May Corporate Update

Transcription

1 May 2016 Corporate Update 1

2 Cautionary Statement Forward Looking Statements This presentation contains forward looking information and forward looking statements within the meaning of applicable Canadian securities laws and the United States Private Securities Litigation Reform Act of 1995, respectively, which may include, but are not limited to, statements with respect to future events or future performance, management s expectations regarding Franco-Nevada s growth, results of operations, estimated future revenues, carrying value of assets, future dividends and requirements for additional capital, mineral reserve and mineral resource estimates, production estimates, production costs and revenue, future demand for and prices of commodities, expected mining sequences, business prospects and opportunities. In addition, statements (including data in tables) relating to reserves and resources and gold equivalent ounces are forward looking statements, as they involve implied assessment, based on certain estimates and assumptions, and no assurance can be given that the estimates and assumptions are accurate and that such reserves and resources and gold equivalent ounces will be realized. Such forward looking statements reflect management s current beliefs and are based on information currently available to management. Often, but not always, forward looking statements can be identified by the use of words such as plans, expects, is expected, budgets, scheduled, estimates, forecasts, predicts, projects, intends, targets, aims, anticipates or believes or variations (including negative variations) of such words and phrases or may be identified by statements to the effect that certain actions may, could, should, would, might or will be taken, occur or be achieved. Forward looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Franco-Nevada to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. A number of factors could cause actual events or results to differ materially from any forward looking statements, including, without limitation: fluctuations in the prices of the primary commodities that drive royalty and stream revenue (gold, platinum group metals, copper, nickel, uranium, silver, iron-ore and oil and gas); fluctuations in the value of the Canadian and Australian dollar, Mexican Peso and any other currency in which revenue is generated, relative to the U.S. dollar; changes in national and local government legislation, including permitting and licensing regimes and taxation policies, and the enforcement thereof; regulatory, political or economic developments in any of the countries where properties in which Franco-Nevada holds a royalty, stream or other interest are located or through which they are held; risks related to the operators of the properties in which Franco-Nevada holds a royalty, stream or other interest, including changes in the ownership and control of such operators; influence of macroeconomic developments; business opportunities that become available to, or are pursued by Franco-Nevada; reduced access to debt and equity capital; litigation; title, permit or license disputes related to interests on any of the properties in which Franco-Nevada holds a royalty, stream or other interest; whether or not Franco-Nevada is determined to have passive foreign investment company ( PFIC ) status as defined in Section 1297 of the United States Internal Revenue Code of 1986, as amended; potential changes in Canadian tax treatment of offshore streams; excessive cost escalation as well as development, permitting, infrastructure, operating or technical difficulties on any of the properties in which Franco-Nevada holds a royalty, stream or other interest; actual mineral content may differ from the reserves and resources contained in technical reports; rate and timing of production differences from resource estimates, other technical reports and mine plans; risks and hazards associated with the business of development and mining on any of the properties in which Franco-Nevada holds a royalty, stream or other interest, including, but not limited to unusual or unexpected geological and metallurgical conditions, slope failures or cave-ins, flooding and other natural disasters, terrorism, civil unrest or an outbreak of contagious diseases; and the integration of acquired assets. The forward looking statements contained in this presentation are based upon assumptions management believes to be reasonable, including, without limitation: the ongoing operation of the properties in which Franco-Nevada holds a royalty, stream or other interest by the owners or operators of such properties in a manner consistent with past practice; the accuracy of public statements and disclosures made by the owners or operators of such underlying properties; no material adverse change in the market price of the commodities that underlie the asset portfolio; Franco-Nevada s ongoing income and assets relating to determination of its PFIC status; no material changes to existing tax treatment; no adverse development in respect of any significant property in which Franco-Nevada holds a royalty, stream or other interest; the accuracy of publicly disclosed expectations for the development of underlying properties that are not yet in production; integration of acquired assets; and the absence of any other factors that could cause actions, events or results to differ from those anticipated, estimated or intended. However, there can be no assurance that forward looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements and investors are cautioned that forward looking statements are not guarantees of future performance. Franco-Nevada cannot assure investors that actual results will be consistent with these forward looking statements. Accordingly, investors should not place undue reliance on forward looking statements due to the inherent uncertainty therein. For additional information with respect to risks, uncertainties and assumptions, please refer to the Risk Factors section of Franco-Nevada s most recent Annual Information Form filed with the Canadian securities regulatory authorities on and Franco-Nevada s most recent Annual Report filed on Form 40-F filed with the SEC on The forward-looking statements herein are made as of the date herein only and Franco-Nevada does not assume any obligation to update or revise them to reflect new information, estimates or opinions, future events or results or otherwise, except as required by applicable law. Non-IFRS Measures Adjusted Net Income, Adjusted EBITDA and Margin are intended to provide additional information only and do not have any standardized meaning under International Financial Reporting Standards ( IFRS ) and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate these measures differently. For a reconciliation of these measures to various IFRS measures, please see the end of this presentation or the Company s most recent Management s Discussion and Analysis filed with the Canadian securities regulatory authorities on and with the SEC on This presentation does not constitute an offer to sell or a solicitation of an offer to purchase any security in any jurisdiction 2

