TSX:FNV 102.22 +0.81 +0.8%
Volume 367,024
May 17, 2019
NYSE:FNV 75.92 +0.61 +0.81%
Volume 447,074
May 17, 2019
Gold 1,278.30 -9.10 -0.71%
Volume
May 17, 2019
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Franco-Nevada

Sabodala (Au)

Location: Senegal
Operator: Teranga Gold 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 an additional interest of the Oromin Joint Venture (“OJVG”). The OJVG owned the adjacent property which hosts several deposits representing future ore sources for Teranga’s neighbouring Sabodala mill. With the acquisition, Teranga now controls a sizable land package of over 950 km2 which includes much of a 70 km strike length along a prospective greenstone belt.

Under the terms of the agreement between Franco-Nevada and Teranga, Teranga will deliver 22,500 ounces of gold annually over the first six years of the agreement. Following delivery of 135,000 ounces of gold, Franco-Nevada will receive 6% of gold production that is sourced from either the Sabodala or OJVG properties. Franco-Nevada will make ongoing payments for each ounce of gold delivered equal to 20% of the spot gold price. As of the end of 2018, Teranga has delivered 112,500 ounces. As such, 2019 represents the final year of the fixed deliveries.

Sabodala produced 245,230 ounces in 2018 which compares favorably to the 233,267 ounces produced in 2017 and the initial guidance of 210,000-225,000 ounces. For 2019, Teranga expects to produce between 215,000-230,000 ounces from Sabodala. Teranga expects to spend $15 to $20 million in 2019 to continue relocation and construction activities of the Sabodala village. Currently the Sabodala village sits atop Niakafiri, the largest deposit on the Sabodala mine license.

ASSET HIGHLIGHTS:

  • Fixed payments of 22,500 gold ounces per year for six years
  • Trailing 6% gold stream
  • Land package offers significant exploration potential

2018 2017 2016
Revenue to Franco-Nevada ($ million) $ 28.5 $ 30.5 $ 26.0