(in U.S. dollars unless otherwise
noted)
Guidance exceeded and $110 million
agreement to acquire second package of U.S. oil & gas
royalties
TORONTO, March 22, 2017 /PRNewswire/ - Franco-Nevada's
CEO, David Harquail, commented: "Our
diversified portfolio continues to perform very well. In 2016, we
exceeded our recently increased guidance ranges for both Gold
Equivalent Ounces1 ("GEOs") and oil & gas revenues. The growth
in 2016 is reflecting the contribution from acquisitions we made
during the recent downturn and increased activity by many of the
operators on our lands. Franco-Nevada has no debt and is growing its cash
balances. We continue to see investment opportunities and
Franco-Nevada has just agreed to acquire, for $110 million, oil & gas royalties on the
Midland portion of the Permian Basin in Texas, U.S."
2016 Q4 Financial Highlights
- Record 129,036 GEOs delivered in the quarter, with 121,910 GEOs
sold
- $155.3 million in revenue – a
28.0% increase over Q4/2015
- $122.2 million of Adjusted
EBITDA2 or $0.69 per
share
- $4.5 million of net loss, or
$0.03 per share, reflecting
impairment charges of $67.4 million
on the Cooke 4 stream
- $42.9 million of Adjusted Net
Income3 or $0.24 per
share
2016 Full Year Financial Highlights
- 464,383 GEOs sold – a new record and a 29.0% increase
year-over-year
- $610.2 million in revenue — a new
record and a 37.6% increase year-over-year
- $489.1 million of Adjusted
EBITDA2 or $2.79 per
share
- $122.2 million of net income, or
$0.70 per share
- $164.4 million of Adjusted Net
Income3 or $0.94 per
share
- $157.8 million of cash and DRIP
dividends paid
- $253.0 million in cash and cash
equivalents at year end and no debt
Revenue and GEOs by Asset Categories
|
Q4/2016
|
Q4/2015
|
|
|
Revenue
|
|
GEOs
|
|
Revenue
|
|
GEOs
|
|
|
(in millions)
|
|
#
|
|
(in millions)
|
|
#
|
Precious
Metals
|
|
|
|
|
|
|
|
|
|
|
|
Gold
|
|
$
|
112.8
|
|
93,775
|
|
$
|
88.0
|
|
79,800
|
|
Silver
|
|
|
21.9
|
|
18,650
|
|
|
18.9
|
|
17,112
|
|
PGM
|
|
|
8.0
|
|
7,611
|
|
|
7.9
|
|
7,523
|
Precious Metals -
Total
|
|
$
|
142.7
|
|
120,036
|
|
$
|
114.8
|
|
104,435
|
Other
Minerals
|
|
|
2.2
|
|
1,874
|
|
|
2.1
|
|
1,877
|
Oil &
Gas
|
|
|
10.4
|
|
—
|
|
|
4.4
|
|
—
|
|
|
$
|
155.3
|
|
121,910
|
|
$
|
121.3
|
|
106,312
|
For Q4/2016, revenue was sourced 91.9% from precious metals
(72.6% gold, 14.1% silver and 5.2% PGM) and 87.2% from the Americas
(18.5% U.S., 22.3% Canada and
46.4% Latin America).
Operating costs and expenses decreased slightly year-over-year,
reflecting a realized gain of $14.1
million on the partial buy back of the Kirkland Lake NSR.
Oil & gas revenue increased 136%, reflecting both higher
prices and production levels year-over-year. Cash provided by
operating activities was $121.9
million, an increase of 43.5% compared to Q4/2015.
Corporate Updates
- Credit Facilities: On March 22,
2017, Franco-Nevada extended the term of its existing
$1 billion credit facility from
November 12, 2020 to March 22, 2022. In addition, on
March 20, 2017, Franco-Nevada's
subsidiary, Franco-Nevada (Barbados) Corporation, entered into an
unsecured revolving credit facility which provides for the
availability of up to $100 million in
borrowings.
- Midland oil & gas royalties: On March 13, 2017, Franco-Nevada agreed to purchase
a portfolio of oil & gas royalties in the Midland shale play of
the Permian Basin of Texas for
$110 million. Closing is
expected in the second quarter of 2017.
