(in U.S. dollars unless otherwise noted)
New Precious Metals and Oil & Gas Investments
Added
TORONTO, Nov. 6, 2017 /CNW/ - "Franco-Nevada's
diversified portfolio continues to perform very well" commented
David Harquail, CEO. "We are
seeing organic growth at some of our key precious metals assets
such as Tasiast, Stillwater and
Subika. We are also having good success at adding new
investments. During the quarter, we closed the purchase of an
oil royalty on the Orion Thermal Project in Alberta for C$92.5
million. We also announced an agreement to acquire an
additional precious metals stream at Cobre Panama for approximately
$119 million. Subsequent to
quarter end, we entered into an agreement to acquire for
approximately $110 million a new
package of oil & gas royalties on the Delaware portion of the Permian Basin in
Texas. Franco-Nevada will now have royalties on the top
three most active shale basins in the U.S. On-top of its
ongoing funding for the Cobre Panama project, Franco-Nevada has
made over $500 million in new
commitments in the past year to grow its portfolio and remains debt
free."
Q3/2017 Financial Highlights
- 123,787 Gold Equivalent Ounces1 ("GEOs") sold
- $171.5 million in revenue
- $134.1 million of Adjusted
EBITDA2 or $0.72 per
share
- $60.0 million of net income or
$0.32 per share
- $55.3 million of Adjusted Net
Income3 or $0.30 per
share
- $533.3 million in cash and cash
equivalents at quarter-end and no debt
Revenue and
GEOs by Asset Categories
|
|
|
Q3/2017
|
Q3/2016
|
|
|
GEOs
|
Revenue
|
GEOs
|
Revenue
|
|
|
#
|
(in millions)
|
#
|
(in millions)
|
Precious
Metals
|
|
|
|
|
|
|
|
|
Gold
|
89,240
|
$
|
114.4
|
85,127
|
$
|
113.4
|
|
Silver
|
20,698
|
|
26.8
|
27,337
|
|
36.2
|
|
PGMs
|
8,518
|
|
11.1
|
9,098
|
|
12.1
|
Precious Metals
-
|
Total
|
118,456
|
$
|
152.3
|
121,562
|
$
|
161.7
|
Other
Minerals
|
|
5,331
|
|
6.7
|
1,503
|
|
2.0
|
Oil &
Gas
|
|
—
|
|
12.5
|
—
|
|
8.3
|
|
|
123,787
|
$
|
171.5
|
123,065
|
$
|
172.0
|
For Q3/2017, revenue was sourced 88.8% from precious metals
(66.7% gold, 15.6% silver and 6.5% PGM) and 81.5% from the Americas
(13.3% U.S., 18.2% Canada and
50.0% Latin America).
Operating costs and expenses increased year-over-year due to higher
stream GEOs sold during the quarter. Oil & gas revenue
increased 50.6% year-over-year, reflecting higher prices, increased
payments from Weyburn as well as
the addition of the STACK, Midland and Orion royalties. Cash
provided by operating activities was $116.0
million, a decrease of 4.6% compared to Q3/2016, reflecting
negative changes in non-cash working capital.
Corporate Updates
- Cobre Panama: Franco-Nevada has agreed to add to its Cobre Panama
precious metals stream for a net purchase price of approximately
$119 million, following the expected
syndication of one-third of the agreement to CEF Holdings Limited.
First Quantum Minerals Ltd. intends to use the proceeds to
partially fund its previously announced acquisition of an
additional 10% interest in Cobre Panama from one of its joint
venture partners, LS-Nikko Copper Inc. The terms of the additional
stream, other than the ongoing price and the upfront funding,
mirror the existing stream on Cobre Panama.
