On-Track to Meet Full Year Guidance
(in U.S. dollars unless otherwise noted)
TORONTO, Nov. 7, 2022
/PRNewswire/ - "Our diversified portfolio performed well in the
quarter with declines in precious metal prices partially offset by
strong oil and gas prices", stated Paul
Brink, CEO. "Cobre Panama's record production for the
quarter is not fully reflected in our Q3 GEO sales due to timing of
shipments. Franco-Nevada has
record GEOs, revenue, net income, Adjusted Net Income and Adjusted
EBITDA for the three quarters through September 30, 2022 and is on-track to meet full
year guidance. The weaker gold price environment has led to an
increase in demand for royalty and stream financing. We are pleased
to have acquired a royalty on Argonaut's Magino project in
Ontario that is currently under
construction and our business development group remains very
active."
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Q3 2022
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YTD 2022
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Q3 results
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vs
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YTD results
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vs
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Q3 2021
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YTD 2021
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Total GEOs1
sold (including Energy)
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176,408 GEOs
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-1 %
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546,074 GEOs
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+0 %
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Precious Metal
GEOs1 sold
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120,542 GEOs
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-6 %
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380,743 GEOs
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-9 %
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Revenue
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$304.2
million
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-4 %
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$995.3
million
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+2 %
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Net income
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$157.1 million
($0.82/share)
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-5 %
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$535.6 million
($2.80/share)
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+4 %
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Adjusted Net
Income2
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$159.7 million
($0.83/share)
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-4 %
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$532.7 million
($2.78/share)
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+5 %
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Adjusted
EBITDA2
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$256.7 million
($1.34/share)
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-5 %
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$844.5 million
($4.41/share)
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+3 %
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Margin2
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84.4 %
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-1.1 %
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84.8 %
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+0.3 %
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Strong Financial Position
- Earned record GEOs, revenue, net income, Adjusted Net Income
and Adjusted EBITDA YTD in 2022
- No debt and $2.0 billion in
available capital as at September 30,
2022
- Generated $232.3 million in
operating cash flow for the quarter
- Quarterly dividend of $0.32/share
Sector-Leading ESG
- Ranked #1 gold company by Sustainalytics, AA by MSCI and Prime
by ISS ESG
- Named on the Corporate Knights' 2022 list of the Best 50
Corporate Citizens in Canada
- Committed to the World Gold Council's "Responsible Gold Mining
Principles"
- Partnering with our operators on community and ESG
initiatives
- Goal of 40% diverse representation at the Board and top
leadership levels as a group by 2025
Diverse, Long-Life Portfolio
- Most diverse royalty and streaming portfolio by asset, operator
and country
- Core assets outperforming since time of acquisition
- Long-life reserves and resources
Growth and Optionality
- Acquisitions, mine expansions and new mines driving future
growth
- Long-term optionality in gold, copper and nickel and to some of
the world's great mineral endowments
- Strong pipeline of precious metal opportunities
Quarterly revenue and GEOs sold by
commodity
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Q3 2022
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Q3 2021
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GEOs Sold
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Revenue
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GEOs Sold
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Revenue
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#
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(in millions)
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#
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(in millions)
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PRECIOUS METALS
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Gold
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96,628
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$
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166.6
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94,829
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$
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169.2
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Silver
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17,883
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30.3
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23,405
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41.4
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PGMs
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6,031
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9.8
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9,458
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16.9
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120,542
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$
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206.7
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127,692
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$
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227.5
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DIVERSIFIED
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Iron ore
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6,311
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$
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10.8
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17,933
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$
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32.2
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Other mining
assets
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1,574
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2.9
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870
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1.5
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Oil
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20,930
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36.6
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15,714
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27.9
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Gas
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23,516
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40.9
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11,982
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21.2
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NGL
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3,535
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6.3
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3,387
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6.0
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55,866
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$
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97.5
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49,886
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$
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88.8
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176,408
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$
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304.2
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177,578
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$
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316.3
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Year-to-date revenue and GEOs sold by
commodity
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YTD 2022
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YTD 2021
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GEOs Sold
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Revenue
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GEOs Sold
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Revenue
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#
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(in millions)
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(in millions)
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PRECIOUS METALS
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#
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Gold
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299,173
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$
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544.9
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310,898
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$
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554.1
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Silver
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58,740
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107.2
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75,755
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134.1
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PGMs
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22,830
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41.2
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32,946
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58.4
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380,743
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$
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693.3
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419,599
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$
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746.6
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DIVERSIFIED
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Iron ore
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24,573
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$
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44.7
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41,148
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$
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74.1
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Other mining
assets
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3,459
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6.4
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2,180
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4.1
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Oil
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66,448
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121.8
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44,298
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79.1
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Gas
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59,597
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108.3
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30,116
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53.5
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NGL
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11,254
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20.8
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8,353
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14.9
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165,331
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$
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302.0
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126,095
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$
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225.7
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546,074
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$
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995.3
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545,694
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$
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972.3
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In Q3 2022, we earned $304.2 million
in revenue, down 3.8% from Q3 2021. The decrease was driven by
lower revenue from our Precious Metal and Iron Ore assets
reflecting lower metal prices, largely offset by higher revenue
from our Energy assets due to realized oil and gas prices. Precious
Metal revenue accounted for 67.9% of our revenue (54.7% gold, 10.0%
silver, 3.2% PGM). Revenue was sourced 90.1% from the Americas
(27.7% South America, 20.2%
Central America & Mexico, 26.1% U.S. and 16.1% Canada).
