Mines & Money. October

Transcription

1 Mines & Money SSydney, d Australia A t li October

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 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 h Franco-Nevada holds aroyalty, stream or other interest; texcessive cost escalation as well as development, permitting, infrastructure, t 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 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 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 Franco Nevada () A gold focused royalty & stream company. Listed on the TSX & NYSE with a market capitalization of > $8 billion.* ldstrike Go Growth > 80% revenue growth in 2011 World class discoveries Deto our Yield >1.0% yield Growing dividends Tasiast Low Risk Royalty and stream model ~$1B cash and no debt Palmarejo *As of October 5,

4 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 4

5 s Close Correlation to Gold $2,000 $1,500 R² = 0.92 ) Go old Price (USD $1,000 $500 $0 Chart to Oct 5, 2012 $0 $10 $20 $30 $40 $50 $60 Franco Nevada Share Price (USD) Business model protects against rising operating and capital costs 5

6 Outperforming other Gold Investments 400% 360% 320% 280% 240% 200% GOLD 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 Oct 5, % >30% compounded annual rate of return including dividends 6

7 Assets Revenue Royalties Net Smelter Royalties (NSR) Gross Overriding Royalties (GOR) Streams Contract to purchase physical metal with ongoing fixed cost (~$400/oz) Profit Royalties Net Profit Royalties (NPI) All agreements share common components: No cash calls beyond fixed stream payments Exposure to commodity prices and exploration upside No management involvement in operations 7

8 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 209 mineral royalties and streams 135 producing Oil & Gas interests assets * As at October 4, Does not include 158 undeveloped oil & gas interests 8

9 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 MWS Ezulwini Mt. Keith - nickel Timmins West Cerro San Pedro CASH Hemlo Edikan ~$1 Billion * See 2012 Annual Information Form for further detail A diversified global gold portfolio 9

10 2% NSR on Duketon Regis Resources Moolart Well Pit ~270,000 hectares Garden Well Processing Plant An Australian success story 10

11 Our Key Transaction Principles Long-term secure tenure Minimize i i potential ti for encroachments Our first dollar is our last Operators manage, not Exploration o upside Free our focus for future investments Maximizes long term optionality and scale 11

12 Big Wins Goldstrike Initial purchase price < $3 million Expected royalties > $1 billion* Goldstrike Detour eou Initial purchase price ~ $2 million loan Expected royalties > $1 billion* Detour Tasiast Book value at IPO ~ $2.7 million Expected royalties > $600 million* Tasiast Africa * Please refer to cautionary statements and supportive information in s 2012 Annual Information Form. Expected royalties based on $1700/oz gold price 12

13 Transaction Categories Purchase of Existing Exploration or Mine Financing Royalties Land Financing Typically Existing 1-3% NSR Equity Exploration placement %ofgold Mine production Financing Royalties with Financing royalty option ( stream ) Recent Examples Recent Examples Recent Examples Cdn Malartic - $10 M Timmins 81- $4.0 M Cobre Panama- $1,000 M Edikan - $35 M Dorato - $2.6 M Sudbury FNX - $400 M Phoenix - $24 M Creso - $1.5 M Prosperity - $365 M Lumina Royalty - $66 M MWS - $125 M Palmarejo - $80 M 13

14 Royalty vs. Gold Stream Royalty Smaller % of production Potential tax gain on sale Registered on title No inter-creditor issues Gold Stream Larger % of gold (as by-product) Potential tax efficiency Mortgage on property Greater lending value for bankers Tasiast jo Palmarej 14

15 Royalty/Stream Alternative Financing Instrument Cash Burden Dilution of Shareholder s interest Equity None (other than dividends) Dilution in all current and future assets plus discounts, fees, warrants LOW Royalty / Stream Burden proportional to production and gold price Asset specific Risk Re eturn Debt Interest,,principal, p covenants, hedging, fees Full upside potential of assets is retained HIGH An alternative between equity and debt 15

16 Over $4B of Stream Transactions 1,200 1,000 ons US$ Milli Franco Nevada* Other * Including Gold Wheaton transactions acquired by Franco-Nevada 16

17 Why Operators use Royalty/Stream Financing Versus Equity Alternative when equity markets weak Less dilutive as asset specific No commissions, discounts, or warrants Used in advance reduces equity overhang and discount Versus Debt One stop financing vs. large bank syndication Avoid commitment, advisor, standby, syndication fees and cash sweep accounts No restrictive covenants or hedging Less downside risk to operator Royalty/Steam financing now used in combination with equity and debt 17

18 Available Capital Franco-Nevada has >$1 B capital to invest Kevin McElligott Managing Director Australia Phone: Mobile: mcelligott@franco-nevada.comnevada.com 18

19 The New Gold Equity Space Royalty Co's $30 Billion GOLD ETF's $150 Billion GOLD Equities $400 Billion One in three investors have chosen new gold investment options 19

20 Dow vs. Gold Equity market Equity market Equity market Equity market 64 Gold bull market Gold bull market 20 Gold bull market 32 Yamana Kinross Yanacocha Placer Dome Homestake Gold Fields Agnico Eagle Placer Development 16 Harmony Goldstrike Campbell Red Lake Kerr Addison Newmont Anglo American Dome Mines 8 4 /Gold (Logarithmic Scale) Hemlo DOW/?? 2 1 Gold price and gold equities have much more upside Source: Franco-Nevada and Exploration Insights

21 Thank You for Your Interest 21