Hedge Against Inflation
(in U.S. dollars unless otherwise noted)
TORONTO, May 4, 2022
/CNW/ - "I am pleased to announce another strong quarter
demonstrating our high margin business", stated Paul Brink, President & CEO. "The portfolio
benefited from strong precious metal, energy and iron ore prices.
The Energy contribution was particularly strong, offset somewhat by
lower precious metal deliveries. Total GEOs are on track to meet
annual guidance. Our NSR and stream interests are inflation-proof
and our G&A expenses are less than 3% of revenue. This allows
revenue growth to translate directly into expanded earnings.
Franco-Nevada is debt-free and is growing its cash balances. Our
recent Asset Handbook highlighted good resource growth at our
assets and we have a strong pipeline of precious metal
opportunities."
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Q1
2022
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Strong Q1
results
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vs
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Q1
2021
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Total GEOs1
sold (including Energy)
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178,614 GEOs
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+2%
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Revenue
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$338.8
million
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+10%
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Net income
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$182.0 million
($0.95/share)
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+6%
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Adjusted Net
Income2
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$177.2 million
($0.93/share)
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+10%
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Adjusted
EBITDA2
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$286.6 million
($1.50/share)
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+9%
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Margin2
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84.6%
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-1%
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Strong Financial Position
- No debt and $1.7 billion in
available capital as at March 31,
2022
- Generated $230.6 million in
operating cash flow for the quarter
- Quarterly dividend of $0.32/share
Sector-Leading ESG
- Ranked #1 gold company by Sustainalytics, AA by MSCI and Prime
by ISS ESG
- Committed to the World Gold Council's "Responsible Gold Mining
Principles"
- Partnering with our operators on community and ESG
initiatives
- Goal of 40% diverse representation at the Board and top
leadership levels as a group by 2025
Diverse, Long-Life Portfolio
- Most diverse royalty and streaming portfolio by asset, operator
and country
- Core assets outperforming since time of acquisition
- Long-life reserves and resources
Growth and Optionality
- Acquisitions, mine expansions and new mines driving long-term
growth
- Long-term optionality in gold, copper and nickel
- Strong pipeline of precious metal opportunities
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Quarterly
revenue and GEOs sold by commodity
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Q1
2022
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Q1 2021
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GEOs
Sold
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Revenue
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GEOs Sold
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Revenue
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#
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(in
millions)
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#
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(in millions)
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PRECIOUS
METALS
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Gold
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99,831
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$
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187.5
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107,005
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$
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190.0
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Silver
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21,401
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41.1
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27,466
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47.7
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PGMs
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7,395
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14.2
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11,498
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19.5
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128,627
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$
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242.8
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145,969
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$
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257.2
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DIVERSIFIED
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Iron
ore
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10,493
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$
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19.3
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2,801
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$
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5.0
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Other
mining assets
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563
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1.1
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805
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1.6
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Oil
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20,176
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39.0
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14,926
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26.0
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Gas
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15,142
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29.5
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8,477
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14.4
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NGL
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3,613
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7.1
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2,759
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4.7
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49,987
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$
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96.0
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29,768
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$
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51.7
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178,614
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$
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338.8
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175,737
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$
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308.9
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For Q1 2022, we earned $338.8 million
in revenue, up 9.7% from Q1 2021. The growth was primarily driven
by higher realized oil and gas prices from our Energy assets and
revenue from our Vale Royalty. These more than offset the decrease
in Precious Metal revenue and resulted in 71.7% of our revenue
being sourced from Precious Metal assets (55.4% gold, 12.1% silver,
4.2% PGM). Revenue was sourced 90.4% from the Americas (30.2%
South America, 23.4% Central America & Mexico, 21.6% U.S. and 15.2% Canada).
Environmental, Social and Governance (ESG) Updates
During the quarter, we made further progress on our diversity
goals with additional diverse representation through recruitment at
the senior management level. We also published our fourth
annual ESG report providing comprehensive emissions disclosure for
our producing mining assets and our second year of TCFD and
SASB-aligned disclosure. We continue to work with our partners on
expanding our community contributions.
Portfolio Additions
- Acquisition of Caserones Royalty: Subsequent to
quarter-end, on April 14, 2022, we
agreed to acquire an effective 0.4582% NSR royalty on JX Nippon
Mining and Metals Group's producing Caserones copper-molybdenum
mine located in the Atacama Region of northern Chile for an aggregate purchase price of
approximately $37.4 million. In
connection with the royalty acquisition, we completed a
$10.0 million private placement with
EMX Royalty Corporation ("EMX"). EMX used the proceeds from the
private placement to acquire an NSR on the Caserones mine on
similar terms as Franco-Nevada.
