TSX:FNV 102.22 +0.81 +0.8%
Volume 367,024
May 17, 2019
NYSE:FNV 75.92 +0.61 +0.81%
Volume 447,074
May 17, 2019
Gold 1,278.30 -9.10 -0.71%
Volume
May 17, 2019
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Franco-Nevada

Canadian Malartic (Au)

LOCATION: 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 the 50/50 joint operators of the Canadian Malartic mine following the 2014 acquisition of Osisko Mining Corporation.

Canadian Malartic produced a record 697,200 ounces in 2018 which was better than the projected production of 650,000 ounces and better than 2017 production of 633,462 ounces of gold. For 2019, production is expected to be 660,000 ounces, increasing to between 690,000 - 710,000 ounces for both 2020 and 2021. The production increase will likely not benefit the Franco-Nevada royalty as mining progresses to the Barnat pit which is only partially covered by the Franco-Nevada royalty.

The operators are aggressively drilling east of the open pit. The permit allowing for the development of an underground ramp at the Odyssey project was received in December 2018. The operators are currently evaluating the potential for underground mining of the Odyssey and East Malartic deposits from surface to a depth of 600 meters. These deposits could provide higher grade tonnes that could potentially supplement open pit production in the future. Currently, the Odyssey project contains an Inferred Mineral Resource of 1,618,000 ounces (23 million tonnes @ 2.19 g/t) while the East Malartic project has an Indicated Mineral Resource of 722,000 ounces (10.6 million tonnes @ 2.13 g/t gold) and Inferred Mineral Resource of 2,800,000 ounces (44 million tonnes @ 1.98 g/t gold). Drilling is ongoing to extend and upgrade the Mineral Resources in these zones.

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

2018 2017 2016
Revenue to Franco-Nevada ($ million) $ 2.5 $ 2.0 $ 2.1
Canada Malarctic