Franco-Nevada

In 1983, two Canadians had an idea so elegant the mining world didn't know what to do with it. Seymour Shulish, a deal-maker steeped in oil and gas royalties, and Pierre Laçonne, a mining engineer with an MBA from the University of Utah, raised a modest $2 million and launched Franco-Navada mining corporation. Their thesis was radical. You don't need to dig a single hole to build a gold empire. You just need to own a piece of every hole someone else digs. While the rest of the industry poured billions into drills, trucks, and processing plants, Shulic and Laçonne built a company that would never operate a mine. They imported the royalty model from the oil patch and dropped it into precious metals, a space where nobody had thought to do it before. The bet crystallized in 1986 when Laçonne acquired a royalty on gold strike, a small heap leech mine in Nevada's Carlin trend. It looked modest at the time. Then Barrick Gold bought the property and did what major miners do. They spent hundreds of millions of their own capital drilling deeper, expanding infrastructure, and exploring aggressively. Every dollar Barrick invested, every drill hole that hit pay dirt, every ounce added to reserves flowed directly into Franco-Navada's royalty without Franco-Navada spending a cent. Barrick uncovered a 50 million ounce ore body, one of the largest gold deposits ever found, and Franco-Navada rode the entire upside. No operating costs, no labor disputes, no environmental cleanup bills, just a percentage of every ounce pulled from the ground delivered in perpetuity. That is the genius of the royalty model.