Franco-Nevada Corp.
(FNV-N, FNV-T) US$160.79 | C$205.90
Q4/21 Results and 2022 Guidance: GEOs Down Slightly Y/Y in 2022
Event
FNV reported Q4/21 adjusted EPS of $0.86, in line with TD at $0.85 and consensus at $0.87. Adjusted EBITDA for the quarter was $269.8mm (TD: $258mm; consensus $271mm).
Impact: NEUTRAL
FNV reported Q4/21 total delivered GEOs (including oil and gas) of 182.5 kozs (TD: 172 kozs) and total revenue of $327.7mm (TD: $309mm). Precious metal GEOs sold for the quarter were 138.8 kozs (TD: 133 kozs); 76.1% of revenue was sourced from precious metal assets.
Total delivered GEOs for 2021 were 728,237 ozs (including oil and gas), an annual record, and 27% higher y/y. Excluding oil and gas, precious metal GEOs sold totalled 558,397 ozs, up 9% y/y.
FNV ended 2021 with $539mm in cash, zero long-term debt, and ~$1.6bln of available liquidity. The quarterly dividend was increased to $0.32/share from $0.30/ share (+6.7%).
FNV is projecting 2022 total GEOs produced between of 680-740 kozs (TD: 730 kozs) and 765-825 kozs by 2026 (TD: 780 kozs). For the 2022 and five- year outlook, FNV is assuming prices of: $1,800/oz Au, $23.00/oz Ag, $1,000/oz Pt, $2,100/oz Pd, $125/tonne Fe 62% CFR China, $85/bbl WTI oil, and $3.75/mcf Henry Hub natural gas.
For 2022, precious metal GEOs are forecast at 510,000-550,000 ozs (TD 576,000 ozs). Diversified mining GEOs (mostly iron ore) for 2022 are expected to be 35,000-55,000 ozs (TD 32,400 ozs) and oil and gas GEOs are projected at 125,000-145,000 ozs (TD 121,400 ozs).
At the mid-point, 2022 GEO guidance (710 kozs) is slightly lower than 2021 GEOs sold. Management expects a lower contribution from the Guadalupe- Palmarejo stream and lower grades at Antamina and Antapaccay in 2022.
Acquisition of Rosemont/Copper World Royalty. In November 2021, FNV acquired from private sellers an existing 0.585% NSR royalty interest on Hudbay's Rosemont copper project. With the acquisition of this royalty, which has identical terms as FNV's existing 1.5% NSR royalty and covers the same land package, including most of the Copper World deposits, FNV now has a 2.085% NSR over the project. The total consideration for the 0.585% NSR royalty interest was up to $19.5M