Q1 2013 Conference Call - s21.q4cdn.com › ... › Q1_2013_Conference_Call.pdf · Q1 2013 Q1 2012 1. Adjusted EBITDA is defined by the Company as net income (loss) excluding income

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Forward-Looking StatementsThis presentation contains certain “forward looking information” and “forward looking statements” within the meaning of applicable Canadian securities laws and the United States PrivateSecurities Litigation Reform Act 1995, respectively, which may include, but are not limited to, statements with respect to future events or future performance, management’s expectationsregarding Franco-Nevada’s growth, results of operations, estimated future revenues, requirements for additional capital, mineral reserve and mineral resource estimates, production estimates,production costs and revenue, future demand for and prices of commodities, expected mining sequences, business prospects and opportunities. In addition, statements (including data in tables)relating to reserves and resources together with related royalty equivalent unit and gold equivalent ounce calculations are forward looking statements, as they involve implied assessment, basedon certain estimates and assumptions and no assurance can be given that the estimates will be realized Such forward looking statements reflect management’s current beliefs and are basedon certain estimates and assumptions, and no assurance can be given that the estimates will be realized. Such forward looking statements reflect management s current beliefs and are basedon information currently available to management. Often, but not always, forward looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”,“scheduled”, “estimates”, “forecasts”, “predicts”, “projects”, “intends”, “targets”, “aims”, “anticipates” or “believes” or variations (including negative variations) of such words and phrases or may beidentified by statements to the effect that certain actions “may”, “could”, “should”, “would”, “might” or “will” be taken, occur or be achieved. Forward looking statements involve known andunknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Franco-Nevada to be materially different from any future results,performance or achievements expressed or implied by the forward looking statements. A number of factors could cause actual events or results to differ materially from any forward lookingstatement, including, without limitation, fluctuations in the prices of the primary commodities that drive royalty and stream revenue (gold, platinum group metals, copper, nickel, uranium, silver,iron-ore and oil & gas), fluctuations in the value of the Canadian and Australian dollar, Mexican peso, and any other currency in which revenue is generated, relative to the US dollar, changes innational and local government legislation, including permitting and licensing regimes and taxation policies, regulations and political or economic developments in any of the countries whereproperties in which Franco-Nevada holds a royalty, stream or other interest are located or through which they are held, risks related to the operators of the properties in which Franco-Nevadaholds a royalty, stream or other interest, including changes in the ownership and control of such operators, influence of macroeconomic developments, business opportunities that becomeavailable to, or are pursued by Franco-Nevada, reduced access to debt and equity capital, litigation, title, permit or license disputes related to interests on any of the properties in which Franco-Nevada holds a royalty, stream or other interest, whether or not the Company is determined to have PFIC status, excessive cost escalation as well as development, permitting, infrastructure,operating or technical difficulties on any of the properties in which Franco-Nevada holds a royalty, stream or other interest, rate and timing of production differences from resource estimates,risks and hazards associated with the business of development and mining on any of the properties in which Franco-Nevada holds a royalty, stream or other interest, including, but not limited to

l t d l i l d t ll i l diti l f il i fl di d th t l di t i il t d th i t ti f i d t Th f dunusual or unexpected geological and metallurgical conditions, slope failures or cave-ins, flooding and other natural disasters or civil unrest, and the integration of acquired assets. The forwardlooking statements contained in this presentation are based upon assumptions management believes to be reasonable, including, without limitation, the ongoing operation of the properties inwhich Franco-Nevada holds a royalty, stream or other interest by the owners or operators of such properties in a manner consistent with past practice, the accuracy of public statements anddisclosures made by the owners or operators of such underlying properties, no material adverse change in the market price of the commodities that underlie the asset portfolio, the Company’songoing income and assets relating to determination of its PFIC status, no adverse development in respect of any significant property in which Franco-Nevada holds a royalty, stream or otherinterest, accuracy of publicly disclosed expectations for the development of underlying properties that are not yet in production, integration of acquired assets and the absence of any otherfactors that could cause actions, events or results to differ from those anticipated, estimated or intended. However, there can be no assurance that forward looking statements will prove to beaccurate as actual results and future events could differ materially from those anticipated in such statements and readers are cautioned that forward looking statements are not guarantees ofaccurate, as actual results and future events could differ materially from those anticipated in such statements and readers are cautioned that forward looking statements are not guarantees offuture performance. Franco-Nevada cannot assure investors that actual results will be consistent with these forward looking statements. Accordingly, readers should not place undue reliance onforward looking statements due to the inherent uncertainty therein. For additional information with respect to risks, uncertainties and assumptions, please refer to the “Risk Factors” section ofour AIF, as well as Franco-Nevada’s most recent Management’s Discussion and Analysis filed with the Canadian securities regulatory authorities on www.sedar.com and contained in Franco-Nevada’s Form 40-F filed with the SEC on www.sec.gov. The forward looking statements herein are made as of the dates set out in this presentation only and Franco-Nevada does not assumeany obligation to update or revise them to reflect new information, estimates or opinions, future events or results or otherwise, except as required by applicable law.

