Strong portfolio performance leads to
increase in guidance. $100
million agreement to acquire oil & gas
royalties.
TORONTO ,
Nov. 7, 2016 /CNW/
- Franco-Nevada's CEO, David
Harquail, commented: "Our overall portfolio is performing
very well. We now expect to exceed the high end of our
previous guidance range for both Gold Equivalent Ounces1
("GEOs") and oil & gas revenues. In addition, we are
benefiting from higher commodity prices. Even with our
ongoing Cobre Panama contributions and industry leading dividend,
Franco-Nevada is growing its cash balances and has no debt. We are
also seeing investment opportunities across a range of
commodities. Franco-Nevada has just agreed to acquire for
$100 million oil & gas royalty
assets in the U.S."
Financial results for Q3/2016 are reported in U.S. dollars
unless otherwise noted. The highlights include:
- 123,065 GEOs — a new record
- $172.0 million in revenue —
a new record
- $142.2 million of Adjusted
EBITDA2 or $0.80 per share — a new record
- $54.4 million of Net Income
or $0.31 per share
- $53.5 million of Adjusted Net
Income3 or $0.30 per share
- $277.6 million in cash and
cash equivalents at quarter end and no debt
Revenues and GEOs by Asset Categories
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Q3/2016
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Q3/2015
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Revenue
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GEOs
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Revenue
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GEOs
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(in millions)
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#
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(in millions)
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#
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Precious Metals
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Gold
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$
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113.4
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85,127
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$
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81.9
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72,908
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Silver
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36.2
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27,337
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4.0
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3,522
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PGM
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12.1
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9,098
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7.0
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6,506
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Precious Metals - Total
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$
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161.7
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121,562
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$
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92.9
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82,936
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Other Minerals
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2.0
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1,503
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3.0
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2,701
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Oil & Gas
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8.3
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—
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7.8
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—
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$
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172.0
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123,065
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$
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103.7
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85,637
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For Q3/2016, revenue was sourced 94% from precious metals (66%
gold, 21% silver and 7% PGM) and 83% from the Americas (15% U.S.,
19% Canada and 49% Latin America). Costs and expenses increased
year-over-year due to higher depletion and cost of sales,
reflecting deliveries from the Antamina and Antapaccay stream
acquisitions which were completed in October
2015 and February 2016,
respectively. Oil & gas production levels and prices were
stable year-over-year. Cash provided by operating activities was
$121.6 million, an increase of 67%
compared to Q3/2015.
Portfolio Updates
- Precious Metals — U.S.: GEOs from
U.S. precious metals assets increased by 8% year-over-year with
decreases from Goldstrike being more than offset by increased
production at Marigold and the start of deliveries from the South
Arturo mine. GEOs received from the U.S. precious metal assets were
18,920 GEOs.
- South Arturo (4-9% royalty) – This project,
operated by Barrick and Premier Gold, poured its first gold in
August. Initial royalty payments were net of $3.1 million in advance minimum royalties
previously paid. Q4/2016 payments are expected to be stronger as
advance minimum royalties will no longer be netted from future
payments.
- Marigold (0.5-5% royalty) – Silver Standard
provided new 5-year guidance that projects higher production
averaging 220,000 ounces per year.
- Bald Mountain (0.875-5% royalty) – Kinross reported that it has received a Record
of Decision that will allow for increased exploration activity and
a potential expansion.
- Hollister (3-5% royalty) – Klondex Mines,
Franco-Nevada's partner at Fire Creek/Midas, acquired the Hollister
project during the quarter. Klondex has since reported high grade
intersections at the Hatter Graben zone which is on the 5% royalty
ground.
- Mesquite (0.5-2% royalty) – New Gold announced
that Mesquite's full-year gold production is expected to be
approximately 15,000 ounces below the guidance range of 130,000 to
140,000 ounces. Q3/2016 production focused on waste stripping with
a stronger Q4/2016 expected.
- Fire Creek/Midas (Fixed gold deliveries / 2.5%
royalty) – Klondex reported increased mineral reserves and
resources for its Fire Creek and Midas operations.
