(in U.S. dollars unless otherwise noted)
TORONTO, March 7, 2018 /CNW/ - "I am pleased that
Franco-Nevada's 10th full year since its IPO was its best year
ever" stated David Harquail,
CEO. "We achieved record results that were at the high end of
our guidance for 2017. We are now looking forward to another
phase of growth through 2022 with the ramp-up of Cobre Panama over
2019-2022, the first phase expansion of Tasiast later this year and
the second phase in 2020, the expansion or start-up of a number of
smaller mines over 2018 and 2019 and the 50% expansion of
Stillwater by 2021. The
on-going full-field development of our U.S. oil & gas royalties
is tracking ahead of our original expectations. On top of
that, our business development team has been very active adding new
investments in precious metals, oil & gas and other
minerals. Franco-Nevada remains debt free and is well
positioned for another 10 years of success."
2017 Financial Highlights
- 497,745 Gold Equivalent Ounces1 (GEOs) sold – a new
record and a 7.2% increase year-over-year
- $675.0 million in revenue — a new
record and a 10.6% increase year-over-year
- $516.1 million of Adjusted
EBITDA2 or $2.82 per share
— a new record
- $194.7 million of net income, or
$1.06 per share — a new record
- $198.3 million of Adjusted Net
Income3 or $1.08 per
share
- $167.9 million of cash and DRIP
dividends paid — a new record
- $511.1 million in cash and cash
equivalents at year-end and no debt
- $356.4 million from the exercise
of warrants at C$75 per share
Q4/2017 Financial Highlights
- 119,839 GEOs sold
- $167.2 million in revenue – a
7.7% increase over Q4/2016
- $128.0 million of Adjusted
EBITDA2 or $0.69 per
share
- $43.5 million of net income, or
$0.23 per share
- $52.1 million of Adjusted Net
Income3 or $0.28 per
share
Revenue and
GEOs by Asset Categories
|
|
|
2017
|
2016
|
|
|
GEOs
|
Revenue
|
GEOs
|
Revenue
|
|
|
#
|
(in millions)
|
#
|
(in millions)
|
Precious
Metals
|
|
|
|
|
|
|
|
Gold
|
371,440
|
$
|
467.2
|
341,379
|
$
|
425.9
|
|
Silver
|
77,426
|
|
98.1
|
87,137
|
|
108.5
|
|
PGMs
|
34,520
|
|
44.5
|
28,958
|
|
37.1
|
Precious Metals
-
|
Total
|
483,386
|
$
|
609.8
|
457,474
|
$
|
571.5
|
Other
Minerals
|
|
14,359
|
|
18.2
|
6,909
|
|
8.6
|
Oil &
Gas
|
|
—
|
|
47.0
|
—
|
|
30.1
|
|
|
497,745
|
$
|
675.0
|
464,383
|
$
|
610.2
|
Revenue and
GEOs by Asset Categories
|
|
|
Q4/2017
|
Q4/2016
|
|
|
GEOs
|
Revenue
|
GEOs
|
Revenue
|
|
|
#
|
(in millions)
|
#
|
(in millions)
|
Precious
Metals
|
|
|
|
|
|
|
|
Gold
|
88,954
|
$
|
113.4
|
93,775
|
$
|
112.8
|
|
Silver
|
18,843
|
|
24.1
|
18,650
|
|
21.9
|
|
PGMs
|
8,977
|
|
11.7
|
7,611
|
|
8.0
|
Precious Metals
-
|
Total
|
116,774
|
$
|
149.2
|
120,036
|
$
|
142.7
|
Other
Minerals
|
|
3,065
|
|
4.0
|
1,874
|
|
2.2
|
Oil &
Gas
|
|
—
|
|
14.0
|
—
|
|
10.4
|
|
|
119,839
|
$
|
167.2
|
121,910
|
$
|
155.3
|
For Q4/2017, revenue was sourced 89.2% from precious metals
(67.8% gold, 14.4% silver and 7.0% PGM) and 82.1% from the Americas
(46.3% Latin America, 16.1% U.S.
and 19.7% Canada). Operating
costs and expenses increased year-over-year, reflecting increased
stream ounce deliveries. Oil & gas revenue increased
34.6%, reflecting both higher prices and production levels
year-over-year. Cash provided by operating activities was
$126.3 million, an increase of 3.6%
compared to Q4/2016.
