Investors in Franco-Nevada (NYSE:FNV) had high hopes for the streaming and royalty company coming into 2018. After a strong 2017 that featured solid stock performance, Franco-Nevada shareholders believed that the company was making the right moves, expanding its traditional exposure to gold, silver, and other metals while also making a stronger push toward adding more oil and gas financing projects to its pipeline.

Yet even though that push into energy timed well with a substantial uptick in crude oil prices to start the year, Franco-Nevada shares haven't been able to keep up their upward momentum, and nearly halfway through the year, the stock is just about exactly where it started 2018. Yet that hasn't changed the fundamental opportunities the business has for continued success, and Franco-Nevada might well prove later on that now would have been a good time to invest in its future.

Mining complex on coastline with terminal dock extending offshore.

Cobre Panama project. Image source: Franco-Nevada.

Moving against the grain

One of the most surprising things about Franco-Nevada's poor performance is that it's come in the face of reasonably solid returns for the commodities to which it has the most exposure. Gold has held its own relatively well so far this year, easing downward by just 2%. Crude oil prices have moved sharply higher, and even after falling back slightly over the past few weeks, oil in the $60s has been a boon for the production partners with which Franco-Nevada has forged relationships.

Past performance isn't the problem. Franco-Nevada's fourth-quarter financial report in March showed a record year in 2017, including substantial gains in both revenue and earnings. Overall production figures also hit record levels, with the company seeing a shift away from its traditional reliance on gold to incorporate greater exposure to platinum group metals as well as non-precious metals.

Yet some concerns arose later in the period about Franco-Nevada's growth. In the first quarter of 2018, the streaming giant saw revenue rise just a fraction of a percent. Net income rose sharply, but total precious metal production was down substantially from year-earlier figures. Only the increase in revenue from oil and gas investments was enough to keep Franco-Nevada's overall top line moving higher.

The big uncertainty

The biggest question mark for Franco-Nevada is how a key investment will pan out for the streaming company. Franco-Nevada is now fully committed to the developing Cobre Panama mine, having boosted its stake in the asset gradually over time. Testing has both the mining companies developing the project and Franco-Nevada excited about its future, with huge proven and probable reserves of copper and molybdenum to go along with the gold and silver expected to come out of Cobre Panama.

Franco-Nevada expects the payouts from Cobre Panama to be huge, but before they start, the company will have to be patient. Further development work is needed to get the mine up to full production, and capital expenditures of more than $1 billion in 2018 will add financial pressure to the equation. Once up and running, Franco-Nevada should be a productive force into the 2050s, but until actual gold and silver starts coming in, investors in the streaming company won't be certain about exactly how well the mine will produce.

For now, Franco-Nevada's being somewhat cautious in its near-term projections, and that's contributed to the uncertain mood among investors. Full-year 2018 production targets are actually less than what Franco-Nevada saw in 2017, with the company banking on no contribution at all from Cobre Panama this year. Longer-term growth looks better, but investors don't seem to be focused as sharply on that bigger picture.

An opportunity to beat the rush

Franco-Nevada's lethargic performance could well be a bargain opportunity, because by the time production numbers actually rise when Cobre Panama comes online, investors will have likely already taken those figures into account. That's why it's entirely possible that during the rest of 2018, Franco-Nevada could see shares rise in anticipation of added gold and silver streams from the mine, making now the time to look closely at the stock.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.