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Franco-Nevada Corporation Message Board

  • investora2z investora2z Apr 24, 2013 1:26 PM Flag

    More confirmation required to become confident

    All the gold and silver companies have been on downtrend since quite sometime. This is mainly because of the decline in prices of the precious metals. For FNV, the fundamentals have not been very strong with the company reporting a net loss in Q4'12. Even the revenue had declined on a YoY basis. The stock is trading well below its short term averages, and there has been lot of momentum to the decline. The 10 day average volumes have been in excess of one million shares compared with 411K for the three month average. The stock has fallen from above $61 in October 2012 to its 52 week low ($34.53) made on April 17, 2013. It has bounced sharply from those levels and is now almost 15% up from there. However, such long periods of declines do not get over so quickly and the stock has to spend time around current levels to make a march towards the 50 DMA of $43.35. However, the recent crash has also created opportunities for contracts which are available at low valuations. FNV, being in the streaming business, should remain on the lookout for good quality development stage companies which are on the verge of starting production. Pershing Gold Corporation (PGLC) is about to start production in 2014, and is anticipated to produce 50K ounces of gold in the first year. There are other stories also, and FNV would do well to use the cash available to make investments in assets which can help it in the long term. Being a zero debt company, the cash can be put to good use as these depressing times are the best to buy assets. Coeur D'Alene Mines (CDE) recently had taken a stake in PGLC to take advantage of the capital appreciation expected over the next one year. FNV had recently put in $1 billion in Cobre Panama project.

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