Franco-nevada Corporation · TSX:FNV
Franco-nevada — Investor Presentation (May 2012)
25 slides from Franco-nevada's investor presentation, May 2012
Slide 1: May 2012 Update
STATESN {ERICA 9995 PLATINUM | May 2012 Update
Slide 2: Cautionary Statement
Cautionary Statement Forward-Looking Statements This presentation may contain certain information that may constitute “forward looking information” and “forward-looking statements” within the meaning of applicable Canadian securities laws and United States Private Securities Litigation Reform Act 19
Slide 3: Dow vs. Gold
Dow vs. Gold 32 16 mic Scale) Gold (Logarithm 8 DOW/G 4 2 1 Gold price has more upside potential FNV 3
Slide 4: Franco-Nevada (FNV)
Franco‐Nevada (FNV) A gold focused royalty & stream company. Palmarejo Listed on the TSX & NYSE with a market capitalization it li ti off over $5 billion billi Goldsttrike Growth > 80% revenue growth in 2011 ~$1B $1B cashh andd no debt d b World class discoveries Yield 1.4% %y yield ed 25%
Slide 5: Business Model Benefits
Business Model Benefits Gold ETF FNV Operators Dividend Yield -0.4% >1% 0-2% Leverage to Gold Price 1 >1 >1 Exploration & Expansion upside 0% 100% 100% Reduced Exposure to: Capital costs costs* 0% 0% 100% Operating costs* 0% 0% 100% Environmental costs* 0% 0% 100% FNV provides yield and more upside
Slide 6: Outperforming other Gold Investments
Outperforming other Gold Investments % 320% FNV* 280% 240% 200% GOLD 160% 120% 80% S&P/TSX Global FNV IPO: Gold Index Dec 2007 40% 0% *27% compounded annual rate of return FNV and S&P/TSX Global Gold Index converted to USD. Chart to May 4, 2012 FNV 6
Slide 7: Gold Equities disconnected from Gold Price
Gold Equities disconnected from Gold Price Source: Morgan Stanley Notes: Gold index includes AngloGold, Barrick, Newmont, Goldcorp, Newcrest, Kinross, Yamana, Agnico, Eldorado, Buenaventura Notes: Streaming Companies index includes Franco-Nevada and Royal FNV 7
Slide 8: Our Portfolio
Our Portfolio Key Producing Advanced Exploration Assets* Assets* Assets* 43 25 139 G ld - Gold US ● Both B h organici andd ● Exploration E l i - Canada acquisition near optionality at no - Australia term growth cost to FNV - International PGMs Other Minerals Oil & Gas Over 200 mineral royalties and
Slide 9: Key Producing Assets
Key Producing Assets GOLD ASSETS PGMs U.S. Australia Stillwater Goldstrike Duketon Sudbury (3 mines) Gold Quarry Henty Pandora Marigold South Kalgoorlie Mesquite Bronzewing Other Hollister International Weyburn – oil Canada Tasiast Midale – oil Sudbury (3 mines) Palmarejo Edson – gas / ngl’s Golden
Slide 10: Q1 2012 Financial Results
Q1 2012 Financial Results (US $ millions except per share and % ) Q1 2012 Q1 2011 % Chg IFRS MEASURES Revenue $105.0 $73.1 44% Net Income 46.8 21.2 121% Net Earnings Per Share $0.33 $0.18 83% KEY NON IFRS MEASURES Precious Metals Revenue 93.1 62.6 49% 1 Adjusted EBITDA 85.4 58.4 46% 1 Adjusted EBITD
Slide 11: Q1 2012 Revenue Sources
Q1 2012 Revenue Sources By Country By Commodity Australia Other 4% 1% Other Africa US 11% 14% 23% PGMs 17% Mexico Gold 26% 72% Canada 32% 81% of Revenue from North America 89% Precious Metals FNV 11
Slide 12: Quarterly Revenue Growth – Q1s
Quarterly Revenue Growth – Q1s 120 $105.0 M 100 OTHER 44% PGM 80 $73.1 M s) ($ Millions 60 56% $46.9 M 40 $29.5 M 59% $27.5 M GOLD 7% 20 0 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 FNV 12
Slide 13: Scalable Business Model
Scalable Business Model 120 100 80 Revenue 60 Millions $) 40 (M 20 G&A ‐ Proceed taxes ‐20 Stream costs ‐40 Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 FNV 13
Slide 14: Our Growth Pipeline
