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Franco-Nevada

Karma (Au)

Location: Burkina Faso
Operator: Endeavour Mining Corporation
Royalty: Fixed gold deliveries / 4.875% Gold Stream

In August 2014, a subsidiary of 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 was repayed in 8 quarterly deliveries totaling 5,625 ounces of gold. 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. Karma produced 109,000 gold ounces in 2018. Production is expected to be unchanged for 2019 with estimated production between 105,000 - 115,000 ounces.

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. 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. More than 23,000 meters were drilled in the first nine months of 2018. Drilling has mainly focused on the eastern extension of the North Kao deposit, Yabonsgo and Rambo West where Endeavour Mining hopes to provide updated Indicated Mineral Resources with its year end results.

ASSET HIGHLIGHTS:

  • Fixed gold ounce deliveries over five years with trailing 4.875% gold stream
  • Prospective land package of over 850 km2

2017 2016 2015
Revenue to Franco-Nevada ($ million) $ 22.5 $ 23.0 $ 14.4