Franco-Nevada

Condestable (Au & Ag)

Condestable


Location: Peru, South America
Stream: Gold and Silver Stream
Operator: Southern Peaks Mining LP

On March 8, 2021, a subsidiary of Franco-Nevada closed a precious metals stream on production from the Condestable mine in Peru, for an up-front deposit of $165 million. The Condestable mine is located approximately 90 km south of Lima, Peru, and is owned and operated by a majority-owned subsidiary of Southern Peaks Mining LP (“SPM”), a private company. The Condestable mine has a demonstrated operating track record of over 50 years with a proven history of resource conversion.

Under the streaming agreement, commencing on January 1, 2021 and ending December 31, 2025, Franco-Nevada will receive 8,760 ounces of gold and 291,000 ounces of silver annually until a total of 43,800 ounces of gold and 1,455,000 ounces of silver have been delivered (the “Fixed Deliveries”). Thereafter, Franco-Nevada will receive 63% of the contained gold and contained silver produced until a cumulative total of 87,600 ounces of gold and 2,910,000 ounces of silver have been delivered (the “Variable Phase 1 Deliveries”). The stream then reduces to 25% over the remaining life of mine (the “Variable Phase 2 Deliveries”). Franco-Nevada will pay 20% of the spot price for gold and silver for each ounce delivered under the stream (the “Ongoing Payment”). The stream has an effective date of January 1, 2021, with the first quarterly delivery received on March 15, 2021.

For a period of four years from closing, subject to certain restrictions, a subsidiary of SPM may, at its option, make a one-time special delivery comprising the number of ounces of refined gold equal to $118.8 million at the then current spot price subject to the Ongoing Payment, to achieve the early payment of the Fixed Deliveries and Variable Phase 1 Deliveries. The Variable Phase 2 Deliveries would commence immediately thereafter.

The stream is referenced to the entire Condestable concessions covering approximately 450 km2 with excellent near mine exploration upside. SPM is currently expanding processing capacity at the Condestable mine from 7,000 tpd to 8,400 tpd and is advancing a feasibility study on additional plant capacity expansion to 10,000 tpd.

ASSET HIGHLIGHTS

  • Proven operation with excellent potential for expansions and mine life extension (over 50 year operating history)
  • Large, prospective land package (approximately 450 km2)
  • Low cost operation (2nd quartile copper cash costs)

2020 2019 2018
Revenue to Franco-Nevada ($ million) $ – $ – $ –

Condestable