Franco-nevada Corporation · TSX:FNV
Franco-nevada — Investor Presentation (June 2011)
28 slides from Franco-nevada's investor presentation, Jun 17, 2011
Slide 1: June 2011 Presentation
JUNE 2011 PRESENTATION 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 Logarithmic Scale 25 DOW/Gold 8 20 4 15 10 2 Arithmetic Scale 5 1 0 Financial vs hard assets 3
Slide 4: Franco-Nevada: A gold focused royalty & streaming company
Franco-Nevada A gold focused royalty & streaming company arejo generating growing cash flow and dividends Palma f from a di diversified ifi d portfolio tf li off quality lit assets t > 50% expected growth in 2011 Growth Goldstrike World class discoveries >$500M available capital 60% increase
Slide 5: Business Model Benefits
Business Model Benefits Gold ETF Franco‐Nevada Operators Yield 0% >1% 0‐1% Leverage to Gold Price 1 >1 >1 Exploration & Expansion Upside 0% 100% 100% Exposure to Opex, Capex & 0% 0% 100% Environmental Costs (NSR) Franco-Nevada provides yield and more upside th a gold than ld ETF with ith less l risk
Slide 6: Current and Future Assets
Current and Future Assets Over 200 mineral royalties and streams* *Does not include Franco-Nevada’s 135 oil & gas assets and 157 undeveloped oil & gas interests 6
Slide 7: Quality Operators & Assets
Quality Operators & Assets Goldstrike Stillwater Bald Mountain East Boulder Hemlo Gold Quarry Tasiast Subika Morrison Marigold Podolsky Musselwhite McCreedy West 7
Slide 8: Secure and Diversified (Q1 2011 Revenues)
Secure and Diversified (Q1 2011 Revenues) By Country By Asset Edson Australia Weyburn 2% 4% Other Other 4% O&G + Minerals Other 8% 2% 6% Sudbury Basin Palmarejo 5% 26% US 38% Stillwater Mexico 9% 30% Goldstrike - Ezulwini NPI 4% 8% MWS Canada 3% Gold Other 17% 20% Marigold 4% Goldstrike - NSR 6% Gol
Slide 9: Revenue Growth Reflects Diversified Portfolio
Revenue Growth 80 70 60 50 Reflects year end US$ (millions) Oil & Gas + Other top–up 40 payments 86% PGM precious 30 metals in Gold Q1 2011 20 10 ‐ Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2009 2010 2011 Diversified portfolio with growing precious metals 9
Slide 10: First Quarter Revenue Growth
First Quarter Revenue Growth 80 70 O&G + other 60 PGM 50 ($ Millions) 40 Gold 30 20 10 0 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Strong St year-over-year growth th 10
Slide 11: Sources of Growth (Gold Revenue)
Sources of Growth (Gold Revenue) 450% 400% 350% +332% 300% 250% G ld Gold 200% Revenue 150% 100% Gold Price +71% 50% 0% ‐50% Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Growth from: ~20% gold price increase ~30% organic (expansions and start-ups from portfolio
Slide 12: Growth in the Pipeline
Growth in the Pipeline zc ~ 37 - Prod S roducing a g assets Advanced assets* Goldstrike Gold Quarry Tasiast Aai Dagi Marigold ane g Sudbury Detour Dee Stillwater Palmarejo Subika HBJ Superpit Duketon Henty Hemlo npi Kirkland Lake Hollister Holloway Rosemont Guruph Holt Hislop ae Hitt —_ Mesquite Nor
Slide 13: Growth From Existing Portfolio
Growth From Existing Portfolio Category Royalty* Operator New mines: • Duketon (2%) • Regis Resources • Lounge Lizard (2%) • Kagara Ltd • Peculiar Knob (production ( d ti payment) t) • WPG Resources • Red October (1.75%) • Saracen Project restarts: • Falcondo (4.1% equity) • Xstrata • Holt (up to 10
Slide 14: Growth from Discoveries
Growth from Discoveries Tasiast (2% royalty) Potential >20m oz resource* Potential 1.5 moz/yr by 2015** Revenue expected to begins in Q3 Tasiast ‐ Mauritania Detour (2% royalty) >25m oz resource* Potential 660k oz/yr starting 2013 2013** Likely further expansion Potential for >$60m/yr for >20 years*
Slide 15: Growth though Acquisition
Growth though Acquisition Acquisition strategy has delivered: 50% Gold Revenue g growth since IPO Precious metals now >85% of revenue Gold Quarry – Nevada Palmarejo‐ Mexico Greater gold leverage via stream structure Increased platinum and palladium exposure Diversification - no asset greater than 15
