(in U.S. dollars unless otherwise noted)
Assets returning to normal operations
TORONTO, Aug. 5, 2020 /CNW/ - Franco-Nevada's diversified
portfolio performed well despite the impact of COVID-19 during the
quarter. "We recognise the efforts of our operators and their
related communities during this difficult period", stated
Paul Brink, CEO. "Of our original 56
cash generating mining assets, 15 experienced some form of
temporary curtailment in Q2. All except Golden Highway have
since resumed operations. The return to normal operations and
higher gold prices makes us optimistic about the second
half. In addition, we see the potential for longer-term
organic growth from our over 240 exploration and development
royalties due to increased capital available to the gold
sector. Our energy assets should benefit now that oil &
gas prices have stabilized since the lows experienced in
Q2. Franco-Nevada is debt free, has a growing cash balance and
expects good growth in our gold equivalent ounces over the next few
years."
Q2/2020 Financial Highlights
- 104,330 Gold Equivalent Ounces1 ("GEOs") sold
- $195.4 million in revenue
- $94.4 million of Net Income, or
$0.50 per share
- $91.8 million of Adjusted Net
Income2, or $0.48 per
share
- $27.0 million in Cash
Costs3, or $259 per GEO
sold
- $158.1 million of Adjusted
EBITDA4, or $0.83 per
share
|
Revenue and
GEO Sales by Asset Categories
|
|
|
|
|
Q2/2020
|
Q2/2019
|
|
GEO
Sales
|
Revenue
|
GEO
Sales
|
Revenue
|
|
#
|
(in millions)
|
#
|
(in millions)
|
Gold
|
79,758
|
$
|
136.6
|
80,606
|
$
|
105.9
|
Silver
|
11,630
|
|
20.2
|
12,278
|
|
16.6
|
PGMs
|
11,367
|
|
21.4
|
10,540
|
|
14.7
|
Other Mining
Assets
|
1,575
|
|
2.6
|
4,350
|
|
5.7
|
Mining
|
104,330
|
$
|
180.8
|
107,774
|
$
|
142.9
|
Energy
|
—
|
|
14.6
|
—
|
|
27.6
|
|
104,330
|
$
|
195.4
|
107,774
|
$
|
170.5
|
For Q2/2020, revenue was sourced 92.5% from gold and gold
equivalents (69.9% gold, 10.3% silver, 11.0% PGM and 1.3% other
mining assets) and 7.5% from energy (oil, gas and NGLs). The focus
of the portfolio is on precious metals (gold, silver and PGM) with
a target of no more than 20% in revenue from energy.
Geographically, revenue was sourced 82.3% from the Americas (41.1%
Latin America, 22.9% U.S. and
18.3% Canada).
Corporate Updates
- Alpala Royalty Interest: On May
11, 2020, Franco-Nevada agreed, subject to due diligence, to
acquire a 1% NSR with reference to all minerals produced from the
Alpala copper-gold-silver project in northern Ecuador for $100
million.
- At-the-Market Equity Program ("ATM Program"): In
Q2/2020, the Company issued 474,900 shares under its ATM Program
for net proceeds of $66.8 million.
The ATM Program was established on May 11,
2020 permitting the Company to issue up to an aggregate of
$300 million worth of common
shares.
2020 Guidance
After withdrawing guidance for the year on April 7, 2020 due to uncertainties related to the
COVID-19 pandemic, the Company is now issuing new guidance.
Franco-Nevada expects attributable
royalty and stream sales to total 475,000 to 505,000 GEOs from its
mining assets and revenue of $60 to
$75 million from its energy assets in
2020. For this guidance, silver, platinum and palladium metals have
been converted to GEOs using assumed commodity prices of
$1,800/oz Au, $20.00/oz Ag, $900/oz Pt and $2,200/oz Pd. The WTI oil price and Henry Hub
natural gas price are assumed to average $40 per barrel and $2.00 per mcf, respectively. The 2020 guidance is
based on public forecasts and other disclosure by the third-party
owners and operators of our assets or our assessment thereof.
COVID-19 Updates
Franco-Nevada supports measures
to address the COVID-19 pandemic. All of our employees continue to
work remotely and there are no known cases in the Company. The
Company is closely monitoring the impact of the COVID-19 pandemic
on its portfolio of assets.
