Franco-nevada Corporation · TSX:FNV
Franco-nevada — Investor Day (March 2015)
47 slides from Franco-nevada's investor day presentation, Mar 26, 2015
Slide 1: 2014 Results & Investor Day
FNV TSX/NYSE 2014 Results & Investor Day March 26, 2015
Slide 2: Cautionary Statement
Cautionary Statement 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 include, but are
Slide 3: Management Participants
Management Participants David Harquail Sandip Rana Paul Brink President & CEO CFO SVP Business Development Geoff Waterman Lloyd Hong Kerry COO CLO & Sparkes Corporate VP, Geology Secretary 3
Slide 4: Agenda
Agenda Overview of 2014 Results: Sandip Rana Business Development: Paul Brink Oil & Gas Update: Geoff Waterman Associated Gold Ounces & REUs: Kerry Sparkes Outlook and Q&A: David Harquail 4
Slide 5: Overview of 2014 Results
Overview of 2014 Results Sandip Rana – CFO 5
Slide 6: Delivering Growth in 2014
Delivering Growth in 2014 $500 $1,800 Record Revenues $450 Average Annual Gold Price ($/oz) $1,600 $442.4 $400 $427.0 $1,400 2014: +10.4% $411.2 Revenue (millions) $350 $400.9 $1,200 $300 2014 Gold Price: -10% $1,000 $250 $800 $200 $227.2 $600 CAGR2: +19.6% $150 $151.0 $155.1 $100 $400 $50 $200 $0 $
Slide 7: Record Corporate Activity in 2014
Record Corporate Activity in 2014 January Sabodala Stream $135 million February Fire Creek/Midas Royalties $35 million March Increased Dividend +11% April Cerro Moro Royalty $20 million August Bought Deal Financing $500 million August Karma Stream $75 million November Candelaria Stream $648 million
Slide 8: 2014 Performance vs Guidance
2014 Performance vs Guidance 2013 2014 2014 Results 2014 Results Results Guidance1 without with Candelaria Candelaria GEOs2 241,000 245 – 265,000 273,000 293,000 Oil & Gas Revenue $67 million $60-$70 million $74 million $74 million Exceeded guidance 1. Original March 19, 2014 guidance pre-Candelaria
Slide 9: GEOs Realized
GEOs1 Realized Gold Equivalent (000 ounces) 350 293.4 300 other 241.4 PGM 250 237.7 230.3 200 GOLD 156.2 150 100 2010 2011 2012 2013 2014 GEOs1 realized increased 21.5% year over year 1. Please see note 4 on slide 43 9
Slide 10: 2014 Financial Results
2014 Financial Results ($ millions except gold price, Q4 2014 Q4 2013 FY 2014 FY 2013 GEOs, per share and %) Gold Price ($/ounce) $1,200 $1,272 $1,266 $1,411 Gold Equivalent Ounces (GEOs)1 92,774 69,741 293,415 241,402 Revenue $123.0 $100.0 $442.4 $400.9 Adjusted EBITDA2 96.2 77.3 356.9 322.5 Adjust
Slide 11: 2014 Q4 Revenue Sources
2014 Q4 Revenue Sources By Commodity By Geography Other 3% Oil & Gas 9% Rest of US World 18% 20% PGMs 9% Canada Gold Latin 30% 79% America 32% 88% Precious Metals 80% from the Americas 11
Slide 12: Adjusted Net Income: 2013 to 2014
Adjusted Net Income1: 2013 to 2014 2.7 1.6 41.5 33.8 12.7 138.3 137.5 1. Please see note 2 on slide 43 12
Slide 13: Impairments Recorded
Impairments Recorded MWS: $26.6 million • This stream was capped as part of agreement to transfer asset from First Uranium to AngloGold Ashanti • Benefit of blending both AngloGold dumps with First Uranium • More dependable producer in stronger hands Exploration Assets: $4.5 million • Determined six
Slide 14: A High Margin and Scalable Business
A High Margin and Scalable Business $925/oz 500 79.2% 79.6% 81.5% 80.4% 80.7% Margin1 400 300 Revenue 200 Millions $ $1,569/oz $1,669/oz $1,411/oz $1,266/oz Au price2 $1,225/oz 100 - Fixed Costs3 Variable Costs4 -100 -200 2010 2011 2012 2013 2014 1. Please see note 3 on slide 43 2. Average based on
Slide 15: Business Development
Business Development Paul Brink – SVP, Business Development 15
Slide 16: Our Business Principles
Our Business Principles Goldstrike Candelaria Duketon Maximize Minimize Exploration upside Cost exposure Security of tenure Potential for encroachments Management time on new deals Involvement in operations Long term optionality 16
Slide 17: New Investment Opportunities