Our Growth Pipeline Key Producing Advanced Exploration Assets* Assets* Assets* 43 25 139 G ld - Gold US ● Both B h organici andd ● Exploration E l i - Canada acquisition near optionality at no - Australia term growth cost to FNV - International PGMs Other Minerals Oil & Gas Over 200 mineral royaltie
Slide 15: Key Near-Term Growth Assets
Key Near‐Term Growth Assets Detour Lake - Ontario Detour (2% NSR royalty) Ramping up production in 2013 to 649 koz/yr* Tasiast (2% NSR royalty) Major expansion currently under feasibility S bik (2% NSR royalty) Subika lt ) Tasiast - Mauritania Royalty expected to start in 2013 Duketon (2% NSR royalt
Slide 16: Recent Acquisitions
Recent Acquisitions Gold Wheaton (KGHM; First Uranium) • Sudbury Basin, MWS and Ezulwini streams Canadian C di Malartic M l ti (Osisko (O i k Mining) Mi i ) • 1.5% gross royalty on portion Sudbury – Ontario Edikan (Perseus Mining) • 1 5% gross royalty 1.5% Phoenix Gold Project (Rubicon Minerals) • 1
Slide 17: Growing Reserves and Resources
Growing Reserves and Resources Total Resource Growth* Resource Growth per Share* 300 0% 220% Inf 250 M&I e (%) 0% 180% oz) s & Resources (mo growth per share P&P 200 0% 140% 150 0% 100% Resource g Reserves 100 0% 60% 50 0 0% 20% 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 P&P M&I (incl. P&P) T
Slide 18: Growing Revenues ($1,700/oz Au)
Growing Revenues ($1,700/oz Au) 500 2012 includes: • Full year of MWS and Sudbury 400 • End of Goldstrike waste stripping • Smaller asset startups, expansions and NPIs ons) 81% 300 US$ (Millio 2013 will add: • Detour • Subika 200 • Organic growth 46% Future excludes: 100 • Permitting projects: • New
Slide 19: Capital for Future Acquisitions
Capital for Future Acquisitions Capital Resources (Mar 31, 2012) (US$ Millions) Working Capital $986 Marketable Securities $54 Total Capital $1,040 More investment opportunities due to: Strong commodity environment G ld price Gold i volatility l tilit Tight equity and credit markets Broader focus on
Slide 20: Franco-Nevada is outperforming gold by:
Franco‐Nevada is outperforming gold by: Growth (>80% revenue growth in 2011) Profits and Yield (25% dividend increase in 2012) 320% Business model that minimizes inflationary cost risks FNV Participation in world class discoveries (Detour, Tasiast) 280% Strong balance sheet with ~$1B for further gro
Slide 21: Q & A
Q&A FNV 21
Slide 22: Growth in the Near-Term
Growth in the Near‐Term Category Asset Operator Royalty Startup1 Avg Prod1 New • Edikan • Perseus Mining • 1.5% NSR • Aug 2011 • 265,000 oz mines: • Garden Well • Regis Resources • 2% NSR • Sept 2012 • 180,000 oz • Canadian Malartic • Osisko Mining • 1.5% NSR* • Apr 2011 • 574,000 oz* • Red October
Slide 23: Non IFRS Measures
Non IFRS Measures Three m onths ended (Ex pressed in m illions ex cept per share am ounts) M ar 3 1 , 2 0 1 2 M ar 3 1 , 2 0 1 1 N et Incom e 46.8 21.2 Income tax expense 12 6 12.6 91 9.1 Finance costs 0.4 0.6 Finance income (2.2) (0.4) Depletion and depreciation 31.7 25.4 F ig exchange Foreign h g
Slide 24: Management & Directors
Management & Directors Management David Harquail President & CEO Sandip Rana Chief Financial Officer Jacqueline Jones Chief Legal Officer Geoff Waterman Chief Operating Officer Paul Brink SVP,, Business Development p Directors Pierre Lassonde Director, Chairman David Harquail Director, President & C
Slide 25: Franco-Nevada Corporation
Franco‐Nevada Corporation Capital Structure (as of May 7, 2012) Analyst Coverage Shares Outstanding (FNV on TSX & NYSE) 144.0m BMO Capital Markets David Haughton 2013 Warrants(1) (C$64.27 exercise price) 4.1m / BOA/Merrill Lynch y Mike Jalonen 2014 Warrants(1) (C$32.14 exercise price) 2.1m CIBC Capi