Cautionary Statement FNV. Forward-Looking Statements. Non-IFRS Measures

Transcription

1 April 2012 Update 1

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: uncertainties relating to the closing of the First Uranium transactions, 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 the First Uranium transactions, 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 our most recent Form 40-F filed with the 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 dby 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 and with the Securities and Exchange Commission on EDGAR at 1. Adjusted EBITDA is defined by the Company as net income (loss) excluding income tax expense, finance income and costs, foreign exchange gains/losses, gains/losses on the sale of investments, income/losses from equity investees, depletion and depreciation and impairment charges related to royalties, streams, working interests and investments. See Non-IFRS Measures at the end of this presentation. 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. See Non-IFRS Measures at the end of this presentation. 2

3 Dow vs. Gold: Gold price has more potential 3

4 Franco Nevada () A gold focused royalty & stream company. Listed on the TSX & NYSE with a market capitalization ti of over $5 billion marejo Pal Growth > 80% revenue growth in 2011 ~$1B cash and no debt World class discoveries Goldst trike Yield 1.1% %yed yield 60% dividend increase in 2011 Increases in each of past 4 years Tasiast Low Risk Royalty and stream model Secure and diversified portfolio Protected from inflationary costs Sudbury 4

5 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 Former CEO, Cambior Inc Randall Oliphant (1) Hon. David R. Peterson (2) Director Former CEO, Barrick Gold Corporation Director Former Premier of Ontario (1) Member of the Audit and Risk Committee (2) Member of the Compensation and Corporate Governance Committee 5

6 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 6

7 Outperforming other Gold Investments 320% 280% * 240% 200% 160% GOLD 120% 80% 40% IPO: Dec 2007 S&P/TSX Global Gold Index 0% *27% compounded annual rate of return and S&P/TSX Global Gold Index converted to USD. Chart to March 27,

8 Key Producing Assets GOLD ASSETS PGM s U.S International Stillwater Goldstrike Tasiast Sudbury (3) Gold Quarry Palmarejo Pandora Marigold MWS Mesquite Ezulwini Other Hollister Cerro San Pedro Weyburn oil Canada Edikan Midale oil Sudbury (3) Australia Edson gas Golden Highway (3) Duketon Mt. Keith - nickel Musselwhite Henty South Kalgoorlie Bronzewing CASH ~$1 Billion 8

9 2011 Revenue Sources By Country Australia 4% Other 1% By Asset Other 9% Africa 16% US 27% PGMs (3 Assets) 16% Mexico 26% Canada 26% Gold (33 Assets) 75% 79% of Revenue from North America 91% Precious Metals 9

10 Revenue by Commodity (US$ Millio ons) Other 92% precious metals in Q PGM Gold 0 Diversified Portfolio with Growing Precious Metals 10

11 Our Growth Pipeline Key Producing Assets* Advanced Assets* Exploration Assets* Gold - US Both organic and Exploration - Canada acquisition near optionality at no - Australia term growth cost to - International PGMs Other Minerals Oil & Gas Over 200 mineral royalties and streams* *Numbers are for mineral assets not inclusive of 135 oil & gas assets and 157 undeveloped oil & gas interests 11

12 Key Near Term Growth Assets Detour (2% NSR royalty) Ramping up production in 2013 to 649 koz/yr* Detour Lake - Ontario Tasiast (2% NSR royalty) Major expansion currently under feasibility Subika (2% NSR royalty) Tasiast - Mauritania Royalty expected to start in 2013 Duketon (2% NSR royalty) Multiple mine potential on >2,600km 2 Hemlo (50% NPI royalty) NPI reaching payout in 2012 Subika - Ghana New Acquisitions See next slide * Based on operator guidance 12