- Gold and Gold Equivalent Mining Assets:
Franco-Nevada has a diversified
portfolio that originally included 56 producing assets consisting
of four larger cash-flowing assets, Antamina, Antapaccay,
Candelaria and Cobre Panama and 52 smaller cash-flowing assets.
Operations at Cobre Panama and Antamina were temporarily suspended
in Q1/2020 but have since restarted. 15 of the cash-flowing assets
experienced temporarily reduced or curtailed production. All except
Golden Highway have since resumed operations. With the assets from
Golden Highway currently in temporary suspension, our total
producing mining assets have reduced from the original 56 at the
beginning of Q2/2020 to 53 at the end Q2/2020.
- Energy Assets: Recent geopolitical and market factors
impacting global energy markets (including those related to the
COVID-19 pandemic) have contributed to a significant decrease
in the price of oil and gas. Reduced demand and a lack of available
storage contributed to oil prices and future contracts reaching
historical lows in April 2020. Prices
have since rebounded from the lows.
Q2/2020 Portfolio Updates
Gold Equivalent Ounces Sold: GEOs sold for the
quarter were 104,330, a decrease of 3.2% from the 107,774 sold in
Q2/2019. Lower contributions from Antapaccay, Goldstrike and
Sabodala were partly offset by higher contributions from Cobre
Panama and Hemlo.
Latin America:
- Cobre Panama (gold and silver stream) – On April 7, 2020, First Quantum announced that Cobre
Panama was placed on care and maintenance as the Ministry of Health
of the Republic of Panama
("MINSA") ordered the temporary suspension of labor activities at
the mine due to COVID-19. On July 7,
2020, First Quantum announced that it had received notice
from MINSA lifting the temporary suspension and it is implementing
a reopening plan. The operation is expected to ramp up to full
production by mid-August, depending on successful implementation of
the reopening plan. Franco-Nevada
sold 10,344 GEOs from the asset in Q2/2020.
- Candelaria (gold and silver stream) – Franco-Nevada sold
15,463 GEOs from the mine in Q2/2020. On July 29, 2020, Lundin Mining reported that copper
production at the Candelaria mine was higher quarter-over-quarter
due to higher copper head grades and recoveries as more higher
grade open-pit and underground ore was mined. However, throughput
was lower than planned due to ore hardness, operational issues and
an unplanned maintenance stop. In addition, COVID-19 has further
delayed the Candelaria Mill Optimization Project and installation
of the final ball mill motor is now planned for January 2021. In Lundin Mining's revised
guidance, Candelaria is expecting annual production of 145,000 –
155,000 tonnes of copper and 80,000 – 90,000 ounces of gold,
compared to original guidance of 160,000 – 175,000 tonnes of copper
and 90,000 – 100,000 ounces of gold.
- Antapaccay (gold and silver stream) – Antapaccay
production was lower quarter-over-quarter due to anticipated lower
grades based on the life of mine plan. GEOs delivered and sold were
lower due to concentrate shipment delays in April and May as a
result of the COVID-19 pandemic.
- Antamina (22.5% silver stream) – GEOs sold from Antamina
were lower quarter-over-quarter due to COVID-19 related temporary
suspension of mine operations that was announced on April 13, 2020. On May 27,
2020, Teck announced that Antamina had resumed operations
with plans to start operating at 80% capacity with a gradual ramp
up to full production expected in the third quarter of 2020.
- Guadalupe-Palmarejo (50% gold stream) – Sales from
Guadalupe-Palmarejo were slightly lower quarter-over-quarter. As a
result of COVID-19, operations at the mine were suspended on
April 7, 2020. On May 13, 2020, Coeur Mining announced that it had
taken steps to restart active mining, processing and exploration
activities at the Palmarejo gold-silver complex.
- Cerro Moro (2% royalty) – Due to COVID-19, operations at
Cerro Moro were temporarily suspended on March 20, 2020 but restarted on April 3, 2020 following the Argentine Government
declaring mining an essential service; however, ongoing provincial
restrictions over interprovincial travel have temporarily extended
the length of the operational ramp-up. Following the ramp-up, Cerro
Moro's plant is expected to return to its optimized 1,110 tpd
throughput.
