(in U.S. dollars unless otherwise noted)
Warrant Exercise Adds $356
million to Treasury
TORONTO, Aug. 8, 2017 /CNW/ -
"Franco-Nevada's diversified portfolio continues to perform
very well" commented David Harquail,
CEO. "We are now expecting to finish 2017 at the higher
end of our original gold equivalent ounce guidance. The
exercise of our 2017 warrants during the second quarter has raised
$356 million. That brings
our cash and cash equivalents to over $600 million
and we have another $1.1 billion
in available credit facilities. Franco-Nevada is very active
in both precious metals and Oil & Gas investment
opportunities and I am confident we can add further assets in
each category before year end."
Q2/2017 Financial Highlights
- 122,541 Gold Equivalent Ounces1 (GEOs) sold
- $163.6 million in revenue
- $125.5 million of Adjusted
EBITDA2 or $0.69 per
share
- $45.6 million of net income or
$0.25 per share
- $46.1 million of Adjusted Net
Income3 or $0.25 per
share
- $614.3 million in cash and cash
equivalents at quarter-end and no debt, reflecting proceeds of
$356.4 million from the exercise of
share purchase warrants
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Revenue and
GEOs by Asset Categories
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|
|
|
|
|
Q2/2017
|
|
Q2/2016
|
|
|
|
GEOs
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Revenue
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|
GEOs
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|
Revenue
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|
|
|
#
|
|
(in millions)
|
|
#
|
|
(in millions)
|
Precious
Metals
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|
|
|
|
|
|
|
|
|
|
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Gold
|
|
92,706
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$
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116.5
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|
85,724
|
|
$
|
108.2
|
|
Silver
|
|
18,139
|
|
|
22.8
|
|
18,523
|
|
|
23.6
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|
PGMs
|
|
8,801
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|
|
11.0
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|
7,053
|
|
|
9.4
|
Precious Metals
-
|
Total
|
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119,646
|
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$
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150.3
|
|
111,300
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|
$
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141.2
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Other
Minerals
|
|
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2,895
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|
|
3.7
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|
1,487
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|
|
1.9
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Oil &
Gas
|
|
|
—
|
|
|
9.6
|
|
—
|
|
|
7.8
|
|
|
|
122,541
|
|
$
|
163.6
|
|
112,787
|
|
$
|
150.9
|
For Q2/2017, revenue was sourced 91.9% from precious metals
(71.2% gold, 13.9% silver and 6.8% PGM) and 82.2% from the Americas
(15.8% U.S., 19.9% Canada and
46.5% Latin America).
Operating costs and expenses increased year-over-year due to the
increase in the number of GEOs sold during the quarter.
Oil & gas revenue increased 23.1% year-over-year,
reflecting higher prices as well as the addition of the STACK and
Midland portfolio of royalties. Cash provided by operating
activities was $126.5 million, an
increase of 22.2% compared to Q2/2016, reflecting increased gross
profits as well as positive changes in non-cash working
capital.
Corporate Updates
- 2017 Warrants: Franco-Nevada received proceeds of
C$479.1 million, or approximately
$356.4 million, from the exercise of
6,388,528 common share purchase warrants in the first half of
2017. The warrants had an exercise price of C$75.00 per warrant and were due to expire on
June 16, 2017
- Midland Oil & Gas
Royalties: Franco-Nevada reported on this
$110.0 million purchase in the West
Texas Permian Basin in our last quarterly update. Following
completion of title due diligence, the first part of the portfolio
was acquired for $89.8 million and
was closed on May 24, 2017. The
second part of the portfolio is expected to close shortly bringing
the adjusted total purchase price to approximately $107 million.
- STACK Oil & Gas Royalties: Franco-Nevada has agreed to purchase, for
$27.8 million, a second package of
mineral titles in the core of the STACK shale play in Oklahoma from a private company. This will
complement our existing position acquired in late 2016. This
transaction will have an effective date of June 1, 2017 and is expected to close in
November 2017.
Q2/2017 Portfolio Updates
- Precious Metals — U.S.: GEOs from U.S. precious
metals assets increased by 15.8% year-over-year with increases at
South Arturo, Gold Quarry, Stillwater, Fire Creek/Midas and Bald Mountain
more than offsetting the decrease from Goldstrike. 19,350 GEOs were
received from the U.S. precious metal assets.
