Royalty and streaming company Franco-Nevada has struck a $1.05-billion deal to acquire a royalty package on the Côté gold mine, in Ontario.

The package, acquired from a private third party, comprises a 7.5% gross margin royalty on 100% of the mineral production from the Chester 1, 2 and 3 claims. These cover all of the mine’s mineral reserves and more than 99.9% of its current mineral resources.

Franco-Nevada partnered with mine owners Iamgold and Sumitomo Metal Mining in the transaction, securing access for in-depth due diligence and the opportunity to enter into a new royalty agreement that will take effect on closing, anticipated at the end of the second quarter.

“We are pleased to add this new cornerstone gold royalty to our extensive portfolio in Ontario,” said Franco-Nevada president and CEO Paul Brink. 

“We appreciate the opportunity to partner with Iamgold and Sumitomo and the due diligence access they provided to us. Their team has developed an excellent new operation with an extensive resource endowment that has high potential to continue expanding.”

As part of the new arrangement, Iamgold and Sumitomo will have the option to buy back up to 50% of the royalty in two tranches of 25%. The first tranche is exercisable within two years at Franco-Nevada’s cost of borrowing, and the second within three years at an internal rate of return of 10%, following exercise of the first.

Located near Gogama in north-eastern Ontario, the Côté mine is ramping up following the start of commercial production in August last year. Iamgold, which owns 70% of the mine and operates it, has guided 2025 production of 360 000 oz to 400 000 oz at cash costs of $950/oz to $1 100/oz, inclusive of royalty costs.

Based on Iamgold’s mid-point guidance and a gold price of $3 200/oz, Franco-Nevada expects to generate $33.5-million in royalty revenue in the second half of 2025, with full-year revenue of $67-million.

“The Côté gold mine is just at the beginning of its operating life with excellent opportunities being evaluated to further grow the resource base, improve mining productivity, and optimise and expand mill throughput beyond the initial ramp-up,” said Iamgold president and CEO Renaud Adams. 

“The value upside of the Côté gold mine is further supported by the rapidly growing Gosselin zone which we intend to incorporate into an updated mine plan next year that will bring the Côté and Gosselin zones together to outline a Côté gold mine of increased scale and scope for generations to come.”

Côté hosts measured and indicated mineral resources of 16.23-million ounces and inferred resources of 4.2-million ounces. The royalty applies to both the Côté and Gosselin deposits, as well as to nearby targets Clam Lake and Jack Rabbit.

The modern operation features autonomous haul trucks, autonomous drills, and energy-efficient high pressure grinding roll milling. During the first quarter of 2025, cash costs stood at $1 260/oz, including about $130/oz related to the royalty. Costs are expected to decline as operations continue to stabilise.

Franco-Nevada said it sees strong long-term expansion potential at Côté, with the mill expected to reach its nameplate 13-million-tonne-a-year capacity by the end of 2025. The company also sees potential for expansion to 20-million tonnes a year to align with mining capacity of 54-million tonnes a year and a 2:1 strip ratio.

Franco-Nevada will fund the transaction from its existing $2-billion in available capital. The company continues to generate $275-million to $300-million in free cash flow per quarter and remains well positioned to expand its portfolio.