New Investment Opportunities Cerro Moro – Yamana Gold Since 1985 3rd Party Royalties Brucejack – Pretium Resources Hardrock – Premier Gold Mines Since Cobre Panama - First Quantum 2008 By-product Streams Palmarejo - Coeur Mining Stibnite Gold – Midas Gold Since Gold Royalty/Streams Kirkland Lake – K
Slide 18: Ring of Fire Royalties
Ring of Fire Royalties Franco-Nevada is providing Noront Resources Ltd. with1: • $22.5 million loan (5 year, 7%, secured on Cliffs’ ROF lands) • $3.5 million for royalties Royalties acquired are: • 3% on Black Thor chromite deposit • 2% on all Noront ROF properties except Eagle’s Nest ~600 km2 • 2%
Slide 19: Ring of Fire Royalties
Ring of Fire Royalties Noront properties * * New royalties covering >1,000 km2 * Royalties do not cover the Eagle’s Nest deposit or certain JV ground 19
Slide 20: Available Capital
Available Capital Capital Resources Working Capital1 $ 678 million Marketable Securities1 62 million Credit Facility1 (undrawn) 500 million Cobre Panama commitments (2015) (~325 million) Other commitments (~75 million) Total Available Capital $ >800 million Liquid with NO DEBT 1. As at December 31,
Slide 21: Oil & Gas
Oil & Gas Geoff Waterman – COO 21
Slide 22: Oil & Gas Revenue vs Oil Price
Oil & Gas Revenue vs Oil Price $80 $120 $70 $73.9 $100 WTI Oil Price ($US/Barrel) $60 $67.0 Addition of Revenue (millions) Weyburn NRI $80 $50 $40 $60 $40.9 $30 $35.8 $34.9 $40 $20 $20 $10 $0 $0 2010 2011 2012 2013 2014 2015* Revenue ($US) WTI Oil Price Oil & Gas 2015 revenue guidance: $20 – 30 mill
Slide 23: 2015 Expected Revenue Sources
2015 Expected Revenue Sources (@$50 WTI) Other 1% Oil & Gas 6% Assumes: • Midpoint of GEO guidance (see slide 35) • $1,200 per ounce gold • Midpoint of Oil & Gas guidance (previous slide) Precious Metals 93% Opportunity to add new O&G royalty assets 23
Slide 24: Associated Gold Ounces & REUs
Associated Gold Ounces & REUs Kerry Sparkes – VP, Geology 24
Slide 25: 2015 Asset Handbook
2015 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 Today: Website or Hard Copy 25
Slide 26: Gold Reserves Associated with FNV Assets
Gold Reserves Associated with FNV Assets Seven straight years of increased gold reserves 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 20-
Slide 27: Gold Resources Associated with FNV Assets
Gold Resources Associated with FNV Assets Reserve growth at expense of resources in 2014 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 20-
Slide 28: Associated Ounces Notable Changes
Associated Ounces Notable Changes Candelaria New Assets: Karma Dublin Gulch (Eagle) Midas/Fire Creek Reserve & Resource Growth: Hardrock Cooke 4 Stibnite Gold Resources converted to Reserves: Tasiast Marigold Reserves converted to Resources: Canadian Malartic Bald Mountain Goldstrike Mesquite Reserv
Slide 29: 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 30: REUs Comparison Year over Year
REUs Comparison Year over Year 12 +4% +116% +2% 10 M&I M&I M&I 8 REUs (Moz) 6 +71% -14% 4 M&I -12% P&P P&P P&P Inferred Inferred Inferred Inferred 2 P&P 0 2011 2012 2013 2014 Overall growth in P&P and M&I REUs Notes: For further information on REUs as well as how they are calculated, please refer to
Slide 31: Outlook
Outlook David Harquail, President & CEO 31
Slide 32: Cobre Panama is Advancing
Cobre Panama is Advancing Port PP Foundation & conc. warehouse Power plant man camp Botija quarry Expect $300-$350 million of funding in 2015 32
Slide 33: Cobre Panama Mill and Stockpile Reclaim
Cobre Panama Mill and Stockpile Reclaim Looking south Aerial view Looking NW Looking west 33
Slide 34: 2015 Expected Changes vs 2014
2015 Expected Changes vs 2014 Candelaria: • 60,000 GEOs Oil & Gas • Lower oil price • Hemlo (stronger NPI) • Sabodala (full year) Other upsides: • Goldstrike (less capex) • Detour (continued ramp up) • Subika (mine sequence & Ghana power) Other downsides: • Peculiar Knob (iron ore mine closure) • St
Slide 35: 2015 Guidance
