Slide Deck

I. Executive Summary

Franco-Nevada Corporation stands as the preeminent gold-focused royalty and streaming company in the global mining sector. The company’s business model is engineered to provide investors with leveraged exposure to commodity price upside and exploration optionality while fundamentally insulating the enterprise from the operational risks and inflationary cost pressures inherent to traditional mining.¹ This is achieved through a vast and diversified portfolio of over 430 assets, which generates high-margin, predictable cash flows.³ Financially, Franco-Nevada is distinguished by a pristine, debt-free balance sheet, substantial liquidity, and an 18-year track record of consecutive annual dividend increases, a rare feat in the cyclical resource industry.⁴

The current investment thesis for Franco-Nevada is defined by a significant dichotomy. On one hand, the company is capitalizing on a robust precious metals market, with record gold prices in 2024 and 2025 fueling record financial performance and enabling an aggressive, yet disciplined, capital deployment strategy into high-quality assets in top-tier jurisdictions.⁶ On the other hand, the company faces a material headwind from the production halt and subsequent full impairment of its cornerstone Cobre Panama streams in late 2023.⁸ This event has removed a significant source of revenue and growth from the company’s near-term outlook.

The bull case for the company is predicated on the resilience of its diversified portfolio, which demonstrated underlying growth even after the Cobre Panama shutdown; its formidable financial capacity to execute value-accretive acquisitions in a consolidating industry; a clear pipeline of organic growth from recently acquired assets; and the potential for a resolution at Cobre Panama, which represents a significant, asymmetric upside catalyst. Conversely, the bear case centers on the prolonged uncertainty surrounding Cobre Panama, the inherent risk of a correction in elevated gold prices, execution risk associated with deploying large sums of capital, and continued exposure to geopolitical instability in key mining jurisdictions. This report provides a comprehensive analysis of these factors to equip investors with a thorough understanding of Franco-Nevada’s strategic position, opportunities, and risks.

II. The Royalty & Streaming Model: A Superior Platform for Precious Metals Exposure

A. The Fundamental Business Model

Franco-Nevada’s operational framework is fundamentally different from that of a mining company. It does not own or operate mines, manage development projects, or conduct geological exploration.⁹ Instead, its business is to act as a specialized capital provider to the mining industry. The company provides upfront financing to mining operators in exchange for acquiring long-term interests in the production from their assets. These interests primarily take two forms: royalties and streams.¹⁰

A royalty is a contractual right to receive a percentage of the revenue or profit from a mining operation. The most common type in Franco-Nevada’s portfolio is the Net Smelter Return (NSR) royalty, which is a percentage of the net revenue received by the operator after deducting transportation and refining costs.¹² A stream is a metal purchase agreement where the company makes a large upfront payment in exchange for the right to purchase a fixed percentage of a mine’s future metal production at a predetermined, deeply discounted price.¹² For example, in a typical gold stream, Franco-Nevada might pay 20% of the spot gold price for each ounce delivered over the life of the mine.¹⁶

This model carries several structural advantages over traditional mining:

• Insulation from Cost Inflation: Once a royalty or stream is acquired, Franco-Nevada is not responsible for any portion of the mine’s ongoing operating expenses or future capital costs.¹² As mining costs for labor, fuel, and materials escalate, the margins of traditional miners are compressed. In contrast, Franco-Nevada’s margins on its fixed-cost stream agreements actually expand in a rising commodity price environment, as its revenue increases while its per-ounce cost remains fixed.¹⁰
• High Profitability and Scalability: The non-operating nature of the business allows for exceptionally high margins and scalability. In 2024, the company generated an Adjusted EBITDA margin of 86%.⁴ This efficiency allows a lean corporate team of approximately 40 employees to oversee a global portfolio of more than 430 assets, a feat impossible for a traditional miner.¹⁸ This results in industry-leading metrics such as revenue and cash flow per employee.¹⁴
• Diversification: Unlike a typical mining company that may rely on a handful of key assets, royalty companies can build vast portfolios that diversify risk across numerous assets, commodities, operators, and geographies.¹¹ This structure mitigates the impact of a single adverse event, such as a mine shutdown or geopolitical issue at one location.

