Canadian royalties, streaming firm Franco-Nevada reports rising revenues as it looks to diversify

VANCOUVER (miningweekly.com) – Canadian gold royalties and streaming firm Franco-Nevada Corp has recorded a 37.6% increase in revenue for 2016, boosted by record ounces delivered and soaring sales.

The company, which derives income from 107 producing royalties and streams, achieved a 30.9% increase in gold-equivalent ounces (GEOs) delivered to 471 509 oz in 2016. Revenue rose to $610.2-million, derived from the sale of 464 383 GEOs.

Removing one-off items, the company saw headline earnings grow 84.9% to $164.4-million, or $0.94 a share, surprising analysts who had predicted on average full-year earnings a share of $0.89.

Franco-Nevada said while it strives over a long-term horizon to generate 80% of revenue from precious metals, including gold, platinum-group metals and silver, it will not preclude itself from diverging from the long-term target based on opportunities available. With 93.7% of revenue earned from precious metals in 2016, the company says it has the flexibility to consider diversification opportunities outside of the precious metals space and to increase its exposure to other commodities.

The company, meanwhile, increased its guidance for GEO output to between 470 000 oz and 500 000 oz in 2017, with oil and gas asset income set to rise to between $35-million and $45-million, up from $30.1-million in 2016.

Franco-Nevada expects its existing portfolio to generate between 515 000 oz to 540 000 GEOs by 2021. Oil and gas revenues at the same $50/bl West Texas Intermediate oil price assumption are expected to range between $55-million and $65-million.