Corporate Updates
- Cobre Panama: In September
2017, Franco-Nevada agreed to terms with First Quantum to
purchase an additional precious metals stream on the Cobre Panama
project for $178.0 million.
This agreement was expanded to $356.0
million on January 22, 2018 to
also include a precious metals stream on the 10% indirect interest
held by Korea Resources Corp. The purchase price will be paid as a
one-time advance payment expected to be made before the end of
March, 2018. Franco-Nevada now has exposure to the precious
metals produced from 100% of the ownership of the Cobre Panama
project.
- Delaware Oil & Gas Royalties: Franco-Nevada finalized the purchase of a royalty
portfolio in the Delaware Basin,
which represents the western portion of the larger Permian Basin in
Texas for $101.3 million on February
20, 2018. The royalties are derived principally from mineral
title which provides a perpetual interest in royalty lands. The
transaction has an effective date of October
1, 2017.
2018 Guidance
In 2018, Franco-Nevada expects attributable royalty and stream
production to total 460,000 to 490,000 GEOs from its mineral assets
and revenue of $50 million to
$60 million from its oil & gas
assets. Of the royalty and stream production, 310,000 to 330,000
GEOs are expected from Franco-Nevada's various stream agreements
with no GEOs assumed from Cobre Panama in 2018. For 2018 guidance,
silver, platinum and palladium metals have been converted to GEOs
using assumed commodity prices of $1,300/oz Au, $17.00/oz Ag, $950/oz Pt and $1,050/oz Pd. The WTI oil price is assumed to
average $55 per barrel with a
$4.80 per barrel price differential
between the Edmonton Light and realized prices for Canadian oil.
The Company estimates depletion expense of $250 million to $280
million. 2018 guidance and 5-year outlook below is
based on public forecasts and other disclosures by the third-party
owners and operators of our assets or our assessment thereof.
5-Year Outlook
Our outlook to 2022 assumes that the Cobre Panama project will
be fully ramped-up by 2022. From 2019-2021, scheduled fixed ounce
payments from Midas/Fire Creek,
Karma and Sabodala are expected to step down to longer-term royalty
payments or stream deliveries. Using the same commodity price
assumptions as were used for our 2018 guidance (see above) and
assuming no other acquisitions, Franco-Nevada expects its existing
portfolio to generate between 565,000 to 595,000 GEOs by 2022. Oil
& gas revenues at the same $55
per barrel WTI oil price assumption are expected to range between
$80 million and $90 million.
Q4/2017 Portfolio Updates
- Precious Metals — Latin
America: GEOs from Latin American precious metals assets
were consistent year-over-year. Precious metal GEOs earned from
Latin America were 60,568 GEOs
compared with 60,808 GEOs in Q4/2016.
-
- Cobre Panama (gold and silver stream) – During Q4/2017,
Franco-Nevada contributed $89.4
million of its share of construction capital for the Cobre
Panama project. Franco-Nevada at
year-end has contributed $726.6
million of its total $1
billion commitment for the construction of Cobre Panama.
Franco-Nevada expects to fund
between $230 and $250 million in 2018 towards the $1 billion deposit. Recently, First Quantum
announced expansion plans for the Cobre Panama throughput capacity
to 85 million tonnes per annum and potential to accommodate a
further increase to 100 million tonnes per annum after 2022. First
Quantum reported that the project was 70% complete as of year-end
with phased commissioning expected during 2018 and continued
ramp-up during 2019.
- Candelaria (gold and silver stream) – GEOs earned from
Candelaria were 14,185, compared to 19,698 GEOs in the prior year
quarter, in line with expectations. 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 reserve will allow Lundin to optimize the mine plan as
well as extend the mine life at Candelaria.
