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Bill Mann tells us to "Buy 'em when everyone else hates 'em" in his most recent article. One of the better run companies I know of, as well as one of the most out of favor, is Franco-Nevada (FN.Toronto). One guess what sector they're in. That's right, natural resources. Damn shame or good fortune? For the 9 months ended Dec. 99, they reported revenues of C$166.8 million, up 81% v. '98, net earning after tax of C$75.3 million,or $0.48/share, up 55%, and cash flow of C$102.3 million, up 34%. And, get this, they have over C$1 billion in working capital and market value of investments and NO DEBT. Despite these numbers, the stock price has dropped from its 52 week high of C$35 3/4 to C$16 today.

Let's talk diversification. They have operations and royalty interests in gold, silver, platinum, palladium, nickel, diamonds, and oil and gas. In this POS metals market, their 100% owned Ken Snyder gold/silver mine on their Midas property in Nevada generated US$25.3 million, or over 25% of the capital cost of the Midas project, over the last 9 months. A US$2 million expansion of mill production capicity is also on schedule and on budget. FN also has royalties on Barrick's Goldstrike property in Nevada, Stillwater's platinum/palladium mine in Montana (PD prices reached record high levels last quarter of over US$450/oz) as well as many others. Go to their website at for more info on their royalty interests and operations.

They are also 100% unhedged so rising gold prices mean higher earnings. Is gold going higher? I won't speculate on that but the follow facts may help get things in perspective a bit better. The largest 6 tech companies (Microsoft, Intel, IBM, Cisco, Lucent and Dell) are today valued at more than all the gold produced in the history of the world. Annual gold supply, which is today worth about $38 billion, is less than 1% of the annual supply of new bonds. When the psychology changes, the potential upside is tremendous.

And, I know, nobody cares.

Most info from Franco's 3rd quarter report.
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