- Acquisition of Additional Castle Mountain Royalty:
Subsequent to quarter-end, on May 2,
2022, we acquired an existing 2% NSR on gold and silver
produced from the Pacific Clay claims, which comprise a portion of
the JSLA pit of Equinox Gold's Castle Mountain project in
San Bernardino County, California,
for $6.0 million. When combined with
our 2.65% NSR on the broader Castle Mountain land position, we now
have a 4.65% NSR on the Pacific Clay claims.
Q1 2022 Portfolio Updates
Precious Metal assets: GEOs from our Precious Metal
assets were 128,627, compared to 145,969 GEOs sold in Q1 2021.
Higher contributions from Guadalupe-Palmarejo and Candelaria were more than offset by lower
deliveries from Hemlo, Antamina
and Antapaccay.
South America:
- Candelaria (gold and silver
stream) – GEOs delivered and sold increased in Q1 2022 compared
to Q1 2021. Copper and gold production were higher than in the
prior year quarter primarily due to better grades. Deliveries in Q1
2021 were also relatively low due to the timing of shipments.
- Antapaccay (gold and silver stream) – GEOs delivered and
sold were lower in Q1 2022 compared to Q1 2021, due to anticipated
lower than normal grades in 2022, as well as lower recoveries
reflecting a temporarily elevated strip ratio.
- Antamina (22.5% silver stream) – GEOs delivered and sold
were lower in Q1 2022 compared to Q1 2021. In the prior year
period, we benefited from particularly strong silver production as
well as a more favourable GEO conversion ratio. In mid-April 2022, Antamina applied for an amendment
to its currently approved environment impact study. The primary
scope is to extend mine life from 2028 to 2036 by increasing
storage capacities for waste and tailings in their current
locations.
- Cascabel (1% royalty) – In April
2022, SolGold released a prefeasibility study on the
Cascabel project. The prefeasibility study mine plan targets the
high grade core of the Alpala deposit with an initial Mineral
Reserve of 558 million tonnes containing 3.3 million tonnes of
copper at 0.58%, 9.4 million ounces of gold at 0.52 g/t and 30
million ounces of silver at 1.65 g/t over an initial 26-year mine
life. SolGold plans to release a prefeasibility study addendum to
include the Tandayama-America deposit in H2 2022 and a feasibility
study in H2 2023.
- Posse (Mara Rosa) (1%
royalty) – In April 2022,
Hochschild Mining announced the completion of the acquisition of
Amarillo Gold, including Amarillo's flagship Posse gold project,
located in Brazil. Hochschild is
targeting for construction to start in 2022, with production
commencing in 2024.
Central America &
Mexico:
- Cobre Panama (gold and silver stream) – GEOs sold were
relatively consistent with those sold in Q1 2021. For Q1 2022,
Cobre Panama delivered copper production of 78,337 tonnes and
achieved a record mill throughput of 7.6 million tonnes in March.
Copper production was marginally down from Q4 2021 on slightly
lower throughput due to planned SAG mill relines. Lower head grade
compared to the same period in Q1 2021 accounted for 5% lower
copper production, but full-year grades are expected to be
consistent with full year 2021.
- Guadalupe-Palmarejo (50% gold stream) – GEOs sold from
Guadalupe-Palmarejo increased in Q1 2022 compared to the same
quarter in 2021, owing to higher production from ground covered by
the stream and higher mill throughput.
U.S.:
- Stillwater (5% royalty)
– GEOs from Stillwater decreased
compared to Q1 2021. Production has been impacted by operational
challenges and restrictions following a fatality in June 2021. Sibanye-Stillwater is assessing the
operational output to optimise for operational constraints and
market conditions.
- Castle Mountain (2.65-4.65% royalties) – In 2021,
Equinox Gold completed a feasibility study for a proposed Phase 2
expansion that is expected to increase average production to more
than 200,000 ounces of gold annually, from 25,300 ounces produced
in 2021. Equinox Gold submitted the Phase 2 permit amendment
application in March 2022.
- Rosemont/Copper World
(2.085% royalty) – Hudbay Minerals is expecting to complete
a preliminary economic assessment contemplating the development of
the Copper World deposits in conjunction with the Rosemont deposit in the first half of
2022.
- Stibnite (1.7% royalty) – Perpetua Resources announced
that permitting continues to progress at its Stibnite Gold project
and that it expects the U.S. Forest
Service to publish a Supplemental Draft Environmental Impact
Statement for public review and comment in early Q3 2022.