- STACK oil & gas royalties: On December 19, 2016, Franco-Nevada acquired a
$100 million portfolio of oil &
gas royalty rights in the Sooner Trend, Anadarko Basin, Canadian and Kingfisher counties ("STACK") play in
Oklahoma's Anadarko basin.
- Kirkland Lake royalty buy
back: In October 2016,
Kirkland Lake Gold exercised its
option to buy back 1% of an overlying 2.5% net smelter return
royalty for aggregate cash consideration of $30.3 million. Franco-Nevada recorded a gain on disposal of
$14.1 million.
- Cooke 4 stream
impairment: In October 2016,
Sibanye Gold Limited announced that it had ceased production at the
Cooke 4 mine. Franco-Nevada
recorded an impairment charge of $67.4
million.
- Antapaccay stream: On February
26, 2016, Franco-Nevada acquired a $500 million precious metals stream from Glencore
plc with reference to production from the Antapaccay mine located
in Peru.
- Equity financing: On February 19,
2016, Franco-Nevada completed a bought deal financing with a
syndicate of underwriters for 19.2 million common shares at
$47.85 per common share. Net proceeds
were $884.3 million.
2017 Guidance
In 2017, Franco-Nevada expects attributable royalty and stream
production to total 470,000 to 500,000 GEOs from its mineral assets
and revenue of $35 million to $45
million from its oil & gas assets. Of the royalty and
stream production, 335,000 to 345,000 GEOs are expected from
Franco-Nevada's various stream agreements. For 2017 guidance,
silver, platinum and palladium metals have been converted to GEOs
using assumed commodity prices of $1,200/oz Au, $17.50/oz Ag, $950/oz Pt and $750/oz Pd. The WTI oil price is assumed to
average $50 per barrel with a
$3.50 per barrel price differential
between the Edmonton Light and realized prices for Canadian oil.
The Company estimates depletion expense of $265 million to $295 million. 2017 guidance and
2021 outlook below is based on assumptions including the forecasted
state of operations from our assets based on the public statements
and other disclosures by the third-party owners and operators of
the underlying properties (subject to our assessment thereof).
2021 Outlook
Our outlook to 2021 further assumes that the Cobre Panama
project will be ramping up production in 2019. At the same time,
scheduled fixed ounce payments from Midas/Fire Creek, Karma and Sabodala are
expected to step down to longer term royalty or stream payments.
Using the same commodity price assumptions as were used for our
2017 guidance (see above) and assuming no other acquisitions,
Franco-Nevada expects its existing portfolio to generate between
515,000 to 540,000 GEOs by 2021. Oil & gas revenues at the same
$50 per barrel WTI oil price
assumption are expected to range between $55
million and $65 million.
Q4/2016 Portfolio Updates
- Precious Metals — U.S.: GEOs from U.S. precious
metals assets increased by 14.5% year-over-year with decreases from
Goldstrike being more than offset by payments received from the
South Arturo mine. GEOs received from the U.S. precious metal
assets were 22,971 GEOs.
- South Arturo (4-9% royalty) – This project, operated by
Barrick and Premier Gold, poured its first gold in August. Q4/2016
payments represented 8,808 GEOs. The partners are looking at
a second open pit (Dee) on the property and are advancing
permitting for the El Nino underground opportunity below the
current pit.
- Goldstrike (2-4% royalty & 2.4-6% NPI) – Barrick is
unitizing Goldstrike in an effort to reduce AISC by $100 per ounce which would benefit the profit
royalty.
- Bald Mountain (0.875-5% royalty) – Kinross reported that it has doubled reserves
at this project to 2.1 million gold ounces.
- Stillwater (5% royalty)
– Stillwater Mining 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.
- Precious Metals — Canada: GEOs from Canadian
precious metals assets increased by approximately 8.6% to 20,849
GEOs compared with Q4/2015.
- Hemlo (3% royalty & 50%
NPI) – The main contributor to the increase in Canadian GEOs
was the Hemlo NPI. Barrick has increased reserves at
Hemlo including the Interlake and
C-Zone Deep zones to which the royalties apply.