U.S.:
- Stillwater (5% royalty)
– Stillwater benefited from strong
palladium prices during the quarter. On March 23, 2020, Sibanye-Stillwater announced the
deferral of non-essential growth capital expenditures at the mine
in response to COVID-19, which may impact the development schedule
of the Blitz project.
- South Arturo (4-9% royalty) – El Nino mine production
exceeded the operator's expectations during the second quarter
despite a planned shutdown of the Goldstrike roaster which resulted
in minimal ore processing during the month of June. 4,764 ounces of
gold were produced at South Arturo during the quarter prior to the
shutdown.
- Castle Mountain (2.65% royalty) – Phase 1 operation
targeted by Equinox to start in Q3/2020 anticipates production of
45,000 ounces per year for three years. Phase 1 construction was
more than 75% complete by May 2020.
Feasibility and permitting for Phase 2 is underway and is expected
to be completed by late 2020. Annual average production of 200,000
ounces is expected for Phase 2.
Canada:
- Detour Lake (2% royalty) – Production from the Detour
Lake mine totaled 131,992 ounces in Q2/2020 despite disruptions
caused by COVID-19. Kirkland Lake
Gold re-issued guidance on June 30,
2020, with annual production of 520,000 – 540,000 ounces of
gold in 2020 expected from Detour, unchanged from its original
guidance in February 2020.
- Kirkland Lake (1.5-5.5%
royalty & 20% NPI) – Kirkland Lake
Gold reported that workers at Macassa began to be recalled
starting in early May after the mine transitioned to reduced
operations due to COVID-19 around the end of March. Exploration
drilling and work on key projects resumed early in Q2/2020.
Kirkland Lake reported that
exploration results at Macassa were encouraging including the
identification of a new, large corridor of high-grade
mineralization in close proximity to the #4 shaft, currently under
development, and also the continued expansion of the South Mine
Complex. In Kirkland Lake's
re-issued guidance on June 30, 2020,
Macassa is expecting annual production of 210,000 – 220,000 ounces
of gold in 2020, compared to original guidance of 240,000 – 250,000
ounces in its original guidance in February
2020.
- Hemlo (3% royalty & 50%
NPI) – Royalties from Hemlo
increased quarter-over-quarter. The 50% NPI at Hemlo increased significantly year-over-year
as a result of an increase in the gold price. Barrick Gold reported that Q2/2020 production
from Hemlo totaled 54,000
ounces.
- Golden Highway (Holt, Holloway and Taylor mines) – Kirkland Lake Gold announced that Golden Highway
operations were placed on temporary suspension as part of its
COVID-19 protocols effective April 2,
2020 with production for Q2/2020 totaling 807 ounces. Golden
Highway will remain on temporary suspension while Kirkland Lake continues to assess options for
the future of the assets. Kirkland
Lake's June 30, 2020 re-issued
guidance assumes no production from Golden Highway in the second
half of the year.
- Canadian Malartic (1.5%
royalty) – Canadian Malartic production in Q2/2020 exceeded its
production plan despite the government-mandated temporary
suspension of operations between March 24,
2020 to April 15, 2020 due to
COVID-19.
Rest of World:
- MWS (gold stream) – Due to COVID-19, operations at MWS
were suspended on March 26, 2020. On
April 15, 2020, AngloGold Ashanti
announced it had been granted permission for a limited restart,
with a third of its usual workforce.
- Sabodala (gold stream) – Teranga Gold announced on
May 26, 2020 that Sabodala mine
operations continued uninterrupted during the COVID-19 pandemic.
Gold shipment logistics were a challenge in mid-March, however
regular shipments to refineries in Europe have since resumed in early April.
- Tasiast (2% royalty) – Kinross
Gold reported on July 29, 2020
that the Tasiast 24k project
continues to advance and remains on schedule to increase throughput
capacity to 21,000 tonnes per day by the end of 2021, and to 24,000
tonnes per day by mid-2023. The project team continues to explore
measures to mitigate potential impacts on the global movement of
people and supplies caused by COVID-19. However, by late June, the
company reinstated more regular rotations of expatriate staff in
Mauritania, which has improved the
situation. Kinross also reached an agreement with the Government of
Mauritania to resolve outstanding
matters between the parties. The agreement will provide Kinross
with a 30 year license for Tasiast Sud with expedited
permitting.
