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Franco-Nevada

South Arturo (Au)

SouthArturo-Panoramic

LOCATION: Nevada, United States
OPERATOR: Barrick Gold / Premier Gold Mines Limited
ROYALTY: GR: 4-9% with AMR

The South Arturo project consists of a series of sediment hosted Carlin-style gold deposits adjacent to and including the former Dee gold mine, 60 km northwest of Elko, Nevada. The project is operated by a joint venture between Barrick (60%) and Premier Gold Mines Limited (“Premier”) (40%). Premier purchased its interest in the property in 2015 from Goldcorp. Franco-Nevada holds a sliding scale gross royalty (4-9%) on production from the Dee claims. The royalty rate depends on type of ore (oxide versus non-oxide) as well as the grade (just for the oxide). Franco-Nevada estimates a 4% royalty rate for the oxide mineralization and 6% for the non-oxide. The royalty agreement includes an annual minimum which is credited against any future production royalty payments.

The South Arturo mine achieved commercial production in August 2016. The operation is located in close proximity to Barrick’s Goldstrike where the ore is processed at the refractory facilities. The mine produced 52,450 ounces in 2018 versus 142,810 ounces produced in 2017. 2018 production was significantly higher than the expected production of 12,500-25,000 ounces. 2018 production was down significantly year-over-year as the joint venture had previously completed mining of the Phase 2 pit and began processing stockpiled ore.

Future production at South Arturo will come from two additional developments underway at the property. Both the Phase 1 open pit and the El Nino underground mine are under construction with production expected to ramp up late in the second half of 2019 at the El Nino underground. The Phase 1 open-pit is currently stockpiling heap leach material for potential future processing with a construction of a heap leaching facility possible in 2020 if approved. Premier forecasts pre-commercial production of 12,500-25,000 ounces of gold in 2019 with commercial production expected to begin in 2020. Based on the March 2018 technical report published by Premier, El Nino and Phase 1 are expected to actively mine over a 7 year period and produce approximately 550,000 ounces of gold with two strong production years of approximately 170,000 ounces each. There is ongoing work being conducted to advance additional mining opportunities which includes the potential Phase 3 pit.

ASSET HIGHLIGHTS:

  • Phase 1 open pit and El Nino underground currently in construction
  • Additional future potential at the Phase 3 open pit

2018 2017 2016
Revenue to Franco-Nevada ($ million) $ 4.1 $ 10.7 $ 13.8

SouthArturo