Franco-nevada Corporation · TSX:FNV
Franco-nevada — Merger or Acquisition (August 2012)
22 slides from Franco-nevada's merger presentation, Aug 20, 2012
Slide 1: Cobre Panama Precious Metals Stream
Cobre Panama Precious Metals Stream August 20, 2012 All dollar references in US dollars unless otherwise noted
Slide 2: Cautionary Statement
Cautionary Statement CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION Certain information contained in this presentation, including any information as to future financial or operating performance and other statements that express the parties’ expectations or estimates of future performance, const
Slide 3: Transaction Overview
Transaction Overview • $1 billion of funding towards Inmet’s 80% of Cobre Panama – one of the world’s largest copper projects under development • Precious metals stream linked to copper production – approximately 80% gold and 20% silver • Franco-Nevada funding pro-rata with Inmet’s share of funding
Slide 4: Attributes to Franco-Nevada
Attributes to Franco‐Nevada • Exposure to a Tier 1, large scale, low cost project in a supportive jurisdiction • Partnering with an experienced mine builder and operator • Greater than 30 year mine life based on existing reserves • Opportunities for production expansion and resource growth many year
Slide 5: Attributes to Inmet
Attributes to Inmet • $1 billion in committed funding, recognizing significant precious metals value • Precious metal price exposure after delivery thresholds are met • Endorsement from an industry leader • Cash costs after stream expected to remain below $1.00/lb Cu LOM • Substantially fully funded
Slide 6: Transaction Details
Transaction Details • The amounts of Au and Ag deliverable are indexed to copper produced in concentrate for the 31 year mine plan (on a 100% basis), and thereafter are based on a percentage of the Au and Ag produced in concentrate Delivery period 1 Delivery period 2 Delivery period 3 (~years 1 – 11
Slide 7: Transaction Details
Transaction Details • Ongoing payments: Lesser of (i) prevailing market prices and (ii) $400/oz Au and $6.00/oz Ag, adjusted as follows: - Increased by 1.5% per year, beginning 3 yrs after closing; and - after delivery of 1,341,000 Au oz or 21,510,000 Ag oz (estimated approximately 20 years), ongoin
Slide 8: Stream Profile
Stream Profile • 2.2 million gold-equivalent ounces to be delivered under the stream based on current mine plan reserves with further potential for resource addition Stream Profile 120,000 120,000 100,000 100,000 80,000 80,000 Ounces Ounces 60,000 60,000 40,000 40,000 20,000 20,000 0 0 Gold Stream G
Slide 9: Cobre Panama Project
Cobre Panama Project • Copper, gold, silver, molybdenum porphyry • Standard mining & proven processing technology • Projected mine life: 31 years based on reserves • Expected low cost mine – Low strip ratio – Close to tidewater – Low cost dedicated power • Construction underway • Supportive governme
Slide 10: World Class Asset
World Class Asset 30 LOM Total Cu Production (Bn lbs) 25 Feasibility & Construction 25 20 17 15 13 10 10 9 8 7 6 5 5 0 Oyu Tolgoi Cobre Las Bambas Sierra Relincho Sentinel Agua Rica El Morro Cerro Panama Gorda Casale 30.00 Operating Cost ($/t milled) 25.00 Feasibility & Construction 20.00 15.31 15.0
Slide 11: Project Parameters
Project Parameters • Large scale: 160ktpd expanding to 240ktpd in year 10 • Estimated annual production (LOM): 266k t Cu, 87k oz Au, 1.5M oz Ag, 2.9k t Mo • Low strip ratio: 0.58 to 1 • Estimated cash costs: $0.86/lb Cu (years 2-16) and $0.94/lb Cu (LOM) including stream transaction • Estimated cape
Slide 12: Upside Opportunities
Upside Opportunities • Inmet estimated reserves of 2.3 billion tonnes, M&I resources of 4.2 billion tonnes (inclusive of reserves), & Inferred resources of 3.7 billion tonnes • Inmet estimated contained gold-equivalent reserves of 6.8 million ounces, M&I resources of 11.7 million ounces and Inferred
Slide 13: Panama
Panama • Commercially oriented US style democracy and US style contract law • S&P upgraded sovereign debt to BBB in July 2012 • Rapid economic growth • 7.2% average GDP/capita growth over 5 years • Unemployment dropped from 12% to 3% over 5 years Panama City • Support at the highest levels of govern
Slide 14: Proven Operator
Proven Operator • Canadian based global mining company that Las Cruces produces copper & zinc • Cobre Panama now the focus asset Çayeli Pyhäsalmi 14
Slide 15: Available Capital & Funding Commitment
Available Capital & Funding Commitment • Franco-Nevada has close to $1.2 billion in available capital as at June 30, 2012 • Franco-Nevada’s Cobre Panama funding over three years beginning in first half of 2013 (US$ millions) Total Inmet Inmet’s Share Franco‐Nevada Expenditures after Stream Funding 8
Slide 16: Potential Cobre Panama Contribution to FNV
Potential Cobre Panama Contribution to FNV EBITDA NAV1 500 Base Metal, 3% Oil & Gas, 5% 450 Detour Lake, 5% 400 Stillwater, 5% 350 Other Precious, US$ (millions) 300 25% 250 MWS, 6% 200 Tasiast, 6% 150 100 Goldstrike, 8% Cobre Panama, 50 17% 0 2 Sudbury, 8% 2012 +2016 Palmarejo, 12% Cobre Panama ($1
Slide 17: Franco-Nevada's Benefits
Franco‐Nevada’s Benefits: Long term, low risk gold production from world class asset • Long reserve life asset with strong likelihood of reserve expansion • Opportunities to expand capacity • Large contribution to precious metals revenue starting 2016 • Low cost operation inclusive of precious metal
Slide 18: Inmet's Benefits
Inmet’s Benefits: Capital security without sacrificing copper production • $1 billion in committed funding, recognizing significant precious metals value • Precious metal price exposure after delivery thresholds are met • Endorsement from an industry leader • Cash costs after stream expected to rema
Slide 19: Cobre Panama Financing
Cobre Panama Financing • Capital cost: $6.2 billion* estimate reported May 6, 2012 • Ownership: Inmet (80%) & KPMC (20%) • **Other potential sources of funds that could provide in excess of $1 billion include additional Inmet operating cash flow, offtake and equipment financing or other forms of deb
Slide 20: Thank you
Francoc)Nevada INMET MINING Thank you
Slide 21: Appendix: Cobre Panama Reserves
Appendix: Cobre Panama Reserves The mineral reserve and resource estimates are prepared in accordance with the CIM Definition Standards On Mineral Resources and Mineral Reserves, adopted by CIM Council on November 14, 2004, and the CIM Estimation of Mineral Resources and Mineral Reserves Best Practi
Slide 22: Appendix: Cobre Panama Resources
Appendix: Cobre Panama Resources The mineral reserve and resource estimates are prepared in accordance with the CIM Definition Standards On Mineral Resources and Mineral Reserves, adopted by CIM Council on November 14, 2004, and the CIM Estimation of Mineral Resources and Mineral Reserves Best Pract