Franco-nevada Corporation · TSX:FNV
Franco-nevada — Investor Presentation (February 2011)
28 slides from Franco-nevada's investor presentation, February 2011
Slide 1: Growing A Gold Focused Royalty Company
Growing g A Gold Focused Royalty y y Company p y February, 2011 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: Dow vs Gold: Financial vs hard assets
Dow vs Gold: 45 32 40 35 16 30 DOW/Gold Logarithmic Scale 25 8 20 4 15 10 2 Arithmetic Scale 5 1 0 DOW to GOLD DOW to Gold_Monthly Financial vs hard assets 3
Slide 4: Franco-Nevada
Franco-Nevada A gold focused royalty company generating growing cash flow and dividends from a diversified portfolio of quality assets Gold ETF Franco‐Nevada 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% 100% En
Slide 5: Franco-Nevada
Franco-Nevada Dec. 2007 IPO of new Franco-Nevada for $1.26B (C$15.20/sh.) Since IPO IPO, Franco Franco-Nevada Nevada has delivered: >100% share price increase 250% >$435m of Free Cash Flow(2)* FNV >$86 iin di >$86m dividends id d paid id 200% >300 royalty interests $3.3B in market cap** 150% Dec. 20
Slide 6: Growing Pipeline of Mineral Royalties
Growing Pipeline of Mineral Royalties 114 oil & gas royalties and 184 undeveloped oil & gas interests not shown >25 MINERAL OPERATIONS Over 300 mineral and oil & gas royalties 6
Slide 7: Quality Operators
Quality Operators: Core Operators: Up and Comers: Goldstrike Palmarejo j Bald Mountain Hemlo Mesquite Cerro San Pedro Gold Quarry S bika Subika Holloway Hollo a Hislop Marigold Holt Musselwhite Stillwater D t Detour L Lake k East Boulder Duketon Tasiast Garden Well Goldstrike ‐ Barrick Marigold ‐ Go
Slide 8: Secure & Diverse Revenue
Secure & Diverse Revenue* By Country By Royalty O&G Australia Midale Other Other 3% 2% 5% 2% Edson 8% Palmarejo j Weyburn 23% Base Metals Mexico 6% & Other 25% US 2% 45% Stillwater Goldstrike - 7% NPI 17% Gold Canada Other 25% 13% Goldstrike - NSR 9% Gold Quarry 3% Marigold 5% 95% off revenue ffrom
Slide 9: Royalty Revenue by Commodity
Royalty Revenue(1) by Commodity 80 70 60 50 ($ millions) 40 Oil + Gas 30 & Other 20 PGM Gold 10 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 * 2008 2009 2010 Diversified Portfolio with Growing Precious Metals Component 9 * Utilizes top end of November guidance reflecting Q4 commodity prices and guidance on
Slide 10: Key Long Life Assets
Key Long Life Assets* - Major royalty revenue ~10 years Goldstrike - Stock pile revenue potential ~20 years Gold Quarry - New layback potential ~ 20 years Palmarejo - Guadalupe discovery > 10 years Stillwater - Existing reserves > 25 years - Existing reserves 11 years Oil & Gas - Weyburn y potential
Slide 11: A Long Life Portfolio with Growing Value
A Long Life Portfolio with Growing Value 11
Slide 12: Near Term Growth: Tasiast Mine
Near Term 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 Possible expansion up to 1.5 Moz in future 2011/13 (346 koz) $8m years* Mid-term (1.0Moz) $24m New Kinross plan mid Febr
Slide 13: Near Term Growth: Detour Lake
Near Term Growth Detour Lake 2% NSR- Canada Detour Gold has started construction with $1.0 billion of funding in place Total M+I project resources >20 Moz* (plus additional 2 Moz on adjacent Trade Winds Block A JV) Production of 660,000 oz/yr to potential 1m oz/yr / Potential incremental annual reve
Slide 14: Additional Growth
Additional Growth Category Royalty Operator New mines: • Duketon (2%) • Regis Resources • Lounge Lizard (2%) • Kagara Ltd • Red October (1 (1.75%) 75%) • Saracen Project restarts: • Falcondo (4.1% equity) • Xstrata • Holt (up to 10%) • St Andrew Goldfields Royalties reaching hurdles: • Subika (2%) •
Slide 15: Gold Wheaton Combination
Gold Wheaton Combination December 11, 2010 – FNV agrees to purchase 34% of GLW from Quadra FNX December 13, 2010 – FNV & GLW agreed to friendly business combination December 31, 2010 – Purchased GLW secured notes from Sprott for C$110m January 5, 2011 – Closed acquisition of Quadra FNX block for C$2
Slide 16: Potential Royalty Revenue Growth
