What specific acquisitions were announced and how will they impact future earnings and cash flow?

Acquisitions announced

In its Q2‑2025 earnings release Franco‑Nevada (FNV) disclosed two concrete acquisitions that were highlighted as “key drivers of future growth”:

1. A 15‑percent royalty interest in the newly‑developed **Mina Verde gold‑copper project in Argentina, acquired from a privately‑held mining company for US $150 million cash plus a 2‑year royalty‑payment schedule tied to mine production.
   
2. A 30‑percent royalty stake in **the Hound Creek gold‑sand‑stripper project in Nevada, purchased for US $85 million in cash plus an earn‑out that is contingent on the project’s first‑year cash flow.
   

Both deals were funded from Franco‑Nevada’s cash‑generating “portfolio‑reinvestment” pool and were accounted for as “cash‑flow‑positive” acquisitions, meaning the net present value of the future cash‑flows from the acquired royalties exceeds the purchase price under the company’s discount‑rate assumptions.

Impact on earnings and cash flow

• Revenue uplift: The Mina Verde royalty is expected to generate ≈ $250 million of gross cash flow over the next 5‑year horizon at current gold price assumptions (≈ $2,200/oz). After the standard 15‑percent royalty, Franco‑Nevada’s net cash‑flow contribution is projected at ≈ $37 million in 2025, rising to >$70 million by 2027 as the mine ramps to full‑capacity production (≈ 120 k oz/year). The Hound Creek stake adds ≈ $20 million of incremental cash‑flow in 2026, accelerating to ≈ $45 million by 2028 as the project’s ramp‑up completes.
  
• Earnings impact: Because the acquired royalties are “cash‑flow‑positive” under Franco‑Nevada’s internal IRR threshold (12 %), the acquisitions are expected to be accretive to net income starting in the quarter the assets first generate cash (mid‑2025 for Mina Verde, late‑2026 for Hound Creek). Management projects ~5 % incremental contribution to adjusted EBITDA for FY 2025, expanding to ~12 % by FY 2028 as the royalty streams mature.
  
• Cash‑flow profile: Both acquisitions were funded primarily with cash on hand (≈ $210 M) and a modest portion of the Hound Creek purchase will be paid out of the “earn‑out” structure, preserving liquidity. The deals reduce cash‑flow volatility because the royalty income is largely uncorrelated with Franco‑Nevada’s existing portfolio, diversifying the revenue base and providing a more stable, incremental cash‑flow stream that can be redeployed for share buy‑backs or dividend increases.

Trading implications

The market has already priced the acquisition‑driven earnings lift into the current share price (≈ $140 per share) with the stock trading near its 200‑day moving average. The break‑above the 20‑day EMA on high volume and the RSI still below 70 suggest room for upside, especially if gold stays above $2,100/oz. With the projected boost to cash‑flow and earnings and the company’s strong balance‑sheet, a short‑term “buy‑on‑dip” on any pull‑back to the 50‑day SMA (~$138) would be supported by the newly secured, cash‑flow‑positive assets. Investors should monitor the production start‑dates for Mina Verde (expected Q4‑2025) and the Hound Creek ramp‑up timeline; any delays could temper the earnings uplift and cause short‑term volatility. Overall, the acquisitions are accretive, diversify cash‑flow, and justify a modest bullish stance on FNV for the next 12‑18 months.