Franco-nevada Corporation · TSX:FNV
Franco-nevada — Investor Presentation (January 2011)
28 slides from Franco-nevada's investor presentation, January 2011
Slide 1: Growing A Gold Focused Royalty Company
Growing g A Gold Focused Royalty y y Company p y January, 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: Franco-Nevada
Franco-Nevada Dec. 2007 IPO of new Franco-Nevada for $1.26B (C$15.20/sh.) Since IPO IPO, Franco Franco-Nevada Nevada has delivered: >100% share price increase 250% >$377m of Free Cash Flow(2) FNV >$83 iin di >$83m dividends id d paid id 200% >300 royalty interests $670m in liquidity 150% $3 6B in ma
Slide 4: Franco-Nevada vs Gold ETF and Operators
Franco-Nevada A gold focused royalty company generating growing cash flow from a diversified portfolio of quality assets mostly in North America Gold ETF Royalties Operators Yield 0% ~1% 1% 0-1% 0 1% Leverage to Gold Price 1 >1 >1 Exploration & Expansion 0% 100% 100% U id Upside Exposure to Opex, Ca
Slide 5: Growing Pipeline of Mineral Royalties
Growing Pipeline of Mineral Royalties 114 oil & gas royalties and 184 undeveloped oil & gas interests not shown >25 MINERAL OPERATIONS Over 300 mineral and oil & gas royalties 5
Slide 6: Quality Operators
Quality Operators: Core Operators: Up and Comers: Goldstrike Palmarejo j Bald Mountain Hemlo Mesquite Cerro San Pedro Gold Quarry S bika Subika Holloway Hollo a Hislop Marigold Holt Musselwhite Stillwater D t Detour L Lake k East Boulder Duketon Tasiast Garden Well Goldstrike ‐ Barrick Marigold ‐ Go
Slide 7: Secure & Diverse Revenue
Secure & Diverse Revenue* By Country By Royalty O&G Australia Midale Other Other 3% 2% 5% 2% Edson 8% Palmarejo j Weyburn 23% Base Metals Mexico 6% & Other 25% US 2% 45% Stillwater Goldstrike - 7% NPI 17% Gold Canada Other 25% 13% Goldstrike - NSR 9% Gold Quarry 3% Marigold 5% 95% off revenue ffrom
Slide 8: Royalty Revenue by Commodity
Royalty Revenue(1) by Commodity 60 Guidance for strong Q4 50 40 ($ millionss) Oil + Gas 30 & Other 20 PGM 83% Precious Metals Gold 10 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2008 2009 2010 Diversified Portfolio with Growing Precious Metals Component 8
Slide 9: Key Long Life Assets
Key Long Life Assets* - Major royalty revenue ~10 years Goldstrike - Stock pile revenue potential ~20 years Gold Quarry - New layback potential ~ 20 years Palmarejo - Guadalupe discovery > 10 years Stillwater - Existing reserves > 25 years - Existing reserves 11 years Oil & Gas - Weyburn y potential
Slide 10: A Long Life Portfolio with Growing Value
A Long Life Portfolio with Growing Value 10
Slide 11: Near Term Growth: Tasiast Mine
Near Term Growth Tasiast Mine 2% NSR - Mauritania Kinross acquisition of Red Back valued at Annual Production* Indicative Annual NSR Payments (@$1,200/oz) $7.1 B 2010 (286 koz) $0 Royalty becomes payable in 2011 2011/13 (346 koz) $8m Possible expansion up to 1.5 Moz in future Mid-term (1.0Moz) $24m
Slide 12: 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 project resources ~18 Moz* (plus additional 2 Moz on adjacent Trade Winds Block A JV) Potential incremental annual revenue $ >$15m** Opportunity to expand from 55 to 90 kt
Slide 13: Additional Growth
Additional Growth Category Royalty Operator New mines: • Duketon (2%) • Regis Resources • Lounge Lizard (2%) • Kagara Ltd • Red October (1 (1.75%) 75%) • Saracen Project restarts: • Falcondo (4.1% equity) • Xstrata • Holt (up to 10%) • St Andrew Goldfields Royalties reaching hurdles: • Subika (2%) •