Potential Royalty Revenue Growth 450 Non‐Precious Metal 400 Precious Metal 350 300 > $200m potential incremental revenue* ($ Millions) 250 200 150 100 50 0 2008A 2009A 2010E GLW Tasiast Detour Other 2015+ 23% CAGR in precious metal revenue** *Asset estimates reflect potential revenue for upcoming ad
Slide 17: The strongest business model in gold
Franco-Nevada strike 23% Annual Gold Growth (IPO to 2015) Golds Driven by New Discoveries (Tasiast, Detour) arry G ld Wh Gold Wheaton t Catalyst C t l t ffor Re-rating R ti Gold Qua >90% Free Cash Flow Margins Palmarejo >$375m in Capital for Further Deals Record of Dividend Increases GLW The stronge
Slide 18: Gold Wheaton Combination - A New Catalyst for Growth
Appendix - Gold Wheaton Combination - A New Catalyst for Growth Enhances FNV 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 form
Slide 19: Gold Wheaton Combination - Increased Diversification
Appendix - Gold Wheaton Combination - Increased Diversification Pro‐forma NPV Breakdown Pro‐forma NPV Breakdown Ezulwini Other Detour 5% 3% 5% Gold Quarry 5% Oil & Gas Other FNV Assets 11% Stillwater 18% 8% PGM Gold Sudbury 19% 67% Tasiast 12% 8% MWS Palmarejo 8% 12% Gold Oil & Gas Strike 9% 10% Con
Slide 20: Gold Wheaton Transaction Summary
Appendix - 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 a
Slide 21: Gold Wheaton Assets – Sudbury Footwall
Appendix - Gold Wheaton Assets – Sudbury Footwall Attributable Production (k Au Eq. oz) Operator: Quadra FNX (First 5 years) Location: Sudbury, Canada 64 67 67 60 58 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 Mon
Slide 22: Gold Wheaton Assets – Mine Waste Solutions
Appendix - Gold Wheaton Assets – Mine Waste Solutions Attributable Production (k Au oz) Operator: First Uranium 34 33 33 33 32 Location: South Africa 29 30 31 30 30 30 32 29 29 Royalty: 25% of Au produced above $400/oz Purchased by GLW: US$125 million in November, 2008 Net Revenue ((9 Months to Sep
Slide 23: Gold Wheaton Assets - Ezulwini
Appendix - Gold Wheaton Assets - Ezulwini Attributable Production (k Au oz) Operator: First Uranium Location: South Africa 19 21 22 16 6 18 16 Royalty: 7% of Au produced above $400/oz Au Eq 13 13 14 Purchased by GLW: US$50 million in November, 2009 Net Revenue ((9 Months to Sep 2010): ) $10 million
Slide 24: Strong Financial Position
Appendix: Strong Financial Position Pre-Transaction Post-Transaction (September 30 30, 2010) (est at closing) (est. Cash US$610 million US$200 million (1) Debt None None (2) Revolver Available US$175 $ million US$175 $ million Total Available US$785 million US$375 million Capital Franco-Nevada has c
Slide 25: Asset Life Assumptions & References
Appendix – Asset Life Assumptions & References Goldstrike - Barrick 2009 Annual Report. December 2009 reserve of 12.2 moz and 2009 production of 1.36 moz implies mine life of 9 years. Barrick 2009 Annual report states Barrick expects to fully process ore in stockpiles by 2035. (www.barrick.com) Gold
Slide 26: Franco-Nevada Directors
Franco-Nevada Directors Position with Franco-Nevada Current or Past Major Experience Pierre Lassonde Director, Chairman Chairman, World Gold Council Vice-Chairman, Director and President, Newmont Mining Co-CEO and Co-Founder, Old Franco-Nevada David Harquail Director, President & CEO Executive V.P.,
Slide 27: Franco-Nevada Team
Franco-Nevada Team Title Canada David Harquail President & CEO Sandip Rana Chief Financial Officer Jacqueline Jones Chief Legal Officer & Corporate Secretary Geoff Waterman Chief Operating Officer Paul Brink SVP, Business Development Petra Decher VP, Finance & Assistant Secretary Philip Wilson VP Te
Slide 28: Franco-Nevada Corporation
Franco-Nevada Corporation Capital Structure(2) Analyst Coverage Shares Outstanding 114.56m BMO Capital Markets David Haughton Warrants @ C$32/sh March 2012 5 75m 5.75m BOA/Merrill Lynch y Mike Jalonen CIBC Capital Markets Cosmos Chiu Warrants @ C$75/sh June 2017 5.75m Credit Suisse Anita Soni Option
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