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Franco-Nevada Q1 profit up 121%, increases monthly dividend

Published: 10:38 08 May 2012 EDT

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Gold royalty and stream company Franco-Nevada Corp. (TSE:FNV) reported Tuesday that its first-quarter profit more than doubled to US$46.8 million, and raised its monthly dividend by 12.5 percent.

For the three months that ended March 31, net income was $46.8 million, or $0.33 per share, up 121 percent from $21.2 million, or 18 cents per share, a year earlier.

The company said that adjusted profit was $43.6 million, or $0.31 per share, compared to $22.1 million, or 19 cents per share, in the first quarter of 2011.

Revenue increased 44 percent to $105.0 million, from $73.1 million a year earlier.

According to Thomson Reuters, analysts had been expecting earnings per share of 34 cents on revenues of $118 million.

"Franco-Nevada had another solid quarter with significant growth year-over-year,” said president and CEO David Harquail.

"This growth has allowed us to increase our dividend for the fifth consecutive year since going public. For those shareholders that bought our shares in our IPO in late 2007, the effective yield on their cost base is now 3.9 percent.

"Our goal is to continue to deliver increased overall shareholder returns."

Franco-Nevada completed approximately $110 million in new investments during the quarter, including gold royalties at Timmins West in Ontario and Bronzewing in Australia, and an addition to its Weyburn Unit working interest in Saskatchewan.

The company said its U.S. gold assets, which include Goldstrike and Gold Quarry and Marigold in Nevada, generated $19.4 million in revenue in the first quarter.

Its Canadian assets generated $9.7 million in revenue, largely from the company’s Sudbury and Golden Highway, Ontario assets. Franco-Nevada said a new contributor to Canadian gold revenue was Musselwhite in Ontario with $1.6 million, as the net profit interest began payments in late 2011.

Revenue from the company’s Australian assets totaled $2.9 million, with the strongest growth coming from its Henty asset, due to higher average gold prices and production.

Internationally, Palmarejo in Mexico, and MWS in South Africa, generated revenue of $25.4 million and $10.6 million, respectively, in the first quarter, compared with $20.8 million and $2.0 million, a year earlier.

The company said increases at Palmarejo were largely the result of higher average gold prices during the quarter.

Meanwhile, revenue from Franco-Nevada’s Sudbury platinum group metals (PGM) assets was $13.7 million for the quarter.

The company’s Stillwater complex in Nevada reported that revenue was lower due to lower production and lower average PGM prices.

Franco-Nevada’s oil and gas revenue was $10.5 million in the first quarter, compared to $8.8 million in the same quarter of 2011.

The company noted that oil and gas revenue was generated 76 percent from oil in the latest period, and 24 percent from gas, and was positively impacted by the acquisition of the additional Weyburn Unit working interest completed on January 1, 2012.

Franco-Nevada also announced Tuesday an increased monthly dividend of five cents per share for July, August and September 2012.

The gold royalty company has interests in some of the largest new gold development and exploration projects in the world. Its shares were down 1.09 percent early Tuesday, trading at $42.64.

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