- Hardrock (3% royalty) – Centerra Mining and Premier Gold
presented a feasibility for a 14.5 year project with production
averaging 300,000 gold ounces per year. A draft EA has been
submitted.
- Detour (2% royalty) – Detour Gold has had challenges in
getting approvals for its West Detour pit and is expected to
provide an alternative mine plan.
- Holloway (sliding scale royalty) – In Q4, Kirkland Lake Gold announced its intention to
put Holloway on care and maintenance. The Holloway royalty
property encompasses the Holt mine property on which Franco-Nevada
also receives royalties. Mining at Holt is expected to extend
onto the Holloway property in the near term. At December 31, 2016, Franco-Nevada has recovered
its initial investment in the Holloway mine.
- Brucejack (1.2% royalty) – Pretium Resources expects to
begin commissioning of the underground mine in mid-2017.
- Timmins West (2.25%
royalty) – Tahoe Resources expects to provide a reserve
estimate for the Gap 144 zone in Q3/2017.
- Precious Metals — Latin America: GEOs from Latin
American precious metals assets represented the largest
year-over-year increase due to the addition of the Antapaccay
stream. Precious metal GEOs earned from Latin America were 60,808 GEOs, an increase of
26.0% year-over-year.
- Antapaccay (gold and silver stream) – Antapaccay
delivered 22,927 GEOs in Q4/2016, for a total of 73,612 GEOs in
2016.
- Antamina (22.5% silver stream) – Antamina delivered
10,619 GEOs during the quarter compared to 13,021 GEOs in Q4/2015,
reflecting adjustments for final settlements of provisionally
priced sales. For the full year 2016, Antamina delivered 60,273
GEOs.
- Candelaria (gold and silver stream) – Candelaria earned
19,698 GEOs, compared to 21,846 GEOs in the prior year quarter, as
expected according to its mine plan. Since acquisition, contained
copper and gold in the reserves have increased by approximately 50%
when mined depletion is included and the production profile has
significantly improved.
- Guadalupe (50% gold stream) – The 400,000 minimum ounce
Palmarejo obligation was paid and fully met by Coeur Mining in
Q3. That resulted in the original Palmarejo gold stream being
terminated and the new Guadalupe stream commencing. During Q4,
Franco-Nevada received 7,058 GEOs under the new Guadalupe
agreement.
- Cobre Panama (gold and silver stream) – During the
quarter, Franco-Nevada contributed $46.6
million of its share of construction capital for the Cobre
Panama project. Franco-Nevada at quarter end has contributed
$462.2 million of its total
$1 billion commitment for the
construction of Cobre Panama. First Quantum reported that the
project was 46% complete as of year end and that initial production
in expected in late 2018 with ramping up through 2019.
Franco-Nevada expects to contribute between $200-$220 million to the project in
2017.
- Precious Metals — Rest of World: GEOs from Rest of
World precious metals assets were 15,408 GEOs during the quarter, a
9.0% decrease year-over-year. This reflected lower
production at MWS and that a portion of ounces delivered from Karma
and Sabodala had not been sold as at quarter end.
- Karma (fixed gold deliveries and stream) – 3,750 GEOs
were delivered in the quarter of which 2,500 were sold in
Q4/2016.
- Sabodala (fixed gold deliveries and stream) – 5,625 GEOs
were delivered in the quarter, of which 3,750 were sold in Q4/2016.
Teranga Gold won the PDAC award for Environmental & Social
Responsibility for its work around the Sabodala mine.
- Edikan (1.5% royalty) – Perseus Mining completed an
upgrade to the plant in October 2016
and is now reporting improved operating performance.
- Sissingué (0.5% royalty) – Perseus Mining reports that
this project has been in full scale development since July 2016 and expects first production in the
March 2018 quarter. Perseus has
also secured financing of $40 million
to complete the development of the project.
- Cerro Morro (2% royalty)
– Yamana is targeting a Q2/2018 start-up.
- Tasiast (2% royalty) – Kinross continues to advance development of
the Tasiast Phase One expansion and expects to provide a
feasibility for a possible Phase Two expansion in Q3/2017.
- Subika (2% royalty) – Newmont Mining is expected to make
a decision in the first half of 2017 regarding the underground
development of Subika and expanding the Ahafo mill.
