Coeur renegotiates royalty agreement with Franco-Nevada

An amended royalty agreement with Franco-Nevada (TSX: FNV; NYSE: FNV) has led Coeur Mining (NYSE:CDE) to consider completing the Guadalupe underground mine at its Mexico-based Palmarejo silver-gold operation, with initial production set for early 2015.

The amendment calls for the termination of the existing royalty agreement on half of the gold produced from the open pit and underground operation at Palmarejo after Coeur has completed its initial 400,000 oz of gold obligation, expected by September 2016.

Once fulfilled, the new agreement would see Coeur continue to deliver half of the life of mine gold production from Palmarejo to Franco-Nevada, but would receive US$800 per oz compared to US$408 per oz previously.

Raymond James analyst Chris Thompson estimates this would save the largest primary silver producer in the United States roughly US$20 million a year in royalty payments.

Along with that, Franco-Nevada would contribute US$22 million to develop Guadalupe versus no contribution under the old agreement …

Read the complete story at NorthernMiner.com/news/coeur