- Orion Oil Royalty: Franco-Nevada acquired a 4% gross overriding royalty
interest on the Orion Thermal Project in the Cold Lake region of Alberta from Osum Oil Sands Corp. ("Osum") for
C$92.5 million. Orion is currently
producing 7,500 – 8,000 barrels per day of bitumen. The just
completed Phase 2A is expected to add 1,500 barrels per day over
the next twelve months. Osum intends to use a portion of the
royalty proceeds for its Phase 2B expansion project which is
expected to progressively increase production through mid-2019 by
an additional 3,000 barrels per day. The project has regulatory
approval for production of up to 20,000 barrels per day. The
transaction has an effective date of September 1, 2017.
- Delaware Oil & Gas Royalties: Franco-Nevada has agreed to purchase a royalty
portfolio on the Delaware portion
of the Permian Basin in Texas for
$109.8 million. The royalties consist
predominantly of mineral title which provides a perpetual interest
in royalty lands. The transaction will have an effective date of
October 1, 2017 and is expected to
close in February 2018 following
title due diligence.
Q3/2017 Portfolio Updates
- Precious Metals — U.S.: GEOs from U.S. precious metals
assets decreased by 12.5% year-over-year with decreases at
Goldstrike and South Arturo partially offset by an increase at
Stillwater. In addition, a portion
of ounces delivered from Fire Creek/Midas had not been sold as at
quarter-end. 16,549 GEOs were earned from U.S. precious metal
assets.
-
- Stillwater (5% royalty)
– In May, Sibanye Gold successfully acquired Stillwater Mining.
First production at the Blitz project occurred in September which
is expected to reach full production by late 2021 or early 2022.
Blitz is anticipated to increase total PGM production from
Stillwater by more than 50% to
approximately 850,000 ounces per year.
- South Arturo (4-9% royalty) – 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.
- Marigold (0.5-5% royalty) – SSR Mining is currently
evaluating an equipment replacement trade-off which is expected to
be finalized by mid-2018. Under one scenario, production could
increase to over 300,000 ounces per year if additional shovels and
trucks are added.
- Castle Mountain (2.65% royalty) – NewCastle provided a new Mineral Resource
estimate which includes total in-pit resources of 4.0 million
ounces in the Measured & Indicated categories, a 9% increase
versus the previous estimate.
- Hollister (3-5% royalty) – Klondex began processing
Hollister ore at the Midas mill which included the commissioning of
a new CIL circuit in order to optimize recovery.
- 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 the 130,000 ounces produced in 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.
- Precious Metals — Canada: GEOs from Canadian precious metals
assets decreased by approximately 34.7% to 11,586 GEOs compared
with Q3/2016, primarily due to reduced production from the
Sudbury assets as well as an
adjustment to the Q2/2017 accrual for the Hemlo NPI.
-
- Brucejack (1.2% royalty) – Brucejack poured first gold
on June 20, 2017, declared commercial
production on July 3, 2017 and
produced 82,203 ounces of gold in Q3/2017. Franco-Nevada's royalty begins after approximately
500,000 ounces have been produced.
- Detour (2% royalty) – Permitting of the West Detour
project will remain under the provincial environment assessment
permitting process. While the provincial process is typically
faster than the federal process, Detour has stated that it does not
intend to change the overall timing for the development of West
Detour which is scheduled to commence in 2025.
- 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 an Environmental Impact Statement /
Environmental Assessment to initiate the formal environmental
review process for the Hardrock project.
- Precious Metals — Latin
America: GEOs from Latin American precious metals assets
increased 4.4% year-over-year, with 66,740 precious metal GEOs
earned in Q3/2017, benefitting from increased deliveries from
Candelaria and Guadalupe which were slightly offset by decreases
from Antapaccay and Antamina.
-
- Candelaria (gold and silver stream) – Candelaria
delivered 24,961 GEOs, compared to 16,807 GEOs in Q3/2016. Lundin
Mining provided a Mineral Reserve update for the project which
included a net increase to both Proven & Probable and Measured
& Indicated estimates despite mining depletion. The substantial
increase to the underground estimate could allow Lundin to optimize
the mine plan as well as extend the mine life at Candelaria.
