TORONTO, Sept. 7, 2017 /CNW/ - Franco-Nevada is
pleased to announce that its wholly-owned subsidiary, Franco-Nevada
(Barbados) Corporation ("FNB"),
has agreed with First Quantum Minerals Ltd. ("First Quantum") to
terms for an additional precious metals stream from the Cobre
Panama project for a purchase price of US$178 million. FNB may syndicate one-third of
the transaction to a third party and the transaction is subject to
final documentation.1 First Quantum intends to use the
proceeds to partially fund its previously announced acquisition of
an additional 10% interest in Cobre Panama from one of its joint
venture partners, LS Nikko Copper Inc.2
"We are pleased to support our partner and increase our interest
in the Cobre Panama project," said David
Harquail, CEO of Franco-Nevada. "First Quantum has made
tremendous progress de-risking the project and advancing it toward
commissioning in late 2018."
Transaction Highlights
- Growth: Cobre Panama is one of the world's largest
copper-gold-silver-molybdenum porphyry projects. The project
was recently reported to be over 60% complete and is scheduled to
ramp up production beginning in late 2018. First Quantum
anticipates further potential expansions underpinned by the scale
and high quality of the resource.3
- Strong Margins: FNB will initially pay an on-going
price of 20% of the spot price of gold and silver until 302,000
ounces of refined gold and 4.8 million ounces of refined silver
have been delivered. This additional stream will have higher
margins than the existing stream for the current mine plan.
Thereafter, the on-going price will increase to 50% of the
prevailing spot price of gold and silver.
- Purchase Price: The US$178
million purchase price will be paid as a one-time advance
payment upon closing of the transaction which is expected to occur
by the end of September. No additional pro-rata funding will apply
to the additional stream.
- Stream Terms: The terms of the additional stream,
other than the ongoing price, will mirror FNB's existing
stream on Cobre Panama, including initially linking precious metals
deliveries to copper in concentrate shipped for approximately the
first 25 years of production.4
Corporate Summary
Franco-Nevada Corporation is the leading gold-focused royalty
and stream company with the largest and most diversified portfolio
of cash-flow producing assets. Its business model provides
investors with gold price and exploration optionality while
limiting exposure to many of the risks of operating
companies. Franco-Nevada is debt free and uses its free cash
flow to expand its portfolio and pay dividends. It trades
under the symbol FNV on both the Toronto and New
York stock exchanges. Franco-Nevada is the gold
investment that works.
[1] – All figures in this press release,
unless otherwise noted, should be reduced by 33% to determine FNB's
attributable share of the additional stream,
post-syndication. Closing is not subject to the syndication
of the transaction.
[2] – First Quantum announced on September 1, 2017 its agreement to acquire
LS-Nikko Copper's 50% interest in Korea Panama Mining Corporation,
a 50/50 joint venture company with Korea Resources Corporation,
which holds a 20% interest in Minera Panamá S.A., which holds the
concession for Cobre Panama.
[3] – First Quantum's plan is to construct the
Cobre Panama processing plant with an initial capacity of 74 mt per
year expanding to 90 mt per year. First Quantum has reported that
the project is fully permitted, construction is over 60% complete
and phased commissioning is slated for 2018 with ramp up continuing
in 2019. Please refer to First Quantum's public disclosure on
its website and SEDAR for further details on Cobre Panama.
[4] – The following table sets out the
attributable deliveries and thresholds to FNB under the additional
stream post-syndication.