-
- South Arturo (4-9% royalty) – This project, operated by Barrick
and Premier Gold, represented an increase of 2,366 GEOs
year-over-year. Premier Gold stated that mining from the
current phase has been extended into Q3/2017 and processing at
Goldstrike could continue to early 2018. A further phase of
open pit mining is under detailed review for which development
could begin in early 2019. Drilling of the El Nino
underground deposit is expected to begin later this year.
- Stillwater (5% royalty) – In
May, Sibanye Gold successfully acquired Stillwater Mining and is
now the new operator. Sibanye continues to advance the Blitz
project which it expects to add between 270,000 and 330,000 PGM
ounces of incremental production per annum by 2021.
- Hollister (3-5% royalty) – Klondex reports that it is
ramping-up mining rates at Hollister and expects to begin
processing ore at the Midas mill in the second half. An
initial reserve was reported for Hollister and drilling is reported
to be ongoing, notably at the Hatter Graben area.
- Bald Mountain (0.875-5% royalty) – Kinross expects production at Bald Mountain to
be higher in the second half of the year with overall 2017
production to be double that of 2016.
- Rosemont (1.5% royalty) –
Hudbay released results of a feasibility study for the Rosemont project which outlined a 19 year mine
life with annual copper production over the first 10 years of
127,000 tonnes. The final Record of Decision was received
from the U.S. Forest Service in June
2017. Franco-Nevada's 1.5%
royalty covers all commodities.
- Goldstrike (2-4% royalty & 2.4-6% NPI) – Barrick is
integrating the Cortez and Goldstrike mines in an effort to reduce
all-in sustaining costs which would benefit the profit
royalties.
- Precious Metals — Canada: GEOs from Canadian precious
metals assets increased by approximately 14.6% to 17,097 GEOs
compared with Q2/2016, primarily from its interests in the
Hemlo property and the
Sudbury assets.
-
- Brucejack (1.2% royalty) – Brucejack poured first gold
on June 20, 2017 and declared
commercial production on July 3,
2017. Franco-Nevada's royalty begins after approximately
500,000 ounces have been produced.
- Hemlo (3% royalty & 50%
NPI) – Barrick filed a Technical Report for Hemlo outlining the life of mine plan and
providing additional detail of the increased reserves previously
announced.
- Hardrock (3% royalty) – Joint venture operators Centerra
Gold and Premier Gold submitted the Environmental Impact Statement
/ Environmental Assessment to initiate the formal environmental
review process for the Hardrock project.
- Dublin Gulch/Eagle (1.5-2% royalty) – Victoria Gold has obtained a $220 million debt financing commitment for the
construction of the Eagle gold project.
- Positive exploration news since our last quarterly update was
provided by operators at Macassa (various royalties),
Timmins West (2.25% royalty),
Taylor (1% royalty), Canadian Malartic Odyssey project (1.5% royalty),
Dublin Gulch/Eagle (1.5%-2% royalty) and on part of the
Cariboo/Barkerville play (3% royalty).
- Precious Metals — Latin
America: GEOs from Latin American precious metals
assets were flat year-over-year, with 60,548 precious metal GEOs
earned in Q2/2017, as increased deliveries from Candelaria were
offset by decreases from Guadalupe, Antapaccay and Antamina.
-
- Antapaccay (gold and silver stream) – Antapaccay
delivered 17,364 GEOs in Q2/2017, a decrease of 11.3%
year-over-year, in line with the 2017 life of mine plan.
- Antamina (22.5% silver stream) –11,081 GEOs from
Antamina were sold during the quarter, a decrease compared to
11,898 GEOs in Q2/2016. The year-over-year decrease was expected,
as 2016 was an exceptionally strong year of silver production for
Antamina.
- Candelaria (gold and silver stream) – Candelaria earned
21,981 GEOs, compared to 16,247 GEOs in Q2/2016, as expected
according to its mine plan. The Los Diques tailings facility
construction is progressing on schedule and conceptual studies to
increase production from five underground deposits to optimize
life-of-mine plan are advancing.
- Guadalupe (50% gold stream) – The Guadalupe agreement,
which became effective in Q3/2016, delivered 9,683 GEOs in Q2/2017,
compared to 12,501 under the Palmarejo agreement in Q2/2016.
Under the Guadalupe agreement, Franco-Nevada pays an ongoing cost
of $800 per gold ounce received
versus the inflation adjusted cost of $400 per gold ounce under the prior Palmarejo
agreement.
