March 2012 Update p 1

Transcription

1 March 2012 Update p 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: fluctuations in the prices of the primary commodities that drive the 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: 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 by applicable law. Non-IFRS Measures Adjusted Net Income, EBITDA 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 with Canadian securities regulatory authorities on SEDAR at and with the Securities and Exchange Commission on EDGAR at 1. EBITDA is defined by the Company as Net Income excluding income tax expense, finance costs, finance income and depletion and depreciation. 2. Adjusted EBITDA is defined by the Company as Net Income excluding income tax expense, finance costs and income, foreign exchange gains /losses, 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. 3. Adjusted Net Income is defined by the Company as Net Income 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 these items. 2

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

4 Franco-Nevada (FNV) A gold focused royalty & stream company. Listed on the TSX & NYSE with a market capitalization ti of over $5 billion marejo Pal Growth > 75% expected revenue growth* >$700M cash and no debt World class discoveries Goldst trike Yield 1.1% yield 60% dividend id d increase in 2011 Increases in each of past 4 years Tasiast Low Risk y y Royalty and stream model Secure and diversified portfolio Protected from inflationary costs Sudbury *For 2011 based on the top-range of November, 2011 outlook guidance 4

5 Business Model Benefits Gold ETF FNV Operators Dividend Yield <0% >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% FNV provides yield and more upside than a gold ETF with less risk than an operator *Revenue royalties & streams 5

6 Outperforming other Gold Investments * *30% compounded annual rate of return FNV and S&P/TSX Global Gold Index converted to USD. Chart to February 23,

7 Current and Future Assets Over 200 mineral royalties and streams* *Does not include Franco-Nevada s 135 oil & gas assets and 157 undeveloped oil & gas interests 7

8 Our Key Assets GOLD ASSETS PGM s U.S International Stillwater Goldstrike Tasiast Sudbury (3) Gold Quarry Palmarejo Pandora Marigold MWS Mesquite Ezulwini Other Hollister Subika Weyburn oil Canada Cerro San Pedro Midale oil Detour Edikan Edson gas Sudbury (3) Australia Mt. Keith - nickel Golden Highway (3) Duketon Musselwhite Henty CASH South Kalgoorlie > $700M Bronzewing 8

9 Secure and Diverse Revenue* By Country By Asset 1 >50% from U.S. and Canada >75% from North America >90% Precious Metals * Q Revenue 1 Counts are for mineral assets and don t include 135 producing O&G assets. 9

10 Growing Precious Metals Revenue 10

11 Key Near-Term Growth Assets Detour (2% royalty) Ramping up production in 2013 to 649 koz/yr* Detour Lake - Ontario Tasiast (2% royalty) Major expansion currently under feasibility Subika (2% royalty) Tasiast - Mauritania Royalty expected to start in 2013 Duketon (2% royalty) Multiple mine potential on >2,600km 2 New Acquisitions See next slide Subika - Ghana * Based on operator guidance 11

12 Acquisitions in Last Twelve Months 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 Edikan/Central Ashanti - Ghana Subika Ghana 12

13 Growing Revenues ($1,600/oz Au) ** E includes: Full year GLW assets Tasiast, Detour & Subika End of Goldstrike waste stripping New Acquisitions Organic growth risk adjusted Future excludes: Permitting projects: New Prosperity Rosemont and Perama Hill * Represents upper end of 2011 November revenue guidance at $1,500/oz Au, $1,700/oz Pt, $750/oz Pd, $90/bbl Oil. ** Incremental revenue calculation based on operator guidance and $1,600/oz Au. Represents revenue from new assets and an estimate for depletion of existing assets. 13

14 Capital for Future Acquisitions Total cash & short-term investments (US$ Millions) Cash & short-term term investments (Sept 30 th, 2011) $372 Nov 2011 bought deal financing (net) $375 Total cash and short-term investments $747 More investment opportunities due to: Higher prices create more projects Gold price volatility Tight equity and credit markets Broader focus on all commodities 14

15 Franco-Nevada is outperforming gold by: Growth (>75% revenue growth expected 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 >$700m for further growth Diversified and secure portfolio 240% FNV 320% 280% 200% GOLD 160% FNV IPO: Dec 2007 S&P/TSX Global Gold Index 120% 80% 40% 0% Why Own a Gold ETF? 15

16 Appendix Goldstrike Barrick Palmarejo Coeur Detour Detour Gold MWS First Uranium Tasiast Kinross Mesquite New Gold East Boulder Stillwater Sudbury Quadra FNX Weyburn Cenovus 16

17 Q Financial Highlights (US $ millions except per share and %) Q3 11 Q3 10 VAR % Change Revenue $113.3 $55.0 $ % Precious Metals Revenue $ % Cost of Sales % Net Income % Earnings Per Share $0.35 $0.07 $ % EBITDA (1) % Adjusted EBITDA (2) % Adjusted EBITDA (2) Per Share $0.73 $0.38 $ % Adjusted Net Income (3) % Adjusted Net Income (3) per share $0.31 $0.12 $ % Record results 1. EBITDA is defined by the Company as Net Income excluding income tax expense, finance costs, finance income and depletion and depreciation. 2. Adjusted EBITDA is defined by the Company as Net Income excluding income tax expense, finance costs and income, foreign exchange gains /losses, 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. 3. Adjusted Net Income is defined by the Company as Net Income 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 these items.. *Quantitative reconciliation of non-ifrs financial measures to Net Income can be found on slide 19 of this presentation 17