Canada:
- Detour Lake (2% royalty) – In Q1 2022, Agnico Eagle
reported new high-grade intersections at Detour Lake confirming the
existence of a broad and continuous corridor of mineralization with
the system remaining open at depth. An updated life of mine plan is
expected in H2 2022. Agnico Eagle is also evaluating the potential
to expand operations to 32 million tonnes per year and develop an
underground mining operation.
- Hemlo (3% royalty & 50%
NPI) – Revenue from Hemlo was
significantly lower than in Q1 2021 reflecting a decrease in
production from ground where Franco-Nevada has royalty interests
and higher operating costs which affected royalties under the NPI.
Barrick expects improved underground activity in 2022.
- Brucejack (1.2% royalty) – In March 2022, Newcrest Mining completed the
acquisition of Pretium and the Brucejack mine. Newcrest Mining is
focused on exploring the near-mine, extensional and district scale
opportunity across the Brucejack district.
- Kirkland Lake (1.5-5.5%
royalty & 50% NPI) – Agnico Eagle reported that the focus
at Macassa is on completing Shaft #4 infrastructure and ramping up
production. Agnico Eagle is also evaluating the potential
integration of the Amalgamated Kirkland ("AK") deposit with
production potentially starting in 2024. Franco-Nevada has an effective 3.5% NSR on the AK
claims.
- Canadian Malartic (1.5%
royalty) – Production continues to transition from the
Malartic pit to the Barnat pit.
The Odyssey underground project, which is expected to extend the
life of the complex to at least 2039, is progressing as planned
with shaft sinking expected to begin in the fourth quarter of 2022.
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 point to increased scale.
- Island Gold (0.62% royalty) – In April 2022, Alamos Gold reported that the Ontario
Government had approved the Closure Plan Amendment for the Phase
III Expansion which allows for the commencement of construction
activities. An optimized mine plan is expected to be released
mid-2022 and completion of the Phase III expansion is expected in
2025.
- Ring of Fire (1-3% royalties) – In April 2022, Wyloo completed its acquisition of
Noront. In addition to owning several royalties over Wyloo's
property, Franco-Nevada also has a loan receivable from Noront that
had a contractual maturity date of September
30, 2022. Subsequent to Q1 2022, following the change of
control, we elected for repayment of the loan and received
$42.7 million on May 4, 2022.
- Valentine Lake (2%
royalty) – In April 2022,
Marathon Gold reported that, upon receipt of final regulatory
approvals and site permits, it intends to start early works
activities in Q3 2022, supporting a schedule for first gold
production in late 2024. A new technical report is also being
prepared for Q4 2022. Marathon Gold continues to report positive
exploration results at the Berry and Victory deposits.
- Eskay Creek (1% royalty) – In March 2022, Skeena Resources announced further
drilling results from the 2021 regional and near mine exploration
programs at Eskay Creek including the 21A West Zone expansion
discovery.
Rest of World:
- Karma (4.875% gold stream) – In March 2022, Endeavour Mining sold its 90%
interest in Karma to Néré Mining.
- Duketon (2% royalty) – Development of the Garden Well
South underground mine continues to progress, with commissioning of
the primary pump station and first ore delivered during Q1 2022 and
stoping in late Q2 2022.
- Aphrodite (2.5% royalty) – In April 2022, St Barbara announced the completion
of its acquisition of Bardoc Gold. The acquisition is expected to
advance the development of the Bardoc Gold project, which
encompasses the Aphrodite underground deposit, located in
Western Australia.
- Séguéla (1.2% royalty) - In March
2022, Fortuna Silver Mines announced a maiden Inferred
Mineral Resource estimate for the satellite Sunbird discovery of
3.4 million tonnes at an average grade of 3.16 g/t gold containing
350,000 gold ounces.
Diversified assets: Our Diversified assets,
primarily comprising our Iron Ore and Energy interests, generated
$96.0 million in revenue, up from
$51.7 million in Q1 2021. The
increase is primarily due to higher realized oil and gas prices and
the addition of the Vale Royalty in April 2021.
Iron Ore:
- Vale Royalty (iron ore royalty) – We recorded
$16.8 million in revenue from our
Vale Royalty. Revenue recorded in Q1 2022 included $4.5 million of royalty payments related to the
H2 2021 production period, reflecting retroactive volume
adjustments and higher realized prices. As the royalty was acquired
in April 2021, there is no revenue in
the comparative period.
- LIORC – LIORC declared a cash dividend of C$0.50 per common share, compared to C$1.00 per common share in Q1 2021, reflecting
lower iron ore prices. Iron Ore Company of Canada ("IOC") reported increased capital
expenditures to upgrade existing infrastructure at the Carol Lake
mine.
