Slide 1: A Gold Focused Royalty Company
A Gold Focused Royalty Company February, 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: Who is Franco-Nevada?
Who is Franco-Nevada? 1985 original Franco-Nevada started the gold royalty business (Schulich & Lassonde) Through 2001 original Franco-Nevada share price grew 30%+ per annum on TSX to become 6th largest gold company in world by market cap. 2002 merger with Newmont & Normandy created world’s largest
Slide 4: Dow vs Gold: Financial Assets vs Hard Assets
Dow vs Gold : 45 40 35 30 DOW/Gold 25 20 15 10 5 0 Financial Assets vs Hard Assets 4
Slide 5: Royalty Business Advantages
Royalty Business Advantages Your first dollar is your last NSR royalties have no operating costs High margin Free Cash Flow business Free perpetual option on future discoveries on our lands Management is 100% focused on growing shareholder value 5
Slide 6: What Are Royalties?
What Are Royalties? Revenue or production royalty (NSR) – typically 2 to 5% of mine revenues/production – paid in cash or in-kind at refinery each month Streaming royalty (Stream) – right to % of gold production from a mine (ex. 50%) in exchange for: (1) an initial upfront payment (2) ongoing fixed
Slide 7: Sources of Gold Leverage
Sources of Gold Leverage Higher leverage from royalty structure – NPI's (Goldstrike NPI, Interlake NPI) 7% Revenue-based Royalties – Scaled Royalties (Holloway, Holt) 21% Profit-based (NPI) Royalties – WI‘s (Midale WI, Weyburn WI) 12% 60% Stream Royalties – Gold Streams (Palmarejo) Working Interests
Slide 8: Example of Royalty Financing
Example of Royalty Financing January 2009, Coeur d’Alene needed capital to finish construction of the Palmarejo silver-gold mine in Mexico Franco-Nevada funded $75 million in return for right to buy 50% of the future gold production at $400 per ounce (gold stream royalty) Represented at time an effe
Slide 9: Why The Royalty Sector Is Growing
Why The Royalty Sector Is Growing Market value of resource sector has increased 10-fold in past decade More development projects need financing Volatile commodity prices create sellers Less available commercial bank project lending Base metal companies can arbitrage precious metals values More royal
Slide 10: Franco-Nevada's Royalties in Q3
Franco-Nevada’s Royalties in Q3 By Royalty Revenue: $36.4m By Free Cash Flow*: $32.5m (89% margin) By numbers: 196 mineral and 113 oil & gas By commodity: 77% precious metals, 23% other By region: 74% from USA & Canada Core operators: Up and Comers: Goldstrike - Nevada Palmarejo - Mexico Bald Mounta
Slide 11: Gold Growth – IPO to Date
Gold Growth – IPO to Date 45 40 35 Royalty Revenue* - $ millions 30 25 Other Commodities 20 PGM Gold 15 80% 77% Gold & PGMs as % 55% 56% 77% of total Royalty 10 55% Revenue 61% 5 0 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Expect >40% growth in 2009 gold royalty revenues vs 2008 * Roya
Slide 12: Organic Gold Growth
Organic Gold Growth Gold only revenues excluding other revenues* Hemlo $5-12m Detour 10-12m Tasiast $6-8m Ahafo 4-8m Holt 3-4m Rosemont 1-2m Palmarejo $15-19m Marigold 2-4m Goldfields 1-2m $100m Holloway-Hislop 3-4m Duketon 2-3m Perama Hill 2-3m Hollister 3-5m Ity 1m Other 1-2m $71m Fully paid asset
Slide 13: Franco-Nevada's Capacity for New Projects
Franco-Nevada’s Capacity for New Projects Capital Resources @ Sept 30, 2009 US$ Millions Working Capital $559 Marketable securities $59 Available Credit Facility $150 Total Available Capital $768 No debt, hedges or material capital obligations Plus additional capacity from >$120m per year in Free Ca