- Stillwater (5%
royalty) – Stillwater now
anticipates that the Blitz project will add between 270,000 and
330,000 PGM ounces of incremental production annually when fully
ramped up by 2021-2022. This is an increase from the 150,000 to
200,000 PGM ounces that Stillwater
previously expected.
- Castle Mountain (2.65% royalty) – During the
quarter, NewCastle Gold reported additional promising drill results
and raised additional funding for this project in California.
- Stibnite Gold (1.7% royalty) – Midas Gold filed
its Plan of Restoration & Operations to start the environmental
assessment for this historic mine in Idaho.
- Precious Metals — Canada: GEOs from Canadian
precious metals assets increased by approximately 34% to 17,749
GEOs compared with Q3/2015. The main contributor to the increase
was the Sudbury operation which
benefited from stronger production.
- Detour (2% royalty) – Detour Gold has revised
production guidance slightly lower as a result of heavy rains
during the summer. Detour also provided a preliminary 2017 outlook,
which estimates production between 540,000 to 590,000 ounces versus
the life-of-mine plan for 2017 of 614,000 ounces.
- Brucejack (1.2% royalty) – Pretium Resources
expects to begin commissioning of the underground mine in
mid-2017.
- Eagle (1.5-2% royalty) – Victoria Gold provided an updated feasibility
study for this project in the Yukon which is part of the larger Dublin Gulch
claim block.
- Musselwhite (5% profit royalty) — Goldcorp has
announced approval for a materials handling project which it
expects will increase production by 20% over 2016-2018.
- Kirkland Lake (2.5%
royalty reducing to 1.5%) – In October
2016, Kirkland Lake
exercised its option to buyback 1% of an overlying 2.5% NSR for an
aggregate cash consideration of approximately $30.5 million ($36.0
million less royalty proceeds attributable to the buyback
portion of the NSR paid to Franco-Nevada prior to the date of the
buyback). The NSR, which covers all of Kirkland Lake's properties (including the
Macassa mine), was acquired in October
2013 for $50.0 million.
- Precious Metals — Latin
America: GEOs from Latin American precious
metals assets represented the largest year-over-year increase due
to the addition of the Antamina and Antapaccay streams. Precious
metal GEOs delivered from Latin
America were 63,921 GEOs, an increase of 88%
year-over-year.
- Antamina (22.5% silver stream) – Antamina
delivered 19,975 GEOs during the quarter and 49,654 GEOs
year-to-date. GEOs received year-to-date are higher than
Franco-Nevada's original full-year 2016 guidance of 40,000
GEOs.
- Antapaccay (gold and silver stream) – Antapaccay
delivered 22,186 GEOs in Q3/2016.
- Candelaria (gold and silver stream) – Candelaria
delivered 16,807 GEOs, compared to 19,081 GEOs in the prior
year quarter, as expected according to its mine plan. Lundin Mining
reported increases in mineral reserves and resources despite
depletion. Lundin also reported that all critical tailings dam
construction permits have been received for the Los Diques tailings
management facility and that early works are substantially
complete.
- Guadalupe (50% gold
stream) – Early in the quarter, the 400,000 minimum ounce
Palmarejo obligation was paid and fully met by Coeur Mining. That
results in the original Palmarejo gold stream being terminated and
the new Guadalupe stream
commencing. Under the new agreement, deliveries are based on 50% of
the gold produced from the Palmarejo property (including the new
Guadalupe mine and the western
portion of the Independencia mine) with ongoing payments equal to
the lesser of $800 per ounce and the
then prevailing spot price for gold. During the quarter, Coeur
reported high grade intercepts in Guadalupe's Block C.
- Cobre Panama (gold and silver stream) – During the
quarter, Franco-Nevada contributed $40
million of its share of construction capital for the Cobre
Panama project. Franco-Nevada at
quarter end has contributed $416
million of its total $1
billion commitment for the construction of Cobre Panama.
First Quantum increased its planned 2016 capital expenditure to
$450 million from $390 million due to expedited stripping of the
pit. The development remains on track for a phased commissioning in
2018 and continued ramp-up in 2019.
- Cerro Moro (2% royalty) – Yamana reported that the
Cerro Moro project in Argentina is
expected to achieve production in early 2018.