Energy: Revenue from the energy assets decreased to
$14.6 million in Q2/2020 compared to
$27.6 million in Q2/2019. Revenues
were negatively impacted by lower realized commodity prices and
lower volumes associated with a reduction in drilling by operators
in the SCOOP/STACK, and negative revenue from Weyburn as operating and capital costs
exceeded revenue. The overall decrease for the energy assets was
partially offset by revenue from new investments in the
Marcellus.
U.S.:
- Marcellus (1% royalty) – The royalty, acquired in
Q3/2019 from Range Resources, contributed $4.9 million to revenue in Q2/2020. The asset
will benefit from its first full year of revenue in 2020.
- SCOOP/STACK (various royalty rates) – Royalties from
SCOOP/STACK decreased quarter-over-quarter due to lower realized
commodity prices and lower volumes through reduced drilling by the
operators on royalty lands. In Q2/2020, Franco-Nevada recorded
capital contributions of $2.5 million
to the Royalty Acquisition Venture. Franco-Nevada has a remaining commitment of
$124.5 million to be funded in future
periods. The pace of acquisition in the Royalty Acquisition Venture
has been slowed with a focus on acquiring acreage at lower prices.
The anticipated range of capital contributions for H2/2020 is
expected to be between $10 million to
$20 million.
- Permian Basin (various royalty rates) – Revenue from
Franco-Nevada's interests in the Permian Basin decreased
quarter-over-quarter due to lower drilling activity on royalty
lands and lower realized prices.
Canada:
- Weyburn (NRI, ORR, WI)
– Revenue from Weyburn was
negative for the quarter due to accounting treatment for the NRI.
While our ORR and WI royalties are accounted for on a gross basis,
our NRI is recorded on net basis, after deduction of costs.
Operating and capital costs in the quarter exceeded sales due to
lower realized prices and higher capital spending.
- Orion (4% GORR) – Revenue from Orion decreased
quarter-over-quarter due to lower production and lower realized
prices. Production volumes have since returned to more normal
levels.
Dividend Declaration
Franco-Nevada is pleased to
announce that its Board of Directors has declared a quarterly
dividend of $0.26 per share. The
dividend will be paid on September 24,
2020 to shareholders of record on September 10, 2020 (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 (the "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. Canadian and U.S. registered shareholders
may also enroll in the DRIP online through the plan agent's
self-service web portal at www.investorcentre.com/franco-nevada.
Canadian and U.S. beneficial shareholders should contact their
financial intermediary to arrange enrollment. Non-Canadian and
non-U.S. shareholders may potentially participate in the DRIP,
subject to the satisfaction of certain conditions. Non-Canadian and
non-U.S. shareholders should contact the Company to determine
whether they satisfy the necessary conditions to participate in the
DRIP.
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 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, Thursday, August 6, 2020 at 10:00
a.m. Eastern Time to review Franco–Nevada's Q2/2020 results.
Interested investors are invited to participate as follows:
- Via Conference Call: Toll-Free: (888) 390-0546;
International: (416) 764-8688
- Conference Call Replay until August
13, 2020: Toll-Free (888) 390-0541; International (416)
764-8677; Code 213924 #
- 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 streaming 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, audits
being conducted by the Canada Revenue Agency, the expected exposure
for current and future assessments and available remedies, the
remedies relating to and consequences of the ruling of the Supreme
Court of Panama in relation to the
Cobre Panama project, the aggregate value of Common Shares which
may be issued pursuant to the ATM Program, and the Company's
expected use of the net proceeds of the ATM Program, if any, and
the acquisition of the SolGold royalty interest. 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: the price at which Common
Shares are sold in the ATM program and the aggregate net proceeds
received by the Company as a result of the ATM program;
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 Company 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; access to sufficient pipeline capacity;
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; the impact of the COVID-19 (coronavirus)
pandemic; 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 Company's
ongoing income and assets relating to determination of its PFIC
status; no material changes to existing tax treatment; risks
related to the completion of the acquisition of the SolGold royalty
interest; the expected application of tax laws and regulations by
taxation authorities; the expected assessment and outcome of any
audit by any taxation authority; 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. In addition, there can be no
assurance as to the outcome of the ongoing audit by the CRA or the
Company's exposure as a result thereof. Franco-Nevada cannot assure investors that actual
results will be consistent with these forward-looking statements.
