Streaming Transaction – Antapaccay
10 February 2016
Glencore plc (“Glencore”) announces that a long-term streaming agreement has been entered into by Narila Investments Ltd. (“Narila”), a wholly-owned subsidiary of Glencore, with Franco-Nevada (Barbados) Corporation (“Franco-Nevada”), a wholly-owned subsidiary of Franco-Nevada Corporation, for delivery of gold and silver calculated by reference to copper produced at the Antapaccay mine, located in Peru. This transaction forms part of Glencore’s debt reduction plans announced on 7 September 2015.
Franco-Nevada will make an advance payment of US$500 million to Narila upon closing of the transaction, which is subject to the completion of certain customary conditions and is expected to occur prior to the end of February 2016.
In return, Narila will deliver gold and silver to Franco-Nevada by reference to copper production: 300 ounces of gold per 1,000 tonnes of copper in concentrate up until 630,000 ounces of gold have been delivered and 30% of gold production thereafter; and 4,700 ounces of silver per 1,000 tonnes of copper in concentrate up until 10,000,000 ounces of silver have been delivered and 30% of silver production thereafter.
Franco-Nevada will make ongoing payments of 20% of the spot gold and silver price per ounce delivered which will increase to 30% of the respective spot prices after 750,000 ounces of gold and 12,800,000 ounces of silver have been delivered.
Scotiabank Europe plc is acting as financial advisor to Glencore.
Notes for Editors
Glencore is one of the world’s largest global diversified natural resource companies and a major producer and marketer of more than 90 commodities. The Group's operations comprise of over 150 mining and metallurgical sites, oil production assets and agricultural facilities.
With a strong footprint in both established and emerging regions for natural resources, Glencore's industrial and marketing activities are supported by a global network of more than 90 offices located in over 50 countries.
Glencore's customers are industrial consumers, such as those in the automotive, steel, power generation, oil and food processing. We also provide financing, logistics and other services to producers and consumers of commodities. Glencore's companies employ around 160,000 people, including contractors.
Glencore is proud to be a member of the Voluntary Principles on Security and Human Rights and the International Council on Mining and Metals. We are an active participant in the Extractive Industries Transparency Initiative.
Antapaccay is a large copper mine located in the Cusco Region, approximately 250 kilometres from the cities of Cusco and Arequipa in Peru. In 2015, Antapaccay produced 202,100 tonnes of copper in concentrate, 122,000 ounces of gold and 1,315,000 ounces of silver. Glencore owns 100% of Compañía Minera Antapaccay S.A., which owns and operates the Antapaccay mine.
Appendix: Outline of a Precious Metals Streaming Transaction
A streaming transaction is a forward sale of a supply of precious metal calculated by reference to underlying production at a particular mine owned by the stream seller.
In such a transaction the stream purchaser makes an advance payment, which represents a prepayment of a portion of the purchase price, for metal equivalent to a fixed percentage of future precious metals production or an amount of precious metals production linked to future base metal production from the mine.
Typically ongoing payments are structured as a fixed price per ounce or a fixed percentage of the prevailing spot price. The stream provides the stream purchaser with exposure to the precious metals component of the mine as if it were a stand-alone operation.
The stream purchaser benefits from any production and exploration upside, but bears operational risk as well as the producer. A stream does not carry any fixed annual delivery obligations, only a percentage of actual precious metal production or an amount of precious metals production linked to base metal production from the mine.
There is no requirement for the mine owner to change how it manages the mine’s operation.