Franco-Nevada Corporation (TSX: FNV) (NYSE: FNV) is pleased to announce that its wholly-owned subsidiary, Franco-Nevada (Barbados) Corporation has entered into a precious metals stream (with reference to specific production from Sibanye-Stillwater Limited’s  Marikana, Rustenburg and Kroondal mining operations located on the Western Limb of the Bushveld Complex in South Africa. The Stream is primarily comprised of a gold component for the life of mine and a platinum component for approximately 25 years supporting a more stable gold equivalent ounce delivery profile to FNB over this period.

“We are excited to partner with Sibanye-Stillwater and gain exposure to production from this fully integrated, long life, platinum group metal complex,” said Paul Brink, President & CEO of Franco-Nevada. “The Bushveld complex represents a unique and essential source of PGMs, with Sibanye-Stillwater’s Western Limb operations currently providing approximately 15% of global platinum supply. The combination of extensive resources, established infrastructure, and a large pipeline of extension projects, operated by a leading global PGM producer, makes for a high-quality stream with very long-life potential. This immediately cash flowing transaction, along with our recent Cascabel and Yanacocha deals, provide both meaningful medium and long-term growth.”

Neal Froneman, CEO of Sibanye-Stillwater said, “We are pleased to have concluded this US$500 million (R8.8bn) Stream with Franco-Nevada which unlocks further value from our SA PGM operations, a core part of our business, bolstering our balance sheet. By primarily streaming gold, which is a single component of the diverse production mix at our SA PGM operations, we retain significant leverage to higher PGM prices, which we anticipate.  The support from Franco-Nevada underscores the quality and long-term viability of our PGM assets. We welcome this opportunity to continue to build our relationship with Franco-Nevada.”

Transaction Highlights:

•  Immediate Precious Metals Growth: The Stream will deliver immediate cash flow from a diversified production base in South Africa, a seasoned mining jurisdiction. The Stream is expected to generate a stable GEO profile over the next 20 years based off the platinum, palladium, rhodium and gold production profile shown in the chart below. This profile is based on Sibanye-Stillwater’s board-approved ore reserve LOM as at December 31, 2023 for its existing operations and includes certain pre-feasibility and feasibility stage projects being studied, which leverage existing infrastructure. The Stream GEO profile is comprised of approximately 70% gold and 30% platinum deliveries¹ at consensus commodity prices with a 45+ year LOM.
•  Proven Operator and Significant Invested Capital in an Integrated Complex: Sibanye-Stillwater’s Western Limb operations benefit from extensive existing infrastructure consolidated through the merger of three prior operators, which has unlocked numerous synergies. The complex is expected to operate at the lower half of the PGM cost curve². These operations consist of the Marikana, Rustenburg, and Kroondal operations and a total of 13 underground mines. The mines are supported by Sibanye-Stillwater’s concentrators and smelter and refining complex. Sibanye-Stillwater is a leader in South African mine safety and has committed to continuous safety improvements. The operations have strong relationships with their Black Economic Empowerment partners and local communities.
•  Long Reserve Lives with Extensive Resources: The Stream is referenced to production from the Stream Area, which extends over 500 km² of Sibanye-Stillwater’s Western Limb operations in South Africa. The Stream Area assets have a mine life up to 2070 including ore Reserves and Replacement Projects, based on current projections. Sibanye-Stillwater has the potential to sustain higher production levels for longer, with 4E PGM Measured and Indicated Resources of 182 Moz inclusive of the 34 Moz of 4E PGM Reserves³, providing extensive long-term optionality.
•  Operations Benefit from a Unique and Diversified Basket of Metals: Sibanye-Stillwater’s Western Limb operations currently produce approximately 15% of the world’s platinum supply⁴. In addition, they produce palladium, rhodium and gold as primary 4E PGM components and a significant amount of chrome and other by-products, including approximately 28% of current global iridium and ruthenium supply⁴. The latter are both important to data storage and chip manufacturing and with platinum to a potential future hydrogen economy. By-products provide a more diversified basket price to the operations compared to many other global PGM producers. By-products contributed approximately 18% of Sibanye-Stillwater’s SA PGM revenue basket in H1 2024 with potential to expand this component of the business.
•  Gold Deliveries linked to PGM Production: For approximately the first 25 years⁵, gold deliveries are linked to the volume of 4E PGM ounces produced. This reference to the overall production of these key metals helps ensure that gold deliveries are aligned with Sibanye-Stillwater’s PGM production, mitigating variations in gold grade between deposits.

Key Transaction Terms:

Gold Stream Parameters

• Stream deliveries to FNB are based on production from the Steam Area, according to the following schedule:
  • Gold ounces equal to 1.1% of 4E PGM ounces contained in concentrate until delivery of 87.5 koz of gold, then
  • Gold ounces equal to 0.75% of 4E PGM ounces contained in concentrate until total delivery of 237 koz of gold, then
  • 80% of gold contained in concentrate for the remaining LOM.