3 A Gold Focused Royalty/Stream Company Market Cap 1 ~ US$12.0 Billion FNV on TSX & NYSE S&P/TSX 60 GDX Top Shareholders Fidelity BlackRock T. Rowe Price Available Capital ~ US$1.3 Billion Free Cash Flow Margin 2 > 75% Overhead/mkt cap <0.2% Dividend ~1.3% 9 years of increases US$0.88 annualized Aristocrat Index Board of Directors Pierre Lassonde, Chair David Harquail, CEO Tom Albanese Derek Evans Graham Farquharson Dr. Catharine Farrow Louis Gignac Randall Oliphant Hon. David R. Peterson Free cash flow and no debt 1. As at May 3, Please see notes on page 16 3

4 The Gold Investment that Works 400% 350% FNV 300% 250% 200% 150% 100% 50% 0% -50% FNV IPO: Dec % Gold S&P/TSX Global Gold Index FNV and S&P/TSX Global Gold Index converted to USD. Chart to May 3,

5 Our Business Principles Maximize Exploration upside Security of tenure Focus on new investments Minimize Cost exposures Margin encroachment Involvement in operations Long term optionality 5

6 Business Model Benefits Risk of: Gold ETF FNV Operators Capital Costs 0% 0% 1 100% Operating & Other Costs 0% 0% 1 100% Benefit of: Leverage to Gold Price 1 >1 >1 Exploration & Expansion 0% 100% 100% Dividend Yield (0.4%) 2 ~1.4% 0-2% FNV provides yield and more upside than a gold ETF with less risk than an operator 1. Revenue royalties & streams. 2. Source: SPDR Gold Trust. 6

7 Franco-Nevada since IPO 400 GEOs 1 (000s) 500 Revenue (US$ millions) 1.40 Adjusted Net Income 1 (US$ per share) GEOs (Koz) US$ Millions US$ per share '08 '09 '10 '11 '12 '13 '14 '15 0 '08 '09 '10 '11 '12 '13 '14 ' '08 '09 '10 '11 '12 '13 '14 '15 30 G&A (US$ millions) Market Capitalization 2 9 (US$ billions) 0.90 Dividends (US$ per share) US$ Millions 15 US$ Billions 5 4 US$ / share Please see notes slide As at December 31 0 '08 '09 '10 '11 '12 '13 '14 '15 0 '08 '09 '10 '11 '12 '13 '14 ' '08 '09 '10 '11 '12 '13 '14 '15 7

8 Q Revenue Sources By Commodity By Geography O&G 3% PGMs 6% Rest of World 18% US 13% Silver 20% Other 2% Canada 16% Gold 69% Latin America 53% 95% Precious Metals 82% from Americas 8