Accordingly, 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 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: Cash Costs, Adjusted EBITDA, and
Adjusted Net Income 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 production from our Mining assets and
do not include Energy 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. Silver, platinum, palladium and other mining commodities
are converted to GEOs by dividing associated revenue, which
includes settlement adjustments, by the relevant gold price. The
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 price for the month, quarter, or year in which the
mining commodity was produced or sold. For Q2/2020, the average
commodity prices were as follows: $1,711 gold (Q2/2019 - $1,310), $16.38
silver (Q2/2019 - $14.89),
$790 platinum (Q2/2019 - $842) and $1,965
palladium (Q2/2019 - $1,388).
- 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"):
impairment charges related to royalty, stream and working interests
and investments; gains/losses on the sale of royalty, stream and
working interests and investments; foreign exchange gains/losses
and other income/expenses; unusual non-recurring items; and the
impact of income taxes on these items.
- Cash Costs attributable to GEOs sold and Cash Costs per GEO
sold are non-IFRS financial measures. Cash Costs
attributable to GEOs sold is calculated by starting with total
costs of sales and excluding depletion and depreciation, costs not
attributable to GEO sales such as our Energy operating costs, and
other non-cash costs of sales such as costs related to our prepaid
gold purchase agreement. Cash Costs is then divided by GEOs sold,
excluding prepaid ounces, to arrive at Cash Costs per GEO
sold.
- 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 and
finance income; depletion and depreciation; non-cash costs of
sales; impairment charges related to royalty, stream and working
interests and investments; gains/losses on the sale of royalty,
stream and working interests and investments; foreign exchange
gains/losses and other income/expenses; and unusual non-recurring
items.
Reconciliation to IFRS measures:
|
|
|
|
|
For the three
months ended
|
|
For the six months
ended
|
|
June 30,
|
|
|
June 30,
|
(expressed in
millions, except per GEO amounts)
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
Total costs of
sales
|
$
|
80.3
|
|
|
$
|
86.3
|
|
|
$
|
188.3
|
|
|
$
|
179.6
|
Depletion and
depreciation
|
|
(52.3)
|
|
|
|
(58.9)
|
|
|
|
(116.7)
|
|
|
|
(119.8)
|
Energy operating
costs
|
|
(1.0)
|
|
|
|
(1.8)
|
|
|
|
(3.1)
|
|
|
|
(3.2)
|
Cash Costs
attributable to GEOs sold
|
$
|
27.0
|
|
|
$
|
25.6
|
|
|
$
|
68.5
|
|
|
$
|
56.6
|
GEOs, excluding
prepaid ounces
|
|
104,330
|
|
|
|
107,774
|
|
|
|
239,271
|
|
|
|
229,823
|
Cash Costs per GEO
sold
|
$
|
259
|
|
|
$
|
238
|
|
|
$
|
286
|
|
|
$
|
246
|
|
|
|
|
|
|
For the three
months ended
|
|
|
For the six months
ended
|
|
June 30,
|
|
|
June 30,
|
(expressed in
millions, except per share amounts)
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
Net Income
(loss)
|
$
|
94.4
|
|
|
$
|
64.0
|
|
|
$
|
(4.4)
|
|
|
$
|
129.2
|
Income tax expense
(recovery)
|
|
11.5
|
|
|
|
13.7
|
|
|
|
(33.4)
|
|
|
|
26.7
|
Finance
expenses
|
|
0.8
|
|
|
|
2.5
|
|
|
|
1.9
|
|
|