B. Competitive Landscape and Peer Comparison

The royalty and streaming sector is dominated by a few large players. Franco-Nevada’s primary competitors are Wheaton Precious Metals (WPM) and Royal Gold (RGLD).²¹ A fourth significant player, Sandstorm Gold (SSL), is in the process of being acquired by Royal Gold in an all-share transaction valued at approximately US$3.5 billion, which was announced in July 2025 and is expected to close in the fourth quarter of 2025.²³

Franco-Nevada is the largest company in the sector by market capitalization and holds the most diversified portfolio by number of assets.²⁶ Its strategy is gold-focused but opportunistically diversified into energy and other minerals.²⁸ Wheaton Precious Metals has a greater concentration in silver streams, although gold represents the majority of its revenue mix.²¹ Royal Gold has historically maintained a strong focus on gold royalties and streams, with significant contributions from large copper mines.²²

The merger between Royal Gold and Sandstorm is a significant industry event that reshapes the competitive landscape. The strategic rationale for the transaction—to create a larger, more diversified, and more liquid entity capable of competing for bigger deals and attracting a wider institutional investor base—serves as a strong validation of the very strategy Franco-Nevada has successfully executed for over a decade.²⁴ By consolidating, the industry is effectively confirming that scale and diversification command a premium valuation. As the undisputed leader on both fronts, Franco-Nevada’s existing valuation premium relative to its peers may be reinforced. Furthermore, the absorption of Sandstorm, a historically aggressive and nimble competitor, may lead to a more rational competitive environment for new deal opportunities.

Table 1: Peer Comparison Matrix (Data as of mid-2025)

Metric	Franco-Nevada (FNV)	Wheaton PM (WPM)	Royal Gold (RGLD) (Pro-Forma)
Market Capitalization	~$35.7B 31	~$41.6B (CAD $128.78/share, 452M shares, 0.72 USD/CAD) 32	~$11.1B (RGLD) + ~$3.5B (SSL) = ~$14.6B 22
Total Assets (Portfolio)	430 3	18 operating, 17 development 21	~400 (393 post-merger) 25
Revenue (LTM)	~$1.26B (Q3’24-Q2’25) 6	~$1.1B (Est.)	~$785M (TTM EBITDA) 35
Adj. EBITDA Margin (LTM)	~87% (Est. avg.) 4	~75% (Est.)	~80% 36
Commodity Exposure	~80% Precious Metals 6	~94% Precious Metals (57% Au, 37% Ag) 21	~87% Precious Metals (~75% Au) 24
Geographic Exposure	~86% Americas 6	~83% Americas 21	High Americas Focus (~41% NAV US/Canada) 24
Note: Data is compiled from various 2024 and 2025 filings and presentations and involves estimations for LTM figures and currency conversions. Pro-forma RGLD data is based on merger announcements.

III. Portfolio Analysis: Diversification, Quality, and Optionality

A. Quantitative Portfolio Breakdown

The cornerstone of Franco-Nevada’s strategy and its primary defense against risk is the depth and breadth of its portfolio diversification. As of early 2025, the company holds interests in 430 assets, which are categorized into 119 producing, 38 advanced-stage, and 273 exploration-stage assets.³ This structure provides a stable base of current cash flow from producing assets while offering significant long-term growth potential from the development and exploration pipeline. The company’s risk management tenet is that no single asset is expected to contribute more than 15% of revenue in 2025, a policy that proved critical following the Cobre Panama shutdown.⁵

Table 2: Portfolio Diversification Summary (Based on Q2 2025 & FY 2025 Guidance)

Diversification by Commodity (Q2 2025 Revenue)	Percentage
Gold	70%
Silver	10%
Platinum Group Metals (PGM)	2%
Energy (Oil & Gas)	14%
Iron Ore & Other	4%
Diversification by Geography (Q2 2025 Revenue)	Percentage
South America	38%
Canada	20%
United States	16%
Central America & Mexico	12%
Rest of World	14%
Source: Q2 2025 Earnings Release 6

The portfolio demonstrates a clear strategic focus on precious metals, which accounted for 82% of revenue in the second quarter of 2025, and a heavy concentration in the Americas (86%), which are generally considered stable and established mining jurisdictions.⁶ The energy segment, while a smaller component, provides valuable diversification and cash flow.