Environmental, Social and Governance (ESG) Updates
During the quarter, we expanded the Franco-Nevada Diversity
Scholarship program by awarding four new tuition scholarships to
diverse mining engineering students attending McGill, UofT and
Queens. As part of the Magino transaction, we committed to
$225,000 of environmental and
community-support programs over three years. We continue to rank
highly with leading ESG rating agencies.
Portfolio Additions
- Financing Package with Argonaut Gold on the Magino Gold
Project: On October 27, 2022, we
acquired a 2% NSR on Argonaut Gold Inc.'s ("Argonaut")
construction-stage Magino gold project located in Ontario, Canada, for a purchase price of
$52.5 million. We also completed a
private placement with Argonaut of $10.0
million (C$13.6 million).
Argonaut reported that the construction of the project is
approximately 70% complete as at September
30, 2022, with first gold pour expected in April 2023.
- Financing Package with Westhaven Gold Corp. on Spences
Bridge Gold Belt Claims: On October 6,
2022, we acquired a 2% NSR on all of Westhaven Gold Corp.'s
("Westhaven") claims across the Spences Bridge Gold Belt in
Southern British Columbia, Canada,
for $6.0 million and an existing 2.5%
NSR from Westhaven on adjoining properties currently owned by
Talisker Resources Ltd. for a purchase price of $0.75 million. In addition, we also subscribed
for $0.73 million (C$1.0 million) of Westhaven's common shares.
- Financing Package with G Mining Ventures on the
Tocantinzinho Gold Project: As previously announced on
July 18, 2022, we acquired, through
our wholly-owned subsidiary, Franco-Nevada (Barbados) Corporation ("FNBC"), a gold stream
with reference to production from the Tocantinzinho project, owned
by G Mining Ventures Corp. ("G Mining Ventures") and located in
Pará State, Brazil (the "Stream").
FNBC will provide a deposit of $250
million. Additionally, through one of our wholly-owned
subsidiaries, we agreed to provide G Mining Ventures with a
$75.0 million secured term loan (the
"Term Loan"). We also subscribed for $27.5
million (C$35.8 million) of G
Mining Ventures' common shares.
Board Update
Franco-Nevada is pleased to
announce that Jacques Perron has
joined the board, effective today. Mr. Perron has over 35 years of
experience in the mining industry and has extensive technical and
operations experience. He currently serves as a director of
Centerra Gold Inc. Previously, Mr. Perron was President and Chief
Executive Officer at a number of mining companies including Pretium
Resources, Thompson Creek Metals Company Inc. and St Andrew
Goldfields Ltd. and has held senior executive roles at a number of
other mining companies prior thereto. Mr. Perron has a Bachelor of
Science degree in Mining Engineering from l'École Polytechnique de
Montréal.
Q3 2022 Portfolio Updates
Precious Metal assets: GEOs sold from our Precious Metal
assets were 120,542, compared to 127,692 GEOs in Q3 2021. Higher
contributions from Candelaria,
Tasiast and Sudbury were more than
offset by lower deliveries from Cobre Panama, Stillwater, Antamina and
Guadalupe-Palmarejo.
South America:
- Candelaria (gold and silver
stream) – GEOs delivered and sold in Q3 2022 were higher than
in Q3 2021 due to higher head grades. Lundin Mining reported that
following the detection of a sinkhole on July 30, 2022, operations at the Alcaparrosa
mine, which is part of the Candelaria operations, remain suspended.
Lundin expects the suspension of operations to reduce Candelaria's copper production by 2%.
- Antapaccay (gold and silver stream) – GEOs delivered and
sold were consistent in Q3 2022 compared to Q3 2021 due to the
timing of shipments. For the first nine months of 2022, copper
production at Antapaccay was lower than in the same period in 2021
due to anticipated lower grades and a temporarily elevated strip
ratio which is expected to improve during 2023.
