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Volume 367,024
May 17, 2019
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Volume 447,074
May 17, 2019
Gold 1,278.30 -9.10 -0.71%
Volume
May 17, 2019
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Franco-Nevada

Cobre Panama (Au & Ag)

Cobre-Panama

Location: PANAMA, LATIN AMERICA
Operator: FIRST QUANTUM MINERALS LTD. / KOREA RESOURCES CORP.
Stream: Gold and Silver Stream

Cobre Panama is one of the world’s largest copper-gold-silver porphyry deposits currently being constructed and is 90% owned by First Quantum Minerals Ltd. (“First Quantum”) and 10% by Korea Resources Corp. (“KORES”). The concession covers an area of 136 km2. In January 2018, a subsidiary of Franco-Nevada agreed to add a new precious metals stream which increases its coverage to 100% of the ownership of the Cobre Panama project. Franco-Nevada now has two precious metals streams with slightly different terms:

  • Fixed Ongoing Payment Stream - Applies to First Quantum’s original 80% interest in the Cobre Panama project which has been in place since 2015.
  • Floating Ongoing Payment Stream - Effective since March 2018 and applies to First Quantum’s 10% indirect interest acquired from LS-Nikko Copper Inc.’s and KORES’ 10% indirect interest.

Franco-Nevada has fully funded its $1.356 billion project commitment. The amount of precious metals deliverable under both the Fixed Payment Stream and Floating Payment Stream is indexed to total project metal-in-concentrate shipped. The main difference between the Fixed Payment Stream and Floating Payment Stream is the ongoing price per ounce paid. The ongoing payment of the Fixed Payment Stream is fixed per ounce payments of $418/oz gold and $6.27/oz silver with a 1.5% annual inflation factor. The Floating Payment Stream ongoing price per ounce for deliveries is 20% of the spot price for the current Mineral Reserve life and higher thereafter.

First Quantum introduced first ore to the milling circuit on February 13, 2019 at Cobre Panama. Ramp-up is scheduled over 2019 and 2020 with First Quantum expecting an annualized production rate of 72 million tonnes per year (“Mtpa”) by the end of 2019 and 85 Mtpa in 2020. First Quantum has stated the potential to accommodate a further increase to 100 Mtpa after 2022. Franco-Nevada will receive a 5% return on its capital invested effective from January 1, 2019 until the mill throughput reaches 58 Mtpa. The return will be achieved by a $100 per gold ounce discount in the ongoing price for the initial ounces acquired.

Franco-Nevada’s precious metals delivery is indexed off the copper in concentrate shipped. For 2019, First Quantum expects to produce between 140,000 - 175,000 tonnes of contained copper (midpoint equates to ~52,000 ounces of gold and 0.6 million ounces of silver to Franco-Nevada), increasing to between 270,000 - 300,000 tonnes of contained copper in 2020 (midpoint equates to ~94,000 ounces of gold and 1.1 million ounces of silver to Franco-Nevada), approximately 300,000 tonnes of contained copper in 2021 (equates to ~99,000 ounces of gold and 1.1 million ounces of silver) and 350,000 tonnes of contained copper in 2022 (equates to ~116,000 ounces of gold and 1.3 million ounces of silver). Gold deliveries will lag the production schedule noted above, particularly in 2019, due to the timing of shipments and payments.

ASSET HIGHLIGHTS:

  • Stream agreement now covers 100% of the ownership of Cobre Panama
  • Steady increasing production over next several years
  • 5% return on capital invested until the mill throughput reaches 58 Mtpa

2018 2017 2016
Revenue to Franco-Nevada ($ million) $ – $ – $ –

Cobre_Panama