- Precious Metals — Rest of World: GEOs
from Rest of World precious metals assets increased year-over-year
by 16% mainly due to deliveries from the Karma fixed ounce
obligation. Precious metal GEOs from the Rest of World were 20,972
GEOs during the quarter.
- Cooke 4 (7% gold stream) – On October 27th, Sibanye Gold announced
it has ceased production at the Cooke 4 underground operation.
Franco-Nevada has an approximate
$69 million carrying value for this
stream. Once further information is obtained, an impairment
analysis will be carried out and recorded in Q4/2016 as
appropriate.
- Karma (fixed gold deliveries and stream) – An
additional 1,250 GEOs were sold in the quarter due to the timing of
sales being carried over from the previous quarter, for a total of
5,000 GEOs sold in Q3/2016.
- Ity (1.5% capped royalty) – Endeavour Mining
previously reported an increase in reserves at Ity. It has now
reported on two new discoveries, Bakatouo and Colline Sud, that are
both on the royalty property and are in close proximity to the
current mine.
- Sissingué (0.5% royalty) – Also in Cote d'Ivoire, Perseus Mining stated it has
started construction of Sissingué and expects to pour its first
gold in the fourth quarter of 2017.
- Sabodala (fixed gold deliveries and stream) –
Teranga Gold announced that the mill optimization was commissioned
early in August. It expects throughput to increase by
15%.
- Duketon (2% royalty) – Regis Resources has
announced reserve increases at its Duketon belt
projects.
- Matilda (3-5% royalty) – Blackham Resources began
production at the Matilda Gold Project in July 2016. The company expects to produce 100,000
ounces per year over an 8 year mine life. A large land package and
large sulphide resource offers longer-term potential.
- Butcher Well (1% royalty after 50,000 ounces
produced) – AngloGold Ashanti has entered into an exploration
partnership with Saracen whereby AngloGold can earn up to 70% of
the Butcher Well and Lake Carey tenements after spending
A$25 million over 6 years. The
exploration partnership excludes the Red October operation on which
Franco-Nevada has a 1.75% royalty.
- Tasiast (2% royalty) – Kinross continues to advance development of
the Tasiast Phase One expansion. Normal operations resumed after a
work stoppage in August and the company has signed a new 3-year
collective labour agreement with unionized employees.
- Subika (2% royalty) – Newmont Mining is expected
to make a decision in the next quarter regarding an Ahafo mill
expansion and the underground development of Subika.
- Oil & Gas: Revenue from oil &
gas assets increased to $8.3 million
in Q3/2016 compared to $7.8 million
in Q3/2015. Production remains relatively stable. Subsequent
to quarter end, Franco-Nevada agreed to purchase for $100 million, from a private party, royalty
rights in the STACK shale play in Oklahoma's Anadarko basin. The STACK has been
gaining momentum over the past couple of years due to its status as
one of the most economic shale plays in North America. The lands consist of 16,865
acres of GORR and mineral title rights that with pooling provides
an estimated gross acreage of 74,880 acres with an estimated
average 1.61% royalty rate. The top two operators of the lands
are Newfield Exploration and Devon Energy. Both companies have
made the STACK a major focus of their capital spending, a portion
of which will be on the royalty lands. Full-field development is
expected to begin in 2017. Cash flow from the royalty acreage
as of September represents an annualized rate of $3 million per year and this is expected to grow
substantially as full-field development is rolled out.
Guidance
Franco-Nevada realized
record growth from its mineral assets for the first nine months of
2016. Mineral assets contributed 342,473 GEOs, while
Franco-Nevada's Oil & Gas assets contributed $19.7 million in revenue in the nine months ended
September 30, 2016. As a
result, Franco-Nevada is pleased to raise its guidance for 2016 as
follows:
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Previously announced
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Revised guidance
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Mineral assets - GEO
production1
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(oz)
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425,000 - 445,000 GEOs
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445,000 - 455,000 GEOs
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Oil & Gas assets -
Revenue2
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($)
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$15.0 million - $25.0 million
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$25.0 million - $30.0 million
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1
|
In forecasting GEOs for the remainder of 2016, gold,
silver, platinum and palladium metals have been converted to GEOs
using commodity prices of $1,300/oz Au, $18.00/oz Ag, $950/oz Pt
and $650/oz Pd.
