2021 Energy Guidance Increased
(in U.S. dollars unless otherwise noted)
TORONTO, Nov. 3, 2021 /PRNewswire/ - "Franco-Nevada
delivered a strong third quarter, setting the stage for a record
year in 2021. Our diversified portfolio continues to serve us well
with strong contributions during the quarter from precious metals,
energy and iron ore," stated Paul
Brink, President & CEO. "Higher energy prices have
led us to increase our 2021 Energy guidance for the second time
this year. Margins have moved higher this year due to the
inflation-protected nature of our business model. Franco-Nevada is
debt-free and is growing its cash balances."
|
Record YTD
results
|
YTD/2021
|
Strong Q3
results
|
Q3/2021
|
vs
|
vs
|
YTD/2020
|
|
Q3/2020
|
GEOs1
sold
|
462,926
|
+24%
|
146,495
|
+9%
|
Revenue
|
$972.3
million
|
+36%
|
$316.3
million
|
+13%
|
Net income
|
$512.8 million
($2.68/share)
|
+243%
|
$166 million
($0.87/share)
|
+8%
|
Adjusted Net
Income2
|
$509.1 million
($2.67/share)
|
+44%
|
$165.6 million
($0.87/share)
|
+9%
|
Adjusted
EBITDA3
|
$822.5
million
|
+40%
|
$269.8
million
|
+15%
|
Margin4
|
84.6%
|
+3%
|
85.3%
|
+2%
|
Strong Financial Position
- No debt and $1.6 billion in
available capital as at September 30,
2021
- Generated $206.9 million in
operating cash flow for the quarter
- Quarterly dividend of $0.30/share
Sector-Leading ESG
- Ranked #1 gold company by Sustainalytics, AA by MSCI and Prime
by ISS ESG
- 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
Diverse, Long-Life Portfolio
- Most diverse royalty and streaming portfolio by asset, operator
and country
- Core assets outperforming since time of acquisition
- Growth in long-life reserves
Growth and Optionality
- Acquisitions, mine expansions and new mines driving growth
- 10.1 million ounce increase in Measured and Indicated
Mineral Resources at Detour Lake
- Long-term options in gold, copper and nickel
- Noront consolidation likely to accelerate development of Ring
of Fire properties
Quarterly
revenue and GEOs sold by commodity
|
|
|
|
|
Q3/2021
|
|
Q3/2020
|
|
|
GEOs
Sold
|
|
Revenue
|
|
GEOs
Sold
|
|
Revenue
|
|
|
#
|
|
(in millions)
|
|
#
|
|
(in millions)
|
Gold
|
|
94,829
|
|
$
|
169.2
|
|
108,709
|
|
$
|
206.1
|
Silver
|
|
23,405
|
|
|
41.4
|
|
13,691
|
|
|
26.1
|
PGMs
|
|
9,458
|
|
|
16.9
|
|
10,630
|
|
|
21.3
|
Other Mining
Assets
|
|
18,803
|
|
|
33.7
|
|
1,787
|
|
|
3.5
|
Mining
|
|
146,495
|
|
$
|
261.2
|
|
134,817
|
|
$
|
257.0
|
Oil
|
|
—
|
|
|
27.9
|
|
—
|
|
|
16.1
|
Gas
|
|
—
|
|
|
21.3
|
|
—
|
|
|
3.9
|
NGL
|
|
—
|
|
|
5.9
|
|
—
|
|
|
2.8
|
|
|
146,495
|
|
$
|
316.3
|
|
134,817
|
|
$
|
279.8
|
Year-to-date revenue
and GEOs sold by commodity
|
|
|
|
|
YTD/2021
|
|
YTD/2020
|
|
|
GEOs
Sold
|
Revenue
|
|
GEOs
Sold
|
Revenue
|
|
|
#
|
(in millions)
|
|
#
|
(in millions)
|
Gold
|
|
310,898
|
|
$
|
554.1
|
|
294,218
|
|
$
|
509.7
|
Silver
|
|
75,755
|
|
|
134.1
|
|
39,203
|
|
|
68.4
|
PGMs
|
|
32,945
|
|
|
58.4
|
|
35,876
|
|
|
65.3
|
Other Mining
Assets
|
|
43,328
|
|
|
78.2
|
|
4,791
|
|
|
8.4
|
Mining
|
|
462,926
|
|
$
|
824.8
|
|
374,088
|
|
$
|
651.8
|
Oil
|
|
—
|
|
|
78.9
|
|
—
|
|
|
40.0
|
Gas
|
|
—
|
|
|
53.8
|
|
—
|
|
|
15.1
|
NGL
|
|
—
|
|
|
14.8
|
|
—
|
|
|
8.8
|
|
|
462,926
|
|
$
|
972.3
|
|
374,088
|
|
$
|
715.7
|
For Q3/2021, revenue was sourced 82.6% from Mining assets (53.5%
gold, 13.1% silver, 5.3% PGM and 10.7% other Mining assets). Energy
assets contributed 17.4% (8.8% oil, 6.7% gas and 1.9% NGL). Our
current acquisition focus is to grow the precious metal side of our
business, but we will also add opportunistically in other mining
commodities if good assets are available. A strength of our
diversified portfolio is that we benefit from the relative
outperformance of different commodities over time. Geographically,
revenue was sourced 91.2% from the Americas (33.1% South America, 23.6% Central America & Mexico, 19.8% U.S. and 14.7% Canada).
