TORONTO (Reuters) - Toronto-based Franco-Nevada (FNV.TO) has agreed to acquire a precious metal stream in southern Peru from Glencore for $500 million and arranged a $550 million financing to fund the deal, it said on Wednesday.
Franco-Nevada’s President and Chief Executive David Harquail said the acquisition would further strengthen the company’s portfolio, following its recent Antamina and Candelaria investments.
“This investment is expected to be immediately accretive and provide our shareholders with gold price optionality over multiple cycles and potential further exploration and expansion upside,” he said.
Franco-Nevada said it had agreed financing for the deal with a syndicate of underwriters led by BMO Capital Markets, CIBC Capital Markets, RBC Capital Markets and Scotiabank. The underwriters have agreed to purchase 11.5 million Franco-Nevada shares at $47.85 per share.
They also have an option to purchase an additional 1.725 million shares and the gross proceeds for Franco-Nevada could rise to $663 million.
Franco-Nevada said the Glencore stream is referenced to production from the Antapaccay mine in southern Peru, which is owned by Glencore, and has been expanding production since late 2012.
Reporting by Matt Scuffham; Editing by Meredith Mazzilli