- Antamina (22.5% silver stream) – GEOs delivered and sold
were lower in Q3 2022 compared to Q3 2021. As expected, silver
ounces sold decreased in the current quarter compared to the prior
year period where silver production was particularly strong. In
addition, the decrease in GEOs reflects a less favourable silver to
gold GEO conversion ratio when compared to the 2021 period.
- Salares Norte (1-2% royalty) – Gold Fields reported
total project completion for the construction of Salares Norte of
82% at the end of September 2022.
First production, which has been expected at the end of
March 2023, may be marginally delayed
by a few months as construction has been impacted by COVID and
severe weather.
- Tocantinzinho (gold stream) – In September 2022, G Mining Ventures announced that
its board of directors made a formal decision to proceed with the
construction of the Tocantinzinho gold project and that it had
received extension for key installation licenses. First gold
production is expected in H2 2024 with the first full year of
production in 2025. Franco-Nevada
currently anticipates that funding for its recently acquired stream
of $250 million will commence in H1
2023.
- Cascabel (1% royalty) – In October 2022, SolGold and Cornerstone Capital
Resources announced a friendly merger, consolidating the ownership
of the Cascabel project under one combined entity. Prior to the
agreement, the Cascabel project was owned by SolGold and
Cornerstone on an 80%/20% basis, respectively.
- Cerro Moro (2% royalty) –
Yamana advanced ore sorting testing and plans for a phased plant
expansion to increase production up to 200,000 gold equivalent
ounces from the current ten-year outlook of 150,000-160,000 gold
equivalent ounces per year.
Central America &
Mexico:
- Cobre Panama (gold and silver stream) – First Quantum
reported record quarterly copper production of 92,000 tonnes and
mill throughput of 22.4 million tonnes in Q3 2022. Copper
production guidance for 2022 has been narrowed from 330,000 –
360,000 tonnes to 340,000 – 350,000 tonnes. Franco-Nevada received and sold fewer GEOs than in Q3
2021 due to the timing of shipments.
- Guadalupe-Palmarejo (50% gold stream) – GEOs sold from
Guadalupe-Palmarejo decreased in Q3 2022 compared to the same
quarter in 2021 due to a lower proportion of production being
sourced from ground covered by our stream.
U.S.:
- Stillwater (5% royalty)
– GEOs from Stillwater decreased
compared to Q3 2021 due to lower realized palladium and platinum
prices and PGM production. In August
2022, Sibanye-Stillwater announced a revised mine plan
prompted by various operational constraints and changing market
conditions, reducing production growth to 700,000 PGM ounces by
2027, down from 850,000 PGM ounces previously expected. Production
in Q3 2022 at the East Boulder operation was also impacted by a
Mine Health and Safety Administration stop order from September 18, 2022.
- Copper World/East Pit (Rosemont) (2.085% royalty) – Hudbay is
prioritizing the completion of the pre-feasibility study, state
level permits, bulk sampling program and a minority joint venture
partner process in 2023, and deferred the definitive feasibility
study to 2024. Hudbay also submitted remaining state permit
applications for Phase I in September and October 2022.
- Stibnite Gold (1.7% royalty) – Perpetua Resources
announced that the U.S. Forest
Service released the Supplemental Draft Environmental Impact
Statement for public comment in October
2022, with comments due in January
2023.
Canada:
- Detour Lake (2% royalty) – In October 2022, Agnico Eagle reported that
improvements to increase mill throughput to 28 million tonnes per
year ("mtpa") continue to advance as planned, achieving daily
average throughput equivalent to 28 mtpa for the month of
September 2022. Agnico Eagle
completed a technical evaluation which extended the expected mine
life of Detour by 10 years to 2052 and is also evaluating the
potential to expand operations to 32 mtpa, develop an underground
mining operation and increase production to 1.0 million ounces or
more per year.
- Hemlo (3% royalty & 50%
NPI) – Revenue from our Hemlo
royalties was higher than in Q3 2021 reflecting an increase in
production on royalty lands. Barrick reported that it expects
Hemlo to be below its 2022
guidance range of 160,000 to 180,000 ounces following lower
production in Q3 2022 driven by lower ore grades mined and
processed, as well as an impact to productivity from a temporary
water inflow that occurred in late Q2 2022.
- Brucejack (1.2% royalty) – Newcrest Mining announced on
October 24, 2022, that it had
suspended operations at the Brucejack mine due to a fatality. An
investigation into the incident is currently underway.
- Kirkland Lake (1.5-5.5%
royalty & 20% NPI) – Agnico Eagle reported that the focus
at Macassa remains on completing Shaft #4 infrastructure, with
commissioning expected to commence in December 2022 and completion in the first quarter
of 2023. The extension of the ramp from Macassa to the Amalgamated
Kirkland ("AK") deposit is now completed, with two underground
drills operating in the ramp. Agnico Eagle believes ore could be
sourced from AK for the Macassa mill in early 2024.
