How has Franco-Nevada grown its portfolio, and how did it perform in 2024?

2024 has been an exciting year, with several of our royalties and streams on new mines starting, including Equinox Gold’s Greenstone mine and Argonaut Gold’s Magino mine in Ontario. We are also benefitting from expansions on our portfolio of assets, for example, one of the larger royalties Franco-Nevada has in Ontario is on Agnico Eagles’ Detour Lake mine, which has recently expanded the resource base with plans to increase production to over 1 million oz/y. Another large growth driver for the company has been the Tocantinzinho project in Brazil, which has recently achieved commercial production. 

In terms of Franco-Nevada’s stock performance, we still have the shadow of what happened at Cobre Panama in November 2023 hanging over us when the government of Panama, on the back of protests, decided to shut down the mine. Since then, there have been elections in Panama, and the new President has indicated a willingness to talk about reopening the mine. Those talks will hopefully happen in early 2025.

Has the closure of Cobre Panama influenced Franco-Nevada’s strategy in terms of jurisdictional risk?

The main takeaway from the Cobre Panama incident is that we need to keep our portfolio diversified and not put too many eggs in any one basket. We are also focusing our attention on jurisdictions with a strong domestic mining industry rather than countries where the domestic mining industry is still being developed, and therefore, many issues still need to be ironed out.

Is Argentina of interest to Franco-Nevada?

Argentina has had a difficult history in terms of foreign investment, but the current course the government is on is extremely positive. There is terrific geology in Argentina, much of which is undeveloped, and having the RIGI investment regime in place will help unlock investment in the mining sector. Franco-Nevada has royalties on assets in Argentina, including the Cerro Moro mine and Taca Taca, and we would like to participate in more opportunities in this jurisdiction moving forward.

Does the strength of the streaming and royalty model still hold up in the current gold bull market?

The streaming market is currently active. We are still at a period where rates and the cost of debt are high, and despite the run on commodity prices, equity is still fairly limited. For many players, the cheapest cost of financing is streaming. 

The streaming and royalty model benefits most from organic growth, as opposed to acquisitions, as you are getting incremental ounces without the upfront capital cost. In the current gold price environment, when operators have the capital to spend on putting new mines into production and expanding existing mines, there is tremendous organic growth.

When the gold price increases sharply, investors look for who has the most leverage over the gold price, which is often an operator rather than a royalty and streaming company. However, it is typically at the back end of a strong gold price run when the royalty and streaming companies outperform, and I expect this to happen again as we get longer into the cycle. 

Does Franco-Nevada fund junior exploration?

The real value in mining is created with the drill bit, and Franco-Nevada does invest in earlier-stage projects. We have recently financed Westhaven, who has attained great results on their Shovelnose property, and Scottie Resources on their namesake property in the Golden Triangle. 

What are your thoughts on the current stance of the Canadian government towards foreign investment? 

Considering the energy transition, Canada will require tremendous investment, including foreign investment, to be a leader in critical minerals. The government should do all it can to attract this investment into the sector and needs to think carefully about how they ensure we are not arbitrary in fending off foreign investment. In addition, Canada is a global mining leader and is setting a benchmark for how other countries conduct themselves in the mining space. Therefore, the government must not make arbitrary decisions about who can and cannot invest in mining operations, as we run the risk that it will get turned around on us. Many of Canada's leading mining companies rely on foreign countries being receptive to them operating in their jurisdictions. Canada should set a positive tone in terms of international mining investment.