleted in 2014.

Under KLG, Holt, Holloway and Taylor have been amalgamated into the Holt Complex for reporting purposes, all of which have fed the Holt mill for processing. The Holloway mine was placed on care and maintenance in March 2020. Operations at the remainder of the Holt Complex were suspended effective April 2020, with the suspension being extended until further notice in July 2020. Total production at the Holt Complex in 2020 was 29,391 gold ounces produced, almost all of which was in Q1 2020.

In August 2020, KLG and Newmont entered into a strategic alliance agreement, with Newmont acquiring an option on certain mining and mineral rights related to KLG’s Holt property.

ASSET HIGHLIGHTS

  • Large land position offers future potential
  • KLG announced strategic alliance with Newmont

2020 2019 2018
Revenue to Franco-Nevada ($ million) $ 3.0 $ 7.0 $ 8.0
Timmins