Franco-nevada Corporation · TSX:FNV
Franco-nevada — Investor Presentation (October 2010)
28 slides from Franco-nevada's investor presentation, October 2010
Slide 1: A Gold Focused Royalty Company
A Gold Focused Royalty Company October 2010 1
Slide 2: Cautionary Statement
Cautionary Statement Forward-Looking Statements 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, estima
Slide 3: Franco-Nevada's Performance Since IPO
Franco-Nevada’s Performance Since IPO Dec. 2007 IPO of new Franco-Nevada for $1.26B (C$15.20/sh.) Since IPO, Franco-Nevada has delivered: >100% share price increase >$333m of Free Cash Flow(2) FNV >$83m in dividends paid >300 royalty interests $650m in liquidity $3.6B in market cap* S&P / TSX * As a
Slide 4: Franco-Nevada: Gold ETF, Royalties, Operators
Franco-Nevada A gold focused royalty company generating growing cash flow from a diversified portfolio of quality assets mostly in North America. Gold ETF Royalties Operators Yield 0% ~1% 0-1% Leverage to Gold Price 1 >1 >1 Exploration & Expansion 0% 100% 100% Upside Exposure to Opex, Capex & 0% 0%
Slide 5: Growing Pipeline of Mineral Royalties
Growing Pipeline of Mineral Royalties Prosperity Perama Hill Tasiast Goldfields Detour Lake Lounge Lizard Subika Gurupi Hemlo Dee Ity Pinson Rosemont Kirkland Lake Admiral Hill Bronzewing Duketon Holt McDermott >152 other Musselwhite exploration assets others… 114 oil & gas royalties and 184 undevel
Slide 6: Quality Operators
Quality Operators: Core Operators: Up and Comers: Goldstrike Palmarejo Bald Mountain Hemlo Mesquite Cerro San Pedro Gold Quarry Holloway Subika Hislop Holt Marigold Musselwhite Tasiast Stillwater Detour Lake East Boulder Goldstrike ‐ Barrick Marigold ‐ Goldcorp Tasiast ‐ Kinross Detour – Detour Gold
Slide 7: Secure & Diverse Revenue
Secure & Diverse Revenue* By Country By Royalty Other Australia 3% 3% Mexico 23% US 43% Canada 28% * Q2 2010 Royalty Revenue 7
Slide 8: Growing Precious Metals Royalty Revenue
Growing Precious Metals Royalty Revenue(1) 50 Guidance for 45 strong H2 40 35 Other 30 ($ millions) 25 20 PGM 71‐80% Precious 15 Metals* 10 Gold 5 0 Q1 Q3 Q4 Q1 2009 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q2 2008 2009 2010 87-89% Free Cash Flow Margins(3) * Represents a range over the last four quarters 8
Slide 9: Long Life Assets
Long Life Assets* Goldstrike Major royalty revenue 10 years Stock pile revenue potential 20 years Gold Quarry Gold Quarry New layback potential 20 years Palmarejo Guadalupe discovery > 10 years Stillwater Existing reserves 25 years Palmarejo Oil & Gas Existing reserves 11 years Weyburn potential > 4
Slide 10: A Portfolio with Growing Value
A Portfolio with Growing Value 10
Slide 11: Major Organic Growth Drivers: Tasiast
Major Organic Growth Drivers Tasiast Mine 2% NSR - Mauritania Acquisition of Red Back valued at $7.1 B Annual Production* Indicative Annual NSR Payments (@$1,200/oz) Royalty becomes payable in 2011 2010 (286 koz) $0 Possible expansion up to 1.5 Moz in future 2011/13 (346 koz) $8m years* Mid-term (1.