- Cobre Panama (gold and silver stream) – During the
quarter, Franco-Nevada contributed $52.4
million of its share of construction capital for the Cobre
Panama project, or $102.6 million for
the first half of 2017, for a cumulative total contribution of
$564.8 million of its maximum
$1 billion commitment as of the end
of Q2/2017. First Quantum reported that the project is now
over 58% complete as of the end of Q2/2017 and that all aspects of
the project remain scheduled for phased commissioning during 2018,
with continued ramp-up over 2019. Franco-Nevada expects to
contribute $200-$220 million to the
project in 2017.
- Cerro Moro (2% royalty) –
Yamana reports that the mine construction is proceeding on schedule
with production expected in 2018.
- Precious Metals — Rest of World: 22,651 GEOs from
Rest of World precious metals assets were sold during the quarter,
an increase of 20.6% year-over-year, primarily due to an increase
in the fixed ounce deliveries from Karma.
-
- Sabodala (fixed gold deliveries and stream) – Teranga
Gold announced that, as at June 30,
2017, Sabodala has increased its Mineral Reserve to 2.7
million ounces of gold representing an increase of more than
400,000 ounces.
- Subika (2% royalty) – Newmont announced plans to begin
underground mining and expand plant capacity at its Ahafo
operation in Ghana. Together, the two projects are forecast
to add incremental gold production between 200,000 to 300,000
ounces per year during the first five years of production.
Franco-Nevada estimates that the majority of underground reserves
are covered by its royalty.
- Tasiast (2% royalty) – Kinross reports the Tasiast Phase 1 expansion
remains on schedule for full production in Q2/2018. Kinross expects to provide a feasibility for a
possible Phase 2 expansion in Q3/2017. This is expected to add an
additional 18,000 tonnes per day for a total combined throughput
capacity of 30,000 tonnes per day. Encouraging drilling in
the Tasiast Sud area (located immediately south of the Tasiast
mine) has accelerated an infill drilling program and initiation of
a pre-feasibility study.
- Karma (fixed gold deliveries and stream) – 4,453 GEOs
were sold in the quarter, an increase compared to 2,500 in Q2/2016,
due to a scheduled increase in the fixed ounce deliveries. Q2/2016
also only included two months of deliveries.
- Agi Dagi (2% royalty) –
Alamos Gold has tabled a positive feasibility report for the
project projecting annual production of 177,600 ounces of gold over
5 years. A positive PEA was also completed for the
neighbouring Camyurt project on which Franco-Nevada also holds a
royalty.
- Duketon (2% royalty) – Gloster and Erlistoun, two
satellite deposits at Duketon, commenced operations to provide
additional mill feed. Regis Resources continues to
actively explore the extensive land package.
- At Sissingue (0.5% royalty), Perseus Mining reports that
construction remains on schedule and first gold is expected in
early 2018. At Ity (1.5% royalty), Endeavour Mining
has reported an additional 1 million ounces of M&I resource
compared to the year end 2016 estimate.
- Oil & Gas: Revenue from Oil & Gas
assets increased to $9.6 million in
Q2/2017 compared to $7.8 million in
Q2/2016, reflecting higher prices and higher production levels
year-over-year on the Company's Canadian assets, as well as the
addition of the STACK and Midland portfolio of royalties. The
contribution from the new U.S. royalty assets is expected to become
more significant after 2017.
Dividend Declaration
Franco-Nevada Corporation is pleased to announce that its Board
of Directors has declared a quarterly dividend of US$0.23 per share. The dividend will be paid on
September 28, 2017 to shareholders of
record on September 14, 2017 (the
"Record Date"). The Canadian dollar equivalent is to be determined
based on the daily average rate posted by the Bank of Canada on the Record Date. 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 Consolidated Interim 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, Wednesday, August 9, 2017 at 10:00
a.m. Eastern Time to review Franco‑Nevada's Q2/2017
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 August
16th: Toll-Free (855) 859-2056; Toronto (416) 849-0833; Pass code
54013459
- 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 disease; 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 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
Q2/2017, the average commodity prices per ounce were as follows:
$1,257 gold (Q2/2016 - $1,259), $17.26 silver (Q2/2016 - $17.17),
$940 platinum (Q2/2016 - $1,004) and $819 palladium (Q2/2016 -
$568). For the six months ended June 30, 2017, the average
commodity prices were as follows: $1,238 gold (H1/2016 - $1,220),
$17.34 silver (H1/2016 - $16.00), $960 platinum (H1/2016 - $959)
and $793 palladium (H1/2016 - $546).
|
|
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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 sale of royalty interests; gains/losses on
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; 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.
