Franco-nevada Corporation · TSX:FNV
Franco-nevada — Toronto MRAG Presentation (November 2009)
24 slides from Franco-nevada's conference presentation, Nov 27, 2009
Slide 1: Growing a High Margin Gold Business
Growing a High Margin Gold Business – Q3 2009 financial results – Near term growth outlook – New royalty acquisitions November 27 2009 Toronto MRAG Presentation
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: Franco-Nevada (TSX- FNV)
Franco-Nevada (TSX- FNV) Leading gold royalty company by – gold revenues Goldstrike – number of gold royalties – free cash flow margins – delivered gold revenue growth Future gold royalty growth – existing secure and profitable assets Gold Quarry – paid for pipeline of near term projects – recent an
Slide 4: Royalties are a High Margin Business
Royalties are a High Margin Business Exposure to: Operators Explorers ETF Bullion Metal price appreciation D D D D D Earnings and dividends D D U U U New reserves D D D U U Expansion potential D D U U U Reduced Exposure to: Capital costs D U U D D Operating Costs D U U D D Environmental costs D U U
Slide 5: Diversified Quality Portfolio
Diversified Quality Portfolio % of Royalty Revenue (1) 61% 21% >300 royalties with 82% of Royalty Revenue from US & Canada (1) Royalty Revenue is defined by the Company as cash received or receivable from operating royalty assets 5 earned during the period. Percentages above are for the 9 month peri
Slide 6: Pipeline For Future Growth
Pipeline For Future 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
Slide 7: Recent Results: Royalty Revenue and Free Cash Flow
Recent Results 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 $0.0 Q1/09
Slide 8: Growing Gold Revenues
Growing Gold Revenues 45 40 35 Oil & Gas 30 Base Metals & Other ($ 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 the IPO Chart reflects Royalty Revenue,
Slide 9: 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 10: 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 $22-30m 20 0 Near term
Slide 11: Added Commodity Opportunity
Added Commodity Opportunity 30 Not Shown • >20 non-producing 25 other royalties • Stand-by assets such as Falcondo 20 • Undeveloped O&G properties ($ 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 $40
Slide 12: Added Growth Potential
Added Growth Potential Capital Resources @ September 30, 2009 US$ 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 12
Slide 13: New Royalty Acquisitions
New Royalty Acquisitions* Franco-Nevada is rapidly growing its portfolio and since Sept 30th has added 3 more quality royalties: 2% on Newmont’s Ahafo South mine, Ghana - $58m – covers ~78 km2 and all or portions of 3 of the 4 pits – Subika expansion opportunity to add 4 to 7 million ounces 2.5%-5%
Slide 14: Comparables
Comparables Royal Gold Silver Wheaton Commodity mix Mostly gold Mostly gold Mostly silver USA 60% USA 44% Mexico 51% (1) Revenues by geography Canada 22% Africa 28% Peru 17% Mexico 11% Mexico 17% Sweden 11% Number of mineral royalties 194 118 14 Market cap at Nov 16, 2009 $3,246m $2,225m $5,455m Pro
Slide 15: Comparables
Comparables EV/CF 60.0 51.2 50.0 40.0 35.7 FNV 30.0 27.6 24.2 25.6 RGLD 23.5 22.5 24.1 20.8 20.6 SLW 20.0 16.9 15.1 NA Intermediate Average 10.0 0.0 EV/CF 2009 EV/CF 2010 EV/CF 2011 Assumes Franco-Nevada does not invest its >$700m in currently available capital Royalties, gold and developed US & Can
Slide 16: 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 17: Supporting Material
Supporting Material Capital Structure: Common 112.0m shares outstanding (FNV-TSX) Warrants 5.75m @ C$32/sh Mar. 2012 (FNV.WT) Warrants 5.75m @ C$75/sh June 2017 (FNV.WT.A) Warrants 0.32m Special Warrants Share Price Range(1) C$31.49 - C$11.62 Market Capitalization(2) $3.1B Working Capital + Investme
Slide 18: Gold Royalty Growth - Palmarejo
Gold Royalty Growth - Palmarejo – 50% gold stream above $400/oz – New open-pit and underground silver-gold mine in Mexico – Coeur d’Alene is operator – Minimum annual royalty of 50,000 oz began July 1 – Operator guidance is for gold capacity of 120,000 oz/yr (60,000 oz/yr net to Franco) – 2010 is fi
Slide 19: New Royalties – Ahafo South, Ghana
New Royalties – Ahafo South, Ghana Mill complex Source: Newmont November, 2009 presentation Royalty details Source: Moydow – $58m valued two step transaction announced Nov 2009 – 2% NSR royalty on a portion of Newmont’s Ahafo South Mine in Ghana – royalty applies after 1.2 million ounces of producti
Slide 20: New Royalties – Ahafo South, Ghana
New Royalties – Ahafo South, 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 expa
Slide 21: New Royalties – Marigold, Nevada
New Royalties – Marigold, Nevada Royalty details – $20m acquisition signed November 2009 – Royalties vary by square mile checkerboard sections and depend on location of mining – Acquired ~ 8.5 of new sections with royalties of: 50% of a 3%GR 50% of a sliding scale 5-8%GR 100% of a 3%NSR – Comp
Slide 22: New Royalties - Mt Keith, Australia
New Royalties - Mt Keith, Australia Royalty details – A$20 m acquisition closed October 2009 – 0.375% gross royalty on all nickel produced from +200km2 of highly prospective greenstone in W. Australia – Covers BHP’s Mt Keith tenements and Norilsk Nickel’s Kingston tenements Mt Keith mine – Australia
Slide 23: Management Team
Management Team Title Canada David Harquail President & CEO Sharon E. Dowdall Chief Legal Officer & Corporate Secretary H. Geoffrey Waterman Chief Operating Officer Paul Brink S.V.P. Business Development Petra Decher VP, Finance & Assistant Secretary Jason O’Connell Manager, IR & Business Developmen
Slide 24: Board of Directors
Board of 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., Newm
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