- Antapaccay (gold and silver stream) – Antapaccay
delivered 19,430 GEOs in Q4/2017, for a total of 71,183 GEOs in
2017.
- Antamina (22.5% silver stream) – GEOs earned from
Antamina were 12,870 during the quarter compared to 10,619 GEOs in
Q4/2016. For the full year 2017, Antamina sales were 49,656
GEOs.
- Guadalupe-Palmarejo (50% gold stream) – During
Q4/2017, Franco-Nevada sold 13,741 GEOs under the Guadalupe
agreement and 52,124 GEOs for the full year. Coeur Mining, Inc.
provided a new Mineral Resource estimate for the project in
February 2018 following a strong
exploration campaign in 2017. Gold Mineral Reserves increased by
19% while gold Measured & Indicated Mineral Resources increased
by 56%. Franco-Nevada estimates
that the majority of the Mineral Reserves & Resources are
covered by the gold stream.
- Cerro Moro (2% royalty) –
Yamana reports that Cerro Moro
construction is progressing and is expected to be completed by the
end of Q1/2018 with ramp-up of operations expected in Q2/2018.
- Precious Metals — U.S.: GEOs from U.S. precious metals
assets decreased by 16.1% year-over-year mainly due to the
completion of Phase 2 mining at South Arturo. GEOs received from
the U.S. precious metal assets were 19,284 GEOs.
-
- Goldstrike (2-4% royalty & 2.4-6% NPI) – Successful
exploration at Goldstrike increased the Mineral Reserve. Barrick is
expected to continue to target areas below the Betze-Post open
pit and below the current workings at the Meikle underground
which are subject to Franco-Nevada royalties.
- Stillwater (5% royalty)
–The Blitz project achieved first production in September 2017 and 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.
- Bald Mountain (0.875-5% royalty) – Kinross successfully doubled production from
the operation in 2017. Kinross has
started construction of new process facilities in the South Zone
and expects commissioning in Q1/2019.
- Fire Creek (fixed gold deliveries and stream) – Klondex
provided an initial open pit Mineral Resource at what has
historically been an underground operation in December 2017.
- 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.
- South Arturo (4-9% royalty) – Joint Venture operators
Barrick and Premier Gold announced a significant increase to
Mineral Reserves and Mineral Resources for the South Arturo
operation. Phase 2 mining was completed in 2017 and the Joint
Venture now expects to start development of the Phase 1 open pit in
mid-2018.
- Precious Metals — Canada: GEOs from Canadian precious metals
assets decreased by approximately 31.6% to 14,262 GEOs compared
with Q4/2016 mainly due to reduced NPI payments from Hemlo and Musselwhite.
-
- Brucejack (1.2% royalty) – Brucejack poured first gold
on June 20, 2017, declared commercial
production on July 3, 2017 and
produced a total of 152,484 ounces of gold in 2017.
Franco-Nevada's royalty begins
after approximately 500,000 ounces have been produced. Pretium
submitted an application to increase production from 2,700 tonnes
per day to 3,800 tonnes per day with a decision expected before the
end of 2018.
- Hemlo (3% royalty & 50%
NPI) – Barrick had another successful exploration campaign at
Hemlo in 2017 and added 397,000
ounces of Mineral Reserves (before mining depletion). Barrick has
indicated that exploration will focus on the expansion potential of
the underground operation.
- Musselwhite (5% NPI) – Goldcorp estimates that the
Materials Handling project is 53% complete and is tracking 10%
below the capital cost estimate. The project is expected to reach
commercial production in Q1/2019.
- Kirkland Lake (1.5-5.5%
royalty & 20% NPI) – Kirkland Lake
Gold announced plans for a new shaft at the Macassa mine
which would support higher levels of production and offer more
effective underground exploration. The two phase project is
expected to be completed by the end of 2023.
- Canadian Malartic (1.5%
royalty) – Canadian Malartic
reported an updated Mineral Resource estimate for the Odyssey
deposit and a new Mineral Resource at East Malartic. Both of these deposits are
located east of the currently planned open pit and may partially be
covered by the Franco-Nevada royalty.
