Franco-Nevada (TSX: FNV) is contesting a court ruling out of Burkina Faso that seeks to tear up one of its longest-running gold streams.
The royalty and streaming company said it had become aware of a news release from Riverstone Karma SA announcing a local court decision that purports to nullify the stream agreement tied to the Karma gold mine. Franco-Nevada’s response was short on the matter, stating that the agreement is governed by Ontario law, the judgment is not valid, and the company intends to have it vacated.
Franco-Nevada added that it is pursuing its own legal remedies in Ontario and other jurisdictions, in line with the dispute resolution provisions written into the agreement. Those actions name Riverstone Karma SA, its parent Néré Mining SA, and other affiliates.
The fight centres on an asset that has sat in Franco-Nevada’s portfolio for more than a decade. The Karma stream was signed in August 2014 as the first syndicated gold stream between two streaming companies, with Franco-Nevada funding 75 percent and Sandstorm Gold the remainder. The structure committed up to $120 million in financing in exchange for fixed gold deliveries followed by an ongoing share of production.
Under the terms, Franco-Nevada received 15,000 ounces of gold a year from March 2016 through February 2021, totalling 75,000 ounces, after which it became entitled to refined gold equal to 4.875 percent of output over the life of the mine, which it is to purchase for 20% of spot.
The asset has changed hands several times since, and now sits with Riverstone Karma SA.
The matter remains ongoing.
Franco-Nevada last traded at $322.47 on the TSX.
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