December 2012 Update

Transcription

1 December 2012 Update

2 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: closing of announced acquisitions; 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 Franco-Nevada holds a royalty, stream or other interest; 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 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 closing of announced acquisitions, 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; closing of announced transactions 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 our most recent Form 40-F filed with the U.S. Securities and Exchange Commission on EDGAR at 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. Advisory Regarding Oil and Gas Reserves Reserves are the estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, from a given date forward, based on: analysis of drilling, geological, geophysical and engineering data, the use of established technology, and specified economic conditions, which are generally accepted as being reasonable. Proved reserves are those reserves which can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. Franco-Nevada retains Independent Qualified Reserves Evaluators (IQREs) to conduct a full evaluation of the company s reserves. All production and reserves quantities included in this presentation have been prepared in accordance with Canadian practices and specifically in accordance with NI These practices are different from the practices used to report production and to estimate reserves in reports and other materials filed with the SEC by United States companies. 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 disclosurefound 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 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

3 Franco Nevada () A gold focused royalty & stream company. Listed on the TSX & NYSE with a market capitalization of > $8 billion.* ldstrike Go Growth Yield 5 year track record World class new projects >1% yield paid monthly 5 years of consecutive increases Low Risk Royalty and stream model >$1B available capital; no debt *As of December 7,

4 Outperforming other Gold Investments 400% 360% 320% 280% 240% GOLD 200% 160% 120% 80% 40% IPO: Dec 2007 S&P/TSX Global Gold Index and S&P/TSX Global Gold Index converted to USD. Chart to Dec 7, % >30% compounded annual rate of return including dividends 4

5 Business Model Benefits Gold ETF Operators Dividend Yield -0.4% >1% 0-2% Leverage to Gold Price 1 >1 >1 Exploration & Expansion upside 0% 100% 100% Reduced Exposure to: Capital Costs 0% 0%* 100% Operating Costs 0% 0%* 100% Environmental Costs 0% 0%* 100% provides yield and more upside than a gold ETF with less risk than an operator *Revenue royalties & streams 5

6 s Close Correlation to Gold $2,000 $1,500 Go old Price (USD) $1,000 $500 R² = 0.89 $0 Chart to December 7, 2012 $0 $10 $20 $30 $40 $50 $60 Franco Nevada Share Price (USD) Business model protects against rising operating and capital costs 6

7 Over 340 Assets* Producing Assets Advanced Assets Exploration Assets Oil & Gas Assets Gold -US Both organic and Exploration Does not -Canada acquisition nearterm growth cost to optionality at no -Australia -International PGMs Other Minerals include 158 undeveloped oil & gas interests 210 mineral royalties and streams 136 producing Oil & Gas interests assets * As at December 10, Does not include 158 undeveloped oil & gas interests 7

8 Key Producing Assets* GOLD ASSETS PGMs U.S. Australia Stillwater Goldstrike Duketon Sudbury (3 mines) Gold Quarry Henty Pandora Marigold South Kalgoorlie Mesquite Bronzewing Other Hollister International Weyburn oil Canada Tasiast Midale oil Sudbury (3 mines) Palmarejo Edson gas / ngl s Golden Highway (3 mines) Musselwhite Subika Cerro San Pedro Mt. Keith - nickel Timmins West Edikan Available Capital Hemlo MWS ~$1 Billion * See 2012 Annual Information Form for further detail A diversified global gold portfolio 8

9 High Margin Business US $ millions (except per share and %) Q Q Nine Months 2012 Nine Months 2011 IFRS MEASURES Revenue $105.2 $113.3 $312.9 $292.7 Net Income $52.0 $44.1 $135.7 $98.6 Net Earnings Per Share $0.36 $0.35 $0.95 $0.80 KEY NON IFRS MEASURES Gold Revenue $79.9 $87.0 $236.2 $ Adjusted EBITDA 1 $86.2 $92.2 $254.1 $233.1 Adjusted EBITDA 1 Per Share $0.59 $0.73 $1.78 $1.89 Adjusted Net Income 2 $45.3 $39.8 $124.0 $94.3 Adjusted Net Income 2 Per Share $0.31 $0.31 $0.87 $0.76 Margin (EBITDA/Revenue) 82% 81% 81% 80% 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. 9

10 Q Revenue Sources By Commodity By Geography Australia 4% PGMs 15% Other 9% Other 15% US 28% Gold 76% Mexico 22% Canada 31% 91% Precious Metals 81% from North America 10

11 Continued Annual Growth Reve enue (US$ Millions) $227 M $151 M $156 M $411 M Q4 Q3 Q2 Q1 $313OTHER M Q3 Q2 Q GOLD Growth from: ~50% acquisitions ~25% higher commodity prices ~25% organic growth 11

12 Organic Growth Detour (2% NSR royalty) Production begins early 2013 Detour Lake - Ontario Tasiast (2% NSR royalty) Major expansion currently under feasibility Subika (2% NSR royalty) Tasiast - Mauritania Received first royalty payment Q Duketon (2% NSR royalty) Multiple mine potential on >2,600km 2 Hemlo (50% NPI royalty) NPI reaching payout in 2012 Subika - Ghana * Based on operator guidance 12