Franco-Nevada has multiple
royalties at Macassa that include AK.
- Canadian Malartic (1.5%
royalty) – Agnico Eagle reported that the Odyssey underground
project, which is expected to extend the life of the complex to at
least 2039, is progressing on schedule and on budget, with shaft
sinking activities expected to commence in January 2023 and initial pre-commercial
production in March 2023.
- Island Gold (0.62% royalty) – Alamos Gold reported
construction activities on the Phase 3+ Expansion have increased,
with pre-sinking of the shaft having started in August 2022. The Phase 3+ Expansion is expected
to more than double gold production to an average of 287,000 ounces
per year starting in 2026.
- Greenstone (Hardrock) (3% royalty) – Equinox Gold
reported that construction of the project is on schedule and
budget, with the Greenstone project 57% complete as of the end of
October 2022 and first gold pour
expected in H1 2024.
- Valentine Lake (2%
royalty) – Marathon Gold reported that early works commenced in
October 2022, following the project's
release from environmental assessment in both the province of
Newfoundland and Labrador and federally. Marathon Gold
anticipates first ore to the mill at the end of 2024 and, first
gold production early 2025 with production ramping-up during the
first quarter of 2025.
- Ring of Fire (1-3% royalties) – Exploration activities
resumed at the Eagle's Nest project, with drilling to finalize
infrastructure planning for the mine's development, a diamond
drilling program, geological surveys and collection of soil
samples. Noront Resources was renamed Ring of Fire Metals following
its acquisition by Wyloo Metals in May
2022.
- Eskay Creek (1% royalty) – Skeena Resources released a
feasibility study for the Eskay Creek project, outlining average
annual production of 431,000 gold equivalent ounces for years 1 to
5 and total life of mine production of 3.2 million gold equivalent
ounces. Skeena also announced drilling results for the 23 Zone and
21A West Zone, along with additional results indicating a new
discovery that extends the Eskay Creek Rift north and west of the
current defined resources for the project.
Rest of World:
- Tasiast (2% royalty) – Kinross reported that the process plant
averaged 21,000 tonnes per day during June and July 2022 and that the second phase of the
Tasiast 24k project, which aims to
reach throughput of 24,000 tonnes per day by mid-2023, is
continuing to progress on schedule.
- Séguéla (1.2% royalty) – Fortuna Silver Mines reported
that construction activities are progressing on time and on budget
with the overall project 83% complete as of the end of October 2022, with the first gold pour expected
in mid-2023.
Diversified assets: Our Diversified assets,
primarily comprising our Iron Ore and Energy interests, generated
$97.5 million in revenue, up from
$88.8 million in Q3 2021. The
increase is primarily due to higher realized oil and gas prices
relating to our Energy assets.
Iron Ore:
- Vale Royalty (iron ore royalty) – Revenue from the Vale
royalty decreased compared to Q3 2021 due to lower iron ore prices
and attributable sales. In addition, royalty payments relating to
the six-month period ended June 30,
2022 were lower than had been estimated by Franco-Nevada in
its H1 2022 accruals with the adjustment reflected in the current
quarter.
- LIORC – LIORC declared a cash dividend of C$1.00 per common share, reflecting lower iron
ore prices, compared to C$2.10 per
common share in Q3 2021. Iron Ore Company of Canada reported significant capital
expenditures to upgrade existing infrastructure at the Carol Lake
mine.
Energy:
- Marcellus (1% royalty) – Revenue from the Marcellus
asset increased compared to Q3 2021. Revenues benefited from
significantly higher NGL and natural gas prices, partly offsetting
a slight decrease in production.
- Haynesville (various royalty rates) – Revenue from the
Haynesville portfolio increased compared to Q3 2021, reflecting
current high NGL and natural gas prices.
- SCOOP/STACK (various royalty rates) – Revenue from the
SCOOP/STACK increased compared to Q3 2021 due to higher prices and
increased production from our interests earned through the Royalty
Acquisition Venture with Continental Resources. In October 2022, Continental Resources announced it
had entered into a definitive agreement to be acquired by an entity
owned by the family of Harold G.
Hamm, Continental Resources' founder. The transaction is
currently expected to close prior to December 31, 2022 and does not directly impact
our Royalty Acquisition Venture with Continental.
- Permian Basin (various royalty rates) – Revenue from the
Permian Basin increased compared to Q3 2021. The increase in
revenue in the current period reflects higher realized prices.
