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February 19, 2019
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Location: PANAMA

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 recent acquisition of LS-Nikko Copper Inc.’s 10% indirect interest in the project and KORES’ 10% indirect interest.

Under the terms of the Fixed Payment Stream, Franco-Nevada will provide a maximum of $1 billion pro-rated to First Quantum’s share of the capital costs. As of December 31, 2017, Franco-Nevada has provided $727 million with the remaining $273 million to be funded to project completion. For the Floating Payment Stream agreed to in 2018, Franco-Nevada provided an upfront deposit of $178 million to each of First Quantum and KORES for total consideration of $356 million.

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 $400/oz gold and $6/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.

In February 2018, First Quantum announced plans to expand Cobre Panama’s initial throughput capacity by 15% to 85 million tonnes per annum (“Mtpa”) and potential to accommodate a further increase to 100 Mtpa after year 2022. First Quantum plans phased commissioning of Cobre Panama in 2018, with ramp-up over 2019 reaching 85 Mtpa throughput rate by 2020. Over this period, contained copper production is expected to be a minimum of 150,000 tonnes in 2019, 270,000-300,000 tonnes in 2020 and up to 350,000 tonnes in 2021. Franco-Nevada’s precious metals delivery is indexed off the copper in concentrate shipped.

Franco-Nevada is getting the benefit of a larger than expected project without having to provide any additional capital for the expansion. In addition, Franco-Nevada is protected if the ramp-up is slower than expected. If the mill has not reached a 58 Mtpa run-rate by January 1, 2019, Franco-Nevada will get a discount on the initial ounces it acquires to provide a 5% cost of capital adjustment.


  • Stream agreement now covers 100% of the ownership of Cobre Panama
  • Increased throughput capacity to 85 Mtpa – a 15% increase to the 2015 construction plan
  • Agreement provides downside protection if ramp-up slower than expected

2017 2016 2015
Revenue to Franco-Nevada ($ million) $ – $ – $ –