Increased 2021 Energy Guidance
Based on the increase in oil and gas prices and the performance
of its Energy portfolio, Franco-Nevada is pleased to raise its
Energy revenue guidance. Energy revenue is now expected to range
from $195 to $205 million, an increase from the prior range of
$155 to $170
million. Franco-Nevada is on track to meet the previously
announced GEO guidance of 590,000 to 615,000 GEOs for 2021.
Commodity prices used for the remainder of 2021 in our revised
guidance are the following: $1,750/oz
Au, $22.00/oz Ag, $950/oz Pt, $2,000/oz Pd, $110/t Fe 65% CFR China, $70/bbl WTI and $4.00/mcf Henry Hub.
Please see our annual MD&A and Q3/2021 MD&A for more
details on our guidance and see "Forward-Looking Statements"
below.
Environmental, Social and Governance (ESG) Updates
Franco-Nevada continues to receive top rankings from ESG
agencies and during the quarter had its Prime rating reaffirmed by
ISS ESG. The Company recently added to its community
programs, committing to fund water supply infrastructure to
communities around Antapaccay. The Company is also partnering with
Continental Resources to fund a pilot project for solar-powered
water recycling. An added diversity initiative was the award
of the first Franco-Nevada diversity scholarship to a student
entering mining engineering at the University
of Toronto.
Q3/2021 Portfolio Updates
Gold Equivalent Ounces Sold: GEOs sold for the
quarter were 146,495, an increase of 8.7% from the 134,817 sold in
Q3/2020. Higher contributions from Cobre Panama and Antamina, as
well as the additions of the Vale Royalty Debentures and
Condestable stream, were partly offset by lower deliveries from
Hemlo. There was limited impact
from COVID-19 on our assets this quarter, in comparison to Q3/2020,
where a number of our assets were impacted by suspensions of
production.
South
America:
- Antamina (22.5% silver stream) – GEOs delivered and sold
were significantly higher in Q3/2021 than in Q3/2020, which was
impacted by a temporary suspension of production. In addition,
changes in gold and silver prices in the current period have
resulted in a more favourable GEO conversion ratio than in the
prior period.
- Antapaccay (gold and silver stream) – GEOs
delivered and sold were lower in Q3/2021 than in Q3/2020 due to
lower grades as anticipated in the life of mine plan.
- Candelaria (gold and silver
stream) – GEOs delivered and sold decreased in Q3/2021 relative
to Q3/2020. Production at Candeleria was lower this quarter than in
the prior year quarter due to changes in mine sequencing which have
reduced 2021 copper and gold production guidance and are also
expected to impact the operation's life of mine plan. Lundin is
also aiming to improve mill throughput and address grade
reconciliation.
- Condestable (gold and silver stream) – Franco-Nevada
received its second quarter of deliveries from the recently
acquired stream, with the asset contributing 3,127 GEOs in Q3/2021.
Deliveries from Condestable are a fixed amount of ounces through
the end of 2025.
