Franco-Nevada (NYSE: FNV) stands out in the gold sector by avoiding the complexities of mining operations. Instead, the company generates revenue through royalties and streaming agreements with mining companies. This model allows Franco-Nevada to benefit from rising gold prices without the operational headaches that traditional miners face, such as high costs for diesel, labor, and equipment maintenance.
The company's financial performance has been impressive, with an adjusted EBITDA margin of 91.2% in the second quarter. This is significantly higher than margins reported by major miners like Barrick (60%) and Newmont (61.2%). Franco-Nevada's lean operations, with only 41 full-time employees and five part-time contractors, contribute to its high profitability.
Franco-Nevada's diversified portfolio includes interests in 447 assets, including 129 operating mines. The company's revenue streams are spread across precious metals, oil, gas, and other mining assets. This diversification has helped Franco-Nevada achieve record financial results midway through its fiscal year, with six-month revenue of $1.23 billion, up 67% year over year, and earnings per share of $4.27, up 80% year over year.
The company has raised its dividend for 19 consecutive years, including a 16% increase this year to $0.44 per share. Despite gold's volatility, rising over 105% in the past five years but dropping from a high of $5,344.30 per ounce in February to around $3,913, Franco-Nevada's shares have performed well, up more than 8% this year. This compares favorably to Barrick's 15% decline and Newmont's 5% gain.