TSX:FNV 82.53 -0.90 -1.08%
Volume 967,041
September 21, 2018
NYSE:FNV 63.95 -0.66 -1.02%
Volume 1,891,366
September 21, 2018
Gold 1,200.30 -8.03 -0.66%
Volume
September 21, 2018
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QUEBEC, CANADA
OPERATOR: YAMANA GOLD / AGNICO EAGLE
ROYALTY: GR: 1.5%

In June 2011, Franco-Nevada purchased a 1.5% gross royalty on part of the Canadian Malartic gold project. The project is located in Quebec’s Abitibi mining district and is Canada’s largest gold producer. The royalty covers seven claims on the property including the central portion of the open-pit as shown in the schematic which equates to approximately 3 km2. Royalty payments are expected to fluctuate annually based on the location of mining relative to the royalty property. Yamana and Agnico Eagle are now 50/50 joint operators of the Canadian Malartic mine following the 2014 acquisition of Osisko Mining Corporation.

Canadian Malartic produced 633,462 ounces of gold in 2017 which was higher than the 600,000 ounces forecast at the beginning of the year. Mid-point production guidance for 2018 and 2019 is 650,000 ounces per year which is expected to increase to 690,000 ounces in 2020. Production in 2020 is expected to increase primarily due to the mining of higher grades in the Barnat pit of which only a small portion is covered by the Franco-Nevada royalty.

The operators are aggressively drilling east of the open pit. An updated Mineral Resource was reported at Odyssey and a new Mineral Resource was reported at East Malartic. Permitting activities are underway for an exploration ramp to provide access to the shallower portions of the Odyssey South and East Malartic deposits. The ramp, which will provide access for underground drilling and collection of a bulk sample, is expected to begin in late 2018. The goal of the underground development program is to provide higher grade feed to the Canadian Malartic mill and extend the current mine life. The Odyssey Zones further east appear to be striking south-east on to Franco-Nevada’s royalty claims and there is potential for the East Malartic deposit to also be partially covered by the royalty.

ASSET HIGHLIGHTS:

  • Canada’s largest gold producer–increasing production over next couple years
  • Long life asset in Quebec
  • Exploration targets partially on royalty ground to the east

2017 2016 2015
Revenue to Franco-Nevada ($ million) $ 2.0 $ 2.1 $ 1.6