- Vale Royalty Debentures (iron ore royalty) –
Franco-Nevada accrued an estimated $21.7
million, or 12,101 GEOs, in Q3/2021, of which $5.6 million, or 3,109, GEOs, relates to H1/2021.
The royalty payment received for H1/2021 exceeded our accrual due
to higher average realized iron ore prices. In Q3/2021, iron ore
prices decreased after achieving record highs in mid-2021 while
deductible transportation costs increased. Year-to-date, we have
recorded 27,594 GEOs.
Central America & Mexico:
- Cobre Panama (gold and silver stream) – GEOs increased
in Q3/2021 relative to one year earlier, which was impacted by a
suspension of operations due to COVID-19. Cobre Panama's production
in Q3/2021 was a record of 87.2 kt of copper, and achieved further
quarterly milestones, including records in tonnes milled. Along
with its Q3/2021 results, First Quantum provided additional details
on its construction and commissioning plans to expand Cobre Panama
to achieve a throughput rate of 100 million tonnes per annum by the
end of 2023. First Quantum reported that Law 9 discussions with the
Government of Panama continue to
be transparent and constructive towards a mutually beneficial
agreement and that the environmental and labour aspects of the
discussions have been concluded.
- Guadalupe-Palmarejo (50% gold stream) – GEOs sold from
Guadalupe-Palmarejo were higher than in the same quarter in 2020
due to higher mill throughput and recoveries, reflecting ongoing
blending optimization and business improvement initiatives. In
September 2021, Coeur reported
positive results from its infill and expansion drilling campaign at
the Independencia and Guadalupe deposits that demonstrated
near-mine growth potential.
- Cascabel (1% royalty) – SolGold announced a maiden
mineral resource at its Tandayama-America deposit, part of the
Cascabel project, approximately 3 km north of the Alpala deposit,
and covered by the Franco-Nevada royalty. The maiden resource
comprises 233.0 million tonnes at 0.33% copper equivalent
containing 0.53 million tonnes of copper and 1.20 million ounces of
gold in the Indicated category, plus 197.0 million tonnes at 0.39%
copper equivalent containing 0.52 million tonnes of copper and 1.24
million ounces of gold in the Inferred category.
U.S.:
- Stillwater (5% royalty)
– GEOs from Stillwater increased
from prior year, reflecting higher platinum and palladium
prices.
- Goldstrike (2-6% royalties) – Production was impacted by
planned maintenance shutdowns as well as a mechanical failure at
the Goldstrike roaster. Repairs have been completed in Q3/2021 and
production is anticipated to normalize in Q4/2021.
- South Arturo (4-9% royalty) – In October 2021, Nevada Gold
Mines acquired from i-80 Gold the 40% interest in the South
Arturo JV that it did not already own. The transaction provides
Nevada Gold Mines 100% of the longer
term upside at the South Arturo pit and the El Nino underground, as
well as flexibility to pursue other potential operational synergies
at Goldstrike.
- Mesquite (0.5-2% royalty) – In September 2021, Equinox Gold announced an updated
mineral reserve and resource estimate for Mesquite. Measured and
Indicated Mineral Resources, exclusive of Mineral Reserves,
increased by 65% to 1,384,000 ounces of contained gold.
- Rosemont (1.5% royalty)
– Hudbay Minerals has had continued success at its Copper World
Project, expects an initial resource estimate before the end of the
year, and is planning a preliminary economic assessment in the
first half of 2022.
Canada:
- Sudbury (50% gold and PGM
stream) – Production at McCreedy West was lower than in
Q3/2020, as expected in the updated life of mine plan. In
February 2021, KGHM approved an
updated life of mine plan which extends mining operations at the
McCreedy West mine for another 5 years but at a lower production
rate than in 2020.
- Detour Lake (2% royalty) – Kirkland Lake Gold announced a new mineral
resource estimate, reporting an increase of 216% in Measured and
Indicated Mineral Resources to 14.7 million ounces of gold,
exclusive of Mineral Reserves. Mineral reserves were 15.8
million ounces of gold as at December 31,
2020. Kirkland Lake Gold and
Agnico Eagle have entered into an agreement to combine in a merger
of equals.
- Hemlo (3% royalty & 50%
NPI) – Revenue from Hemlo was
significantly lower than in Q3/2020 reflecting a decrease in
production from grounds where Franco-Nevada has royalty interests
and higher operating costs which affected royalties under the
NPI.