|
5.0
|
Finance
income
|
|
(1.0)
|
|
|
|
(1.2)
|
|
|
|
(1.9)
|
|
|
|
(1.9)
|
Depletion and
depreciation
|
|
52.3
|
|
|
|
58.9
|
|
|
|
116.7
|
|
|
|
119.8
|
Impairment of royalty,
stream and working interests
|
|
—
|
|
|
|
—
|
|
|
|
271.7
|
|
|
|
—
|
Foreign exchange
(gains)/losses and other (income)/expenses
|
|
0.1
|
|
|
|
—
|
|
|
|
0.2
|
|
|
|
—
|
Adjusted
EBITDA
|
$
|
158.1
|
|
|
$
|
137.9
|
|
|
$
|
350.8
|
|
|
$
|
278.8
|
Basic weighted
average shares outstanding
|
|
190.2
|
|
|
|
187.2
|
|
|
|
189.6
|
|
|
|
187.1
|
Adjusted EBITDA
per share
|
$
|
0.83
|
|
|
$
|
0.74
|
|
|
$
|
1.85
|
|
|
$
|
1.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
For the six months
ended
|
|
June 30,
|
|
|
June 30,
|
(expressed in
millions, except per share amounts)
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
Net Income
(loss)
|
$
|
94.4
|
|
|
$
|
64.0
|
|
|
$
|
(4.4)
|
|
|
$
|
129.2
|
Impairment of royalty,
stream and working interests
|
|
—
|
|
|
|
—
|
|
|
|
271.7
|
|
|
|
—
|
Foreign exchange
(gains)/losses and other (income)/expenses
|
|
0.1
|
|
|
|
—
|
|
|
|
0.2
|
|
|
|
—
|
Tax effect of
adjustments
|
|
(2.7)
|
|
|
|
—
|
|
|
|
(66.5)
|
|
|
|
—
|
Adjusted Net
Income
|
$
|
91.8
|
|
|
$
|
64.0
|
|
|
$
|
201.0
|
|
|
$
|
129.2
|
Basic weighted
average shares outstanding
|
|
190.2
|
|
|
|
187.2
|
|
|
|
189.6
|
|
|
|
187.1
|
Adjusted Net
Income per share
|
$
|
0.48
|
|
|
$
|
0.34
|
|
|
$
|
1.06
|
|
|
$
|
0.69
|
FRANCO-NEVADA
CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
(unaudited, in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
At
June 30,
|
|
|
At
December 31,
|
|
|
2020
|
|
|
2019
|
ASSETS
|
|
|
|
|
|
|
|
Cash and cash
equivalents (Note 4)
|
|
$
|
378.5
|
|
|
$
|
132.1
|
Receivables
|
|
|
78.4
|
|
|
|
97.8
|
Loan receivable
(Note 5)
|
|
|
15.0
|
|
|
|
—
|
Prepaid expenses and
other (Note 6)
|
|
|
43.8
|
|
|
|
48.8
|
Current
assets
|
|
$
|
515.7
|
|
|
$
|
278.7
|
|
|
|
|
|
|
|
|
Royalty, stream and
working interests, net (Note 7)
|
|
$
|
4,423.8
|
|
|
$
|
4,797.8
|
Investments and loan
receivable (Note 5)
|
|
|
179.9
|
|
|
|
183.2
|
Deferred income tax
assets
|
|
|
54.0
|
|
|
|
6.8
|
Other assets (Note
8)
|
|
|
8.8
|
|
|
|
14.1
|
Total
assets
|
|
$
|
5,182.2
|
|
|
$
|
5,280.6
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
35.3
|
|
|
$
|
41.8
|
Current income tax
liabilities
|
|
|
2.8
|
|
|
|
11.6
|
Current
liabilities
|
|
$
|
38.1
|
|
|
$
|
53.4
|
|
|
|
|
|
|
|
|
Debt (Note
9)
|
|
$
|
—
|
|
|
$
|
80.0
|
Deferred income tax
liabilities
|
|
|
69.4
|
|
|
|
82.4
|
Other
liabilities
|
|
|
4.3
|
|
|
|
2.6
|
Total
liabilities
|
|
$
|
111.8
|
|
|
$
|
218.4
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY (Note 15)
|
|
|
|
|
|
|
|
Share
capital
|
|
$
|
5,531.9
|
|
|
$
|
5,390.7
|
Contributed
surplus
|
|
|
15.1
|
|
|
|
14.2
|
Deficit
|
|
|
(265.8)
|
|
|
|
(164.4)
|
Accumulated other
comprehensive loss
|
|
|
(210.8)
|
|
|
|
(178.3)
|
Total shareholders'
equity
|
|
$
|
5,070.4
|
|
|
$
|
5,062.2
|
Total liabilities and
shareholders' equity
|
|
$
|
5,182.2
|
|
|
$
|
5,280.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingencies (Note 19)
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of
these consolidated financial statements and can be found in our
Q2/2020 Report available on our website
