Franco-nevada Corporation · TSX:FNV
Franco-nevada — Shareholder Meeting (May 2011)
28 slides from Franco-nevada's shareholder meeting presentation, May 18, 2011
Slide 1: Annual and Special Meeting of Shareholders
ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS May 18, 2011 1
Slide 2: Head Table
Head Table Pierre Lassonde Chairman David Harquail President & CEO Sandip Rana CFO Jacqueline Jones CLO & Corporate Secretary 2
Slide 3: Directors
Directors Pierre Lassonde – Chairman David Harquail – President & CEO Derek Evans Graham Farquharson Louis Gignac Randall Oliphant The Hon. David R. Peterson 3
Slide 4: 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 5: Why Gold and the Royalty Business
WHY GOLD AND THE ROYALTY BUSINESS Pierre Lassonde – Chairman 5
Slide 6: Dow vs Gold
Dow vs Gold: Logarithmic Scale Arithmetic Scale Financial vs hard assets 6
Slide 7: Royalty Business Advantages
Royalty Business Advantages Your first dollar in is your last Revenue based royalties have no operating cost exposure A high margin and free cash flow business Free perpetual option on future discoveries on our lands Management is 100% focused on growing shareholder value 7
Slide 8: Franco-Nevada Continues to Deliver
Franco-Nevada Continues to Deliver 200% 150% FNV 100% Gold 50% 0% S&P -50% Q1’08 Q2’08 Q3’08 Q4’08 Q1’09 Q2’09 Q3’09 Q4’09 Q1’10 Q2’10 Q3’10 Q4’10 Q1’11 8
Slide 9: Report to Shareholders
REPORT TO SHAREHOLDERS David Harquail – President & CEO 9
Slide 10: Management
Management Executives David Harquail President & CEO Sandip Rana Chief Financial Officer Jacqueline Jones Chief Legal Officer & Corporate Secretary Geoff Waterman Chief Operating Officer Paul Brink SVP, Business Development Steve Alfers Chief of U.S. Operations Senior Management Philip Wilson Vice P
Slide 11: Franco-Nevada: A gold focused royalty & streaming company
Franco-Nevada A gold focused royalty & streaming company Palmarejo generating growing cash flow and dividends from a diversified portfolio of quality assets > 50% expected growth in 2011 Growth Goldstrike World class discoveries >$500M available capital 60% increase in monthly dividend Yield
Slide 12: Business Model Benefits
Business Model Benefits Gold ETF Franco‐Nevada Operators Yield 0% >1% 0‐1% Leverage to Gold Price 1 >1 >1 Exploration & Expansion Upside 0% 100% 100% Exposure to Opex, Capex & 0% 0% 100% Environmental Costs (NSR) Franco-Nevada provides yield and more upside than a gold ETF with less risk than an ope
Slide 13: Current and Future Assets
Current and Future Assets Over 200 mineral royalties and streams* *Does not include Franco-Nevada’s 135 oil & gas assets and 157 undeveloped oil & gas interests 13
Slide 14: Quality Operators & Assets
Quality Operators & Assets Goldstrike Stillwater Bald Mountain East Boulder Hemlo Gold Quarry Tasiast Subika Morrison Marigold Podolsky Musselwhite McCreedy West 14
Slide 15: Secure and Diversified (Q1 2011 Revenues)
Secure and Diversified (Q1 2011 Revenues) By Country By Asset 88% from North America 86% from precious metals 15
Slide 16: Revenue Growth Reflects Diversified Portfolio
Revenue Growth 80 70 60 50 Reflects year end US$ (millions) Oil & Gas + Other top–up 40 payments 86% PGM precious 30 metals in Gold Q1 2011 20 10 ‐ Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2009 2010 2011 Diversified portfolio with growing precious metals 16
Slide 17: First Quarter Revenue Growth
First Quarter Revenue Growth 80 70 O&G + Other 60 PGM 50 ($ Millions) 40 Gold 30 20 10 0 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Strong year-over-year growth 17
