VANCOUVER — Depressed base metal prices have created a strong deal-making environment for precious-metal streaming companies, and industry leader Franco-Nevada (TSX: FNV; NYSE: FNV) is ready to take advantage. On Feb. 10 the company unveiled its latest transaction, wherein it will pay US$500 million for a silver-gold stream from Glencore’s (LON: GLEN) large-scale Antapaccay copper mine in Peru’s Cusco Region.
Under terms of the deal Franco’s initial silver and gold deliveries will be determined by reference to copper shipments. The company will receive 300,000 oz. gold for every 1,000 tonnes of copper in concentrate, and 30% of gold in concentrate after 630,000 oz. have been delivered.
In terms of silver, Franco will receive 4,700 oz. for every 1,000 tonnes of copper in concentrate, and 30% of silver in concentrate after 10 million oz. have been delivered.
Franco will continue to make payments — through its Barbados-based subsidiary — totaling 20% of spot gold and silver prices until 750,000 oz. gold and 12.8 million oz. silver have been received, and 20% or spot prices thereafter.
“We are currently in what I call an opportunity-rich environment,” president and CEO David Harquail commented during a conference call. “This deal highlights the quality of these investment opportunities, and demonstrates that they go well beyond the gold industry.”
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