- Precious Metals — Rest of World: GEOs from Rest of World
precious metals assets were 22,660 GEOs during the quarter. This
represented the largest year-over-year increase at 47.1% as
increased sales from MWS, Sabodala and Karma positively impacted
the quarter.
-
- 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 H2/2018.
The Ahafo mill expansion is expected to be in commercial production
in H2/2019. Together, the Ahafo expansion projects (Subika
underground and mill expansion) are expected to increase Ahafo's
production to 550,000 - 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.
- Karma (fixed gold deliveries and stream) – 4,453 GEOs
were delivered and sold in Q4/2017. In Q4/2016, 3,750 GEOs were
delivered of which 2,500 GEOs were sold.
- Sabodala (fixed gold deliveries and stream) – 5,625 GEOs
were delivered and sold in Q4/2017 compared with 3,750 GEOs sold in
Q4/2016.
- Sissingué (0.5% royalty) – Perseus Mining poured first
gold from Sissingué on January 26,
2018 and expects to ramp-up to full scale commercial
production by the end of Q1/2018.
- Oil & Gas: Revenue from oil & gas assets
increased to $14.0 million in Q4/2017
compared to $10.4 million in Q4/2016,
reflecting both higher prices and production levels
year-over-year.
-
- Weyburn (NRI, ORR, WI)
– Whitecap Resources Inc. are the new operators of the asset having
acquired operatorship from Cenovus Energy Inc. Weyburn generated $8.8
million in the quarter versus $7.9
million in the previous year capping off a strong year
overall.
- Orion (GORR) – Osum Oil Sands Corp. announced plans to
double production by accelerating the expansion of Phase 2C, which
will now be constructed concurrently with the Phase 2B expansion. Together, the two phases are
expected to increase production capacity to over 18,000 barrels per
day.
- Anadarko (STACK/SCOOP) (various royalty rates) – Higher
production and new mineral royalty purchases increased revenue
year-over-year. Rig activity is, on average, at or ahead
of our original expectations and royalty revenue is expected
to increase.
- Permian (Midland/Delaware)
(various royalty rates) – A second transaction on the
Delaware side of the Permian Basin
was closed in February 2018. Rig
activity is ahead of original expectations and royalty revenue
is expected to increase.
Shareholder Information
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. The 2018 Asset
Handbook will be released at the beginning of April
2018.
Management will host a conference call tomorrow, Thursday, March 8, 2018 at 10:00
a.m. Eastern Time to review Franco‑Nevada's 2017 results, as
well as discuss the 2018 and five-year outlook.
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
15: Toll-Free (855) 859-2056; Toronto (416) 849-0833; Pass code
9393915
- 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
acquisition of the additional Cobre Panama stream and its expected
impact on future performance and results of operations. 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; risks related to the completion of the
acquisition of the additional Cobre Panama stream in accordance
with its terms; 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 Q4/2017, the average commodity prices were as
follows: $1,274 gold (2016 -
$1,218), $16.70 silver (2016 - $17.18), $920
platinum (2016 - $944) and
$993 palladium (2016 - $684). For 2017, the average commodity prices
were as follows: $1,257 gold (2016 -
$1,248), $17.05 silver (2016 - $17.20), $948
platinum (2016 - $987) and
$870 palladium (2016 - $613).