13 Recent Acquisitions Gold Wheaton (Quadra FNX; First Uranium) Sudbury Basin, MWS and Ezulwini streams Canadian Malartic (Osisko Mining) i 1.5% gross royalty on portion Edikan/Central Ashanti (Perseus Mining) 1.5% gross royalty Phoenix Gold Project (Rubicon Minerals) 1.5% gross royalty (net of 0.5% buyback) Lumina Royalty Corp. 4 royalties including Relincho & Taca Taca Timmins West (Lake Shore Gold) 2% gross royalty Weyburn oil (Cenovus Energy) 1.15% working interest Sudbury Basin Ontario Canadian Malartic - Quebec ~$1.3B of investments Edikan/Central Ashanti - Ghana Subika Ghana 13

14 Growing Revenues ($1,700/oz Au) includes: 400 Full year of MWS and Sudbury Basin End of Goldstrike waste stripping US$ (Millio ons) % 81% Smaller asset startups, expansions and NPIs 2013 will add: Detour Subika Organic growth risk adjusted A 2009A 2010A 2011A 2012E* Future excludes: Permitting projects: New Prosperity Rosemont and Perama Hill 2012 revenue guidance of $ million * Represents midpoint of 2012 March revenue guidance at $1,700/oz Au, $1,700/oz Pt, $750/oz Pd, $90/bbl Oil. 14

15 Capital for Future Acquisitions Capital Resources (US$ Millions) Working Capital $851 Marketable Securities $44 Total Capital (Dec 31, 2011) $895 Updated 2012 Activity 2012 investment YTD ($110) C$32.00 warrant exercise $175 Total Capital $960 More investment opportunities due to: Higher prices create more projects Gold price volatility Tight equity and credit markets Broader focus on all commodities 15

16 Franco Nevada is outperforming gold by: Growth (>80% revenue growth in 2011) Profits and Yield (60% dividend increase in 2011) Business model that minimizes inflationary cost risks Participation in world class discoveries (Detour, Tasiast) Strong balance sheet with ~$1B for further growth Diversified and secure portfolio 320% 280% 240% 200% GOLD 160% IPO: Dec 2007 S&P/TSX Global Gold Index 120% 80% 40% 0% Why Own a Gold ETF? 16

17 Appendix Goldstrike Barrick Palmarejo Coeur Detour Lake Detour Gold MWS First Uranium Tasiast Kinross Phoenix Mesquite Rubicon New Gold East Boulder Stillwater Sudbury Quadra FNX Weyburn Cenovus 17

18 2011 Financial Results (US $ millions except per share and %) Q Q % Chg FY 2011 FY 2010 % Chg IFRS MEASURES Revenue $118.5 $ % $411.2 $ % Net Income (Loss) (105.4) 17.2 (713%) (6.8) 62.7 (111%) Net Earnings (Loss) Per Share ($0.80) $0.15 (633%) ($0.05) $0.55 (109%) KEY NON IFRS MEASURES Precious Metals Revenue % % Adjusted EBITDA (1) % % Adjusted EBITDA (1) Per Share $0.72 $ % $2.61 $ % Adjusted Net Income (2) % % Adjusted Net Income (2) per share $0.31 $ % $1.08 $ % Record Results 1. Adjusted EBITDA is defined by the Company as net income (loss) excluding income tax expense, finance income and costs, foreign exchange gains/losses, gains/losses on the sale of investments, income/losses from equity investees, depletion and depreciation and impairment charges related to royalties, streams, working interests and investments. See Non-IFRS Measures at the end of this presentation. 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. See Non-IFRS Measures at the end of this press release 18

19 Increasingly diverse portfolio H Timmins West Hemlo NPI Garden Well Detour Subika # of Royalties/Streams generating Revenue* * Excludes Oil and Gas 19

