Franco-Nevada Corporation is a Toronto, Ontario, Canada-based, gold-focused
royalty
Royalty may refer to:
* the mystique/prestige bestowed upon monarchs
** one or more monarchs, such as kings, queens, emperors, empresses, princes, princesses, etc.
*** royal family, the immediate family of a king or queen-regnant, and sometimes h ...
and
streaming
Streaming media refers to multimedia delivered through a network for playback using a media player. Media is transferred in a ''stream'' of packets from a server to a client and is rendered in real-time; this contrasts with file downl ...
company with a diversified portfolio of cash-flow producing assets. It is traded on the
Toronto Stock Exchange
The Toronto Stock Exchange (TSX; ) is a stock exchange located in Toronto, Ontario, Canada. It is the List of stock exchanges, 10th largest exchange in the world and the third largest in North America based on market capitalization. Based in th ...
and
New York Stock Exchange
The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It is the List of stock exchanges, largest stock excha ...
.
The ''Old Franco-Nevada'' was a publicly listed company on the Toronto Stock Exchange from 1983 to 2002. In 1986, Old Franco-Nevada made its first royalty acquisition, and acquired or created additional royalties and resource investments from 1986 to 2002. Following several royalty acquisitions in the 1980s and 1990s, Old Franco-Nevada sold its only mining property to
Normandy Mining
Normandy Mining was an Australian mining company which predominantly mined gold. Normandy was, during much of the late 20th century, Australia's largest gold miner.
in exchange for 19.9% of the company's shares.
In 2002, Newmont acquired 100% of Franco-Nevada as part of a three-way combination of Newmont, Normandy and Old Franco-Nevada. Newmont maintained Franco-Nevada as a royalty holding division, transferring numerous other royalties to it over the five-year period following the acquisition, building its portfolio of royalties to include investments in almost 300 royalties (two-thirds in base and
precious metal
Precious metals are rare, naturally occurring metallic chemical elements of high Value (economics), economic value. Precious metals, particularly the noble metals, are more corrosion resistant and less reactivity (chemistry), chemically reac ...
miners, and one-third in
oil
An oil is any nonpolar chemical substance that is composed primarily of hydrocarbons and is hydrophobic (does not mix with water) and lipophilic (mixes with other oils). Oils are usually flammable and surface active. Most oils are unsaturate ...
and
natural gas
Natural gas (also fossil gas, methane gas, and gas) is a naturally occurring compound of gaseous hydrocarbons, primarily methane (95%), small amounts of higher alkanes, and traces of carbon dioxide and nitrogen, hydrogen sulfide and helium ...
) at the time.
In 2007 Newmont spun off Franco-Nevada in an
initial public offering
An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investm ...
(IPO). Franco-Nevada has grown substantially since the IPO through the acquisition of existing royalties but also by acquiring precious metal streams directly from mine operators. The largest acquisitions have been by-product gold and silver streams from some of the world’s largest copper mines including Cobre Panama (
Panama
Panama, officially the Republic of Panama, is a country in Latin America at the southern end of Central America, bordering South America. It is bordered by Costa Rica to the west, Colombia to the southeast, the Caribbean Sea to the north, and ...
Chile
Chile, officially the Republic of Chile, is a country in western South America. It is the southernmost country in the world and the closest to Antarctica, stretching along a narrow strip of land between the Andes, Andes Mountains and the Paci ...
), Antapaccay (
Peru
Peru, officially the Republic of Peru, is a country in western South America. It is bordered in the north by Ecuador and Colombia, in the east by Brazil, in the southeast by Bolivia, in the south by Chile, and in the south and west by the Pac ...
) and the
Antamina mine
The Antamina mine in the Andes Mountains of Peru is one of the largest copper/zinc mines in the world. It is an open pit mine which had an estimated life of mine at 15 years. It also produced molybdenum. The mine is jointly owned by Teck Reso ...
(Peru). Franco-Nevada has also continued to add to its oil and gas royalty interests, particularly in the major US oil and gas fracking basins.
Early history
Franco-Nevada initially began trading as a public gold exploration company in 1983 and was led by executives
Seymour Schulich
Seymour Schulich ( ; born January 6, 1940) is a Canadian businessman, investor, author, and philanthropist.
Biography
Schulich was raised in a Canadian Jews, Jewish family in Montreal, Quebec.Pierre Lassonde. At the time, oil and gas royalty ownership—but not gold royalty ownership—was an established business strategy. In 1985 Franco-Nevada raised $930,000 to purchase gold royalties in a follow-on offering. The company made its first royalty investment in 1986, spending half the corporate treasury ($2 million) to acquire 4% of revenues from a mine in
Nevada
Nevada ( ; ) is a landlocked state in the Western United States. It borders Oregon to the northwest, Idaho to the northeast, California to the west, Arizona to the southeast, and Utah to the east. Nevada is the seventh-most extensive, th ...
owned by Western States Minerals, later called Goldstrike mine. Franco-Nevada assumed that known reserves would allow the royalty to pay for itself regardless of additional exploration results. Barrick Gold Corp. acquired the Goldstrike property in 1986 and started production in 1987. The Goldstrike deposit is the largest Carlin-style deposit discovered globally and up until 2018, the mine had produced 44 Moz of gold.