13 Acquisition Growth Gold Wheaton Sudbury (KGHM), MWS (AngloGold) & Cooke 4 [Ezulwini] (Gold One) Canadian Malartic (Osisko Mining) Edikan (Perseus Mining) Phoenix Gold Project (Rubicon Minerals) Edikan/Central Ashanti - Ghana Lumina Royalty Corp. 4 royalties including Relincho (Teck) & Taca Taca (Lumina Copper) Timmins West (Lake Shore Gold) Cobre Panama (Inmet Mining) Cobre Panama - Panama Weyburn Oil Unit (Cenovus Energy) 1.15% Working Interest & 11.7% Net Royalty Interest ~$2.7B of investments Weyburn - Canada 13

14 Cobre Panama Transaction Overview $1 billion commitment Precious metals stream linked to copper production Attributes to Franco-Nevada Partnering with an experienced mine builder and operator Greater than 30 year mine life based on existing reserves* Opportunities for production expansion and resource growth *Based on Inmet Mining s Basic Engineering Summary Report for the Cobre Panama Project. 14

15 Weyburn Oil Unit Transaction Overview C$400 million % Net Royalty Interest Adds to s existing royalties on the unit Attributes to Franco-Nevada Projected to continue for well over 40 years 1 Provides immediate cash flow from proven operation Significant opportunity for expansion with the use of enhanced recovery techniques Profit margins have historically i been 40-50% 2 2 Weyburn Unit Plant 1 Cenovus Annual Information Form dated Feb 21, Actual data from Weyburn WI. Different applicable royalties and taxes may not correlate exactly to NRI 15

16 Capital for Future Acquisitions Cobre Panama investment substantially funded from future cash flow Capital Resources (Sept 30, 2012) ($ Millions) Working Capital $1,182 Marketable Securities $87 Credit Facility $175 Weyburn Acquisition (closed Nov 13 th ) ($400) Total Available Capital >$1.0 billion More investment opportunities due to: Tight equity and project lending markets Commodity price volatility Investing in precious and non-precious 16

17 Franco Nevada provides: Growth - Participation in world class discoveries - Strong balance sheet for future acquisitions Yield - Dividend increases in each of past 5 years Low Risk - Diversified and secure portfolio - Minimizes inflationary cost risks 400% 360% 320% 280% GOLD 240% 200% 160% 120% IPO: Dec 2007 S&P/TSX Global Gold Index 80% 40% and S&P/TSX Global Gold Index converted to USD. Chart to Dec 7, % Why Own a Gold ETF? 17

18 Appendix 18

19 Appendix Growth in the Near Term Category Asset Operator Royalty Startup 1 Avg Prod 1 New mines or restarts: Edikan Garden Well Canadian Malartic Red October Peculiar Knob Detour Falcondo Cobre Panama Perseus Mining Regis Resources Osisko Mining Saracen Arrium Limited Detour Gold Xstrata Inmet Mining 1.5% NSR 2% NSR 1.5% NSR* 1.75% NSR Production payment 2% NSR 4.1% equity ~86% Au Stream Ramping up Ramping up Ramping up Jun Jan ,000 oz 180,000 oz 574,000 oz* Trial mining 3.6 metric tonnes per year 649,000 oz 14,000 tpa 87 Koz Au*, 1.5 Moz Ag* Hurdle Reached 1 Royalties reaching Subika Newmont Mining 2% NSR* Q oz* hurdles Musselwhite Goldcorp 5% NPI Q ,000 oz or Macassa Kirkland Lake Gold 20% NPI* Q koz* payout Hemlo Barrick Gold 50% NPI* Q ,000 oz* Decision Expected 1 Permitting projects: Perama Hill Eldorado Gold 2% NSR , oz Rosemont Augusta Resources 1.5% NSR Mlbs Cu, 4.7Mlbs Moly, 2.4Moz Ag New Prosperity Taseko Mines 22% Au Stream ,000 oz Feasibility Date 1 Feasibility stage: Tasiast (expansion) Kinross 2% NSR H TBD HBJ Superpit Agi Dagi/Camyurt Phoenix Gold Gurupi Alacer Gold Alamos Gold Rubicon Minerals Jaguar Mining 1.75% NSR* 2% NSR* 1.5% NSR* 1% NSR >$400/oz TBD m tpa* 135,000 oz* 180,000 oz* 150,000 oz * Certain royalties do not cover the entire resource or are rounded. See Annual Information Form for further details. 1 Dates and average production based on operator guidance 19

