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Franco-Nevada

Sudbury (PGM & Au)

LOCATION: Ontario, Canada
OPERATOR: KGHM International Ltd.
STREAM: 50% Precious Metals Stream

Franco-Nevada acquired three precious metals streams in the Sudbury basin of Ontario with its acquisition of Gold Wheaton Gold Corp. (“Gold Wheaton”) in March 2011. Franco-Nevada is entitled to purchase 50% of the precious metals contained in ore produced from the footwall portions of three separate mines subject to ongoing payments per ounce. The streams are calculated based on contained precious metals in the delivered ore rather than payable metals.

At the time of acquisition by Franco-Nevada, the mines were operated by Quadra FNX Mining Ltd. (“Quadra FNX”) which was acquired by KGHM International Ltd. (“KGHM”) in March 2012. The three mines are the Levack (Morrison Deposit), Podolsky and McCreedy West mines. The footwall deposits are primarily rich in palladium followed by platinum and gold. KGHM does not have processing facilities in Sudbury and sells the ore to third parties for processing. Currently all ore is being processed by Vale’s Clarabelle plant in Sudbury.

McCreedy West Mine: The stream agreement applies to the PM and 700 deposits at the McCreedy West mine. McCreedy West stopped mining of the precious metal-rich ores in the PM deposit in 2011. Franco-Nevada agreed to renegotiate the existing contract with KGHM by increasing the ongoing per ounce payment to a fixed amount of $800 per ounce from a price of $400 per ounce until December 31, 2021 and mining restarted in September 2018. McCreedy is expected to be the main source of revenue from Sudbury to Franco-Nevada in 2020 following Levack (Morrison Deposit) being put on care and maintenance in 2019.

Levack (Morrison Deposit): This mine was put into production in 2007 but was placed on care and maintenance in Q1 2019.

Podolsky Mine: The stream agreement applies to the 2000 and North deposits at the Podolsky mine which operated between 2008 and 2013. The mine is currently on care and maintenance and KGHM is evaluating possible new processing arrangements.

ASSET HIGHLIGHTS

  • McCreedy West mine continues to be the main source of revenue from Sudbury for Franco-Nevada in 2020
  • Levack (Morrison Deposit) placed on care and maintenance in Q1 2019
  • KGHM evaluating possible new processing arrangements for Podolsky

2019 2018 2017
Total Revenue to FNV ($ million) $ 41.2 $ 23.3 $ 30.3
Sudbyry