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2
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In forecasting revenue from Oil & Gas assets for
the remainder of 2016, the WTI oil
price is assumed to average $50 per barrel with a $3.50 per barrel
price differential for Canadian oil.
|
Of the 445,000 to 455,000 GEOs, Franco-Nevada expects to receive
315,000 to 325,000 GEOs under its various stream agreements. For
the first nine months of 2016, 243,896 GEOs have been received from
stream agreements, while 222,670 GEOs were received for full year
2015.
Dividend Declaration
Franco-Nevada is pleased
to announce that its Board of Directors has declared a quarterly
dividend of $0.22 per share.
The dividend will be paid on December 22,
2016 to shareholders of record on December 8, 2016. The Canadian dollar equivalent
is determined based on the noon rate posted by the Bank of
Canada on November 4, 2016. Under Canadian tax legislation,
Canadian resident individuals who receive "eligible dividends" are
entitled to an enhanced gross-up and dividend tax credit on such
dividends.
The Company has a Dividend Reinvestment Plan ("DRIP").
Participation in the DRIP is optional. The Company will issue
additional common shares through treasury at a 3% discount to the
Average Market Price, as defined in the DRIP. However, the
Company may, from time to time, in its discretion, change or
eliminate the discount applicable to treasury acquisitions or
direct that such common shares be purchased in market acquisitions
at the prevailing market price, any of which would be publicly
announced. The DRIP and enrollment forms are available on the
Company's website at www.franco-nevada.com. Registered shareholders
may also enroll in the DRIP online through the plan agent's
self-service web portal at www.investorcentre.com/franco-nevada.
Beneficial shareholders should contact their financial intermediary
to arrange enrollment.
This press release is not an offer to sell or a
solicitation of an offer of securities. A registration statement
relating to the DRIP has been filed with the U.S. Securities and
Exchange Commission and may be obtained under the Company's profile
on the U.S. Securities and Exchange Commission's website at
www.sec.gov.
Shareholder Information
The complete Condensed Interim Consolidated Financial
Statements and Management's Discussion and Analysis can be found
today on Franco-Nevada's website at www.franco-nevada.com, on SEDAR
at www.sedar.com and on EDGAR at www.sec.gov.
Management will host a conference call tomorrow,
Tuesday, November 8, 2016 at
10:00 a.m. Eastern Time to review
Franco-Nevada's Q3/2016 results. Interested investors are
invited to participate as follows:
- Via Conference Call: Toll-Free: (888) 231-8191;
International: (647) 427-7450
- Conference Call Replay until November 15: Toll-Free (855) 859-2056;
Toronto (416) 849-0833; Pass code
96664262
- Webcast: A live audio webcast will be accessible at
www.franco-nevada.com
Corporate Summary
Franco-Nevada Corporation is the leading gold-focused
royalty and stream company with the largest and most diversified
portfolio of cash-flow producing assets. Its business model
provides investors with gold price and exploration optionality
while limiting exposure to many of the
risks of operating companies. Franco-Nevada is debt free and uses its free cash
flow to expand its portfolio and pay dividends. It trades under the
symbol FNV on both the Toronto and
New York stock exchanges.
Franco-Nevada is the gold
investment that works.
