Franco-nevada Corporation · TSX:FNV
Franco-nevada — Q3 2009 Earnings Presentation
18 slides from Franco-nevada's earnings presentation, Nov 10, 2009
Slide 1: Q3 2009 Conference Call
Q3 2009 Conference Call - Q3 financial results - Dividend declaration - Near term growth outlook - New Royalty Acquisitions November 10, 2009 David Harquail - CEO Alex Morrison - CFO
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: Q3/2009 Highlights
Q3/2009 Highlights Q3 Q2 Q3 US$ 000’s except per share and %’s 2009 2009 2008 Royalty Revenue(1) $ 36,409 $ 32,887 $ 39,937 Gold Royalty Revenue 25,500 23,629 19,971 Total revenue(3) 41,090 45,079 40,023 Net income 12,343 25,089 9,893 Basic earnings per share $ 0.11 $ 0.25 $ 0.10 Free Cash Flow(2) $
Slide 4: Royalty Revenue and Free Cash Flow by Quarter
Key Themes Royalty Revenue(1) Free Cash Flow(2) By Quarter By Quarter $40.0 $40.0 $36.4 $35.0 $35.0 89% $32.9 $32.5 $30.0 $30.0 85% $29.2 $27.9 85% $25.0 $25.0 Other $24.9 Millions Millions $20.0 $20.0 Royalty Revenue (1) Free Cash Flow (2) $15.0 $15.0 $10.0 $10.0 Gold $5.0 $5.0 $0.0 $0.0 Q1/09 Q2/0
Slide 5: Royalty Revenue: Growing gold and precious metals contribution
Royalty Revenue Growing gold and precious metals contribution 45 40 35 Oil & Gas 30 Base Metals & Other ($ millions) 25 PGM Gold 20 15 80% 77% gold & PGMs as % 56% of total Royalty 55% 55% 77% 10 Revenue 61% 5 0 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Gold revenues have doubled since
Slide 6: Royalty Revenue Q2/09 to Q3/09
Royalty Revenue(1) Q2/09 to Q3/09 (000’s) 1,191 847 1,654 4,994 36,409 3,050 32,887 2,114 (1) Royalty Revenue is defined by the Company as cash received or receivable from operating royalty assets earned during the period. 6
Slide 7: Net Income Q2/09 to Q3/09
Net Income Q2/09 to Q3/09 (000’s) 1,700 1,654 2,432 2,786 3,096 3,251 3,126 25,089 12,343 18,347 7
Slide 8: Dividend Declaration
Dividend Declaration Declared a C$0.14 per share semi-annual dividend payable on December 18, 2009 to shareholders of record on December 4, 2009 - 16.7% higher in C$ terms than December, 2008 dividend - ~33% higher in US$ terms than December ,2008 dividend - annualized dividend payout of US$30m at c
Slide 9: Near-term Growth
Near-term Growth Current producers New in 2010-11 Near term 2012+ Longer term Goldstrike Holloway-Hislop Detour Pinson Palmarejo* Hollister Hemlo NPI Arturo Gold Quarry* Hemlo NSR Falcondo nickel Kirkland Lake Stillwater Tasiast Pandora platinum Arctic Gas Marigold Holt Rosemont >145 other Robinson
Slide 10: Gold Royalty Growth - Near Term
Gold Royalty Growth - Near Term Annual Incremental Royalty Potential c Project Operator Royaltyd @ $1,000 gold Palmarejo Coeur d’Alene 50% stream $15-19m eg Holloway–Hislop St Andrew Gold 4-5% NSR 3-4m e 2010 Hollister Great Basin Gold 3-5% NSR 3-5m e Hemlo NSR Barrick Gold 3% NSR 1-2m f $22-30m Tas
Slide 11: Gold Royalty Growth - Near Term
Gold Royalty Growth - Near Term Existing Gold-Only New Incremental Gold- Royalty Revenue Only Royalty Revenue(2) 120 Not Shown $100m • Any contribution 100 from >130 other longer term gold $52-76m royalties 80 $71m • PGM revenues 60 • Co-product base $32-43m metal revenues 40 $22-30m 20 0 Near term
Slide 12: Added Commodity Opportunity
Added Commodity Opportunity 30 Not Shown • >20 non-producing 25 other royalties • Stand-by assets such as Falcondo 20 • Undeveloped O&G properties ($ millions) 15 Potential • Arctic Gas 10 Oil & Gas 5 Base Metals & Other PGM 0 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Potential for $40
Slide 13: Added Growth Potential
Added Growth Potential Capital Resources @ September 30, 2009 US$ Millions Working Capital $559 Marketable securities $59 Available Credit Facility $150 Total Available Capital $768 No debt or hedges and limited capital obligations Future acquisitions prefunded for further growth 13
Slide 14: New Royalties – Ahafo South, Ghana
New Royalties – Ahafo South, Ghana $58 million acquisition of Ahafo South Royalty Mill complex Source: Newmont November, 2009 presentation Royalty Details Source: Moydow – 2% NSR royalty on a portion of Newmont’s Ahafo South Mine in Ghana – royalty applies after 1.2 million ounces of production – 85
Slide 15: New Royalties – Ahafo, Ghana
New Royalties – Ahafo, Ghana Ahafo South Mine – reserves of 6.1 million ounces at Ahafo South as at Dec 31, 2008 – over 50% of production to date has come from the royalty property – 520,800 ounces of gold sold in 2008 at a cost of $408/oz – Newmont guidance for 2009 is 500-525 koz Subika expansion
Slide 16: New Royalties - Mt Keith, Australia
New Royalties - Mt Keith, Australia AUD$20 million acquisition of Mt Keith & Kingston Royalties Royalty Details – 0.375% gross royalty on all nickel produced from +200km2 of highly prospective greenstone in W. Australia – Royalties cover BHP’s producing Mt Keith nickel mine Mt Keith Mine – Australia
Slide 17: Franco-Nevada Attributes
Franco-Nevada Attributes Leading gold royalty company – Highest margins in business – Generates free cash flow in all likely scenarios – Strongest asset base in U.S. and Canada – Growing and increasingly diversified gold revenue Capital available for additional growth – >$600m in cash & marketable i
Slide 18: Appendix: Adjusted Net Income
Appendix: Adjusted Net Income 3 Months Ended 9 Months Ended September 30 September 30 US$ 000’s except per share and %’s 2009 2008 2009 2008 Net income $ 12,343 $ 9,893 $ 41,229 $ 24,970 Impairment of royalty assets, net of income tax - - 206 - Foreign exchange loss (gain), net of income tax 307 66