Franco Nevada

Franco-Nevada holds a sliding scale gross royalty on production from the Dee claims, located at the northern end of the Carlin trend in north-central Nevada. This sliding scale gross royalty rate ranges from 4% to 9% depending upon the production rate, a CPI indexed dollar value per ton and certain metallurgical characteristics of the ore. The royalty agreement includes an AMR payment provision during non-producing periods, which has been paid since prior open pit operations were discontinued in 2001 and is currently paid at $200,000 per year. Once any royalty burdened production begins, the past AMR payments are credited against the production royalty payments.

Currently, the property is operated by a joint venture between Barrick (60%) and Goldcorp (40%). Exploration on and adjacent to the property has led to the discovery of the Storm, South Arturo and, more recently, the West Button Hill deposits. The underground Storm deposit, which lies mostly to the north of the royalty property, has been developed and went into production in late 2006 using the Dee pit for decline access into the underground mine. A production royalty from the Storm operation would be payable to Franco-Nevada only on production from the Dee claims, which may occur late in the mine’s life. The South Arturo deposit, which lies on the Dee royalty claims, is being actively drilled by Barrick with positive results announced in each of the past two years. It is anticipated that South Arturo could be mined by conventional open-pit methods, utilizing on-site heap leach processing for lower grade ore, with higher grades going to the nearby Goldstrike processing facilities for treatment.  Barrick also recently announced the discovery of the West Button Hill deposit east of the South Arturo zone.

On February 17, 2010, Goldcorp released updated reserves and resources for their 40% portion of the Dee project.  Based on Goldcorp’s reported attributable ounces, converted to a 100% basis for the property, the Proven and Probable Gold Reserves as of December 31, 2009 were reported to be 2.15 million ounces, the Measured and Indicated Gold Resources were estimated at 0.28 million ounces and the Inferred Gold Resources were 0.05 million ounces.