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Franco-Nevada: Great Q4 Results Overshadowed By Market Turmoil

Mar. 10, 2020 5:08 AM ETFranco-Nevada Corporation (FNV), FNV:CA3 Comments


  • Franco-Nevada sold 153,396 toz of gold equivalent in Q4 2019, setting a new record high.
  • The operating cash flow equaled $184.6 million and net income equaled $113.3 million. Both the numbers reached new record highs.
  • The debt declined to $80 million (it was eliminated completely after the end of Q4) and net debt declined to negative figures.
  • The 2020 guidance envisions gold equivalent production of 550,000-580,000 toz gold and energy-related revenues of $80-95 million.
  • The technical picture looks really bad. Adding to it the current stock market panic, and Franco-Nevada's near-term share price development doesn't look positive.

Franco-Nevada Corp. (NYSE:FNV) reported its Q4 2019 financial results. The numbers are great: the company achieved record high quarterly gold equivalent sales, record-high revenues, record-high operating cash flow and also record-high net income. The problem is that these great results are reported during a global stock market turmoil. During a single trading day, just before the release of the financial results, Franco-Nevada lost almost 10% of its value. Given the current market sentiment, it is hard to say whether the positive news will be able to ease the pain.

In Q4 2019, Franco-Nevada sold 153,396 toz of gold equivalent. It means a more than 15% increase compared to Q3 and an impressive more than 46% increase compared to Q4 2018. The growth was fueled especially by the successful ramp-up of First Quantum's (OTCPK:FQVLF) Cobre Panama mine. Candelaria, Guadalupe-Palmarejo, Sudbury, and Stillwater also contributed to the growth. The overall 2019 sales equaled 516,438 toz of gold equivalent, which is a new record as well.

(Source: Author's own processing, using data of Franco-Nevada)

The increased volumes of gold equivalent sales, as well as improved gold prices, helped to lift Franco-Nevada's revenues to new highs. In Q4 2019, the company recorded revenues of $258.1 million, which is 9.5% more than in Q3 and even 75% more than in Q4 2018. The majority of revenues, nearly 68%, were generated by gold sales. Silver contributed by 8.83%, PGM's by 9.53%, energies by 11.62% and other mining assets by 2.29%. The importance of gold keeps on growing, as the yellow metal was responsible for 62% of Franco-Nevada's revenues in Q2, and its share increased to 64% in Q3 and almost to 68% in Q4. On the other hand, while the energies generated more than 16% of revenues in Q2, it was only less than 12% in Q4.

This article was written by

Peter Arendas profile picture
An in-depth analysis of the royalty and streaming industry

I am an associate professor at the University of Economics in Bratislava, Department of Banking and International Finance. My dissertation was focused on commodity markets and my habilitation was focused on the calendar anomalies. I have more than 15 years of investing experience. My investments mostly focus on small- and mid-cap companies in the resource sector. Since May 2019, I have been preparing regular monthly reports focused on the precious metals royalty & streaming industry. Based on positive feedbacks and numerous inquiries, I decided to launch a Marketplace Service named "Royalty & Streaming Corner", which provides an in-depth analysis of this exciting market segment, as well as investment ideas from the mining industry.

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