- Weyburn (NRI, ORR, WI)
– Revenue from the Weyburn Unit was significantly higher compared
to Q3 2021, reflecting the increase in commodity prices which more
than offset higher operating and capital expenditures.
Dividend Declaration
Franco-Nevada is pleased to
announce that its Board of Directors has declared a quarterly
dividend of US$0.32 per share. The
dividend will be paid on December 22,
2022 to shareholders of record on December 8, 2022 (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 for 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 unaudited Condensed Consolidated Financial
Statements and Management's Discussion and Analysis can be found on
our 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 this morning,
Monday, November 7, 2022 at 10:00
a.m. Eastern Time to review Franco‑Nevada's Q3 2022
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 November
14, 2022: Toll-Free (888) 390-0541; International (416)
764-8677; Code 962590 #
- 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 cost inflation. 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, performance guidance, 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,
the performance and plans of third party operators, audits being
conducted by the CRA, the expected exposure for current and future
assessments and available remedies, and the remedies relating to
and consequences of the ruling of the Supreme Court of Panama in relation to the Cobre Panama
project. In addition, statements relating to reserves and
resources, gold equivalent ounces ("GEOs") and mine life 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, GEOs or mine life 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",
"potential for", "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; the adoption of a global minimum tax
on corporations; 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;
relinquishment or sale of mineral properties; 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 disease; 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; 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.
ENDNOTES:
- GEOs: Starting in Q4 2021, revenue from Franco-Nevada's
Energy assets is included in the calculation of GEOs. GEOs for
comparative periods have been recalculated to conform with the
current presentation. GEOs include Franco-Nevada's attributable
share of production from our Mining and Energy assets after
applicable recovery and payability factors. GEOs are estimated on a
gross basis for NSRs 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, iron ore, oil, gas and
other 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 commodity was produced or sold. For Q3 2022, the
average commodity prices were as follows: $1,728/oz gold (Q3 2021 - $1,789), $19.22/oz
silver (Q3 2021 - $24.36),
$886/oz platinum (Q3 2021 -
$1,024) and $2,074/oz palladium (Q3 2021 - $2,459), $105/t Fe
62% CFR China (Q3 2021 - $191),
$91.56/bbl WTI oil (Q3 2021 -
$70.52) and $7.91/mcf Henry Hub natural gas (Q3 2021 -
$4.32). For YTD 2022 prices, the
average commodity prices were as follows: $1,825/oz gold (YTD 2021 - $1,801), $21.94/oz
silver (YTD 2021 - $25.78),
$958/oz platinum (YTD 2021 -
$1,122) and $2,163/oz palladium (YTD 2021 - $2,551), $129/t Fe
62% CFR China (YTD 2021 - $205),
$98.09/bbl WTI oil (YTD 2021 -
$64.82) and $6.65/mcf Henry Hub natural gas (YTD 2021 -
$3.34).
- NON-GAAP FINANCIAL MEASURES: Adjusted Net Income
and Adjusted Net Income per share, Adjusted EBITDA and Adjusted
EBIDA per share, and Margin are non-GAAP financial measures with no
standardized meaning under International Financial Reporting
Standards ("IFRS") and might not be comparable to similar financial
measures disclosed by other issuers. For a quantitative
reconciliation of each non-GAAP financial measure to the most
directly comparable IFRS financial measure, refer to the following
tables. Further information relating to these Non-GAAP financial
measures is incorporated by reference from the "Non-GAAP Financial
Measures" section of Franco-Nevada's MD&A for the three and
nine months ended September 30, 2022 dated November 7, 2022 filed with the Canadian
securities regulatory authorities on SEDAR available at
www.sedar.com and with the U.S. Securities and Exchange Commission
available on EDGAR at www.sec.gov.
- Adjusted Net Income and Adjusted Net Income per share
are non-GAAP financial measures, which exclude the following from
net income and earnings per share ("EPS"): impairment charges and
reversal 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.
- Adjusted EBITDA and Adjusted EBITDA per share are
non-GAAP 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 and reversals 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.
- Margin is a non-GAAP financial measure which is defined
by the Company as Adjusted EBITDA divided by revenue.
