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Franco-Nevada

Guadalupe-Palmarejo (Au)

Palmarejo

Location: Mexico, Latin America
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, a subsidiary of Franco-Nevada 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 new agreement improved mine economics for Coeur and helped extend the mine life of the entire Palmarejo operation. The agreement applies to a land position totaling over 1,200 km2. Franco-Nevada provided an upfront $22 million deposit which was used to partially fund the development of the Guadalupe underground mine on the Palmarejo property. In the third quarter of 2016, the original stream agreement terminated once Coeur delivered the minimum ounce obligation of 400,000 ounces under that agreement.

Franco-Nevada sold 35,031 ounces of gold from the mine in 2019, compared with 35,807 ounces of gold in 2018. Franco-Nevada estimates that over 80% of the existing Mineral Reserves and Mineral Resources are covered by the stream agreement. Production from the La Nación deposit, which straddles the stream ground border and is located between the Independencia and Guadalupe underground mines, started in early Q3 2019 with the majority of Mineral Reserves from La Nación falling on stream ground.

Coeur drilled over 61,000 meters at the Palmarejo property in 2019, conducting infill drilling at Guadalupe and targeting zones of mineralization near the Guadalupe and Independencia mine complexes.

ASSET HIGHLIGHTS

  • Exploration success has maintained Mineral Reserves and Mineral Resources

2019 2018 2017
Revenue to Franco-Nevada ($ million) $ 49.7 $ 45.3 $ 65.5

Guadalupe-Palmarejo