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
Contact Share

Location: BURKINA FASO
Operator: Endeavour Mining Corporation
Royalty: Fixed gold deliveries / 4.875% Gold Stream

In August 2014, Franco-Nevada and Sandstorm Gold Inc. (“Sandstorm”) committed to provide up to $120 million in stream financing to assist the construction of the Karma Project in Burkina Faso, West Africa, the first ever syndicated stream transaction. Franco-Nevada committed 75% of the funding and Sandstorm committed the remaining 25%. Franco-Nevada ultimately contributed $78.75 million (minimum commitment of $75 million and $3.75 million as part of the increase option). The Karma Project was constructed by True Gold Mining Inc. which was acquired by Endeavour Mining Corporation (“Endeavour Mining”) in March 2016.

Under the terms of the agreement, Endeavour Mining will deliver to Franco-Nevada 15,000 ounces of gold per year beginning March 31, 2016 and will continue until 75,000 ounces have been delivered. Once reached, Endeavour Mining shall then deliver to Franco-Nevada an amount of refined gold equal to 4.875% of the equivalent amount of gold produced at Karma over the life of the mine in exchange for ongoing payments equal to 20% of the spot price of gold. The increase option is repayable in 8 quarterly deliveries totaling 5,625 ounces of gold, starting 18 months from when the first tranche under the increase option was drawn down. Sandstorm will receive deliveries for its 25% interest from Endeavour Mining directly.

The Karma project poured first gold on April 11, 2016 and reached commercial production on October 1, 2016. The operation increased production to 98,000 gold ounces in 2017 which represented the first year of full production. Production for 2018 is expected to increase to 105,000-115,000 ounces.

Endeavour Mining announced in February 2017 that it had extended the mine life to over 10 years as infill drilling at the North Kao deposit added 262,000 gold ounces to Mineral Reserves. Drilling during 2017 confirmed mineralization at the Yabongso target and discovered a parallel oxide structure east of the North Kao deposit, both of which are expected to be delineated into Mineral Resource estimates in Q1 2018. The agreement covers all of the concessions within the 856 km2 Karma project and also includes a defined area of interest of 5 km surrounding the borders of the project.

ASSET HIGHLIGHTS:

  • Fixed ounce deliveries over five years with trailing 4.875% gold stream
  • Growing Mineral Reserves and mine life extended to over 10 years
  • Prospective land package of over 850 km2

2017 2016 2015
Revenue to Franco-Nevada ($ million) $ 23.0 $ 14.4 $ –