FRANCO-NEVADA
CORPORATION
CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND
COMPREHENSIVE (LOSS) INCOME
(unaudited, in millions of
U.S. dollars and shares, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
|
For the six
months ended
|
|
June 30,
|
|
|
June 30,
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
Revenue (Note 10)
|
$
|
195.4
|
|
|
$
|
170.5
|
|
|
$
|
435.9
|
|
|
$
|
350.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of sales
(Note 11)
|
$
|
28.0
|
|
|
$
|
27.4
|
|
|
$
|
71.6
|
|
|
$
|
59.8
|
Depletion and
depreciation
|
|
52.3
|
|
|
|
58.9
|
|
|
|
116.7
|
|
|
|
119.8
|
Total costs of
sales
|
$
|
80.3
|
|
|
$
|
86.3
|
|
|
$
|
188.3
|
|
|
$
|
179.6
|
Gross
profit
|
$
|
115.1
|
|
|
$
|
84.2
|
|
|
$
|
247.6
|
|
|
$
|
170.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating
expenses (income)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of royalty,
stream and working interests (Note 7)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
271.7
|
|
|
$
|
—
|
General and
administrative expenses
|
|
11.7
|
|
|
|
5.6
|
|
|
|
17.9
|
|
|
|
12.5
|
Gain on sale of gold
bullion
|
|
(2.4)
|
|
|
|
(0.4)
|
|
|
|
(4.4)
|
|
|
|
(0.8)
|
Total other operating
expenses
|
$
|
9.3
|
|
|
$
|
5.2
|
|
|
$
|
285.2
|
|
|
$
|
11.7
|
Operating income
(loss)
|
$
|
105.8
|
|
|
$
|
79.0
|
|
|
$
|
(37.6)
|
|
|
$
|
159.0
|
Foreign exchange gain
(loss) and other income (expenses)
|
$
|
(0.1)
|
|
|
$
|
—
|
|
|
$
|
(0.2)
|
|
|
$
|
—
|
Income (loss) before
finance items and income taxes
|
$
|
105.7
|
|
|
$
|
79.0
|
|
|
$
|
(37.8)
|
|
|
$
|
159.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance items
(Note 13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
income
|
$
|
1.0
|
|
|
$
|
1.2
|
|
|
$
|
1.9
|
|
|
$
|
1.9
|
Finance
expenses
|
|
(0.8)
|
|
|
|
(2.5)
|
|
|
|
(1.9)
|
|
|
|
(5.0)
|
Net income (loss)
before income taxes
|
$
|
105.9
|
|
|
$
|
77.7
|
|
|
$
|
(37.8)
|
|
|
$
|
155.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(recovery) (Note 14)
|
|
11.5
|
|
|
|
13.7
|
|
|
|
(33.4)
|
|
|
|
26.7
|
Net income
(loss)
|
$
|
94.4
|
|
|
$
|
64.0
|
|
|
$
|
(4.4)
|
|
|
$
|
129.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to profit and loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation
adjustment
|
$
|
29.4
|
|
|
$
|
14.1
|
|
|
$
|
(34.2)
|
|
|
$
|
28.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that will
not be reclassified subsequently to profit and loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on changes in the
fair value of equity investments at fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
value through other
comprehensive income (loss) ("FVTOCI"),
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of income tax
(Note 5)
|
|
37.0
|
|
|
|
24.8
|
|
|
|
1.7
|
|
|
|
47.7
|
Other comprehensive
income (loss)
|
$
|
66.4
|
|
|
$
|
38.9
|
|
|
$
|
(32.5)
|
|
|
$
|
75.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income (loss)
|
$
|
160.8
|
|
|
$
|
102.9
|
|
|
$
|
(36.9)
|
|
|
$
|
205.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share (Note 16)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.50
|
|
|
$
|
0.34
|
|
|
$
|
(0.02)
|
|
|
$
|
0.69
|
Diluted
|
$
|
0.50
|
|
|
$
|
0.34
|
|
|
$
|
(0.02)
|
|
|
$
|
0.69
|
Weighted average