- Kirkland Lake (1.5-5.5%
royalty & 20% NPI) – Kirkland Lake
Gold reported that the Macassa #4 Shaft is on track for
completion in late 2022. Once completed, production at Macassa is
targeted to grow to over 400,000 ounces of gold per year, compared
to targeted production of 220,000-255,000 ounces of gold for
2021.
- LIORC – LIORC declared a cash dividend of C$2.10 per common share, compared to C$0.45 per common share in Q3/2020, as higher
iron ore prices have offset lower production at the Carol Lake
mine.
- Canadian Malartic (1.5%
royalty) – Agnico Eagle and Yamana reported record quarterly
production due to higher grade and recoveries from the ore found
deeper in the Malartic pit. The
mine will continue its transition from the Malartic pit to the Barnat pit through 2021.
The Odyssey underground project, which is expected to extend the
life of the complex to at least 2039, is progressing as planned.
Infill and step-out drilling at the East Gouldie zone, where
Franco-Nevada's royalty claims cover a portion of the deposit,
support continuity and scale.
- Greenstone (Hardrock) (3% royalty) – On October 27, 2021, 60/40 joint venture partners
Equinox Gold and Orion Mine Finance held a ground-breaking ceremony
to start construction of the Greenstone mine in Ontario, formerly known as the Hardrock
project.
- Eskay Creek (1% royalty)
– In July 2021, Skeena Resources
announced a positive pre-feasibility study, outlining average
annual production of 249,000 ounces of gold and 7.2 million ounces
of silver over a 10-year mine life, and anticipates further
increases to the annual production profile as part of a feasibility
study expected in Q1/2022.
- Ring of Fire (1-3% royalties) – In October 2021, both Wyloo and BHP increased their
offers to acquire Noront, with Noront supporting BHP's latest bid
as of October 20, 2021.
- Valentine Lake (2%
royalty) – In October 2021,
Marathon Gold reported continued positive exploration results from
ongoing in-fill drilling of the Berry deposit. Marathon also
announced a delay in its environmental permitting process for the
project. Construction of the project, which was previously
anticipated to commence in early 2022, is expected to be delayed by
several months.
Rest of World:
- Tasiast (2% royalty) – In June
2021, Kinross announced a
temporary suspension of mill operations due to a fire at its
Tasiast mine. Kinross expects to
re-start the mill in Q4/2021. The Tasiast 24k project remains on schedule to be completed
in mid-2023.
Energy: Revenue from the Energy assets increased to
$55.1 million in Q3/2021 compared to
$22.8 million in Q3/2020. Revenues
were positively impacted by higher realized prices across the
portfolio relative to the prior period. Revenue in Q3/2021 also
reflects the addition of royalty interests in the Haynesville shale
play acquired at the end of 2020.
U.S.:
- Haynesville (various royalty rates) – The newly acquired
portfolio of royalties contributed $11.1
million in Q3/2021, of which $1.3
million was attributable to prior periods. The asset is
benefiting from current high natural gas prices, as well as strong
initial production levels due to high royalty interest wells.
- SCOOP/STACK (various royalty rates) – Royalties from the
SCOOP/STACK generated $8.4 million in
Q3/2021 compared to $3.6 million in
the prior year period, due to higher prices and a significant
increase in production from our royalties held through the Royalty
Acquisition Venture with Continental.
- Permian Basin (various royalty rates) – Royalties from
the Permian contributed $9.0 million
in Q3/2021 compared to $4.1 million
in Q3/2020. Volumes in Q3/2021 increased significantly compared to
Q3/2020 reflecting higher commodity prices and production at a
number of new wells.
- Marcellus (1% royalty) – Revenue from the Marcellus
asset, operated by Range Resources, was $10.0 million in Q3/2021 versus $4.8 million in Q3/2020. Production was
relatively consistent compared to the prior year period, but
revenues benefited from significantly higher NGL and natural gas
prices.
Canada:
- Weyburn (NRI, ORR, WI)
– Revenue from the Weyburn Unit was $11.8
million in Q3/2021 compared to $7.2
million in Q3/2020, reflecting slightly lower production
offset by the increase in commodity prices and the operating
leverage of our NRI.
