Glencore to Deliver Gold and Silver to Franco-Nevada

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 [e-mail]

(END) Dow Jones Newswires

February 10, 2016 18:06 ET (23:06 GMT)

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