Franco-nevada Corporation · TSX:FNV
Franco-nevada — Investor Presentation (November 2010)
26 slides from Franco-nevada's investor presentation, November 2010
Slide 1: A Gold Focused Royalty Company
A Gold Focused Royalty Company November 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: Franco-Nevada's Performance Since IPO
Franco-Nevada’s Performance Since IPO Dec. 2007 IPO of new Franco-Nevada for $1.26B (C$15.20/sh.) Since IPO, Franco-Nevada has delivered: >100% share price increase >$333m of Free Cash Flow(2) FNV >$83m in dividends paid >300 royalty interests $650m in liquidity $4.0B in market cap* S&P / TSX * As a
Slide 4: Franco-Nevada Gold ETF Royalties
Franco-Nevada A gold focused royalty company generating growing cash flow from a diversified portfolio of quality assets mostly in North America. Gold ETF Royalties Operators Yield 0% ~1% 0-1% Leverage to Gold Price 1 >1 >1 Exploration & Expansion 0% 100% 100% Upside Exposure to Opex, Capex & 0% 0%
Slide 5: Growing Pipeline of Mineral Royalties
Growing Pipeline of Mineral Royalties Prosperity Perama Hill Tasiast Goldfields Detour Lake Lounge Lizard Subika Gurupi Hemlo Dee Ity Pinson Rosemont Kirkland Lake Admiral Hill Bronzewing Duketon Holt McDermott >152 other Musselwhite exploration assets others… 114 oil & gas royalties and 184 undevel
Slide 6: Quality Operators
Quality Operators: Core Operators: Up and Comers: Goldstrike Palmarejo Bald Mountain Hemlo Mesquite Cerro San Pedro Gold Quarry Subika Holloway Hislop Marigold Holt Musselwhite Detour Lake Stillwater East Boulder Tasiast Goldstrike ‐ Barrick Marigold ‐ Goldcorp Tasiast ‐ Kinross Detour – Detour Gold
Slide 7: Secure & Diverse Revenue
Secure & Diverse Revenue* By Country By Royalty Other Australia 3% 3% Mexico 23% US 43% Canada 28% 94% of revenue from North America & 22% of revenue protected by minimum guarantees * Q2 2010 Royalty Revenue 7
Slide 8: Growing Precious Metals Royalty Revenue
Growing Precious Metals Royalty Revenue(1) 50 Guidance for 45 strong H2 40 35 Oil + Gas 30 & Other ($ millions) 25 20 PGM 71‐80% Precious 15 Metals* 10 Gold 5 0 Q1 Q3 Q4 Q1 2009 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q2 2008 2009 2010 87-89% Free Cash Flow Margins(3) * Represents a range over the last four quarters 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 Oil & Gas - Existing reserves 11 years - Weyburn potential >
Slide 10: A Portfolio with Growing Value
A Portfolio with Growing Value 10
Slide 11: Major Organic Growth Drivers: Tasiast
Major Organic Growth Drivers 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
Slide 12: Major Organic Growth Drivers: Detour Lake
Major Organic Growth Drivers Detour Lake 2% NSR- Canada Detour Gold has started with long lead capital orders Total M+I project resources ~18 Moz Potential incremental annual revenue >$15m* Opportunity to expand from 55 to 90 ktpd could lead to further royalty revenue growth Undiscounted in-situ roy
Slide 13: New Organic Growth Potential
New Organic Growth Potential Category Royalty Operator New mines: • Duketon (2%) • Regis Resources • Lounge Lizard (2%) • Kagara Ltd Royalties reaching hurdles: • Subika (2%) • Newmont Mining • Ity (1%) • La Mancha NPI’s pending payout: • Hemlo (50%) • Barrick Gold • Musselwhite (5%) • Goldcorp • Pa
Slide 14: Potential Gold Royalty Growth
Potential Gold Royalty Growth $40‐$50m PGM & other revenues Up to $150m Incremental gold revenue* * Note: 2010E represents management estimate of additional gold revenue in 2010 at current gold prices. Asset estimates reflect potential revenue for upcoming advanced assets at full capacity and assume
Slide 15: Continued Financial Strength
Continued Financial Strength Capital Resources June 2010 December 2009 (US Millions) (US Millions) Working Capital $622 $531 Marketable Securities $33 $76 Available Credit Facility $175 $150 Total Available Capital $830 $757 No debt or hedges Plus additional capacity from >$160m per year in Free Cas
Slide 16: Benefitting From Exploration Success
Benefitting From Exploration Success Royalty Ounces* Franco Undiscounted in‐ Royalty situ value at $1200 gold price Tasiast Kinross mid range resource 21m 2% $500m projection – September 2010 Detour Detour Gold M+I resource – May 18m 2% $425m 2010 Duketon Regis Resources – addition of 3-5m 2% $100m
Slide 17: Goldstrike, Gold Quarry, Palmarejo
Franco-Nevada Goldstrike Major discovery on our royalty lands 89% Free Cash Flow Margins Gold Quarry >$650m in Capital for Further Deals >$30m of Annual Dividends Palmarejo Track Record of Value Accretion 17
Slide 18: Thank You
----------THANK YOU---------- Goldstrike ‐ Barrick Weyburn ‐ Cenovus East Boulder ‐ Stillwater Bald Mountain ‐ Barrick Palmarejo ‐ Coeur Cerro San Pedro ‐ New Gold Mesquite – New Gold Marigold ‐ Goldcorp Robinson – Quadra FNX Tasiast ‐ Kinross Marigold ‐ Goldcorp 18
Slide 19: Dow vs Gold
Dow vs Gold: Logarithmic Scale Arithmetic Scale Financial vs hard assets 19
Slide 20: Second Quarter Record Results
Second Quarter Record Results (US $ millions 2008 2009 Q1 ‘10 Q2 ‘10 except per share and %) Royalty Revenue(1) $150.6 $142.8 $41.8 $45.2 Gold Royalty Revenue 70.7 100.5 27.4 28.9 Total Revenue(3) 151.0 199.7 37.9 67.1 Net Income 40.3 80.9 7.8 27.6 Earnings per share $0.41 $0.76 $0.07 $0.24 Free Cas
Slide 21: Track Record of Transactions since IPO
Track Record of Transactions since IPO >95% of capital deployed into gold assets Amount Asset Royalty Commodity Operator Location $104m Gold Quarry 7.29% Gold Newmont Nevada Coeur $80m Palmarejo 50% Gold Mexico d’Alene $58m Subika 2% Gold Newmont Ghana $20m Marigold 2.5-5% Gold Goldcorp Nevada A$20m
Slide 22: 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 23: 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 Philip Wilson VP,
Slide 24: FNV vs S&P/TSX since IPO
FNV vs S&P/TSX since IPO 250% IPO Financing Financing $1.3B $260m $313m Gold Palmarejo Quarry $75m FNV $103m 200% 150% Ahafo Marigold Mt. Keith Offer For Prosperity $100m IRC $675m $350m 100% December 20, 2007 IPO issue price C$15.20/sh S&P 50% 0% 24
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 Corporation
Franco-Nevada Corporation Capital Structure(2) Analyst Coverage Shares Outstanding 114.48m BMO Capital Markets David Haughton BOA/Merrill Lynch Mike Jalonen Warrants @ C$32/sh March 2012 5.75m CIBC Capital Markets Cosmos Chiu Warrants @ C$75/sh June 2017 5.75m Credit Suisse Anita Soni Options (avg C
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