Franco-Nevada Corp

NYSE:FNV

Earnings Call Analysis

Quarterly Results Driven by High Gold Prices Despite Lower Production

Franco-Nevada reported strong financial results for Q2 2024, bolstered by record gold prices. While revenues and cash flow improved compared to Q1, they were down from last year due to lower production at Candelaria and Antapaccay. The company expects these operations to normalize in the second half of the year. Franco-Nevada added two long-life assets, including a gold stream on SolGold's project in Ecuador and a royalty on Newmont's operations in Peru. Despite disruptions, Franco-Nevada projects total GEO sales for 2024 to be 480,000 to 540,000, with mid-single-digit returns anticipated from key investments.

Strong Production Despite Short-term Setbacks

Franco-Nevada's Q2 2024 earnings call revealed a mix of challenges and successes. The quarter saw lower production from key assets, Candelaria and Antapaccay, due to operational issues. Despite this, the company anticipates stronger production in the second half of the year. Notably, Candelaria expects higher grade ore access, and Glencore projects improved production at Antapaccay .

Financial Performance and Commodity Prices

The company's financial results showed a revenue of $260.1 million, down from $329.9 million the previous year. This reduction was primarily due to the absence of contributions from Cobre Panama. However, when excluding Cobre Panama from the prior year's revenue, revenue was slightly up from $258.2 million. The average gold and silver prices were higher, positively impacting revenues .

Significant Tax Adjustments and Lower Depletion

A crucial point for investors is the tax adjustments due to the new OECD Pillar Two Global Minimum Tax initiative. The total tax expense recorded for the first half of 2024 was $122.8 million, with a significant portion, $49.1 million, related to an adjustment for prior years. This realignment also increased the company's effective tax rate to 19-20%. Moreover, depletion expenses decreased due to no recorded depletion for Cobre Panama and lower depletion at Antapaccay .

Strategic Acquisitions and Capital Allocation

Franco-Nevada continued its strategy of acquiring long-life assets. The company secured a gold stream on SolGold's Cascabel project in Ecuador and a royalty on Newmont's Yanacocha operations in Peru. These acquisitions are expected to provide significant long-term contributions. The company also reiterated its 2024 guidance for 480,000 to 540,000 total GEOs sold and expects to be at the lower end of this range .

Operational Efficiency and Cost Management

The average cash cost per Gold Equivalent Ounce (GEO) was $264 in Q2 2024, down from $280 in Q2 2023. This reduction highlights the company's efficiency in managing its operational costs, maintaining strong margins despite fluctuating commodity prices. Franco-Nevada's robust business model is designed to capitalize on rising commodity prices without a proportional increase in costs .

Future Outlook and Guidance

The company’s outlook remains positive, with expectations of stronger deliveries from Candelaria, and contributions from the recently started Tocantinzinho, Greenstone, and Salares Norte projects. The guidance for Precious Metal GEOs stands at 360,000 to 400,000, with an overall total GEOs sold range of 480,000 to 540,000 for 2024 .

Earnings Call Transcript 2024-Q2

[Operator]

Good morning and welcome to Franco-Nevada Corporation's Second Quarter 2023 Results Conference Call and Webcast. This call is being recorded on August 14, 2024. [Operator Instructions]

And I would like to turn the conference over to your host, Candida Hayden, Senior Analyst, Investor Relations. Please go ahead.

[Candida Hayden, executive]

Thank you, Laura. Good morning, everyone. Thank you for joining us today to discuss Franco-Nevada's Second Quarter 2024 results. Accompanying this call is a presentation, which is available on our website at franco-nevada.com, where you will also find our full financial results. The presentation is also available to view on the webcast.

During our call this morning, Paul Brink, President and CEO of Franco-Nevada, will provide introductory remarks; followed by Sandip Rana, Chief Financial Officer, who will provide a brief review of our results, and Eaun Gray, Senior Vice President Business Development who will discuss our recent transaction. This will be followed by a Q&A period. Our full executive team is available to answer any questions. Participants may submit questions by telephone or via the webcast.

