Franco-Nevada Corp T.FNV

Brian Madden - BNN - TOP PICK

[Possibleidiot01]

Franco-Nevada Corp.(FNV-T)

20/12/2023

 

Biggest and best-of-breed in the category. Likes business model for its exposure to commodity price and upside optionality to more reserve and resource discovery. Insulates shareholders from operating and capital cost overruns endemic to mining. Well diversified by geography and operator. Bit of non-gold commodity exposure. 

Timely right now. Price has pulled back a lot since the summer, because biggest royalty interest is in Panama, operated by FM. That mine accounts for about 22% of Franco's NAV, and market's shaved about 30% off shares, which gives a good margin of safety. Good entry opportunity. Believes arbitration will prevail in its favour, which is what happens historically. Yield is 1.2%.

(Analysts’ price target is $200.67)

precious metals

 

$145.390

Owned

Franco Nevada Corp (FNV TSX)

Franco-Nevada is a resource royalty and investment company whose management team and founders pioneered the resource royalty concept forty years ago. The business model affords shareholders exposure to commodity prices via a royalty payment for each ounce produced but insulates them from the operating and capital cost overruns that are endemic to the mining industry. The business model also affords shareholders long term optionality on future discoveries on any of their royalty lands, across a portfolio of 431 royalties that is well diversified by commodity, by geography and by operator. 

Franco-Nevada has consistently and significantly outperformed its gold mining peer group, in eleven of the last fourteen years since its initial public offering, on the strength of this superior business model. The steep selloff in the shares over the past two months reflects the market effectively writing off its largest royalty on the Cobre Panama copper mine which was nationalized by the government of Panama. We expect that its royalty interest will be upheld in international arbitration. Although not imminent, this royalty which accounts for 22 per cent of its net asset value represents excellent upside optionality once Franco Nevada and operator First Quantum Minerals has its day in court.