Franco-Nevada Acquires Silver from Teck's Antamina Mine
08 October 2015 - 4:30AM
Dow Jones News
Franco-Nevada Corp. said Wednesday it had agreed to buy a
portion of silver production from Teck Resources Ltd.'s Antamina
copper and zinc mine in Peru for $610 million.
The arrangement comes as mining companies grapple with low metal
prices and fears of a slowdown in China, leading many to implement
cost-cutting measures and work to strengthen their balance sheets,
including by way of streaming deals.
Vancouver-based Teck's deal with Franco-Nevada follows a similar
arrangement in July in which Teck sold a gold stream on the Carmen
de Andacollo mine in Chile to Royal Gold Inc. for $525 million. In
August, gold-mining giant Barrick Gold Corp. also reached a deal to
supply Royal Gold with gold and silver from a Dominican Republic
mine.
Teck had said last month it would consider possible streaming
options for the silver byproduct at some of its mines to raise
additional funds.
Toronto-based Franco-Nevada, which invests in mines, will pay
Teck a one-time, advance payment of $610 million on closing of the
deal and an additional 5% of the spot silver price for each ounce
of delivered silver. The first delivery is expected in the final
quarter of 2015.
Antamina is a joint venture between Teck, BHP Billiton PLC,
Glencore PLC and Mitsubishi Corp. Franco-Nevada's silver will come
from Teck's 22.5% stake in the operation.
The stream will reduce by one-third after 86 million ounces have
been delivered, estimated at current throughput to be about 30
years. The mine has reserves of 647 million metric tons—including
copper, zinc and silver––and is located about 170 miles northeast
of Lima.
Last year, Antamina produced about 345,000 metric tons of
copper, 211,000 metric tons of zinc, 3.1 million pounds of
molybdenum and 12 million ounces of silver.
On Tuesday, Franco-Nevada finalized a separate $1 billion
precious-metal stream agreement with First Quantum Minerals Ltd.
for the Cobre Panama mining project in Panama.
Following the funding of the Antamina transaction and the Cobre
Panama agreement, Franco-Nevada said it would have liquidity of
about $800 million between cash and its expanded credit line.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com and Judy
McKinnon at judy.mckinnon@wsj.com
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(END) Dow Jones Newswires
October 07, 2015 13:15 ET (17:15 GMT)
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