Franco-Nevada Corporation (“Franco-Nevada” or the “Company”) (TSX: FNV) (NYSE: FNV) is pleased to announce that it has entered into an agreement to acquire an existing royalty package on the Côté Gold Mine in Ontario from a private third party for total cash consideration of $1,050 million (the “Transaction”). The royalty package consists of a 7.5%1 gross margin royalty (the “Royalty”) on the Côté Gold Mine. The Royalty applies, on a 100% basis, to mineral production from the Chester 1, 2 & 3 claims which cover all of the Mineral Reserves and over 99.9% of current Mineral Resources on the Côté Gold Mine. Royalty deductions include cash operating costs and exclude all capital, exploration, depreciation and other non-cash costs. The Côté Gold Mine is operated through an unincorporated joint venture by IAMGOLD Corporation (“IAMGOLD”) and is owned by IAMGOLD (70%) and Sumitomo Metal Mining Co. Ltd. (“Sumitomo”) (30%). The Côté Gold Mine is one of the newest, large scale, and most modern gold mines to be built in Canada with an already extensive gold Mineral Resource base of more than 16 million ounces of Measured and Indicated Mineral Resources and 4 million ounces of Inferred Mineral Resources. Please refer to the Côté Gold Mine Royalty Acquisition presentation on our website dated May 27, 2025 for additional information.
Franco-Nevada partnered with IAMGOLD and Sumitomo for the acquisition of the Royalty, which exclusively allowed Franco-Nevada access to conduct detailed due diligence. As part of these arrangements, concurrently with closing of the Transaction (anticipated at the end of Q2 2025), the Royalty arrangements will be replaced with a new Royalty agreement with IAMGOLD and Sumitomo, which will be registered on title and, among other things, provide for clarified audit and information rights. The payment calculation methodology of the replacement Royalty is economically unchanged from the acquired Royalty. Further, as part of our partnering with IAMGOLD and Sumitomo, they will be granted an option, exercisable at their discretion, to buy down up to 50% of the Royalty at Franco-Nevada’s attributable cost in two equal tranches of 25%. The cost to repurchase the tranches are as follows: (i) the initial 25% buydown option for an IRR equal to SOFR plus 1.10% (i.e. Franco-Nevada’s cost of borrowing), exercisable within two years of closing, and (ii) the additional 25% buydown option cost for an IRR equal to 10%, following exercise of the initial option, exercisable within three years of closing. The calculation of the IRR for both options takes into account the attributable Royalty payments received up to the repurchase date2.
“We are pleased to add this new cornerstone gold royalty to our extensive portfolio in Ontario,” said Paul Brink, President & CEO of Franco-Nevada. “We appreciate the opportunity to partner with IAMGOLD and Sumitomo and the due diligence access they provided to us. Their team has developed an excellent new operation with an extensive Resource endowment that has high potential to continue expanding. We look forward to their views on Resource growth and future expansions to the mill capacity, expected in late 2026.”
Renaud Adams, President & CEO of IAMGOLD, commented: “We are pleased to welcome our new partner Franco-Nevada to the Côté Gold Mine as we continue to ramp up one of Canada’s largest and longest-life gold mines. The Côté Gold Mine is just at the beginning of its operating life with excellent opportunities being evaluated to further grow the Resource base, improve mining productivity, and optimize and expand mill throughput beyond the initial ramp up. The value upside of the Côté Gold Mine is further supported by the rapidly growing Gosselin zone which we intend to incorporate into an updated mine plan next year that will bring the Côté and Gosselin zones together to outline a Côté Gold Mine of increased scale and scope for generations to come.”
Royalty Highlights
Immediate Gold Cash Flow from Major Canadian Mine: The Royalty will add immediate gold revenues from a major new gold mine in Ontario. Côté Gold Mine commenced commercial production in August 2024 and continues its ramp up. IAMGOLD has provided 2025 guidance for Côté Gold Mine (on a 100% basis) of 360 to 400 koz Au at cash costs of $950/oz to $1,100/oz3 inclusive of the Royalty costs. Implied costs attributable to the Royalty are $770/oz to $930/oz assuming $3,200/oz Au. On a full year basis at IAMGOLD’s midpoint of guidance and at $3,200/oz Au, this implies annual revenue from the Royalty of $67 million ($33.5 million for H2 2025, assuming a July 1, 2025 effective date).
Extensive Mineral Endowment with Exploration Potential: The Côté Gold Mine has a large and rapidly growing Mineral Resource base across the Côté and Gosselin deposits for a total of 16.23 Moz of gold Measured and Indicated Mineral Resources (599.8 Mt at 0.84 g/t Au) and 4.2 Moz of gold Inferred Mineral Resources (184 Mt at 0.70 g/t Au), respectively. The Mineral Resources have grown extensively over time, doubling since the recent addition of Gosselin in 2021. Côté Gold Mine is one of the largest gold Mineral Resources in Canada with excellent potential to convert further Mineral Resources into Mineral Reserves while also growing the overall inventory. The Royalty applies to more than 99.9% of the current Mineral Resource (see map in posted presentation) and includes coverage of the two nearby targets (Clam Lake and Jack Rabbit).
Low-Cost Production from a Modern Operating Gold Mine: Côté Gold Mine is a new, modern operation utilizing a fully autonomous haul truck fleet, autonomous drilling and power efficient HPGR milling capability. Côté Gold Mine is expected to be in the lower half of the cost curve and benefits from low cost, clean hydroelectric power. In Q1 2025, cash costs of $1,260/oz inclusive of the Royalty reflected increased maintenance and repairs associated with the ongoing ramp up. Cash costs are expected to decline through the year as volumes increase and operating processes are refined. In addition, approximately $130/oz of cash costs were attributable to the Royalty in Q1 2025.
Excellent Expansion Potential: The large Mineral Resource base provides excellent potential to expand the milling capacity. In the near term, we expect the mill to ramp-up to nameplate capacity of 13 Mtpa by year end, in concert with the installation of additional crushing capacity to debottleneck the secondary comminution circuit. Longer term, based on our due diligence, Franco-Nevada believes the Côté mill has the potential to be expanded up to 20 Mtpa, which would better align with the current mining capacity of 54 Mtpa and strip ratio of 2:1.
Additional Considerations
The acquisition is expected to close at the end of Q2 2025, with the effective date of the Transaction being the earlier of closing and July 1, 2025, providing Franco-Nevada an economic interest in the Royalty from such date.
Financing the Transaction
Franco-Nevada is well positioned to finance the Transaction from available capital. The Company currently has approximately $2 billion in available capital and continues to generate $275-$300 million in free cash flow each quarter. The Company remains well positioned to continue to add to its portfolio.
Advisors
RBC Capital Markets is acting as financial advisor to the private third-party seller.
