January 2015 FNV TSX/NYSE

Transcription

1 January 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 Corporation is determined to have PFIC status; 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; 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, 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 Corporation s ongoing income and assets relating to determination of our PFIC status; 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 as well as our most recent Management s Discussion and Analysis filed with the Canadian securities regulatory authorities on and contained in Franco-Nevada s most recent Annual Report on Form 40-F filed 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 current MD&A disclosure found on the Company s website and filed with Canadian securities regulatory authorities on SEDAR at and with the Securities and Exchange Commission on EDGAR at This presentation does not constitute an offer to sell or a solicitation of an offer to purchase any security in any jurisdiction

3 A Gold Focused Royalty/Stream Company $8.9 Billion 1 Market Cap TSX & NYSE Listed S&P/TSX & GDX Top Shareholders BlackRock Fidelity T. Rowe Price Available Capital Working Cap 2 = $0.7 B Credit line = $0.5 B NO DEBT Free Cash Flow Margin 3 > 80% Dividend ~1.4% 7 years of increases Board of Directors Pierre Lassonde, Chair David Harquail, CEO Tom Albanese Derek Evans Graham Farquharson Louis Gignac Randall Oliphant Hon. David R. Peterson 1. As at January 20, Working Capital at September 30, 2014 less $648 million Candelaria investment and $22 million equity investment in Lundin which closed November For Q3/ Margin is defined by the Company as Adjusted EBITDA divided by Revenue 3

4 The Gold Investment that Works 300% 250% CAGR 1 : 24% FNV 200% 150% 100% GOLD 50% 0% -50% FNV IPO: Dec 2007 S&P/TSX Global Gold Index -100% FNV and S&P/TSX Global Gold Index converted to USD. Chart to January 19, From IPO to January 19, 2015 includes dividends. 4

5 Our Business Principles Goldstrike Candelaria Duketon Maximize Exploration upside Security of tenure Management time on new deals Minimize Cost exposures Potential for encroachments 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% 0-3% 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 Diversified Portfolio of > 380 Assets GOLD ASSETS U.S. Latin America PGM Stillwater Goldstrike Gold Quarry Marigold Fire Creek/Midas Canada Detour Sudbury Golden Highway Musselwhite Timmins West Kirkland Lake Candelaria Palmarejo Cerro San Pedro Cobre Panama Rest of World MWS Sabodala Tasiast Subika Karma Duketon Sudbury Pandora Other Weyburn oil Midale oil Edson gas / ngl s Mt. Keith nickel Available Capital > $1.1 Billion 1 See our Annual Information Form filed on on March 19, 2014 and 2014 Asset Handbook for further detail. 1. Working Capital at September 30, 2014 less $648 million Candelaria investment and $22 million equity investment in Lundin which closed November

8 Track Record Gold Equivalent Ounces 1 Revenue Adj Net Income 2 per share 3 Dividends per share GEOs (Koz) 150 US$ Millions US$ per share US$ / share Dividend increased again in GEOs include our gold, platinum, palladium 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 and other minerals were converted to GEOs by dividing associated revenue, excluding settlement adjustments, by the average gold price for the period. 2. Adjusted Net Income is defined by the Company as net income (loss) excluding foreign exchange gains/losses, 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. Adjusted Net Income per share is Adjusted Net Income divided by the weighted average number of shares outstanding for the period. See Non-IFRS Measures at the end of this presentation for 2013 reconciliation. For a reconciliation for 2008 through 2012 to various IFRS and Canadian GAAP measures, please refer to the MD&A for the respective years available on our website and on SEDAR. 3. Fiscal years 2010 through 2013 were prepared in accordance with IFRS. Fiscal years 2008 and 2009 were prepared in accordance with Canadian GAAP. 9

9 2014 Q3 Revenue Sources By Commodity By Geography Oil & Gas 19% Rest of World 21% US 21% PGMs 12% Other 3% Gold 66% Australia 5% Mexico 16% Canada 37% 78% Precious Metals 79% from North America & Australia 9

10 Major 2014 Actions January Sabodala Stream $135 million February Fire Creek/Midas Royalties $35 million March Increased Dividend +11% April Cerro Moro Royalty $20 million August Bought Deal Financing $500 million August Karma Stream $75 million November Candelaria Stream $648 million >$ 900 million committed in

