DESCRIPTION: Franco-Nevada Corporation is a resource royalty and investment company owning a diversified portfolio of precious and base metal royalties, oil and natural gas royalties and other interests. The portfolio includes assets in production, under development or in the exploration phase mostly located in geopolitically secure countries. Franco-Nevada intends to use its free cash flow to expand its portfolio and pay dividends.
The information provided below is based on the most recent information we have received from analysts, newsletters and other contributors to Streetwise Reports' The Gold Report or The Energy Report. We encourage you to visit the company's web site and call the company for more specifics on this company before you decide to invest.
"Franco-Nevada, our favorite royalty company, has seen income up 37% on last year, mostly from one new asset, Palmarejo, which started generating revenues for Franco last July. The percentage of revenues from precious metals rose to 71%, which the margin of 89% remains very high. Revenues should continue to increase next year, as mining at Goldstrike returns to more of Franco's royalty land.
Beyond that, Franco has a solid pipeline and is looking to double revenues within four years. . .With $650M in cash and securities, and an unused credit line of $175M, Franco is in a very strong position. Add to this solid balance sheet, top management, world-class assets and a strong pipeline of development projects—300 royalties in all—and Franco is a core holding. Close to a high, we'll look to buy more on any weakness."
The Gold Report Interview with John Doody (06/23/10)
"Franco-Nevada was a Top 10 stock last year. It has great management and is really the originator of the royalty stock concept. I would never bet against these guys. Franco was one of these situations where we bought it at $17, and it got to $27—our target price. We couldn't justify a higher target, so we took it off the list. Boy, we'd love to buy it back at $17 again; and, if it gets there, we'll be first in line to buy it. It's just fully priced right now, so its upside is not as clearly defined as the other two."
The Gold Report Interview with Adrian Day (06/11/10)
"I just love the royalty model because it is a good way to get exposure to gold but at much lower risk. The business model itself is very low risk, very high margin. My favorite, Franco-Nevada Corp., in Canada, has a margin of 86%. You also get a lot of the upside because with the royalty companies; as the price of gold goes up, more of the properties on which they hold royalties become profitable. A lot of the royalties go up, as the price of gold goes up, and then a lot of these companies have an exploration upside because they own the royalty on a whole piece of ground. If the producing company at the mine starts exploring the ground around the mine and finds more metal, the royalty gets the benefit of that as well. There's very little downside, so I like the royalty companies a lot. My two favorites are Franco-Nevada and Royal Gold, which are the two large ones with strong balance sheets, strong management and excellent pipelines. To me, these are just a core low-risk gold exposure positions."
View Entire Article: Adrian Day: Buy Gold Bullion, Royalties and Juniors
Canaccord Wealth Management (06/07/10)
"Credit Suisse initiated bullish coverage on the royalty company, comparing the name to a gold ETF, with exploration upside. Franco-Nevada is a royalty company with a focus on gold and precious metal production and additional interests in base metals and oil & gas assets. The portfolio consists of over 300 royalties, including revenue-based (56%), profit-based (15%) working interests (7%) and others like stream-based royalties (22%). The majority of revenues come from its gold royalties. At spot prices, precious metals are expected to comprise 78% of revenues this fiscal year, with gold contributing 70% of total revenues.
Credit Suisse sees value, given that: 1) Upside to metal prices, particularly gold with less risk than a traditional producer and more leverage than the ETF. The analyst expects FNV will benefit from new investment in the sector as traditional ETF investors seek a way to beat the ‘ETF benchmark’; 2) Exploration upside from a royalty stream through Red Back Mining’s (RBI) Tasiast mine could add $1.20 to share price; 3) They believe the market is not currently ascribing the full potential value of Prosperity gold stream transaction. As the project advances in the coming months, the market could ascribe $2.00-3.00 more to the share price; and 4) If gold prices continue to rise into a growing credit crisis, Franco Nevada may drive growth as junior exploration and development companies are not able to secure traditional bank financing."
The Gold Report Interview with Matt Badiali (05/21/10)
"Franco-Nevada, of course, was the original royalty company, formed by Pierre Lassonde and Seymour Schulich. Pierre Lassonde is my hero; he's spectacular. These guys were in business 10 or 20 years before Newmont bought them in the original incarnation of Franco-Nevada. They returned 35% annualized to their shareholders over that time. That's astonishing; an absolutely a phenomenal return. Then Pierre Lassonde became the president of Newmont for maybe four years. Fairly recently, Newmont spun out a bunch of those royalty projects into the new Franco-Nevada. I think Pierre Lassonde is chairman of the Board. His star power has propelled Franco-Nevada to fairly dizzying heights."
View Entire Article: Matt Badiali: Smart Money Holds Gold & Buys Major Miners
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