2009 Year End Results Conference Call March 26, 2010

Transcription

1 2009 Year End Results Conference Call March 26,

2 Cautionary Statement Forward-Looking Statementst t 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. In addition, 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: general business and economic conditions; 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 Royalty Revenue, Free Cash-Flow, EBITDA and Adjusted Net Income are intended to provide additional information only and do not have any standardized meaning prescribed by GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. These measures are not necessarily indicative of operating profit or cash flow from operations as determined under GAAP. Other companies may calculate these measures differently. 2

3 2009 Highlights (US $ millions except per share and %) Q1 09 Q2 09 Q3 09 Q Year 2008 Year Royalty Revenue (1) $29.2 $32.9 $36.4 $44.3 $142.8 $150.6 Gold Royalty Revenue Total revenue (3) Net income Earnings per share $0.04 $0.25 $0.11 $0.36 $0.76 $0.41 Free Cash Flow (2) Free Cash Flow (2) per share Margin (4) 85% 85% 89% 88% 87% 87% Dividends - $ $14.7 $28.2 $21.8 Dividends per share - C$ C$0.14 C$0.28 C$0.24 (As at December 31,) Working capital $530.7 $239.1 Total shareholders equity $1,930.3 $1,433.6 Record Results (1) Royalty Revenue is defined by the Company as cash received or receivable from operating royalty assets earned during the period. (2) 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 (3) Includes fair value gains on derivative assets. (4) Margin is Free Cash Flow as a % of Royalty Revenue. 3

4 Growing Gold Royalty Revenues (1) Year Ended December 31, Oil & Gas 36% Gold 47% ($ millions) Oil & Gas Other Minerals PGM Gold 80% precious metals Other Minerals 8% PGM 9% Year Ended December 31, Q Q Q Q Q Q Q Q Other Minerals 2% PGM 8% Oil & Gas 20% Gold 70% 42% Growth in Gold Royalty Revenue 09 vs % of Royalty Revenue in Q4 was precious metals (1) Royalty Revenue is defined by the Company as cash received or receivable from operating royalty assets earned during the period. 4

5 Royalty Revenue Sources Royalty Revenue (1) Components Year Ended December 31, 2009 Royalty Revenue (1) by Country Year Ended December 31, 2009 Midale 3% Edson Other Minerals 6% 2% Weyburn 6% Pandora 1% Stillwater 7% Gold - Other 13% O&G Other 5% Goldstrike - NSR 15% Goldstrike - NPI 14% Palmarejo 13% Other 4% Mexico 15% Canada 21% Australia 2% US 58% Marigold 5% Gold Quarry 10% Diversified portfolio of assets in secure countries (1) Royalty Revenue is defined by the Company as cash received or receivable from operating royalty assets earned during the period. 5

6 Royalty Revenue (1) 2008 to 2009 (000 s) 18,823 13,845 7,845 2, ,592 27,117 10,495 10,022 3, ,804 (1) Royalty Revenue is defined by the Company as cash received or receivable from operating royalty assets earned during the period. 6

7 Net Income 2008 to 2009 (000 s) 74,982 8,249 6,960 27,117 22, ,879 40,347 7

8 2P Oil and Gas Reserves and RLI (years) 10, (mboe) 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, RLI (Res serve Life Inde ex in years) 12/31/ /31/ /31/2009 Oil (mboe) Gas (mboe) RLI Reserve replacement without exploration costs 8

9 Outlook for 2010 Positives: Full year of production at Palmarejo and Holloway Start up of production at Hislop Hollister begins processing ore Robinson copper and gold royalties triggered Mt Keith royalty, acquired Oct 2009 Higher Oil & Gas and PGM prices Offsets: Lower contributions from Gold Quarry (11,200-14,400 oz) Lower contribution from Goldstrike as waste stripping phase continues to mid-2010 Lower contribution from Pandora Royalty Revenue (1) of $155 million to $170 million* (1) Royalty Revenue is defined by the Company as cash received or receivable from operating royalty assets earned during the period. * Estimate based on operators guidance where available, management expectations and pricing of $1106/oz for gold, $79.50/bbl for oil and 4.95/mcf for gas. Note that a 10% increase in gold price (at $1,000/oz) results in a 13.3% increase in gold revenue for Reference should be made to the Cautionary Statement on Forward-Looking Information in the Company s annual MD&A. 9