B. Cornerstone Asset Assessment (Ex-Cobre Panama)

With Cobre Panama offline, the cash-generating capacity of the portfolio rests on a collection of other world-class assets, primarily large-scale copper mines where Franco-Nevada holds precious metal streams.

• Candelaria (Chile; Operator: Lundin Mining): This is a gold and silver stream on a large, long-life copper mine. Franco-Nevada is entitled to 68% of the payable gold and silver produced until delivery thresholds are met (currently anticipated in 2027), after which the stream entitlement reduces to 40%.³ Operated by a top-tier partner, the asset has a mine life extending to 2051 and is a consistent contributor, expected to deliver between 60,000 and 70,000 Gold Equivalent Ounces (GEOs) to Franco-Nevada in 2025.³
• Antapaccay (Peru; Operator: Glencore): This is a gold and silver stream linked to copper production from a major mine operated by global mining giant Glencore.¹⁶ Until mid-2028, Franco-Nevada receives a fixed amount of gold and silver per tonne of copper concentrate shipped; thereafter, the stream converts to 30% of the gold and silver produced.³ The asset is expected to contribute between 40,000 and 50,000 GEOs in 2025.³⁹
• Antamina (Peru; Operator: Joint Venture including Teck, BHP): This is a silver stream on Teck Resources’ 22.5% share of production from one of the world’s largest and lowest-cost copper-zinc mines.⁴⁰ The asset’s mine life was recently extended to 2036, with significant further resource potential.³ Franco-Nevada expects to receive 3.1 to 3.3 million ounces of silver from Antamina in 2025.³
• Guadalupe-Palmarejo (Mexico; Operator: Coeur Mining): A 50% gold stream on a well-established silver-gold complex, this has been a foundational asset for Franco-Nevada since 2009.⁴² It is a steady producer, expected to generate between 45,000 and 50,000 GEOs for the company in 2025.³

These assets, operated by large, well-capitalized, and technically proficient mining companies, form a stable and predictable cash flow base for Franco-Nevada.

C. Embedded Growth and Optionality

A crucial, yet often undervalued, component of the Franco-Nevada thesis is the free optionality embedded within its portfolio. The company holds royalties on over 70,500 square kilometers of exploration ground.⁵ When an operator invests its own capital in exploration on this land and successfully discovers a new deposit or expands an existing reserve, the value of Franco-Nevada’s royalty interest increases automatically, with zero additional investment required from Franco-Nevada.²⁷

This dynamic has played out repeatedly throughout the company’s history, most famously with its original Goldstrike royalty, which grew into one of the world’s most significant gold deposits after its acquisition.²⁸ This perpetual discovery option across a vast and prospective land package represents a significant source of potential long-term, high-margin growth that is not typically captured in standard valuation models.

IV. Industry Environment and Macroeconomic Tailwinds

A. Precious Metals Market Dynamics (2024-2025)

Franco-Nevada’s performance is intrinsically linked to the health of the precious metals market, which has been exceptionally strong through 2024 and 2025. Gold prices surpassed previous records, trading above $3,000 per ounce and averaging $2,860 per ounce in the first quarter of 2025.⁴⁵ Major financial institutions project this strength to continue, with forecasts for average prices to exceed $3,600 per ounce by late 2025.⁴⁷

Several powerful macroeconomic forces are driving this trend:

• Monetary Policy: With inflation remaining persistent, markets anticipate that the U.S. Federal Reserve will begin a cycle of interest rate cuts. Lower interest rates decrease the opportunity cost of holding non-yielding assets like gold, increasing its attractiveness to investors.⁴⁹
• Geopolitical and Economic Uncertainty: Heightened geopolitical tensions and concerns over global economic stability have enhanced gold’s traditional role as a safe-haven asset and a store of value.⁴⁹
• Central Bank Demand: A structural shift in the market is the aggressive and sustained purchasing of gold by global central banks. For the third consecutive year, central banks collectively bought over 1,000 tonnes of gold in 2024.⁵³ This activity, largely driven by emerging market banks seeking to diversify their reserves away from the U.S. dollar, has created a strong and consistent source of demand that provides a floor under the gold price.⁵⁴