20 Growing Reserves and Resources 300 Total Au Resource Growth* Inf 0% Resource Growth per Share* 220% Reserves s & Resources (mo oz) M&I P&P 0% 0% 0% 0% 180% 140% 100% 60% Resource growth per share (%) % % Cautionary Note to US Investors Regarding Reserve and Resource Reporting Standards P&P M&I (incl. P&P) Total Resource (Incl. P&P, M&I and Inf) The disclosure in this presentation has been prepared in accordance with the requirements of Canadian securities laws, which differ from the requirements of United States securities laws. Disclosure, including scientific or technical information, has been made in accordance with Canadian National Instrument Standards of Disclosure for Mineral Projects ( NI ). NI is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. For example, the terms measured mineral resources, indicated mineral resources, inferred mineral resources, proven mineral reserves and probable mineral reserves are used in this presentation and the documents referred to herein to comply with the reporting standards in Canada. While those terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission (the SEC ) does not recognize them. Under United States standards, mineralization may not be classified as a reserve unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Investors are cautioned not to assume that all or any part of the mineral deposits in these categories will ever be converted into mineral reserves. These terms have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of measured mineral resources, indicated mineral resources, inferred mineral resources, proven mineral reserves or probable mineral reserves will ever be upgraded or mined. In accordance with Canadian rules, estimates of inferred mineral resources cannot form the basis s of feasibility or other economic o c studies. udes Investors s are cautioned not to assume that any part of the reported ed measured ed mineral resources, indicated dca mineral resources or inferred ed mineral resources in this presentation is economically or legally mineable and will ever be classified as a reserve. In addition, the definitions of proven and probable mineral reserves used in NI differ from the definitions in the SEC Industry Guide 7. Disclosure of contained ounces is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute reserves as in place tonnage and grade without reference to unit measures. Accordingly, information contained in this presentation containing descriptions of the Company s mineral properties may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federalsecurities laws and the rules and regulations there under * Totals exclude Gold Quarry, New Prosperity and Cobre Panama 20

21 Non IFRS Measures Three months ended Nine months ended (Expressed in millions except per share amounts) Sep 30, 2012 Sep 30, 2011 Sep 30, 2012 Sep 30, 2011 Net Income $52.0 $44.1 $135.7 $98.6 Income tax expense Finance costs Finance income (3.5) (1.3) (8.2) (2.9) Depletion and depreciation Foreign exchange (gains)/losses and other expenses (8.3) 1.2 (9.6) 6.7 Loss from equity investee Gain on investments - (6.2) - (11.9) Adjusted EBITDA $86.2 $92.2 $254.1 $233.1 Basic Weighted Average Shares Outstanding Adjusted EBITDA per share $0.59 $0.73 $1.78 $1.89 Net Income $52.0 $44.1 $135.7 $98.6 Foreign exchange (gain)/loss and other (income)/expenses, net of income tax (0.4) (0.6) Gain on acquisition of Gold Wheaton/sale of investments, net of income tax - (5.4) - (17.0) Mark-to-market changes on derivative (6.3) (8.6) Loss from equity investee, net of income tax Transaction costs of Gold Wheaton, net of income tax Credit facility costs written off, net of income tax Withholding taxes reversal - - (3.5) - Adjusted Net Income $45.3 $39.8 $124.0 $94.3 Adjusted Net Income per share $0.31 $0.31 $0.87 $

22 Scalable Business Model $871/oz $960/oz $1,227/oz $1,700/oz $1,655/oz Avg Quarterly Gold price 1 (US$ Million ns) Q3/08 Q3/09 Q3/10 Q3/11 Q3/12 Revenue G&A Proceedstaxes + Oil & Gas costs Streamcosts 1 Based on London PM Fix 22

23 Management & Directors Management David Harquail Sandip Rana Jacqueline Jones Geoff Waterman Paul Brink President & CEO Chief Financial Officer Chief Legal Officer Chief Operating Officer SVP, Business Development Directors Pierre Lassonde David Harquail Derek Evans (1) Graham Farquharson (2) Director, Chairman Director, President & CEO Director CEO, Pengrowth Energy Corporation Director President, Strathcona Mineral Services Louis Gignac (1) Director President, G Mining Services Inc. Randall Oliphant (1) Hon. David R. Peterson (2) Director Executive Chairman, New Gold Inc. Director Former Premier of Ontario (1) Member of the Audit and Risk Committee (2) Member of the Compensation and Corporate Governance Committee 23

24 Franco Nevada Corporation Capital Structure (Q3 2012) Shares Outstanding ( on TSX & NYSE) 146.5m 2013 Warrants (1) (C$64.27 exercise price) 4.1m 2014 Warrants (1) (C$32.14 exercise price) 0.1m 2017 Warrants (C$75 exercise price) 8.5m Options & other 2.3m 161.5m Share Price Range (2) C$ $37.68 Market Capitalization $8.3B Working Capital + Marketable Investments (4) $1.3B 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 Monthly Dividend Annualized (3) Management Ownership Nil US$0.60/share 3.1% (4.0% 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 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 Oct 5, 2012 (3) Based on current US$0.05 monthly divided. Dividend increased to US$0.06 monthly starting January 2013 (4) As of September 30,