Glencore to Deliver Gold and Silver to Franco-Nevada
February 10 2016 - 06:21PM
Dow Jones News
By Scott Patterson
CAPE TOWN, South Africa-- Glencore PLC said it entered a $500
million deal to deliver gold and silver to Franco-Nevada Corp., the
latest installment in the Swiss mining firm's plans to rebuild its
troubled balance sheet.
The deal builds on Glencore's agreement in November to deliver
silver from its Antamina mine in Peru in exchange for $900
million.
The agreement is part of the $10 billion debt reduction plan
Glencore unveiled in September as the Swiss miner and commodities
trader scrambles to pare down its debt load amid concerns that
prices for the commodities it mines and sells will continue to
decline.
Glencore said Franco-Nevada will make payments of 20% of the
gold and silver delivered from its Antapaccay mine in Peru. The
payments will increase to 30% after Glencore delivers 750,000
ounces of gold and 12.8 million ounces of silver, the company
said.
The deal with Glencore is "another step in strengthening and
diversifying Franco-Nevada's portfolio," said David Harquail, chief
executive of the Toronto-based firm.
Streaming companies typically provide a chunk of cash upfront to
miners in exchange for a "stream" of precious metals down the road.
Streaming deals have become increasingly popular of late, since
miners have had trouble raising cash on stock and bond markets.
The deals can also be seen as signs of desperation, indicating
trouble with mining operations and concerns about a miner's ability
to fund its business in a commodity downturn.
Write to Scott Patterson at scott.patterson@wsj.com
(END) Dow Jones Newswires
February 10, 2016 18:06 ET (23:06 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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