Franco-Nevada

Antapaccay (Au & Ag)

Antapaccay

Location: PERU, South AMERICA
Operator: Glencore PLC
Stream: GOLD AND SILVER STREAM

In February 2016, a subsidiary of Franco-Nevada acquired a precious metals stream on production from the Antapaccay mine for $500 million from Glencore plc (“Glencore”) and its subsidiaries. Antapaccay is located within the province of Espinar in Southern Peru–a district with a long mining history. The property also hosts the historic Tintaya open-pit mine and related infrastructure which began operating in 1984. Glencore (Xstrata) invested in excess of $1.5 billion of initial capital to build and commission the Antapaccay open-pit mine and plant, which commenced operations in 2012.

Under the streaming agreement, gold and silver deliveries are initially referenced to copper in concentrate shipped. Franco-Nevada will receive 300 ounces of gold and 4,700 ounces of silver for each 1,000 tonnes of copper in concentrate shipped, until 630,000 ounces of gold and 10 million ounces of silver have been delivered. Cumulatively, 299,700 ounces of gold and 4.7 million ounces of silver have been delivered since acquisition until December 31, 2020. Thereafter, Franco-Nevada will receive 30% of the gold and silver shipped. Franco-Nevada will initially pay an on-going price of 20% of the spot price of gold and silver until 750,000 ounces of refined gold and 12.8 million ounces of refined silver have been delivered. Thereafter, the on-going price will increase to 30% of the spot price of gold and silver.

The stream is referenced to the entire Antapaccay concession covering approximately 997 km2. Glencore is considering developing the Coroccohuayco deposit which is located within 10 km of the Antapaccay plant. The project has been rescoped as an open-pit with mine planning reset to the conceptual level. Coroccohuayco hosts M&I Mineral Resources of 559 million tonnes with a copper grade that is approximately 50% higher than the Antapaccay Mineral Reserves. In addition, there are a number of large-scale regional targets and prospects on the Antapaccay concessions.

Franco-Nevada sold 65,901 GEOs from the mine in 2020, compared with 71,521 GEOs in 2019, and in 2021 expects sales from its Antapaccay stream to be between 55,000 and 65,000 GEOs due to planned lower grades based on the life of mine plan. Antapaccay has a planned mine life to 2031 which would be further extended by any development of Coroccohuayco.

ASSET HIGHLIGHTS

  • Provides significant revenue and cash flow
  • Gold and silver deliveries initially referenced to copper in concentrate shipped
  • Potential for Coroccohuayco to extend mine life
  • Significant land package offers a number of large-scale regional targets

2020 2019 2018
Revenue to Franco-Nevada ($ million) $ 118.5 $ 100.4 $ 97.5