Slide 16: Pipeline developments in 2011
Pipeline developments in 2011 First half 2011 developments: Announced $200 million expansion of Subika project 2% of revenues Development approval of 1.6 Moz Garden Well gold project 2% of revenue Commercial production at Holt gold mine 10% of revenues Restart of Falcondo nickel 4% of profits Resour
Slide 17: 2011 Growth Outlook
2011 Growth Outlook ($US million) 2010 Revenue: $227 million 2011 R Revenue (M (March h guidance): id ) $325 $325-$350 $350 million illi If GLW added As Reported Jan 1, 2011 So far with Q1 results: Revenue $73.1 $100.0 Adjusted EBITDA(2) $50.6 $68.0 On pace to meet or beat high end of 2011 guidance*
Slide 18: Longer Term Growth Outlook
Longer Term Growth Outlook ($1,400/oz Au) 500 Includes: Excludes: 450 • Full year GLW assets • Prosperity stream • Tasiast & Detour until permitted expansions 400 • Organic growth risk adjusted 350 Includes: 300 50% • Higher prices vs. ‘10 US$ (Millions) • Nine months GLW 250 • Start of Tasiast • Or
Slide 19: Continued Financial Strength
Continued Financial Strength Capital Resources March 31, 2011 (US Millions) Working Capital $306 Marketable Securities $55 Available Credit Facility $175 Total Available Capital $536 No debt or obligations No capital or exploration costs Ongoing free cash flow Note: Cash flow estimate based on conse
Slide 20: Growing Dividends
Growing Dividends 60% increase in monthly dividend starting in July US$0.04 per share/mth or US$0.48 per share annualized Represents third annual dividend increase since IPO 1.3% yield on current share price 3.2% yield on cost for our IPO shareholders Franco-Nevada F N d provides id one off the h hi
Slide 21: Why Own a Gold ETF?
Why Own a Gold ETF? 200% 150% FNV 100% Gold 50% S&P 0% -50% 50% Q1’08 Q2’08 Q3’08 Q4’08 Q1’09 Q2’09 Q3’09 Q4’09 Q1’10 Q2’10 Q3’10 Q4’10 Q1’11 Franco-Nevada is outperforming gold by delivering: Growth (>50% revenue growth expected in 2011) Profits and Yield (60% dividend increase in 2011) Business mo
Slide 22: Appendix
Appendix Goldstrike ‐ Barrick Palmarejo ‐ Coeur Detour – Detour Gold MWS – First Uranium Tasiast ‐ Kinross Mesquite – New Gold East Boulder ‐ Stillwater Sudbury – Quadra FNX Weyburn ‐ Cenovus 22
Slide 23: 2011 Outlook (March 24, 2011 Guidance)
2011 Outlook (March 24, 2011 Guidance) 9 months of Sudbury, MWS & Ezulwini Higher Au, Au PGM and oil prices Higher Palmarejo production Smaller asset startups & expansions Falcondo re-start Temporarily lower on Goldstrike L Lower minimum i i att G Gold ld Q Quarry 2011 GAAP Revenue guidance $325m to
Slide 24: Precious Metals Growth
Precious Metals Growth 180% Inferred Resource 160% M&I Resource +27% 140% P&P Reserve Further growth in 2011 Growth (¹) (²) (3) 120% expected from: +16% • Tasiast +4% • Detour 100% • Sudbury Basin ecious Metals G 80% • MWS • Ezulwini 60% • Duketon 40% Pre 20% 0% 2007 2008 2009 2010 2011 53% growth i
Slide 25: Long Life Assets
Long Life Assets Goldstrike Mining ~10 years Stock pile processing ~20 years Gold Quarry New layback potential ~ 20 years Palmarejo Guadalupe development > 10 years Stillwater Existing reserves > 25 years Existing reserves 10 years Oil & Gas Weyburn potential > 40 years Falcondo Existing resources >
Slide 26: Asset Life Assumptions & References
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 Quarry – N
Slide 27: Directors & Management
Directors & Management Directors Pierre Lassonde Director, Chairman David Harquail Director, President & CEO Derek Evans(1) Director Graham Farquharson(2) Director L i Gi Louis Gignac(1) Di t Director Randall Oliphant(1) Director Hon. David R. Peterson(2) Director Management David Harquail President
Slide 28: Franco-Nevada Corporation: Capital Structure
Franco-Nevada Corporation Capital Structure Analyst Coverage Shares Outstanding 126.3m BMO Capital Markets David Haughton 2012 Warrants (C$32 exercise price) 5.75m BOA/Merrill Lynch y Mike Jalonen 2013 Warrants(1) (C$64.27 exercise price) 4.05m CIBC Capital Markets Cosmos Chiu 2014 Warrants(1) (C$32