Forward Looking
Statements
This press release contains "forward looking
information" and "forward looking statements" within the meaning of
applicable Canadian securities laws and the United States Private
Securities Litigation Reform Act of 1995, respectively, 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, estimated future
revenues, carrying value of assets, future dividends and
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 and gold equivalent ounces ("GEOs") are
forward looking statements, as they involve implied assessment,
based on certain estimates and assumptions, and no assurance can be
given that the estimates and assumptions are accurate and that such
reserves and resources and GEOs will be realized. Such forward
looking statements reflect management's current beliefs and are
based on 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", "budgets",
"scheduled", "estimates", "forecasts", "predicts", "projects",
"intends", "targets", "aims", "anticipates" or "believes" or
variations (including negative variations) of such words and
phrases or may be identified 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 and unknown 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 looking statement,
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 and 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 U.S. dollar; changes in
national and local government legislation, including permitting and
licensing regimes and taxation policies and the enforcement
thereof; regulatory, political or economic developments in
any of the countries where properties 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-Nevada holds a royalty, stream or other interest,
including changes in the ownership and control of such operators;
influence of macroeconomic developments; business opportunities
that become available 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 Corporation is determined to have "passive
foreign investment company" ("PFIC") status as defined in
Section 1297 of the United States Internal Revenue Code of
1986, as amended; potential changes in Canadian tax treatment of
offshore streams; 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; actual mineral content may differ from
the reserves and resources contained in technical reports; rate and
timing of production differences from resource estimates, other
technical reports and mine plans; 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 unusual or unexpected geological and
metallurgical conditions, slope failures or cave-ins, flooding and
other natural disasters, terrorism, civil unrest or an outbreak of
contagious diseases; and the integration of acquired assets. The
forward looking statements contained in this press release are
based upon assumptions management believes to be reasonable,
including, without limitation: the ongoing operation of the
properties in which 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
and disclosures 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 Corporation's
ongoing income and assets relating to determination of its PFIC
status; no material changes to existing tax treatment; no adverse
development in respect of any significant property in which
Franco-Nevada holds a royalty, stream or other interest; the
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 other factors 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 be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Investors are cautioned that
forward looking statements are not guarantees of future
performance. Franco-Nevada cannot
assure investors that actual results will be consistent with these
forward looking statements and investors should not place undue
reliance on forward 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 of Franco-Nevada's most recent Annual Information
Form filed with the Canadian securities regulatory authorities
on www.sedar.com and Franco-Nevada's most recent Annual Report
filed on Form 40-F filed with the SEC on www.sec.gov. The
forward looking statements herein are made as of the date of this
press release only and Franco-Nevada does not assume any 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: Adjusted Net
Income and Adjusted EBITDA are intended to provide additional
information only and do not have any standardized meaning
prescribed under 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 indicative of
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 IFRS
measures, please see below or the Company's current MD&A
disclosure found on the Company's website, on SEDAR and on EDGAR.
Comparative information has been recalculated to conform to current
presentation.
1
|
GEOs include our
gold, silver, platinum, palladium and other mineral assets. GEOs
are estimated on a gross basis for NSR royalties and, in the case
of stream ounces, before the payment of the per ounce contractual
price paid by the Company. For NPI royalties, GEOs are calculated
taking into account the NPI economics. Platinum, palladium, silver and other minerals were
converted to GEOs by dividing associated revenue, which includes
settlement adjustments, by the average gold price for the
period. For Q3 2016, the average
commodity prices were as follows: $1,335 gold (2015 - $1,124),
$19.62 silver (2015 - $14.91), $1,084 platinum (2015 - $988) and
$676 palladium (2015 - $615).
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|
|
2
|
Adjusted EBITDA and Adjusted EBITDA per
share are non-IFRS financial
measures, which exclude the following from net income and EPS:
income tax expense/recovery; finance expenses; finance income;
depletion and depreciation; non-cash costs of sales; impairment
charges related to royalty, stream and working interests and
investments; gains/losses on the sale of investments; and foreign
exchange gains/losses and other income/expenses.
|
|
|
3
|
Adjusted Net Income and Adjusted Net Income per
share are non-IFRS financial
measures, which exclude the following from net income and earnings
per share ("EPS"): foreign exchange gains/losses and other
income/expenses; gains/losses on the sale of investments;
impairment charges related to royalty, stream and working interests
and investments; unusual non-recurring items; and the impact of
income taxes on these items.