|
|
Delivery period
1
|
Delivery period
2
|
Delivery period
3
|
|
|
|
|
|
Au oz
delivered
|
0 to
67,670
|
67,670 to
143,731
|
>
143,731
|
|
Delivery
terms
|
10.1 oz Au per 1 mm
lbs Cu
|
6.8 oz Au per 1 mm
lbs Cu
|
5.3% of Au in
concentrate
|
|
|
|
|
|
Ag oz
delivered
|
0 to
824,268
|
824,268 to
2,489,971
|
>
2,489,971
|
|
Delivery
terms
|
115.2 oz Ag per 1 mm
lbs Cu
|
148.7 oz Ag per 1 mm
lbs Cu
|
5.2% of Ag in
concentrate
|
Forward Looking Statements
This press release contains "forward looking information" and
"forward looking statements" within the meaning of applicable
Canadian securities laws and the United States Private Securities
Litigation Reform Act of 1995, respectively, which may include, but
are not limited to, statements with respect to future events or
future performance, management's expectations regarding
Franco-Nevada's growth, results of operations, estimated future
revenues, carrying value of assets, future dividends and
requirements for additional capital, mineral reserve and mineral
resource estimates, production estimates, production costs and
revenue, future demand for and prices of commodities, expected
mining sequences, business prospects and opportunities and the
acquisition of the additional Cobre Panama stream and its expected
impact on future performance and results of operations. In
addition, statements (including data in tables) relating to
reserves and resources and gold equivalent ounces ("GEOs") are
forward looking statements, as they involve implied assessment,
based on certain estimates and assumptions, and no assurance can be
given that the estimates and assumptions are accurate and that such
reserves and resources and GEOs will be realized. Such forward
looking statements reflect management's current beliefs and are
based on information currently available to management. Often, but
not always, forward looking statements can be identified by the use
of words such as "plans", "expects", "is expected", "budgets",
"scheduled", "estimates", "forecasts", "predicts", "projects",
"intends", "targets", "aims", "anticipates" or "believes" or
variations (including negative variations) of such words and
phrases or may be identified by statements to the effect that
certain actions "may", "could", "should", "would", "might" or
"will" be taken, occur or be achieved. Forward looking statements
involve known and unknown risks, uncertainties and other factors,
which may cause the actual results, performance or achievements of
Franco-Nevada to be materially different from any future results,
performance or achievements expressed or implied by the forward
looking statements. A number of factors could cause actual events
or results to differ materially from any forward looking statement,
including, without limitation: fluctuations in the prices of the
primary commodities that drive royalty and stream revenue (gold,
platinum group metals, copper, nickel, uranium, silver, iron-ore
and oil and gas); fluctuations in the value of the Canadian and
Australian dollar, Mexican peso, and any other currency in which
revenue is generated, relative to the U.S. dollar; changes in
national and local government legislation, including permitting and
licensing regimes and taxation policies and the enforcement
thereof; regulatory, political or economic developments in any of
the countries where properties in which Franco-Nevada holds a
royalty, stream or other interest are located or through which they
are held; risks related to the operators of the properties in which
Franco-Nevada holds a royalty, stream or other interest, including
changes in the ownership and control of such operators; influence
of macroeconomic developments; business opportunities that become
available to, or are pursued by Franco-Nevada; reduced access to
debt and equity capital; litigation; title, permit or license
disputes related to interests on any of the properties in which
Franco-Nevada holds a royalty, stream or other interest; whether or
not Franco-Nevada is determined to have "passive foreign investment
company" ("PFIC") status as defined in Section 1297 of the United
States Internal Revenue Code of 1986, as amended; potential changes
in Canadian tax treatment of offshore streams; excessive cost
escalation as well as development, permitting, infrastructure,
operating or technical difficulties on any of the properties in
which Franco-Nevada holds a royalty, stream or other interest;
actual mineral content may differ from the reserves and resources
contained in technical reports; rate and timing of production
differences from resource estimates, other technical reports and
mine plans; risks and hazards associated with the business of
development and mining on any of the properties in which
Franco-Nevada holds a royalty, stream or other interest, including,
but not limited to unusual or unexpected geological and
metallurgical conditions, slope failures or cave-ins, flooding and
other natural disasters, terrorism, civil unrest or an outbreak of
contagious disease; and the integration of acquired assets. The
forward looking statements contained in this press release are
based upon assumptions management believes to be reasonable,
including, without limitation: the ongoing operation of the
properties in which Franco-Nevada holds a royalty, stream or other
interest by the owners or operators of such properties in a manner
consistent with past practice; the accuracy of public statements
and disclosures made by the owners or operators of such underlying
properties; no material adverse change in the market price of the
commodities that underlie the asset portfolio; Franco-Nevada's
ongoing income and assets relating to determination of its PFIC
status; no material changes to existing tax treatment; no adverse
development in respect of any significant property in which
Franco-Nevada holds a royalty, stream or other interest; the
accuracy of publicly disclosed expectations for the development of
underlying properties that are not yet in production; integration
of acquired assets; risks related to the additional Cobre Panama
stream and its completion; and the absence of any other factors
that could cause actions, events or results to differ from those
anticipated, estimated or intended. However, there can be no
assurance that forward looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Investors are
cautioned that forward looking statements are not guarantees of
future performance. Franco-Nevada
cannot assure investors that actual results will be consistent with
these forward looking statements and investors should not place
undue reliance on forward looking statements due to the inherent
uncertainty therein. For additional information with respect to
risks, uncertainties and assumptions, please refer to the "Risk
Factors" section of Franco-Nevada's most recent Annual Information
Form filed with the Canadian securities regulatory authorities on
www.sedar.com and Franco-Nevada's most recent Annual Report filed
on Form 40-F filed with the SEC on www.sec.gov. The forward looking
statements herein are made as of the date of this press release
only and Franco-Nevada does not assume any obligation to update or
revise them to reflect new information, estimates or opinions,
future events or results or otherwise, except as required by
applicable law.
SOURCE Franco-Nevada Corporation