11 Available Capital Capital Resources Working Capital 1 $ 1,312 million Marketable Securities 1 Credit Facility 1 (undrawn) Candelaria Stream (Nov 3, 2014) Lundin Equity Investment 2 (Nov 3, 2014) 39 million 500 million (648 million) (22 million) Total Available Capital $ >1.15 billion NO DEBT 1. As at September 30, CAD$25 million investment converted to USD$22 million assuming a CAD/USD exchange rate of

12 Increasing Investment Options Since rd Party Royalties Cerro Moro Yamana Gold Brucejack Pretium Resources Hardrock Premier Gold Mines Since 2008 By-product Streams Cobre Panama - First Quantum Palmarejo - Coeur Mining Since Gold Royalty/Streams to Fund Development Golden Meadows Midas Gold Kirkland Lake - Kirkland Lake Gold Karma True Gold Mining Since 2013 Royalty/Streams through M&A Sabodala Teranga Gold Fire Creek/Midas Klondex Mines Candelaria Lundin Mining 12

13 Franco-Nevada Provides: Gold exposure at a discount Growth organic and acquisitions Dividends vs. ETF fees Why Own a Gold ETF? FNV 300% 250% 200% 150% GOLD 100% 50% FNV IPO: Dec 2007 S&P/TSX Global Gold Index % -50% -100% 1. At January 19, 2015; FNV and S&P/TSX Global Gold Index converted to USD 13

14 Appendix Non IFRS Measures (expressed in millions, except per share amounts) Net Income (Loss) Foreign exchange (gain) loss, net of income tax Mark-to-market changes on warrants, net of income tax Impairment of investments, net of income tax Impairment of royalty, stream and working interests, net of income tax Credit facility costs written off, net of income tax Foreign withholding taxes Withholding tax reversal Adjusted Net Income Basic Weighted Average Shares Outstanding Twelve months ended December 31, $ 11.7 $ (0.1) 9.9 (7.2) (3.5) - (2.5) $ $ Basic EPS Foreign exchange (gain) loss, net of income tax Mark-to-market changes on derivatives, net of income tax Impairment of investments, net of income tax Impairment of royalty, stream and working interests, net of income tax Foreign withholding taxes Withholding tax reversal Adjusted Net Income per share $ 0.08 $ (0.05) (0.02) - (0.02) $ 0.94 $

15 Growth in the Near-Term Category Asset Operator Royalty/Stream Additional Info 1 Avg Proj Yr Prod 1 Newly acquired assets: Sabodala Kirkland Lake Fire Creek/Midas Teranga Gold Kirkland Lake Gold Klondex Mines Ounce payment / 6% Stream 2.5% NSR Ounce payment / 2.5% NSR Producing Producing Producing 250,000 oz 140,000 oz NA Karma True Gold Mining Ounce payment / 4.875% Stream Construction ~100,000 oz Candelaria Lundin Mining 68% gold and silver Stream Producing ~95,000 oz (GEOs) Cerro Moro Yamana Gold 2% NSR* Construction Decision ,000 oz* Ramping up: Goldstrike Barrick Gold NPI Payment (CaTS) Construction TBD Subika Newmont Mining 2% NSR* Ramping up ,000 oz* Rosemont (Duketon) Regis Resources 2% NSR 80,000 oz Detour Detour Gold 2% NSR 660,000 oz Cobre Panama First Quantum ~86% Au Stream 2018 ~100 Koz Au, ~1.8 Moz Ag Permitting projects: Perama Hill Rosemont Eldorado Gold Augusta Resource 2% NSR 1.5% NSR Pending Approval 110,000 oz 220 Mlbs Cu, 4.7Mlbs Moly Golden Meadows Midas Gold 1.7% NSR Permitting Stage 348,000 oz Agi Dagi/Camyurt Alamos Gold 2% NSR* 135,000 oz* Feasibility stage: Tasiast (expansion) Phoenix Gold Kinross Rubicon Minerals 2% NSR 1.5% NSR* Construction 830,000 oz 180,000 oz* Brucejack Pretium Resources 1.2% NSR* 321,500 oz* Hardrock Premier Gold Mines 3% NSR* TBD* Monument Bay Mega Precious Metals 2-3% NSR TBD Castle Mountain Castle Mountain Mining 1-5% NSR TBD * Certain royalties do not cover the entire resource or are rounded. See 2013 Annual Information Form and 2014 Asset Handbook for further details. 1. Dates and average projected annual production based on operator guidance. 15