Canada’s Franco-Nevada (TSX, NYSE: FNV) plans to expand its royalty and streaming business in Australia, chief executive Paul Brink said Thursday, as record-high gold prices fuel fresh investment in the sector.
Brink confirmed the Toronto-based firm has made two new hires in Western Australia, signalling its intent to back junior gold developers in the resource-rich state. “The reason that we are hiring is our plan to focus more on Australia,” he told a mining conference in Melbourne.
Australia, one of the world’s largest gold producers, is on track to make the metal its second most valuable export this financial year as prices soar to unprecedented levels.
Gold hit an all-time high above $4,000 an ounce on Wednesday, marking a 52% surge driven by uncertainty over global trade, U.S. fiscal stability, and concerns about Federal Reserve independence.
The rally has unleashed a wave of mergers and acquisitions across the industry, promising bumper profits for producers such as Agnico Eagle (TSX, NYSE: AEM), Barrick (TSX: ABX) (NYSE: B) and Newmont (NYSE: NEM). With operating costs largely fixed, miners have seen higher gold prices translate directly into stronger margins.
Gold stocks have outperformed the underlying commodity because, with day-to-day production costs largely fixed, a higher price can translate into pure profit.
Pressure to boost shareholder returns has reshaped corporate leadership, with both Newmont and Barrick announcing new chief executives last week. Barrick’s surprise move to replace Mark Bristow was likely “related to stock underperformance versus peers”, Matthew Murphy, analyst at BMO Capital Markets, said in a note.
BMO projects that the sector could generate $60 billion in free cash flow next year, forcing executives to decide how best to deploy the coming windfall.
(With files from Reuters)
Latest comments
Join the conversation
You can post now and register later.
If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.
Canada’s Franco-Nevada (TSX, NYSE: FNV) plans to expand its royalty and streaming business in Australia, chief executive Paul Brink said Thursday, as record-high gold prices fuel fresh investment in the sector.
Brink confirmed the Toronto-based firm has made two new hires in Western Australia, signalling its intent to back junior gold developers in the resource-rich state. “The reason that we are hiring is our plan to focus more on Australia,” he told a mining conference in Melbourne.
Australia, one of the world’s largest gold producers, is on track to make the metal its second most valuable export this financial year as prices soar to unprecedented levels.
Gold hit an all-time high above $4,000 an ounce on Wednesday, marking a 52% surge driven by uncertainty over global trade, U.S. fiscal stability, and concerns about Federal Reserve independence.
The rally has unleashed a wave of mergers and acquisitions across the industry, promising bumper profits for producers such as Agnico Eagle (TSX, NYSE: AEM), Barrick (TSX: ABX) (NYSE: B) and Newmont (NYSE: NEM). With operating costs largely fixed, miners have seen higher gold prices translate directly into stronger margins.
Gold stocks have outperformed the underlying commodity because, with day-to-day production costs largely fixed, a higher price can translate into pure profit.
Pressure to boost shareholder returns has reshaped corporate leadership, with both Newmont and Barrick announcing new chief executives last week. Barrick’s surprise move to replace Mark Bristow was likely “related to stock underperformance versus peers”, Matthew Murphy, analyst at BMO Capital Markets, said in a note.
BMO projects that the sector could generate $60 billion in free cash flow next year, forcing executives to decide how best to deploy the coming windfall.
(With files from Reuters)