In 1988 Franco-Nevada purchased a royalty on the ''Castle Mountain mine'' in
California
California () is a U.S. state, state in the Western United States that lies on the West Coast of the United States, Pacific Coast. It borders Oregon to the north, Nevada and Arizona to the east, and shares Mexico–United States border, an ...
. Despite the Castle Mountain mine being unsuccessful, losing money and eventually closing, Franco-Nevada collected triple its investment of $2.8 million.
Franco-Nevada further went on to purchase royalties in various other commodities, but continued its focus on gold.
In the early 1990s, consulting geologist Ken Snyder convinced the management of Franco-Nevada to stake a play at the intersection of the Carlin and Getchell trends in Nevada, leading to the high-grade gold and silver discovery of what became the ''Ken Snyder Mine''. Franco-Nevada concluded that the mine had a high enough silver credit to carry all operating costs, thereby ''creating an effective 100% gold royalty''. Construction of the $84 million project was completed and first gold was produced in December 1998.
Seymour Schulich and Pierre Lassonde created a sister company to Franco-Nevada, named ''Euro-Nevada''. Euro-Nevada had a gold-only focus while Franco-Nevada was more diversified. In June 1999, they merged Franco-Nevada and Euro-Nevada to increase liquidity and financial capacity and improve clarity for shareholders. The combined companies had a market value of $3.5 billion at the time.
Newmont take over
In April 2001, Franco-Nevada sold the ''Nevada Midas mine'' (previously named the ''Ken Snyder mine''), its only wholly owned mine, to Normandy Mining in exchange for 20% of Normandy and a five-percent royalty on the mine. That September, Anglo Gold made a bid for Normandy at a valuation 60% greater than Franco-Nevada's acquisition cost. Seeing the potential to take advantage of Newmont's rivalry with Anglo, Schulich and Lassonde approached Newmont Mining Corporation to discuss purchasing Franco-Nevada and Normandy, striking a deal richer than Anglo's offer, and ultimately valuing Franco-Nevada at $2.5 billion.
Spin-off from Newmont
In 2007, Newmont made the decision to divest its portfolio of royalty assets. Pierre Lassonde, David Harquail and a small team led by management of the original Franco-Nevada, launched an initial public offering on the Toronto Stock Exchange raising CA$1.1 billion which helped fund the US$1.2 billion acquisition of a portfolio of royalties from Newmont. The listing was one of the largest in Canadian history, second only to the 2000 Sun Life IPO, and the largest mining IPO in North American History.
Major Assets
Cobre Panama
In August 2012, Franco-Nevada partnered with Inmet Mining to invest $1 billion in various metal streams from the '' Cobre Panama Copper Project''. In 2013, First Quantum Minerals took over Inmet Mining. At the end of January 2018, the subsidiary Franco-Nevada (Barbados) acquired an additional precious metals stream on Korea Resources Corporation’s interest in Cobre Panama and provided a second tranche of funding to First Quantum to assist it with acquiring a further 10% interest in the project. After this transaction, FNB has precious metal stream interests covering 100% of the ownership of Cobre Panama. FNB has funded a total of $1.356 billion funding commitment of the more than $6 billion capital cost for the project. In June 2019, Cobre Panama started shipping ore concentrate. An announcement of a Panamanian Supreme Court ruling in connection to the constitutionality of Law 9 of 1997 is raising questions concerning ''Minera Panama S. A..'', the holder of the Cobre Panama concession. In April 2019, First Quantum indicated its plan to invest a further US$327 million to expand Cobre Panama’s throughput from 85 Mtpa to 100 Mtpa starting in 2023.
In January 2022, negotiations between the Government of Panama and First Quantum Minerals started to define a new contract concerning the Cobre Panama mine. First Quantums subsidiary Minera Panamá S. A. made proposals favorable to the Government of Panamá including yearly payments of US$375 million in tax and royalty revenue. These payments were offered under the conditions that metal prices and profitability of this mine would not drop significantly. However, the Government of Panamá halted discussions in December 2022 and announced plans to order suspension of operations at this mine. After a closure of the mine during two weeks, operations resumed and the terms and conditions of a ''refreshed concession contract'' between Minera Panamá S. A. and the Government of Panama have been announced on March 8, 2023. In October 2023, the Panamanian
congress
A congress is a formal meeting of the representatives of different countries, constituent states, organizations, trade unions, political parties, or other groups. The term originated in Late Middle English to denote an encounter (meeting of ...
approved the controversial bill 1100 approving the refreshed concession contract in its third debate, which has led to multiple protests in the country. These protests led to a moratorium on metallic mining throughout the country, "for an indefinite term", through Bill 1110, excluding already granted concessions and approved with 59 votes in favor by the National Assembly (AN), on November 3, 2023. However, the constitutionality of the already approved new concession between the Government of Panana and Minera Panamá S. A. was questioned, leading to more uncertainty.
