TSX:FNV 82.53 -0.90 -1.08%
Volume 967,041
September 21, 2018
NYSE:FNV 63.95 -0.66 -1.02%
Volume 1,891,366
September 21, 2018
Gold 1,200.30 -8.03 -0.66%
Volume
September 21, 2018
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Palmarejo

Location: Mexico
Operator: Coeur Mining, Inc.
Stream: 50% Gold Stream

Since January 2009, Franco-Nevada has received 50% of the gold produced from the Palmarejo operation located in Chihuahua Province, Mexico which is owned and operated by Coeur Mining, Inc. (“Coeur”). Palmarejo is a silver project with a considerable gold by-product. In June 2014, Franco-Nevada agreed to terminate the original stream agreement once Coeur delivered the minimum 400,000 ounce obligation under that agreement. The minimum obligation was met in the third quarter of 2016.

In June 2014, Franco-Nevada also entered into a new 50% gold stream with Coeur on the Palmarejo project with ongoing payments equal to the lesser of $800 per ounce (no inflation provision) and the then prevailing spot price for gold for each ounce delivered under the new gold stream agreement. The restructured agreement improves mine economics for Coeur and extends the mine life of the entire Palmarejo operation. This agreement continues to apply to the extensive land position totaling over 1,200 km2. Franco-Nevada provided an upfront $22 million deposit which was used to to partially fund the development of the Guadalupe underground mine on the Palmarejo property.

Franco-Nevada received 52,124 ounces of gold in 2017 under the revised agreement, benefitting from a very strong year of production at the Palmarejo operation. This compares with a combined 36,386 ounces received in 2016. For 2018, Coeur expects to produce between 110,000-115,000 ounces of gold but does not publicly provide a breakdown of what is expected from Guadalupe/Independencia West (stream ground) and Independencia East (non-stream ground).

Coeur provided a new Mineral Resource estimate for the Palmarejo project in February 2018 following a strong exploration campaign in 2017. Gold Mineral Reserves increased by 19%. In addition, the drill campaign contributed to a 56% increase to the M&I Mineral Resource as well as a 48% increase to the Inferred Mineral Resource. Several new veins have been discovered on the property including the Nacioin-Dana, La Bavisa and Zapata veins. The majority of the Mineral Reserves and Mineral Resources are expected to be covered by the stream agreement.

ASSET HIGHLIGHTS:

  • Restructured agreement following completion of minimum stream payments
  • Solid production in 2017 expected to continue into 2018
  • Exploration results led to increase in all Mineral Resource categories

2017 2016 2015
Revenue to Franco-Nevada ($ million) $ 65.5 $ 44.6 $ 59.6

Guadalupe-Palmarejo