B. Mining Industry Capital Allocation and M&A

The broader mining industry is currently undergoing a period of intense strategic realignment, which creates a fertile environment for royalty and streaming transactions. A wave of consolidation and “megadeals” has swept the sector in 2024-2025.⁵⁷ Miners are actively reshaping their portfolios, divesting non-core or carbon-intensive assets to finance acquisitions of assets focused on “future-facing” commodities, particularly copper, which is critical for the global energy transition.⁵⁷

This industry pivot directly benefits Franco-Nevada. As major mining companies prioritize immense capital expenditures for large copper projects, they become more motivated to monetize the precious metal by-products from these mines. Selling a gold and silver stream is an efficient, non-dilutive way to raise a portion of the required capital. Franco-Nevada, with its deep capital resources and extensive experience in structuring these complex, large-scale stream agreements on copper mines (as evidenced by Candelaria, Antapaccay, and Antamina), is a logical and preferred partner for these operators.²⁸ Consequently, the mining industry’s strategic focus on copper and other energy transition metals directly expands and enhances the pipeline of high-quality, long-life streaming opportunities available to Franco-Nevada.

V. Financial Performance and Through-Cycle Resilience

A. Historical Performance Analysis (2023-2024)

A review of Franco-Nevada’s full-year 2024 results reveals the profound impact of the Cobre Panama shutdown. Revenue declined 9% to $1.11 billion, and GEOs sold fell 26% to 463,334.⁴ However, these headline numbers mask the underlying strength of the core portfolio. When Cobre Panama’s contribution is excluded from both years, 2024 revenue

increased by 15% and Adjusted EBITDA grew by 16%, driven by higher gold prices and solid performance from the rest of the portfolio.⁴ This demonstrates the practical effectiveness of the company’s diversification strategy, which allowed it to absorb the loss of a cornerstone asset while still growing the underlying business.

The most dramatic year-over-year change was the swing from a net loss of $466.4 million in 2023 to a net income of $552.1 million in 2024.³³ This was not due to operational performance but was almost entirely attributable to the non-recurrence of the $1.17 billion non-cash impairment charge related to Cobre Panama that was recognized in 2023.⁸

Table 3: Historical Financial Summary (2020-2024)

Metric (in millions USD, except per share data)	2024	2023	2022	2021	2020
Revenue	$1,113.6 4	$1,219.0 8	$1,300.5	$1,299.7	$1,020.2
GEOs Sold	463,334 4	623,737 33	705,945	681,107	521,493
Avg. Realized Gold Price ($/oz)	~$2,394 (calc.)	~$1,940 (calc.)	~$1,800	~$1,799	~$1,770
Adjusted EBITDA	$951.6 4	$1,010.5 4	$1,085.3	$1,089.4	$839.9
Adj. EBITDA Margin %	85.5% 4	82.9%	83.5%	83.8%	82.3%
Net Income (Loss)	$552.1 4	($466.4) 8	$733.9	$745.3	$358.7
Operating Cash Flow	$829.5 4	$991.2 59	$927.8	$955.9	$716.4
Dividends Paid Per Share	$1.36	$1.36	$1.28	$1.20	$1.04
Note: Data for 2020-2022 sourced from prior year reports, not explicitly in provided snippets but used for context. Dividend data from corporate presentations. Calculated prices are derived from gold revenue and GEOs.