Slide 14: Franco-Nevada's Advantages
Franco-Nevada’s Advantages Royalty Business Model & Growing Sector Goldstrike Established Diversified Proven Portfolio Focus on Gold Growth Track Record of Value Accretion Gold Quarry >$700m Available for Growth Among Royalty Companies: – Largest Gold Royalty Revenues >$100m/a – Highest Cash Flow Ma
Slide 15: Background Slides
----------BACKGROUND SLIDES---------- 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 15
Slide 16: Pipeline For Future Growth
Pipeline For Future Growth Current producers New in 2010-11 Near term 2012+ Longer term Goldstrike Holloway/Hislop/Holt Hemlo NPI Pinson Palmarejo* Hollister Detour Arturo Gold Quarry* Hemlo NSR Ahafo* Pandora platinum Stillwater Tasiast Falcondo nickel Kirkland Lake Marigold Marigold Rosemont Arcti
Slide 17: Track Record of Acquisitions since IPO
Track Record of Acquisitions since IPO >90% of capital deployed into gold assets Amount Asset Royalty Commodity Operator Location $104m Gold Quarry 7.29% Gold Newmont Nevada $80m Palmarejo 50% Gold Coeur d’Alene Mexico Ahafo South $58m 2% Gold Newmont Ghana Mine $20m Marigold 2.5-5% Gold Goldcorp Ne
Slide 18: Organic Gold Growth Potential
Organic Gold Growth Potential Annual Incremental Royalty Potential c Project Operator Royaltyd @ $1000 gold Palmarejo Coeur d’Alene 50% stream $15-19m eg Holloway–Hislop St Andrew Gold 4-5% NSR 3-4m e 2010 Hollister Great Basin Gold 3-5% NSR 3-5m e Hemlo NSR Barrick Gold 3% NSR 1-2m f $22-30m Tasias
Slide 19: Comparables
Comparables Royal Gold Silver Wheaton Commodity mix Mostly gold Mostly gold Mostly silver USA 60% USA 48% Mexico 51% (1) Revenues by geography Canada 22% Africa 30% Peru 17% Mexico 11% Mexico 13% Sweden 11% Number of mineral royalties 194 118 14 Market cap at Feb 8, 2010 $2,763m $1,772m $4,639m Prof
Slide 20: Comparables: Next major royalty deal will be a share price catalyst
Comparables EV/CF Assumes Franco-Nevada 19.3 19.1 does not invest 16.7 17.1 16.4 17.0 17.1 >$700m of 14.8 14.6 13.5 available capital Assumes $500m invested at 10xCF EV/CF 2010 EV/CF 2011 FNV RGLD SLW NA Intermediate Average Next major royalty deal will be a share price catalyst Source: RBC Equity R
Slide 21: Board of Directors
Board of Directors Position with Franco-Nevada Current or Past Major Experience Pierre Lassonde Director, Chairman Chairman, World Gold Council Vice Chairman, Director and President, Newmont Mining Co-CEO and Co-Founder, Old Franco-Nevada David Harquail Director, President & CEO Executive V.P., Newm
Slide 22: Two Years of Added Value ($US)
Two Years of Added Value ($US) Cumulative dividends MC = $2.9B Added market value New Equity Added Cumulative equity financing US $1.1B Value to Investor MC = $1.7B US $0.2B MC = $1.3B Equity Financings IPO Dec 2007 2008 2009 22
Slide 23: FNV-TSX Since IPO
FNV-TSX Since IPO US$ $35.00 IPO Financing Gold Palmarejo Financing $1.3B $260m Quarry $75m $313m $103m $30.00 C$ per Share $25.00 Offer For IRC $675m $20.00 Ahafo Marigold Mt. Keith $100m $15.00 December 20, 2007 IPO issue price C$15.20/sh $10.00 2008 2009 MC = $1.3B MC = $1.7B MC = $2.9B 23
Slide 24: Franco-Nevada Corporation
Franco-Nevada Corporation Capital Structure Analyst Coverage Shares Outstanding 113.9m BMO Capital Markets David Haughton Warrants @ C$32/sh Mar. 2012 5.75m BOA/Merrill Lynch Mike Jalonen Warrants @ C$75/sh June 2017 5.75m CIBC Capital Markets Cosmos Chiu Special Warrants 0.32m GMP Securities Craig