- 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:
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
For the year
ended
|
|
December 31,
|
December 31,
|
(expressed in
millions, except per share amounts)
|
2017
|
2016
|
2017
|
2016
|
Net
Income
|
$
|
43.5
|
$
|
(4.5)
|
$
|
194.7
|
$
|
122.2
|
|
Income tax
expense
|
|
16.9
|
|
13.4
|
|
41.3
|
|
45.7
|
|
Finance
expenses
|
|
1.0
|
|
0.8
|
|
3.4
|
|
3.6
|
|
Finance
income
|
|
(1.8)
|
|
(0.9)
|
|
(5.4)
|
|
(3.5)
|
|
Depletion and
depreciation
|
|
63.8
|
|
67.2
|
|
273.0
|
|
273.8
|
|
Non-cash costs of
sales
|
|
3.0
|
|
1.2
|
|
7.7
|
|
6.5
|
|
Impairment
charges
|
|
—
|
|
67.5
|
|
—
|
|
67.5
|
|
Impairment of
investments
|
|
4.5
|
|
—
|
|
4.5
|
|
—
|
|
Gain on sale of
royalty interest
|
|
—
|
|
(14.1)
|
|
—
|
|
(14.1)
|
|
Gain on
investments
|
|
(2.0)
|
|
(7.9)
|
|
(2.0)
|
|
(12.4)
|
|
Foreign exchange
(gains)/losses and other (income)/expenses
|
|
(0.9)
|
|
(0.5)
|
|
(1.1)
|
|
(0.2)
|
Adjusted
EBITDA
|
$
|
128.0
|
$
|
122.2
|
$
|
516.1
|
$
|
489.1
|
Basic weighted
average shares outstanding
|
|
185.5
|
|
178.3
|
|
182.9
|
|
175.2
|
Adjusted EBITDA
per share
|
$
|
0.69
|
$
|
0.69
|
$
|
2.82
|
$
|
2.79
|
|
|
|
|
For the three
months ended
|
For the year
ended
|
|
December 31,
|
December 31,
|
(expressed in
millions, except per share amounts)
|
2017
|
2016
|
2017
|
2016
|
Net
Income
|
$
|
43.5
|
$
|
(4.5)
|
$
|
194.7
|
$
|
122.2
|
|
Foreign exchange
(gains)/losses and other (income)/expenses
|
|
(2.7)
|
|
(0.5)
|
|
(2.9)
|
|
(0.2)
|
|
Impairment
charges
|
|
—
|
|
67.5
|
|
—
|
|
67.5
|
|
Impairment of
investments
|
|
4.5
|
|
—
|
|
4.5
|
|
—
|
|
Gain on sale of
royalty interest
|
|
—
|
|
(14.1)
|
|
—
|
|
(14.1)
|
|
Gain on
investments
|
|
—
|
|
(7.9)
|
|
—
|
|
(12.4)
|
|
Tax effect of
adjustments
|
|
1.0
|
|
4.3
|
|
(0.1)
|
|
4.7
|
|
Other tax related
adjustments:
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Valuation
allowance
|
|
—
|
|
(2.5)
|
|
0.1
|
|
(4.4)
|
|
|
Utilization of tax
attributes for which no deferred tax asset was previously
recognized
|
|
(1.3)
|
|
—
|
|
(5.1)
|
|
—
|
|
|
U.S. Tax Reform
Impact
|
|
7.1
|
|
—
|
|
7.1
|
|
—
|
|
|
Impact of tax
increases
|
|
—
|
|
0.6
|
|
—
|
|
1.0
|
Adjusted Net
Income
|
$
|
52.1
|
$
|
42.9
|
$
|
198.3
|
$
|
164.4
|
Basic weighted
average shares outstanding
|
|
185.5
|
|
178.3
|
|
182.9
|
|
175.2
|
Adjusted Net
Income per share
|
$
|
0.28
|
$
|
0.24
|
$
|
1.08
|
$
|
0.94
|
FRANCO-NEVADA
CORPORATION
|
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
|
(in millions of
U.S. dollars)
|
|
|
|
|
|
|
At
December 31,
2017
|
At December 31,
2016
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents (Note 5)
|
$
|
511.1
|
$
|
253.0
|
Receivables
|
|
65.9
|
|
71.1
|
Prepaid expenses and
other (Note 7)
|
|
39.4
|
|
37.1
|
|
Current
assets
|
|
616.4
|
|
361.2
|
|
|
|
|
|
Royalty, stream and
working interests, net (Note 8)
|
|
3,939.2
|
|
3,668.3
|
Investments (Note
6)
|
|
203.1
