Franco-Nevada raises the ante..."Coeur Receives $80 Million from Royalty Transaction with Franco-Nevada Corporation for Future Palmarejo Gold Production"
https://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20090121005399&newsLang=en
"COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Coeur d'Alene Mines Corporation (NYSE:CDE) (TSX:CDM) (ASX:CXC) announced today it has entered into a gold royalty stream transaction with Franco-Nevada Corporation (TSX:FNV) under which Franco-Nevada will purchase 50% of the life of mine gold to be produced by Coeur from its Palmarejo silver and gold mine in Mexico.
"Gold Royalty Stream Financing
"Coeur will receive total proceeds of US$80.0 million consisting of a US$75.0 million upfront cash payment plus a contingent payment of US$5.0 million comprised of special warrants that are each exercisable to purchase one common share of Franco-Nevada for no additional consideration once the mine achieves certain completion tests. In addition to this consideration, Coeur will retain the benefit of the lesser of US$400 (increasing by 1% per annum beginning on the fourth anniversary of the transaction) and the prevailing market price for each ounce of gold delivered to Franco-Nevada. (italics are mine.)
“Coeur is excited to have Franco-Nevada, the leading precious metals royalty company, as a partner in our Palmarejo silver and gold mine," said Dennis E. Wheeler, Chairman, President and CEO of Coeur. "This transaction solidifies Coeur’s liquidity position and provides sufficient capital to complete the construction of the mine and fund continued exploration and development. This major project remains on-budget and on-schedule for start-up this quarter. Once in production, Palmarejo’s low-cost ounces will contribute to an expected 66% increase in 2009 companywide silver production to 20 million ounces and an 85% increase in total 2009 gold production to over 85,000 ounces compared to 2008 levels."
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Couer gets $400 per ounce for the gold they sell to Franco Nevada in the stream. Doubt any other company will go below $400 for such a gold royalty now.
It's one thing to have Silver Wheaton--loaded up with debt, as it is--as a competitor for these royalty stream deals; quite another to have cash laden Franco Nevada in the arena.