18 Non-IFRS Financial Reconciliation Three months ended d Sept 30, Nine months ended d Sept 30, (Expressed in millions except per share amounts) Net Income $44.1 $8.1 $98.6 $45.4 Income tax expense Finance costs Finance income (1.3) (0.7) (2.9) (2.9) Depletion and depreciation EBITDA $ $137.2 Basic Weighted Average Shares Outstanding EBITDA per share $0.76 $0.32 $1.92 $1.20 Net Income $ $45.4 Income tax expense Finance costs Finance income (1.3) (0.7) (2.9) (2.9) Depletion and depreciation Foreign exchange gains/losses and other expenses Loss from equity investee Gain on investments (6.2) (2.4) (11.9) (24.6) Adjusted EBITDA $92.2 $43.0 $233.1 $118.6 Adjusted EBITDA per share $0.73 $0.38 $1.89 $1.04 Net income $44.1 $8.1 $98.6 $45.4 Foreign exchange loss and other expenses, net of income tax (0.6) Gain on acquisition of Gold Wheaton/sale of investments, net of income tax (5.4) (2.0) (17.0) (21.1) Mark-to-market changes on derivative 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 Adjusted Net Income $39.8 $13.8 $94.3 $28.7 Adjusted Net Income per share $0.31 $0.12 $0.76 $

19 Growth of Portfolio # of Royalties/Streams generating revenue H2 H2: Expected H1 Tasiast Edikan/Central Ashanti Canadian Malartic Ity Musselwhite Macassa Increasingly diverse portfolio * Excludes Oil and Gas 19

20 Growth in the Near-Term Category Asset Operator Royalty Startup 1 Avg Prod 1 New mines: Lounge Lizard Moolart Well Canadian Malartic Edikan Red October Kagara Ltd Regis Resources Osisko Mining Perseus Mining Saracen 2% NSR 2% NSR 1.5% NSR* 1.5% NSR 1.75% NSR Jan 2010 Sept 2010 Apr 2011 Aug 2011 June ,000 tpa 89,509 oz 574,000 oz* 265,000 oz Trial mining Garden Well Detour Tasiast (expansion) Regis Resources Detour Gold Kinross 2% NSR 2% NSR 2% NSR Sept ,000 oz 649,000 oz Moz Restart 1 Project Falcondo Xstrata 4.1% equity Mar ,000 tpa restarts: Holt St Andrew Goldfields Up to 10% NSR Apr ,000 oz Hurdle Reached 1 Royalties reaching hurdles: Ity Ahafo La Mancha Newmont Mining 1-1.5% NSR 2% NSR* Q ,000 oz oz* Payout 1 NPI s pending payout: 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 projects: Perama Hill Eldorado Gold 2% NSR ,000 oz Rosemont Augusta Resources 1.5% NSR Mlbs, 4.7Mlbs, 2.4Moz New Prosperity Taseko Mines 22% Au Stream Q ,000 oz Feasibility Date 1 Pre-feasibility stage: HBJ Superpit Agi Dagi/Camyurt Alacer Gold Alamos Gold 1.75% NSR* 2% NSR* H H m tpa* 135,000 oz* Phoenix Gold Gurupi Rubicon Minerals Jaguar Mining 1.5% NSR* 1% NSR >$400/oz ,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 Further growth in 2011 expected from: Tasiast Detour Sudbury Basin MWS Ezulwini Garden Well Edikan/Central Ashanti Canadian Malartic Phoenix 53% growth in resources over 3 years 18% growth in reserves per share over 3 years Growth is ~74% organic and ~26% from acquisitions (1) Based on publicly reported reserves and resources by operators. Non-public reserve and resource information has not been included and some royalties do not cover all of reported ounces. Prosperity project not included until permitted. (2) Operators have varying economic assumptions and effective dates vary from June 30, 2010 to Dec. 31, Adjustments made so all resources are reported exclusive of reserves. (3) Au + Pt + Pd oz, included, Ag oz excluded. 21

22 Growth in Gold Revenue Growth from*: ~ 25% gold price increase ~ 15% organic leverage ~ 60% new acquisitions * Q vs. Q

23 Directors & Management Directors Pierre Lassonde Director, Chairman David Harquail Director, President & CEO Derek Evans (1) Director CEO, Pengrowth Energy Corporation Graham Farquharson (2) Director President, Strathcona Mineral Services Louis Gignac (1) Director Former CEO, Cambior Inc Randall Oliphant (1) Director Former CEO, Barrick Gold Corporation Hon. David R. Peterson (2) Director Former Premier of Ontario 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 (1) Member of the Audit and Risk Committee (2) Member of the Compensation and Corporate Governance Committee 23

24 Franco-Nevada Corporation Capital Structure (as of Feb 9, 2011) Shares Outstanding (FNV on TSX & NYSE) 138.4m 2012 Warrants (C$32 exercise price) 5.7m 2013 Warrants (1) (C$64.27 exercise price) 4.1m 2014 Warrants (1) (C$32.14 exercise price) 2.1m 2017 Warrants (C$75 exercise price) 8.5m Options & other 2.9m 161.7m Share Price Range (2) C$ $27.75 Market Capitalization $5.5B Working Capital + Marketable Investments (3) $453m 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 Management Ownership Nil US$0.48/share 4.1% (5.1% 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 FNV share, approximately 6.43 warrants need to be exercised (i.e. $64.27/FNV share). Former $5 GLW warrants each still exercisable at $5/warrant. To acquire one whole FNV share, approximately 6.43 warrants need to be exercised (i.e. $32.14/FNV share). (2) Previous 52 weeks. (3) As of Sept 30,