20 Growth in the Near Term Category Asset Operator Royalty Startup 1 Avg Prod 1 New mines: Edikan Garden Well Canadian Malartic Red October Lounge Lizard Detour Tasiast (expansion) Perseus Mining Regis Resources Osisko Mining Saracen Kagara Ltd Detour Gold Kinross 1.5% NSR 2% NSR 1.5% NSR* 1.75% NSR 2% NSR 2% NSR 2% NSR Aug 2011 Sept 2012 Apr 2011 June 2012 Jan ,000 oz 180,000 oz 574,000 oz* Trial mining 50,000 tpa 649,000 oz Moz Restart 1 Project Falcondo Xstrata 4.1% equity Mar ,000 tpa restarts: t Holt St Andrew Goldfields Up to 10% NSR Apr ,000 oz Hurdle Reached 1 Royalties reaching hurdles: Subika Newmont Mining 2% NSR* oz* Payout 1 NPI s paying out: Musselwhite Macassa Hemlo Goldcorp Kirkland Lake Gold Barrick Gold 5% NPI 20% NPI* 50% NPI* Q Q Q ,000 oz koz* 250,000 oz* Decision Expected 1 Permitting gprojects: Perama Hill Eldorado Gold 2% NSR ,000 oz Rosemont New Prosperity Augusta Resources Taseko Mines 1.5% NSR 22% Au Stream 2012 Q Feasibility Date Mlbs, 4.7Mlbs, 2.4Moz 300,000 oz Pre-feasibility stage: 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 H H 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 producer guidance 20

21 Precious Metals Growth per Share s Growth (1,2 2,3) Pre ecious Metal 250% 200% 150% 100% 50% Inf M&I P&P Per share growth 0% % CAGR in resources over 4 years Growth in resources per share Growth is ~50% organic and ~50% from acquisitions (1) Based on publicly reported reserves and resources by operators and some royalties do not cover all of reported ounces. Non-public reserve and resource information has not been included. Prosperity project not included until permitted. (2) Based on an effective date of March 26, 2012 and operators have varying economic assumptions. Adjustments made so all resources are reported exclusive of reserves. (3) Au + Pt + Pd oz, included, Ag oz excluded. 21

22 Appendix Non IFRS Measures Adjusted EBITDA (US $ millions except per share) Three Months Ended Year Ended Dec 31, 2011 Dec 31, 2010 Dec 31, 2011 Dec 31, 2010 Net income $(105.4) $17.2 $(6.8) $62.7 Income tax expense Finance costs Finance income (1.4) (1.0) (4.3) (3.9) Depletion and depreciation Impairment on stream/royalty interests Impairment on investments Foreign exchange gains/losses and other expenses (3.6) Loss from equity investee Gain on investments (2.0) (1.0) (13.9) (25.6) Adjusted EBITDA $94.2 $ $ $ Basic Weighted Average Shares Outstanding Adjusted EBITDA per share $0.72 $0.53 $2.61 $

23 Appendix Non IFRS Measures Adjusted Net Income (US $ millions except per share) Three Months Ended Year Ended Dec 31, 2011 Dec 31, 2010 Dec 31, 2011 Dec 31, 2010 Net Income $(105.4) $17.2 $(6.8) $62.7 Foreign exchange loss, net of income tax (0.3) Gain on acquisition of Gold Wheaton/sale of investments, net of income tax (1.2) (1.1) (20.0) (22.0) Mark-to-market changes on derivative (2.1) - - (0.2) Loss from equity investee, net of income tax Impairment of stream/royalty interests Impairment of investments Transaction costs of Gold Wheaton, net to income tax Foreign withholding taxes Credit facility costs written off, net of income tax Adjusted d Net Income $40.8 $23.4 $136.0 $52.1 Adjusted Net Income per share $0.31 $0.20 $1.08 $

24 Franco Nevada Corporation Capital Structure (as of March 21, 2012) Shares Outstanding ( on TSX & NYSE) 143.9m 2013 Warrants (1) (C$64.27 exercise price) 4.1m 2014 Warrants (1) (C$32.14 exercise price) 2.1m 2017 Warrants (C$75 exercise price) 8.5m Options & other 2.9m 161.5m Share Price Range (2) C$ $34.78 Market Capitalization $5.90B Working Capital + Marketable Investments (4) $895m 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$0.48/share 3.4% (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 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. (3) Year starting July (4) As of December 31,