Franco-nevada Corporation · TSX:FNV
Franco-nevada — Investor Day (March 2014)
40 slides from Franco-nevada's investor day presentation, Mar 20, 2014
Slide 1: 2013 Results & Investor Day
2013 Results & Investor Day March 20 20, 2014
Slide 2: Cautionary Statement Forward-Looking Statements
Cautionary Statement Forward-Looking Forward Looking Statements This presentation contains “forward looking information” and “forward looking statements” within the meaning of applicable Canadian securities laws and the U.S. Private Securities Litigation Reform Act of 1995, respectively, which may i
Slide 3: Management Participants
Management Participants David Harquail Sandip Rana Paul Brink President & CEO CFO SVP Business Development Geoff Waterman Lloyd Hong Phil Wilson COO CLO & VP Technical Corporate Secretary Sec eta y 3
Slide 4: Agenda
Agenda Overview of 2013 Results: Sandip Rana Business Model & Development: Paul Brink Associated Gold Ounces & REUs: Phil Wilson Outlook and Q&A: David Harquail 4
Slide 5: Overview of 2013 Results
Overview of 2013 Results Sandip Rana – CFO
Slide 6: 2013 Performance
2013 Performance 2012 2013 2013 Results Guidance Results GEOs1 230,000 215 - 235,000 241,000 Oil & Gas Revenue $41 million $55-$65 million $67 million Surpassed GEOs Guidance p Surpassed Oil & Gas Revenue Guidance 1 GEOs include our gold, platinum, palladium and other mineral assets. GEOs are estima
Slide 7: 2013 Financial Results
2013 Financial Results (US $ millions except Q4 2013 Q4 2012 FY 2013 FY 2012 GEOs, per share and %) IFRS MEASURES Revenue $100 0 $100.0 $114 1 $114.1 $400 9 $400.9 $427 0 $427.0 Net Income (Loss) (80.6) (33.1) 11.7 102.6 Net Income (Loss) per share ($0.55) ($0.23) $0.08 $0.72 KEY NON-IFRS NON IFRS M
Slide 8: 2013 GEOs Summary
2013 GEOs Summary FY 2013 FY 2012 Change Gold 192 297 192,297 191 610 191,610 PGM 40,007 35,826 Oth Minerals Other Mi l 9 098 9,098 2 816 2,816 TOTAL GEOs 241,402 230,252 +4.8% Exclude NPIs GEOs 232 503 232,503 205 505 205,505 +13 1% +13.1% NPIs Highly Levered to Gold Price 8
Slide 9: 2013 Revenue Sources by Commodity and Geography
2013 Revenue Sources By Commodity By Geography Oil & Gas Rest of 17% US Other World 19% Minerals 18% 3% Australia 5% PGMs 13% Canada Gold Mexico 36% 67% 22% 80% Precious Metals 77% from North America 9
Slide 10: Adjusted Net Income: 2012 to 2013
Adjusted Net Income1: 2012 to 2013 171.0 4.4 0.8 138.3 26.1 66 6.6 2.6 2.6 1. Please see definition on Slide 7 10
Slide 11: Impairments Recorded
Impairments Recorded Sudbury McCreedy: $107.9 million • In 2011 2011, changed focus to mining non-stream non stream nickel ores; stopped mining PM zone • In early 2014, KGHM ceased mining of nickel ores; still mining 700 zone Falcondo Nickel: $24.2 million • Swing producer that Glencore has placed o
Slide 12: Amended Credit Facility
Amended Credit Facility Amended $500 Million Credit Facility • E t d d tto March Extended M h 2019 • Unsecured • Lower pricing vs previous facility Additional $250 Million Accordion 12
Slide 13: Business Model & Development
Business Model & Development Paul Brink – SVP, Business Development
Slide 14: Our Business Principles
Our Business Principles Maximize Minimize Exploration upside Cost exposures Security of tenure Potential for encroachments Mgm’t time on new deals Involvement in operations L Long term t optionality ti lit 14
Slide 15: New Acquisition: Cerro Moro (Yamana)
New Acquisition: Cerro Moro1 (Yamana) Agreed to acquire from AngloGold Ashanti a 2% NSR on Yamana’s Cerro Moro high grade gold & silver project for $23.5 million at official exchange rates Yamana’s priority development asset in established mining province Updated p feasibility y expected p in 2014:
Slide 16: 3rd Avenue for Growth