We would like to remind participants that some of today's commentary may contain forward-looking information and we refer you to our detailed cautionary note on Slide 2 of this presentation.

I will now turn the call over to Paul Brink, President and CEO of Franco-Nevada.

[Paul Brink, executive]

Thanks, Candida, and good morning. Our Q2 results benefited from record gold prices. Revenues and cash flow from operations were up compared with Q1.

Results were lower compared to Q2 last year without the contribution from Cobre Panama and due to lower production at Candelaria and Antapaccay. Lower quarterly production at the 2 operating assets is a short-term bump and we expect to return to normal operations at both for the balance of the year. These are 2 of our best-performing assets over the long term. We look forward to the potential underground expansion at Candelaria and the future development of the Coroccohuayco project at Antapaccay.

Our business development team have had great success in recent months, and we're very pleased to have added 2 long-life assets to the portfolio. The gold stream on SolGold's Cascabel copper-gold development project in Ecuador, and royalty on Newmont’'s Yanacocha operations in Peru. Eaun will give more detail on the acquisitions later in the call.

Initial contributions from Yanacocha and the growing contribution from the Salares Norte, Greenstone and Tocantinzinho Gold Mines that all started production in recent months, will boost our results in the second half of the year.

With that, I'll hand it over to Sandip.

[Sandip Rana, executive]

Thanks, Paul. Good morning, everyone. I'll turn to Slide 4 to give an overview of the financial results for the quarter.

Overall, GEOs sold were 110,264 for second quarter of 2024, this compares to 168,515 for the prior year quarter and 131,865 for the prior year quarter when Cobre Panama GEOs are excluded.

As you are aware, Cobre Panama continues to be on preservation and safe management. In terms of operating assets and GEOs delivered and sold for the quarter, we did receive less ounces from Candelaria and Antapaccay compared to prior year. GEOs delivered from both were less than our expectations.

At Candelaria, GEOs delivered and sold in Q2 2024 were lower than those sold in Q2 2023 as mining rates were impacted by the interface of the open pit and historic underground mining stopes. This required more stockpile ore to be processed with reduced grades and recoveries. With access to higher grade ore anticipated in the second half of 2024, Lundin Mining anticipates stronger production and have maintained the production guidance for Candelaria.

At Antapaccay, GEOs delivered and sold were also lower in second quarter compared to prior year. Mine scheduling was adjusted in part due to a geotechnical event, which temporarily limited pit access, resulting in a lower production.

Glencore anticipates stronger production in the second half of 2024 and Franco-Nevada expected stream deliveries for the full year to be within its initial expectations of 50,000 to 60,000 GEOs.

Hemlo NPI was also weaker than expected in the second quarter 2024. There was less mining on royalty land along with higher costs, which resulted in a lower NPI paid to Franco. It continues to be difficult to estimate what the Hemlo NPI will be going forward.

For the quarter, Precious Metal GEOs were 82,350. This compares to 95,383 in prior year when Cobre Panama GEOs are excluded. Precious Metal GEOs represented approximately 75% of total GEOs for the quarter.

For diversified GEOs, total GEOs sold were 27,914 compared to just over 36,000 in Q2 2023. Iron ore GEOs sold were relatively flat year-over-year, while energy GEOs were lower at 22,100 for Q2 compared to 28,683 a year ago. The decrease in GEOs is a combination of lower revenue due to weaker natural gas prices as well as the impact of converting energy revenue to GEOs by higher gold prices.

Also in Q2 2023, revenue included a catch-up royalty payment related to new wells in the Permian Basin, which was not present in Q2 2023.

As we look at total revenue, revenue was $260.1 million for the quarter compared to $329.9 million a year ago when you exclude Cobre Panama from prior year revenue, revenue was actually up from $258.2 million.