|
Reconciliation to IFRS measures:
|
|
Three months ended
September 30,
|
|
(expressed in millions, except per share amounts)
|
|
2016
|
|
2015
|
|
Net Income (Loss)
|
|
$
|
54.4
|
|
$
|
15.2
|
|
|
Income tax expense (recovery)
|
|
|
12.9
|
|
|
8.5
|
|
|
Finance expenses
|
|
|
0.7
|
|
|
0.6
|
|
|
Finance income
|
|
|
(0.5)
|
|
|
(1.3)
|
|
|
Depletion and depreciation
|
|
|
72.9
|
|
|
49.7
|
|
|
Non-cash costs of sales
|
|
|
1.8
|
|
|
1.7
|
|
|
Impairment of investments
|
|
|
—
|
|
|
1.9
|
|
|
Foreign exchange (gains)/losses and other
(income)/expenses
|
|
|
—
|
|
|
1.2
|
|
Adjusted EBITDA
|
|
$
|
142.2
|
|
$
|
77.5
|
|
Basic Weighted Average Shares
Outstanding
|
|
|
178.1
|
|
|
156.9
|
|
Adjusted EBITDA per share
|
|
$
|
0.80
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
(expressed in millions, except per share amounts)
|
|
2016
|
|
2015
|
|
Net Income (Loss)
|
|
$
|
54.4
|
|
$
|
15.2
|
|
|
Foreign exchange (gains)/losses
|
|
|
0.2
|
|
|
1.3
|
|
|
(Gain) on sale of investments
|
|
|
(0.2)
|
|
|
—
|
|
|
Impairment of investments
|
|
|
—
|
|
|
1.9
|
|
|
Tax effect of adjustments
|
|
|
0.3
|
|
|
1.0
|
|
|
Other tax related adjustments:
|
|
|
|
|
|
|
|
|
|
Valuation
allowance
|
|
|
(1.2)
|
|
|
—
|
|
Adjusted Net Income
|
|
$
|
53.5
|
|
$
|
19.4
|
|
Basic Weighted Average Shares
Outstanding
|
|
|
178.1
|
|
|
156.9
|
|
Adjusted Net Income per share
|
|
$
|
0.30
|
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
|
|
FRANCO-NEVADA CORPORATION
|
|
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
|
|
(unaudited, in millions of U.S.
dollars)
|
|
|
|
|
|
September 30, 2016
|
|
December 31, 2015
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Cash and cash equivalents (Note 4)
|
|
$
|
277.6
|
|
$
|
149.2
|
|
Short-term investments (Notes 5 &
8)
|
|
|
—
|
|
|
18.8
|
|
Receivables (Note 8)
|
|
|
72.4
|
|
|
65.1
|
|
Prepaid expenses and other (Notes 6 &
13)
|
|
|
34.8
|
|
|
41.6
|
|
|
Current assets
|
|
|
384.8
|
|
|
274.7
|
|
|
|
|
|
|
|
|
|
Royalty, stream and working interests,
net
|
|
|
3,684.7
|
|
|
3,257.5
|
|
Investments (Notes 5 & 8)
|
|
|
131.7
|
|
|
94.8
|
|
Deferred income tax assets
|
|
|
23.3
|
|
|
16.1
|
|
Other assets (Notes 7 and 13)
|
|
|
26.5
|
|
|
31.2
|
|
|
Total assets
|
|
$
|
4,251.0
|
|
$
|
3,674.3
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
$
|
19.5
|
|
$
|
18.0
|
|
Current income tax liabilities
|
|
|
7.7
|
|
|
2.8
|
|
|
Current liabilities
|
|
|
27.2
|
|
|
20.8
|
|
|
|
|
|
|
|
|
|
Debt (Note 13)
|
|
|
—
|
|
|
457.3
|
|
Deferred income tax liabilities
|
|
|
35.7
|
|
|
33.2
|
|
|
Total liabilities
|
|
|
62.9
|
|
|
511.3
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY (Note 14)
|
|
|
|
|
|
|
|
Common shares
|
|
|
4,654.0
|
|
|
3,709.0
|
|
Contributed surplus
|
|
|
43.2
|
|
|
44.3
|
|
Deficit
|
|
|
(292.6)
|
|
|
(302.2)
|
|
Accumulated other comprehensive
loss
|
|
|
(216.5)
|
|
|
(288.1)
|
|
|
Total shareholders' equity
|
|
|
4,188.1
|
|
|
3,163.0
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders'
equity
|
|
$
|
4,251.0
|
|
$
|
3,674.3
|
|
|
|
|
|
|
|
|
|
Subsequent events (Note 17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
condensed consolidated financial statements and can
