CIBCHave a $260 target. GLTA
April 17, 2022 Earnings Update
FRANCO-NEVADA CORPORATION
2022 Investor Day Takeaways
Our Conclusion
Franco-Nevada hosted its annual investor day on April 14, 2022, providing a
wide-ranging update on near-term and longer-term growth opportunities, as
well as hosting presentations from three key partners, Southern Peak Mining, Lundin Mining and Skeena Resources. Franco-Nevada continues to be a top pick in the royalty space and continues to perform well in the current environment, given the company’s fixed cost structure, and little to no exposure to capex and operating cost inflation. At spot prices, FNV shares currently trade at 2.4x P/NAV and 29.3x P/CF, versus the peer group average of 2.0x P/NAV and 25.3x P/CF.
Key Points
ESG: ESG continues to be at the forefront of Franco-Nevada’s business. The company highlighted its commitment to furthering diversity and inclusion
through the adoption of objective targets and ongoing sponsorships of
diversity programs, and pointed to the company’s stringent due diligence
process, which includes ESG metrics such as tailings management, water
management, climate risk, and engagement with local communities.
Condestable: Southern Peaks Mining presented on the Condestable mine
located in Peru, where FNV holds a fixed delivery gold and silver stream until
43,800 ounces of gold and 291,000 ounces of silver are delivered, thereafter
reducing to 63% of the contained gold and silver, and subsequently dropping
to 25% for the life of mine. The Condestable mine is an underground iron-
oxide-copper-gold deposit currently operating at 8,400tpd, producing 20,000
tonnes of payable copper-equivalent annually, with current plans for a further
expansion to +10,000tpd.
Candelaria: Lundin Mining presented on the Candelaria mine, located in
Chile. The Candelaria complex currently hosts an open pit and four
underground mines, as well as two processing plants, and Lundin is currently
developing a second open pit. FNV holds a 68% gold and silver stream,
reducing to 40% after 0.72Moz gold and 12Moz silver are delivered for the
life of mine. Since the acquisition, exploration success has extended the
mine life at Candelaria from 2028 to 2040+ based on reserves alone.
Candelaria represents ~9% of FNV’s 2022 GEOs based on the midpoint of
guidance.
Eskay Creek: Skeena Resources presented on the past producing Eskay
Creek project in Golden Triangle, BC. Franco-Nevada holds a 1.5% NSR on
the Eskay Creek gold-silver project and a right-of-first-refusal agreement. An
updated resource and feasibility study is expected in Q2/22, and Skeena is
aiming for production by late 2025.
Long-term Outlook: Looking further out, FNV pointed to Casabel and the
Ring of Fire as potential key growth contributors.