Franco-nevada Corporation · TSX:FNV
Franco-nevada — Investor Presentation (December 2010)
26 slides from Franco-nevada's investor presentation, December 2010
Slide 1: A Gold Focused Royalty Company
A Gold Focused Royalty Company December 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
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 2.50 >$377m of Free Cash Flow(2) FNV >$75m in dividends paid 2.00 >300 royalty interests 1.50 $670m in liquidity $4.0B in market cap* 1.00 S&P / TSX 0.50 0.00
Slide 4: Franco-Nevada Gold ETF Royalties
Franco-Nevada A gold focused royalty company generating growing cash flow from a diversified portfolio of quality assets mostly in North America. Gold ETF Royalties Operators Yield 0% ~1% 0-1% Leverage to Gold Price 1 >1 >1 Exploration & Expansion 0% 100% 100% Upside Exposure to Opex, Capex & 0% 0%
Slide 5: Growing Pipeline of Mineral Royalties
Growing Pipeline of Mineral Royalties 114 oil & gas royalties and 184 undeveloped oil & gas interests not shown >25 MINERAL OPERATIONS 5
Slide 6: Quality Operators
Quality Operators: Core Operators: Up and Comers: Goldstrike Palmarejo Bald Mountain Hemlo Mesquite Cerro San Pedro Gold Quarry Subika Holloway Hislop Marigold Holt Musselwhite Stillwater Detour Lake East Boulder Duketon Tasiast Garden Well Goldstrike ‐ Barrick Marigold ‐ Goldcorp Tasiast ‐ Kinross
Slide 7: Secure & Diverse Revenue
Secure & Diverse Revenue* By Country By Royalty 95% of revenue from North America & 22% of revenue protected by minimum guarantees * Royalty Revenue - 9 Months to September 30, 2010 7
Slide 8: Royalty Revenue by Composition
Royalty Revenue(1) by Composition 60 Guidance for strong Q4 50 40 Oil + Gas ($ millions) 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 50% Growth in Gold Royalty Revenue Q3 2010 vs. Q3 2
Slide 9: Key Long Life Assets
Key Long Life Assets* - Major royalty revenue ~10 years - Stock pile revenue potential ~20 years - New layback potential ~ 20 years - Guadalupe discovery > 10 years - Existing reserves > 25 years - Existing reserves 11 years - Weyburn potential > 40 years - Existing resources > 20 years - Expanding
Slide 10: A Long Life Portfolio with Growing Value
A Long Life Portfolio with Growing Value 10
Slide 11: Major Growth: Tasiast Mine
Major 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 year
Slide 12: Major Growth: Detour Lake
Major Growth 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 royalty value >$4
Slide 13: Additional Growth
Additional Growth Category Royalty Operator New mines: • Duketon (2%) • Regis Resources • Lounge Lizard (2%) • Kagara Ltd • Red October (1.75%) • Saracen Project restarts: • Falcondo (4.1% equity) • Xstrata • Holt-McDermott (up to 10%) • St Andrew Goldfields Royalties reaching hurdles: • Subika (2%)
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 September 2010 December 2009 (US Millions) (US Millions) Working Capital $640 $531 Marketable Securities $31 $76 Available Credit Facility $175 $150 Total Available Capital $846 $757 No debt or hedges Plus additional capacity from >$160M per year in Fre
Slide 16: Exploration Success on Franco-Nevada Lands
Exploration Success on Franco-Nevada Lands Royalty Millions of Franco Undiscounted in-situ Ounces* Royalty value at $1200 gold price Tasiast Kinross mid range resource 21 2% $500m projection – September 2010 Detour Detour Gold M+I resource – May 18 2% $425m 2010 Duketon Regis Resources – addition of
Slide 17: Goldstrike Palmarejo
Franco-Nevada Goldstrike Major discoveries on royalty lands 91% Free Cash Flow Margins Gold Quarry >$670m in Capital for Further Deals >$33m 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: Third Quarter Record Results
Third Quarter Record Results % (US $ millions Q3 ‘10 Q3 ’09 Change except per share and %) Total Revenue(5) $52.2 $41.1 27% Net Income 18.0 12.3 46% Earnings per share $0.16 $0.11 45% Cash Flow from Operating Activities 40.7 41.2 (1%) Royalty Revenue(1) 49.0 36.4 35% Gold Royalty Revenue 38.2 25.5 5
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: 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 23: 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 24: 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 25: 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% 25
Slide 26: Appendix - Franco-Nevada Corporation
Appendix - 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 Opt
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