- Antapaccay (gold and silver stream) – Antapaccay
delivered 19,370 GEOs in Q3/2017, a decrease of 12.7%
year-over-year, in line with the 2017 life-of-mine plan.
- Antamina (22.5% silver stream) – 12,575 GEOs from
Antamina were sold during the quarter, a decrease compared to
19,975 GEOs in Q3/2016. The year-over-year decrease was expected,
as 2016 was an exceptionally strong year of silver production for
Antamina.
- Guadalupe/Palmarejo (50% gold stream) – Guadalupe
delivered 9,400 GEOs in Q3/2017, compared to 4,326 GEOs in Q3/2016
due to higher mining rates. 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 $72.4
million of its share of construction capital for the Cobre
Panama project, or $175.0 million
year to date, for a cumulative total contribution of $637.2 million of its maximum $1 billion commitment as of the end of Q3/2017.
First Quantum reports that the project has advanced to 63%
completion. Franco-Nevada expects
to contribute a total of $240-$260
million of the original $1
billion commitment 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: 23,581 GEOs from Rest
of World precious metals assets were earned during the quarter, an
increase of 12.4% year-over-year, primarily due to an increase in
deliveries from MWS.
-
- Tasiast (2% royalty) – Kinross announced plans to proceed with the
Phase Two expansion at Tasiast. Phase Two is expected to increase
mill capacity to 30,000 tonnes per day and produce an average of
approximately 812,000 gold ounces per year for the first five
years. The Phase One expansion remains on schedule for full
production in Q2/2018 with Phase Two commercial production expected
in Q3/2020.
- Subika (2% royalty) – Newmont has begun underground
mining at Subika with commercial production expected in the second
half of 2018. The Ahafo mill expansion is expected to be in
commercial production in the second half of 2019. Together, the
Ahafo expansion projects (Subika underground and mill expansion)
will increase Ahafo's production to 550 - 650,000 ounces per year
for the first five full years of production (2020–2024).
Franco-Nevada estimates that the
majority of underground reserves are covered by its royalty.
- 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.
- Karma (fixed gold deliveries and stream) – 4,453 GEOs
were sold in the quarter, a decrease compared to 5,000 GEOs in
Q3/2016, which included an additional month 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
five years. A positive preliminary economic assessment 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 Measured & Indicated
resource compared to the year-end 2016 estimate and a construction
start on the CIL project.
- Oil & Gas: Revenue from Oil & Gas
assets increased to $12.5 million in
Q3/2017 compared to $8.3 million in
Q3/2016, reflecting higher prices and higher production levels
year-over-year on the Company's Canadian assets, as well as the
addition of the STACK, Midland and Orion 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
December 21, 2017 to shareholders of
record on December 7, 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 today, Monday, November 6, 2017 at 10:00
a.m. Eastern Time to review Franco‑Nevada's Q3/2017
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 November
13th: Toll-Free (855) 859-2056; Toronto (416) 849-0833; Pass code
99470541
- 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 and the
completion of previously announced transactions, including Cobre
Panama. 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 Franco-Nevada 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; Franco-Nevada'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; risks related to the completion of previously
announced transactions, including Cobre Panama; 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 Q3/2017, the average commodity prices per
ounce were as follows: $1,278 gold
(Q3/2016 - $1,335), $16.83 silver (Q3/2016 - $19.62), $953
platinum (Q3/2016 - $1,084) and
$901 palladium (Q3/2016 -
$676). For the nine months ended
September 30, 2017, the average commodity prices were as
follows: $1,251 gold (YTD/2016 -
$1,258), $17.17 silver (YTD/2016 - $17.20), $958
platinum (YTD/2016 - $1,001) and
$829 palladium (YTD/2016 -
$590).
- Adjusted EBITDA and Adjusted EBITDA per share are
non-IFRS financial measures, which exclude the following from net
income and earnings per share ("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; foreign exchange
gains/losses and other income/expenses and unusual non-recurring
items.