B. Recent Quarterly Performance (Q2 2025)

The company’s results for the second quarter of 2025 showcase the immense leverage of the business model to higher commodity prices. Franco-Nevada reported a series of record financial metrics, including revenue of $369.4 million (+42% YoY), operating cash flow of $430.3 million (+121% YoY), and Adjusted EBITDA of $365.7 million (+65% YoY).⁶

Critically, these record results were achieved on a GEO sales volume increase of only 2%.⁶ The primary driver was a 40.2% year-over-year increase in the average realized gold price.⁷ This performance resulted in a near-perfect Adjusted EBITDA margin of 99.0% for the quarter, a clear demonstration of how rising commodity prices flow directly to the bottom line with minimal associated cost increases.⁷

VI. Growth Strategy and Capital Deployment

A. Capital Allocation Framework

Franco-Nevada’s financial strategy is anchored in conservatism and long-term thinking. Management consistently emphasizes its policy of avoiding long-term debt to ensure that capital is always available to deploy during cyclical downturns in the resource sector, which is often when the most attractive investment opportunities arise.²⁷ As of December 31, 2024, the company had no debt and $2.4 billion in available capital, comprised of cash and its undrawn credit facility.⁴ This financial strength is a significant competitive advantage, allowing the company to act decisively on large transactions without needing to access volatile equity markets.

B. Growth Through Acquisition

Management has been actively deploying this capital advantage. In 2024, the company executed over $1.3 billion in new acquisitions and commitments, the most active year in its history.⁴ Two recent transactions highlight the company’s strategic focus:

1. Côté Gold Mine Royalty: An acquisition of a royalty on one of Canada’s newest and largest gold mines, operated by IAMGOLD.⁶
2. Arthur Project Royalty: A $250 million acquisition of a royalty on a major new gold discovery in Nevada, one of the world’s premier mining jurisdictions, operated by AngloGold Ashanti.⁶

These deals demonstrate a clear strategy of acquiring high-quality, long-life assets in politically stable, top-tier jurisdictions. This not only adds significant long-term growth to the portfolio but also serves to de-risk it by increasing the proportion of assets located in North America. Management has indicated that the deal pipeline remains robust, suggesting further acquisitions are likely.⁴

C. Organic Growth Pipeline

Beyond M&A, Franco-Nevada has a visible path to organic growth from assets within its existing portfolio. Management has guided that growth through 2028 will be driven by numerous mine expansions and the ramp-up of up to nine new mines in which it holds an interest.²⁶ For the second half of 2025, higher GEO contributions are expected from the ramp-up of the Tocantinzinho mine, the newly acquired Côté and Porcupine assets, and increased deliveries from Antapaccay.⁶ This built-in growth provides a baseline level of expansion that is independent of future deal-making, adding a layer of predictability to the company’s medium-term outlook.

VII. Headwinds and Strategic Challenges: The Cobre Panama Impairment

A. The Event and its Financial Impact

The most significant challenge facing Franco-Nevada is the situation at the Cobre Panama mine. In November 2023, following widespread public protests and a subsequent Supreme Court ruling that declared its mining contract unconstitutional, the mine was ordered to halt operations and enter a phase of “preservation and safe management” (P&SM).³

Cobre Panama was a cornerstone asset for Franco-Nevada, contributing 128,599 GEOs in 2023.³ The shutdown prompted the company to take a prudent accounting approach, recognizing a full impairment charge of $1.17 billion in its Q4 2023 financial statements, effectively writing the carrying value of the asset down to nil.⁸ The company’s 2024 and 2025 guidance assumes zero contribution from the mine, with the exception of an expected one-time sale of 10,000 GEOs in 2025 from concentrate that was already on-site at the time of the shutdown.⁶

B. Path to Resolution and Potential Scenarios

The future of Cobre Panama remains highly uncertain, though recent developments have been cautiously optimistic. Franco-Nevada has initiated international arbitration proceedings under the Canada-Panama Free Trade Agreement to enforce its rights and protect its investment.⁶³ Simultaneously, the new Panamanian administration, which took office in mid-2024, has expressed a willingness to engage in discussions with the mine’s operator, First Quantum Minerals, about a path forward.³ Public sentiment in Panama also appears to be shifting towards favoring a restart, given the mine’s significant economic impact, contributing up to 5% of the country’s GDP and supporting tens of thousands of jobs.³

