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
Contact Share

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. 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. The stream is calculated based on contained precious metals in the delivered ore rather than payable metals.

McCreedy West Mine: The stream agreement applies to the PM and 700 deposits at the McCreedy West mine. McCreedy West ceased mining of the precious metal-rich ores in the PM deposit in 2011. In an effort to restart mining at McCreedy, 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. McCreedy is expected to be the main source of revenue to Franco-Nevada in 2019 following Levack (Morrison Deposit) being put on care and maintenance.

Levack (Morrison Deposit): This mine has been in production since 2007 but is anticipated to be put on care and maintenance in March 2019.

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

ASSET HIGHLIGHTS:

  • McCreedy West mine expected to replace the stream ounces originally expected from Levack (Morrison Deposit) in 2019
  • Levack (Morrison Deposit) to be placed on care and maintenance effective March 31, 2019

2018 2017 2016
PGM Revenue to Franco-Nevada ($ million) $ 17.8 $ 23.9 $ 22.4
Gold Revenue to Franco-Nevada ($ million) $ 5.5 $ 6.4 $ 8.0
Sudbyry