Franco-Nevada tries to get full value from Goldstrike bet

Toronto-based Franco-Nevada Mining (TSE) is planning to make the most of its royalty interest in American Barrick Resources’ (TSE) Goldstrike property near Carlin, Nev.

Franco-Nevada holds a 4% net smelter return and 5% net profit interest in the Goldstrike property where Barrick will produce 115,000 oz gold this year.

After a Goldstrike reserve inventory of 130 million tons grading 0.11 oz gold per ton was announced recently by Barrick, Franco-Nevada said it had hired Merrill Lynch Canada to sell the royalty asset.

“Our objective is to attain a tax- free rollover into convertible preferred shares or common shares of a major gold or mining company,” said Chairman Seymour Schulich.

However, the company has since announced plans to buy back up to 855,000 of its own shares by April 1989. “To date, we have purchased 100,000 shares under this program,” said Schulich. On June 30, the company had just over 12 million shares outstanding.

In the 3-month period ended June 30, Franco-Nevada increased its cash position to $3.8 million from $3.4 million at the same time last year. The company’s deficit was also reduced to $283,000 from $409,000 on June 30, 1987.

First-quarter revenues from royalty and investment income stood at $364,000 compared to $165,000 at the same time last year.