3rd Avenue for Growth Cerro Moro – Yamana Gold 3rd Party 1 Royalties Brucejack – Pretium Resources Hardrock – Premier Gold Mines By-product Cobre Panama - First Quantum 2 Streams Palmarejo - Coeur Mining Golden Meadows – Midas Gold Gold Kirkland Lake - Kirkland Lake Gold 3 Royalty/Stream Sabodala/OJ
Slide 17: Gold Royalty/Stream Financings
Gold Royalty/Stream Financings Attractive to gold development companies • Previously untapped financing opportunities Structure benefits both parties: • Fixed payments – lower startup risk for stream company • Reduced royalty/stream – greater gold optionality and lower long term burden for operator
Slide 18: Klondex Mines: Fire Creek & Midas
Klondex Mines: Fire Creek & Midas $35 million helps fund the combination of Midas infrastructure with Fire Creek asset Transaction terms: • Fixed gold deliveries of 38,250 oz over 5 years • Trailing 2.5% NSR on all minerals mined from Midas and Fire Creek Proven mill with 15 year history of Au & Ag
Slide 19: Teranga Gold: Sabodala & OJVG
Teranga Gold: Sabodala & OJVG $135 million helps funds combination of Sabodala mine/mill with OJVG resources Transaction terms: • 22,500 oz/a from 2014-2019 • 6% gold stream thereafter, • Ongoing payments : 20% of spot gold 2014 guidance: 220-240 koz at AISC of SABODALA MILL $800-$875/oz LOM plan th
Slide 20: Teranga Gold: Prolific District
Teranga Gold: Prolific District
Slide 21: A Winning Transaction for Operator
A Winning Transaction for Operator Performance Since Announcement1 140% 120% +125.0% 100% 80% 60% 40% 20% +33.6% 0% S&P/TSX Global Gold Index Teranga Gold Teranga g has Significantly g y Outperformed p 1 Performance from December 11, 2013 till March 17, 2014 21
Slide 22: Available Capital: No Debt
Available Capital Capital Resources Working Capital1 $ 861 million Marketable Securities1 30 million Credit Facility1 (undrawn) 500 million Acquisitions (Teranga, Klondex, Cerro Moro2) (194 million) Total Available Capital $ ~1.2 billion NO DEBT M More I Investment t t Opportunities O t iti DueD to:
Slide 23: Associated Gold Ounces & REUs
Associated Gold Ounces & REUs Phil Wilson – VP, Technical
Slide 24: Gold Ounces Associated with FNV Assets
Gold Ounces Associated with FNV Assets Continued Growth Notes: For a breakdown of Mineral Reserves and Resources by category and additional information relating to Mineral Reserves and Resources, calculated in accordance with National Instrument 43-101, see pages 21-27 of Franco-Nevada’s 2013 AIF. R
Slide 25: Changes in Associated Gold Ounces
Changes in Associated Gold Ounces P&P M&I Inferred (% ∆) (% ∆) (% ∆) Gold Price -9.4% +5.4% -2.8% New Acquisitions +11.7% +23.4% +24.8% Other Impacts -0.6% +5.8% -34.1% TOTAL +1.7% +34.6% -12.1% Overall Associated Ounces Increased Due to: • Positive impact from acquisitions • Conversion of explorati
Slide 26: Associated Gold Ounces per FNV Share
Associated Gold Ounces per FNV Share Continued Growth Notes: For a breakdown of Mineral Reserves and Resources by category and additional information relating to Mineral Reserves and Resources, calculated in accordance with National Instrument 43-101, see pages 21-27 of Franco-Nevada’s 2013 AIF. Ref
Slide 27: Royalty Equivalent Units (REUs)
Royalty Equivalent Units (REUs) Rationale: • Better representation of value for royalty and stream company • Reflects economics between NSRs, NPIs and Streams Limitations: • Requires management guidance regarding: o Ounces on royalty and stream claims vs public disclosure o NPI cost economics for di
Slide 28: REUs Comparison Year over Year
REUs Comparison Year over Year 12 +116% +2% 10 M&I M&I 8 oz) REUs (mo 6 +71% -14% &I 4 &P M& P&P P P& Inferred Inferred nferred 2 P&P In 0 2011 2012 2013 2013 REUs Comparable to Last Year Notes: For further information on REUs as well as how they are calculated, please refer to our 2014 Asset Handbo