- Adjusted Net Income and Adjusted Net Income per share
are non-IFRS financial measures, which exclude the following from
net income and 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 nine
months ended
|
|
September 30,
|
September 30,
|
(expressed in
millions, except per share amounts)
|
2017
|
|
2016
|
2017
|
|
2016
|
Net
Income
|
$
|
60.0
|
|
$
|
54.4
|
$
|
151.2
|
|
$
|
126.7
|
|
Income tax
expense
|
|
2.9
|
|
|
12.9
|
|
24.4
|
|
|
32.3
|
|
Finance
expenses
|
|
0.8
|
|
|
0.7
|
|
2.4
|
|
|
2.8
|
|
Finance
income
|
|
(1.6)
|
|
|
(0.5)
|
|
(3.6)
|
|
|
(2.6)
|
|
Depletion and
depreciation
|
|
70.5
|
|
|
72.9
|
|
209.2
|
|
|
206.6
|
|
Non-cash costs of
sales
|
|
0.6
|
|
|
1.8
|
|
4.7
|
|
|
5.3
|
|
(Gain) on
investments
|
|
—
|
|
|
(0.2)
|
|
—
|
|
|
(4.5)
|
|
Foreign exchange
(gains)/losses and other (income)/expenses
|
|
0.9
|
|
|
0.2
|
|
(0.2)
|
|
|
0.3
|
Adjusted
EBITDA
|
$
|
134.1
|
|
$
|
142.2
|
$
|
388.1
|
|
$
|
366.9
|
Basic weighted
average shares outstanding
|
|
185.5
|
|
|
178.1
|
|
181.9
|
|
|
175.2
|
Adjusted EBITDA
per share
|
$
|
0.72
|
|
$
|
0.80
|
$
|
2.13
|
|
$
|
2.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
For the nine
months ended
|
|
September
30,
|
September
30,
|
(expressed in
millions, except per share amounts)
|
2017
|
|
2016
|
2017
|
|
2016
|
Net
Income
|
$
|
60.0
|
|
$
|
54.4
|
$
|
151.2
|
|
$
|
126.7
|
|
Foreign exchange
(gains)/losses and other (income)/expenses
|
|
0.9
|
|
|
0.2
|
|
(0.2)
|
|
|
0.3
|
|
(Gain) on
investments
|
|
—
|
|
|
(0.2)
|
|
—
|
|
|
(4.5)
|
|
Tax effect of
adjustments
|
|
(1.1)
|
|
|
0.3
|
|
(1.1)
|
|
|
0.9
|
|
Other tax related
adjustments:
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
Valuation
allowance
|
|
(0.7)
|
|
|
(1.2)
|
|
0.1
|
|
|
(1.9)
|
|
|
Utilization of tax
attributes subject to the initial recognition exemption
|
|
(3.8)
|
|
|
—
|
|
(3.8)
|
|
|
—
|
Adjusted Net
Income
|
$
|
55.3
|
|
$
|
53.5
|
$
|
146.2
|
|
$
|
121.5
|
Basic weighted
average shares outstanding
|
|
185.5
|
|
|
178.1
|
$
|
181.9
|
|
|
175.2
|
Adjusted Net
Income per share
|
$
|
0.30
|
|
$
|
0.30
|
|
0.80
|
|
$
|
0.69
|
|
|
|
|
|
|
|
|
|
|
|
FRANCO-NEVADA
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
|
(unaudited, in
millions of U.S. dollars)
|
|
|
|
|
At
September 30,
|
At
December 31,
|
|
2017
|
2016
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents (Note 4)
|
$
|
533.3
|
$
|
253.0
|
Short-term
investments (Note 5)
|
|
12.7
|
|
—
|
Receivables
|
|
64.9
|
|
71.1
|
Prepaid expenses and
other (Note 6)
|
|
52.0
|
|
37.1
|
|
Current
assets
|
|
662.9
|
|
361.2
|
|
|
|
|
|
Royalty, stream and
working interests, net (Note 3)
|
|
3,877.5
|
|
3,668.3
|
Investments (Note
5)
|
|
166.2
|
|
147.4
|
Deferred income tax
assets
|
|
20.5
|
|
21.3
|
Other assets (Note
7)
|
|
17.7
|
|
23.4
|
|
Total