10 Outlook for Longer Term Gold Growth Gold only revenues excluding other revenues* $70.7m Palmarejo $16-19m $100.5m Holloway-Hislop 4-5m Hollister 3-5m Other 1-2m Tasiast $10-11m Holt 3-4m Marigold 1-4m Duketon 2-3m Ity 1m Hemlo $5-15m Detour 12-13m Ahafo 6-11m Rosemont 1-2m Goldfields 1-2m Perama Hill 2-3m Fully paid assets no further investment in $ or mgm t time 2008A 2009A 2010/11E 2011/12E 2012/14E ~$100m in potential new gold royalties by 2014 * Appendix provides detail to pro-forma estimates assuming $1100 gold. 10

11 Franco-Nevada s Capacity for New Projects Capital December 31, 2009 US$ Millions Working Capital $531 Marketable Investments (Primarily NEM & IRC) $76 Available Credit Facility $175 Total Available Capital $782 No debt, hedges or material capital obligations Plus additional capacity from >$130m per year in Free Cash Flow (1) (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. Estimate based on operators guidance where available, management expectations and pricing of $1106/oz for gold, $79.50/bbl for oil and 4.95/mcf for gas. Note that a 10% increase in gold price (at $1,000/oz) results in a 13.3% increase in gold revenue for Reference should be made to the Cautionary Statement on Forward-Looking Information in the Company s annual MD&A. 11

12 Further Background Available on Financial i statements MD & A AIF dated March 25, 2010 Oil & Gas reserves report May 12, 2010 Annual Meeting Q1 financial results Dividend declaration May 13, 2010 Analyst Day 12

13 Franco-Nevada Corporation Capital Structure (2) Shares Outstanding 113.9m C$32/sh March m C$75/sh June m Options (Avg C$16.00/sh) 2.67m Other 0.45m m Share Price Range (1) C$32.12-C$23.10 Market Capitalization (2) $3.0B Working Capital + Marketable Investments (3) $606.2m Analyst Coverage BMO Capital Markets BOA/Merrill Lynch CIBC Capital Markets GMP Securities National Bank Financial Paradigm Capital RBC Capital Markets UBS Securities Wellington West David Haughton Mike Jalonen Cosmos Chiu Craig West Tanya Jakusconek Don MacLean Stephen Walker Brian MacArthur Paolo Lostritto Available Credit Facilities $175m Debt, Hedges or Payables 2010 Dividends (Indicative) (4) $30.3m (C$0.28/share) Management Ownership (3) 5.0% (6.5% diluted) Nil Major Shareholders Fidelity US Invesco Ti Trimark Canada T. Rowe Price US Blackrock Europe Oppenheimer US (1) Previous 52 weeks (2) As at March 23, 2010 (3) As at December 31, 2009 $CAN/$US =

14 Appendix - Organic Gold Growth Potential 2010 Project Operator Royalty Annual Incremental Royalty $1100 gold Palmarejo Coeur d Alene dalene 50% stream $16-19m 19m Holloway Hislop St Andrew Gold 4-6% NSR 4-5m Hollister Great Basin Gold 3-5% NSR 3-5m Hemlo NSR Barrick Gold 3% NSR 1-2m $24-31m Tasiast Red Back Mining 2% NSR $10-11m11m Holt St Andrew Gold 10% NSR 3-4m Marigold Goldcorp 1.4-4% NSR 1-4m Duketon Regis Resources 2% NSR 2-3m Ity La Mancha 1-1.5% NSR 1m $17-23m Hemlo NPI Barrick Gold 50% NPI $5-15m Detour Detour Gold 2% NSR 12-13m Ahafo Newmont 2% NSR 6-11m Rosemont Augusta Resources 1.5% NSR 1-2m Goldfields Linear Gold 2% NSR 1-2m Perama Hill Eldorado Gold 2% NSR 2-3m $27-46m Management projection of start of royalty. Applicable royalty rate at $1100 gold for sliding scale royalties Reflects operator public guidance as of December 2009 Reflects management s projections based on available data for production and costs (where applicable) 2009 was a half year of production is increment for full year Gold only. With copper & silver, royalty potential is $7-9mm 14

15 Appendix - Reconciliation to Adjusted Net Income Three Months Ended Year Ended December 31, 2009 December 31, 2008 December 31, 2009 December 31, 2008 (US $ millions except per share and %) Net income $39,650 $15,377 $80,879 $40,347 Wit Write-down of mineral royalty interest, t net of income tax , ,034 Write-down of investments, net of income tax - 5, ,558 Foreign exchange loss (gain), net of income tax 9, (6,583) (671) Other income, net of income tax - - (1,708) - Gain on sale of investment, net of income tax - - (380) - Change in fair value of royalties accounted for as derivative assets, net of income tax (25,947) - (40,430) - Adjusted Net Income $22,828 $23,071 $31,984 $47,268 Adjusted Net Income per share $0.20 $0.23 $0.30 $