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Even with the periodic gold sector smackdowns, Franco

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gfp927z   Monday, 08/16/21 07:46:56 PM
Re: bigworld post# 50
Post # of 266 
Even with the periodic gold sector smackdowns, Franco Nevada is not far from its all time highs -

>>> The safest gold stock with a twist


One gold stock that's most unlikely to disappoint you regardless of what gold prices do is Franco-Nevada (NYSE:FNV). Its shares have historically outperformed those of the largest gold miners and are almost always the first to bounce back after a gold-price crash. There's a solid reasoning behind this pattern: Franco-Nevada earns a significantly higher margin, as it's a gold streaming company and so buys gold from mining companies for low prices to sell at spot rates without bearing any mining-related costs and risks.

With streams on more than 50 producing and 42 developing mines, Franco-Nevada can grow its sales as these mines expand, without having to spend money. Its largest revenue-generating gold stream mines include:

First Quantum's Cobre Panama in Panama.
Lundin Mining's Candelaria in Chile.
Glencore's Antapaccay in Peru.

Its low-cost, asset-light business model with leverage to gold prices also explains why Franco-Nevada has increased its dividend for 14 straight years now.

There's another reason to consider Franco-Nevada: the additional revenue sources it's exploring while remaining primarily a gold company. So after venturing into oil and gas some years ago, Franco-Nevada bought iron ore royalties from U.S. mining giant Vale and Canada-based Labrador Iron Ore this past April. Any rally in oil prices and uptick in infrastructure spending, and therefore demand for iron ore from steel manufacturers, should add to Franco-Nevada's top line.

With those additions, here's what Franco-Nevada's growth forecast now looks like:

Metric Actual 2020 2021 Guidance 2025 Guidance

Gold equivalent ounces (GEOs) sold 522,000 580,000-615,000 630,000-660,000
GEO revenue $928 million $1.05 billion $1.13 billion
Energy revenue $92 million $125 million $160 million
Total revenue $1.02 billion $1.18 billion $1.29 billion


Clearly, Franco-Nevada is headed for much bigger things after a record 2020. Chances are, if you check back in a couple of years, you'll think the stock was a steal at today's price.


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