Franco-Nevada (TSX: T.FNV, Stock Forum) Monday announced it will spend $1 billion for 86% of future purchases of gold and silver from Inmet Mining (TSX: T.IMN, Stock Forum)’s Cobre copper project in Panama. Inmet owns an 80% stake in the project, which is expected to begin production in 2015.
Franco-Nevada’s investment equates to $400 per ounce for gold and $6 per ounce for silver for the first 1,341,000 ounces of gold and 21,510,000 ounces of silver for approximately the first 20 years of expected deliveries.
The total cost of Cobre Panama is estimated at $6.2 billion, including $1.4 billion to be funded by Korea Panama Mining, which owns a 20% interest, and $4.8 billion through Inmet.