Franco-Nevada Corp T.FNV

Alternate Symbol(s): FNV

Metals & Mining Gold

Franco-Nevada Corporation is a Canada-based gold-focused royalty and streaming company with a diversified portfolio of cash-flow producing assets. The Company's business model provides investors with gold price and exploration optionality while limiting exposure to cost inflation. The Company is debt-free and uses its free cash flow to expand its portfolio and pay dividends. Its segments include Mining and Energy. The Company owns a portfolio of royalty, stream and working interests, covering properties at various stages, from production to early exploration located in South America, Central America and Mexico, United States, Canada, Australia, Europe and Africa. It invests in various commodities, including gold, silver, platinum group metals (PGM), iron ore, other mining assets, oil, gas and natural gas liquids (NGL). Its portfolio consists of approximately 419 assets covering 66,000 square kilometers (km2).

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Franco-Nevada Corp

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Post by retiredcfon Mar 10, 2022 8:52am

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Post# 34502415

RBC

Their target is US$160.79. GLTA

March 9, 2022

Franco-Nevada Corporation
4Q21 results; first impressions neutral

Our view: 4Q financial results are broadly in line with RBCe and consensus estimates. 1- and 5-year guidance is consistent with RBCe, whereas midpoint FNV targets are -5% cons. in 2022 due to lower precious metals output, but +7% cons. in 2026. Guidance outlines future output is ~75% contributed from precious metals. FNV remains well positioned to pursue additional acquisitions in 2022 with $0.5b in net cash, plus $1.0b in available credit.

Conference call: Thursday, March 10, 10:00am ET, (+1-888-390-0546)

Key takeaways:

• Operating results slightly better, financial results in line. FNV reported revenues of $328m (+3% RBCe), where higher O&G and precious metal production was partially offset by lower iron ore output—see p.3 for details. Adj. EPS was $0.86 (below RBCe $0.90, above cons $0.81), and reported EPS of $1.16 included a Weyburn impairment reversal. FCF after w/c was $243m (RBCe $248m, cons $248m), where higher capex was largely offset by a larger working capital inflow. The Vale royalty pays semi-annually and 4Q represents FNV’s first dividend received for the division, within working capital. 4Q21 net cash totalled $539m ($347m at 3Q21), with $1b available under credit facilities.

• 2022 and 2026 in line with RBCe, mixed vs. consensus. Following high growth of +27% in 2021, 2022 guidance implies stable corporate production yoy in 2022, and +12% growth by 2026. FNV guidance now includes output from the company's o&g division—2022 GEO production guidance is 680-740kGEO (in line vs. RBCe 726koz, -5% cons. 751koz). 5-year guidance in 2026 is 765-825kGEO (in line vs. RBCe 803koz, +7% cons 743koz). RBCe and consensus forecasts are both adjusted for equal comparability, namely $1,800/oz gold and $85/bbl WTI. Capital spending guidance in 2022 for the Continental partnership is $92m (above RBCe, which allocated this spending over 2022-23).

• Incremental royalty purchased at Rosemont, CRA audit ongoing and modest revisions outlined. FNV announced an incremental 0.585% NSR royalty purchased on HudBay's Rosemont/Copper World asset for a total $19.5m ($7m upfront, $12.5m contingent). The transaction increases FNV's overall NSR on the property to 2.085% (representing ~1% of NAV). FNV's CRA audit includes updated figures, reflecting a proposal letter from the CRA for 2017 and the inclusion of the potential 2021 tax year risks. Overall potential exposures have increased by ~$95m to $415m over the full 2012-2021 period.

• Project updates in line, Cobre Panama outlook clarity improved. Key upcoming milestones include a PFS on SolGold's Cascabel project (2Q22), a Detour Lake mine plan update (2Q22), and a Valentine Lake construction decision (2H22). At Cobre Panama, a proposal has been received from the government to resolve outstanding mining concession constitutional proceedings, previously reported by the operator First Quantum. FNV maintains a $40m loan receivable from Noront, which may be payable to FNV at its discretion, following an announcement of a change in control.