be found in our Q3 2016 Report available on our
website
|
|
|
|
|
|
|
|
|
FRANCO-NEVADA CORPORATION
|
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME (LOSS)
|
|
(unaudited, in millions of U.S. dollars, except
per share amounts)
|
|
|
|
|
|
For the three months
ended
|
|
For the nine months
ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue (Note
9)
|
|
$
|
172.0
|
|
$
|
103.7
|
|
$
|
454.9
|
|
$
|
322.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of sales (Note 10)
|
|
|
28.0
|
|
|
22.4
|
|
|
80.1
|
|
|
68.8
|
|
|
Depletion and depreciation
|
|
|
72.9
|
|
|
49.7
|
|
|
206.6
|
|
|
150.5
|
|
|
(Gain) loss on sale of gold bullion (Note
16(a))
|
|
|
(0.7)
|
|
|
0.5
|
|
|
(2.8)
|
|
|
0.5
|
|
|
Impairment charges
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
Corporate administration (Notes 11 &
14(c))
|
|
|
3.8
|
|
|
4.0
|
|
|
14.9
|
|
|
12.2
|
|
|
Business development
|
|
|
0.5
|
|
|
1.0
|
|
|
1.1
|
|
|
2.8
|
|
|
|
|
104.5
|
|
|
77.6
|
|
|
299.9
|
|
|
234.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
67.5
|
|
|
26.1
|
|
|
155.0
|
|
|
87.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange gain (loss) and other income
(expenses) (Notes 5 & 16(a))
|
|
|
—
|
|
|
(1.2)
|
|
|
4.2
|
|
|
(2.4)
|
|
|
Impairment of investments
|
|
|
—
|
|
|
(1.9)
|
|
|
—
|
|
|
(1.9)
|
|
Income before finance items and income
taxes
|
|
|
67.5
|
|
|
23.0
|
|
|
159.2
|
|
|
83.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income
|
|
|
0.5
|
|
|
1.3
|
|
|
2.6
|
|
|
3.2
|
|
|
Finance expenses (Note 13)
|
|
|
(0.7)
|
|
|
(0.6)
|
|
|
(2.8)
|
|
|
(1.5)
|
|
Net income before income taxes
|
|
|
67.3
|
|
$
|
23.7
|
|
|
159.0
|
|
|
84.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (Note 12)
|
|
|
12.9
|
|
|
8.5
|
|
|
32.3
|
|
|
28.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
54.4
|
|
$
|
15.2
|
|
$
|
126.7
|
|
$
|
56.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified subsequently to profit
and loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) in the market value of
available-for-sale
investments, net of income tax expense of $1.2 (2015 - income
tax
expense of $0.3), income tax expense of $1.7 (2015 - income tax
recovery of $1.0) (Note 5)
|
|
|
8.1
|
|
|
0.1
|
|
|
34.7
|
|
|
(4.3)
|
|
|
Realized change in market value of available-for-sale
investments
|
|
|
(0.2)
|
|
|
(1.9)
|
|
|
(4.5)
|
|
|
(2.8)
|
|
|
Currency translation adjustment
|
|
|
(4.1)
|
|
|
(67.3)
|
|
|
41.4
|
|
|
(141.8)
|
|
|
Other comprehensive income (loss)
|
|
|
3.8
|
|
|
(69.1)
|
|
|
71.6
|
|
|
(148.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
(loss)
|
|
$
|
58.2
|
|
$
|
(53.9)
|
|
$
|
198.3
|
|
$
|
(92.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share (Note 15)
|
|
$
|
0.31
|
|
$
|
0.10
|
|
$
|
0.72
|
|
$
|
0.36
|
|
Diluted earnings per share (Note 15)
|
|
$
|
0.30
|
|
$
|
0.10
|
|
$
|
0.72
|
|
$
|
0.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of
these condensed consolidated financial statements and can be found
in our
Q3 2016 Report available on our website
|
|
FRANCO-NEVADA CORPORATION
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
(unaudited, in millions of U.S.
