Post by
savyinvestor333 on Apr 20, 2021 7:12am
From Scotia this Morning
Labrador Iron Ore Royalty Corp. Franco-Nevada Discloses 9.9% Equity Stake
OUR TAKE: Positive.
Franco-Nevada (FNV-T) disclosed that it has accumulated a total of 6.3 million common shares of LIF-T, representing a 9.9% equity stake. FNV-T is now LIF-T's largest shareholder. The position was acquired over several years for a total investment of $93M (or $14.72 per share).
We note that in addition to FNV-T, fellow royalty companies Altius Minerals (ALS-T) and Anglo Pacific (APF-L) currently own 4.5% and 1.6% respective equity stakes in LIF-T as per their most recent disclosures (collectively, the three royalty companies own 16.0% of LIF-T). Although FNV-T noted that it has no intention of increasing its position at current prices, we view this disclosure as a positive development for LIF-T shares.
LIF-T shares are trading at a P/NAV8% of 1.21x based on our relatively conservative Fe price deck. However, based on our spot Fe 8% NAVPS of $115.28, the shares are currently trading at a P/NAV of only 0.33x. Given that Fe prices remain very elevated (62%/65% Fe spot prices are at US$178/t and US$212/t), we continue to see material upside risk to our near-term dividend estimates for LIF-T.
Comment by
ckwong on Apr 21, 2021 6:10am
FNV has great record of investment in precious metals. It branches out to LIF is very interesting. Consider every country wants to reboot the economy through infrastructure, the demand for Fe and Cu should be high in mid to long term. I wouldnot surprise FNV picks up some copper royalty. Or get a seat on the LIF board and diversifies the royalty to beyond Fe.