Franco-nevada Corporation · TSX:FNV
Franco-nevada — BMO Conference February 2011
28 slides from Franco-nevada's conference presentation, February 2011
Slide 1: BMO Conference - February 2011
BMO Conference ‐ February 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 DOW/Gold 25 8 20 4 15 10 2 Arithmetic Scale 5 1 0 Financial vs hard assets 3
Slide 4: Franco-Nevada
Franco-Nevada A gold focused royalty & streaming company generating growing cash flow and dividends from a diversified portfolio of quality assets Gold ETF Franco-Nevada Operators Yield 0% 1% ~1% 0 1% 0-1% Leverage to Gold Price 1 >1 >1 Exploration & Expansion Upside 0% 100% 100% Exposure to Opex, C
Slide 5: Franco-Nevada
Franco-Nevada Dec. 2007 IPO of new Franco-Nevada for $1.26B (C$15.20/sh.) Since IPO,, Franco-Nevada has delivered: >100% share price increase >$435m of Free Cash Flow(2)* 250% >$86m in dividends p paid FNV >300 royalty interests 200% $3.6B in market cap** 150% GLW announced Dec Dec. 2010: • Acquisit
Slide 6: Growing Pipeline of Mineral Royalties
Growing Pipeline of Mineral Royalties 135 oil & gas royalties and 156 undeveloped oil & gas interests not shown Over 300 mineral and oil & gas royalties 6
Slide 7: Quality Operators
Quality Operators: Core Operators: Up and Comers: Goldstrike Palmarejo j B ld Mountain Bald M t i Hemlo Mesquite Cerro San Pedro Gold Quarry S bik Subika Holloway Hollo a Hislop Holt Marigold Musselwhite Stillwater D t Detour L Lake k East Boulder Duketon Tasiast Garden Well Goldstrike ‐ Barrick Mar
Slide 8: Secure & Diverse Revenue
Secure & Diverse Revenue* By Country By Asset Australia Other 3% Midale 2% 2% O&G Other Edson 5% 8% Palmarejo Mexico Weyburn 23% Base Metals 25% US 6% & Other 45% 2% Stillwater Goldstrike - 7% NPI 17% Canada C d G Gold 25% Other 13% Goldstrike - NSR 9% Gold Quarry 3% Marigold 5% 95% off revenue ffro
Slide 9: Net Revenue by Commodity
Net Revenue(1) by Commodity 80 70 60 50 ($ millions) 40 Oil + Gas 30 & Other 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 * Represents top end of November guidance reflecting Q4 commodity prices and guidance on Gold Quarry
Slide 10: Key Long Life Assets
Key Long Life Assets* - Major Net Revenue ~10 years Goldstrike - Stock pile revenue potential ~20 years Gold Quarry - New layback potential ~ 20 years Palmarejo - Guadalupe development > 10 years Stillwater - Existing reserves > 25 years - Existing reserves 11 years Oil & Gas - Weyburn potential > 4
Slide 11: A Long Life Portfolio with Growing Value
A Long Life Portfolio with Growing Value 11
Slide 12: Near Term Growth: Tasiast Mine
Near Term Growth Tasiast Mine 2% NSR - Mauritania Kinross acquisition of Red Back valued at $7.1 B Scoping p g studyy indicates expansion p up p to 1.5 Moz in future years* Study based on 16 year mine life Potential incremental annual revenue of $36m* Royalty becomes payable this year Undiscounted U
Slide 13: Near Term Growth: Detour Lake
Near Term Growth Detour Lake 2% NSR- Canada Detour Gold has started construction with $1.0 billion of funding in place Total M+I p project j resources >20 Moz* (plus additional 2 Moz on adjacent Trade Winds Block A JV) Production of 660,000 oz/yr with potential for 1m oz/yr** Potential incremental a
Slide 14: The Next 20 Projects
The Next 20 Projects Category Royalty* Operator New mines: • Duketon (2%) • Regis Resources • Lounge g Lizard ((2%) %) • Kagara g Ltd • Peculiar Knob (production payment) • WPG Resources • Red October (1.75%) • Saracen Project restarts: • Falcondo (4.1% equity) • Xstrata • Holt (up to 10%) • St Andr
Slide 15: Gold Wheaton Combination