Q2 2024 saw continued volatility in average commodity prices. As you see on Slide 5, gold and silver average prices were significantly higher for the quarter when compared to prior year. However, platinum and in particular, palladium average prices were lower year-over-year, which did negatively impact conversion of PGM revenues to GEOs. Oil prices were higher as well, while natural gas average prices were essentially flat. Slide 6 highlights the financial results for the quarter and year-to-date 2024. As mentioned, GEO's sold and revenue were lower year-over-year. Adjusted EBITDA was $221.9 million, while adjusted net income was $144.9 million.

On a per share basis, adjusted net income was $0.75 for the quarter.

On the cost side, we did have a decrease in cost of sales compared to prior year as we did not incur the ongoing fixed cost per ounces delivered for Cobre Panama and had lower GEOs delivered and sold from Antapaccay and Candelaria.

With respect to the arbitration costs for Cobre Panama, the company incurred cost of $800,000 in Q2 2024 and have incurred $2.3 million year-to-date. We expect approximately $3 million to be incurred for the rest of the year.

Depletion decreased to $52.9 million versus $75.1 million a year ago. Again, the decrease was due to no depletion recorded for Cobre Panama as well as lower depletion recorded for Antapaccay because of the lower deliveries in the quarter.

One additional item to note in Q2 2024 is the tax adjustment recorded in May 2024, the government of Barbados enacted legislation to implement tax measures also in response to the OECD's Pillar Two Global Minimum Tax initiative. Measures include an increase of the Barbados corporate tax rate to 9% and the introduction of a qualified domestic minimum top-up tax, which together aim to ensure that the Barbados effective tax rate payable subject to Pillar Two is at least 15% going forward.

What's important to note is that of the $122.8 million total tax expense recorded for the 6 months ended June 30, 2024, $49.1 million relates to an adjustment for prior years, and the actual incremental tax expense related to 2024 is about $21 million because of exchanges. Going forward, we estimate that our effective tax rate will be about 19% to 20%, depending upon where taxable income is generated.

Slide 7 highlights the continued diversification of the portfolio. From the charts, you can see that 75% of our second quarter 2024 revenue was generated by Precious Metals, with revenue being sourced 82% from the Americas.

Slide 8 illustrates the strength of our business model to generate high margins. For Q2 2024, the cash cost per GEO, which is essentially cost of sales divided by gold equivalent ounces sold, was $264 per GEO. This compares to $280 per GEO in Q2 2023. This amount will fluctuate depending upon the mix of royalty versus stream GEOs, including mining and energy. But as you can see, at current average gold prices, the company generates significant margins. Margin was approximately $2,100 per ounce in Q2.

A rising commodity price environment, we expect to benefit fully as the cost per GEOs sold should not increase significantly.

As we turn to available capital, the company has $2.4 billion as of June 30, 2024, as highlighted on Slide 9. Please note that subsequent to June 30, 2024, the company has funded a number of transaction. The acquisition of a royalty in Newmont's Yanacocha property for $210 million, which Eaun will speak to shortly.

$23.3 million advanced to SolGold as part of the $525 million stream commitment agreed to in July. Purchase of shares in G Mining Ventures as part of the Reunion Gold business combination for $25 million, and the funding of a 5-year $35 million loan to EMX Royalty. Even after funding of the above, the company still has a strong balance sheet to complete additional transactions.

Also during the quarter, the company amended its $1 billion unsecured revolving term credit facility to extend its term to June 3, 2029.

Finally, with respect to the GEOs sold guidance for 2024 of 480,000 to 540,000 total GEOs sold and 360,000 to 400,000 Precious Metal GEOs sold, we reiterate those guidance ranges, but we expect -- but expect to be at the lower end of both ranges.

We anticipate stronger deliveries from Candelaria in the second half of the year and contributions from Tocantinzinho, Greenstone, and Salares Norte.

And with that, I will now pass it over to Eaun, who will speak to the recent business development transactions completed.

