Franco-nevada Corporation · TSX:FNV
Franco-nevada — Bank of America Merrill Lynch Conference 2011
23 slides from Franco-nevada's conference presentation, May 2011
Slide 1: Bank of America Merrill Lynch Conference - May 2011
Bank of America Merrill Lynch Conference ‐ May 2011 1
Slide 2: Cautionary Statement
Cautionary Statement Forward-Looking Statements Certain information contained in this presentation, including any information as to future financial or operating performance and other statements that express management's expectations or estimates of future performance, constitute "forward-looking st
Slide 3: Dow vs Gold: Financial vs hard assets
Dow vs Gold: 45 32 40 35 16 30 Logarithmic Scale 25 DOW/Gold 8 20 4 15 10 2 Arithmetic Scale 5 1 0 Financial vs hard assets 3
Slide 4: Franco-Nevada: Growth and yield at lower risk
Franco-Nevada A gold focused royalty & streaming company arejo generating growing cash flow and dividends from a diversified portfolio of quality assets Palma Gold Striike 49% ‐ expected 2011 growth G Growth h World class discoveries >$500M available capital 60% increase in monthly dividend
Slide 5: Royalty Model
Royalty Model Gold ETF Franco-Nevada Operators Yield 0% ~1% 0-1% Leverage to Gold Price 1 >1 >1 Exploration & Expansion Upside 0% 100% 100% Exposure to Opex, Capex & 0% 0% 100% Environmental Costs (NSR) Franco-Nevada provides yield and more upside than a gold ETF with less risk than an operator 5
Slide 6: Current and Future Assets
Current and Future Assets Over 200 mineral royalties* *Does not include Franco-Nevada’s 135 oil & gas assets and 157 undeveloped oil & gas interests 6
Slide 7: Long Life Assets
Long Life Assets Goldstrike Mining ~10 years Stock pile processing ~20 years Gold Quarry New layback potential ~ 20 years Palmarejo Guadalupe development > 10 years Stillwater Existing reserves > 25 years Existing reserves 10 years Oil & Gas Weyburn potential > 40 years Falcondo Existing resources >
Slide 8: Quality Operators
Quality Operators Goldstrike Stillwater Bald Mountain East Boulder Hemlo Gold Quarry Subika Tasiast Morrison Marigold Podolsky Musselwhite McCreedy West 8
Slide 9: Royalty Revenue Growth
Royalty Revenue(1) Growth 80 $205.4 million = 44% growth 70 year over year 60 50 ($ millions) 40 81% Oil + Gas precious 30 & Other Oh metals in 2010 20 PGM 10 Gold 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2008 2009 2010 Diversified Portfolio with Growing Precious Metals 9
Slide 10: Value Creation through Exploration
Value Creation through Exploration Tasiast (2% royalty) Potential 20 moz resource* Potential 1.5 moz/yr by 2015** Revenue begins 2011 Tasiast Detour (2% royalty) >25 moz resource* Potential 660 koz/yr starting 2013 2013** Potential future expansion Potential for >$60m/yr for >20 years*** Detour Lake
Slide 11: Organic Value Creation
Organic Value Creation Category Royalty* Operator New mines: • Duketon (2%) • Regis Resources • Lounge Lizard (2%) • Kagara Ltd • Peculiar Knob (production ( d ti payment) t) • WPG Resources • Red October (1.75%) • Saracen Project restarts: • Falcondo (4.1% equity) • Xstrata • Holt (up to 10%) • St
Slide 12: GLW – Catalyst for Growth
GLW – Catalyst for Growth Acquisition of Gold Wheaton: ~40%* revenue increase Precious metals now >85% of revenue** Ezulwini – South Africa Greater gold leverage via stream structure Adds further platinum and palladium exposure Diversification - no asset greater than 15% of NAV** MWS – South Africa
