Franco-nevada Corporation · TSX:FNV
Franco-nevada — Merger or Acquisition (December 2010)
24 slides from Franco-nevada's merger presentation, December 2010
Slide 1: Growing A Gold Focused Royalty Company: The Gold Wheaton Transaction
Growing A Gold Focused Royalty Company The Gold Wheaton Transaction December 2010 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 + Gold Wheaton: Compelling Combination
Franco-Nevada + Gold Wheaton: Compelling Combination Accelerates cash flow generation Accretive on all per share metrics to Franco-Nevada shareholders Premium offer provides immediate value-creation and risk diversification for Gold Wheaton shareholders Logical combination that solidifies Franco-Nev
Slide 4: Gold Wheaton Transaction Summary
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 60% in stock
Slide 5: Gold Wheaton: Value, Diversification and Growth
Gold Wheaton: Value, Diversification and Growth Value creation: Premium of 23% to the 20-day VWAP Continued participation in upside of the combined company and retained exposure to precious metals royalties through share ownership in Franco-Nevada Ownership in the largest gold-focused royalty compan
Slide 6: Franco-Nevada: Increased Leverage to Precious Metals
Franco-Nevada: Increased Leverage to Precious Metals Enhanced 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 contribution
Slide 7: Contribution Analysis
Contribution Analysis Achieve an approximate 50% increase in 2011 operating cash flow for only a 25% increase in Enterprise Value * Based on broker estimates 7
Slide 8: Potential Precious Metal Royalty Growth
Potential Precious Metal Royalty Growth $30‐$40m O&G & other revenues Up to ~$250m Incremental precious metal revenue* Gold Wheaton adds ~$100 million in precious metal Net Royalty Revenue in 2011E * Note: 2010E represents management estimate of additional gold revenue in 2010 at current gold prices
Slide 9: Increased Diversification
Increased Diversification Pro‐forma NPV Breakdown Pro‐forma NPV Breakdown Contributes two of the top five assets Increases precious metal contribution from 81% to 86% No asset greater than 15% by value Increases precious metal value Source: Broker consensus estimates 9
Slide 10: Gold Wheaton Assets - Sudbury
Gold Wheaton Assets - Sudbury Attributable Production (k Au Eq. oz) Operator: Quadra FNX Location: Sudbury, Canada 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 Months to Sep 2010): $31 million Description: Source:
Slide 11: Gold Wheaton Assets – Mine Waste Solutions (MWS)
Gold Wheaton Assets – Mine Waste Solutions (MWS) Attributable Production (k Au oz) Operator: First Uranium Location: South Africa Royalty: 25% of Au produced above $400/oz Purchased by GLW: US$125 million in November, 2008 Net Revenue (9 Months to Sep 2010): $12 million Mine Life: 15 years Source: F
Slide 12: Gold Wheaton Assets - Ezulwini
Gold Wheaton Assets - Ezulwini Attributable Production (k Au oz) Operator: First Uranium Location: South Africa Royalty: 7% of Au produced above $400/oz Au Eq Purchased by GLW: US$50 million in November, 2009 Net Revenue (9 Months to Sep 2010): $10 million Mine life: 20 years Source: First Uranium D
Slide 13: Strong Platform for Further Growth
Strong Platform for Further Growth Pre-Transaction Post-Transaction (September 30, 2010) (est. at closing) Cash US$610 million US$170 million (1) Debt None None (2) Revolver Available US$175 million US$175 million Total Available US$785 million US$345 million Capital Franco‐Nevada maintains ~$345 mi
Slide 14: Gold Wheaton catalyst for re-rating
Franco-Nevada Gold Wheaton catalyst for re-rating Goldstrike Major discoveries on royalty lands >90% Free Cash Flow Margins Gold Quarry >$340m in Capital for Further Deals >$33m of Annual Dividends Palmarejo Track Record of Value Accretion Going from strength to strength 14
Slide 15: 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 $3.8B in market cap* 1.00 S&P / TSX 0.50 0.00
Slide 16: Franco-Nevada: more leverage than a gold ETF, less risk than an operator
Franco-Nevada A gold focused royalty company generating growing cash flow from a diversified portfolio of quality assets mostly in North America. Gold ETF Royalties Operators Yield 0% ~1% 0-1% Leverage to Gold Price 1 >1 >1 Exploration & Expansion 0% 100% 100% Upside Exposure to Opex, Capex & 0% 0%
Slide 17: Growing Pipeline of Mineral Royalties
Growing Pipeline of Mineral Royalties Prosperity Perama Hill Tasiast Goldfields Detour Lake Lounge Lizard Subika Gurupi Hemlo Dee Ity Pinson Rosemont Kirkland Lake Admiral Hill Bronzewing Duketon Holt McDermott >152 other Musselwhite exploration assets others… 114 oil & gas royalties and 184 undevel
Slide 18: Quality Operators
Quality Operators: Core Operators: Up and Comers: Goldstrike Palmarejo Bald Mountain Hemlo Mesquite Cerro San Pedro Gold Quarry Subika Holloway Hislop Marigold Holt Musselwhite Stillwater Detour Lake East Boulder Duketon Tasiast Garden Well Goldstrike ‐ Barrick Marigold ‐ Goldcorp Tasiast ‐ Kinross
Slide 19: Secure & Diverse Revenue
Secure & Diverse Revenue* By Country By Royalty 95% of revenue from North America * Royalty Revenue(1) - 9 Months to September 30, 2010 19
Slide 20: Royalty Revenue by Composition
Royalty Revenue(1) by Composition 60 Guidance for strong Q4 50 40 ($ millions) Oil + Gas 30 & Other 20 PGM 83% Precious Metals 10 Gold 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 21: A Long Life Portfolio with Growing Value
A Long Life Portfolio with Growing Value 21
Slide 22: Major Growth: Tasiast Mine 2% NSR
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 23: Major Growth: Detour Lake 2% NSR
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 24: Franco-Nevada Corporation
Franco-Nevada Corporation Capital Structure(2) Analyst Coverage Shares Outstanding 114.48m BMO Capital Markets David Haughton Warrants @ C$32/sh March 2012 5.75m BOA/Merrill Lynch Mike Jalonen CIBC Capital Markets Cosmos Chiu Warrants @ C$75/sh June 2017 5.75m Credit Suisse Anita Soni Options (avg C
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