Slide 12: Major Organic Growth Drivers: Detour Lake
Major Organic Growth Drivers Detour Lake 2% NSR- Canada Detour Gold has started with long lead capital orders Total M+I project resources ~18 Moz Potential incremental annual revenue >$15m* Opportunity to expand from 55 to 90 ktpd could lead to further royalty revenue growth Undiscounted in-situ roy
Slide 13: New Organic Growth Potential
New Organic Growth Potential Category Royalty Operator New mines: • Duketon (2%) • Regis Resources • Lounge Lizard (2%) • Kagara Ltd Royalties reaching hurdles: • Subika (2%) • Newmont Mining • Ity (1%) • La Mancha NPI’s pending payout: • Hemlo (50%) • Barrick Gold • Musselwhite (5%) • Goldcorp • Pa
Slide 14: Acquired Growth Drivers: Prosperity Gold Stream
Acquired Growth Drivers Prosperity Gold Stream - Canada Subject to final permits – a major new long-life development Au asset in Canada Proven operator with Taseko Mines Ltd. 22% of LOM gold production (>$400/oz) 13m ounce resource (7.7m ounces recoverable in reserves) Net 65,000- 55,000 ounces to F
Slide 15: Potential Gold Royalty Growth
Potential Gold Royalty Growth $40‐$50m PGM & other revenues $150‐$200m Incremental gold revenue* * Note: 2010E represents management estimate of additional gold revenue in 2010 at current gold prices. Asset estimates reflect potential revenue for upcoming advanced assets at full capacity and assumes
Slide 16: Continued Financial Strength
Continued Financial Strength Capital Resources June 2010 December 2009 (US Millions) (US Millions) Working Capital $622 $531 Marketable Securities $33 $76 Available Credit Facility $175 $150 Total Available Capital $830 $757 No debt or hedges Plus additional capacity from >$160m per year in Free Cas
Slide 17: Benefitting From Exploration Success
Benefitting From Exploration Success Royalty Ounces* Franco Undiscounted in‐ Royalty situ value at $1200 gold price Tasiast Kinross mid range resource 21m 2% $500m projection – September 2010 Detour Detour Gold M+I resource – May 18m 2% $425m 2010 Duketon Regis Resources – addition of 3-5m 2% $100m
Slide 18: Goldstrike, Gold Quarry, Palmarejo
Franco-Nevada Goldstrike Major discovery on our royalty lands 89% Free Cash Flow Margins Gold Quarry >$650m in Capital for Further Deals >$30m of Annual Dividends Palmarejo Track Record of Value Accretion 18
Slide 19: Thank You
----------THANK YOU---------- Goldstrike ‐ Barrick Weyburn Bald ‐ Cenovus Mountain ‐ Barrick East Boulder ‐ Stillwater Palmarejo ‐ Coeur Cerro San Pedro ‐ New Gold Mesquite – New Gold Marigold ‐ Goldcorp Robinson ‐ Quadra Tasiast ‐ Red Back Marigold ‐ Goldcorp 19
Slide 20: Dow vs Gold
Dow vs Gold: Logarithmic Scale Arithmetic Scale Financial vs hard assets 20
Slide 21: Second Quarter Record Results
Second Quarter Record Results (US $ millions 2008 2009 Q1 ‘10 Q2 ‘10 except per share and %) Royalty Revenue(1) $150.6 $142.8 $41.8 $45.2 Gold Royalty Revenue 70.7 100.5 27.4 28.9 Total Revenue(3) 151.0 199.7 37.9 67.1 Net Income 40.3 80.9 7.8 27.6 Earnings per share $0.41 $0.76 $0.07 $0.24 Free Cas
Slide 22: Track Record of Acquisitions since IPO
Track Record of Acquisitions since IPO >95% of capital deployed into gold assets Amount Asset Royalty Commodity Operator Location $104m Gold Quarry 7.29% Gold Newmont Nevada Coeur $80m Palmarejo 50% Gold Mexico d’Alene $58m Subika 2% Gold Newmont Ghana $20m Marigold 2.5-5% Gold Goldcorp Nevada A$20m
Slide 23: Prosperity Gold Stream
Prosperity Gold Stream Terms $350m deposit funded pro-rata during construction with other financing for the project and 2 million FNV 2017 share warrants Right to purchase gold equal to 22% of LOM gold in concentrate for $400/oz (inflation adjusted) Funding contingent on: – permitting, – project bei
Slide 24: Franco-Nevada Directors
Franco-Nevada Directors Position with Franco-Nevada Current or Past Major Experience Pierre Lassonde Director, Chairman Chairman, World Gold Council Vice-Chairman, Director and President, Newmont Mining Co-CEO and Co-Founder, Old Franco-Nevada David Harquail Director, President & CEO Executive V.P.,
Slide 25: Franco-Nevada Team
Franco-Nevada Team Title Canada David Harquail President & CEO Sandip Rana Chief Financial Officer Jacqueline Jones Chief Legal Officer & Corporate Secretary Geoff Waterman Chief Operating Officer Paul Brink S.V.P. Business Development Petra Decher VP, Finance & Assistant Secretary Philip Wilson VP,
Slide 26: FNV vs S&P/TSX since IPO
FNV vs S&P/TSX since IPO 250% IPO Financing Financing $1.3B $260m $313m Gold Palmarejo Quarry $75m FNV 200% $103m 150% Ahafo Marigold Mt. Keith Offer For Prosperity $100m IRC $675m $350m 100% December 20, 2007 IPO issue price C$15.20/sh S&P 50% 0% 26
Slide 27: Appendix – Asset Life Assumptions & References
Appendix – Asset Life Assumptions & References Goldstrike - Barrick 2009 Annual Report. December 2009 reserve of 12.2 moz and 2009 production of 1.36 moz implies mine life of 9 years. Barrick 2009 Annual report states Barrick expects to fully process ore in stockpiles by 2035. (www.barrick.com) Gold
Slide 28: Franco-Nevada Corporation
Franco-Nevada Corporation Capital Structure(2) Analyst Coverage Shares Outstanding 114.10m BMO Capital Markets David Haughton BOA/Merrill Lynch Mike Jalonen Warrants @ C$32/sh March 2012 5.75m CIBC Capital Markets Cosmos Chiu Warrants @ C$75/sh June 2017 5.75m Credit Suisse Anita Soni Options (avg C