#Canada #Toronto #Franco-Nevada #Arthur Gold Project #AngloGold

Franco-Nevada Acquires 1.0% NSR Royalty on Arthur Gold Project

Franco-Nevada Corporation has recently made headlines with its significant acquisition of a net smelter return (NSR) royalty associated with AngloGold Ashanti plc's Arthur Gold Project. This transaction sees Franco-Nevada's wholly-owned subsidiary securing a 1.0% NSR royalty for a total cash consideration of $250 million, alongside a contingent payment of $25 million, subject to specific conditions relating to ongoing arbitration.

Details of the Acquisition

The Arthur Gold Project, known previously as the Expanded Silicon Project, represents one of the most promising gold discoveries in the United States. This project has seen continual growth in its mineral resources since its discovery in 2018, with a remarkable 20% year-over-year increase in resources. Current estimates reveal that the project hosts 3.4 million ounces of indicated mineral resources and 12.9 million ounces of inferred mineral resources. Paul Brink, President and CEO of Franco-Nevada, expressed enthusiasm about acquiring the royalty, highlighting AngloGold’s operational capabilities that have successfully expanded the resources at this promising site.

Strategic Significance

The royalty acquisition not only strengthens Franco-Nevada's existing portfolio of royalties in Nevada but also positions the company well for future growth as AngloGold makes advancements in its project. The coverage of the royalty encompasses a substantial land area within the Beatty District of Nevada and covers most of the existing mineral resources for the Arthur Gold Project, including both the Merlin and Silicon deposits. The deal is structured to promote long-term cash flow stability for Franco-Nevada as production ramps up.

Additionally, the ongoing arbitration deserves attention as it will potentially broaden the royalty footprint, increasing the area beyond the base area of interest, thus enhancing Franco-Nevada's exposure to this rich and expansive land package.

Impressive Exploration Potential

Notably, the Arthur Gold Project garners recognition not just for its current resource base but also for its significant exploration potential. AngloGold has been proactive in its drilling efforts, completing an impressive 430 kilometers of drilling by year-end 2024, which is pivotal to the project's advancement. The focus will now shift toward advancing a Preliminary Feasibility Study (PFS), set for completion by late 2025 or early 2026, which aims to outline various operational strategies, including both heap leaching and milling processes to optimize production.

Financial Aspects and Future Outlook

The financial structure of the transaction is compelling as it was funded using cash reserves, alongside a $175 million draw from Franco-Nevada’s considerable corporate credit facility. Such moves underscore the company’s financial prudence and readiness to leverage favorable opportunities in the market. Furthermore, Altius Minerals Corporation retains a 0.5% NSR royalty, with Franco-Nevada holding specific pre-emptive rights for any future sale.

This acquisition marks a notable milestone for Franco-Nevada, placing the company in an advantageous position within Nevada's bustling gold sector. As the project progresses and additional favorable outcomes from the arbitration unfold, Franco-Nevada is likely to solidify its standing as a leading player in gold-focused investments.

In summary, the acquisition of the 1% NSR royalty on the Arthur Gold Project signifies not only Franco-Nevada's commitment to expanding its gold portfolio but also reflects the promising outlook predicated on ongoing mineral discoveries and strategic operational enhancements. This move illustrates the company's adeptness at capitalizing on valuable mineral assets while minimizing risks associated with fluctuating gold prices.