Franco-Nevada Versus Wheaton Precious Metals: Why Diversification Matters in Precious Metals Investing

Understanding Two Different Streaming Models

When evaluating precious metals investments, two major players often come up in discussion: Wheaton Precious Metals (NYSE: WPM) and Franco-Nevada (NYSE: FNV). While both companies operate in the precious metals space, their strategies and scope differ significantly.

Wheaton Precious Metals specializes in precious metals streaming agreements with mining operations. The company secures the right to purchase gold, silver, and other metals from mines at substantially discounted rates. In a recent transaction, Wheaton committed $670 million to acquire streaming rights on Nevada’s Spring Valley project. Under the agreement, Wheaton will purchase 8% of production at just 20% of spot price initially, with terms adjusting after 300,000 ounces are produced.

As of now, Wheaton has locked in arrangements across 23 operational mines plus 25 projects in development stages. The company projects production of 600,000 to 670,000 gold equivalent ounces (GEOs) for 2025, with growth accelerating to 870,000 GEOs by 2029. Average costs remain attractive at $473 per ounce for gold and $5.75 per ounce for silver through 2029.

The Broader Portfolio Advantage

Franco-Nevada operates with a fundamentally different scope. Rather than focusing solely on streaming contracts, the company maintains a sweeping portfolio of 434 assets. This includes 120 actively producing operations, 38 in advanced development phases, and 376 exploration properties. The diversification extends well beyond precious metals—the company holds positions in platinum group metals, mining ventures, oil, gas, and natural gas liquids.

Approximately 418 of Franco-Nevada’s 434 assets are structured as royalty agreements, with 82% of gold equivalent ounces derived from precious metals. The company recently invested approximately $1.1 billion to acquire a 7.5% gross margin royalty on the Cote Gold Mine, an asset expected to generate $67 million in annual revenue. Based on current holdings, Franco-Nevada anticipates annual production averaging 495,000 to 525,000 GEOs through 2029.

Growth potential appears substantial. The Cote Gold Mine alone could contribute 175,000 additional GEOs annually once fully operational, while a Cobre Panama restart could add comparable volumes. Longer-term, the company has identified another 225,000 GEOs of incremental production potential across its portfolio.

Cash Flow and Investor Returns

Both companies leverage substantial cash flows from their agreements to fund new investments and maintain growing dividend programs. Franco-Nevada has particularly impressed markets with 18 consecutive years of dividend increases. Wheaton maintains a “sustainable and progressive dividend” supported by its expanding production base.

The Risk Profile Difference

While Wheaton Precious Metals’ streaming model provides a focused and efficient way to gain precious metals exposure, Franco-Nevada’s approach offers something distinct—exposure to multiple commodity cycles and revenue streams. This broader exposure to oil, gas, platinum group metals, and varied mining operations means revenue doesn’t depend entirely on gold and silver price movements.

For investors seeking maximum diversification within the precious metals investment space, Franco-Nevada’s 434-asset portfolio and commodity diversification present a compelling alternative to Wheaton’s more concentrated streaming strategy. Both deserve consideration, but the choice depends on whether an investor prefers focused streaming exposure or broader commodity participation.