Franco-Nevada Corp. (FNV), already one of most diversified of royalty companies, is expecting further commodity diversification ahead, with CEO David Harquail saying the company will do more deals in non-precious metals, particularly oil and gas. The company's mandate allows for up to 20% of the portfolio outside precious metals—currently it's at 94% precious metals—and Harquail said he would like to get to that level soon. Franco currently has availability liquidity (cash and credit lines) over $1 billion.

The reason for the diversification is that the gold industry is essentially "ex-growth," according to Harquail, who says companies are investing in new projects to maintain production, but "none of these projects are really great."

Company can take its time 
Harquail also noted that Franco does not need to be in a rush to invest. It has growth built in for the next five years from royalties on advanced-stage projects, while it could maintain its dividend for the next 32 years even if it did nothing else.

Franco is also appealing more and more as an investment to long-term conservative institutions, including generalist funds who want a small exposure to gold and resources without the extreme volatility from mining companies. Franco remains a foundational investment for us. If you don't own it, it's a good buy here.

Some debt and greater risk, but higher potential? 
Royal Gold Inc. (RGLD) also has near-term growth from new mines (including New Gold's troubled Rainy River, which is still scheduled to start up later this year). Its main assets have long lives, while it has a strong pipeline with optionality to higher prices. Following concerns about the balance sheet when it added to investments in Mount Milligan, the new debt ratios are now reasonable and the company has $420 million in available liquidity with no further funding obligations.

Unlike Franco, it carries debt, and the revenue sources are more concentrated. But in a stronger gold environment, Royal likely has more upside than Franco. It has increased its dividend each year for the past 16 years (currently yielding just over 1.5%). Royal is a strong buy at current levels, albeit with more downside risk if gold is weak.

Flat outlook means wait 
Silver Wheaton Corp. (SLW) has a flat production outlook for the next three years, following a period of strong growth. The Canadian tax issue is still hanging over the company. Silver Wheaton remains our favored way to gain exposure to silver, even though some 45% of its revenue now comes from gold. Given these reasons, we want to buy SLW when it is particularly cheap, so we'll hold for now.

Buy out ahead? 
Almaden Minerals Ltd. (AAU) is nearing completion of its Preliminary Feasibility Study (PFS) on the Ixtaca deposit, which should show improved economics over the PEA (January 2016); the study is expected by the end of the month. Importantly, it should show a larger deposit. The PEA showed life-of-mine production of 724,000 ounces of gold and 49 million ounces of silver at an operating cost of under $700 per ounce of gold, with very attractive returns.

Meanwhile, the company has continued to drill high-grade mineralization in areas within and outside the previous PEA; this material will be included in the new study. The company has many other targets on the Tuligtic project besides the Ixtaca deposit. Also, last month, the company raised $3.4 million in a private placement and is now well funded to continue advancing the project. Final permitting is expected to commence soon, with a 6 to 12-month target for permits. Once the PFS and permits are in hand, we suspect other companies will take a much stronger look at Ixtaca and possible acquisition. With a production profile almost 50/50 gold/silver, Ixtaca could be attractive to one of the several junior silver producers operating in Mexico.

It's a clean deposit, with low capex, upside potential, and in a good jurisdiction. Buy Almaden at the current level.

Multiple properties, with key deposit 
Almadex Minerals Ltd. (AXDDF), spun off from Almaden a year ago, holds all of the exploration properties and royalty assets, including the more advanced El Cobre project which is the company's main focus at present. This is a large property with good grades, and near good infrastructure.

In all, Almadex has about 20 properties, and has been active optioning them to ensure work gets done on as many as possible while it focuses on El Cobre. Almadex has also completed a placement, raising nearly CA$3.4 million to add to its already solid cash, bullion and share hoard. We like Almadex and its management, but would look to buy on further weakness.

Miranda Gold Corp. (MRDDF) has been active of late in Colombia, tying up land and seeking joint venture partners. We hope to see the fruits of this work in coming months. The transition from Nevada is complete. The company's Willow Creek in Alaska is moving forward as its partner, Gold Torrent, has obtained financing to develop the project. Though small, Willow Creek once in production—Gold Torrent is forecasting the end of 2018, though that sounds optimistic to me—will provide cash flow to Miranda sufficient to cover overhead. Currently, Miranda has $3.2 million in cash, sufficient for nearly two years' expenditures. At this price, Miranda is a good buy, but I wouldn't chase it higher until there are partnerships in place in Colombia.