Slide 18: Sources of Growth (Gold Revenue)
Sources of Growth (Gold Revenue) 450% 400% 350% +332% 300% 250% Gold 200% Revenue 150% 100% Gold Price +71% 50% 0% ‐50% Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Growth from: ~20% gold price increase ~30% organic (expansions and start-ups from portfolio) ~50
Slide 19: Growth in the Pipeline
Growth in the Pipeline z ed 37 5 ; 3 roducin g assets Advanced assets* CTT Gold Quarry Tasiast Agi Dagi Marigold Sudbury Detour Dee Stillwater Palmarejo Subika HB Superpit Duketon Henty Hemlo npi Kirkland Lake Hollister Holloway Rosemont Gurupi Holt Hislop eee Hill een : ourageous andman Mesquite No
Slide 20: Growth From Existing Portfolio
Growth From Existing Portfolio Category Royalty* Operator New mines: • Duketon (2%) • Regis Resources • Lounge Lizard (2%) • Kagara Ltd • Peculiar Knob (production payment) • WPG Resources • Red October (1.75%) • Saracen Project restarts: • Falcondo (4.1% equity) • Xstrata • Holt (up to 10%) • St An
Slide 21: Growth from Discoveries
Growth from Discoveries Tasiast (2% royalty) Potential >20m oz resource* Potential 1.5m oz/yr by 2015** Revenue expected to begins in Q3 Tasiast ‐ Mauritania Detour (2% royalty) >25m oz resource* Potential 660k oz/yr starting 2013** Likely further expansion Potential for >$60m/yr for >20 years*** De
Slide 22: Growth from Acquisitions
Growth from Acquisitions Gold Wheaton acquired March 14, 2011: ~40%* revenue increase Precious metals now >85% of revenue** Ezulwini – South Africa Greater gold leverage via stream structure Adds further platinum and palladium exposure Diversification - no asset greater than 15% of NAV** MWS – South
Slide 23: 2011 Growth Outlook
2011 Growth Outlook ($US million) 2010 Revenue: $227 million 2011 Revenue (March guidance): $325-$350 million If GLW added As Reported Jan 1, 2011 So far with Q1 results: Revenue $73.1 $100.0 Adjusted EBITDA(2) $50.6 $68.0 On pace to meet or beat high end of 2011 guidance* * Assuming commodity price
Slide 24: Longer Term Growth Outlook
Longer Term Growth Outlook ($1,400/oz Au) Includes: Excludes: • Full year GLW assets • Prosperity stream • Tasiast & Detour until permitted expansions • Organic growth risk adjusted Includes: 50% • Higher prices vs. ‘10 • Nine months GLW • Start of Tasiast • Organic growth 48% Strong Growth Outlook
Slide 25: Continued Financial Strength
Continued Financial Strength Capital Resources March 31, 2011 (US Millions) Working Capital $306 Marketable Securities $55 Available Credit Facility $175 Total Available Capital $536 No debt or obligations No capital or exploration costs Ongoing free cash flow Note: Cash flow estimate based on conse
Slide 26: Dividend
Dividend 60% increase in monthly dividend starting in July US$0.04 per share/mth or US$0.48 per share annualized Represents third annual dividend increase since IPO 1.3% yield on current share price 3.2% yield on cost for our IPO shareholders Franco-Nevada provides one of the highest yields in the g
Slide 27: Why Own a Gold ETF?
Why Own a Gold ETF? 200% 150% FNV 100% Gold 50% S&P 0% -50% Q1’08 Q2’08 Q3’08 Q4’08 Q1’09 Q2’09 Q3’09 Q4’09 Q1’10 Q2’10 Q3’10 Q4’10 Q1’11 Franco-Nevada is outperforming gold by delivering: Growth (>50% revenue growth expected in 2011) Profits and Yield (60% dividend increase in 2011) Business model
Slide 28: Q&A
Q&A Goldstrike ‐ Barrick Palmarejo ‐ Coeur Detour – Detour Gold MWS – First Uranium Tasiast ‐ Kinross Mesquite – New Gold East Boulder ‐ Stillwater Sudbury – Quadra FNX Weyburn ‐ Cenovus 28