Franco-Nevada

Sabodala (Au)

Location: Senegal, Rest of World
Operator: Endeavour Mining Corporation
Stream: Fixed gold deliveries / 6% Gold Stream

In December 2013, a subsidiary of Franco-Nevada provided Teranga Gold Corporation (“Teranga”) with a $135 million deposit to fund the acquisition by Teranga of additional future ore sources for its Sabodala mill. With the acquisition, Teranga was able to expand its land package to over 950 km2 including much of a 70 km prospective greenstone belt. In February 2021, Endeavour Mining Corporation (“Endeavour”) acquired Teranga.

Over the first six years, Teranga delivered 22,500 ounces of gold annually to Franco-Nevada, under a fixed arrangement, for a total of 135,000 ounces of gold delivered. The fixed delivery period was fulfilled in December 2019 and, between January 2020 and August 2020, Franco-Nevada received 6% of the gold produced from either the Sabodala or Oromin Joint Venture (“OJVG”) properties. Franco-Nevada will make ongoing payments for each ounce of gold delivered equal to 20% of the spot gold price.

In December 2019, Teranga announced an agreement to acquire the adjacent Massawa gold project and commenced processing ore from the project in 2020. Franco-Nevada’s stream does not extend to the Massawa gold project area.

In September 2020, Franco-Nevada amended its existing Sabodala gold purchase and sale agreement with Teranga to compensate for displacement from the processing of Massawa ore through the Sabodala processing facilities and to provide for certain protocols for the commingling of Sabodala and Massawa ores.

The amended agreement provides that effective September 1, 2020, Teranga will make fixed deliveries of 783.33 ounces of refined gold per month until 105,750 ounces of gold have been delivered to Franco-Nevada (the “Fixed Delivery Period”) and 6% of production from the stream area thereafter. Following the Fixed Delivery Period, a reconciliation will be conducted to determine if Franco-Nevada would have received more or less than 105,750 ounces of gold under the 6% variable stream during such period. Teranga will be entitled to a credit for an over-delivery which will be applied against the 6% variable stream until depleted and Franco-Nevada will be entitled to a one-time additional delivery in the case of an under-delivery.

ASSET HIGHLIGHTS

  • As of September 2020, fixed gold deliveries of 9,400 ounces per year until 2031, with 6% of gold production from Sabodala concessions thereafter subject to a reconciliation mechanism
  • Land package offers significant exploration potential

2020 2019 2018
Revenue to Franco-Nevada ($ million) $ 21.6 $ 29.5 $ 28.5