Euro-Nevada spinoff to focus on Latin American properties

The principals behind two hugely successful royalty companies are aiming to roll out another such entity. The targeted royalty investments this time are gold properties in Latin America.

Currently, the new company, L.A. Nevada Ltd., is a wholly owned subsidiary of Euro-Nevada Mining (TSE), which has $160 million in a war chest for royalty acquisitions.

“Once we attain a critical mass of assets worth in the neighborhood of $100 million, we’ll go public with L.A. Nevada,” said Euro-Nevada President Pierre Lassonde.

When exactly that might occur, Lassonde could not say. “It’s a matter of getting the opportunities (to acquire royalties),” he told The Northern Miner, adding that a reasonable time frame runs from nine months to two years. Robert Casaceli, a multilingual geologist who has consulted for major companies from his Nevada base, will preside over the new company at a head office in Barbados.

“Our plan is to align ourselves with local partners in the countries we go into,” Lassonde said. He also wants to make sure the company has interests in a diverse number of mining jurisdictions. “We’re not going to bet the farm on any one country.”

Franco-Nevada Mining (TSE), the original royalty entity launched in 1983 by Lassonde and Chairman Seymour Schulich, began as a conventional junior exploration company, picking up properties in Nevada for the purpose of exploring for orebodies. In 1986, it altered course by buying a net smelter royalty and a net profits interest covering 3,416 acres in the Carlin Gold Trend.

Hardly a year passed before American Barrick bought a piece of the same ground. After drilling a deep hole that revealed a rich, heretofore unknown orebody, Barrick quickly became the darling of investors as news of the significance of the discovery spread.

With its royalty interest on the same ground, Franco-Nevada’s true worth also became apparent to investors. Whereas in 1984 it traded at about $1, today it trades at about $81. The recent, 52-week high was $95.

In the fall of 1987, Franco spun off all its non-Goldstrike properties into a separate entity known as Euro-Nevada Mining. It now trades at the $40 level. The royalty idea has been more modestly successful with a third Schulich-Lassonde collaboration, Redstone Resources (TSE). The company invests in base metal and industrial mineral properties and currently trades at about $8.

L.A. Nevada, when it gets off the ground, may be just the beginning of the globalization of the royalty spinoffs. Lassonde said he is eyeing properties in Australia and Africa, the royalties of which could be put into other country- or continent-specific royalty companies.

“We’re just following the big companies,” Lassonde said. “Obviously, they’re going to come up with discoveries and we want to be there.”