Franco-Nevada has acquired an existing 1.8% net smelter return (NSR) royalty on all minerals across Newmont’s Yanacocha gold mine and adjacent mineral properties in Peru from precious metals mining firm Compañia de Minas Buenaventura (Buenaventura).
According to the terms of the definitive agreement, the gold-focused royalty and streaming company will pay $210m to Buenaventura in cash upon closing.
The consideration for the NSR royalty also includes a contingent payment of $15m in Franco-Nevada common shares, equivalent to 118,534 shares.
Buenaventura CEO Leandro Garcia said: “This transaction enables Buenaventura to strengthen its financial position, with sale proceeds also directed towards driving further growth, led by progress on our San Gabriel project.
“Buenaventura’s San Gabriel project achieved 57% overall progress towards completion by the second quarter’s end, meeting our planned targets. We remain on track to reach our goal of producing our first gold bar by the second half of 2025.”
The NSR royalty includes the Yanacocha Sulfides copper-gold project and the Conga copper-gold porphyry. The Yanacocha Sulfides project is expected to produce over 500,000 ounces of gold equivalent per year during the first five years.
Newmont has deferred the decision to develop the Yanacocha Sulfides project until at least 2025 as the company consolidates its acquisition of Newcrest Mining. The Yanacocha Sulfides project is also expected to have an extended mine plan beyond 2040.
The Conga project, which is primarily owned by Newmont through its subsidiary Minera Yanacocha, has indicated resources of 14.6 million ounces of gold and four billion pounds of copper.
Additionally, the royalty covers a land package of over 750km2 that has produced more than 40 million ounces of gold and holds numerous additional targets and potential for mine life extensions.
The Yanacocha gold project is currently producing from the open pit oxides. Newmont’s guidance for the Peruvian gold mine is to produce 290,000 ounces of gold this year.
Franco-Nevada will pay Buenaventura the contingent payment once the Conga project achieves commercial production for a full year before the twentieth anniversary of the closing date.
Franco-Nevada president and CEO Paul Brink said: “We are pleased to partner with Buenaventura to acquire this existing Royalty which adds immediately cash flowing gold production and growth from a leading gold operator.
“Yanacocha has been one of the largest gold mines globally and the district covered by the Royalty remains highly prospective with over 47 Moz AuEq in total reserves and resources.
“The Royalty covers current oxide production, the planned sulphide project and high-quality growth projects, including Conga, which together have the potential to add decades of contributions to Franco-Nevada.”