9 Diversified Portfolio Precious Metal Assets (selected) U.S. Canada Latin America Rest of World Goldstrike Stillwater Gold Quarry Marigold Fire Creek Bald Mountain Mesquite South Arturo Hollister Midas Sudbury Detour Holt Musselwhite Hemlo Kirkland Lake Timmins W. Cdn. Malartic Brucejack Hardrock Antapaccay Antamina Candelaria Palmarejo Cobre Panama Cerro S. Pedro Cerro Moro Calcatreu Gurupi San Jorge MWS Sabodala Subika Tasiast Duketon Edikan Cooke 4 Karma Henty Perama Hill Other Assets (selected) Weyburn (oil) Midale (oil) Edson (gas) Mt. Keith (Ni) Relincho (Cu) Rosemont (Cu) Selected highlighted assets only. See our Annual Information Form filed on on March 10, 2016 and 2016 Asset Handbook for a more complete listing and further detail. 9

10 Other Positive Portfolio News Adding New Ounces Timmins West (Ontario) 144 GAP discovery Detour (Ontario) 23 year mine plan with West Detour Macassa (Ontario) Kirkland Lake expanding SMC discovery Fire Creek/Midas (Nevada) Klondex s exploration success & permits Marigold (Nevada) Silver Standard exploration success & Valmy claims Duketon (Australia) Regis new discoveries at Baneygo & Tooheys Well Projects Being Advanced Tasiast (Mauritania) Kinross to double production by 2018 with Phase 1 Goldstrike (Nevada) Barrick s TCM ramp-up / South Arturo: production in 2016 Ahafo/Subika (Ghana) Newmont expansion decision in 2016 Sabodala (Senegal) Teranga s Gora production ramp-up Brucejack (British Columbia) Pretium s constructing for production in 2017 Karma (Burkina Faso) True Gold successfully poured first gold Guadalupe (Mexico) Coeur now producing and has expanded reserves Cerro Moro (Argentina) Yamana Gold constructing for production in 2018 Sissingue (Cote d Ivore) Perseus construction decision in 2016 Eagle (Yukon) Victoria Gold receives final major permits New Stronger Sponsorship Hardrock (Ontario) Centerra s $300 million investment 262 Mineral Assets Producing 43 Advanced 42 Exploration 177 East Timmins (Ontario) Kirkland Lake Gold acquisition & Taylor start-up Timmins West (Ontario) Tahoe Resources acquisition Karma (Burkina Faso) Endeavour Mining acquisition Ity (Cote d Ivore) Endeavour Mining acquisition Monument Bay (Manitoba) Yamana Gold acquisition 10

11 Recent Cornerstone Investments Antamina Peru $610 M Teck Corporation Cobre Panama Panama $338 M $1 B First Quantum Candelaria Chile $648 M Lundin Mining Antapaccay Peru $500 M Glencore Long term assets with large land positions 11

12 Growing Projected GEOs 84,000 75,000 65,000 37, ,000 More diversified and longer duration portfolio Note: Base GEOs assumes 2014 GEO production without Candelaria. Cobre Panama expected to start contributing to GEOs in Illustration assumes no decrease in production from existing portfolio 12

13 Outperformance Following Stream Transaction 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Lundin Glencore Teck Relative share price performance since date of announcement versus S&P/TSX Base Metal Index 13

14 Outperformance Following Transaction 160.0% 140.0% 120.0% 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% Teranga Klondex True Gold 1 Relative share price performance since date of announcement versus S&P/TSX Global Gold Index 1.) True Gold performance to April 27, 2016 when it was acquired by Endeavour Mining 14

15 New Investment Opportunities Since 1985 Existing 3 rd party royalties Cerro Moro Yamana Gold Brucejack Pretium Resources Hardrock Premier Gold Mines Since 2008 By-product funding Palmarejo Coeur Mining Cobre Panama First Quantum Since Since 2013 Primary product funding M&A funding Kirkland Lake Kirkland Lake Gold Stibnite Gold Midas Gold Karma Endeavour Mining Sabodala Teranga Gold Fire Creek/Midas Klondex Mines Candelaria Lundin Mining Since 2015 Recapitalization Antamina Teck Resources Antapaccay Glencore 15

16 Over $1.3 B of Available Capital US$ 1,000 US$ 1,333 US$ 83 US$ As at March 31, See notes on page Does not include the US$250 million accordion facility 4. All figures in chart in millions Debt free 16

17 Franco-Nevada Provides: Gold exposure at a discount Growth organic and acquisitions Dividends vs. ETF fees FNV FNV IPO: Dec Why own a gold ETF? Gold S&P/TSX Global Gold Index At May 3, 2016; FNV and S&P/TSX Global Gold Index converted to USD 17