|
|
147.4
|
Deferred income tax
assets (Note 17)
|
|
14.5
|
|
21.3
|
Other assets (Note
9)
|
|
15.2
|
|
23.4
|
|
Total
assets
|
$
|
4,788.4
|
$
|
4,221.6
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Accounts payable and
accrued liabilities (Note 10)
|
$
|
21.5
|
$
|
21.0
|
Current income tax
liabilities
|
|
1.1
|
|
16.6
|
|
Current
liabilities
|
|
22.6
|
|
37.6
|
|
|
|
|
|
Deferred income tax
liabilities (Note 17)
|
|
60.3
|
|
37.5
|
|
Total
liabilities
|
|
82.9
|
|
75.1
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY (Note 18)
|
|
|
|
|
Common
shares
|
|
5,107.8
|
|
4,666.2
|
Contributed
surplus
|
|
14.2
|
|
41.6
|
Deficit
|
|
(310.0)
|
|
(336.8)
|
Accumulated other
comprehensive loss
|
|
(106.5)
|
|
(224.5)
|
|
Total shareholders'
equity
|
|
4,705.5
|
|
4,146.5
|
|
Total liabilities and
shareholders' equity
|
$
|
4,788.4
|
$
|
4,221.6
|
|
|
|
|
|
Commitments (Note 20)
|
|
|
|
|
Subsequent
Events (Note 4 and 13)
|
|
|
|
|
The accompanying notes are an integral part of
these consolidated financial statements and can be found in our
2017 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)
|
For the year
ended
December 31,
|
|
|
2017
|
2016
|
Revenue
(Note 14)
|
$
|
675.0
|
$
|
610.2
|
|
|
|
|
|
Cost of
sales
|
|
|
|
|
|
Costs of sales
(Note 15)
|
|
142.0
|
|
105.8
|
|
Depletion and
depreciation (Note 8(a))
|
|
273.0
|
|
273.8
|
Total cost of
sales
|
|
415.0
|
|
379.6
|
Gross
profit
|
|
260.0
|
|
230.6
|
|
|
|
|
|
Other operating
expenses (income)
|
|
|
|
|
|
Corporate
administration
|
|
21.3
|
|
20.7
|
|
Business
development
|
|
3.6
|
|
3.4
|
|
Impairment charges
(Note 8(b))
|
|
—
|
|
67.5
|
|
(Gain) on sale of
royalty interest (Note 8(c))
|
|
—
|
|
(14.1)
|
|
(Gain) on sale of
gold bullion
|
|
(0.3)
|
|
(2.3)
|
Total other operating
expenses (income)
|
|
24.6
|
|
75.2
|
Operating
income
|
|
235.4
|
|
155.4
|
|
Foreign exchange gain
(loss) and other income (expenses)
|
|
1.1
|
|
0.2
|
|
Realized gain on
investments
|
|
2.0
|
|
12.4
|
|
Impairment of
investments
|
|
(4.5)
|
|
—
|
Income before finance
items and income taxes
|
|
234.0
|
|
168.0
|
|
|
|
|
|
Finance
items
|
|
|
|
|
|
Finance
income
|
|
5.4
|
|
3.5
|
|
Finance expenses
(Note 13)
|
|
(3.4)
|
|
(3.6)
|
Net income before
income taxes
|
|
236.0
|
|
167.9
|
|
|
|
|
|
Income tax expense
(Note 17)
|
|
41.3
|
|
45.7
|
Net
income
|
$
|
194.7
|
$
|
122.2
|
|
|
|
|
|
Other
comprehensive income:
|
|
|
|
|
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 $6.1 (2016 - $5.3) (Note 6)
|
|
38.4
|
|
52.9
|
|
Reclassification of
realized loss (gain) in fair value of available-for-sale
investments, net of income tax recovery of $0.2 (2016 - income tax
expense of $1.6) (Note 6)
|
|
2.4
|
|
(10.6)
|
|
Currency translation
adjustment
|
|
77.2
|
|
21.3
|
|
Other comprehensive
income
|
|
118.0
|
|
63.6
|
|
|
|
|
|
Total
comprehensive income
|
$
|
312.7
|
$
|
185.8
|
Basic earnings per
share (Note 19)
|
$
|
1.06
|
$
|
0.70
