Franco-nevada Corporation · TSX:FNV
Franco-nevada — Investor Presentation (February 2010)
24 slides from Franco-nevada's investor presentation, February 2010
Slide 1: A Gold Focused Royalty Company
A Gold Focused Royalty Company February, 2010 1
Slide 2: Cautionary Statement
Cautionary Statement F Forward-Looking d L ki Statements St t t 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 op
Slide 3: Who is Franco-Nevada?
Who is Franco-Nevada? 1985 original Franco-Nevada started the gold royalty business (Schulich & Lassonde) Through 2001 original Franco-Nevada share price grew 30%+ per annum on TSX to become 6th largest gold company in world by market cap. 2002 merger with Newmont & Normandy created world’s largest
Slide 4: Dow vs Gold: Financial Assets vs Hard Assets
Dow vs Gold : 45 40 35 30 old 25 DOW/Go 20 15 10 5 0 Financial Assets vs Hard Assets 4
Slide 5: Royalty Business Advantages
Royalty Business Advantages* High margin Free Cash Flow No capital costs No ongoing operating or exploration costs No environmental or closure costs Leveraged upside to commodity prices Free option on future discoveries Focus on growth without operating distractions * Advantages of revenue-based roy
Slide 6: What Are Royalties?
What Are Royalties? Revenue or production royalty (NSR) – typically 2 to 5% of mine revenues/production – paid in cash or in-kind at refinery each month Streaming royalty (Stream) – right g to % of g gold p production from a mine ((ex. 50%)) in exchange g for: (1) an initial upfront payment (2) ongo
Slide 7: Example of Royalty Financing
Example of Royalty Financing January 2009, Coeur d’Alene needed capital to finish construction of the Palmarejo silver-gold mine in Mexico Franco-Nevada Franco Nevada funded $75 million in return for right to buy 50% of the future gold production at $400 per ounce (gold stream royalty) Represented a
Slide 8: Why The Royalty Sector Is Growing
Why The Royalty Sector Is Growing Market value of resource sector has increased 10-fold in past decade More development projects need financing V l til commodity Volatile dit prices i create t sellers ll Less available commercial bank project lending Base metal companies can arbitrage precious metal
Slide 9: Franco-Nevada's Royalties in Q3
Franco-Nevada’s Royalties in Q3 Other 4% By Royalty Revenue: $36.4m Mexico 21% By Free Cash Flow*: $32.5m (89% margin) US Australia 51% By numbers: 196 mineral and 113 oil & gas 1% Canada 23% By commodity: 77% precious metals, 23% other By region: 74% from USA & Canada Core operators: Up and Comers:
Slide 10: Gold Growth – IPO to Date
Gold Growth – IPO to Date 45 40 35 e* - $ millions 30 25 yalty Revenue Oth C Other Commodities diti 20 PGM Gold 15 80% 77% Gold & PGMs as % Roy 55% 56% 77% of total Royalty 10 55% Revenue 61% 5 0 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 p Expect >40% g growth in 2009 g y y revenues vs
Slide 11: Organic Gold Growth
Organic Gold Growth G Gold only revenues excluding other revenues** Hemlo H l $5 12 $5-12m Detour 10-12m Tasiast $6-8m Ahafo 4-8m Holt 3-4m Rosemont 1-2m Palmarejo $15-19m Marigold 2-4m Goldfields 1-2m $100m y p 3-4m Holloway-Hislop Duketon 2-3m Perama Hill 2-3m Hollister 3-5m Ity 1m Other 1-2m $71m
Slide 12: Franco-Nevada's Capacity for New Projects
Franco-Nevada’s Capacity for New Projects Capital Resources @ Sept 30, 2009 US$ Millions Working Capital $559 Marketable securities $59 Available Credit Facility $150 Total Available Capital $768 No debt, hedges or material capital obligations Plus additional capacity from >$120m per year in Free Ca
Slide 13: Franco-Nevada's Advantages