[Eaun Gray, executive]

Thank you, Sandip, and good morning. As Paul mentioned, we were happy to announce Gold Stream financing on SolGold's Alpala project in July. We view this as a world-class copper-gold porphyry. Stream is tailored to SolGold's needs, allowing for derisking with initial preconstruction tranches and funding construction once key stage dates are met and funding is secured. Transaction was syndicated 70-30 with Osisko Gold Royalties, and we believe represents a prudent capital allocation and risk-adjusted return.

The Alpala deposit stands out amongst comparable projects globally based on its size and grade. To summarize the recent prefeasibility study, which demonstrates a robust project and look forward to management steps to advance and derisk the project.

Our team sees great upside at Alpala and on the broader Cascabel concession, which the stream covers.

Projects like Tandayama increased the value of the stream in our view. Our experience is that these types of deposits also tend to cluster and we see great potential in the drill bit over time on the property.

The transaction includes a number of risk mitigants to determine when funding takes place and various protections for streamers should there be delays or rescoping of the project. An acquirer would benefit also from the ability to reduce the stream, but to do so would have to provide a payment to both Franco-Nevada and to Osisko.

We, along with Osisko look forward to the steps management has taken to advance the project. I believe that Cascabel will be a meaningful contributor to Franco-Nevada for years to come.

We'd also point investors to SolGold's recent update released this morning providing information on their steps to add value to the project.

Moving to the Yanacocha Royalty acquisition from Buenaventura, which was announced yesterday. We're happy to add these assets to the portfolio. Royalty will contribute immediately given significant oxide production, and we expect would step up significantly with the sulfides project. We're very positive on the sulfides and see great potential from the existing footprint to extend the life for many years beyond what is currently envisaged.

The royalty also covers the Conga and Quilish projects providing excellent upside. We're able to visit the site as part of our review and had good institutional knowledge of the asset getting back to Newmont's and maintain an excellent relationship with Buenaventura, providing comfort in the long-term potential. We view this as another world-class geological setting as evidenced by past production and extensive resource. We see great potential to contribute significant production for decades to come, and add further potential in the ROFR as we maintain on the additional royalties.

With that, I'll hand it back to the operator and Candida for any questions.

[Operator]

[Operator Instructions] Our first question comes from the line of Josh Wolfson from RBC Capital Markets.

[Joshua Wolfson, analyst]

First question on the Yanacocha transaction. The returns that we calculate would be comparable to some of the, I guess, mega type of returns we saw maybe 2015, 2016, which I would know ultimately worked out fairly well for the company. If we're looking at these deals today like Yanacocha and maybe others that could be on the horizon, what's the sort of appeal here? And I would note from our perspective, like the main bulk of the economics are not really -- the project hasn't really been developed versus some of the historical lower term deals were large producing known assets. Just maybe a bit more insight on what the company sees versus what we know in the market today.

[Eaun Gray, executive]

Thanks, Josh. It's Eaun speaking. We see great potential in the asset. It's been a huge producer over the years. It's a brownfield site with a very large resource endowment. We do get the benefit of existing oxide production and expect in the short term, there should be a decision on the sulfides. We were able to do an on-site diligence as part of the transaction, which provided additional comfort especially in the sulfides. We see that as a great project. The Newmont's, we expect will advance. I think they've put off a decision until 2025. But then on top of that, you have fantastic projects on the site, which really incentivizes maintaining production in our view.

You have the Conga project, which not that long ago was advancing. And in the fullness of time, there is potential there in the Quilish project, both very, very large. So you have the benefit both of the immediate cash flow and fantastic optionality longer term. So that is why we find it attractive, and it's a great partner. Newmont's, as I'm sure you know, has a great track record of both advancing projects and operating successfully. So we're happy to be involved there.

[Joshua Wolfson, analyst]

Great. And then just in terms of the opportunity for maybe more of this style transaction that skews towards the optionalities. Are these the type of opportunities you're seeing out there? Or there's been a focus, at least from commentary from other companies about project financing type of deals?

[Eaun Gray, executive]

We see both in short. I think there is certainly opportunity for project financing type transactions, operating assets. There's a pretty rich deal environment at the moment. So we'll continue to advance on all fronts.

