This featured recommendation remains our single top gold investment and one that belongs in every investor’s portfolio, explains Adrian Day, editor of Global Analyst.

Franco-Nevada (FNV) has made another major streaming deal, using debt for the first time in its history.

The new transaction is a silver stream on the world-class Antamina copper mine. Antamina is the eight largest copper mine in the world and one of the lowest-cost mines in the world

Franco will pay Teck Resources (TCK) $610 million, and in return will receive most of its share of the silver produced from Antamina (starting at 90% and declining to 60% after about 30 years.

The deal is immediately cash flowing and is accretive. It also strengthens and diversifies the portfolio.

On current reserves, the rate of return would be mid-single digits, hardly exciting.

But as Franco notes, they acquire royalties and streams for the upside and fully expect production to grow well beyond current reserves. It is a long-life asset, so Franco expects to participate over several price cycles.

After this transaction, Franco will still have $800 million in available capital. The company has clearly telegraphed that there will be another one or two large transactions.

We think this is a very good deal. It is accretive, it diversifies and strengthens the portfolio, and Franco is buying at a low point in the cycle; finally, this is a world-class asset with a long-life and lots of upside.

Franco sees many opportunities for this type of transaction in the current low commodity price environment. Royalty companies have come a long way from the acquisition of third-party royalties.

The stock has moved strongly from $40 in early September, though it remains below the $60+ level it reached last year.

If you don’t own it already, then buy it here and look for any pullbacks if you are adding to existing positions.

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