The Gold Report
Notable Quotes
"ICG has closed a CA$2.5M flow-through placement." (12/24/15) Integra Gold Corp. - Thibaut Lepouttre, Caesars Report More >
"The exploration upside at MAG's Juanicipio project is substantial." (12/23/15) MAG Silver Corp. - Gwen Preston, Resource Maven More >
"AKG's management continues to deliver on its development milestones." (12/22/15) Asanko Gold Inc. - Nana Sangmuah, Clarus Securities More >
"We are initiating coverage on KDX with a Buy rating." (12/21/15) Klondex Mines Ltd. - Don Blyth, Paradigm Capital More >
"VIT's Eagle is a shovel-ready, fully permitted, prefinanced gold project." (12/17/15) Victoria Gold Corp. - Tom Hayes, Edison Investment Research More >
Strong Cash Flow, Strong Balance Sheet, Experienced Management
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MICHAEL JALONEN, Merrill Lynch
(09/30/2008)
"We are initiating coverage on Franco-Nevada Corporation with a Neutral rating and a price objective of C$25.00/sh. While the company has strong cash flow generating ability, experienced management and a sound balance sheet, we believe it is currently fairly valued. We value Franco-Nevada at 2.75x estimated NAV, near the peak end of the historical 1-3 times range for North American precious metal producers. Franco-Nevada is currently trading at 2.19 times NAV, representing a 29% premium to the North American precious metal producer industry and a 54% premium to the other two companies (Royal Gold and Silver Wheaton) we consider peer comparisons. Low risk portfolio Franco-Nevada is the world’s largest precious metals royalty company in terms of number of royalties and market capitalization. The royalty portfolio is operated by industry leaders in regions considered to be of low political risk and is balanced across a number of commodities and stages of development. Around 55% of 2008 revenue is forecast to be from precious metals, the balance from oil gas (38%) and base metals (7%). The royalty asset base has no exposure to capital costs and reclamation liabilities, and minimal exposure to operating costs (on the oil and gas side). Strong financial position to pursue acquisitions The business model is to manage and grow a diversified portfolio of resource sector royalties and investments that delivers attractive returns over long-term commodity cycles as compared to other resource sector investments. Holding over $400 million in cash and liquid investments and generating over $100 million per annum in free cash flow, the company is well positioned financially to pursue acquisitions and/or royalty creation, in our view." |
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Under SEC rules, analysts are required to disclose their interest in securities that they cover. We strongly encourage you to contact them to understand any potential conflicts of interest they may have.
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