Stock price when the opinion was issued
Gold ounces sold were 110,264, down 35% year over year. EPS was 75 vs 95c last year, and estimates 81c. EBITDA fell 19% to $221.9M and below estimates $237M. Results are fairly weak considering the price of gold rose 18% vs the comparable quarter. Guidance was moved to the lower end of the prior range. FNV did announced another smelter royalty. A disappointing quarter, but we think the decline today reflects the picture. We would continue to see it more as a BUY. We also quite like the sector outlook currently.
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Still suffering the shut-down of the Panama mine, though new discussions may arise about it. FNV has no debt. Arbitration could happen. Once Panama is back on line, FNV shares will resume their climb. He bought this just after the Panama situation. He's happy to hold this long term.
Gold is almost like an insurance policy. Good diversifier. Should be a good, long-term hedge. Deposits have become harder to find.
He prefers the business model of the royalty companies like FNV or WPM. As well, they operate counter-cyclically -- give money when gold prices are low and harvest when prices are high. Always looks expensive, but it's expensive for a reason.
They don't take on production and environmental risks, being a royalty company. They just cash the cheques, but their valuation has always been high. They took a big hit when their Panama gold operation was shut down; maybe that mine will reopen. Is in a volatile sector. Great balance sheet and history. Likes it and the sector now.