|
Reconciliations to
IFRS measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
For the six months
ended
|
|
|
June 30,
|
|
June 30,
|
(expressed in
millions, except per share amounts)
|
2017
|
2016
|
2017
|
2016
|
Net
Income
|
|
$
|
45.6
|
|
$
|
42.3
|
|
$
|
91.2
|
|
$
|
72.3
|
|
Income tax
expense
|
|
|
11.1
|
|
|
11.3
|
|
|
21.5
|
|
|
19.4
|
|
Finance
expenses
|
|
|
0.8
|
|
|
0.8
|
|
|
1.6
|
|
|
2.1
|
|
Finance
income
|
|
|
(1.1)
|
|
|
(1.0)
|
|
|
(2.0)
|
|
|
(2.1)
|
|
Depletion and
depreciation
|
|
|
67.2
|
|
|
68.2
|
|
|
138.7
|
|
|
133.7
|
|
Non-cash costs of
sales
|
|
|
2.3
|
|
|
1.7
|
|
|
4.1
|
|
|
3.5
|
|
(Gain) on
investments
|
|
|
—
|
|
|
(2.8)
|
|
|
—
|
|
|
(4.3)
|
|
Foreign exchange
(gains)/losses and other (income)/expenses
|
|
|
(0.4)
|
|
|
—
|
|
|
(1.1)
|
|
|
0.1
|
Adjusted
EBITDA
|
|
$
|
125.5
|
|
$
|
120.5
|
|
$
|
254.0
|
|
$
|
224.7
|
Basic weighted
average shares outstanding
|
|
|
181.6
|
|
|
177.8
|
|
|
180.1
|
|
|
175.2
|
Adjusted EBITDA
per share
|
|
$
|
0.69
|
|
$
|
0.68
|
|
$
|
1.41
|
|
$
|
1.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
For the six months
ended
|
|
|
June 30,
|
|
June 30,
|
(expressed in
millions, except per share amounts)
|
2017
|
2016
|
2017
|
2016
|
Net
Income
|
|
$
|
45.6
|
|
$
|
42.3
|
|
$
|
91.2
|
|
$
|
72.3
|
|
Foreign exchange
(gains)/losses and other (income)/expenses
|
|
|
(0.4)
|
|
|
—
|
|
|
(1.1)
|
|
|
0.1
|
|
(Gain) on
investments
|
|
|
—
|
|
|
(2.8)
|
|
|
—
|
|
|
(4.3)
|
|
Tax effect of
adjustments
|
|
|
0.1
|
|
|
0.8
|
|
|
—
|
|
|
0.6
|
|
Other tax related
adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation
allowance
|
|
|
0.8
|
|
|
(0.6)
|
|
|
0.8
|
|
|
(0.7)
|
|
|
Impact of tax
increases
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
Adjusted Net
Income
|
|
$
|
46.1
|
|
$
|
40.0
|
|
$
|
90.9
|
|
$
|
68.0
|
Basic weighted
average shares outstanding
|
|
|
181.6
|
|
|
177.8
|
|
|
180.1
|
|
|
175.2
|
Adjusted Net
Income per share
|
|
$
|
0.25
|
|
$
|
0.22
|
|
$
|
0.50
|
|
$
|
0.39
|
FRANCO-NEVADA
CORPORATION
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
|
|
|
|
|
|
|
(unaudited,
in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
June 30,
|
|
|
At
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents (Note 4)
|
|
$
|
614.3
|
|
|
$
|
253.0
|
|
Receivables
|
|
|
55.1
|
|
|
|
71.1
|
|
Prepaid expenses and
other (Note 6)
|
|
|
50.1
|
|
|
|
37.1
|
|
|
Current
assets
|
|
|
719.5
|
|
|
|
361.2
|
|
|
|
|
|
|
|
|
|
|
Royalty, stream and
working interests, net (Note 3)
|
|
|
3,752.9
|
|
|
|
3,668.3
|
|
Investments (Note
5)
|
|
|
140.8
|
|
|
|
147.4
|
|
Deferred income tax
assets
|
|
|
22.4
|
|
|
|
21.3
|
|
Other assets (Note
7)
|
|
|
19.9
|
|
|
|
23.4
|
|
|
Total
assets
|
|
$
|
4,655.5
|
|
|
$
|
4,221.6
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
20.5
|
|
|
$
|
21.0
|
|
Current income tax
liabilities
|
|
|
18.2
|
|
|
|
16.6
|
|
|
Current
liabilities
|
|
|
38.7
|
|
|
|
37.6
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax
liabilities
|
|
|
43.6
|
|
|
|
37.5
|
|
|
Total
liabilities
|
|
|
82.3
|
|
|
|
75.1
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY (Note 14)
|
|
|
|
|
|
|
|
|
Common
shares
|
|
|
5,078.9
|
|
|
|
4,666.2
|
|
Contributed