Franco-Nevada’s Advantages Royalty Business Model & Growing Sector Goldstriike Established Diversified E t bli h d Di Proven P ifi d P Portfolio tf li Focus on Gold Growth Track Record of Value Accretion old Quarry >$700m Available for Growth Among Royalty Companies: Go – Largest Gold Royalty Revenu
Slide 14: Background Slides
----------BACKGROUND SLIDES---------- Goldstrike ‐ Barrick Weyburn Bald ‐ Cenovus Mountain ‐ Barrick East Boulder ‐ Stillwater Palmarejo ‐ Coeur Cerro San Pedro ‐ New Gold Mesquite – New Gold Marigold ‐ Goldcorp Robinson ‐ Quadra Tasiast ‐ Red Back Marigold ‐ Goldcorp 14
Slide 15: Pipeline For Future Growth
Pipeline For Future Growth Current producers New in 2010-11 Near term 2012+ Longer term Goldstrike Holloway/Hislop/Holt Hemlo NPI Pinson Palmarejo* Hollister Detour Arturo Gold Quarry* Hemlo NSR Ahafo* Pandora platinum Stillwater Tasiast Falcondo nickel Kirkland Lake Marigold Marigold Rosemont Arcti
Slide 16: Track Record of Acquisitions since IPO
Track Record of Acquisitions since IPO >90% of capital deployed into gold assets Amount Asset Royalty Commodity Operator Location $104m Gold Quarry 7.29% Gold Newmont Nevada Coeur $80m Palmarejo 50% Gold Mexico d’Alene Ahafo South $58m 2% Gold Newmont Ghana Mine $20m Marigold 2.5-5% Gold Goldcorp Ne
Slide 17: Organic Gold Growth Potential
Organic Gold Growth Potential Annual Incremental Royalty Potential c Project Operator Royaltyd @ $1000 gold Palmarejo Coeur d’Alene 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 $22-30
Slide 18: Two Years of Added Value ($US)
Two Years of Added Value ($US) Cumulative dividends MC = $2.9B Added market value New Equity Added Cumulative equity financing US $1.1B Value to Investor MC = $1.7B US $0.2B MC = $1.3B Equity Financings IPO Dec 2007 2008 2009 18
Slide 19: Comparables
Comparables Royal Gold Silver Wheaton Commodity mix Mostly gold Mostly gold Mostly silver USA 60% USA 48% Mexico 51% (1) Revenues by geography Canada 22% Africa 30% Peru 17% Mexico 11% Mexico 13% Sweden 11% Number of mineral royalties 194 118 14 Market cap at Feb 8, 2010 $2,763m $1,772m $4,639m Prof
Slide 20: Comparables
Comparables EV/CF Assumes Franco-Nevada 19.3 19.1 does not invest 16.7 17.1 16.4 17.0 17.1 >$700m of 14.8 14.6 13.5 available capital Assumes $500m invested at 10xCF EV/CF 2010 EV/CF 2011 FNV RGLD SLW NA Intermediate Average Next major royalty deal will be a share price catalyst Source: RBC Equity R
Slide 21: Management
Management Title Canada David Harquail President & CEO Sharon E. Dowdall Chief Legal Officer & Corporate Secretary H G H. Geoffrey ff W t Waterman Chi f O Chief Operating ti Offi Officer Paul Brink S.V.P. Business Development Petra Decher VP, Finance & Assistant Secretary Jason O’Connell Manager, IR
Slide 22: Board of Directors
Board of Directors Position with Franco-Nevada Current or Past Major Experience Pierre Lassonde Director,, Chairman Chairman,, World Gold Council Vice Chairman, Director and President, Newmont Mining Co-CEO and Co-Founder, Old Franco-Nevada David Harquail Director, President & CEO Executive V.P., Ne
Slide 23: FNV-TSX Since IPO
FNV-TSX Since IPO US$ $35.00 IPO Financing Gold Palmarejo Financing $1.3B $260m Quarry $75m $313m $103m $30.00 $ per Share $25.00 Offer For IRC $675m Ahafo C$ $20.00 $ Marigold Mt. Keith $100m $15.00 $ December 20,, 2007 IPO issue price C$15.20/sh $10.00 2008 2009 MC = $1.3B MC = $1.7B MC = $2.9B 23
Slide 24: Franco-Nevada Corporation
Franco-Nevada Corporation Capital Structure Analyst Coverage Shares Outstanding 113.9m BMO Capital Markets David Haughton Warrants @ C$32/sh Mar. 2012 5.75m BOA/Merrill Lynch Mike Jalonen Warrants @ C$75/sh June 2017 5.75m CIBC Cosmos Chiu Special Warrants 0.32m GMP Securities Craig West Options (Av
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