First Quantum sells another precious metals stream on Cobre Panama

VANCOUVER (miningweekly.com) – Canadian precious metals streaming firm Franco-Nevada has added another gold/silver stream on First Quantum’s massive $5.5-billion Cobre Panama project, in Panama.

First Quantum intends to use the proceeds to partially fund its acquisition of a further 10% interest in Cobre Panama from one of its joint venture partners, LS Nikko Copper.

Toronto-based Franco-Nevada has agreed to pay $178-million as an upfront advance payment upon closing of the transaction, which is expected to occur by the end of September.

In return, it will pay an on-going price of 20% of the spot price of gold and silver until 302 000 oz of refined gold and 4.8-million ounces of refined silver have been delivered. Thereafter, the on-going price will increase to 50% of the prevailing spot price of gold and silver.

The terms of the additional stream, other than the on-going price, will mirror Franco-Nevada’s existing stream on Cobre Panama, including initially linking precious metals deliveries to copper in concentrate shipped for about the first 25 years of production. However, this additional stream will have higher margins than the existing stream for the current mine plan.

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 starting in late 2018. First Quantum expects further potential expansions, underpinned by the scale and high quality of the resource.

Franco-Nevada stated that it might syndicate one-third of the transaction to a third party and the transaction is subject to final documentation.

First Quantum recently reported that the process to put in place project financing for the Cobre Panama project continues. Market sounding of banks and export credit agencies was recently undertaken, with the total funding process completion targeted for the end of 2017.