Written by Amy Legate-Wolfe at The Motley Fool Canada
The Mining Sector: A Dynamic Landscape
The mining industry can be likened to the Wild West of finance, characterized by unpredictability yet ripe with opportunity. Today, we explore the Canadian mining stocks of Franco-Nevada and Taseko Mines. Which of these companies presents a more stable investment in this volatile sector?
Franco-Nevada: The Royalty King
Leading the charge is Franco-Nevada, a company akin to a landlord in real estate, generating income through royalties and streaming without the labor of physical mining. In Q3 2024, Franco-Nevada reported revenues of $275.7 million, marking a decline of 10.9% compared to the previous year. However, removing the figures associated with the troubled Cobre Panama project, revenues actually grew by 13.8%, reminiscent of finding cash in an old jacket.
Cobre Panama: A Complicated Saga
The Cobre Panama gold-copper mine has proven to be a source of drama in Franco-Nevada’s story. Recently closed due to public protests, the mine is now embroiled in arbitration with the Panamanian government, in which Franco-Nevada is seeking $5 billion in damages as stipulated by the Canada-Panama free-trade agreement. Investors are closely watching this situation as they await the decision from Panama’s leadership regarding the mine’s future.
Future Outlook for Franco-Nevada
Despite the hurdles, analysts remain optimistic about Franco-Nevada’s viability, projecting earnings growth of 38.3% and revenue growth of 0.9% annually. Earnings per share (EPS) are anticipated to increase by 42.5% per year, leading investors to bet on the company’s slow but steady growth trajectory within the mining stocks market.
Taseko Mines: A Focus on Copper
Transitioning to Taseko Mines, this copper-oriented mining company posted a revenue of $608 million in 2024, derived from the sale of 108 million pounds of copper and 1.4 million pounds of molybdenum. While the company experienced a net loss of $13 million, its adjusted net income stood at a respectable $57 million, illustrating a resilient business model.
Production Insights and Future Developments
Taseko’s Gibraltar Mine achieved impressive results, producing 29 million pounds of copper in Q4 2024 at an operating cost of $2.42 per pound. The mill operations reached record throughput, averaging 89,600 tons per day. Looking ahead, Taseko plans to ramp up production to between 120 and 130 million pounds in 2025, aided by the resumption of its SX/EW plant and normalized mill operations. Additionally, construction on the Florence Copper project in Arizona is approximately 56% complete, with first copper expected by Q4 2025.
Historical Connection Between Franco-Nevada and Taseko
Notably, Franco-Nevada and Taseko have a history of collaboration, having entered into an agreement back in 2010 for Franco-Nevada to purchase 22% of the life-of-mine gold from Taseko’s Prosperity Gold and Copper Mine for $350 million. Unfortunately, this project faced setbacks, including denials related to federal approvals tied to indigenous land claims, leading to ongoing legal disputes between the companies.
Conclusion: Which Mining Stock to Watch?
In the intricate world of mining stocks, both Franco-Nevada and Taseko Mines present unique narratives that embody ambition and challenge. As we look forward to 2025, all eyes will be on these companies to see which one manages to turn their hurdles into stepping stones toward success. Investors hope for a smooth journey ahead filled with fewer twists and turns, leading to prosperous outcomes for both firms.
Before making investment decisions, it’s crucial to conduct thorough research and consult with financial advisors. Both Franco-Nevada and Taseko have their strengths and challenges and recognizing these can aid in making informed choices in the dynamic mining sector.