assets
|
$
|
4,744.8
|
$
|
4,221.6
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
22.3
|
$
|
21.0
|
Current income tax
liabilities
|
|
9.1
|
|
16.6
|
|
Current
liabilities
|
|
31.4
|
|
37.6
|
|
|
|
|
|
Deferred income tax
liabilities
|
|
49.5
|
|
37.5
|
|
Total
liabilities
|
|
80.9
|
|
75.1
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY (Note 14)
|
|
|
|
|
Common
shares
|
|
5,093.4
|
|
4,666.2
|
Contributed
surplus
|
|
16.0
|
|
41.6
|
Deficit
|
|
(310.3)
|
|
(336.8)
|
Accumulated other
comprehensive loss
|
|
(135.2)
|
|
(224.5)
|
|
Total shareholders'
equity
|
|
4,663.9
|
|
4,146.5
|
|
Total liabilities and
shareholders' equity
|
$
|
4,744.8
|
$
|
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 Q3/2017 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 nine
months ended
|
|
September
30,
|
September
30,
|
|
2017
|
2016
|
2017
|
2016
|
Revenue
(Note 10)
|
$
|
171.5
|
$
|
172.0
|
$
|
507.8
|
$
|
454.9
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
|
|
|
|
|
|
|
|
Costs of sales
(Note 11)
|
|
33.0
|
|
28.0
|
|
106.8
|
|
80.1
|
|
Depletion and
depreciation
|
|
70.5
|
|
72.9
|
|
209.2
|
|
206.6
|
Total cost of
sales
|
|
103.5
|
|
100.9
|
|
316.0
|
|
286.7
|
Gross
profit
|
|
68.0
|
|
71.1
|
|
191.8
|
|
168.2
|
|
|
|
|
|
|
|
|
|
Other operating
expenses (income)
|
|
|
|
|
|
|
|
|
|
Corporate
administration
|
|
4.3
|
|
3.8
|
|
15.4
|
|
14.9
|
|
Business
development
|
|
0.9
|
|
0.5
|
|
2.5
|
|
1.1
|
|
Gain on sale of gold
bullion
|
|
(0.2)
|
|
(0.7)
|
|
(0.3)
|
|
(2.8)
|
Total other operating
expenses
|
|
5.0
|
|
3.6
|
|
17.6
|
|
13.2
|
Operating
income
|
|
63.0
|
|
67.5
|
|
174.2
|
|
155.0
|
|
Foreign exchange gain
(loss) and other income (expenses)
|
|
(0.9)
|
|
(0.2)
|
|
0.2
|
|
(0.3)
|
|
Realized gain on
investments
|
|
—
|
|
0.2
|
|
—
|
|
4.5
|
Income before finance
items and income taxes
|
|
62.1
|
|
67.5
|
|
174.4
|
|
159.2
|
|
|
|
|
|
|
|
|
|
Finance
items
|
|
|
|
|
|
|
|
|
|
Finance
income
|
|
1.6
|
|
0.5
|
|
3.6
|
|
2.6
|
|
Finance
expenses
|
|
(0.8)
|
|
(0.7)
|
|
(2.4)
|
|
(2.8)
|
Net income before
income taxes
|
|
62.9
|
|
67.3
|
|
175.6
|
|
159.0
|
|
|
|
|
|
|
|
|
|
Income tax expense
(Note 13)
|
|
2.9
|
|
12.9
|
|
24.4
|
|
32.3
|
Net
income
|
$
|
60.0
|
$
|
54.4
|
$
|
151.2
|
$
|
126.7
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to profit and loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain in
the fair value of available-for-sale investments, net of income
tax
|
|
|
|
|
|
|
|
|
|
expense of $2.7 (2016
- $1.2), and $1.1 (2016 - $1.7) (Note 5)
|
|
17.7
|
|
8.1
|
|
7.4
|
|
34.7
|
|
Reclassification for
realized loss in fair value of available-for-sale investments
(Note 5)
|
|
—
|
|
(0.2)
|
|
—
|
|
(4.5)
|
|
Currency translation
adjustment
|
|
41.4
|
|
(4.1)
|
|
81.9
|
|
41.4
|
Other comprehensive
