Franco-Nevada (TSX, NYSE: FNV) co-founder Pierre Lassonde hasn’t let retirement from the C-suite dim his love for the yellow metal.
Think $4,000 gold is high? Lassonde, the former Newmont (NYSE: NEM, TSX: NGT) president, has news for you. He predicts the yellow metal will hit $17,250 an oz. within three years.
“People are buying gold because they want to have something else than the U.S. dollar,” Lassonde told The Northern Miner in an interview. “All the major developed countries have a budget deficit problem and none of them want to address it.”
If anyone can speak about gold with authority, it’s Lassonde. More than five decades into his storied career, the Quebec-born analyst, entrepreneur, financier and philanthropist – a 2013 inductee into the Canadian Mining Hall of Fame – can now add another laurel to his collection. He is this year’s recipient of The Northern Miner’s Lifetime Achievement award.
Gold’s lure for investors lies in its finite supply, Lassonde says. Only 216,265 tonnes of gold have been mined throughout history, World Gold Council data show. And while demand – including from central banks – keeps increasing, gold miners are struggling to lift output as ore grades decline and new deposits are deeper than ever before.
“If you take just 1% of the money that’s in other asset classes and you move it into gold, gold is going to go way up,” he argues. “Gold is a small asset class. Every year there are only 3,600 tonnes produced and a third goes into central bank coffers. It’s not a whole lot.”
Store of value
In the eyes of some investors, gold is also starting to rival the U.S. dollar as a store of value. The U.S. currency made up 58% of disclosed global official foreign reserves in 2024, down from a peak of 72% of reserves in 2001, U.S. Federal Reserve Board data show.
“Gold is being remonetized within the architecture of global reserves,” Lassonde says. “Whether it’s central banks, family offices or sovereign wealth funds, they are all hedging their investment bets against an increasingly politicized and fragmented world. On top of that, there are cyclical factors such as a lowering of interest rates” that fuel appetite for gold, he says.
Lassonde’s love story with mining almost never took off. As a teenager, he says, he had his heart set on a career in construction.
Bechtel
After obtaining his bachelor’s degree in engineering at Montreal’s Ecole Polytechnique, he left for the United States to do a master’s in business administration at the University of Utah. Upon graduation, he got hired by engineering giant Bechtel. Six months in, the company sent him on a job in Arizona building the Pinto Valley mine.
“When I got there, I met a geologist and we started speculating on junior mining stocks,” he says. “I made five times my money on the first stock I bought over a three-month period. That’s where I got the bug. I thought I was God’s gift to finance! Of course, the second time I lost all my money.”
After a few years with Bechtel, he moved to Toronto to work for mining and metals distribution company Rio Algom. There, he met Keith Winckworth, an industry veteran from South Africa known as Winky, who worked as the assistant to the president and soon took him under his wing.
“I grew up fast because I had a great mentor,” Lassonde recalls. “Every time he would go on a mine visit, he would take me with him.”
Analyst
After moving to Toronto-based investment firm Beutel Goodman as a junior mining analyst, Lassonde produced sizeable returns for a new gold fund and was named president of the firm’s gold division.
It was there he met Seymour Schulich, the Canadian executive who would later become Lassonde’s business partner and Franco’s co-founder. They started Franco in 1982 with a mere $2 million of capital.
“The reality is that we raised the money so that we could go skiing in Nevada, play poker and deduct it against taxes,” Lassonde says with a laugh. “Neither of us are geologists and we didn’t know what we were doing. We knew we had to find a better way to do business.”
Royalty model
That way, it turned out, revolved around a concept popularized by the oil and gas industry: royalties.
It was Schulich, a former Shell Oil employee, who found Franco’s maiden investment, a small heap-leach mine on the Carlin Trend next to a Newmont property. Lassonde soon realized the purchase would far exceed his modest budget.
“The owner had a bank loan for $2 million and he had 90 days to repay or they would put him in bankruptcy,” Lassonde says. “Nothing less than $2 million would solve his problem.”
Eventually, a deal was struck. Lassonde giggles when he recalls breaking the news to Schulich.
“I told him there was good and bad news. The good news was, we had bought our first royalty and we were going to make five times our money. The bad news was that we had no money left in the bank. He went berserk.”
Schulich eventually forgave Lassonde – especially when Barrick ended up developing the project behind Franco’s first asset into the flagship Goldstrike mine.
“Goldstrike has already paid out over $1 billion in royalties, and there’s probably another $500 million coming,” Lassonde says.
$36B value
That wouldn’t be Franco’s last success. In the 20 years between Franco’s foundation and its 2002 acquisition by Newmont, the company posted a 36% annualized rate of return. Now Franco has a market value of about $36 billion.
“For 10 years, we had no competition because nobody thought you would build a business based on royalties. There was a huge first mover advantage. We were buying properties that were not in production for one-year cash flow,” he said. “Today, anything in production is worth 12 to 14 times cash flow. There is so much competition. If you’re a startup company today, it’s a hard life.”
When Newmont acquired Franco in 2002 as part of a three-way merger with Australia’s Normandy Mining, Lassonde became the post-merger president of what still is the world’s largest gold producer. Five years later, he led a group of investors that acquired a royalty portfolio back from Newmont and spun it off into a revived, publicly traded Franco.
“A new president came in and after one year, called me to say he wanted to sell Franco Nevada. I said: ‘I’ll buy it back.’ I raised $1.2 billion in four days,” he said. “By 2007, gold was around $750 and it went up to $1,200 before having a bit of trouble with the financial crisis.”
Philanthropy alongside mining
Besides his storied business career, Lassonde has gained prominence as a generous philanthropist in Canadian mining education, research and institutional capacity. He has endowed mining chairs and study programs, including the University of Utah’s entrepreneurship institute, supported scholarships and led fundraising campaigns for institutions such as the Musée national des beaux-arts du Québec, whose newest wing bears his name.
He remains as passionate as ever about mining.
One of the business projects closest to his heart these days is Fuerte Metals (TSX-V: FMT), a Canadian junior that recently acquired Newmont’s Coffee project in the Yukon with Lassonde’s backing. Fuerte reminds him of an early-stage Orla Mining (TSX: OLA).
“It’s a fantastic project in the Yukon,” Lassonde says. “It could do very well. Fuerte is Orla 2.0. It’s the same sheet music.”
As he approaches his 79th birthday, Lassonde insists he’s still having fun.
“Think of the money that Franco’s made for pension funds and people,” he says.
“Yes, I’ve made money but I’ve made a lot more for Canadians and others. I’ve got more than enough for whatever time I’ve got left and I love giving it away. Almost every day I get letters of thanks, whether it’s from artists or students, and it fills me with joy. That’s what we’re here for: Leave a better world at the end.”
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