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Franco-Nevada Corp. (FNV:TSX; FNV:NYSE) and Altius Minerals Corp. (ALS:TSX) announced the acquisition by Franco of part of Altius' royalty on the AngloGold's Arthur deposit (formerly Silicon and Merlin). Franco is buying a 1% royalty for US$250 million (about CA$342 million) with another $25 million if Altius wins the remaining arbitration proceeding against Anglo on the extend of its royalty. It is one of the fastest-growing deposits in the world, with 20% year-on-year resource growth.

Altius is keeping the other 0.5% of the royalty. This follows the sale of Orogen's similar 1% royalty for about $343 million.

For Franco, this gives them another world-class gold royalty, in a top jurisdiction. It believes that there is potential to more than double the existing resource base at Arthur of 16.3 million ounces. Franco is believed to have been the runner-up to Triple Flag in the bidding for Orogen's similar royalty. Franco used both cash on hand and an additional draw on its line of credit to complete the transaction. Following their $1.05 billion acquisition of a 7.5% royalty on the Cȏté deposit, this puts the company into an unusual net debt position, but we expect the company to pay down its debt out of cash flow.

Franco is a Hold now, but a buy on any weakness.

Altius Strengthens Balance Sheet and Retains Exposure

For Altius, this is a great deal, providing them with immediate value, but also with Altius retaining meaningful interest to the world-class gold deposit, "confirming the addition of precious metals as a long-term component of (our) diversified portfolio." The company's cash balance (including the cash from its sale of Orogen to Triple Flag) is boosted to about CA$360 million, after tax and fees, and increasing total liquidity available to CA$540 million. The sale is yet another clear demonstration of the value of Altius' project generation business.

Altius said its increased cash — up from just $16 million before Orogen's royalty sale) — provides it with flexibility for external M&A opportunities, as well as giving it the cash to increase share repurchases. CEO Brian Dalton has made clear his belief that the share price understates Altius' long-term value, and has many times expressed a desire to increase share purchases. I would also like to see them reduce their debt, though, particularly now, it is far from excessive.

Contrary to my concerns, the stock moved up after the sale as announced. There were widespread rumors in the market that Altius itself may have been acquired, and so I thought there might have been sale sales from investors who had purchased recently speculating on such an outcome. This has not been the case, so far.

I can only express great relief that Altius was not sold. Whatever the premium, we never want to lose a great company that would be irreplaceable.

Altius remains a solid long-term buy. The company's current market value excluding its project net cash and the value of its 0.5% Arthur royalty is a tad over $800 million, while Altius was trading at levels approaching $1 billion prior to the announcement of a resource on Silicon. It was not expensive back then, and is, therefore, all the less so today. I would suggest that its potash royalties and renewals division alone are worth more than than $800 million, giving no value to everything else in the company.

Since the stock has just run up nearly 6% in the last few days, we will probably wait to see if it settles back before buying again. But if you decide to go ahead and buy today, I am not going to argue with you.

New Investor for Midland Provides Exploration Cash

Midland Exploration Inc. (MD:TSX.V) announced a 9.9% investment by Centerra Gold, which has made a series of large investments in Canadian exploration companies in recent months. The acquisition was part of a charity flow flow and institutional offering, the former, the bulk of the raise, at a significant premium of 47.5 cents per share. In all, just over $6.1 million was raised.

Apart from giving the company additional funds for its exploration programs, the addition of a major gold company to its share registry adds both credibility and additional eyes on the company's exploration activities. Midland has several programs underway in James Bay and elsewhere, as well as multiple programs in joint-ventures or alliances with other companies, including Rio Tinto, BHP, and Agnico Eagle. Midland has a very strong shareholder base, with over 40% of the shares in the hands of long-term institutional investors and management.

We have listed Midland as a "Buy" most weeks over the last few months. Given the better-than 20% jump in the stock price over the past two weeks, we will hold for now to see if the stock settle back before buying again.

Nestlé Reiterates Guidance After Difficult Period

Nestle SA (NESN:VX; NSRGY:OTC) reported lower first-half profit and earnings per share, each down around 10%, but it reiterated its 2025 guidance even as it recognized increased macro risks and uncertainties. Although total sales fell moderately, and were weaker in the second quarter than the first, the key "organic growth" metric was a positive 2.9%.

Its worst market was China, due to economic weakness; excluding that region, company wide volumes were actually flat. The company said it planned to address the lack of growth in the China region, which plans, it admitted, would be a drag on growth for the next year or so. Sales were also hurt by the strength in the Swiss franc, while U.S. tariffs as well as higher commodity prices add to the uncertainly.

By sector, coffee was the best performer with growth and better margins, while the growth in pet care slowed after a very strong period. After meaningful price increases recently, particularly in coffee and confectionary, the company is limited in additional price increases, given softer consumer sentiment and strong competition.

Another Disposal Ahead?

The company said it had undertaken a strategic review of its vitamin and supplement business. While the premium brands continue to do well, it may divest its mainstream and value brands.

Separately, Paul Bulcke, chairman of the board, will not stand for re-election at the next AGM after nine years as chairman following another nine as CEO, and almost 50 years with the company.

Uncertainty Amid Good Valuation

Though organic growth was up and the company reiterated full-year guidance, it faces challenges in the period ahead. A slowing economy and tariffs will hurt on the demand side, while continued increases in commodity prices hurt margins.

The company needs to increase volumes and fix or divest underperforming units. The stock fell sharply after the results, down nearly 6% in two days, and nearly 20% in the last two months, to a level not seen since 2018. The current yield of 4.1% is its highest level this century and beyond (though 1H free cash flow did not fully cover it).

We believe the sell-off is overdone, and rate Nestlé a Buy, though not necessarily for immediately gratification.

Hutchison Keeps Dividend Static Despite Higher Profits

Hutchison Port Holdings Trust (HPHT:Singapore) maintained the semi-annual distribution of HK$0.05, despite net profit surging by 67% on the back of increased throughput at the trust's Yantian terminals in China.

Throughput in Hong Kong fell just over 3%, although the revenue per container rose due to increase storage income.

The indicated yield is 6.2%. We are holding after a strong rally in the last several weeks.

Orogen Gets New US Symbol

Orogen Royalties Inc. (OGN:TSXV; OGNNF:OTC) has a new symbol on the U.S. OTC market following its acquisition by Triple Flag and concurrent spin out. OGNNF is now on the OTC Grey Market, but the company intends an immediate upgrade to the more respectable OTC QB now, followed by a move to the higher-level QX once its year-end financials are complete.

The Toronto symbol has not changed. We are holding Orogen for now, waiting for it to settle down from the excitement following the transaction.

TOP BUYS this week, in addition to above, include Royal Gold Inc. (RGLD:NASDAQ).