Dividend declaration
Franco-Nevada is pleased to announce that its Board of Directors
has declared a quarterly dividend of $0.30 per share. The dividend will be paid on
December 23, 2021 to shareholders of
record on December 9, 2021 (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 unaudited Condensed Consolidated 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, November 4, 2021 at 10:00
a.m. Eastern Time to review Franco–Nevada's Q3/2021
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
11, 2021: Toll-Free (888) 390-0541; International (416)
764-8677; Code 596680 #
- 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 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 Company's at-the-market equity program (the
"ATM Program"), and the Company's expected use of the net proceeds
of the ATM Program, if any. In addition, statements (including data
in tables) relating to reserves and resources including reserves
and resources covered by a royalty, stream or other interest, GEOs
or mine lives 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, mine lives 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", "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: 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; 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.
NON-IFRS MEASURES: Cash Costs, Adjusted EBITDA,
Adjusted Net Income and Margin 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 Franco-Nevada's attributable share of
production from our Mining assets, after applicable recovery and
payability factors, 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 Q3/2021, the average commodity prices were as follows:
$1,789/oz gold (Q3/2020 -
$1,911), $24.36/oz silver (Q3/2020 - $24.39), $1,024/oz
platinum (Q3/2020 - $903) and
$2,459/oz palladium (Q3/2020 -
$2,170), $191/t Fe 65% CFR China (Q3/2020 - $129). For YTD/2021 prices, the average
commodity prices were as follows: $1,801/oz gold (YTD/2020 - $1,735), $25.78/oz
silver (YTD/2020 - $19.22),
$1,122/oz platinum (YTD/2020 -
$865) and $2,551/oz palladium (YTD/2020 - $2,142), and $205/t
Fe 65% CFR China (YTD/2020 - $114).
- 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.
- 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.
- Margin is a non-IFRS financial measure which is
defined by the Company as Adjusted EBITDA divided by revenue.
Reconciliation to IFRS measures:
|
|
For the three months
ended
|
|
For the nine months
ended
|
|
|
September 30,
|
|
September 30,
|
(expressed in
millions, except per share amounts)
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
Net
income
|
|
$
|
166.0
|
|
$
|
153.9
|
|
$
|
512.8
|
|
$
|
149.5
|
Impairment
charges
|
|
|
—
|
|
|
—
|
|
|
7.5
|
|
|
271.7
|
Foreign exchange loss
(gain) and other (income) expenses
|
|
|
0.4
|
|
|
(0.5)
|
|
|
1.7
|
|
|
(0.3)
|
Tax effect of
adjustments
|
|
|
(0.4)
|
|
|
(1.1)
|
|
|
(1.9)
|
|
|
(67.6)
|
Other tax related
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognition of
previously unrecognized deferred tax assets
|
|
|
(0.4)
|
|
|
—
|
|
|
(11.0)
|
|
|
—
|
Adjusted Net
Income
|
|
$
|
165.6
|
|
$
|
152.3
|
|
$
|
509.1
|
|
$
|
353.3
|
Basic weighted average
shares outstanding
|
|
|
191.1
|
|
|
190.3
|
|
|
191.0
|
|
|
189.9
|
Adjusted Net Income
per share
|
|
$
|
0.87
|
|
$
|
0.80
|
|
$
|
2.67
|
|
$
|
1.86
|
|
|
For the three months
ended
|
|
For the nine months
ended
|
|
|
September 30,
|
|
September 30,
|
