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Franco-Nevada

Karma (Au)

Karma

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 Ltd. (“Sandstorm”) committed to provide up to $120 million in stream financing to assist the construction of the Karma Project in Burkina Faso, West Africa, for 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 ($75 million with $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”) in March 2016.

Under the agreement, Endeavour will deliver to Franco-Nevada 15,000 ounces of gold per year, beginning in March 2016 through to the end of February 2021, for a total of 75,000 ounces of gold delivered. Thereafter, Endeavour shall deliver to Franco-Nevada an amount of gold equal to 4.875% of the 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 by Q1 2019. Sandstorm will receive deliveries for its 25% interest from Endeavour 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 Karma Project started production in 2016. In 2019, Karma produced 97,000 gold ounces and, in 2020, is expected to produce between 100,000-110,000 gold 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. The 2019 exploration program totaled 27,000 meters and started in late Q3 with drilling mainly focused on the Kao North, Kao Main and GG1 deposits.

On March 9, 2020, Endeavour announced a decrease in Mineral Reserves and Mineral Resources compared to the previous year. The decrease followed an update of the Mineral Resource model for GG1 and re-running pit optimizations based on life of mine unit cost, geotechnical and recovery rate assumptions. Mineral Reserves of 293,000 gold ounces were reported, with M&I Resources inclusive of Reserves of 2,042,000 gold ounces and Inferred Resources of 681,000 gold ounces. Mineral Reserves and Mineral Resources and the related Royalty Ounces in the adjacent table are based on publicly disclosed information as of March 6, 2020 and do not reflect Endeavour’s updated estimate. Endeavour continues to assess near-pit extensions at GG1, Kao North and Kao Main to extend mine life.

ASSET HIGHLIGHTS

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

2019 2018 2017
Revenue to Franco-Nevada ($ million) $ 20.2 $ 22.5 $ 23.0
Karma map