- Agi Dagi (2% royalty) –
Alamos Gold has tabled a positive feasibility for the project
projecting annual production of 177,600 ounces of gold over 5
years. A positive PEA was also completed for the neighboring
Camyurt project on which Franco-Nevada also holds a royalty
- Oil & Gas: Revenue from
oil & gas assets increased to $10.4
million in Q4/2016 compared to $4.4
million in Q4/2015, reflecting both higher prices and
production levels year-over-year.
- Acquisition of U.S. Oil & Gas Royalties – Midland
Basin: On March 13, 2017,
Franco-Nevada, through its wholly-owned U.S. subsidiary, agreed to
purchase a package of royalty rights in the Midland Basin of
West Texas for a price of
$110 million. The Midland Basin forms
the eastern portion of the broader Permian Basin and represents one
of the most active and profitable oil plays in North America.
The royalties consist of approximately 97% mineral title rights,
along with some GORRs, which apply to approximately 908 acres (net
after royalties) that, with pooling, provides exposure to an
estimated gross acreage of 675,000 acres (a significant portion of
the overall Midland Basin) at an estimated average royalty rate of
0.14%. The royalties are subject to a diverse operator base,
which is anchored by Pioneer Natural Resources. Royalty
revenue is expected to grow in future years as horizontal drilling
activity in the area continues to ramp up. The transaction is
expected to close in the second quarter of 2017.
Shareholder Information and 2017 Asset Handbook
The complete Consolidated Annual 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, Thursday, March 23, 2017 at 11:00
a.m. Eastern Time to review Franco‑Nevada's 2016 results, as
well as discuss the 2017 and five-year outlook. In addition,
Franco-Nevada will be releasing its 2017 Asset Handbook with
updated disclosures on our assets and the number of gold ounces and
royalty equivalent units associated with each asset.
Interested investors are invited to participate as follows:
- Via Conference Call: Toll-Free: (888) 231-8191; International:
(647) 427-7450
- Conference Call Replay until March
30: Toll-Free (855) 859-2056; Toronto (416) 849-0833; Pass code
66380664
- 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.
For more information, please go to our website
at www.franco-nevada.com or contact:
Stefan Axell
|
|
|
|
Sandip
Rana
|
Director, Corporate
Affairs
|
|
|
|
Chief Financial
Officer
|
(416)
306-6328
|
|
|
|
(416)
306-6303
|
info@franco-nevada.com
|
|
|
|
|
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.
- 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 are
converted to GEOs by dividing associated revenue, which includes
settlement adjustments, by the relevant gold price. The gold price
used in the computation of GEOs earned from a particular asset
varies depending on the royalty or stream agreement, which may make
reference to the market price realized by the operator, or the
average for the month, quarter, or year in which the mineral was
produced or sold. For Q4/2016, the average commodity prices were as
follows: $1,218 gold (2015 -
$1,104), $17.18 silver (2015 - $14.76), $944
platinum (2015 - $908) and
$684 palladium (2015 - $606).
- 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 sale of royalty
interests; gains/losses on investments; and foreign exchange
gains/losses and other income/expenses.
- 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; impairment charges related
to royalty, stream and working interests and investments;
gains/losses on sale of royalty interests; gains/losses on
investments; unusual non-recurring items; and the impact of
income taxes on these items.
