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Franco-Nevada

Sabodala (Au)

Location: Senegal
Operator: Teranga Gold Corporation
Stream: 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.

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, as of January 2020, Franco-Nevada now receives 6% of the gold that is 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.

Sabodala produced 241,276 ounces of gold in 2019, consistent with the 245,230 ounces produced in 2018 and exceeding the initial 2019 guidance of 215,000-230,000 ounces. For 2020, Teranga expects to produce 215,000 ounces of gold from Sabodala and commence exploration for additional refractory and oxide deposits on the land package.

In December 2019, Teranga announced an agreement to acquire the adjacent Massawa gold project. Franco-Nevada’s stream does not extend to the Massawa gold project area, however, pursuant to the agreement, Franco-Nevada is not to be disadvantaged as a result of the displacement of Sabodala ore and therefore Teranga will continue to deliver the anticipated ounces based on the most current standalone life of mine operating plan.

ASSET HIGHLIGHTS

  • As of January 2020, trailing 6% gold stream
  • Fixed payments of 22,500 gold ounces per year completed in December 2019
  • Land package offers significant exploration potential

2019 2018 2017
Revenue to Franco-Nevada ($ million) $ 29.5 $ 28.5 $ 30.5