TORONTO, Dec. 5, 2018 /CNW/ - As previously disclosed, the
CRA is conducting an audit of Franco-Nevada Corporation's 2012-2015
taxation years. Franco-Nevada has now received a proposal
letter from the Canada Revenue Agency in relation to royalty income
earned by Franco-Nevada's Mexican subsidiary during the 2013
taxation year. The audit is ongoing and there can be no assurance
that CRA will not raise further challenges with respect to
Franco-Nevada or its Mexican or other foreign subsidiaries.
For the 2013 taxation year, Franco-Nevada's Mexican subsidiary
paid Mxn154.3 million Pesos (US$12.1
million) in cash taxes, at a 30% tax rate, to the Mexican
tax authorities on income earned in Mexico. The CRA is proposing to tax a majority
of such income as though it were earned in Canada. Assuming the CRA is successful in its
challenge, Franco-Nevada estimates on a preliminary basis that it
would be subject to federal and provincial tax of approximately
Cdn$12.8 million (US$9.7 million) plus any applicable penalties and
interest but before any relief under the Canada-Mexico
tax treaty.
The tax treaty between Canada
and Mexico is intended to avoid
double taxation. Management strongly believes that the
Company has paid all applicable taxes in compliance with Canadian
and Mexican tax laws. Franco-Nevada intends to vigorously
defend its position and seek relief under the tax treaty.
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 CRA 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. Such forward looking statements reflect
management's current beliefs and are based on information currently
available to management. Often, but not always, forward looking
statements can be identified by the use of words such as "plans",
"expects", "is expected", "budgets", "scheduled", "estimates",
"forecasts", "predicts", "projects", "intends", "targets", "aims",
"anticipates" or "believes" or variations (including negative
variations) of such words and phrases or may be identified by
statements to the effect that certain actions "may", "could",
"should", "would", "might" or "will" be taken, occur or be
achieved. Forward looking statements involve known and unknown
risks, uncertainties and other factors, which may cause the actual
results, performance or achievements of Franco-Nevada to be
materially different from any future results, performance or
achievements expressed or implied by the forward looking
statements. A number of factors could cause actual events or
results to differ materially from any forward looking statement,
including, without limitation: fluctuations in the prices of the
primary commodities that drive royalty and stream revenue (gold,
platinum group metals, copper, nickel, uranium, silver, iron-ore
and oil and gas); fluctuations in the value of the Canadian and
Australian dollar, Mexican Peso and any other currency in which
revenue is generated, relative to the U.S. dollar; changes in
national and local government legislation, including permitting and
licensing regimes and taxation policies and the enforcement
thereof; regulatory, political or economic developments in
any of the countries where properties in which Franco-Nevada holds
a royalty, stream or other interest are located or through which
they are held; risks related to the operators of the properties in
which Franco-Nevada holds a royalty, stream or other interest,
including changes in the ownership and control of such operators;
influence of macroeconomic developments; business opportunities
that become available to, or are pursued by Franco-Nevada; reduced
access to debt and equity capital; litigation; title, permit or
license disputes related to interests on any of the properties in
which Franco-Nevada holds a royalty, stream or other interest;
whether or not Franco-Nevada is determined to have "passive foreign
investment company" ("PFIC") status as defined in Section 1297 of
the United States Internal Revenue Code of 1986, as amended;
potential changes in Canadian tax treatment of offshore streams;
excessive cost escalation as well as development, permitting,
infrastructure, operating or technical difficulties on any of the
properties in which Franco-Nevada holds a royalty, stream or other
interest; actual mineral content may differ from the reserves and
resources contained in technical reports; rate and timing of
production differences from resource estimates, other technical
reports and mine plans; risks and hazards associated with the
business of development and mining on any of the properties in
which Franco-Nevada holds a royalty, stream or other interest,
including, but not limited to unusual or unexpected geological and
metallurgical conditions, slope failures or cave-ins, flooding and
other natural disasters, terrorism, civil unrest or an outbreak of
contagious disease; and the integration of acquired assets. The
forward looking statements contained in this press release are
based upon assumptions management believes to be reasonable,
including, without limitation: the ongoing operation of the
properties in which Franco-Nevada holds a royalty, stream or other
interest by the owners or operators of such properties in a manner
consistent with past practice; the accuracy of public statements
and disclosures made by the owners or operators of such underlying
properties; no material adverse change in the market price of the
commodities that underlie the asset portfolio; Franco-Nevada's
ongoing income and assets relating to determination of its PFIC
status; no material changes to existing tax treatment; 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. Franco-Nevada
cannot assure investors that actual results will be consistent with
these forward looking statements and investors should not place
undue reliance on forward looking statements due to the inherent
uncertainty therein. For additional information with respect to
risks, uncertainties and assumptions, please refer to the "Risk
Factors" section of Franco-Nevada's most recent Annual Information
Form filed with the Canadian securities regulatory authorities on
www.sedar.com and Franco-Nevada's most recent Annual Report filed
on Form 40-F filed with the SEC on www.sec.gov. The forward looking
statements herein are made as of the date of this press release
only and Franco-Nevada does not assume any obligation to update or
revise them to reflect new information, estimates or opinions,
future events or results or otherwise, except as required by
applicable law.
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SOURCE Franco-Nevada Corporation