Q: Is the drop in share price an over reaction to political news? Is this a buying opportunity even if the Panamanian mine deal is revoked?
5i Research Answer:
With a referendum on FM's mine, shutting it down is now an option (it appears, we do not know how the wording on the referendum will be). This was not an option before after FM signed a 20-year contract. FM's mine represents about 18% of FNV's annual EBITDA, and the stock has declined about 14% today. We would not panic here, but think buyers can wait a bit while this news works its way through the market. Uncertainty has a way of bringing stocks down further.