Reconciliation to IFRS measures:
|
Three months
ended
|
Year
ended
|
|
December 31,
|
December 31,
|
(expressed in
millions, except per share amounts)
|
2016
|
2015
|
2016
|
2015
|
Net Income
(Loss)
|
$
|
(4.5)
|
$
|
(31.4)
|
$
|
122.2
|
$
|
24.6
|
|
Income tax expense
(recovery)
|
|
13.4
|
|
(4.9)
|
|
45.7
|
|
23.9
|
|
Finance
expenses
|
|
0.8
|
|
1.4
|
|
3.6
|
|
2.9
|
|
Finance
income
|
|
(0.9)
|
|
(2.1)
|
|
(3.5)
|
|
(5.3)
|
|
Depletion and
depreciation
|
|
67.2
|
|
65.8
|
|
273.8
|
|
216.3
|
|
Non-cash costs of
sales
|
|
1.2
|
|
1.7
|
|
6.5
|
|
6.6
|
|
Impairment
charges
|
|
67.5
|
|
62.8
|
|
67.5
|
|
62.9
|
|
Impairment of
investments
|
|
—
|
|
0.1
|
|
—
|
|
2.0
|
|
Gain on sale of
royalty interest
|
|
(14.1)
|
|
—
|
|
(14.1)
|
|
—
|
|
Gain on
investments
|
|
(7.9)
|
|
—
|
|
(12.4)
|
|
(0.9)
|
|
Foreign exchange
(gains)/losses and other (income)/expenses
|
|
(0.5)
|
|
0.8
|
|
(0.2)
|
|
4.1
|
Adjusted
EBITDA
|
$
|
122.2
|
$
|
94.2
|
$
|
489.1
|
$
|
337.1
|
|
Basic Weighted
Average Shares Outstanding
|
|
178.3
|
|
156.8
|
|
175.2
|
|
156.9
|
Adjusted EBITDA
per share
|
$
|
0.69
|
$
|
0.60
|
$
|
2.79
|
$
|
2.16
|
|
Three months
ended
|
Year
ended
|
|
December 31,
|
December 31,
|
(expressed in
millions, except per share amounts)
|
2016
|
2015
|
2016
|
2015
|
Net Income
(Loss)
|
$
|
(4.5)
|
$
|
(31.4)
|
$
|
122.2
|
$
|
24.6
|
|
Foreign exchange
(gains)/losses and other (income)/expenses
|
|
(0.5)
|
|
0.8
|
|
(0.2)
|
|
4.0
|
|
Impairment
charges
|
|
67.5
|
|
62.8
|
|
67.5
|
|
62.9
|
|
Impairment of
investments
|
|
—
|
|
0.1
|
|
—
|
|
2.0
|
|
Gain on sale of
royalty interest
|
|
(14.1)
|
|
—
|
|
(14.1)
|
|
—
|
|
Gain on
investments
|
|
(7.9)
|
|
—
|
|
(12.4)
|
|
(0.9)
|
|
Tax effect of
adjustments
|
|
4.3
|
|
(11.9)
|
|
4.7
|
|
(9.6)
|
|
Other tax related
adjustments:
|
|
|
|
|
|
|
|
|
|
|
Indexation
adjustment
|
|
—
|
|
—
|
|
0.1
|
|
(0.4)
|
|
|
Valuation
allowance
|
|
(2.5)
|
|
—
|
|
(4.4)
|
|
0.9
|
|
|
Impact of change in
depreciation rate
|
|
—
|
|
4.0
|
|
—
|
|
4.0
|
|
|
Impact of tax
increases
|
|
0.6
|
|
(0.7)
|
|
1.0
|
|
1.4
|
Adjusted Net
Income
|
$
|
42.9
|
$
|
23.7
|
$
|
164.4
|
$
|
88.9
|
Basic Weighted
Average Shares Outstanding
|
|
178.3
|
|
156.8
|
|
175.2
|
|
156.9
|
Adjusted Net
Income per share
|
$
|
0.24
|
$
|
0.15
|
$
|
0.94
|
$
|
0.57
|
FRANCO-NEVADA
CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
(in millions of U.S. dollars)
|
December 31, 2016
|
December 31, 2015
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents (Note 5)
|
$
|
253.0
|
$
|
149.2
|
Short-term
investments (Note 6)
|
|
—
|
|
18.8
|
Receivables
|
|
71.1
|
|
65.1
|
Prepaid expenses and
other (Note 7)
|
|
37.1
|
|
41.6
|
|
Current
assets
|
|
361.2
|
|
274.7
|
|
|
|
|
|
Royalty, stream and
working interests, net (Note 8)
|
|
3,668.3
|
|
3,257.5
|
Investments (Note
6)
|
|
147.4
|
|
94.8
|
Deferred income tax
assets (Note 17)
|
|
21.3
|
|
16.1
|
Other assets (Note
9)
|
|
23.4
|
|
31.2
|
|
Total
assets
|
$
|
4,221.6
|
$
|
3,674.3
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Accounts payable and
