Franco-Nevada Acquires Royalty Package in Cote Gold Mine

Franco-Nevada Corporation FNV announced that it inked a deal to acquire an existing royalty package on the Côté Gold Mine in Ontario from a private third party for $1.05 billion in cash. This move will boost FNV’s portfolio and add immediate gold revenues from a major new gold mine.

Details of FNV’s Côté Gold Mine Royalty Acquisition

The Côté Gold Mine is a joint venture between IAMGOLD Corporation IAG and Sumitomo Metal Mining Co. Ltd., a subsidiary of Sumitomo SSUMY. IAG owns 70% of the venture and Sumitomo Metal Mining owns 30%. The mine has 16 million ounces of Measured and Indicated Mineral Resources and 4 million ounces of Inferred Mineral Resources.

The Côté Gold Mine's potential value is enhanced by the growing Gosselin zone. Plans are underway to incorporate this zone into an updated mine plan next year, which will combine the Côté and Gosselin zones. This is likely to create a larger, long-lasting mine.

Franco-Nevada’s royalty package for the Côté Gold Mine includes a 7.5% gross margin royalty, applicable to 100% of mineral production from the Chester claims. These claims cover all Mineral Reserves  and more than 99.9% of current Mineral Resources at the mine.

FNV collaborated with IAMGOLD and Sumitomo for this royalty acquisition deal.

After the closing of the deal, the existing royalty arrangements will be replaced with a royalty agreement between the three companies. The new agreement will be registered and include clarified audit and information rights. However, the payment calculation methodology will remain economically unchanged.

The transaction is expected to close at the end of the second quarter of 2025.

After the new agreement, the operators, IAMGOLD and Sumitomo, will have the option to buy down up to 50% of the royalty at Franco-Nevada's attributable costs. This can be done in two 25% tranches.

Franco-Nevada’s Benefits From the Deal

The deal will add immediate gold cash flow from one of Canada's newest large-scale gold mines to FNV’s portfolio.

According to the guidance provided by IAMGOLD for the mine, Franco-Nevada is expected to generate annual revenues of $67 million at $3,200/oz Au from this deal.

The Côté Gold Mine's modern design and technology, including autonomous equipment and efficient milling, are expected to keep production costs low, supported by affordable hydroelectric power. The mine’s cash costs are anticipated to reduce throughout the year as volume increases and operating processes are refined.

The Côté Gold Mine's substantial mineral resource base offers significant potential for milling capacity expansion, which will further aid FNV.

Franco-Nevada expects the mine to reach its nameplate capacity of 13 Mtpa by year-end. The company anticipates the mill's capacity to further increase to 20 Mtpa, aligning with the existing mining capacity of 54 Mtpa and a strip ratio of 2:1.

FNV Stock’s Price Performance

The company’s shares have gained 39.8% in the past year compared with the industry’s growth of 43.4%.

Franco-Nevada’s Zacks Rank & Other Stocks to Consider

The company currently flaunts a Zacks Rank #1 (Strong Buy).

Another top-ranked stock from the basic materials space is Carpenter Technology Corporation CRS. Carpenter Technology currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Carpenter Technology has an average trailing four-quarter earnings surprise of 11.1%. The Zacks Consensus Estimate for CRS’ 2025 earnings is pegged at $7.20 per share, which indicates year-over-year growth of 51.9%. Carpenter Technology shares have skyrocketed 111% in the last year.

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