Teck Resources has entered into a long-term streaming agreement with a subsidiary of Franco-Nevada Corp. linked to production at the Antamina mine. Teck holds a 22.5% interest in Compania Minera Antamina S.A. (CMA), which owns and operates Antamina.
Franco-Nevada will make an upfront payment of $610 million to Teck and will pay 5% of the spot price at the time of delivery for each ounce of silver delivered under the agreement. Teck will deliver silver to Franco-Nevada equivalent to 22.5% of payability silver sold by CMA, using a silver pay-ability factor of 90%. After 86 million oz of silver have been delivered under the agreement, the stream will be reduced by one third. Closing of the transaction is subject to completion of certain corporate matters and customary conditions and is expected to take place in the first half of October.
CMA is not a party to the agreement with Franco Nevada and Teck’s rights as a shareholder of CMA are unaffected by the agreement.
Antamina is a large copper and zinc mine located 270 km north of Lima, Peru. In 2014, it produced 344,900 metric tons (mt) of copper, 211,000 mt of zinc, 3.1 million lb of molybdenum and 12 million oz of silver. The shareholders of CMA are BHP Billiton (33.75%), Glencore (33.75%), Teck (22.5%) and Mitsubishi Corp. (10%).