This gold company is expecting double-digit growth next year.
Franco-Nevada Corporation (FNV)
From Internet Wealth Builder
Franco-Nevada Corporation (FNV) is a gold royalty and streaming company. It owns a large and well diversified portfolio of cash flow producing assets in Canada, the U.S., Mexico, Australia, Africa, and Latin America. It derives approximately 80% of its revenues from precious metals and the remainder from oil and gas.
The shares hit a low of $76.50 in October but have now risen by one-third since then and are 8% above the last update in August.
Franco-Nevada will report its 2018 results in mid-March but updated its expected gold equivalent ounces (GEO) forecast and its oil and gas royalty revenues recently.
GEOs for 2018 are expected to total between 445,000-450,000, as previously forecast. This is due to processing of lower grade ore at Candelaria and lower deliveries at Guadalupe due to less mining on properties where Franco-Nevada receives royalty payments. However, oil and gas revenues are forecast to be $85-88 million, up from previous guidance of $75-85 million.
In the third quarter (to Sept. 30), Franco-Nevada received 120,021 GEOs, which generated $140.1 million in revenue. Another $30.5 million came from oil and gas and other minerals. Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) totaled $134.7 million ($0.72 per share). Net income was $52.1 million ($0.28 per share). Revenue was sourced 82.1% from precious metals and 82.7% from the Americas.
With Franco-Nevada making the final $104 million payment of its $1 billion commitment to the capital costs of the giant Cobre Panama mine, and $214.8 million to purchase oil and gas assets from Continental Resources, the company has continued to invest in increasing production and revenues. CEO David Harquail anticipates a 30% increase in revenues in 2019 from Cobre Panama coming on stream (it began production this month), the Candelaria assets returning to normal production, and oil and gas growing further.
The shares pay a quarterly dividend of $0.24 ($0.96 per year).
Franco-Nevada remains a Buy for its geographical and commodity diversification, its growing revenues, and as a lower risk way to play a rise in precious metal prices.
Gavin Graham, in Gordon Pape’s Internet Wealth Builder, www.buildingwealth.ca, 1-888-287-8229, February 25, 2019