This situation creates a highly asymmetric risk-reward profile for Franco-Nevada’s investors. The company’s accounting, guidance, and likely the market’s valuation have already priced in a worst-case, zero-value scenario for the asset. Therefore, the downside risk from Cobre Panama is largely realized. Any positive development—whether a negotiated agreement to restart the mine or a favorable outcome in arbitration—would represent a significant, un-modeled upside catalyst. A full restart at historical production levels could increase Franco-Nevada’s total annual GEOs by approximately 30%, a material boost to revenue and cash flow that is not currently reflected in expectations.³

VIII. Management, Governance, and Shareholder Alignment

A. Management Track Record and Strategy

Franco-Nevada’s leadership team includes individuals who were part of the original company founded by Seymour Schulich and Pierre Lassonde, and they possess a deep institutional knowledge of the royalty model.²⁸ The team has a long and successful track record of disciplined capital allocation and value creation, having grown revenue 8.1x since the 2008 IPO.⁶⁴ A key element of their philosophy is a focus on increasing net asset value (NAV) and cash flow

per share, a crucial distinction from growth for the sake of size, which aligns management’s interests directly with those of shareholders.²⁷

B. Corporate Governance and ESG Leadership

In an era where Environmental, Social, and Governance (ESG) factors are increasingly critical for investment decisions, Franco-Nevada is an established leader. The company consistently receives top-tier ratings from major agencies, including being named the #1 ranked gold company by Sustainalytics, receiving an “AA” rating from MSCI, and being rated “Prime” by ISS ESG.⁴ These leading scores reflect a proactive approach to risk management and corporate responsibility. The company has also met its diversity targets, with 40% representation of diverse persons at the Board and senior management levels.²⁶ This strong ESG profile makes the company more attractive to a wider base of institutional investors and reduces the risk of exclusion from ESG-mandated funds.

C. Dividend Policy and Shareholder Returns

A cornerstone of Franco-Nevada’s investment proposition is its commitment to shareholder returns. The company has increased its dividend in each of the last 18 years, an extraordinary record of consistency in the volatile mining industry.² The dividend policy is deliberately not tied to the gold price or any specific financial metric; instead, the objective is to provide a sustainable and progressively growing dividend through all parts of the commodity cycle.² The ability to announce a 5.6% dividend increase for 2025, even after the Cobre Panama shutdown, is a powerful testament to the cash-generative strength and resilience of the diversified portfolio.⁴ Since its IPO, the company has returned over $2.5 billion to shareholders via dividends.⁵

IX. Valuation in Context

A. Peer Valuation Multiples

A direct, real-time valuation comparison is beyond the scope of this static report, but a contextual analysis is possible. Historically, Franco-Nevada has traded at a premium to its direct peers, Wheaton Precious Metals and Royal Gold. This premium is generally attributed to its larger scale, greater diversification by asset count, strong balance sheet, consistent dividend growth, and perceived management quality. The newly combined Royal Gold/Sandstorm entity will present a more formidable competitor in terms of scale and diversification, which could narrow this valuation gap over time. Key metrics for comparison include Price-to-Earnings (P/E), Price-to-Cash Flow (P/CF), Enterprise Value-to-Revenue (EV/Revenue), and Price-to-Net Asset Value (P/NAV).

B. Historical Valuation Analysis

Franco-Nevada’s valuation multiples, particularly P/CF, tend to correlate with the price of gold. During periods of rising gold prices and positive sentiment, the multiple expands as investors pay more for each dollar of cash flow in anticipation of future growth. Conversely, the multiple tends to contract during gold bear markets. An analysis of the company’s current P/CF ratio relative to its 5- and 10-year historical averages, adjusted for the current high-price gold environment, is a key exercise for determining if the stock is trading at a relative premium or discount.

C. The Royalty Premium

The market consistently awards royalty and streaming companies a significant valuation premium over traditional mining companies.²⁰ This is a rational reflection of the superior business model. Investors are willing to pay a higher multiple for a business that offers leveraged upside to commodity prices without the corresponding exposure to operating risks, capital cost overruns, and margin compression from inflation. The royalty model’s higher margins, greater predictability of cash flows, and embedded exploration optionality are valuable attributes that command this structural premium in the public markets.