(expressed in
millions, except per share amounts)
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
Net
income
|
|
$
|
166.0
|
|
$
|
153.9
|
|
$
|
512.8
|
|
$
|
149.5
|
Income tax expense
(recovery)
|
|
|
30.2
|
|
|
25.2
|
|
|
79.4
|
|
|
(8.2)
|
Finance
expenses
|
|
|
0.8
|
|
|
0.8
|
|
|
2.7
|
|
|
2.7
|
Finance
income
|
|
|
(0.6)
|
|
|
(1.1)
|
|
|
(3.0)
|
|
|
(3.0)
|
Depletion and
depreciation
|
|
|
73.0
|
|
|
56.8
|
|
|
221.4
|
|
|
173.5
|
Impairment
charges
|
|
|
—
|
|
|
—
|
|
|
7.5
|
|
|
271.7
|
Foreign exchange loss
(gain) and other (income) expenses
|
|
|
0.4
|
|
|
(0.5)
|
|
|
1.7
|
|
|
(0.3)
|
Adjusted
EBITDA
|
|
$
|
269.8
|
|
$
|
235.1
|
|
$
|
822.5
|
|
$
|
585.9
|
Basic weighted average
shares outstanding
|
|
|
191.1
|
|
|
190.3
|
|
|
191.0
|
|
|
189.9
|
Adjusted EBITDA per
share
|
|
$
|
1.41
|
|
$
|
1.23
|
|
$
|
4.31
|
|
$
|
3.09
|
|
|
For the three months
ended
|
|
For the nine months
ended
|
|
|
September 30,
|
|
September 30,
|
(expressed in
millions, except Margin)
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Net
income
|
|
$
|
166.0
|
|
$
|
153.9
|
|
$
|
512.8
|
|
$
|
149.5
|
|
Income tax expense
(recovery)
|
|
|
30.2
|
|
|
25.2
|
|
|
79.4
|
|
|
(8.2)
|
|
Finance
expenses
|
|
|
0.8
|
|
|
0.8
|
|
|
2.7
|
|
|
2.7
|
|
Finance
income
|
|
|
(0.6)
|
|
|
(1.1)
|
|
|
(3.0)
|
|
|
(3.0)
|
|
Depletion and
depreciation
|
|
|
73.0
|
|
|
56.8
|
|
|
221.4
|
|
|
173.5
|
|
Impairment
charges
|
|
|
—
|
|
|
—
|
|
|
7.5
|
|
|
271.7
|
|
Foreign exchange loss
(gain) and other (income) expenses
|
|
|
0.4
|
|
|
(0.5)
|
|
|
1.7
|
|
|
(0.3)
|
|
Adjusted
EBITDA
|
|
$
|
269.8
|
|
$
|
235.1
|
|
$
|
822.5
|
|
$
|
585.9
|
|
Revenue
|
|
|
316.3
|
|
|
279.8
|
|
|
972.3
|
|
|
715.7
|
|
Margin
|
|
|
85.3
|
%
|
|
84.0
|
%
|
|
84.6
|
%
|
|
81.9
|
%
|
FRANCO-NEVADA CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
(unaudited, in millions
of U.S. dollars)
|
|
At
September 30,
|
|
|
At
December 31,
|
|
|
2021
|
|
|
2020
|
ASSETS
|
|
|
|
|
|
|
|
Cash and cash
equivalents (note 4)
|
|
$
|
346.7
|
|
|
$
|
534.2
|
Receivables
|
|
|
147.8
|
|
|
|
93.4
|
Loan receivable (note
5)
|
|
|
39.0
|
|
|
|
—
|
Prepaid expenses and
other (note 6)
|
|
|
51.4
|
|
|
|
36.1
|
Current
assets
|
|
$
|
584.9
|
|
|
$
|
663.7
|
|
|
|
|
|
|
|
|
Royalty, stream and
working interests, net (note 7)
|
|
$
|
5,124.6
|
|
|
$
|
4,632.1
|
Investments and loan
receivable (note 5)
|
|
|
205.2
|
|
|
|
238.4
|
Deferred income tax
assets
|
|
|
51.2
|
|
|
|
45.1
|
Other assets (note
8)
|
|
|
18.8
|
|
|
|
13.6
|
Total assets
|
|
$
|
5,984.7
|
|
|
$
|
5,592.9
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
29.5
|
|
|
$
|
40.8
|
Current income tax
liabilities
|
|
|
13.6
|
|
|
|
12.4
|
Current
liabilities
|
|
$
|
43.1
|
|
|
$
|
53.2
|
|
|
|
|
|
|
|
|
Deferred income tax
liabilities
|
|
|
108.4
|
|
|
|
91.5
|
Other
liabilities
|
|
|
4.0
|
|
|
|
4.4
|
Total
liabilities
|
|
$
|
155.5
|
|
|
$
|
149.1
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
Share capital (note
16)
|
|
$
|
5,611.1
|
|
|
$
|
5,580.1
|
Contributed
surplus
|
|
|
18.7
|
|
|
|
14.0
|
Retained earnings
(deficit)
|
|
|
321.3
|
|
|
|
(34.4)
|
Accumulated other
comprehensive loss
|
|
|
(121.9)
|
|
|
|
(115.9)
|
Total shareholders'
equity
|
|
$
|
5,829.2
|
|
|
$
|
5,443.8
|
Total liabilities and
shareholders' equity
|
|
$
|
5,984.7
|
|
|
$
|
5,592.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies (notes 20 and 21)
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
