Franco-Nevada and First Quantum Minerals Announce US$178 Million Precious Metals Streams Agreement for Cobre Panama Project

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.