Franco-Nevada to Acquire Gold and Silver Stream From Lundin for $648 Million

Franco-Nevada (TSX:FNV,NYSE:FNV) announced it has agreed to purchase a gold and silver stream on production from Lundin Mining for $648 million and has agreed to subscribe for up to $50 million in Lundin’s planned subscription receipts. The streams in question are from the Candelaria and Ojos del Salado mines located in Chile.

According to the press release:

[Franco-Nevada] today announced that it has agreed to acquire a gold & silver stream on production from the Candelaria and Ojos del Salado mines (collectively “Candelaria”) located in Chile from Lundin Mining Corporation (“Lundin”) upon the completion of the acquisition of Candelaria by Lundin from Freeport-McMoRan Inc. (“Freeport”). Candelaria is currently owned 80% by Freeport and 20% by Sumitomo Corporation and Sumitomo Metal Mining Co., Ltd. (collectively “Sumitomo”). Lundin announced today that it has agreed to acquire Freeport’s 80% interest in Candelaria for US$1.8 billion and Sumitomo will continue as a 20% partner. Franco-Nevada will provide an up-front deposit of US$648 million to acquire a gold & silver stream and Franco-Nevada has agreed to subscribe for up to C$50 million in Lundin’s planned subscription receipts financing.

David Harquail, President and CEO of Franco-Nevada, said:

Franco-Nevada is pleased to partner with Lundin to support this major step in its growth. Today’s announcement is a good example of how royalty and stream financing can work in parallel with more traditional debt and equity financing sources to help an operating company execute a major acquisition. For Franco-Nevada, this will be a new cornerstone asset defined by substantial cash flow, upside potential and attractive geography.

Click here to read the Franco-Nevada Corporation (TSX:FNV,NYSE:FNV) press release