Free Cash Flow InstabilityA divergence between strong net income and negative TTM free cash flow signals elevated investment or working‑capital outflows. This reduces near‑term cash flexibility for buybacks, payouts, or acquisitions and makes funding cadence more dependent on financing or asset monetization.
Earnings Volatility / ROE VariabilityDespite strong margins in recent TTM, Franco‑Nevada has experienced material earnings swings (including a 2023 loss) that drove returns negative. Royalties remain exposed to commodity cycles, asset-specific issues, and one‑off items, making sustained earnings predictability less certain.
Asset-Level & Political RisksFranco‑Nevada's cashflows depend on third‑party mine performance and jurisdictional outcomes. Uncertainty at large contributors like Cobre Panama and operational weaknesses at assets such as Hemlo can materially affect production-linked royalties and introduce regulatory or fiscal negotiation risk.