surplus
|
|
|
16.1
|
|
|
|
41.6
|
|
Deficit
|
|
|
(327.5)
|
|
|
|
(336.8)
|
|
Accumulated other
comprehensive loss
|
|
|
(194.3)
|
|
|
|
(224.5)
|
|
|
Total shareholders'
equity
|
|
|
4,573.2
|
|
|
|
4,146.5
|
|
|
Total liabilities and
shareholders' equity
|
|
$
|
4,655.5
|
|
|
$
|
4,221.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsequent
events (Note 3)
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of
these condensed consolidated interim financial statements and can
be found in our Q2/2017 Report available on our website
FRANCO-NEVADA
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
|
(unaudited, in
millions of U.S. dollars, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
For the six months ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
|
2016
|
Revenue
(Note 10)
|
|
$
|
163.6
|
|
$
|
150.9
|
|
|
$
|
336.3
|
|
|
$
|
282.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of sales
(Note 11)
|
|
|
33.9
|
|
|
27.7
|
|
|
|
73.8
|
|
|
|
52.1
|
|
Depletion and
depreciation
|
|
|
67.2
|
|
|
68.2
|
|
|
|
138.7
|
|
|
|
133.7
|
Total cost of
sales
|
|
|
101.1
|
|
|
95.9
|
|
|
|
212.5
|
|
|
|
185.8
|
Gross
profit
|
|
|
62.5
|
|
|
55.0
|
|
|
|
123.8
|
|
|
|
97.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating
expenses (income)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
administration
|
|
|
5.8
|
|
|
5.7
|
|
|
|
11.1
|
|
|
|
11.1
|
|
Business
development
|
|
|
0.8
|
|
|
0.3
|
|
|
|
1.6
|
|
|
|
0.6
|
|
Gain on sale of gold
bullion (Note 16)
|
|
|
(0.1)
|
|
|
(1.6)
|
|
|
|
(0.1)
|
|
|
|
(2.1)
|
Total other operating
expenses
|
|
|
6.5
|
|
|
4.4
|
|
|
|
12.6
|
|
|
|
9.6
|
Operating income
(Note 16)
|
|
|
56.0
|
|
|
50.6
|
|
|
|
111.2
|
|
|
|
87.5
|
|
Foreign exchange gain
(loss) and other income (expenses) (Note 16)
|
|
|
0.4
|
|
|
—
|
|
|
|
1.1
|
|
|
|
(0.1)
|
|
Realized gain on
investments
|
|
|
—
|
|
|
2.8
|
|
|
|
—
|
|
|
|
4.3
|
Income before finance
items and income taxes
|
|
|
56.4
|
|
|
53.4
|
|
|
|
112.3
|
|
|
|
91.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
income
|
|
|
1.1
|
|
|
1.0
|
|
|
|
2.0
|
|
|
|
2.1
|
|
Finance
expenses
|
|
|
(0.8)
|
|
|
(0.8)
|
|
|
|
(1.6)
|
|
|
|
(2.1)
|
Net income before
income taxes
|
|
|
56.7
|
|
|
53.6
|
|
|
|
112.7
|
|
|
|
91.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(Note 13)
|
|
|
11.1
|
|
|
11.3
|
|
|
|
21.5
|
|
|
|
19.4
|
Net
income
|
|
$
|
45.6
|
|
$
|
42.3
|
|
|
$
|
91.2
|
|
|
$
|
72.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to profit and loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized (loss)
gain in the market value of available-for-sale investments, net of
income tax recovery of $1.8 (2016 - income tax expense of $0.3),
income tax recovery of $1.6 (2016 - income tax expense of $0.5)
(Note 5)
|
|
|
(11.7)
|
|
|
10.8
|
|
|
|
(10.2)
|
|
|
|
26.6
|
|
Realized change in
market value of available-for-sale investments (Note
5)
|
|
|
—
|
|
|
(2.8)
|
|
|
|
—
|
|
|
|
(4.3)
|
|
Currency translation
adjustment
|
|
|
30.7
|
|
|
(4.0)
|
|
|
|
40.4
|
|
|
|
45.5
|
Other comprehensive
income
|
|
|
19.0
|
|
|
4.0
|
|
|
|
30.2
|
|
|
|
67.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income
|
|
$
|
64.6
|
|
$
|
46.3
|
|
|
$
|
121.4
