Q2 2012 Financial Results Conference Call Conference Call August 9, 2012 1
Cautionary Statement Forward-Looking Statements This presentation may contain certain information that may constitute forward looking information and forward-looking statements within the meaning of applicable Canadian securities laws and United States Private Securities Litigation Reform Act 1995, respectively. Forward-looking statements 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, future demand for and prices of commodities, expected mining sequences, business prospects and opportunities. 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, budget, 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 Franco-Nevada s royalty and stream revenue (gold, platinum group metals, copper, nickel, uranium, silver and oil and gas); fluctuations in the value of the Canadian and Australian dollar, Mexican peso, and any other currency in which Franco- Nevada generates revenue, 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; influence of macro-economic 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 Franco-Nevada s interests or any of the properties in which h Franco-Nevada holds aroyalty, stream or other interest; texcessive cost escalation as well as development, permitting, infrastructure, t operating or technical difficulties on any of the properties in which Franco-Nevada holds a royalty, stream or other interest; rate and timing of production differences from resource estimates; 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 or civil unrest; 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 assumptions relating to: 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; 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 the 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. Readers are cautioned that forward-looking statements are not guarantees of future performance. Franco- Nevada cannot assure readers that actual results will be consistent with these forward looking statements. Accordingly, readers 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 also refer to the Risk Factors section of our most recent Annual Information Form filed with the Canadian securities regulatory authorities on SEDAR at www.sedar.com, our most recent Form 40-F filed with the U.S. Securities and Exchange Commission on EDGAR at www.sec.gov, as well as our most recent annual and interim MD&As. 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 and Adjusted EBITDA 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 current MD&A disclosure found on the Company s website and filed with Canadian securities regulatory authorities on SEDAR at www.sedar.com and with the Securities and Exchange Commission on EDGAR at www.sec.gov. 1 Adjusted EBITDA is defined by the Company as net income excluding income tax expense, finance income and costs, foreign exchange gains/losses and other income/expenses, gains/losses on the sale of investments, income/losses from equity investees, depletion and depreciation and impairment charges related to royalty, stream and working interests and investments. See Non-IFRS Measures and Reconciliation at the end of this presentation. 2 Adjusted Net Income is defined by the Company as net income excluding foreign exchange gains/losses and other income/expenses, gains/losses on the sale of investments, impairment charges related to royalties, streams, working interests and investments, unusual non-recurring items, and the impact of taxes on all these items. See Non-IFRS Measures and Reconciliation at the end of this presentation. 2
2012 Financial Results US $ millions (except per share and %) Q2 2012 Q2 2011 Six Months 2012 Six Months 2011 IFRS MEASURES Revenue $102.7 $106.3 $207.7 $179.4 Net Income $36.9 33.3 83.7 54.5 Net Earnings Per Share $0.26 $0.27 $0.59 $0.45 KEY NON IFRS MEASURES Gold Revenue $81.4 72.0 156.3 124.7 Adjusted EBITDA 1 $82.5 82.6 167.9 140.9 Adjusted EBITDA 1 Per Share $0.57 $0.65 $1.18 $1.16 Adjusted Net Income 2 $35.1 33.2 78.7 54.6 Adjusted Net Income 2 Per Share $0.24 $0.26 $0.55 $0.45 1 Adjusted EBITDA is defined by the Company as net income excluding income tax expense, finance income and costs, foreign exchange gains/losses and other income/expenses, gains/losses on the sale of investments, income/losses from equity investees, depletion and depreciation and impairment charges related to royalty, stream and working interests and investments. See Non-IFRS Measures and Reconciliation at the end of this presentation. 2 Adjusted Net Income is defined by the Company as net income excluding foreign exchange gains/losses and other income/expenses, gains/losses on the sale of investments, impairment charges related to royalties, streams, working interests and investments, unusual non-recurring items, and the impact of taxes on all these items. See Non-IFRS Measures and Reconciliation at the end of this presentation. 3