Reconciliation of Non-GAAP Financial Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
|
For the nine months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
(expressed in millions, except per share
amounts)
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Net income
|
|
$
|
157.1
|
|
|
$
|
166.0
|
|
|
$
|
535.6
|
|
|
$
|
512.8
|
|
Impairment and
charges
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7.5
|
|
Foreign exchange loss
(gain) and other (income) expenses
|
|
|
2.3
|
|
|
|
0.4
|
|
|
|
(3.5)
|
|
|
|
1.7
|
|
Finance income related
to repayment of Noront loan
|
|
|
—
|
|
|
|
—
|
|
|
|
(2.2)
|
|
|
|
—
|
|
Tax effect of
adjustments
|
|
|
0.3
|
|
|
|
(0.4)
|
|
|
|
2.8
|
|
|
|
(1.9)
|
|
Other tax related
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognition of
previously unrecognized deferred tax assets
|
|
|
—
|
|
|
|
(0.4)
|
|
|
|
—
|
|
|
|
(11.0)
|
|
Adjusted Net Income
|
|
$
|
159.7
|
|
|
$
|
165.6
|
|
|
$
|
532.7
|
|
|
$
|
509.1
|
|
Basic weighted average
shares outstanding
|
|
|
191.6
|
|
|
|
191.1
|
|
|
|
191.5
|
|
|
|
191.0
|
|
Adjusted Net Income per share
|
|
$
|
0.83
|
|
|
$
|
0.87
|
|
|
$
|
2.78
|
|
|
$
|
2.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
|
For the nine months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
(expressed in millions, except per share
amounts)
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Net income
|
|
$
|
157.1
|
|
|
$
|
166.0
|
|
|
$
|
535.6
|
|
|
$
|
512.8
|
|
Income tax
expense
|
|
|
30.4
|
|
|
|
30.2
|
|
|
|
103.1
|
|
|
|
79.4
|
|
Finance
expenses
|
|
|
0.8
|
|
|
|
0.8
|
|
|
|
2.5
|
|
|
|
2.7
|
|
Finance
income
|
|
|
(2.4)
|
|
|
|
(0.6)
|
|
|
|
(5.9)
|
|
|
|
(3.0)
|
|
Depletion and
depreciation
|
|
|
68.5
|
|
|
|
73.0
|
|
|
|
212.7
|
|
|
|
221.4
|
|
Impairment
charges
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7.5
|
|
Foreign exchange loss
(gain) and other (income) expenses
|
|
|
2.3
|
|
|
|
0.4
|
|
|
|
(3.5)
|
|
|
|
1.7
|
|
Adjusted EBITDA
|
|
$
|
256.7
|
|
|
$
|
269.8
|
|
|
$
|
844.5
|
|
|
$
|
822.5
|
|
Basic weighted average
shares outstanding
|
|
|
191.6
|
|
|
|
191.1
|
|
|
|
191.5
|
|
|
|
191.0
|
|
Adjusted EBITDA per share
|
|
$
|
1.34
|
|
|
$
|
1.41
|
|
|
$
|
4.41
|
|
|
$
|
4.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
|
For the nine months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
(expressed in millions, except
Margin)
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Adjusted
EBITDA
|
|
$
|
256.7
|
|
|
$
|
269.8
|
|
|
$
|
844.5
|
|
|
$
|
822.5
|
|
Revenue
|
|
|
304.2
|
|
|
|
316.3
|
|
|
|
995.3
|
|
|
|
972.3
|
|
Margin
|
|
|
84.4
|
%
|
|
|
85.3
|
%
|
|
|
84.8
|
%
|
|
|
84.6
|
%
|
FRANCO-NEVADA
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
(in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
At September 30,
|
|
|
At
December 31,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents (Note 4)
|
|
$
|
1,057.4
|
|
|
$
|
539.3
|
|
Receivables
|
|
|
150.0
|
|
|
|
119.8
|
|
Loan receivable (Note
5)
|
|
|
—
|
|
|
|
39.7
|
|
Prepaid expenses and
other (Note 6)
|
|
|
55.8
|
|
|
|
52.6
|
|
Current
assets
|
|
$
|
1,263.2
|
|
|
$
|
751.4
|
|
|
|
|
|
|
|
|
|
|
Royalty, stream and
working interests, net (Note 7)
|
|
$
|
4,864.7
|
|
|
$
|
5,149.3
|
|
Investments (Note
5)
|
|
|
225.7
|
|
|
|
235.9
|
|
Deferred income tax
assets
|
|
|
41.4
|
|
|
|
49.4
|
|
Other assets (Note
8)
|
|
|
48.7
|
|
|
|
23.9
|
|
Total
assets
|
|
$
|
6,443.7
|
|
|
$
|
6,209.9
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
40.0
|
|
|
$
|
33.6
|
|
Current income tax
liabilities
|
|
|
11.9
|
|
|
|
9.6
|
|
Current
liabilities
|
|
$
|
51.9
|
|
|
$
|
43.2
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax
liabilities
|
|
$
|
135.1
|
|
|
$
|
135.4
|
|
Other
liabilities
|
|
|
5.3
|
|