Slide 29: Outlook
Outlook David Harquail, President & CEO
Slide 30: 2014 Asset Handbook
2014 Asset Handbook Includes: • Update on all our Producing & Advanced Assets • Details of ounces associated with each asset • Details of our REUs estimates • Oil & Gas reserves • Other corporate information Available A ailable Today: Toda Website or Hard Copy
Slide 31: 11% Quarterly Dividend Increase
11% Quarterly Dividend Increase Per Share Total Paid 0.90 140 0.80 120 0.70 100 0.60 US$ / share ons 80 US$ millio 0 50 0.50 0.40 60 0.30 40 0.20 20 0.10 0.00 0 2008 2009 2010 2011 2012 2013 2014 E 2008 2009 2010 2011 2012 2013 2014 E Will Increase to $0.20 per Quarter in Q2 2014 S Seventh th Consec
Slide 32: 2014 Expected Changes vs 2013
2014 Expected Changes vs 2013 Sabodala (22,500 fixed ounces) New Fire Creek / Midas (6,750 fixed ounces) Acquisitions q Kirkland Lake Detour ((Full yyear ramp-up) p p) Goldstrike (NPI Recovery) Duketon (Full year Rosemont production) Palmarejo (Assuming 50,000 ounces to FNV) G ld Quarry Gold Q (A (A
Slide 33: 2014 Guidance
2014 Guidance Expect gold equivalent royalty & stream ounces of: 245,000 245 000 – 265,000 265 000 GEOs1 Oil & Gas revenue of: $60 to $70 million2 Begin funding of Cobre Panama ($200 million est.) 1 Assuming: $1,300/oz Au; $1,400/oz Pt; $725/oz Pd 2 Assuming $95/bbl WTI oil with higher discounts for
Slide 34: Five Year Outlook
Five Year Outlook Expect gold equivalent royalty & stream ounces of: 300,000 300 000 – 325,000 325 000 GEOs1 • Commissioning of Cobre Panama (50% of capacity in 2018) • Construction of Rosemont, Rosemont Phoenix and Agi Dagi • No expansion at Tasiast • Lower production from Palmarejo and Goldstrike
Slide 35: Franco-Nevada Provides: Why Own a Gold ETF?
Franco-Nevada Provides: Gold exposure at a discount Growth – organic and acquisitions 300% Yield – pay dividends vs. ETF fees 250% FNV 200% Why Own a 150% Gold ETF? 100% GOLD 50% 0% FNV IPO: S&P/TSX Global -50% Dec 2007 Gold Index -100% 2008 2009 2010 2011 2012 2013 2014 1 At March 18, 2014; FNV and
Slide 36: Cautionary Note Regarding Mineral and Oil and Gas Reserve and Resource Estimates
Q&A Cautionary y Note Regarding g g Mineral and Oil and Gas Reserve and Resource Estimates This presentation has been prepared in accordance with the requirements of Canadian securities laws in effect in Canada, which differ from the requirements of U.S. securities laws. Unless otherwise indicated,
Slide 37: Appendix – Non IFRS Measures
Appendix – Non IFRS Measures Three months ended Twelve months ended December 31, December 31, (expressed in millions, except per share amounts) 2013 2012 2013 2012 Net Income (Loss) $ (80.6) $ (33.1) $ 11.7 $ 102.6 Income tax (recovery) expense (17.1) 10.9 22.3 52.3 Finance costs 0.6 0.2 1.9 1.1 Fin
Slide 38: Appendix – Non IFRS Measures
Appendix – Non IFRS Measures Three months ended Twelve months ended December 31, December 31, (expressed in millions, except per share amounts) 2013 2012 2013 2012 Net Income (Loss) $ (80.6) $ (33.1) $ 11.7 $ 102.6 Foreign exchange (gain) loss, loss net of income tax 05 0.5 (0 5) (0.5) 23 2.3 (0 1)
Slide 39: Appendix – Income Taxes
Appendix – Income Taxes Depletion and balances at December 31, 2013: Applicable statutory tax rates as at December 31, 2013: CANADA Canadian combined income tax rates (Canadian Oil & Gas, Canadian Mining Assets) • Canadian Oil & Gas: 10% declining balance ($466.3M CAD) • 2014 & thereafter – 24.38% •
Slide 40: Appendix - Book Value at Dec 31, 2013
Appendix - Book Value at Dec 31, 2013 GOLD – UNITED STATES PRODUCING ADVANCED & PGM PGMs PRODUCING ADVANCED & EXPLORATION EXPLORATION Goldstrike $123.8 M $0.0 M Stillwater $164.4 M $0.0 M Gold Quarry 63.8 0.0 Pandora 14.9 0.0 Marigold 20 8 20.8 00 0.0 OTHER MINERALS Bald Mountain 35.8 0.0 Mt. Keith