September Presentation

Transcription

1 September Presentation

2 Cautionary Statement Forward-Looking Statements This Presentation contains "forward-looking statements", 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, costs and timing of acquiring new royalties, equity and other resource related interests, requirements for additional capital, mineral reserve and resources estimates, production costs and revenue, future demand for and prices of commodities, expected mining sequences, business prospects and opportunities. All statements, other than statements of historical fact, are forward-looking statements. The words "expects", expected, estimated and similar expressions identify forward-looking statements. 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 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, and any other factors that 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. Franco-Nevada cannot assure investors that actual results will be consistent with these forward-looking statements and readers are cautioned that forward-looking statements are not guarantees of future performance. Accordingly, readers should not place undue reliance on forward-looking statements due to the inherent uncertainty therein. These risks, uncertainties and other factors include, but are not limited to: fluctuations in the prices of the primary commodities that drive the Company s royalty revenue (gold, platinum group metals, copper, nickel, oil and gas); fluctuations in the value of the Canadian and Australian dollar, and any other currency in which the Company generates revenue, relative to the U.S. dollar; changes in national and local government legislation, including taxation policies; regulations and political or economic developments in any of the countries where the company holds interests in mineral or oil and gas properties; influence of macroeconomic developments; business opportunities that become available to, or are pursued by us; access to debt and equity capital; litigation; title disputes related to our interests or any of the underlying properties; operating or technical difficulties; risks and hazards associated with the business of development and mining, including, but not limited to unusual or unexpected operating difficulties, financial stress and other natural disasters or civil unrest. 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 as well as our Annual and interim MD&A. 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-GAAP Measures Free Cash Flow, EBITDA and Royalty Revenue are non-gaap financial measures which management believes are valuable indicators of the Company. These measures do not have any standardized meanings and are unlikely to be comparable to similar measures of other companies. For a reconciliation of these measures to various GAAP measures please see the Company s current and historical Annual and Interim MDA disclosure found on the Company s website and on SEDAR. 2

3 Franco-Nevada Leading gold royalty company Secure and profitable assets High free cash flow (1) margins Growing gold revenue Active acquirer with > $700m in available capital Semi annual dividend increased to C$0.14 per share Part of S&P/TSX Composite Index with US$2.8B market cap (2) Goldstrike Palmarejo Gold Quarry (1) Free Cash Flow is defined by the Company as operating income plus depletion and depreciation, non-cash charges, and any impairment of investments and royalty interests (2) As at Sep 1,

4 Quality Portfolio Diversified & Geopolitically Secure Assets % of Royalty Revenue (1) 66% 20% >300 Royalty Assets Worldwide with Majority of Royalty Revenue from US & Canada (1) Royalty Revenue is defined by the Company as cash received or receivable from operating royalty assets earned during the period. Percentages above are for the 3 month period ending June 30,

5 Quality Portfolio Balanced Growth Profile BASE GROWING FUTURE UPSIDE GOLDSTRIKE GOLD QUARRY STILLWATER OIL & GAS MARIGOLD ROBINSON OTHERS PALMAREJO TASIAST HOLLISTER HEMLO DETOUR PERAMA HILL PINSON PANDORA ROSEMONT FALCONDO HOLLOWAY >145 EXPLORATION INTERESTS >100,000 ACRES OF UNDEVELOPED O&G LANDS ARCTIC GAS OTHERS >20 ESTABLISHED OPERATING MINERAL PROPERTIES AND >100 O&G OPERATIONS ~4 PROJECTS THAT ARE UNDER DEVELOPMENT OR EXPANDING PRODUCTION ~15 MINERAL PROJECTS POTENTIALLY OPERATING WITHIN 5YRS Balanced portfolio of operating & future growth assets 5

6 Quality Portfolio Gold Focus with Added Optionality ($ millions) % 55% 55% 56% 77% 80% 5 0 Q Q Q Q Q Q Gold PGM Base Metals & Other Oil & Gas Increasing precious metals contribution in absolute & relative terms Chart reflects Royalty Revenue, defined by the Company as cash received or receivable from operating royalty assets earned during the period. 6

7 Quality Portfolio Solid Assets with Quality Operators Goldstrike outperformed guidance for the first half of 2009 Goldstrike - Barrick Palmarejo - Coeur Contribution from Palmarejo minimum payments beginning in Q3/09 Oil & gas assets performing ahead of expectations Weyburn - Encana Gold Quarry - Newmont Potential to increase reserves and mine life at Gold Quarry through West Wall layback 7