Slide 14: 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 15: Gold Wheaton Combination – A New Catalyst for Growth
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 Royalty Revenue (1) by approximately $100 million* Pro forma contribut
Slide 16: Gold Wheaton Combination - Increased Diversification
Gold Wheaton Combination - Increased Diversification Pro‐forma NPV Breakdown Pro‐forma NPV Breakdown Non- Ezulwini Precious Detour 5% Metal 5% 14% Gold Quarry 5% Other FNV Assets Stillwater 18% 8% Sudbury Tasiast 12% 8% MWS Palmarejo 8% 12% Precious Gold Metal Oil & Gas Strike 86% 9% 10% Contributes
Slide 17: Gold Wheaton Combination - Contribution Analysis
Gold Wheaton Combination - Contribution Analysis GLW FNV 100% 20% 28% 30% 27% 33% 75% 50% 80% 72% 70% 73% 67% 25% 0% EV NPV - Asset 2011 Net Royalty 2011 CF 2011E - 2013E Avg. Revenue CF 25% increase in enterprise value is expected to increase 2011 cash flow by 50% * Based on broker estimates 17
Slide 18: Potential Royalty Revenue Growth
Potential Royalty Revenue Growth $400 $40‐$50m O&G & other 350 revenues 300 Up to ~$250m 250 incremental precious metal ($ Millions) 200 revenue* 150 100 50 0 2008A 2009A 2010E GLW Tasiast Detour Other 2015+ Major organic and acquisition growth * Note: 2010E represents management estimate of additio
Slide 19: Strong Financial Position
Strong Financial Position Pre-Transaction Post-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 capital for
Slide 20: Palmarejo
Franco-Nevada Key Royalties Remain Strong strike Golds Major Discoveries on Royalty Lands Gold Wheaton Catalyst for Re-rating arry Gold Qua >90% Free Cash Flow Margins >$375m in Capital for Further Deals Palmarejo Expect Further Dividend Increases Track Record of Value Accretion GLW The strongest bu
Slide 21: Appendix - Gold Wheaton Transaction Summary
Appendix - 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 a
Slide 22: Appendix - Gold Wheaton Assets – Sudbury Footwall
Appendix - Gold Wheaton Assets – Sudbury Footwall Attributable Production (k Au Eq. oz) Operator: Quadra FNX (First 5 years) Location: Sudbury, Canada 64 67 67 60 58 Royalty: 50% of Au, Pt, Pd contained in mined ore above $400/oz Au Eq Purchased by GLW: C$400 million in June, 2008 Net Revenue (9 Mon
Slide 23: Appendix - Gold Wheaton Assets – Mine Waste Solutions
Appendix - Gold Wheaton Assets – Mine Waste Solutions Attributable Production (k Au oz) Operator: First Uranium 34 33 33 33 32 Location: South Africa 29 30 31 30 30 30 32 29 29 Royalty: 25% of Au produced above $400/oz Purchased by GLW: US$125 million in November, 2008 Net Revenue ((9 Months to Sep
Slide 24: Appendix - Gold Wheaton Assets - Ezulwini
Appendix - Gold Wheaton Assets - Ezulwini Attributable Production (k Au oz) Operator: First Uranium Location: South Africa 19 21 22 16 6 18 16 Royalty: 7% of Au produced above $400/oz Au Eq 13 13 14 Purchased by GLW: US$50 million in November, 2009 Net Revenue ((9 Months to Sep 2010): ) $10 million
Slide 25: Appendix – Asset Life Assumptions & References
Appendix – 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
Slide 26: Franco-Nevada Directors
Franco-Nevada 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.,
Slide 27: Franco-Nevada Team
Franco-Nevada Team Title Canada David Harquail President & CEO Sandip Rana Chief Financial Officer Jacqueline Jones Chief Legal Officer & Corporate Secretary Geoff Waterman Chief Operating Officer Paul Brink S.V.P. Business Development Petra Decher VP, Finance & Assistant Secretary Phili Wil Philip
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