|
|
6.1
|
|
Total
liabilities
|
|
$
|
192.3
|
|
|
$
|
184.7
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Share capital (Note
16)
|
|
$
|
5,669.8
|
|
|
$
|
5,628.5
|
|
Contributed
surplus
|
|
|
19.6
|
|
|
|
16.1
|
|
Retained
earnings
|
|
|
836.9
|
|
|
|
484.9
|
|
Accumulated other
comprehensive loss
|
|
|
(274.9)
|
|
|
|
(104.3)
|
|
Total shareholders'
equity
|
|
$
|
6,251.4
|
|
|
$
|
6,025.2
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
|
$
|
6,443.7
|
|
|
$
|
6,209.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The condensed consolidated financial
statements and accompanying notes can be found in our Q3 2022
Quarterly Report available on our website
FRANCO-NEVADA
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(LOSS) AND COMPREHENSIVE INCOME (LOSS)
(in millions of
U.S. dollars and shares, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
|
For the nine months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Revenue (Note 10)
|
|
$
|
304.2
|
|
|
$
|
316.3
|
|
|
$
|
995.3
|
|
|
$
|
972.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of sales (Note
11)
|
|
$
|
42.0
|
|
|
$
|
42.0
|
|
|
$
|
131.1
|
|
|
$
|
129.9
|
|
Depletion and
depreciation
|
|
|
68.5
|
|
|
|
73.0
|
|
|
|
212.7
|
|
|
|
221.4
|
|
Total costs of
sales
|
|
$
|
110.5
|
|
|
$
|
115.0
|
|
|
$
|
343.8
|
|
|
$
|
351.3
|
|
Gross profit
|
|
$
|
193.7
|
|
|
$
|
201.3
|
|
|
$
|
651.5
|
|
|
$
|
621.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating expenses
(income)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
|
$
|
4.7
|
|
|
$
|
4.8
|
|
|
$
|
16.1
|
|
|
$
|
14.4
|
|
Share-based
compensation expenses (Note 12)
|
|
|
0.4
|
|
|
|
(0.2)
|
|
|
|
4.7
|
|
|
|
6.8
|
|
Impairment
charges
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7.5
|
|
Loss (gain) on sale of
gold bullion
|
|
|
0.4
|
|
|
|
(0.1)
|
|
|
|
(1.1)
|
|
|
|
(1.3)
|
|
Total other operating
expenses
|
|
$
|
5.5
|
|
|
$
|
4.5
|
|
|
$
|
19.7
|
|
|
$
|
27.4
|
|
Operating
income
|
|
$
|
188.2
|
|
|
$
|
196.8
|
|
|
$
|
631.8
|
|
|
$
|
593.6
|
|
Foreign exchange
(loss) gain and other income (expenses)
|
|
$
|
(2.3)
|
|
|
$
|
(0.4)
|
|
|
$
|
3.5
|
|
|
$
|
(1.7)
|
|
Income before finance
items and income taxes
|
|
$
|
185.9
|
|
|
$
|
196.4
|
|
|
$
|
635.3
|
|
|
$
|
591.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance items (Note 14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
income
|
|
$
|
2.4
|
|
|
$
|
0.6
|
|
|
$
|
5.9
|
|
|
$
|
3.0
|
|
Finance
expenses
|
|
|
(0.8)
|
|
|
|
(0.8)
|
|
|
|
(2.5)
|
|
|
|
(2.7)
|
|
Net income before income taxes
|
|
$
|
187.5
|
|
|
$
|
196.2
|
|
|
$
|
638.7
|
|
|
$
|
592.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(Note 15)
|
|
|
30.4
|
|
|
|
30.2
|
|
|
|
103.1
|
|
|
|
79.4
|
|
Net income
|
|
$
|
157.1
|
|
|
$
|
166.0
|
|
|
$
|
535.6
|
|
|
$
|
512.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss) income, net of
taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified subsequently to profit
and loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation
adjustment
|
|
$
|
(83.4)
|
|
|
$
|
(38.0)
|
|
|
$
|
(110.4)
|
|
|
$
|
(10.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that will not be reclassified subsequently to
profit and loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) gain on changes
in the fair value of equity investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at fair value through
other comprehensive income ("FVTOCI"),
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of income tax
(Note 5)
|
|
|
(2.5)
|
|
|
|
(53.5)
|
|
|
|
(59.6)
|
|
|
|
11.8
|
|
Other comprehensive
(loss) income, net of taxes
|
|
$
|
(85.9)
|
|
|
$
|
(91.5)
|
|
|
$
|
(170.0)
|
|
|
$
|
0.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
$
|
71.2
|
|
|
$
|
74.5