8 Quality Portfolio Future Growth Assets Property Royalty Operator Update Tasiast 2% NSR Red Back Mining Reserves and resources have been rapidly expanded with resources now >4 Moz* Hollister 3-5% NSR Great Basin Gold Recent discovery on 5% royalty ground. Hemlo 3% NSR & 50% NPI Barrick Gold Underground development and mining on royalty ground could begin in Detour 2% NSR Detour Gold 13.2 Moz* in-pit gold resource with prefeasibility study in late 2009 Perama Hill 2% NSR Eldorado Gold Pre-Environmental Impact Assessment &Technical Report to be submitted Q3/09 Holloway/ Hislop 4% NSR & variable St. Andrew Financing completed for near-term production Other Various Various Pinson, Pandora, Rosemont, Falcondo, Dee/Arturo, Duketon, Kirkland Lake * Resources stated in Franco-Nevada 2008 AIF 8

9 High Margin Business Free Cash Flow in All Likely Scenarios $35.0 Free Cash Flow (1) By Quarter $ % 85% $25.0 Millions $20.0 $15.0 $10.0 $5.0 Free Cash Flow (2) Royalty Revenue (1) $0.0 Q1/09 Q2/09 (1) Free Cash Flow is defined by the Company as operating income plus depletion and depreciation, non-cash charges, and any impairment of investments and royalty interests 9

10 High Margin Business Royalties Limit Downside Exposure Commodity and exploration exposure with less downside 10

11 High Margin Business Undervalued Free Cash Flow per Share Free Cash Flow per $1,000 Investment (1) Assumes Franco s >$500m not invested (1) Source: CIBC Equity Research. Calculations based on 1H 2009 actual results, annualized. FCF is represented by operating cash flow less capital expenditures. 11

12 Growth Through Acquisition Track Record $103.5 million Dec 29, % gross royalty at Gold Quarry, Nevada $80 million Jan 21, % gold royalty stream at Palmarejo, Mexico April 2009 Update: Increased minimum guidance to 14,400 oz/annum March 30, 2009 Update: First gold poured Precious metals now 80% of Royalty Revenue 12

13 Growth Through Acquisition Growth in Gold Revenue US$ (millions) Palmarejo 2009 (1) Q1/09 Q2/09 Q3/09 Q4/09 Palmarejo Royalty Revenue Potential Gold Price Palmarejo (2) Minimum Capacity $800/oz $20m $24m $900/oz $25m $30m $1000/oz $30m $36m Actual/Minimum Potential (1) Royalty revenue chart reflects actual revenue in Q2/09 and forecasted revenue for Q3/09 & Q4/09 based on a minimum payment obligation of 25,000 oz for 2H 2009 and Coeur s production guidance of 72,000 in 2009 (assuming equal quarterly production). Revenue is calculated using a $900/oz gold price. (2) Minimum payment calculated on 50,000 oz above $400/oz. Capacity based on 50% of Coeur guidance from Mar 30, 2009 of 120,000 oz/yr above $400/oz 13

14 Growth Through Acquisition Growth in H Proforma Royalty Revenue - 1H 2009 Annualized US$ (millions) GQ Minimum (3) Palmarejo Minimum (2) Existing Gold Revenue (1) Existing Gold Revenue 0 Acquisitions have grown gold revenues >50% (1) Existing Gold Royalty Revenue based on annualized 1H 2009 results, adjusted to remove initial contributions from Gold Quarry and Palmarejo (2) Palmarejo minimum based on 50koz/yr minimum payment at 1H 2009 average gold price of $915/oz (3) GQ minimum based on minimum annual guidance of 14.4koz at 1H 2009 average gold price of $915/oz 14

15 Growth Through Acquisition Financial Strength Capital June 30, 2009 US$ Millions Working Capital $513 Marketable Securities $54 Available Credit Facility $150 Total Available Capital $717 No debt or hedges and limited capital obligations Potential catalyst for share price increase 15

16 The Leading Gold Royalty Company Low risk business model and portfolio High margins and Free Cash Flow (1) More capital for royalty growth (1) Free Cash Flow is defined by the Company as operating income plus depletion and depreciation, non-cash charges, and any impairment of investments and royalty interests 16

17 Franco-Nevada (TSX:FNV) Capital Structure: Share Price Range (1) Common Warrants Warrants Warrants 112.0m shares outstanding (FNV) $32/sh Mar (FNV.WT) $75/sh June 2017 (FNV.WT.A) 316,436 Special Warrants C$ C$11.62 Market Capitalization (2) Working Capital + Investments (3) Available Credit Facilities Debt or Hedges (3) US$2.8B US$567m US$150m Nil 2009 Dividends (Indicative) C$31.2m (C$0.28/share) Management Ownership 5.4% (1) Previous 52 weeks (2) September 1, 2009 (3) June 30, 2009 working capital plus marketable investments 17

18 Thank You Goldstrike - Barrick Bald Weyburn Mountain - Encana - Barrick East Boulder - Stillwater Palmarejo - Coeur Cerro San Pedro - New Gold Mesquite New Gold Marigold - Goldcorp Marigold - Goldcorp Robinson - Quadra Tasiast - Red Back 18