|
Diluted earnings
per share (Note 19)
|
$
|
1.06
|
$
|
0.69
|
The accompanying notes are an integral part of
these consolidated financial statements and can be found in our
2017 Annual Report available on our website
FRANCO-NEVADA
CORPORATION
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
(in millions of
U.S. dollars)
|
For the year
ended
December 31,
|
|
|
2017
|
2016
|
Cash flows from
operating activities
|
|
|
|
|
Net income
|
$
|
194.7
|
$
|
122.2
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depletion and
depreciation
|
|
273.0
|
|
273.8
|
|
Non-cash costs of
sales
|
|
7.7
|
|
6.5
|
|
Share-based
payments
|
|
4.6
|
|
5.0
|
|
Impairment charges
(Note 8(b))
|
|
—
|
|
67.5
|
|
Gain on sale of
royalty interest
|
|
—
|
|
(14.1)
|
|
Unrealized foreign
exchange (gain) loss
|
|
(1.7)
|
|
0.5
|
|
Mark-to-market on
warrants
|
|
0.2
|
|
(0.4)
|
|
Gain on
investments
|
|
(2.0)
|
|
(12.4)
|
|
Impairment of
investments
|
|
4.5
|
|
—
|
|
Deferred income tax
expense
|
|
21.8
|
|
3.5
|
|
Other non-cash
items
|
|
(2.1)
|
|
(1.2)
|
|
Acquisition of gold
bullion
|
|
(24.1)
|
|
(53.5)
|
Proceeds from sale of
gold bullion
|
|
19.0
|
|
67.3
|
Operating cash flows
before changes in non-cash working capital
|
|
495.6
|
|
464.7
|
|
Changes in non-cash
working capital:
|
|
|
|
|
|
|
Decrease (increase)
in receivables
|
|
5.2
|
|
(6.0)
|
|
|
Decrease (increase)
in prepaid expenses and other
|
|
3.3
|
|
(4.5)
|
|
|
(Decrease) increase
in current liabilities
|
|
(15.5)
|
|
16.8
|
Net cash provided by
operating activities
|
|
488.6
|
|
471.0
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
Proceeds from sale of
investments
|
|
12.6
|
|
28.6
|
|
Proceeds from sale of
royalty interest
|
|
—
|
|
30.3
|
|
Acquisition of
investments
|
|
(12.3)
|
|
(1.6)
|
|
Acquisition of
royalty, stream and working interests
|
|
(499.5)
|
|
(744.8)
|
|
Acquisition of
oil & gas well equipment
|
|
(1.7)
|
|
(2.1)
|
|
Acquisition of
property and equipment
|
|
—
|
|
(0.2)
|
Net cash used in
investing activities
|
|
(500.9)
|
|
(689.8)
|
|
|
|
|
|
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
|
|
(125.8)
|
|
(118.1)
|
|
Proceeds from
exercise of warrants
|
|
356.4
|
|
—
|
|
Proceeds from
exercise of stock options
|
|
10.1
|
|
16.3
|
Net cash provided by
financing activities
|
|
239.7
|
|
321.7
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
30.7
|
|
0.9
|
Net change in cash
and cash equivalents
|
|
258.1
|
|
103.8
|
Cash and cash
equivalents at beginning of year
|
|
253.0
|
|
149.2
|
Cash and cash
equivalents at end of year
|
$
|
511.1
|
$
|
253.0
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
Cash paid for
interest expense and loan standby fees
|
$
|
2.4
|
$
|
3.0
|
Income taxes
paid
|
$
|
38.2
|
$
|
30.7
|
The accompanying notes are an integral part of
these consolidated financial statements and can be found in our
2017 Annual Report available on our website
SOURCE Franco-Nevada Corporation