Non-IFRS Measures

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Adjusted Net Income, Adjusted EBITDA and Margin are intended to provide additional information only and do not have any standardized meaning under International Financial ReportingStandards (“IFRS”) and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures are not necessarily indicativeof operating profit or cash flow from operations as determined under IFRS. Other companies may calculate these measures differently. For a reconciliation of these measures to various IFRSmeasures, please see the end of this presentation or the Company’s current MD&A disclosure found on the Company’s website and filed with Canadian securities regulatory authorities onSEDAR at www.sedar.com and with the Securities and Exchange Commission on EDGAR at www.sec.gov.

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($ millions except per share) Q1 2013 Q1 2012

1. Adjusted EBITDA is defined by the Company as net income (loss) excluding income tax expense, finance income and costs, foreign exchange gains/losses,

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j y p y ( ) g p , , g g g / ,gains/losses on the sale of investments, income/losses from equity investees, depletion and depreciation and impairment charges related to royalties, streams, working interests and investments. See Non-IFRS Measures at the end of this presentation.

2. Adjusted Net Income is defined by the Company as net income (loss) excluding foreign exchange gains/losses, gains/losses on the sale of investments, impairment charges related to royalties, streams, working interests and investments, unusual non-recurring items, and the impact of taxes on all these items. See Non-IFRS Measures at the end of this presentation.

3. Margin is defined by the Company as Adjusted EBITDA divided by Revenue.

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120 $925/oz$925/oz

81.3% 81.9% Margin1

80 

100 

79.8%Revenue(Au price)2

40 

60 

llion

s $

$1387/oz

$1691/oz$1630/oz

81.0% 80.5%

78.1%

‐

20 Mil

$925/oz $908/oz$1109/oz

$ /81.0% 80.5%

G&AP d t

‐40 

‐20 Proceeds taxesStreamcosts

6FNV1 Please see definition on slide 42 Based on London PM Fix

Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q1/13

US24%

Australia

Rest of World18%

Other 15%

Australia4%PGMs

14%

Canada33%

Mexico21%

Gold 71%

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43.6

3.8

2.9

2.71 2

40.6

1.2

Q1

20

12

Q1

20

13

Q Q

8FNV1 Please see definition on Slide 4

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10FNV1 Based on Pretium Resources Inc.’s Technical Report dated November 20, 2012 available on www.sedar.com

11FNV1 Based on Midas Gold Corp.’s Technical Report dated September 21, 2012 available on www.sedar.com

Capital Resources (Mar 31, 2013) ($)

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300 120%

200

250

s (m

oz)

Inf

80%

100%

er s

har

e (%

)

P&P

M&I + Inf

100

150

rves

& R

esou

rce

M&

I

20%

40%

60%

ourc

e gr

owth

pe

0

50

2007 2008 2009 2010 2011 2012

Res

er

P&

P

-20%

0%

2007 2008 2009 2010 2011 2012R

es

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Notes: For a breakdown of reserves and resources by category and additional information relating to reserves and resources, calculated in accordance with National Instrument 43-101, see pages 18-23 of Franco-Nevada’s 2012 AIFRefer to slide 16 for Cautionary Note to US Investors Regarding Reserve and Resource Reporting Standards

* Totals exclude Gold Quarry and New Prosperity

7,000

8,000it

s)

