Q Results November 12, 2015 FNV TSX/NYSE

Transcription

1 Q Results November 12, 2015 FNV TSX/NYSE

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 U.S. 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, 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 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 statement, 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; regulations and 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 the Company is determined to have PFIC status; 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 disease; 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; the Company 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 our most recent Annual Information Form filed with the Canadian securities regulatory authorities on and contained in our most recent form 40-F filed with the Securities and Exchange Commission (the SEC ) on as well as our most recent Management s Discussion and Analysis filed with the Canadian securities regulatory authorities on and with the SEC on The forward looking statements herein are made as of the date of this presentation 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

3 Key Developments Q3 Results: Antamina: Cobre Panama: Candelaria: Credit Facility: Increase in GEOs helping to compensate for lower commodity prices Stream acquired for $610 million and will start contributing in Q4 Revised agreement finalized and $338 million of initial funding provided Performing strongly and new mine plan projects 26% more GEOs over Increasing to $1 billion with $250 million accordion and 5 year maturity 3

4 Gold Price & GEOs Realized Average Gold Price ($/oz) $1,300 $1,250 $1,200 $1,150 $1,100 $1,050 $1,282/oz $1,200/oz $1,219/oz $1,193/oz $1,124/oz Average Gold Price: continued weakness; down 12.3% YoY $1,000 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/2015 Gold Equivalent (000 ounces) other PGM GOLD GEOs 1 Realized: +22.2% YoY 10 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/ Please see definition on slide 18 4

5 GEOs 1 : Q to Q ,081 4,255 1, ,226 85,637 70, Please see definition on slide 18 5

6 Revenue Performance Revenue (millions) $130 $120 $123.0 $110 $100 $107.6 $109.2 $109.4 $90 $80 $70 $60 $103.7 Overall Revenue: positive impact of increased GEOs; offset by lower commodity prices $50 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/2015 Oil&Gas Revenue (millions) $30 $25 $20 $15 $10 $5 $20.5 $11.0 $5.5 $10.3 $7.8 Oil & Gas Net Revenue: volatile oil & gas prices impacting revenue $0 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/2015 6

7 Q and YTD Financial Results ($ millions except gold price, GEOs, per share and %) Q Q YTD 2015 YTD 2014 Gold Price ($/ounce) $1,124 $1,282 $1,179 $1,288 Gold Equivalent Ounces (GEOs) 1 85,637 70, , ,641 Revenue $103.7 $107.6 $322.3 $319.4 Adjusted EBITDA 2 $78.0 $88.7 $243.4 $260.7 Adjusted EBITDA 2 per share $0.50 $0.59 $1.55 $1.75 Net Income $15.2 $33.2 $56.0 $105.5 Net Income per share $0.10 $0.22 $0.36 $0.71 Adjusted Net Income 3 $19.4 $34.5 $65.2 $104.8 Adjusted Net Income 3 per share $0.12 $0.23 $0.42 $0.71 Margin % 82.4% 75.5% 81.6% 1. Please see note 4 on slide Please see note 1 on slide Please see note 2 on slide Please see note 3 on slide 18 7

8 Adjusted Net Income 1 : Q to Q Please see definition on slide 18 8

9 A High Margin and Scalable Business $925/oz 130 Millions $ , % 81.4% 82.1% 81.3% 82.4% 75.2% Margin 1 Q3/10 Q3/11 Q3/12 Q3/13 Q3/14 Q3/15 1,800 1,600 1,400 1,200 1, Gold Price 2 ($/oz) Revenue Gold Price 2 Fixed Costs 3 Stream & Other Costs 4 1. Please see definition on slide Quarterly average based on London PM Fix 3. Fixed costs include corporate administration and business development 4. Stream & Other costs include costs of stream sales, production taxes and oil & gas operating costs 9

10 2015 Q3 Revenue Sources By Commodity Other 3% O&G 7% By Geography PGMs 7% Rest of World 21% US 19% Canada 23% Gold 83% Latin America 37% 90% Precious Metals 79% from Americas 10

11 Antamina Transaction $610 million stream on Teck s 22.50% share of silver produced at Antamina One of the lowest cost major Cu producers Immediately accretive to GEOs, revenue, cash flow and EPS Exposure to long life asset with resource, exploration and expansion upside First contribution in Q4 Antamina open pit 11

12 Cobre Panama Finalized terms - replacement precious metals stream agreement signed Initial payment - initial payment of $337.9 million made on November 3 - no further payments expected in $180 million expected in 2016 FQM reports - project at 35% completion - commission and ramping up in 2018 Cobre Panama port 12

13 Cobre Panama Site Plant Area Botija Pit Pre-Stripping Tailings Facility Decant Outlet Channel Concentrate Storage Building 13