condensed consolidated financial statements and can be found in
Q3/2021 Quarterly Report available on our website
FRANCO-NEVADA CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME
(LOSS)
(unaudited, in millions of U.S. dollars and
shares, except per share amounts)
|
|
For the three months
ended
September 30,
|
For the nine months
ended
September 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
Revenue (note
10)
|
|
$
|
316.3
|
|
$
|
279.8
|
|
$
|
972.3
|
|
$
|
715.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of sales (note
11)
|
|
$
|
42.0
|
|
$
|
40.5
|
|
$
|
129.9
|
|
$
|
112.1
|
Depletion and
depreciation
|
|
|
73.0
|
|
|
56.8
|
|
|
221.4
|
|
|
173.5
|
Total costs of
sales
|
|
$
|
115.0
|
|
$
|
97.3
|
|
$
|
351.3
|
|
$
|
285.6
|
Gross profit
|
|
$
|
201.3
|
|
$
|
182.5
|
|
$
|
621.0
|
|
$
|
430.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating
expenses (income)
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
|
$
|
4.8
|
|
$
|
4.8
|
|
$
|
14.4
|
|
$
|
14.7
|
Share-based
compensation expenses (note 12)
|
|
|
(0.2)
|
|
|
1.5
|
|
|
6.8
|
|
|
9.5
|
Impairment charges
(note 7)
|
|
|
—
|
|
|
—
|
|
|
7.5
|
|
|
271.7
|
Gain on sale of gold
bullion
|
|
|
(0.1)
|
|
|
(2.1)
|
|
|
(1.3)
|
|
|
(6.5)
|
Total other operating
expenses (income)
|
|
$
|
4.5
|
|
$
|
4.2
|
|
$
|
27.4
|
|
$
|
289.4
|
Operating
income
|
|
$
|
196.8
|
|
$
|
178.3
|
|
$
|
593.6
|
|
$
|
140.7
|
Foreign exchange (loss)
gain and other income (expenses)
|
|
$
|
(0.4)
|
|
$
|
0.5
|
|
$
|
(1.7)
|
|
$
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before finance
items and income taxes
|
|
$
|
196.4
|
|
$
|
178.8
|
|
$
|
591.9
|
|
$
|
141.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance items (note
14)
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
income
|
|
$
|
0.6
|
|
$
|
1.1
|
|
$
|
3.0
|
|
$
|
3.0
|
Finance
expenses
|
|
|
(0.8)
|
|
|
(0.8)
|
|
|
(2.7)
|
|
|
(2.7)
|
Net income before
income taxes
|
|
$
|
196.2
|
|
$
|
179.1
|
|
$
|
592.2
|
|
$
|
141.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(recovery) (note 15)
|
|
|
30.2
|
|
|
25.2
|
|
|
79.4
|
|
|
(8.2)
|
Net
income
|
|
$
|
166.0
|
|
$
|
153.9
|
|
$
|
512.8
|
|
$
|
149.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
(loss) income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to profit and loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation
adjustment
|
|
$
|
(38.0)
|
|
$
|
13.6
|
|
$
|
(10.9)
|
|
$
|
(20.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
(53.5)
|
|
|
7.5
|
|
|
11.8
|
|
|
9.2
|
Other comprehensive
(loss) income
|
|
$
|
(91.5)
|
|
$
|
21.1
|
|
$
|
0.9
|
|
$
|
(11.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
$
|
74.5
|
|
$
|
175.0
|
|
$
|
513.7
|
|
$
|
138.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
(note 17)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.87
|
|
$
|
0.81
|
|
$
|
2.68
|
|
$
|
0.79
|
Diluted
|
|
$
|
0.87
|
|
$
|
0.81
|
|
$
|
2.68
|
|
$
|
0.79
|
Weighted average number
of shares outstanding (note 17)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
191.1
|
|
|
190.3
|
|
|
191.0
|
|
|
189.9
|
Diluted
|
|
|
191.5
|
|
|
190.7
|
|
|
191.4
|
|
|
190.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
condensed consolidated financial statements and can be found in our
Q3/2021 Quarterly Report available on our website
FRANCO-NEVADA CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited, in millions of U.S.