+138%

5,000

6,000

Us

(00

0 u

ni

2013

+ 71%

2 000

3,000

4,000

us

Me

tal

RE

2013

13

+ 75%

0

1,000

2,000

Pre

cio

2012

2012 20

12

2013

20

0

P&P M&I Inferred

14FNVNotes: For an explanation on the calculation and assumptions behind the Royalty Equivalent Units, please refer to our 2013 Asset Handbook available on

our website at www.franco-nevada.com* Totals exclude New Prosperity

15FNV1 M&I are inclusive of P&P2 Calculation assumes: 10 million REUs multiplied by the gold price ($1,500/oz). Assumption is forward looking in nature and not necessarily indicative

of future results. Please see cautionary statement on slide 2

Cautionary Note to US Investors Regarding Reserve and Resource Reporting Standards The disclosure in this presentation has been prepared in accordance with the requirements of Canadian securities laws, which differ from the requirements of United States securities laws. Disclosure, including scientific or technical information, has been made in accordance with Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) unless otherwise indicated. NI 43-101 is an instrument developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. For example, the terms “measured mineral resources”, “indicated mineral resources”, “inferred mineral resources”, “proven mineral reserves” and “probable mineral reserves” are used in this presentation to comply with the reporting standards in Canada. While those terms are recognized and required by Canadian standards, the SEC does not recognize them. Under United States standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Investors are cautioned not to assume that all or any part of the mineral deposits in these categories will ever be converted into mineral reserves. These terms carry a great amount of uncertainty as to the existence of the underlying minerals,

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assume that all or any part of the mineral deposits in these categories will ever be converted into mineral reserves. These terms carry a great amount of uncertainty as to the existence of the underlying minerals, and great uncertainty as to the economic and legal feasibility of the recovery of the underlying minerals. It cannot be assumed that all or any part of measured mineral resources, indicated mineral resources, inferred mineral resources, proven mineral reserves or probable mineral reserves will ever be upgraded or mined. In accordance with Canadian standards, estimates of inferred mineral resources cannot form the basis of feasibility or other economic studies. Investors are cautioned not to assume that any part of the reported measured mineral resources, indicated mineral resources or inferred mineral resources in this presentation is economically or legally mineable and will ever be classified as a reserve. In addition, the definitions of proven and probable mineral reserves used in NI 43-101 differ from the definitions in the SEC Industry Guide 7. Disclosure of “contained ounces” is permitted disclosure under Canadian standards; however, the SEC normally only permits issuers to report mineralization that does not constitute reserves as in place tonnage and grade without reference to unit measures. In addition to NI 43-101, a number of resource and reserve estimates have been prepared in accordance with JORC or SAMREC which differ from the requirements of NI 43-101 and United States securities laws. See “Reconciliation to CIM Definitions” contained in our AIF published March 19, 2013. Accordingly, information contained in this presentation containing descriptions of the Company’s mineral properties may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.

Three months ended (Expressed in millions except Margin and per share amounts) March 31, 2013 March 31,2012 Net Income $ 35.4 $ 46.8

Income tax expense 13.4 12.6 Finance costs 0.7 0.4 Finance income (0.9) (2.2) Depletion and depreciation 34.4 31.7 I i t f i t t 1 4 Impairment of investments 1.4 - Foreign exchange (gains)/losses and other (income)/expenses 4.7 (3.9)

Adjusted EBITDA $ 89.1 $ 85.4 Basic Weighted Average Shares Outstanding 146.7 139.9 Adjusted EBITDA per share $ 0.61 $ 0.61

$ $Net Income $ 35.4 $ 46.8 Impairment of investments, net of income tax 1.4 - Foreign exchange (gains)/losses and other (income)/expenses,

net of income tax 3.5 (3.2) Credit facility costs 0.3 -

Adjusted Net Income $ 40.6 $ 43.6 Adjusted Net Income per share $ 0.28 $ 0.31 As at March 31, 2013 December 31, 2012 Current assets $ 916.3 $ 879.2 Current liabilities (49.3) (56.8)

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Working Capital $ 867.0 $ 822.4

Analyst CoverageCapital Structure (Q1 2013)

Major Shareholders

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1. Warrants that upon exercise will entitle the holder thereof, at its election, to receive either 0.1556 of a Franco-Nevada common share or C$5.20 in cash, per warrant. Former $10 GLW warrants each still exercisable at $10/warrant. To acquire one whole FNV share, approximately 6.43 warrants need to be exercised (i.e. $64.27/FNV share).

2. Previous 52 weeks as of May 8, 20133. As of March 31, 20134. Based on current US$0.06 monthly dividend