Franco-Nevada, a leading royalty and streaming company, announced it has acquired the 1.8% net smelter return (NSR) royalty on Newmont’s Yanacocha gold mine in Peru for $210 million. The royalty, previously owned by Peruvian mining company Buenaventura, covers all minerals produced at the Yanacocha mine and adjacent mineral properties. The deal, finalized post-market on Tuesday, also includes a contingent payment of $15 million in Franco-Nevada shares, contingent upon specific conditions being met. Additionally, Franco-Nevada has secured a right of first refusal on any future sales of Buenaventura’s royalty interests.
This acquisition represents a significant addition to Franco-Nevada’s portfolio, which already includes various royalties and streaming agreements across the globe. Paul Brink, Franco-Nevada’s chief executive, highlighted the strategic value of this purchase, noting the immense potential of the Yanacocha district. “Yanacocha has been one of the largest gold mines globally, and the district covered by the royalty remains highly prospective with over 47 million ounces of gold equivalent in total reserves and resources,” Brink said in a statement.
The Yanacocha gold mine, located in the Peruvian province of Cajamarca, is currently South America’s largest gold-producing operation. Newmont, the operator and owner of the mine, expects Yanacocha to produce 290,000 ounces of gold this year. With Franco-Nevada’s acquisition, the company stands to benefit immediately from the mine’s ongoing gold production.
In addition to the gold production, the acquired royalty also covers the Yanacocha copper-gold sulfides project. This project holds significant reserves, including 1.2 million tonnes of copper and 7.2 million ounces of gold, within the current oxide operations’ footprint. As Yanacocha transitions from open-pit oxide production to sulfide mining, these reserves will become increasingly important for the mine’s future output.
Newmont’s Yanacocha mine has been a cornerstone of the company’s operations in South America for decades. The mine sits at altitudes between 3,500 and 4,100 meters above sea level, making it one of the highest gold mines in the world. The mine has produced over 38 million ounces of gold since it began operations in the 1990s. However, as the oxide resources near depletion, Newmont has been preparing to transition to sulfide mining to extend the mine’s life.
Earlier this year, Newmont delayed its decision on the $2 billion “Yanacocha Sulfides” project until next year. This project is crucial for extending the mine’s life beyond 2040, as it will focus on developing the Yanacocha Verde and Chaquicocha deposits. These deposits are expected to produce more than 500,000 ounces of gold equivalent per year during the first five years of operation. The project will involve transitioning from open-pit mining to underground mining, which presents both challenges and opportunities for Newmont and its stakeholders.
The Yanacocha Sulfides project is divided into multiple phases. The first phase involves the development of the Yanacocha Verde and Chaquicocha deposits, which will allow operations to continue beyond 2040. The second and third phases, according to Newmont’s plans, have the potential to extend the mine’s life for “multiple decades.” This extended timeline makes the royalty acquired by Franco-Nevada particularly valuable, as it will continue to generate returns for the company well into the future.
