On Friday, H.C. Wainwright adjusted its outlook on Franco-Nev Corp (NYSE:FNV), reducing the price target to $155 from the previous $200, while continuing to endorse the stock with a Buy rating. The revision follows the recent announcement by Franco-Nevada on Thursday, December 19, 2024, regarding a new precious metals stream agreement with Sibanye-Stillwater Limited's mining operations in South Africa.
The streaming deal, which is retroactive to September 1, 2024, involves specific production from Sibanye-Stillwater's Marikana, Rustenburg, and Kroondal mines. Franco-Nevada is slated to make a $500 million payment to Sibanye-Stillwater in the near future as part of the agreement terms. The first delivery of precious metals under this new arrangement is expected approximately 45 days following the closure of the transaction.
The agreement stipulates that the metal deliveries will be based solely on the output from the mines included in the streaming deal, explicitly excluding any production from surface tailings retreatment, unless otherwise agreed upon. Additionally, Franco-Nevada has secured a right of first refusal on any future streams or royalties linked to the area covered by the current stream.
Furthermore, the completion of this transaction is contingent upon meeting certain conditions, which include obtaining approval from the South African Reserve Bank. In a related move, Franco-Nevada has agreed to transform its existing 5% net profit interest on Sibanye-Stillwater's Pandora (OTC:PANDY) property into a 1% net smelter return royalty. The analyst reiterated their Buy rating on Franco-Nevada's shares despite the lowered price target, reflecting confidence in the company's ongoing performance and the potential of the new streaming agreement.
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