Franco-Nevada (NYSE:FNV) outlined its approach to profitable growth, citing a focus on return on capital, flexible financing structures and partnerships with operating teams, while highlighting potential production growth from its existing portfolio.
A company representative said Franco-Nevada differentiates itself in the royalty and streaming sector through significant insider ownership and an emphasis on transactions intended to increase shareholder value rather than simply expand the company’s size. The representative said the company seeks to structure financing around the needs of mine operators and views their success as central to its own.
Growth outlook tied to Cobre Panama and portfolio options
Franco-Nevada said it expects growth over the next five years and estimated that a restart of Cobre Panama could lift growth to roughly 45% over that period. The company also said its larger portfolio assets could add a combined 222,000 gold-equivalent ounces, or GEOs, annually, although those projects would not necessarily operate at the same time.
The company expects to produce about 550,000 GEOs this year and said production could approach 750,000 GEOs in five years. Over a 10-year horizon, management said the portfolio’s larger optionality assets could help push annual output toward 1 million GEOs.
Franco-Nevada said it has more than $1 billion in cash, significant equity investments and debt capacity, giving it roughly $4.5 billion in available capital for additional royalty and streaming opportunities. It also pointed to its exploration royalty portfolio as a source of organic growth amid higher gold and copper prices and increased industry drilling activity.
Cobre Panama developments
Asked about Cobre Panama, the company representative said the direction of developments has been positive. Panama’s government has allowed processing of stockpiles, restarted the site’s power plant and sanctioned a restart of the mills to enable First Quantum Minerals to process existing stockpiles, according to the representative.
First Quantum has increased employment at the site to about 3,000 workers from roughly 1,000 while the mine was in care and maintenance, compared with a full workforce of between 6,000 and 7,000, the representative said. One mill train has been restarted.
The representative said the government has completed an environmental review and established a Council of Ministers to make a recommendation to President José Raúl Mulino. The government has also been consulting local communities, unions and suppliers, with the representative citing support among stakeholders for a mine restart.
While cautioning that the process could take longer, the representative said it was realistic that the government could announce a decision to proceed this year.
Potential contributors to organic growth
Beyond Cobre Panama, Franco-Nevada identified several assets that could be meaningful growth drivers. The company cited Glencore’s Antapaccay operation in Peru, where the Coroccohuayco deposit is nearly the size of Antapaccay and has a higher grade, according to the representative. Glencore could sanction a construction decision for Coroccohuayco later this year or early next year, the representative said.
The company also highlighted the Candelaria copper-gold operation in Chile, where underground expansion work is underway and studies are evaluating a deeper open-pit pushback. The representative said additional deposits on the concession, including La Española and Portuguesa, could support a longer operating life.
On the royalty side, Franco-Nevada pointed to Agnico Eagle Mines’ Detour asset in Canada. The representative said Detour’s resource has grown to more than 40 million ounces and the mine has a plan to reach 1 million ounces of annual production, with potential for further growth from underground development. The company also cited the Côté project, where the Gosselin discovery has added another roughly 10 million ounces to the original Côté deposit, potentially supporting a larger mill expansion.
Exploration and financial-backer investments
Franco-Nevada also discussed smaller royalties that it believes have significant potential, including Banyan Gold’s AurMac project in Yukon, Strickland Metals’ Rogozna project in Serbia and Tiernan Gold’s Volcan project in Chile. The company said each asset either has or could reach approximately 10 million ounces of resources.
The company said its strategy of supporting development teams has generated strong results. It cited G Mining Ventures and Discovery Silver as examples, stating that both companies’ stocks have increased tenfold since Franco-Nevada’s investments. Looking ahead, it said G Mining’s Tocantinzinho project is operating and showing exploration potential, while Discovery’s Porcupine assets in Timmins could benefit from the purchase of Glencore’s Kidd Creek mill, which may free capacity at the Dome mill for future processing of the Dome open-pit resource.
About Franco-Nevada (NYSE:FNV)
Franco-Nevada Corporation (NYSE:FNV) is a gold-focused royalty and streaming company. Rather than operating mines directly, it provides capital to mining and natural resource companies in exchange for the right to receive a portion of future production or revenue. This business model gives Franco-Nevada exposure to commodity production while generally limiting its direct responsibility for operating and capital costs.
The company holds a diversified portfolio of royalties, streams and other interests tied primarily to gold, as well as silver, platinum-group metals, iron ore and other minerals.