dollars)
|
|
|
|
|
|
For the nine months ended
September 30,
|
|
|
|
2016
|
|
2015
|
|
Cash flows from operating
activities
|
|
|
|
|
|
|
|
Net income
|
|
$
|
126.7
|
|
$
|
56.0
|
|
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
Depletion and depreciation
|
|
|
206.6
|
|
|
150.5
|
|
|
Proceeds from sale of gold bullion (Note
16(b))
|
|
|
59.4
|
|
|
36.6
|
|
|
Acquisition of gold bullion (Note
16(b))
|
|
|
(47.8)
|
|
|
(50.9)
|
|
|
Impairment charges
|
|
|
—
|
|
|
0.1
|
|
|
Impairment of investments
|
|
|
—
|
|
|
1.9
|
|
|
Other non-cash items
|
|
|
(0.8)
|
|
|
0.3
|
|
|
Gain on sale of investments (Note
5)
|
|
|
(4.5)
|
|
|
(0.9)
|
|
|
Non-cash costs of sales (Note 10)
|
|
|
5.3
|
|
|
5.0
|
|
|
Deferred income tax expense (Note
12)
|
|
|
2.6
|
|
|
8.0
|
|
|
Share-based payments (Note 14(c))
|
|
|
3.7
|
|
|
4.1
|
|
|
Unrealized foreign exchange loss
|
|
|
0.3
|
|
|
3.0
|
|
|
Mark-to-market on warrants (Note 5)
|
|
|
—
|
|
|
0.3
|
|
Operating cash flows before changes in non-cash
working capital
|
|
|
351.5
|
|
|
214.0
|
|
|
Changes in non-cash working
capital:
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in receivables
|
|
|
(7.3)
|
|
|
22.1
|
|
|
|
Increase in prepaid expenses and
other
|
|
|
(1.4)
|
|
|
(6.8)
|
|
|
|
Increase in current liabilities
|
|
|
6.3
|
|
|
0.1
|
|
|
Net cash provided by operating
activities
|
|
|
349.1
|
|
|
229.4
|
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities
|
|
|
|
|
|
|
|
|
Proceeds from sale of investments
|
|
|
24.0
|
|
|
24.7
|
|
|
Acquisition of investments
|
|
|
(1.6)
|
|
|
(96.6)
|
|
|
Acquisition of royalty, stream and working
interests
|
|
|
(597.1)
|
|
|
(44.2)
|
|
|
Acquisition of oil & gas well
equipment
|
|
|
(1.7)
|
|
|
(2.3)
|
|
|
Acquisition of property and
equipment
|
|
|
(0.1)
|
|
|
—
|
|
|
Net cash used in investing
activities
|
|
|
(576.5)
|
|
|
(118.4)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities
|
|
|
|
|
|
|
|
|
Net proceeds from issuance of common shares (Note
14(a))
|
|
|
883.5
|
|
|
—
|
|
|
Repayment of Credit Facility (Note
13)
|
|
|
(460.0)
|
|
|
—
|
|
|
Credit facility amendment costs
|
|
|
—
|
|
|
(1.2)
|
|
|
Payment of dividends (Note 14(b))
|
|
|
(87.4)
|
|
|
(70.4)
|
|
|
Proceeds from exercise of stock options (Note
14(a))
|
|
|
16.1
|
|
|
0.5
|
|
Net cash provided by (used in) financing
activities
|
|
|
352.2
|
|
|
(71.1)
|
|
Effect of exchange rate changes on cash and cash
equivalents
|
|
|
3.6
|
|
|
(27.0)
|
|
Net change in cash and cash
equivalents
|
|
|
128.4
|
|
|
12.9
|
|
Cash and cash equivalents at beginning of
period
|
|
|
149.2
|
|
|
592.5
|
|
Cash and cash equivalents at end of
period
|
|
|
277.6
|
|
$
|
605.4
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow
information:
|
|
|
|
|
|
|
|
Cash paid for interest expense and loan standby
fees
|
|
$
|
2.4
|
|
$
|
1.2
|
|
Income taxes paid
|
|
$
|
27.1
|
|
$
|
24.2
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of
these condensed consolidated financial statements and can
be found in our Q3 2016 Report available on our
website
|
|
SOURCE Franco-Nevada Corporation