Franco-nevada Corporation · TSX:FNV
Franco-nevada — Denver Gold Forum 2010
29 slides from Franco-nevada's conference presentation, September 2010
Slide 1: A Gold Focused Royalty Company
A Gold Focused Royalty Company Denver Gold Forum September 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: ¾ >100% share price increase ¾ > $333m of Free Cash Flow(2) ¾ > $83m in dividends paid ¾ >300 royalty interests ¾ $650m in liquidity FNV ¾ $3.6B in market cap* S&
Slide 4: Franco-Nevada Gold ETF Royalties Operators
Franco-Nevada A gold focused royalty company generating growing cash flow from a diversified portfolio of quality assets mostly in North America. Gold ETF Royalties Operators Yield 0% >1% 0-1% Leverage to Gold Price 1 >1 >1 Exploration & Expansion 0% 100% 100% Upside Exposure to Opex, Capex & 0% 0%
Slide 5: Franco-Nevada's Growing Pipeline of Mineral Royalties
Franco-Nevada’s Growing Pipeline of Mineral Royalties Prosperity Perama Hill Tasiast Goldfields Detour Lake Lounge Lizard Subika Gurupi Hemlo Dee Ity Pinson Rosemont Kirkland Lake Admiral Hill Bronzewing Duketon Holt McDermott >152 other Musselwhite exploration assets others… 114 oil & gas royalties
Slide 6: Franco-Nevada Royalty Operators include
Franco- Nevada Royalty Operators include: Core Operators: Up and Comers: Goldstrike Palmarejo Bald Mountain Hemlo Mesquite Cerro San Pedro Gold Quarry Holloway Subika Hislop Holt Marigold Musselwhite Tasiast Stillwater Detour Lake East Boulder Goldstrike ‐ Barrick Marigold ‐ Goldcorp Tasiast ‐ Red B
Slide 7: Growing Precious Metals Royalty Revenue
Growing Precious Metals Royalty Revenue(1) 50 45 40 35 30 ($ millions) 25 20 71‐80% Precious Metals* 15 10 5 0 2009 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 2008 2009 2010 87-89% Free Cash Flow Margins(3) * Represents a range over the last four quarters 7
Slide 8: Franco-Nevada's Q2 Royalty Revenue
Franco-Nevada’s Q2 Royalty Revenue(1) By Country By Royalty A secure and increasingly diverse portfolio 8
Slide 9: A Portfolio with Growing Value
A Portfolio with Growing Value 9
Slide 10: 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 1.3 Moz in future 2011/13 (346 koz) $8m years* Mid-term (1.
Slide 11: Major Organic Growth Drivers: Detour Lake
Major Organic Growth Drivers Detour Lake 2% NSR- Canada One of the largest gold development projects in Canada Detour Gold recently completed feasibility study Total project resources >21 Moz Potential incremental annual revenue >$15m* Opportunity to expand from 55 to 90 ktpd could lead to further r
Slide 12: 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 13: 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 14: Potential Gold Royalty Growth
Potential Gold Royalty Growth Gold only royalty revenues excluding 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 f
Slide 15: 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 16: Goldstrike Palmarejo
Franco-Nevada Goldstrike 89% Free Cash Flow Margins Strong Organic Growth Portfolio Gold Quarry >$800m in Capital for Further Deals >$30m of Annual Dividends Palmarejo Track Record of Value Accretion 16
Slide 17: 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 17
Slide 18: Dow vs Gold
Dow vs Gold: Logarithmic Scale Arithmetic Scale Financial vs hard assets 18
Slide 19: Second Quarter Record Results
Second Quarter Record Results % % (US $ millions Q2 ‘10 Q2 ’09 Q1 ‘10 Change Change except per share and %) Royalty Revenue(1) $45.2 $32.9 37% $41.8 8% Gold Royalty Revenue 28.9 23.6 22% 27.4 5% Total Revenue(3) 67.1 45.1 49% 37.9 77% Net Income 27.6 25.1 10% 7.8 253% Earnings per share $0.24 $0.25
Slide 20: Pipeline For Future Growth
Pipeline For Future Growth Current producers New in 2010-11 Near term 2012+ Longer term Prosperity* Goldstrike Holloway/Hislop/Holt Hemlo NPI Pinson Palmarejo* Hollister Detour Dee/Arturo Gold Quarry* Hemlo NSR Subika* Pandora platinum Stillwater Tasiast Falcondo nickel Kirkland Lake Marigold Marigo
Slide 21: Substantial Long Term Gold Growth
Substantial Long Term Gold Growth Gold only royalty revenues excluding other revenues * Prosperity $43-53m Hemlo $5-15m Detour 14-16m Tasiast $6-7m Subika 6-11m Holt 3-4m Tasiast Exp. 8-12m Marigold 1-4m Goldfields 1-2m Palmarejo $21-25m Duketon 2-3m Perama Hill 2-3m $100.5m Holloway-Hislop 4-7m Ity
Slide 22: Organic Gold Growth Potential
Organic Gold Growth Potential Annual Incremental Royalty Potential c Project Operator Royaltyd @ $1,200 gold Palmarejo Coeur d’Alene 50% stream $21-25m eg Holloway–Hislop St Andrew Gold 4-6% NSR 4-7m e 2010/11 Hollister Great Basin Gold 3-5% NSR 3-5m e Hemlo NSR Barrick Gold 3% NSR 1-2m f $29-39m Ta
Slide 23: 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 24: 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 25: Comparables
Comparables Royal Gold Silver Wheaton Commodity mix Mostly gold Mostly gold Mostly silver USA 42% Africa 27% Mexico 42% Revenues by geography(1) Canada 29% USA 24% S. America 24% Mexico 24% Mexico 12% Canada 11% Number of mineral royalties 198 192 20 Market cap at August 26, 2010 $3,578m $2,592m $7,
Slide 26: Board of Directors
Board of 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., Newm
Slide 27: Management
Management Title Canada David Harquail President & CEO Sandip Rana Chief Financial Officer Jacqueline Jones Chief Legal Officer & Corporate Secretary H. Geoffrey Waterman Chief Operating Officer Paul Brink S.V.P. Business Development Petra Decher VP, Finance & Assistant Secretary Philip Wilson VP, T
Slide 28: 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 Offer For Prosperity Mt. Keith IRC $675m $350m $100m 100% December 20, 2007 IPO issue price C$15.20/sh S&P 50% 0% 28
Slide 29: Franco-Nevada Corporation Capital Structure
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