Franco-Nevada

Our Business Model

Our revenue is generated from various forms of agreements, ranging from net smelter return royalties, streams, net profits interests, net royalty interests, working interests and other types of arrangements.

As a gold-focused royalty and streaming company, we do not operate mines, develop projects or conduct exploration. Franco-Nevada has a free cash flow generating business with limited future capital commitments and management is focused on managing and growing its portfolio of royalties and streams that:

Why We Are Different

Royalties and streams expose Franco-Nevada to the exploration optionality inherent with geologically favourable properties and price optionality associated with gold and commodity price cycles. They can often be registered on title to a property or in a secure fashion with less exposure to government resource nationalisation. They are not subject to operating or capital cash calls, making this a free cash flow business. Franco-Nevada can provide yield along with more upside than a gold ETF.

Royalties
The majority of mining properties have government and/or private royalties associated with them. Private royalties are generally created by prospectors or exploration companies that sell their property rights to a more senior company capable of developing and operating a mine on the property. A royalty allows the seller to retain some exploration and price upside while the operating company only pays if ore is actually mined.

The most common royalties are a simple percentage of the value of the future production from the property. There are other forms of royalties such as profit-related royalties or fixed-rate royalties but these are not a major part of Franco-Nevada’s focus or portfolio.

Royalty rights are often registered on the title of the property or mineral rights and, in jurisdictions where recognized, will generally survive an operating company reorganization.

Streams
Streams are metal purchase agreements that allow the holder of the agreement to purchase all or a portion of the gold, silver or other products from a mine in exchange for an upfront payment and an additional payment on each delivery. While streams have similar exploration and price optionality to royalties, they differ from royalties because of the ongoing cash payment required to purchase the physical metal.

Royalties and Streams are explained in further detail under Terms Explained.