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Franco-Nevada Corporation FNV announced that it signed a $500-million precious metals stream agreement with Sibanye-Stillwater. This agreement will allow FNV access to the production of this fully integrated, long-life platinum group metal and generate immediate cash flow.
Details of FNV’s Deal With Sibanye-Stillwater
The Western Limb operations are key components of Sibanye-Stillwater's business. Sibanye-Stillwater's Western Limb operations are a fully integrated. It has a mine life of up to 2070 and a large pipeline of extension projects. This makes the operation a high-quality stream with significant long-term potential.
Over the next 20 years, this deal is expected to provide Franco-Nevada with a stable GEO profile from platinum, palladium, rhodium and gold production. For the first 25 years, gold deliveries to FNV will be determined by the amount of platinum, palladium, rhodium and gold ounces produced.
Franco-Nevada will fund the stream from cash in hand. FNV had $1.3 billion in cash and cash equivalents, and $2.3 billion in available capital as of Sept. 30, 2024.
Franco-Nevada’s Focus on Growth
The stream agreement with Sibanye-Stillwater is expected to expose Franco-Nevada to the growing demand for platinum group metals.
The company continues to diversify its portfolio with further acquisitions. On Aug. 13, 2024, FNV announced that it acquired a 1.8% net smelter return royalty on Yanacocha operations in Peru. The transaction strengthens Franco-Nevada's portfolio with immediate gold equivalent ounces and long-term growth prospects. In the second quarter of 2024, the company acquired a gold stream from SolGold with reference to production from the Cascabel project located in Ecuador.
In the second quarter of 2024, FNV acquired a gold stream from SolGold related to production at the Cascabel project in Ecuador.
These transactions demonstrate Franco-Nevada's commitment to growth, and ability to identify and acquire high-quality assets.
FNV Stock’s Price Performance
The company’s shares have gained 6.1% in the past year compared with the industry’s growth of 13.1%.
Image Source: Zacks Investment Research
Franco-Nevada’s Zacks Rank & Stocks to Consider
Franco-Nevada currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the basic materials space are CF Industries Inc. CF, Carpenter Technology Corporation CRS and New Gold Inc. NGD. CF sports a Zacks Rank #1 (Strong Buy) at present, and CRS and NGD carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CF Industries has an average trailing four-quarter earnings surprise of 10.3%. The Zacks Consensus Estimate for CF’s 2024 earnings is pegged at $6.32 per share. CF’s shares gained 20.6% in the last year.
Carpenter Technology has an average trailing four-quarter earnings surprise of 14.1%. The Zacks Consensus Estimate for CRS’s fiscal 2025 earnings is pegged at $6.61 per share. Its shares skyrocketed 162.7% in the last year.
New Gold has an average trailing four-quarter earnings surprise of 37.5%. The Zacks Consensus Estimate for NGD’s 2024 earnings is pegged at 18 cents per share. Its shares gained 64.2% in the last year.