Franco Nevada reports best ever results in 2019

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Franco Nevada Mining Corp. [FNV-TSX, NYSE] shares advanced in active trading Tuesday March 10 after the company reported record fourth quarter and 2019 annual results.

“I am pleased that Franco-Nevada is reporting its best results ever,” said Franco-Nevada CEO David Harquail. “Record quarterly and annual results were achieved across all our important sales and financial metrics,” he said.

Franco-Nevada is a leading gold-focused royalty and stream company with a current market capitalization of approximately $19.8 billion (Canadian). Based in Toronto, Franco aims to have 80% of its business in precious metals and up to 20% of its business in non-precious resources, including oil and gas.

Franco-Nevada has been looking to grow its oil and gas interests via a strategic relationship with Continental Resources Inc. [CLR-NYSE].

However, Franco-Nevada said the increase in oil and gas revenues is expected to be more than matched by a significant increase in its precious metals revenue as the Cobre Panama Mine ramps up production next year. Cobre Panama is a huge open-pit copper project located in the Panama jungle, about 120 km west of Panama City. It is being developed by First Quantum Minerals Ltd. [FM-TSX].

On Tuesday, Franco-Nevada said its 2019 results benefited from the start of precious metals deliveries from Cobre Panama, strong production at other key assets and higher precious metals prices.

“Thanks to our diversified portfolio, we expect good overall growth in 2020, mostly driven by the continued Cobre Panama ramp-up despite a more conservative outlook for our energy assets,” Harquail said.

Franco-Nevada reported fourth quarter revenue of US$258.1 million and adjusted earnings of US$110.8 million or $0.59 per share, a new record, which easily beat the consensus estimate of $0.49. The 153,396 gold equivalent ounces sold in the fourth quarter also marked a new record for the company. That brought the number of gold equivalent ounces sold in 2019 to 516,438 ounces, which was also a new record.

Other financial highlights in 2019 include US$341.5 million of adjusted net income or $1.82 per share as well as record revenue of US$844.1 million.

In 2020, Franco-Nevada is forecasting attributable royalty and stream sales to total 555,000 to 580,000 gold equivalent ounces from its mining assets and revenue of US$80 to US$95 million from its energy assets.

Of the royalty and stream sales from mining assets, 375,000 to 405,000 gold equivalent ounces area expected from the company’s various stream agreements.

Cobre Panama produced 147,480 tonnes of copper in 2019. This year the mine is expected to produce between 285,000 and 310,000 tonnes of copper as it continues to ramp up. Franco-Nevada sold 43,554 gold equivalent ounces from the mine in 2019 and in 2020 expects sales to be between 90,000 and 110,000 gold equivalent ounces.

Meanwhile, on Tuesday, Franco-Nevada shares rose by almost 1.0% or $1.44 to $148.37 on volume of 1.13 million. The shares are trading in a 52-week range of $93.24 and $163.81.

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