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Message: Franco-Nevada shares fall as outlook disappoints

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Franco-Nevada shares fall as outlook disappoints

posted on Mar 20, 13 01:46PM

by Thomson Reuters

* Company sees no growth in gold ounces for 2013

* Earnings excluding items slightly below estimates

* CEO says market good for new royalty, stream deals

* Shares drop 3.2 percent to C$45.88 in Toronto

TORONTO, March 20 (Reuters) - Shares of Franco-Nevada Corp fell as much as 6.4 percent on Wednesday the day after the Canadian gold royalty and streaming company released fourth-quarter results that missed analyst estimates and offered a disappointing 2013 outlook.

Toronto-based Franco-Nevada, which invests in mining projects rather than producing metals itself, said it expected to receive some 215,000 to 235,000 gold equivalent ounces in 2013, along with $55 million to $65 million in revenue from its oil and gas assets.

While the gold outlook was in line with the 230,000 ounces it received in 2012, it was lower than expected. The company will receive fewer royalty ounces from Barrick Gold Corp's Goldstrike mine in the U.S. state of Nevada, along with declining ounces at other projects.

On the positive side, Franco-Nevada expects its share of gold equivalent ounces from its existing portfolio to expand by at least 40 percent over the next five years and said the current financing market is favorable for striking new deals.

"We continue to see good opportunities to further supplement this growth with further investments," said Chief Executive David Harquail in a statement.

Harquail said the company has some $1.4 billion of capital available for investment in royalty and stream deals.

A royalty is an ongoing economic interest in the production or future production from a project, while a stream deal gives the company the right to buy future metal production at a set price.

Franco-Nevada reported a fourth-quarter loss late on Tuesday, as it posted a $74.1 million impairment charge on the value of its Arctic Gas assets in Northern Canada, along with an additional $8.6 million charge on other long-term investments.

The company had a net loss of $33.1 million, or 23 cents a share, in quarter ended Dec. 31. That compared with a loss of $105.4 million, or 80 cents, in the year ago period.

Adjusted to remove the impairment charges and other items, earnings came in at $47 million, or 32 cents a share, slightly below the average analyst estimate of 34 cents a share, according to Thomson Reuters I/B/E/S.

Revenue fell 4 percent to $114.1 million.

Shares of Franco-Nevada dropped as low as C$44.36 on Wednesday morning on the Toronto Stock Exchange, before regaining slightly to trade down 3.2 percent at C$45.88 around midday.

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