Slide 13: GLW – Greater Gold and PGM leverage
GLW – Greater Gold and PGM leverage NPV – By Commodity NPV – By Asset Detour Gold 5% Quarry 5% Oil & Gas/ Stillwater Other 8% 14% Other FNV Oth Assets 23% PGM Tasiast 19% 8% Gold Sudbury 67% MWS 12% 8% Oil & Gas 9% Gold Palmarejo Strike 12% 10% Precious metal contribution now >85% Contributes two of
Slide 14: GLW – Increased Diversification
GLW – Increased Diversification Revenue – By Geography Revenue – By Asset Type Working Interest 3% Australia 3% South Africa 11% Revenue US Based Mexico 35% 37% 17% Stream 46% Canada Profit 34% Based 14% 86% North America revenues 60% from leveraged profit & stream assets Note: Pro-forma revenue for
Slide 15: 2011 Outlook
2011 Outlook 9 months of Sudbury, MWS & Ezulwini Higher Au, Au PGM and oil prices Higher Palmarejo production Smaller asset startups & expansions Falcondo re-start Temporarily lower on Goldstrike L Lower minimum i i att G Gold ld Q Quarry 2011 GAAP Revenue guidance $325m to $350m 2010 GAAP Revenue o
Slide 16: GAAP Revenue Outlook ($1,400/oz Au)
GAAP Revenue Outlook ($1,400/oz Au) 500 Includes: 450 • Full year GLW assets • Tasiast T i t & Detour D t 400 72% expansions • Organic growth risk adjusted 350 Excludes: 300 • Prosperity stream until ($ Millions) 49% permitted 250 200 48% 150 100 50 0 2008A 2009A 2010A 2012‐2015** 2011E* CAGR of 18%
Slide 17: Continued Financial Strength
Continued Financial Strength Capital Resources March 24, 2011 P Pro F Forma (US Millions) Working Capital $260 Marketable Securities $70 Available Credit Facility $175 T l Available Total A il bl Capital C i l $505 $505M in available capital at March 24, 2011 $250M per year in Free Cash Flow(2) Note
Slide 18: Dividend
Dividend 60% increase in monthly dividend US$0.04 per share starting with July 2011 dividend 1 3% yield on current share price 1.3% 3.2% yield on cost for our IPO shareholders Franco-Nevada F N d provides id one off the h hi highest h yields i ld in the gold sector to institutional investors 18
Slide 19: Franco-Nevada: Growth and yield at lower risk
Franco-Nevada Growth and yield at lower risk arejo Palma 49% Expected Revenue Growth in 2011 Gold Striike World Class Discoveries (Tasiast (Tasiast, Detour) >$500m Capital for Growth % Dividend Increase in 2011 60% Tasiast Diversified & Secure Portfolio 90% margins* Sudbury Why own an ETF? S * Note:
Slide 20: Appendices
Appendices Goldstrike ‐ Barrick Weyburn Bald ‐ Cenovus Mountain ‐ Barrick East Boulder ‐ Stillwater Palmarejo ‐ Coeur Cerro San Pedro ‐ New Gold Mesquite – New Gold Marigold ‐ Goldcorp Robinson – Quadra FNX Tasiast ‐ Kinross Marigold ‐ Goldcorp 20
Slide 21: Asset Life Assumptions & References
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 Quarry – N
Slide 22: Franco-Nevada Directors & Management
Franco-Nevada Directors & Management Directors Pierre Lassonde Director, Chairman David Harquail Director, President & CEO Derek Evans(1) Director Graham Farquharson(2) Director Louis Gignac g (1) Director Randall Oliphant(1) Director Hon. David R. Peterson(2) Director Management David Harquail Pres
Slide 23: Franco-Nevada Corporation Capital Structure
Franco-Nevada Corporation Capital Structure Analyst Coverage Shares Outstanding 126.3m BMO Capital Markets David Haughton 2012 Warrants (C$32 exercise price) 5.75m BOA/Merrill Lynch y Mike Jalonen 2013 Warrants(1) (C$64.27 exercise price) 4.05m CIBC Capital Markets Cosmos Chiu 2014 Warrants(1) (C$32
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