14 Candelaria Reserve Update - Open pit Mineral Reserves increased ~24% from Dec (adjusting for mining depletion and refined economic parameters) Approval of EIA: - Environmental approval for new tailings facility New Mine Plan: - Improved production profile over next four year period 2-26% increase in expected GEOs over Gold Equivalent Ounces 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 - FNV Applicable Stream GEOs 3 26% 8% 28% 49% Applicable Stream GEOs at Oct 6, 2014 Increase to Applicable Stream GEOs as of July 29, As per Lundin Mining Corporation s April 7, 2015 Press Release 2. As per Lundin Mining Corporation s July 29, 2015 Press Release 3. Based on silver to gold ratio of 65:1 and payability and recovery factors as per the Candelaria stream agreement 14

15 Other Positive Portfolio News in 2015 Timmins West Lakeshore Gold s new 144 GAP zone discovery Duketon Regis new discoveries at Baneygo & Tooheys Well Macassa Kirkland Lake s production growth & exploration success Fire Creek/Midas Klondex s exploration success & 2015 production increase Adding new ounces Marigold Silver Standard exploration success & Valmy claims Goldstrike Barrick s TCM ramp-up / South Arturo: production in 2016 Karma True Gold on track for 2016 start-up Guadalupe Coeur now producing and has expanded reserves Sabodala Teranga s Gora production in Q4 Brucejack Pretium s $540 million construction financing Projects being advanced Cerro Moro Yamana construction decision Sissingue Perseus commencing construction Tasiast Kinross studying phased expansion Ity Endeavour Mining acquisition Hardrock Centerra s $300 million investment Monument Bay Yamana acquired the asset New stronger sponsorship # of Mineral Assets As at November 11, 2015 Producing Advanced Exploration new exploration royalties with Noront transaction 15

16 Available Capital 1, As at September 30, See definition on Slide 18 16

17 Q&A 17

18 Notes 1. 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. 2. 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 non-recurring items; and the impact of income taxes on these items. 3. Margin is a non-ifrs financial measure which is defined by the Company as Adjusted EBITDA divided by revenue. 4. 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 for the third quarters: $1,124/oz gold (Q $1,282/oz); $988/oz platinum (Q $1,434/oz); $615/oz palladium (Q $863/oz) and $14.91/oz silver (Q : $19.63/oz). Commodity prices for the nine months ended September 30: $1,179/oz gold ( $1,288oz); $1,103/oz platinum ( $1,437/oz); $720/oz palladium ( $808/oz) and $16.02/oz silver (2014 : $19.91/oz). 5. Working Capital is a Non-IFRS financial measure. The Company defines Working Capital as current assets less current liabilities. 18

19 Appendix Non IFRS Measures Three months ended September 30, Nine months ended September 30, (expressed in millions, except per share amounts) Net Income (Loss) $ 15.2 $ 33.2 $ 56.0 $ Income tax expense Finance costs Finance income (1.3) (1.2) (3.2) (3.0) Depletion and depreciation Non-cash costs of sales Impairment of royalty, stream and working interests Foreign exchange (gains)/losses and other (income)/expenses (0.9) Impairment of investments Adjusted EBITDA $ 78.0 $ 88.7 $ $ Basic Weighted Average Shares Outstanding Adjusted EBITDA per share $ 0.50 $ 0.59 $ 1.55 $ 1.75 Adjusted EBITDA $ 78.0 $ 88.7 $ $ Revenue Margin 75.2% 82.4% 75.5% 81.6% Three months ended September 30, Nine months ended September 30, (expressed in millions, except per share amounts) Net Income (Loss) $ 15.2 $ 33.2 $ 56.0 $ Foreign exchange (gains)/losses and other (Income)/expenses, net of income tax Mark-to-market changes on derivatives, net of income tax (1.3) Impairment of royalty interest, net of income tax Impairment of investments, net of income tax Gain on sale of investments, net of income tax (0.6) - Valuation allowance Indexation tax adjustment - - (0.4) - Impact of tax rate increase Adjusted Net Income $ 19.4 $ 34.5 $ 65.2 $ Basic Weighted Average Shares Outstanding Adjusted Net Income per share $ 0.12 $ 0.23 $ 0.42 $ Income tax impact on foreign exchange (gains)/losses was $1.2 million ( $0.1 million) and $2.1 million ( $0.1 million). 2 Income tax impact on mark-to-market changes was $Nil ( $0.1 million) and $Nil ( $0.2 million). 3 Income tax impact on impairment of investments was $0.2 million ( $Nil) and $0.2 million ( $Nil). 4 Income tax impact on the gain on sale of investments was $Nil ( $Nil) and $0.3 million ( $Nil). 19