Every visitor to Franco-Nevada Corporation’s office in Toronto’s Exchange Tower receives a deck of playing cards. Senior vice-president, business development Paul Brink explains that the cards answer a commonly asked question about the gold-focused royalty company: Where does its name come from? The name is a nod to the Francophone heritage of company co-founder (now chairman) Pierre Lassonde and he and partner Seymour Schulich’s fondness for gambling and skiing trips to Nevada. Franco-Nevada’s ongoing success is an indica- tion of Lassonde and Schulich’s good sense when it comes to calculating the odds in the mining game.

After a three-way merger with Newmont and Normandy Mining in 2002, Franco-Nevada re-emerged as a public company in December 2007, with David Harquail, part of the original Franco-Nevada management team, as CEO.

The company’s accomplishments since its IPO are impres- sive. Its share price has increased more than 78%; it has paid out over $50 million in dividends (all figures in US dollars) and has grown through a series of strategic acquisitions, increasing its market cap to $2.9 billion.

A pioneer in the gold royalty business – in which it acquires a percentage stake in a mine’s revenues/production – Franco- Nevada is able to reap the benefits of metal price appreciation, new reserves and expansion potential with minimal exposure to capital, operating and environmental costs.

And since gold is a commodity with minimal correlation to world markets, Franco-Nevada provides a safe haven for investors during times of economic uncertainty.

“We like being in the position where our existing pipeline will shine if gold prices take off,” says Brink. “And we have a lot of powder to add assets if we see another liquidity crunch.”

The strategy seems to work. The company recently reported record earnings of $80.9 million or 76 cents a share for 2009, up sharply from $40.3 million or 41 cents a share in 2008. Its total 2009 revenues were $199.7 million, up from $151 million the previous year. While some of the gains were due to the accounting treatment of minimum payments due to Franco- Nevada, the company grew its gold royalty revenues by 42% year over year, and its 87% free cash flow margins far exceed those of typical gold producers.

With more than $605 million in working capital and mar- ketable securities, no debt or hedges, and $175 million in available credit, Franco-Nevada says it “anticipates significant acquisition activity” in 2010.

That means the company is looking to add to a global portfolio that includes more than 300 royalties in countries around the world (Canada and the U.S. account for 82% of its royalty revenue). “The focus in our company is just to get the share price up, because there’s no real benefit to scale in our business,” says Brink. “We want to invest in projects where we have a good certainty of a basic return and we get to participate in meaning- ful exploration discoveries.”

In the unlikely event Franco-Nevada fails to add to its asset base in 2010, it is already shaping up as a record year for the company. In guidance issued in March, it said that royalty revenues should increase from $144 million in 2009 to between $155 and $170 million this year.

Much of that growth is expected to come from its 50% gold royalty stream interest in Mexico’s Palmajero mine, which will have a full year of production in 2010 after yielding $18.8 million in royalties in just seven months of operation last year. (Palmajero operator Coeur has issued production guidance of approximately 109,000 ounces of gold for 2010.)

Elsewhere, Franco-Nevada’s long-term prospects look bright thanks to its investments in projects such as a 2% stake in Red Back Mining’s Tasiast project in Mauritania. In March, Red Back announced a 64% increase in proven and probable reserves to approximately five million ounces.

Clearly this is a company with an ace up its sleeve.