Leading royalty and streaming company Franco-Nevada has acquired a 1.8% net smelter return royalty on all minerals from Newmont's Yanacocha mine and adjacent properties in Cajamarca, Peru.

The company paid vender, Peru's Buenaventura, US$210 million in cash, with a contingent payment of $15 million in Franco-Nevada shares due upon achievement of certain conditions.

The 118,534 shares worth $15 million will be payable to Buenaventura upon the Conga project adjacent to Yanacocha, achieving commercial production for a full year before the twentieth anniversary of the royalty deal closing.

"Yanacocha has been one of the largest gold mines globally and the district covered by the royalty remains highly prospective with over 47Moz of gold equivalent in total reserves and resources," said Franco Nevada chief executive Paul Brink.

Yanacocha Sulphides

The royalty covers the Yanacocha Sulphides project, which is waiting for an investment decision from Newmont. Yanacocha is producing from the open pit oxides and will contribute immediate ounces for Franco-Nevada. Newmont's guidance is to produce 290,000oz of gold at Yanacocha this year.

The $2 billion Yanacocha Sulphides project is a large copper-gold project hosting 1.2Mt of copper reserves and resources and 7.2Moz of gold reserves and resources within the footprint of the current oxide operations. It is expected to produce more than 500,000ozpa of gold equivalent during its first five years of operation and extend the mine plan beyond 2040.

Newmont has deferred a decision to develop the Yanacocha Sulphides until at least 2025.

Conga is a large copper-gold porphyry adjacent to Yanacocha with indicated resources of 14.6Moz of gold and 4Blb of copper. Newmont stopped its $4.8 billion development in 2011 following social protests.

Peru

The government of Dina Boluarte is keen to grow the mining sector and mining and energy minister Romulo Mucho is focused on helping to unblock stalled projects. This has resulted in Southern Copper looking to break ground at its $1.4 billion Tia Maria copper project in Arequipa, another project previously stopped by social protests. It received a construction licence in 2019.

For Buenaventura, a long-time partner with Newmont in Yanacocha prior to the 2022 sale of its 43.65% stake to Newmont for $300 million, the royalty sale marks another step to improving its balance sheet as it continues developing its $400 million San Gabriel mine in Moquegua.

It ended the June quarter with debt of $658.4 million and a cash balance of $171.5 million. San Gabriel is 57% complete and is on track to produce its first gold by the second half of 2025.

"Today's announcement represents another critical step forward, aligned with our strategic objective of reinforcing Buenaventura's financial strength to return to leverage levels reflecting our company's true operational performance, aligned with our commitment to our shareholders and bondholders," said Buenaventura chief executive Leandro Garcia.

"This transaction enables Buenaventura to strengthen its financial position, with sale proceeds also directed towards driving further growth, led by progress on our San Gabriel project. Buenaventura's San Gabriel project achieved 57% overall progress towards completion by second quarter's end, meeting our planned targets. We remain on track to reach our goal of producing our first gold bar by the second half of 2025."