Would you recommend buying at this level?
Thanks.
FNV provided an update on November 3rd, that production at the Panama mine has remained uninterrupted, while protests have caused disruptions on site as well as shortages in certain supplies. Management did not provide forward guidance regarding a potential disruption and seems to be taking a wait-and-see with production being uninterrupted. The current geopolitical risks are likely priced into the stock, and FNV put together a decent Q3. We think that 31.4x earnings is an OK valuation for FNV, but the Panama situation adds an unpredictable element that cannot be forecasted until more news comes out. On the conference call, FNV discussed Panama again, but did not really quantify anything. They are 'monitoring' the situation. It said operations continue normally. Panama accounts for 22% of revenue. Guidance was to the 'low end' of prior forecasts, but we do think management should have been more conservative here. We can't predict politics (can anyone?) but the Panama situation certainly does not look good to us. While we think FNV recovers and can adapt to any event, we think buyers have time here and we would wait.