I don’t really follow the large cap mining names very closely and The IKN Weekly has always been about the juniors, but there is a minor part of the Weekly that keeps an eye on the bigger names so this weekend it got a few lines on Franco Nevada’s (FNV) deal with Antamina for its silver. What I most like about the deal is the concept, not the numbers. For sure it’s a bet on silver in the long-term and for sure it’s an immediate revenue generator, in the end the math really isn’t so very difficult. What struck me from the very moment I read the NR on the deal last week is that FNV is growing up fast.
You may have noticed that IKN doesn’t like sucking up to mining’s great’n’good, there are way more than enough sycophantic fanclubs to massage their collective egos already, plus many of them are just plain lucky rather than smart and time catches up with them. But I can’t get round the fact that Pierre Lassonde deserves all the praise he gets. Here’s the short section on FNV from IKN335, out last night.
Nevada (FNV): My one line comment about the deal FNV has struck with the Antamina
mine in Peru was the most visited single post of the week (10), an award it
hardly deserved (because there was virtually no content in it) but it shows how
this deal between two names has captured the limelight. I’ve read several
brokerage published numbercrunches on the deal and
they’re all of an ilk, calling the deal “fair” and “win-win”, but I think on a
conceptual level it deserves far more praise than mere numbers can indicate.
This is exactly the type of deal FNV should be doing, locking down a
generational stream with a company that wants the cash and can afford to
forward sell (de facto) one of its minor metal products from the mine without
FNV’s share price performance this
week reflects its conservative exposure to metals swings compared to the
traditional (and very beaten up) mining companies. We’re seeing it move from
“good idea” to the type of long-term holding that will become a must-own part
of any metals fund portfolio, the next BHP or Rio Tinto.