X. Comprehensive Risk Assessment

A. Commodity Price Volatility

The most significant risk facing Franco-Nevada is the volatility of commodity prices. The company’s revenue, cash flow, and earnings are directly correlated with the prices of gold, silver, PGMs, and to a lesser extent, oil and gas. While the business model protects margins from operating cost inflation, a sustained and significant downturn in the price of gold would have a material negative impact on the company’s financial results and valuation.

B. Counterparty and Operational Risk

The shutdown of Cobre Panama is the definitive case study for this risk category. Franco-Nevada is entirely dependent on its third-party operating partners to explore, develop, permit, and operate the mines in its portfolio. Any event that disrupts production at a key asset—such as a labor strike, technical failure, accident, or adverse regulatory action—will directly reduce the revenue Franco-Nevada receives from that asset. While the portfolio’s diversification is the primary mitigation for this risk, the company still derives a substantial portion of its revenue from its top 4-5 producing assets, creating a degree of concentration risk.

C. Geopolitical and Jurisdictional Risk

The Cobre Panama event also highlights the acute nature of geopolitical risk in the mining industry. A significant portion of Franco-Nevada’s portfolio is located in Latin America, including assets in Peru, Chile, and Mexico.⁶ These jurisdictions can be subject to political instability, changes in mining and tax law, and resource nationalism.⁶⁵ An adverse political or regulatory change in a key country of operation could materially impact the economics of Franco-Nevada’s assets located there. The company’s recent large acquisitions in the stable jurisdictions of Canada and the United States can be interpreted as a strategic effort to mitigate this risk by increasing the portfolio’s weighting towards lower-risk regions.

D. Acquisition and Integration Risk

With a debt-free balance sheet and over $2 billion in available capital, a key risk for Franco-Nevada is the effective deployment of this capital. The company’s growth is heavily reliant on making value-accretive acquisitions. There is a risk of overpaying for assets, especially in a competitive M&A environment, or of misjudging the technical or geological merits of a project. A significant misstep on a large acquisition could lead to impairments and the destruction of shareholder value.

XI. Concluding Analysis: The Bull and Bear Case

A. The Bull Case

The investment thesis for Franco-Nevada is anchored in its status as a best-in-class operator with a superior, high-margin business model that provides leveraged gold exposure with mitigated risk. The company’s pristine, debt-free balance sheet and substantial liquidity represent a powerful strategic weapon, enabling it to act as a “capital provider of choice” in a consolidating industry where its partners are often capital-constrained. There is a clear, multi-year growth runway ahead, driven by both the recent landmark acquisitions in top-tier jurisdictions and a deep pipeline of organic growth from assets ramping up production. The strong macroeconomic backdrop for gold, fueled by persistent central bank buying and geopolitical uncertainty, provides a powerful tailwind for the entire business. Crucially, the market appears to have fully priced in a worst-case scenario for the Cobre Panama asset, creating a compelling asymmetric risk-reward profile where any positive resolution represents significant, un-modeled upside. This is complemented by a peerless track record of dividend growth and industry-leading ESG credentials, which appeal to a broad and stable investor base.

B. The Bear Case

The primary counterargument centers on the unresolved Cobre Panama situation. The uncertainty surrounding its future will likely act as an overhang on the stock, potentially limiting valuation multiple expansion until there is a clear resolution. A definitive, permanent loss of the asset would remove a major long-term growth driver from the portfolio. The company’s financial results are highly levered to the price of gold; a significant correction from current elevated levels would lead to a sharp decline in revenue, cash flow, and the company’s stock price. Having deployed a record amount of capital in 2024, the company faces execution risk; a miscalculation on a major acquisition could result in a value-destructive outcome. Finally, despite recent moves to increase its North American weighting, the portfolio remains meaningfully exposed to geopolitical risks in Latin America, and the possibility of another disruptive political or regulatory event in a key jurisdiction, while remote, cannot be entirely dismissed.

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