VANCOUVER (miningweekly.com) – Commodity royalty streaming firm Franco-Nevada reported a stellar performance for the third quarter ended September 30, setting several new production and financial records for the period.
After market close on Monday, Toronto-based Franco-Nevada reported operating and financial results for the period, lifting net income to $54.4-million, or $0.31 a share, compared with $15.2-million, or $0.10 a share, for the same period a year earlier.
Excluding special items, adjusted net income was $53.5-million, or $0.30 a share, compared with $19.4-million, or $0.12 a share, beating Wall Street analyst forecasts of earning $0.25 a share, on an adjusted basis.
Franco-Nevada ascribed the improved performance to higher revenues on the back of the Antamina and Antapaccay stream acquisitions, completed in October 2015 and February 2016, respectively.
The company reported record revenue of $172-million for the quarter, up 66% year-on-year.
Franco-Nevada continued to see significant growth in gold equivalent ounces (GEOs), with mineral assets contributing 123 065 GEOs in the period, an increase of 43.7% over the third quarter of 2015. The impact on revenue of the growth in the number of GEOs received was further enhanced by higher average precious metal prices.
IMPROVED OUTLOOK
Franco-Nevada also on Monday announced significant increases to its 2016 production guidance.
The company now expected to produce between 445 000 GEOs and 455 000 GEOs, up from between 425 000 GEOs and 445 000 GEOs forecast earlier this year.
Expected full-year revenue from its oil and gas assets increased from between $15-million and $25-million to between $25-million and $30-million, which was partially enhanced by a newly acquired oil and gas royalty package.
Franco-Nevada on Monday announced that it had agreed to acquire a $100-million package of royalty rights in the STACK shale play, in Oklahoma’s Anadarko basin, from a private party. The top two operators of the lands are Newfield Exploration and Devon Energy. The land package will provide an estimated royalty rate of 1.61%.
Meanwhile, in October Kirkland Lake Gold exercised its option to buy back 1% of an overlying 2.5% net smelter return royalty for $30.5-million on Kirkland Lake's properties. Sibanye Gold also announced on October 27 that it had stopped production at the Cooke 4 underground mine, which the company disclosed it carries at a value of $69-million. This might portend booking a fourth-quarter impairment charge on the asset. Further, construction at First Quantum’s Cobre Panama mine continues to advance on schedule for a phased commissioning in 2018.