Candelaria
In October 2014, Lundin Mining agreed to acquire an 80% interest in the ''Candelaria mining complex'' in the Atacama Region of Chile from
Freeport-McMoRan
Freeport-McMoRan Inc., often called Freeport, is an American mining company based in the Freeport-McMoRan Center, in Phoenix, Arizona. The company is the world's largest producer of molybdenum, a major copper producer and operates the world's la ...
for $1.8 billion. To help fund the acquisition cost, Franco-Nevada paid $648 million to acquire a gold and silver stream on the Candelaria mine.
At the time, the mine had reserves supporting a 14 year mine life. Lundin Mining had great exploration success expanding the underground extensions of the orebody and in its reserve update in September 2020 stated reserves supporting a 25 year mine life.
Antamina
In October 2015, Franco-Nevada agreed to pay
Teck Resources
Teck Resources Limited is a diversified natural resources company headquartered in Vancouver, British Columbia, that is engaged in mining and mineral development, including coal for the steelmaking industry, copper, zinc, and energy. Secondary ...
US$610 million for a stream on Teck’s 22.5% share of the silver production on the giant ''Antamina mine'' in Peru. Teck owns its stake in Antamina along with
BHP
BHP Group Limited, founded as the Broken Hill Proprietary Company, is an Australian multinational mining and metals corporation. BHP was established in August 1885 and is headquartered in Melbourne, Victoria.
As of 2024, BHP was the world� ...
,
Glencore
Glencore plc is an Anglo-Swiss Multinational corporation, multinational commodity trading and mining company with headquarters in Baar, Switzerland, Baar, Switzerland. Glencore's oil and gas headquarters are in London, London, England as well a ...
and
Mitsubishi
The is a group of autonomous Japanese multinational companies in a variety of industries.
Founded by Yatarō Iwasaki in 1870, the Mitsubishi Group traces its origins to the Mitsubishi zaibatsu, a unified company that existed from 1870 to 194 ...
Corp. Antamina is the world’s eighth-largest copper mine. A possible future underground expansion at Antamina could extend the mine life beyond 40 years.
Antapaccay
In February 2016, Franco-Nevada (Barbados) acquired a gold and silver steam related to the ''Antapaccay mine'' in Peru from Glencore for $500 million. The deal was part of a $10 billion debt reduction plan announced by Glencore in September 2015. Glencore invested more than $1.5 billion to build and commission the Antapaccay open-pit mine and plant, which started operations in 2012. Glencore received approval from Peruvian authorities in January 2020 for the development of the ''Coroccohuayco project'' on the Antapaccay property. The integrated project would have a 34 year life.
Continental Joint Venture
In August 2018, Franco-Nevada and Continental Resources entered into a strategic relationship to jointly acquire royalty rights in the ''SCOOP and STACK oil and gas plays'' of
Oklahoma
Oklahoma ( ; Choctaw language, Choctaw: , ) is a landlocked U.S. state, state in the South Central United States, South Central region of the United States. It borders Texas to the south and west, Kansas to the north, Missouri to the northea ...
. Franco-Nevada committed $520 million to the venture to be invested through 2021. The venture was established to acquire royalty rights at the grass-roots level in areas primarily within acreage operated by Continental.
Vale Royalty Debentures and Labrador Iron Ore
In April 2021, Franco-Nevada acquired 57 million Royalty Debentures for $538 million from the
Brazilian Development Bank
The National Bank for Economic and Social Development or NBESD (, abbreviated: BNDES) is a development bank structured as a federal public company associated with the Ministry of the Economy of Brazil. The stated goal is to provide long-term fi ...
and the
Federal government of Brazil
The Federal Government of Brazil (''Governo Federal'') is the national government of the Federative Republic of Brazil, a republic in South America divided into States of Brazil, 26 states and a federal district. The Brazilian federal government i ...
, representing 14.7% of the total issued Royalty Debentures. The Royalty Debentures provide holders with life of mine net sales royalties on Vale's Northern Iron Ore system, Southeastern Iron Ore system and on certain copper and gold operations. Franco-Nevada also accumulated a 9.9% equity investment in Labrador Iron Ore Royalty Corporation, acquired over a number of years for a total investment of C$93 million. The mines associated with both investments produce high grade
Iron ore
Iron ores are rocks and minerals from which metallic iron can be economically extracted. The ores are usually rich in iron oxides and vary in color from dark grey, bright yellow, or deep purple to rusty red. The iron is usually found in the f ...
products that allow steelmakers to reduce CO2 and other emissions from their operations.
Succession
In May 2020, after more than twelve years in the role, Pierre Lassonde stepped down as Chair of Franco-Nevada, taking the role of Chair Emeritus. David Harquail, who had been President and CEO since the 2007 IPO, was appointed Chair and Paul Brink as President and CEO.''Franco-Nevada reports strong Q1 results.'' Franco-Nevada, Press Release, May 6, 2020.