accrued liabilities (Note 10)
|
$
|
21.0
|
$
|
18.0
|
Current income tax
liabilities (Note 17)
|
|
16.6
|
|
2.8
|
|
Current
liabilities
|
|
37.6
|
|
20.8
|
|
|
|
|
|
Debt (Note
13)
|
|
—
|
|
457.3
|
Deferred income tax
liabilities (Note 17)
|
|
37.5
|
|
33.2
|
|
Total
liabilities
|
|
75.1
|
|
511.3
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY (Note 18)
|
|
|
|
|
Common
shares
|
|
4,666.2
|
|
3,709.0
|
Contributed
surplus
|
|
41.6
|
|
44.3
|
Deficit
|
|
(336.8)
|
|
(302.2)
|
Accumulated other
comprehensive loss
|
|
(224.5)
|
|
(288.1)
|
|
Total shareholders'
equity
|
|
4,146.5
|
|
3,163.0
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
4,221.6
|
$
|
3,674.3
|
|
|
|
|
|
Commitments
(Note 20)
|
|
|
|
|
Subsequent
events (Notes 13 & 22)
|
|
|
|
|
The accompanying notes are an integral part of
these consolidated financial statements and can be found in our
2016 Annual Report available on our website
FRANCO-NEVADA
CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME (LOSS)
(in millions of U.S. dollars,
except per share amounts)
|
2016
|
2015
|
|
|
|
|
|
Revenue
(Note 14)
|
$
|
610.2
|
$
|
443.6
|
|
|
|
|
|
Cost of
sales
|
|
|
|
|
|
|
Costs of sales
(Note 15)
|
|
105.8
|
|
93.1
|
|
|
Depletion and
depreciation (Note 8)
|
|
273.8
|
|
216.3
|
Total cost of
sales
|
|
379.6
|
|
309.4
|
|
|
|
|
|
|
Gross
profit
|
|
230.6
|
|
134.2
|
|
|
|
|
|
Other operating
expenses (income)
|
|
|
|
|
|
|
Corporate
administration (Notes 16 & 18)
|
|
20.7
|
|
15.1
|
|
|
Business development
(Note 16)
|
|
3.4
|
|
2.7
|
|
|
Impairment charges
(Note 8(b))
|
|
67.5
|
|
62.9
|
|
|
Gain on sale of
royalty interest (Note 8(c))
|
|
(14.1)
|
|
—
|
|
|
(Gain) loss on sale
of gold bullion (Note 2(b))
|
|
(2.3)
|
|
2.2
|
Total other operating
expenses (income)
|
|
75.2
|
|
82.9
|
|
|
|
|
|
|
Operating
income
|
|
155.4
|
|
51.3
|
|
|
|
|
|
|
|
Foreign exchange gain
(loss) and other income (expenses) (Notes 2(b) &
6)
|
|
0.2
|
|
(4.1)
|
|
|
Realized gain on
investments
|
|
12.4
|
|
0.9
|
|
|
Impairment of
investments
|
|
—
|
|
(2.0)
|
Income before finance
items and income taxes
|
|
168.0
|
|
46.1
|
|
|
|
|
|
Finance
items
|
|
|
|
|
|
|
Finance
income
|
|
3.5
|
|
5.3
|
|
|
Finance expenses
(Note 13)
|
|
(3.6)
|
|
(2.9)
|
Net income before
income taxes
|
|
167.9
|
|
48.5
|
|
|
|
|
|
Income tax expense
(Note 17)
|
|
45.7
|
|
23.9
|
|
|
|
|
|
Net
income
|
$
|
122.2
|
$
|
24.6
|
|
|
|
|
|
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 $5.3 (2015 - income tax recovery of $1.6)
(Note 17)
|
|
52.9
|
|
(27.0)
|
|
|
Realized change in
market value of available-for-sale investments, net of income tax
expense of $1.6 (2015 - income tax recovery of $nil) (Note
6)
|
|
(10.6)
|
|
1.1
|
|
|
Currency translation
adjustment
|
|
21.3
|
|
(163.4)
|
|
|
Other comprehensive
income (loss)
|
|
63.6
|
|
(189.3)
|
|
|
|
|
|
Total
comprehensive income (loss)
|
$
|
185.8
|
$
|
(164.7)
|
|
|
|
|
|
Basic earnings per
share (Note 19)
|
$
|
0.70
|
$
|
0.16
|
Diluted earnings
per share (Note 19)
|
$
|
0.69
|
$
|
0.16
|