Revenue by Commodity Diversified Portfolio with Growing Precious Metals 120 $411 M 100 llions) (US$ Mi 80 60 40 $156 M $227 M Other PGM 90% precious metals in Q2 2012 20 Gold 0 4
Continued Annual Growth 450 400 350 $411 M Q4 OTHER (US S$ Millions) 300 250 200 150 100 50 - $151 M $156 M Q3 $227 M $208 M Q2 Q1 Q2 GOLD Q1 2008 2009 2010 2011 2012 5
Scalable Business Model 120 100 (US S$ Millions s) 80 60 40 20 20 40 Q2/08 Q2/09 Q2/10 Q2/11 Q2/122 Revenue G&A Proceeds taxes + Oil&Gascosts Stream costs 6
Q2 2012 Revenue Sources By Geography Australia 3% Other 1% By Commodity Africa 12% US 31% PGMs 11% Other 10% Mexico 28% Canada 25% Gold 79% 84% of Revenue from North America 90% Precious Metals 7
Net Income: Q2/11 to Q2/12 33.3 6.3 3.1 2.9 3.6 36 3.6 1.5 36.9 8
Capital for Future Acquisitions Capital Resources (June 30, 2012) (US$ Millions) Working Capital $1,024 Marketable Securities $74 Credit Facility $175 Total Capital $1,273 More investment opportunities due to: Tight equity and credit markets Commodity price volatility Investing in precious and non-precious 9
Franco Nevada Corporation Capital Structure (Q2 2012) Shares Outstanding ( on TSX & NYSE) 145.0m 2013 Warrants (1) (C$64.27 exercise price) 4.1m 2014 Warrants (1) (C$32.14 exercise price) 1.0m 2017 Warrants (C$75 exercise price) 8.5m Options & other 2.9m 161.5m Share Price Range (2) C$50.13 - $36.42 Market Capitalization $7.0B Working Capital + Marketable Investments (4) $1,098m Available Credit Facilities $175m Analyst Coverage BMO Capital Markets BOA/Merrill Lynch CIBC Capital Markets Credit Suisse GMP Securities National Bank Paradigm Capital RBC Capital Markets Scotia Bank TD Securities UBS Securities David Haughton Mike Jalonen Cosmos Chiu Anita Soni Craig West Paolo Lostritto Don MacLean Stephen Walker Tanya Jakusconek Greg Barnes Brian MacArthur Debt or Hedges Current Annualized Dividend (3) Management Ownership Nil US$0.60/share 3.3% (4.6% diluted) Major Shareholders Fidelity US BlackRock Europe T. Rowe Price US (1) Warrants now of Franco-Nevada GLW Holdings Corp. that upon exercise will entitle the holder thereof, at its election, to receive either 0.1556 of a Franco-Nevada common share or C$5.20 in cash, per warrant. Former $10 GLW warrants each still exercisable at $10/warrant. To acquire one whole share, approximately 6.43 warrants need to be exercised (i.e. $64.27/ share). Former $5 GLW warrants each still exercisable at $5/warrant. To acquire one whole share, approximately 6.43 warrants need to be exercised (i.e. $32.14/ share). (2) Previous 52 weeks as of Aug 7, 2012 (3) Based on US$0.05 monthly divided starting July 1, 2012 (4) As of June 30, 2012 10
Q & A 11
Appendix Non IFRS Measures Three months ended Six months ended (Expressed in millions except per share amounts) Jun 30, 2012 Jun 30, 2011 Jun 30, 2012 Jun 30, 2011 Net Income 36.9 33.3 83.7 54.5 Income tax expense 14.3 12.8 26.9 21.9 Finance costs 0.2 1.3 0.6 1.9 Finance income (2.5) (1.1) (4.7) (1.6) Depletion and depreciation 31.0 37.3 62.7 62.7 EBITDA $79.9 $83.6 $169.2 $139.4 Basic Weighted Average Shares Outstanding 144.0 126.3 142.0 121.6 EBITDA per share $0.55 $0.66 $1.19 $1.15 Net Income 36.9 33.33 83.7 54.55 Income tax expense 14.3 12.8 26.9 21.9 Finance costs 0.2 1.3 0.6 1.9 Finance income (2.5) (1.1) (4.7) (1.6) Depletion and depreciation 31.0 37.3 62.7 62.7 Foreign exchange (gains)/losses and other expenses $2.6 (1.0) (1.3) 5.5 Loss from equity investee - - - 1.7 Gain on investments - - - (5.7) Adjusted EBITDA $82.5 $82.6 $167.9 $140.9 Adjusted EBITDA per share $0.57 $0.65 $1.18 $1.16 Net income 36.9 33.3 83.7 54.5 Foreign exchange (gain)/loss and other (income)/expenses, net of income tax $0.4 (0.3) $0.8 3.9 Gain on acquisition of Gold Wheaton/sale of investments, net of income tax - - - (11.5) Mark-to-market changes on derivative $1.3 (0.4) (2.3) 0.3 Loss from equity investee, net of income tax - - - 1.2 Transaction costs of Gold Wheaton, net of income tax - - - 5.6 Credit facility costs written off, net of income tax - 0.6-0.6 Withholding taxes reversal (3.5) - (3.5) - Adjusted Net Income $35.1 $33.2 $78.7 $54.6 Adjusted Net Income per share $0.24 $0.26 $0.55 $0.45 12