income
|
|
59.1
|
|
3.8
|
|
89.3
|
|
71.6
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income
|
$
|
119.1
|
$
|
58.2
|
$
|
240.5
|
$
|
198.3
|
Basic earnings per
share (Note 15)
|
$
|
0.32
|
$
|
0.31
|
$
|
0.83
|
$
|
0.72
|
Diluted earnings
per share (Note 15)
|
$
|
0.32
|
$
|
0.30
|
$
|
0.83
|
$
|
0.72
|
The accompanying notes are an integral part of
these condensed consolidated interim financial statements and can
be found in our Q3/2017 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,
|
|
2017
|
2016
|
Cash flows from
operating activities
|
|
|
|
|
Net income
|
$
|
151.2
|
$
|
126.7
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depletion and
depreciation
|
|
209.2
|
|
206.6
|
|
Non-cash costs of
sales
|
|
4.7
|
|
5.3
|
|
Share-based
payments
|
|
4.0
|
|
3.7
|
|
Unrealized foreign
exchange (gain) loss
|
|
(0.6)
|
|
0.3
|
|
Gain on
investments
|
|
—
|
|
(4.5)
|
|
Deferred income tax
expense
|
|
10.2
|
|
2.6
|
|
Other non-cash
items
|
|
(2.0)
|
|
(0.8)
|
|
Acquisition of gold
bullion
|
|
(17.8)
|
|
(47.8)
|
Proceeds from sale of
gold bullion
|
|
13.3
|
|
59.4
|
Operating cash flows
before changes in non-cash working capital
|
|
372.2
|
|
351.5
|
|
Changes in non-cash
working capital:
|
|
|
|
|
|
|
Decrease in
receivables
|
|
6.2
|
|
(7.3)
|
|
|
Increase in prepaid
expenses and
other
|
|
(9.9)
|
|
(1.4)
|
|
|
Increase in current
liabilities
|
|
(6.2)
|
|
6.3
|
Net cash provided by
operating activities
|
|
362.3
|
|
349.1
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
Acquisition of
royalty, stream and working interests
|
|
(371.1)
|
|
(597.1)
|
|
Acquisition of oil
& gas well equipment
|
|
(1.3)
|
|
(1.7)
|
|
Proceeds from sale of
investments
|
|
—
|
|
24.0
|
|
Acquisition of
property and equipment
|
|
—
|
|
(0.1)
|
|
Acquisition of
investments
|
|
(12.3)
|
|
(1.6)
|
Net cash used in
investing activities
|
|
(384.7)
|
|
(576.5)
|
|
|
|
|
|
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
|
|
(94.0)
|
|
(87.4)
|
|
Proceeds from
exercise of warrants
|
|
356.4
|
|
—
|
|
Proceeds from
exercise of stock options
|
|
10.3
|
|
16.1
|
Net cash provided by
financing activities
|
|
271.7
|
|
352.2
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
31.0
|
|
3.6
|
Net change in cash
and cash equivalents
|
|
280.3
|
|
128.4
|
Cash and cash
equivalents at beginning of period
|
|
253.0
|
|
149.2
|
Cash and cash
equivalents at end of period
|
$
|
533.3
|
$
|
277.6
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
Cash paid for
interest expense and loan standby fees
|
$
|
1.8
|
$
|
2.4
|
Income taxes
paid
|
$
|
36.6
|
$
|
27.1
|
The accompanying notes are an integral part of
these condensed consolidated interim financial statements and can
be found in our Q3/2017 Report available on our website
SOURCE Franco-Nevada Corporation