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Franco-Nevada

South Arturo (Au)

SouthArturo-Panoramic

LOCATION: Nevada, United States
OPERATOR: Nevada Gold Mines LLC / 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 Nevada Gold Mines (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 the type of ore (oxide versus non-oxide), as well as the grade (for oxide only). Franco-Nevada estimates a 4% royalty rate for the oxide mineralization and a 6% royalty rate for the non-oxide. The royalty agreement includes an annual minimum which is credited against any future production royalty payments.

Commercial production at South Arturo’s El Nino mine was declared at the end of Q3 2019, more than three months ahead of schedule. Ore tons mined during the fourth quarter of 2019 were considerably above plan. The operation is located in close proximity to Nevada Gold Mines’ Goldstrike where the ore is processed at the refractory facilities. On a 100% basis, the mine produced 18,815 ounces in 2019 versus 52,450 ounces produced in 2018. 2019 production was lower than 2018 due to the development of the Phase 1 open-pit and the El Nino underground. On July 1, 2019, Barrick (61.5%) and Newmont (38.5%) combined their significant assets across Nevada to create Nevada Gold Mines as a joint venture. Under this joint venture, Barrick’s 60% share of South Arturo is now reported under the Carlin operations category.

Production at South Arturo will come from two areas of the property: the El Nino underground, which is currently producing, and the Phase 1 open-pit. The Phase 1 open-pit is currently being stripped with heap leach options being evaluated. Based on the March 2018 technical report published by Premier, starting in 2018 El Nino and Phase 1 are expected to be active over a 7 year period and produce approximately 550,000 ounces of gold with two strong production years of approximately 170,000 ounces each in 2021 and 2022. There is ongoing work being conducted to advance additional mining opportunities, which includes the potential Phase 3 pit.

ASSET HIGHLIGHTS

  • Commercial production declared at El Nino
  • Additional future potential at the Phase 3 open-pit

2019 2018 2017
Revenue to Franco-Nevada ($ million) $ 1.8 $ 4.1 $ 10.7

SouthArturo