[Joshua Wolfson, analyst]

And one last question, just on one of the deals that was done earlier this year on the energy side of things for Haynesville. I'm not sure if this is an anomaly for the quarter, but Haynesville production or revenue hasn't really improved that much and there was a large investment made in the first quarter. When should we start to see the increased royalty revenues from this asset?

[Jason O'Connell, executive]

Josh, it's Jason speaking. You're right. We did add incrementally to Haynesville at the end of last year. And despite that, revenues were sort of flat. A lot of that is timing and commodity price. So gas prices, as you probably know, have fallen off fairly dramatically in the period we're speaking about. That impacts the royalty, both in terms of straight royalty economics, but also impacts the way the operators are managing the production.

Low gas prices in Haynesville have resulted in softer drilling rates and at times, operators starting back to the production levels to try to rebalance the market. So there's a bit of a -- there's a large commodity price, I guess, impact there in 2 ways.

We're also onboarding or continuing to onboard the assets that we acquired at the end of last year. It does take some time for all the ownership interest to transfer over. So I think as you'll see commodity prices rebound here in the coming quarters, I think you'll see volumes and revenues normalize a bit.

[Operator]

Our next question comes from the line of Lawson Winder from Bank of America.

[Lawson Winder, analyst]

I wanted to ask, first of all, about the deal in Yanacocha. Congratulations on getting another big deal done. What was the assumption in terms of the startup of the sulfides when you got to an IRR that you were comfortable with for this?

[Eaun Gray, executive]

Lawson, Eaun again here. In terms of the sulfides, I think what Newmont has said is 2025, that's possible that they'll adjust it. It's worth noting that the oxides are currently in production. And I think our diligence would indicate there's potential there to continue to do leaching if there is a delay. But I think we are expecting something around the 2029 timeline production.

[Lawson Winder, analyst]

Okay. Great. Very helpful. And then just thinking about the deal pipeline and the relative metal mix, I mean, that's improved -- I shouldn't use the word improved, but that's swung back in the favor of gold and silver and the Precious Metals quite significantly in Q2 versus Q1, where it dipped to quite a low level. So you're now back to 70% of revenue from gold and silver. In that context, how do you think about adding new streams in terms of metal mix? Is gold and silver still a continued priority here? Or does the rebound in gold and silver prices and the move to the metal mix as a result perhaps shift your focus now going forward more to non-precious deals?

[Paul Brink, executive]

Lawson, it's Paul. Thanks for the question. Focus is always is Precious Metals, and it starts, as always, with asset quality. Anytime we're looking at stuff, it's -- what are the great assets. That is the biggest driver and what generates the best returns over time. And then we get on to commodity mix. So first is, do we like the asset. And second, can we get it done within the guidelines of what we do with the commodity mix. So as always, gold and Precious Metal is #1 on list in terms of what we'd like to do. But always open minded if there are great assets in other commodities we think we'll get long-term returns, happy to add those, too.

[Operator]

Our next question comes from the line of Tanya Jakusconek from Scotiabank.

[Tanya Jakusconek, analyst]

I'm just going to start off on just some of the guidance. And thanks, Sandip, Hemlo is always difficult to forecast. But just as we look at the second half of the year, and we do have the Candelaria, I think it was one that you had mentioned and Tocantinzinho, Salares Norte, those ones ramping up. I might just think that like it's second half -- is second half weighted, but is it more weighted to Q4? Or is it more of an even distribution? Plus I have the Vale top-up in Q3. So I'm just trying to understand Q3 versus Q4.

[Sandip Rana, executive]

Sure, Tanya. Yes. As of right now from the visibility that we have, I would say it's probably going to be pretty even between the 2. Maybe Q4 might be a little bit higher as Greenstone and Salares Norte ramp up, but I don't expect too much of a difference. Obviously, part of it is all dependent on commodity prices with respect to the NPIs. But for simplicity, I would say they should be pretty close.