The accompanying notes are an integral part of
these consolidated financial statements and can be found in our
2016 Annual Report available on our website
FRANCO-NEVADA
CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in millions of U.S. dollars)
|
2016
|
2015
|
Cash flows from
operating activities
|
|
|
|
|
Net income
|
$
|
122.2
|
$
|
24.6
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depletion and
depreciation
|
|
273.8
|
|
216.3
|
|
Non-cash costs of
sales
|
|
6.5
|
|
6.6
|
|
Share-based
payments
|
|
5.0
|
|
4.5
|
|
Impairment charges
(Note 8)
|
|
67.5
|
|
62.9
|
|
Gain on sale of
royalty interest
|
|
(14.1)
|
|
—
|
|
Unrealized foreign
exchange loss
|
|
0.5
|
|
3.7
|
|
Mark-to-market on
warrants
|
|
(0.4)
|
|
0.5
|
|
Gain on
investments
|
|
(12.4)
|
|
(0.9)
|
|
Impairment of
investments
|
|
—
|
|
2.0
|
|
Deferred income tax
expense
|
|
3.5
|
|
(2.2)
|
|
Other non-cash
items
|
|
(1.2)
|
|
(0.8)
|
|
Acquisition of gold
bullion (Note 2(b))
|
|
(53.5)
|
|
(66.6)
|
Proceeds from sale of
gold bullion (Note 2(b))
|
|
67.3
|
|
60.8
|
Operating cash flows
before changes in non-cash working capital
|
|
464.7
|
|
311.4
|
|
Changes in non-cash
working capital:
|
|
|
|
|
|
|
(Increase) decrease
in
receivables
|
|
(6.0)
|
|
7.0
|
|
|
Increase in prepaid
expenses and other
|
|
(4.5)
|
|
(3.8)
|
|
|
Increase (decrease)
in current liabilities
|
|
16.8
|
|
(0.3)
|
Net cash provided by
operating activities (Note 2(b))
|
|
471.0
|
|
314.3
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
Proceeds from sale of
investments
|
|
28.6
|
|
25.6
|
|
Proceeds from sale of
royalty interest
|
|
30.3
|
|
—
|
|
Acquisition of
investments
|
|
(1.6)
|
|
(111.3)
|
|
Acquisition of
royalty, stream and working interests
|
|
(744.8)
|
|
(1,016.8)
|
|
Acquisition of
oil & gas well equipment
|
|
(2.1)
|
|
(3.6)
|
|
Acquisition of
property and equipment
|
|
(0.2)
|
|
—
|
Net cash used in
investing activities (Note 2(b))
|
|
(689.8)
|
|
(1,106.1)
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
Net proceeds from
issuance of common shares
|
|
883.5
|
|
—
|
|
Proceeds from draw of
Credit Facility
|
|
—
|
|
480.0
|
|
Repayment of Credit
Facility
|
|
(460.0)
|
|
(20.0)
|
|
Credit facility
amendment costs
|
|
—
|
|
(2.3)
|
|
Payment of
dividends
|
|
(118.1)
|
|
(94.1)
|
|
Proceeds from
exercise of stock options
|
|
16.3
|
|
10.5
|
Net cash provided by
financing activities
|
|
321.7
|
|
374.1
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
0.9
|
|
(25.6)
|
Net change in cash
and cash equivalents
|
|
103.8
|
|
(443.3)
|
Cash and cash
equivalents at beginning of year
|
|
149.2
|
|
592.5
|
Cash and cash
equivalents at end of year
|
$
|
253.0
|
$
|
149.2
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
Cash paid for
interest expense and loan standby fees
|
$
|
3.0
|
$
|
3.0
|
Income taxes
paid
|
$
|
30.7
|
$
|
27.8
|
The accompanying notes are an integral part of
these consolidated financial statements and can be found in our
2016 Annual Report available on our website
SOURCE Franco-Nevada Corporation