Franco-Nevada May Deploy More Than $1 Billion This YearChristopher Donville
Franco-Nevada Corp., a Canadian company that provides financing for energy and mining projects, sees sagging commodity prices as an opportunity to complete deals worth more than $1 billion this year.
“I’d like to deploy all my cash this year,” David Harquail, chief executive officer of the Toronto-based company, said in an interview in Vancouver Monday. “That would be my ideal.”
Harquail, who put more than $900 million to work in 2014, said mining and energy companies need more financing for projects hurt by falling prices. Franco-Nevada and other buyers of royalties provide financing to developers in exchange for a discount on future output.
Oil prices have dropped by half from last year’s high and prices for natural gas, copper, gold, iron ore and coal have also been declining. Harquail, who declined to predict commodity prices, said he expects to expand Franco-Nevada’s book of oil-and-gas investments later this year as project valuations adjust to volatile commodity prices.
“Most of the projects we’ve been involved in is where people are already pregnant,” Harquail said. “I think the next phase for us is actually helping refinance debt on a more permanent basis.”
Among investments this year, Franco-Nevada will supply about $300 million for Toronto-based First Quantum Minerals Ltd.’s Cobre Panama copper-and-gold development. Last year, Franco-Nevada played a role in Lundin Mining Corp.’s $1.8 billion acquisition of Freeport-McMoRan Inc.’s 80 percent controlling stake in the Candelaria copper mining complex in Chile.
“This summer we’ll be back in acquisition mode,” he said.
Franco-Nevada, which has a market value of C$11.3 billion ($9.1 billion), gained 4.2 percent to C$72.60 at the close in Toronto on Tuesday. The shares have soared 44 percent in the past year.