Gold Wheaton Combination December 11, 2010 – FNV agrees to purchase 34% of GLW from Quadra FNX December 13, 2010 – FNV & GLW agreed to friendly business combination December 31, 2010 – Purchased GLW secured notes from Sprott for C$110m January 5, 2011 – Closed acquisition of Quadra FNX block for C$2
Slide 16: Potential Net Revenue Growth
Potential Net Revenue Growth 450 Precious Metal 400 Non‐Precious N P i Metal M t l 350 > $200m potential 300 incremental revenue** ($ Millions) 250 200 150 100 50 0 2008A 2009A 2010E GLW Tasiast Detour Other 2015+ 23% CAGR in precious metal revenue** * Asset estimates reflect potential revenue for u
Slide 17: The strongest business model in gold
Franco-Nevada strike 23% Annual Gold Growth (IPO to 2015) Golds Major New Discoveries (Tasiast, Detour) arry G ld Wh Gold Wheaton t Catalyst C t l t ffor Re-rating R ti Gold Qua >90% Free Cash Flow Margins Palmarejo >$375m in Capital for Further Deals Record of Annual Dividend Increases GLW Gold Lev
Slide 18: 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 18
Slide 19: Gold Wheaton Combination
Gold Wheaton Combination A New Catalyst for Growth Enhances FNV position as the leading gold-focused royalty company Accelerated cash flow growth – continued industry leading free cash flow margin Increases near-term annual Net Revenue (1) by approximately $100 million* Pro forma contribution of pre
Slide 20: Gold Wheaton Combination: Increased Diversification
Gold Wheaton Combination Increased Diversification Pro‐forma NPV Breakdown Pro‐forma NPV Breakdown Ezulwini Detour 5% 5% Gold Quarry 5% Other FNV Oil & Gas/ Assets Other Stillwater 18% 14% 8% Sudbury PGM Tasiast 12% 19% 8% Gold 67% MWS Palmarejo 8% 12% Gold Oil & Gas Strike 9% 10% Contributes two of
Slide 21: Gold Wheaton Transaction
Gold Wheaton Transaction Summary Consideration: C$5.20 per Gold Wheaton common share 23% premium based on the 20-day volume-weighted average price Transaction value of C$830 million Structure: Plan of Arrangement supported by both Boards of Directors and management Consideration payable approx. 60%
Slide 22: Gold Wheaton Assets: Sudbury Footwall
Gold Wheaton Assets Sudbury Footwall Attributable Production (k Au Eq. oz) Operator: Quadra FNX (First 5 years) 67 67 Location: Sudbury, Canada 60 64 58 Stream: 50% of Au, Pt, Pd contained in mined ore above $400/oz Au Eq Purchased byy GLW: C$400 million in June, 2008 Net Revenue (9 Months to Sep 20
Slide 23: Gold Wheaton Assets: MWS
Gold Wheaton Assets MWS Attributable Production (k Au oz) Operator: First Uranium 33 34 32 32 33 33 33 32 Location: South Africa 29 29 30 30 28 29 Stream: 25% of Au produced above $400/oz 18 Purchased by GLW: US$125 million in Nov, 2008 N t Revenue Net R (9 M Months th tto S Sep 2010) 2010): $12 mil
Slide 24: Gold Wheaton Assets: Ezulwini
Gold Wheaton Assets Ezulwini Attributable Production (k Au oz) Operator: First Uranium 24 24 24 24 24 24 24 21 23 23 Location: South Africa 17 18 19 18 15 16 14 12 Stream: 7% of Au produced above $400/oz Au Eq 7 Purchased by GLW: US$50 million in Nov, 2009 2011 2012 2013 2014 4 2015 2016 2017 2018 2
Slide 25: Strong Financial Position
Strong Financial Position Pre-GLW Transaction Post-GLW Transaction (September 30, 30 2010) (est at closing) (est. Cash US$610 million US$200 million (1) Debt None None (2) Revolver Available US$175 $ million US$175 $ million Total Available US$785 million US$375 million Capital Franco-Nevada has cap
Slide 26: 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 27: 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 28: Franco-Nevada Corporation
Franco-Nevada Corporation Capital Structure(2) Analyst Coverage Shares Outstanding 114.56m BMO Capital Markets David Haughton Warrants @ C$32/sh March 2012 5 75m 5.75m BOA/Merrill Lynch y Mike Jalonen CIBC Capital Markets Cosmos Chiu Warrants @ C$75/sh June 2017 5.75m Credit Suisse Anita Soni Option