[Tanya Jakusconek, analyst]

Okay. That's helpful. And then if I can move on to just the transactions and just the environment itself. And Eaun, for you, thank you for your forecast of 2029 for start-up of the sulfides, we modeled it into the next decade ourselves. But when you look at the internal rate of return, and again, making that decision, whatever gold price you want to use, for both of your transactions that you recently did, what are you getting? Are you getting the middle single-digit internal rate of returns? Just a benchmark for us to see on that. And the same with Cascabel, like when did you figure start-up on that asset as well?

[Eaun Gray, executive]

Tanya, there is a lot there to unpack. I would say, first of all, it's risk-adjusted returns is what we think about and optionality is important in the investments. We want to see that there's a lot there that can go right over time, and we can earn an outsized return. Even if it does take time, it might not show up in an IRR, but certainly enhances the profile of the company providing gold for years to come. So with Yanacocha, yes, I would say it's a pretty reasonable return we see with the oxides and the sulfides. And beyond that, you have fantastic projects, which stands to provide you many multiples on your investment as those move forward.

Now Conga, Quilish could take a lot of time, if they get developed. But certainly, that skewed towards outsized cash flows from the investment was attractive to us. So maybe that provides a bit of good context.

[Tanya Jakusconek, analyst]

Is reasonable for you single digit, middle single digit, like 5%? I don't know what reasonable is for you.

[Eaun Gray, executive]

Yes, for an asset that has a great degree of optionality, that would be a reasonable return. Again, all just all things equal, it's risk-adjusted. In other cases, like SolGold, the return was meaningfully higher, and it just represents, as again, I mentioned a risk-adjusted rate of return.

[Tanya Jakusconek, analyst]

Okay. And then for SolGold, when did you assume start-up of that one? And when you say significantly higher, are you implying double digit?

[Eaun Gray, executive]

Yes. In terms of -- I don't want to get into too much of deal specifics. I don't think it's appropriate. But roughly, if we look at scenarios. We started there in the early 2030s, and rate of return certainly above the mid-single digits. But beyond that, I don't think it's appropriate to comment.

[Tanya Jakusconek, analyst]

Okay. And maybe just turning to the M&A environment. Just I wanted to -- on the last conference call, we talked about you're seeing bigger-sized deals, plus $500 million. I guess the Cascabel one was over $500 million. What sort of opportunity size are we still looking at now? Is it still over that $500 million? Are we back to about $100 million to $300 million on the gold side? That's my first question on the transaction side.

[Eaun Gray, executive]

Thanks, Tanya, for the question. Good question. I would say expect more of the same in terms of what you've seen recently for deal size. $100 million to $300 million is a pretty good kind of average size within the pipeline. The overall comments, I think that it remains extremely busy. So there's lots to look at, which is great and plenty on the Precious Metal side. So the team remains very focused.

[Tanya Jakusconek, analyst]

Okay. Great. And then in terms of royalties, I mean, Buenaventura has been talking about the selling of this royalty in Yanacocha since last year. So congrats on finally getting this done. Are you seeing other opportunities on the royalty side in the environment separate from stream?

[Eaun Gray, executive]

Certainly. We like royalties. They're great within the portfolio. So we see a bit of both, both in terms of streams and Yanacocha.

[Tanya Jakusconek, analyst]

Okay. And then maybe just for Paul. I think the last conference call, we talked about transactions in non-gold space. We had specifically talked about lithium in the $50 million to $400 million range. And just looking at opportunities in the part of the market where commodities are not as strong as we see in the gold market. So I'm just wondering, what your thoughts, have they changed? Is the opportunities for lithium still there? And is that something you still want to pursue?

[Paul Brink, executive]

We're still busy on that front, as Eaun mentioned. Most of our assets on the Precious Metals side, but we are looking at some diversified, some of that is lithium, some in other commodities. So I think there's still good potential to get some deals done in those areas.