2015 Guidance Expected GEOs1: 335,000 – 355,000 • 18% increase versus 2014 (assuming midpoint of guidance) Oil & Gas revenue: $20 to $30 million2 • $49 million decrease versus 2014 (assuming midpoint of guidance) Begin funding of Cobre Panama: • Estimate $300 - $350 million in 2015 1 Assuming: $1,20
Slide 36: Five Year Outlook (2019)
Five Year Outlook (2019) Expect GEOs1: 385,000 – 415,000 • Cobre Panama producing based on First Quantum’s projections • Candelaria delivering 60,000 GEOs/annum • Guadalupe production at Palmarejo (decrease from minimum 50,000 oz/year) • New production from Phoenix, Cerro Moro and Karma • No expansi
Slide 37: Other Portfolio Potential
Other Portfolio Potential • TCM ramp-up Goldstrike • Supplementary ore from South Arturo Candelaria • Lundin new mine plan Subika / Ahafo • Mill expansion and underground decisions Rosemont (HudBay) • Final permits Lakeshore Gold • New 144 GAP zone discovery Kirkland Lake Gold • Production growth &
Slide 38: Progressive Dividend
Progressive Dividend Dividends Dividends & DRIP Paid (US$ per share) (US$ millions) 0.90 120 0.80 100 0.70 0.60 80 US$ / share US$ millions 0.50 60 0.40 0.30 40 0.20 20 0.10 0.00 0 2008 2009 2010 2011 2012 2013 2014 2008 2009 2010 2011 2012 2013 2014 5% increase to dividend in Q2 2015 Eighth consecu
Slide 39: Franco-Nevada since IPO
Franco-Nevada since IPO Revenue Adjusted Net Income1 Producing Mineral (US$ millions) (US$ per share) Assets3 Working Capital2 Market Capitalization3 Dividends (US$ millions) (US$ billions) (US$ per share) 1. Please see note 2 on slide 43 2. Please see note 5 on slide 43 3. As at December 31 39
Slide 40: What Differentiates Franco-Nevada?
What Differentiates Franco-Nevada? OUR BOARD OUR EXECUTIVES • Highly experienced in resource • Focused only on FNV, no other boards investments • Lower G&A than comparables • Owners with >$200 million invested • Active with deals and new innovations SETTING THE BAR OUR BUSINESS MODEL OUR PORTFOLIO •
Slide 41: Franco-Nevada Provides:
Franco-Nevada Provides: Gold exposure at a discount 300% Growth – organic and acquisitions FNV 250% Dividends vs. ETF fees 200% 150% 100% GOLD 50% FNV IPO: Dec 2007 0% S&P/TSX Global -50% Gold Index -100% 2008 2009 2010 2011 2012 2013 2014 2015 Why own a gold ETF? 1. At March 23, 2015; FNV and S&P/T
Slide 42: Q&A Cautionary Note Regarding Mineral Reserve and Resource Estimates
Q&A Cautionary Note Regarding Mineral 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, all mineral resource a
Slide 43: Notes
Notes 1. Adjusted EBITDA and Adjusted EBITDA per share are non-IFRS financial measures, which excludes the following from net income and net income per share: income tax expense/recovery; finance expenses and finance income; foreign exchange gains/losses and other income/expenses; gains/losses on th
Slide 44: 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) 2014 2013 2014 2013 Net Income (Loss) $ 1.2 $ (80.6) $ 106.7 $ 11.7 Income tax expense 10.2 (17.1) 50.3 22.3 Finance costs 0.4 0.6 1.6 1.9 Finance income (0
Slide 45: 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) 2014 2013 2014 2013 Net Income (Loss) $ 1.2 $ (80.6) $ 106.7 $ 11.7 Foreign exchange (gains)/losses and other (Income)/expenses, net of income tax 1.1 0.5 1
Slide 46: Appendix – Income Taxes
Appendix – Income Taxes Depletion and balances as at December 31, 2014: Applicable statutory tax rates as at December 31, 2014: CANADA Canadian combined income tax rates (Canadian Oil & Gas, Canadian Mining Assets) • Canadian Oil & Gas: 10% declining balance ($419.7M CAD) • 2015 & thereafter – 24.9%
Slide 47: Appendix - Book Value at Dec 31, 2014
Appendix - Book Value at Dec 31, 2014 GOLD – UNITED STATES PRODUCING ADVANCED & PGMs PRODUCING ADVANCED & EXPLORATION EXPLORATION Goldstrike $113.1 M $0.0 M Stillwater $158.9 M $0.0 M Gold Quarry 58.2 0.0 Pandora 13.7 0.0 Marigold 19.7 0.0 OTHER MINERALS Bald Mountain 25.9 7.5 Mt. Keith 13.3 0.0 Oth