dollars)
|
|
For the nine
months ended
|
|
|
September 30,
|
|
|
|
2021
|
|
|
2020
|
Cash flows from
operating activities
|
|
|
|
|
|
|
Net income
|
|
$
|
512.8
|
|
$
|
149.5
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depletion and
depreciation
|
|
|
221.4
|
|
|
173.5
|
Share-based
compensation expenses
|
|
|
4.5
|
|
|
3.8
|
Impairment
charges
|
|
|
7.5
|
|
|
271.7
|
Unrealized foreign
exchange loss
|
|
|
0.4
|
|
|
0.5
|
Deferred income tax
expense (recovery)
|
|
|
10.2
|
|
|
(39.6)
|
Other non-cash
items
|
|
|
(2.7)
|
|
|
(9.2)
|
Acquisition of gold
bullion
|
|
|
(34.1)
|
|
|
(27.4)
|
Proceeds from sale of
gold bullion
|
|
|
21.2
|
|
|
42.3
|
Operating cash flows
before changes in non-cash working capital
|
|
$
|
741.2
|
|
$
|
565.1
|
Changes in non-cash
working capital:
|
|
|
|
|
|
|
(Increase) decrease in
receivables
|
|
$
|
(54.4)
|
|
$
|
4.3
|
Increase in prepaid
expenses and other
|
|
|
(9.0)
|
|
|
(1.0)
|
Decrease in current
liabilities
|
|
|
(1.4)
|
|
|
(10.8)
|
Net cash provided by
operating activities
|
|
$
|
676.4
|
|
$
|
557.6
|
|
|
|
|
|
|
|
Cash flows used in
investing activities
|
|
|
|
|
|
|
Acquisition of royalty,
stream and working interests
|
|
$
|
(740.2)
|
|
$
|
(174.0)
|
Acquisition of energy
well equipment
|
|
|
(1.1)
|
|
|
(0.5)
|
Proceeds from sale of
investments
|
|
|
12.7
|
|
|
3.4
|
Net cash used in
investing activities
|
|
$
|
(728.6)
|
|
$
|
(171.1)
|
|
|
|
|
|
|
|
Cash flows used in
financing activities
|
|
|
|
|
|
|
Payment of
dividends
|
|
$
|
(133.4)
|
|
$
|
(115.1)
|
Proceeds from draw of
revolving credit facilities
|
|
|
150.0
|
|
|
—
|
Repayment of revolving
credit facilities
|
|
|
(150.0)
|
|
|
—
|
Repayment of term
loan
|
|
|
—
|
|
|
(80.0)
|
Proceeds from
at-the-market equity offerings
|
|
|
—
|
|
|
135.7
|
Credit facility
amendment costs
|
|
|
(1.0)
|
|
|
—
|
Proceeds from exercise
of stock options
|
|
|
0.3
|
|
|
7.3
|
Net cash used in
financing activities
|
|
$
|
(134.1)
|
|
$
|
(52.1)
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
$
|
(1.2)
|
|
$
|
0.3
|
Net change in cash
and cash equivalents
|
|
$
|
(187.5)
|
|
$
|
334.7
|
Cash and cash
equivalents at beginning of period
|
|
$
|
534.2
|
|
$
|
132.1
|
Cash and cash
equivalents at end of period
|
|
$
|
346.7
|
|
$
|
466.8
|
|
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
Dividend income
received
|
|
$
|
24.4
|
|
$
|
5.8
|
Interest and standby
fees paid
|
|
$
|
1.8
|
|
$
|
1.8
|
Income taxes
paid
|
|
$
|
71.6
|
|
$
|
46.0
|
The accompanying notes are an integral part of
these condensed consolidated financial statements and can be found
in our Q3/2021 Quarterly Report available on our website
View original
content:https://www.prnewswire.com/news-releases/franco-nevada-reports-strong-q3-results-301415802.html
SOURCE Franco-Nevada Corporation