18 Appendix Non IFRS Measures 1. Adjusted Net Income and Adjusted Net Income per share are non-ifrs financial measures, which excludes the following from net income and net income per share: foreign exchange gains/losses and other income/expenses; gains/losses on the sale of investments; impairment charges related to royalty, stream and working interests and investments; unusual nonrecurring items; and the impact of income taxes on these items. Please refer to the 2015 Annual MD&A for details as to the relevance of this non-ifrs measure. See the tables below for non-ifrs reconciliation for 2015 and Please refer to the relevant Annual MD&A for non-ifrs reconciliation for 2012, 2011 and Adjusted Net Income for 2009 and 2008 provided for illustrative purposes only as these years predate IFRS. 2. Adjusted EBITDA and Adjusted EBITDA per share are non-ifrs financial measures, which excludes the following from net income and net income per share: income tax expense/recovery; finance expenses and finance income; foreign exchange gains/losses and other income/expenses; gains/losses on the sale of investments; impairment charges related to royalty, stream and working interests and investments; depletion and depreciation; and non-cash costs of sales. Please refer to the 2015 Annual MD&A for details as to the relevance of this non-ifrs measure. See the tables below for non-ifrs reconciliation for 2015 and Please refer to the relevant Annual MD&A for non-ifrs reconciliation for 2012, 2011 and Adjusted EBITDA for 2009 and 2008 provided for illustrative purposes only as these years predate IFRS 3. Margin is defined by the Company as Adjusted EBITDA divided by revenue. 4. Working Capital is a Non-IFRS financial measure. The Company defines Working Capital as current assets less current liabilities. 5. Fiscal years 2010 through 2015 were prepared in accordance with IFRS. Fiscal years 2008 and 2009 were prepared in accordance with Canadian GAAP 6. GEOs include our gold, platinum, palladium, silver and other mineral assets. GEOs are estimated on a gross basis for NSR royalties and, in the case of stream ounces, before the payment of the per ounce contractual price paid by the Company. For NPI royalties, GEOs are calculated taking into account the NPI economics. Platinum, palladium, silver and other minerals were converted to GEOs by dividing associated revenue, which includes settlement adjustments, by the average gold price for the period. Commodity prices : $1,160/oz gold ( $1,266/oz); $1,054/oz platinum ( $1,385/oz); $691/oz palladium ( $803/oz) and $15.68/oz silver (2014: $19.05/oz). Three months ended December 31, Twelve months ended December 31, (expressed in millions, except Margin) Net Income (Loss) $ (31.4) $ 1.2 $ 24.6 $ Income tax expense (recovery) (4.9) Finance costs Finance income (2.1) (0.9) (5.3) (3.9) Depletion and depreciation Non-cash costs of sales Impairment charges Impairment of investments Foreign exchange (gains)/losses and other (income)/expenses Adjusted EBITDA $ 95.8 $ 96.2 $ $ Revenue Margin 79.0% 78.2% 76.5% 80.7% Three months ended December 31, Twelve months ended December 31, (expressed in millions, except per share amounts) Net Income (Loss) $ (31.4) $ 1.2 $ 24.6 $ Foreign exchange (gains)/losses and other (Income)/expenses, net of income tax Mark-to-market changes on derivatives, net of income tax (1.1) Impairment charges, net of income tax Impairment of investments, net of income tax Indexation adjustment - (0.6) (0.4) 0.4 Valuation allowance Impact of change in depreciation rate Impact of tax rate increases (0.7) Adjusted Net Income $ 23.7 $ 31.6 $ 88.9 $ Basic Weighted Average Shares Outstanding Basic EPS $ (0.20) $ 0.01 $ 0.16 $ 0.71 Foreign exchange(gains)/losses and other (income)/expenses, net of income tax Impairment charges, net of income tax Indexation adjustment - (0.01) - (0.01) Valuation allowance Impact of change in depreciation rate, net of income tax Impact of tax rate increases (0.01) Adjusted Net Income per share $ 0.15 $ 0.20 $ 0.57 $