|
|
|
$
|
140.1
|
Basic earnings per
share (Note 15)
|
|
$
|
0.25
|
|
$
|
0.24
|
|
|
$
|
0.51
|
|
|
$
|
0.41
|
Diluted earnings
per share (Note 15)
|
|
$
|
0.25
|
|
$
|
0.24
|
|
|
$
|
0.51
|
|
|
$
|
0.41
|
The accompanying notes are an integral part of
these condensed consolidated interim financial statements and can
be found in our Q2/2017 Report available on our website
FRANCO-NEVADA
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(unaudited,
in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
For the six months ended
|
|
|
June 30,
|
|
|
2017
|
|
|
2016
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
Net income
|
|
$
|
91.2
|
|
|
$
|
72.3
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depletion and
depreciation
|
|
|
138.7
|
|
|
|
133.7
|
|
Non-cash costs of
sales
|
|
|
4.1
|
|
|
|
3.5
|
|
Share-based
payments
|
|
|
3.1
|
|
|
|
2.4
|
|
Unrealized foreign
exchange (gain) loss
|
|
|
(0.6)
|
|
|
|
0.2
|
|
Gain on
investments
|
|
|
—
|
|
|
|
(4.3)
|
|
Deferred income tax
expense
|
|
|
6.0
|
|
|
|
2.3
|
|
Other non-cash
items
|
|
|
(0.7)
|
|
|
|
(0.8)
|
|
Acquisition of gold
bullion (Note 16)
|
|
|
(12.1)
|
|
|
|
(33.7)
|
Proceeds from sale of
gold bullion (Note 16)
|
|
|
9.4
|
|
|
|
46.1
|
Operating cash flows
before changes in non-cash working capital
|
|
|
239.1
|
|
|
|
221.7
|
|
Changes in non-cash
working capital:
|
|
|
|
|
|
|
|
|
|
Decrease in
receivables
|
|
|
16.0
|
|
|
|
8.7
|
|
|
Increase in prepaid
expenses and other
|
|
|
(9.3)
|
|
|
|
(4.3)
|
|
|
Increase in current
liabilities
|
|
|
0.5
|
|
|
|
1.4
|
Net cash provided by
operating activities (Note 16)
|
|
|
246.3
|
|
|
|
227.5
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
|
Acquisition of
royalty, stream and working interests
|
|
|
(198.2)
|
|
|
|
(555.7)
|
|
Acquisition of oil
& gas well equipment
|
|
|
(0.9)
|
|
|
|
(1.3)
|
|
Proceeds from sale of
investments
|
|
|
—
|
|
|
|
23.6
|
|
Acquisition of
investments
|
|
|
—
|
|
|
|
(1.6)
|
Net cash used in
investing activities (Note 16)
|
|
|
(199.1)
|
|
|
|
(535.0)
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
|
Net proceeds from
issuance of common shares
|
|
|
—
|
|
|
|
883.5
|
|
Repayment of Credit
Facility
|
|
|
—
|
|
|
|
(460.0)
|
|
Credit facility amendment costs
|
|
|
(1.0)
|
|
|
|
—
|
|
Payment of
dividends
|
|
|
(62.2)
|
|
|
|
(57.5)
|
|
Proceeds from
exercise of warrants
|
|
|
356.4
|
|
|
|
—
|
|
Proceeds from
exercise of stock options
|
|
|
7.8
|
|
|
|
15.6
|
Net cash provided by
financing activities
|
|
|
301.0
|
|
|
|
381.6
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
13.1
|
|
|
|
2.5
|
Net change in cash
and cash equivalents
|
|
|
361.3
|
|
|
|
76.6
|
Cash and cash
equivalents at beginning of period
|
|
|
253.0
|
|
|
|
149.2
|
Cash and cash
equivalents at end of period
|
|
$
|
614.3
|
|
|
$
|
225.8
|
|
|
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
Cash paid for
interest expense and loan standby fees
|
|
$
|
1.2
|
|
|
$
|
1.8
|
Income taxes
paid
|
|
$
|
29.4
|
|
|
$
|
21.4
|
The accompanying notes are an integral part of
these condensed consolidated interim financial statements and can
be found in our Q2/2017 Report available on our website
SOURCE Franco-Nevada Corporation