Platinum Stream Parameters     

• Stream deliveries to FNB are based on platinum production from the Stream Area, according to the following schedule:
  • 1.0% of platinum contained in concentrate until the delivery of 48 koz of platinum, then
  • Step-up to 2.1% of platinum contained in concentrate until total delivery of 294 koz of platinum, then
  • No further platinum deliveries.

Additional Considerations

• Effective start date of the Stream is September 1, 2024 with funding of the $500 million deposit anticipated in the next few weeks and first delivery approximately 45 days after closing of the transaction
• Gold and platinum ounces delivered will be subject to an ongoing payment of 5% of spot prices respectively to Sibanye-Stillwater. In the case of gold, the ongoing payment will increase to 10% following completion of the 4E PGM link (after the delivery of 237 koz of gold to FNB)⁶
• Deliveries will be based on production from the mining operations from the Stream Area and exclude surface tailings retreatment, except in certain circumstances
• Corporate guarantees will be provided to FNB by Sibanye-Stillwater and the Marikana, Rustenburg and Kroondal operations’ operating companies, amongst others
• FNB will maintain a right of first refusal on future streams and royalties related to the Stream Area
• The transaction is subject to customary closing conditions, including the approval from the South African Reserve Bank

Medium-Term Production Profile

Figure 1.: Sibanye-Stillwater’s Western Limb Production (Metal in Concentrate) details a 20-year production profile from Sibanye-Stillwater’s Western Limb PGM operations based on reserve LOM declared at the end of 2023 and in addition, includes the Replacement Projects (including the Kroondal depth extension projects, E3, E4, and Saffy projects)⁷. Sibanye-Stillwater’s total reserve LOM plan based on 34 Moz of 4E PGM Mineral Reserves (100% basis) extends production beyond this period to 2070 at a reduced rate due to its long life K4 project at the Marikana operation.

Sibanye-Stillwater’s Western Limb Production (Metal in Concentrate)

Pandora Royalty

Franco-Nevada and Sibanye-Stillwater have agreed to convert the 5% net profit interest that Franco-Nevada holds on the Pandora property to a 1% net smelter return royalty. Sibanye-Stillwater’s Pandora property forms a portion of its Marikana operations and includes the currently operating E3 decline. Three of the Replacement Projects being studied fall on a portion of the Pandora royalty ground.

Financing the Transactions

Franco-Nevada intends to finance the Stream from cash on hand, with approximately $1.3 billion in cash and cash equivalents and $2.3 billion in available capital as at September 30, 2024.

Franco-Nevada Corporate Summary

Franco-Nevada Corporation is the leading gold-focused royalty and streaming company with the most diversified portfolio of cash-flow producing assets. Its business model provides investors with gold price and exploration optionality while limiting exposure to cost inflation. Franco-Nevada is debt-free and uses its free cash flow to expand its portfolio and pay dividends. It trades under the symbol FNV on both the Toronto and New York stock exchanges.

About Sibanye-Stillwater

Sibanye-Stillwater is a multinational mining and metals processing group with a diverse portfolio of operations, projects and investments across five continents. The Group is also one of the foremost global recyclers of PGM autocatalysts and has interests in leading mine tailings retreatment operations.

Sibanye-Stillwater is one of the world’s largest primary producers of platinum, palladium, and rhodium and is a top tier gold producer. It also produces and refines iridium, ruthenium, nickel, chrome, copper and cobalt. The Group has recently begun to diversify its asset portfolio into battery metals mining and processing and increase its presence in the circular economy by growing its recycling and tailings reprocessing exposure globally. For more information refer to www.sibanyestillwater.com.

Sibanye-Stillwater Mineral Resources and Mineral Reserves

Sibanye-Stillwater’s Mineral Resources and Mineral Reserves are estimates at a particular date (as at December 31, 2023), and are affected by fluctuations in mineral prices, the exchange rates, operating costs, mining permits, changes in legislation and operating factors. Sibanye-Stillwater reports its Mineral Resources and Mineral Reserves in accordance with the rules and regulations promulgated by each of the United States Securities and Exchange Commission (SEC) and the JSE at all managed operations, development, and exploration properties.

Additional Information

Information relating to the Sibanye-Stillwater PGM assets contained in this news release has been provided by Sibanye-Stillwater.

Scientific and technical information included in this news release has been reviewed by Gregory Snow, P Eng, Senior Manager, Geology of Franco-Nevada, a non-independent qualified person under National Instrument 43-101.

Figure 1. (CNW Group/Franco-Nevada Corporation)