#Canada #Toronto #Franco-Nevada #Côté Gold #IAMGOLD

Franco-Nevada Expands Gold Portfolio with the Acquisition of Côté Gold Mine Royalty

Toronto, Canada — In a significant move for its investment strategy, Franco-Nevada Corporation has announced the acquisition of a cash-flowing royalty associated with the Côté Gold Mine located in Ontario, from a private third party. This strategic acquisition, valued at approximately $1.05 billion, embraces a 7.5% gross margin royalty on the mine's production. This deal not only strengthens Franco-Nevada's position in the gold market but also promises to deliver immediate cash flow as Côté Gold Mine ramps up its operations.

Overview of the Acquisition

The purchase agreement includes a comprehensive royalty package applicable to a vast majority of the mine’s mineral resources. Franco-Nevada specified that the royalty would align with production from Chester 1, 2, and 3 claims, covering more than 99.9% of the mine's current resources. As per the agreement, the Royalty will be recalibrated with a new contract with IAMGOLD Corporation and Sumitomo Metal Mining Co. Ltd., who operate the mine. These new arrangements will ensure Franco-Nevada continues to maintain clarity in audit and information rights while retaining the economic structure of the original Royalty.

Paul Brink, President and CEO of Franco-Nevada, expressed enthusiasm regarding the acquisition, citing IAMGOLD and Sumitomo's excellent operation of the Côté mine, along with its robust resource base that anticipates continuous growth.

Côté Gold Mine: A Jewel in the Canadian Mining Landscape

The Côté Gold Mine, marked as one of Canada's newest large-scale gold mining operations, commenced commercial production in August 2024. It boasts an estimated resource base of over 16 million ounces of measured and indicated gold resources. This mine operates under an unincorporated joint venture primarily between IAMGOLD (70% ownership) and Sumitomo (30%). The mine not only has undergone substantial capital investments to establish its modern capabilities but indicates further potential for resource growth and mill capacity expansion.

Financial Implications of the Acquisition

As IAMGOLD provided guidance for Côté's production in 2025, with estimates ranging from 360,000 to 400,000 ounces of gold, Franco-Nevada's acquisition will yield an expected annual income of about $67 million, projecting within the framework of current gold prices. The acquisition positions Franco-Nevada to leverage the rising gold market while directly benefiting from ongoing operations as the mine scales up. The costs associated with the Royalty will remain competitive, ensuring a solid return for the company.

Potential for Expansion and Growth

With an operating strategy emphasizing low-cost production, Côté Gold Mine is outfitted with technology-driven operations, including an autonomous haul truck fleet, ensuring enhanced efficiency. Franco-Nevada’s acquisition opens doors to bolster expansion aspirations of mill capacity from its current 13 million tons per annum toward a potential 20 million tons per annum. This ambitious objective aligns with increased mining capabilities and the stipulations in the previously established partnerships.

Looking Forward

While Franco-Nevada is poised to finance the acquisition with its substantial available capital, the move is anticipated to close by the end of the second quarter of 2025. This strategic foothold in the Côté Gold Mine signifies Franco-Nevada’s continued commitment to expanding its portfolio in a rapidly evolving gold market. With IAMGOLD and Sumitomo's proven operational competence and Franco-Nevada's financial backing, the future appears bright for this partnership in one of Canada’s most promising gold mining endeavors.

In conclusion, this acquisition not only reinforces Franco-Nevada's competitive edge but also sets the stage for potentially lucrative returns as the world’s demand for gold continues to rise. The Côté Gold Mine's strategic importance in Franco-Nevada’s portfolio highlights the growing synergy within the Canadian mining landscape, promising a future rich in opportunity.