|
|
|
$
|
365.6
|
|
|
$
|
513.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
(Note 17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.82
|
|
|
$
|
0.87
|
|
|
$
|
2.80
|
|
|
$
|
2.68
|
|
Diluted
|
|
$
|
0.82
|
|
|
$
|
0.87
|
|
|
$
|
2.79
|
|
|
$
|
2.68
|
|
Weighted average number
of shares outstanding (Note 17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
191.6
|
|
|
|
191.1
|
|
|
|
191.5
|
|
|
|
191.0
|
|
Diluted
|
|
|
191.9
|
|
|
|
191.5
|
|
|
|
191.9
|
|
|
|
191.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The condensed consolidated financial
statements and accompanying notes can be found in our Q3 2022
Quarterly Report available on our website
FRANCO-NEVADA
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended
|
|
|
|
September 30,
|
|
|
|
2022
|
|
|
2021
|
|
Cash flows from operating
activities
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
535.6
|
|
|
$
|
512.8
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depletion and
depreciation
|
|
|
212.7
|
|
|
|
221.4
|
|
Share-based
compensation expenses
|
|
|
4.6
|
|
|
|
4.5
|
|
Impairment
charges
|
|
|
—
|
|
|
|
7.5
|
|
Unrealized foreign
exchange loss
|
|
|
1.4
|
|
|
|
0.4
|
|
Deferred income tax
expense
|
|
|
22.2
|
|
|
|
10.2
|
|
Other non-cash
items
|
|
|
(4.4)
|
|
|
|
(2.7)
|
|
Acquisition of gold
bullion
|
|
|
(34.7)
|
|
|
|
(34.1)
|
|
Proceeds from sale of
gold bullion
|
|
|
36.1
|
|
|
|
21.2
|
|
Changes in other
assets
|
|
|
(26.7)
|
|
|
|
(5.6)
|
|
Operating cash flows
before changes in non-cash working capital
|
|
$
|
746.8
|
|
|
$
|
735.6
|
|
Changes in non-cash
working capital:
|
|
|
|
|
|
|
|
|
Increase in
receivables
|
|
$
|
(30.2)
|
|
|
$
|
(54.4)
|
|
Increase in prepaid
expenses and other
|
|
|
(3.7)
|
|
|
|
(3.4)
|
|
Increase (decrease) in
current liabilities
|
|
|
7.3
|
|
|
|
(1.4)
|
|
Net cash provided by
operating activities
|
|
$
|
720.2
|
|
|
$
|
676.4
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in investing
activities
|
|
|
|
|
|
|
|
|
Acquisition of
royalty, stream and working interests
|
|
$
|
(15.3)
|
|
|
$
|
(740.2)
|
|
Acquisition of
investments
|
|
|
(75.2)
|
|
|
|
—
|
|
Acquisition of energy
well equipment
|
|
|
(1.2)
|
|
|
|
(1.1)
|
|
Proceeds from
repayment of loan receivable
|
|
|
42.7
|
|
|
|
—
|
|
Proceeds from sale of
investments
|
|
|
1.7
|
|
|
|
12.7
|
|
Net cash used in
investing activities
|
|
$
|
(47.3)
|
|
|
$
|
(728.6)
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in financing
activities
|
|
|
|
|
|
|
|
|
Payment of
dividends
|
|
$
|
(149.6)
|
|
|
$
|
(133.4)
|
|
Proceeds from draw of
revolving credit facilities
|
|
|
—
|
|
|
|
150.0
|
|
Repayment of revolving
credit facilities
|
|
|
—
|
|
|
|
(150.0)
|
|
Credit facility
amendment costs
|
|
|
(0.9)
|
|
|
|
(1.0)
|
|
Proceeds from exercise
of stock options
|
|
|
5.2
|
|
|
|
0.3
|
|
Net cash used in
financing activities
|
|
$
|
(145.3)
|
|
|
$
|
(134.1)
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
$
|
(9.5)
|
|
|
$
|
(1.2)
|
|
Net change in cash and cash
equivalents
|
|
$
|
518.1
|
|
|
$
|
(187.5)
|
|
Cash and cash equivalents at beginning of
period
|
|
$
|
539.3
|
|
|
$
|
534.2
|
|
Cash and cash equivalents at end of
period
|
|
$
|
1,057.4
|
|
|
$
|
346.7
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow
information:
|
|
|
|
|
|
|
|
|
Dividend income
received
|
|
$
|
15.1
|
|
|
$
|
24.4
|
|
Interest and standby
fees paid
|
|
$
|
1.8
|
|
|
$
|
1.8
|
|
Income taxes
paid
|
|
$
|
80.3
|
|
|
$
|
71.6
|
|
The condensed consolidated financial
statements and accompanying notes can be found in our Q3 2022
Quarterly Report available on our website
View original
content:https://www.prnewswire.com/news-releases/franco-nevada-reports-q3-results-301669982.html
SOURCE Franco-Nevada Corporation