[Tanya Jakusconek, analyst]

And that $50 million to $400 million range is the range that those would fit into?

[Paul Brink, executive]

Yes, that's a good range.

[Tanya Jakusconek, analyst]

Okay. Looks like you're very busy. Congratulations on both of those deals.

[Operator]

Our next question comes from the line of Martin Pradier from Veritas Investment Research.

[Martin Pradier, analyst]

It looks like you need the sulfide project to go ahead to make your money back in Yanacocha. Is that the correct assumption?

[Eaun Gray, executive]

That is correct. Eaun speaking here.

[Martin Pradier, analyst]

Okay. And did I hear that there was a $49 million tax adjustment from previous year. Is that correct or is it just previous quarter?

[Sandip Rana, executive]

Yes. So because Barbados increased its tax rate to 9%, it's corporate tax rate, our deferred tax liability on our balance sheet was set up at the old rate. So we had to adjust that and that was $49.1 million onetime adjustment.

[Operator]

There are no further questions on the phone line. I will now turn the Q&A session over to Candida Hayden, who will take questions from the webcast.

[Candida Hayden, executive]

Thank you, Laura. Our first question comes from Bernie Picchi from Palisade Capital. Given the recent social and political turmoil in Ecuador, I'm a bit surprised by your commitment to the Cascabel project especially after Panama experience. What extent have you balanced your attention to the project geology versus your view of the political environment there?

[Eaun Gray, executive]

Thank you for the question. Cascabel transaction was very carefully structured to take advantage of the geology, but also mitigate the risks. First point, in terms of the funding structure, it's broken down in tranches based on stage gains. And this allows certain items to be dealt with before additional capital is funded. And then when it comes to the final construction funding, that is contingent upon the rest of the funding being secured and a robust investment agreement being signed with government of Ecuador with criteria included as a condition to funding. So we take a lot of comfort from that. But I'd probably say, bigger picture, Ecuador has a very fair split fiscal flows versus other countries. And so we draw a lot of comfort from that as well. Mines like Fruta Del Norte, the government derives 50% of the economic benefit of the projects. So that provides what I believe is a good backdrop towards stability going forward, social acceptability of mining projects. The government is also quite supportive of the project, which gave us a lot of comfort as part of our diligence. We met with a number of government officials along with our partners at Osisko and also Canadian and U.S. Embassy staff.

[Candida Hayden, executive]

Next question is also from Bernie Picchi at Palisade Capital, an update on Panama, especially given the new government.

[Paul Brink, executive]

So Bernie, it's Paul. The since the Mulino administration has come in, I think all the indications will be positive. They've indicated a willingness to look at a reopening of mine, enter into negotiations that is with some conditions. I'd say most positive are the steps that they're taking of the first item is that they wanted to do a comprehensive environmental review and so they're putting together a panel of experts that they can do that. I'm very hopeful that, that will help demonstrate that the asset has been very well operated and that some of the misgivings that have been promoted in the population, that there was environmental damage, will be dispelled. So I think taking very positive steps to set the table so that they can, one, have a discussion with the company; and two, position this project better with the public in Panama.

[Candida Hayden, executive]

The last question comes from [ Bjorn Wiklander ]. Current cash portfolio is USD 1.4 billion. Is there deals out there such as royalty or stream that are coming that can match this cash position? Or are there other opportunities that this cash position can be used for? And if so, what could that be?

[Eaun Gray, executive]

Thanks for the question, Eaun speaking. As I mentioned, we see a very robust pipeline at the moment. There's good potential to deploy that capital with what we have in the pipeline. Going forward, I think you will see us continue to transact on a number of opportunities. So I don't see it as surplus, it's quite beneficial for us in terms of bidding competitively.

[Candida Hayden, executive]

Thank you, Eaun. There are no further questions from the webcast. This concludes our second quarter results conference call and webcast. We expect to release our third quarter 2024 results after market close on November 8, with the conference call held the following morning. Thank you for your interest in Franco-Nevada. Goodbye.

[Operator]

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.