09:30 AM EDT, 07/18/2022 (MT Newswires) -- National Bank of Canada said Monday that Franco-Nevada Corp. (FNV.TO)'s US$352.5 million financing package for G Mining Ventures Corp. (GMIN.V)'s Tocantinzinho gold project in Brazil is in line with transactions recently completed in the streaming sector, targeting single-asset companies with a construction-ready project.
The package comprises a US$250 million gold stream, a US$75 million term loan and a US$27.5 million private placement equity deal. Franco-Nevada will fund the transaction with cash on hand.
National Bank said the royalty sector stands to benefit from both the fixed-cost nature of royalty/streaming agreements and opportunities for additional acquisitions amid strong gold prices and inflationary fears impacting the outlook for operators.
"The valuation is a higher premium than precedent transactions and is on the primary product for the operation (whereas the majority of recent transactions in the space have been on precious metal by-product production from base metal projects)," the bank said.
"It appears a portion of the value for this current transaction represents an investment in the G Mining team and indicates a positive outlook that Franco-Nevada has regarding the future exploration potential of the land package."
National Bank gave Franco-Nevada a sector perform rating with a $225.0 price target.