Q: Is it not unusual -and risky for the investor- that a royalty firm (FNV) get more than 20% of their revenues from a single company (FM)?
I guess we have to do our homework and not rely on reputation only. Merci.
I guess we have to do our homework and not rely on reputation only. Merci.
5i Research Answer:
FNV has historically been very well managed. No one really saw the shift in Panama ahead of time. In addition, when companies sign royalty deals, they sometimes themselves do not know how big a contributor a mine will be. This is, in fact, part of the MO: provide capital to a mine in its early stages when it needs the money, and then hope it grows to be a larger, more successful mine than expected.