10:47 AM EDT, 05/27/2025 (MT Newswires) -- Franco-Nevada ( FNV ) on Tuesday said it will acquire an existing royalty package on the Cote gold mine in Ontario from a private third party for US$1.05 billion.

The royalty package is composed of a 7.5% gross margin royalty on the Cote gold mine. The royalty applies to mineral production from the Chester 1, 2 and 3 claims, which cover all the mineral reserves, and nearly 100% of current mineral resources on the mine. The transaction is scheduled to close at the end of the second quarter.

The Cote gold mine is operated through a joint venture between IAMGOLD ( IAG ) and Sumitomo Metal Mining Co. Franco-Nevada ( FNV ) partnered with IAMGOLD ( IAG ) and Sumitomo for the acquisition of the royalty. IAMGOLD ( IAG ) and Sumitomo will be granted an option to buy down up to 50% of the royalty at Franco-Nevada's ( FNV ) attributable cost in two equal tranches of 25%.

Franco-Nevada ( FNV ) expects the royalty to add immediate gold revenues from a major new gold mine in Ontario. The mine commenced commercial production in August 2024 and continues its ramp-up. IAMGOLD ( IAG ) has provided 2025 guidance for the mine of 360,000 to 400,000 ounces of gold at cash costs of $950/oz to $1,100/oz inclusive of the royalty costs. On a full year basis at midpoint of guidance and at $3,200/oz gold, this implies annual revenue of $67 million.

National Bank of Canada retained Franco-Nevada's ( FNV ) Sector Perform rating and C$260 price target following the news.

The bank said the Sector Perform rating offset the company's stable five-year production outlook and industry-leading financial strength with its premium valuation, uncertainty around long-term recoverable value from the Cobre Panama mine, and a competitive deal environment for new royalty/stream origination. "We remain optimistic for a resolution at Cobre Panama before year-end, which would support an improved growth outlook coinciding with our Base Case assumptions (including a restart at full capacity by mid-2027), the bank added.

The price target was based on a multiple of 2.20x NAV (33%) + 30.0x EV/2026E CF (67%), the bank said.

Franco-Nevada ( FNV ) traded down 0.5% at near $231.40 per share at last look in TSX.

Price: 231.36, Change: -1.25, Percent Change: -0.54