Comparing Two Precious Metals Investment Strategies: Why Franco-Nevada (FNV) Might Offer More Upside Than Wheaton (WPM)

Understanding the Core Business Models

The precious metals sector offers investors multiple pathways to gain exposure to gold and silver without owning physical bullion. Two prominent players—Wheaton Precious Metals (NYSE: WPM) and Franco-Nevada (NYSE: FNV)—represent distinct approaches to capturing this market opportunity, each with its own risk-return profile.

Wheaton Precious Metals operates exclusively through streaming agreements. Under this model, the company deploys capital to help mining operators develop new projects or expand existing operations. In return, Wheaton secures the right to purchase a fixed percentage of metal output at predetermined rates, effectively locking in favorable costs relative to market spot prices. A recent example illustrates this strategy: in November, WPM committed $670 million to fund the Spring Valley project in Nevada, gaining the right to purchase 8% of gold production at 20% of spot price until the mine yields 300,000 ounces, then 6% thereafter at 22% of spot price.

Franco-Nevada operates within a broader framework, combining royalty agreements and streaming contracts across a significantly larger asset base. The company maintains exposure to 434 distinct projects spanning precious metals (gold, silver, platinum group metals), traditional mining, oil, and natural gas liquids. Of these, 418 represent royalty agreements—generally considered a lower-maintenance income stream than streaming contracts.

Divergent Portfolio Scales and Growth Trajectories

The scale difference between these two companies becomes apparent when examining their production pipelines and diversification metrics.

Wheaton Precious Metals currently holds streams across 23 operating mines with another 25 in development phases. The company anticipates producing 600,000 to 670,000 gold equivalent ounces (GEOs) in 2025, broken down as 59% gold, 39% silver, with minor cobalt and palladium exposure. This production should climb to 870,000 GEOs by 2029, then stabilize at approximately 950,000 GEOs annually between 2030 and 2034. The company’s existing agreements allow it to acquire gold at an average cost of $473 per ounce and silver at $5.75 per ounce through 2029.

Franco-Nevada’s portfolio encompasses significantly greater complexity and opportunity. Its 434-asset portfolio includes 120 actively producing properties, 38 in advanced development, and 376 early-stage exploration projects. The company expects annual production to average between 495,000 and 525,000 GEOs through 2029 under current operational assumptions. However, two major catalysts could substantially increase this figure: the Cote Gold Mine acquisition (costing nearly $1.1 billion for a 7.5% gross margin royalty, projecting $67 million in annual revenue) represents 175,000 GEOs of potential incremental production, while a full restart of Cobre Panama operations could add similar upside. Beyond 2029, Franco-Nevada identifies an additional 225,000 GEOs of longer-term production growth opportunities.

Cash Generation and Shareholder Returns

Both companies translate their operational advantages into shareholder value through capital allocation discipline. Wheaton Precious Metals generates substantial cash flow from its streaming operations, which it deploys toward acquiring new streams and sustaining a progressive dividend policy.

Franco-Nevada follows an analogous strategy but with an extended track record: the company has increased its dividend for 18 consecutive years. This lengthy history of growing distributions reflects management confidence in the underlying business model and the stability of its cash-generative assets.

Evaluating Risk-Adjusted Returns

Wheaton Precious Metals’ streaming-only focus provides a streamlined, lower-volatility exposure to precious metals upside. The fixed-rate purchase agreements effectively create a spread between acquisition costs and market prices, with less operational complexity than traditional mining.

Franco-Nevada’s more expansive approach—combining royalties across multiple commodities and geographies with selective streaming exposure—introduces additional layers of diversification. This breadth across asset classes, geographies, and development stages creates a more resilient portfolio that can weather commodity price cycles and operational disruptions at individual properties. For investors prioritizing capital preservation alongside growth potential, this enhanced diversification profile represents a compelling alternative framework for precious metals investment.

Both companies maintain the operational leverage that makes precious metals equities attractive when commodity prices rise, yet Franco-Nevada’s structural diversification dampens downside volatility during market corrections. This asymmetric risk-return profile may appeal to investors seeking maximum upside participation with reduced portfolio concentration risk.