number of shares outstanding (Note 16)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
190.2
|
|
|
|
187.2
|
|
|
|
189.6
|
|
|
|
187.1
|
Diluted
|
|
190.6
|
|
|
|
187.5
|
|
|
|
189.6
|
|
|
|
187.4
|
The accompanying notes are an integral part of
these consolidated financial statements and can be found in our
Q2/2020 Report available on our website
FRANCO-NEVADA
CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(unaudited, in millions of U.S. dollars)
|
|
|
|
|
|
|
|
For the six
months ended
|
|
June 30,
|
|
2020
|
|
|
2019
|
Cash flows from
operating activities
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(4.4)
|
|
|
$
|
129.2
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depletion and
depreciation
|
|
116.7
|
|
|
|
119.8
|
Share-based
payments
|
|
2.5
|
|
|
|
2.6
|
Impairment of royalty,
stream and working interests
|
|
271.7
|
|
|
|
—
|
Unrealized foreign
exchange loss (gain)
|
|
0.4
|
|
|
|
(0.1)
|
Deferred income tax
(recovery) expense
|
|
(57.9)
|
|
|
|
5.3
|
Other non-cash
items
|
|
(5.6)
|
|
|
|
(1.9)
|
Acquisition of gold
bullion
|
|
(17.6)
|
|
|
|
(15.6)
|
Proceeds from sale of
gold bullion
|
|
28.1
|
|
|
|
17.9
|
Operating cash flows
before changes in non-cash working capital
|
$
|
333.9
|
|
|
$
|
257.2
|
Changes in non-cash
working capital:
|
|
|
|
|
|
|
Decrease in
receivables
|
$
|
19.4
|
|
|
$
|
4.7
|
Decrease (increase) in
prepaid expenses and other
|
|
2.3
|
|
|
|
(5.4)
|
(Decrease) increase in
current liabilities
|
|
(10.2)
|
|
|
|
6.2
|
Net cash provided by
operating activities
|
$
|
345.4
|
|
|
$
|
262.7
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
Acquisition of
royalty, stream and working interests
|
$
|
(38.3)
|
|
|
$
|
(95.6)
|
Acquisition of energy
well equipment
|
|
(0.2)
|
|
|
|
(0.5)
|
Issuance of loan
receivable
|
|
(15.0)
|
|
|
|
—
|
Proceeds from sale of
investments
|
|
—
|
|
|
|
6.3
|
Net cash used in
investing activities
|
$
|
(53.5)
|
|
|
$
|
(89.8)
|
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
Repayment of revolving
credit facilities
|
$
|
—
|
|
|
$
|
(210.0)
|
Proceeds from draw of
credit facilities
|
|
—
|
|
|
|
275.0
|
(Repayment) proceeds
from draw of term loan
|
|
(80.0)
|
|
|
|
160.0
|
Proceeds from
at-the-market equity offering
|
|
107.3
|
|
|
|
—
|
Credit facility
amendment costs
|
|
—
|
|
|
|
(0.8)
|
Payment of
dividends
|
|
(76.0)
|
|
|
|
(70.0)
|
Proceeds from exercise
of stock options
|
|
6.0
|
|
|
|
2.5
|
Net cash (used in)
provided by financing activities
|
$
|
(42.7)
|
|
|
$
|
156.7
|
Effect of exchange
rate changes on cash and cash equivalents
|
$
|
(2.8)
|
|
|
$
|
(0.4)
|
Net change in cash
and cash equivalents
|
$
|
246.4
|
|
|
$
|
329.2
|
Cash and cash
equivalents at beginning of period
|
$
|
132.1
|
|
|
$
|
69.7
|
Cash and cash
equivalents at end of period
|
$
|
378.5
|
|
|
$
|
398.9
|
|
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
Cash paid for
interest expense and loan standby fees
|
$
|
1.3
|
|
|
$
|
4.4
|
Income taxes
paid
|
$
|
33.5
|
|
|
$
|
25.1
|
The accompanying notes are an integral part of
these consolidated financial statements and can be found in our
Q2/2020 Report available on our website
View original
content:http://www.prnewswire.com/news-releases/franco-nevada-reports-q2-results-301107086.html
SOURCE Franco-Nevada Corporation