Franco-Nevada boosts earnings

Gold-royalty company Franco-Nevada Mining (FN-T) is heading into its merger with Gold Fields (GOLD-Q) with higher revenue and earnings. In the three months ended June 30, Franco-Nevada earned $29.4 million, or 19 a share, on revenue of $64 million.

Earnings were 15% higher than in the comparable quarter of 1999, when Franco made a profit of $25.5 million. Revenue was 13% higher than the 1999 figure of $56.6 million. (Franco-Nevada’s year-end is March 31.)

Slightly higher gold prices helped the top line, with the company realizing an average of US$289 per oz. for gold sold during the quarter. The spot price averaged US$280 during the same period. In the three months ended June 30, 1999, Franco’s average was US$273 per oz.

Higher prices for crude oil and natural gas accounted for about $6.5 million of the company’s revenue in the quarter — almost double the figure of a year ago.

The Ken Snyder mine in Nevada, the only property the company operates, produced 53,262 oz. gold and 438,774 oz. silver during the recent 3-month period. In the corresponding quarter of 1999, the mine produced 54,846 oz. gold and 543,716 oz. silver. Cash production costs at the operation were US$107 per oz., up from US$86.

The Snyder mill’s capacity has been expanded to 900 tonnes per day. In June, daily mill throughput averaged 750 tonnes.

The company’s merger with Gold Fields is proceeding in anticipation of South African government approval and a favorable vote by 75% of Gold Fields shareholders. A meeting to seek Franco shareholders’ approval of the deal is set for September, and a second meeting may be needed to tie up details of the merger.