Energy:
- Marcellus (1% royalty) – Revenue from the Marcellus
asset increased compared to Q1 2021. Production was relatively
consistent compared to the prior-year period, but revenues
benefited from significantly higher NGL and natural gas
prices.
- Haynesville (various royalty rates) – Revenue from the
Haynesville portfolio increased compared to Q1 2021, reflecting
current high NGL and natural gas prices.
- SCOOP/STACK (various royalty rates) – Revenue from the
SCOOP/STACK increased compared to Q1 2021 due to slightly higher
production from our royalties acquired through the Royalty
Acquisition Venture with Continental, as well as higher
prices.
- Permian Basin (various royalty rates) – Revenue from the
Permian basin increased compared to Q1 2021. The increase in
revenue in the current period reflects higher realized prices,
while volumes were relatively consistent with those produced in the
prior year period.
- Weyburn (NRI, ORR, WI)
– Revenue from the Weyburn Unit was significantly higher compared
to Q1 2021, reflecting 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 $0.32 per share. The
dividend will be paid on June 30,
2022 to shareholders of record on June 16, 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 tomorrow, Thursday, May 5, 2022 at 10:00 a.m. Eastern
Time to review Franco‑Nevada's Q1 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 May 12,
2022: Toll-Free (888) 390-0541; International (416)
764-8677; Code 255229 #
- 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.
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 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, 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 Q1 2022, the
average commodity prices were as follows: $1,874/oz gold (Q1 2021 - $1,794), $24.00/oz
silver (Q1 2021 - $26.26),
$1,041/oz platinum (Q1 2021 -
$1,161) and $2,423/oz palladium (Q1 2021 - $2,405), $142/t Fe
62% CFR China (Q1 2021 - $166),
$94.29/bbl WTI oil (Q1 2021 -
$57.84) and $4.57/mcf Henry Hub natural gas (Q1 2021 -
$2.73).
- 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 the three
months ended March 31, 2022 dated May 4, 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
|
|
|
March 31,
|
(expressed in
millions, except per share amounts)
|
2022
|
|
|
2021
|
Net
income
|
|
$
|
182.0
|
|
|
$
|
171.5
|
Foreign exchange (gain) loss and other (income) expenses
|
|
|
(6.2)
|
|
|
|
0.1
|
Tax
effect of adjustments
|
|
|
1.4
|
|
|
|
(0.1)
|
Other tax
related adjustments:
|
|
|
|
|
|
|
|
Recognition of previously unrecognized deferred tax
assets
|
|
—
|
|
|
|
(10.6)
|
Adjusted Net
Income
|
|
$
|
177.2
|
|
|
$
|
160.9
|
Basic weighted average
shares outstanding
|
|
191.3
|
|
|
|
191.0
|
Adjusted Net Income
per share
|
$
|
0.93
|
|
|
$
|
0.84
|
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
|
|
|
March 31,
|
(expressed in
millions, except per share amounts)
|
2022
|
|
|
2021
|
Net
income
|
|
|
|
$
|
182.0
|
|
|
$
|
171.5
|
Income tax expense
|
|
|
|
|
36.0
|
|
|
|
19.8
|
Finance expenses
|
|
|
|
|
0.9
|
|
|
|
0.8
|
Finance income
|
|
|
|
|
(0.7)
|
|
|
|
(0.7)
|
Depletion and depreciation
|
|
|
|
|
74.6
|
|
|
|
71.2
|
Foreign
exchange (gain) loss and other (income) expenses
|
|
(6.2)
|
|
|
|
0.1
|
Adjusted
EBITDA
|
|
|
|
$
|
286.6
|
|
|
$
|
262.7
|
Basic weighted average
shares outstanding
|
|
191.3
|
|
|
|
191.0
|
Adjusted EBITDA per
share
|
$
|
1.50
|
|
|
$
|
1.37
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
|
|
March 31,
|
(expressed in
millions, except Margin)
|
2022
|
|
|
2021
|
Adjusted
EBITDA
|
|
|
$
|
286.6
|
|
|
$
|
262.7
|
Revenue
|
|
338.8
|
|
|
|
308.9
|
Margin
|
|
84.6
|
%
|
|
|
85.0
|
FRANCO-NEVADA
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
(in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
At
March 31,
|
|
|
At
December 31,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents (Note 4)
|
|
$
|
722.7
|
|
|
$
|
539.3
|
|
Receivables
|
|
|
144.5
|
|
|
|
119.8
|
|
Loan receivable (Note
5)
|
|
|
40.4
|
|
|
|
39.7
|
|
Prepaid expenses and
other (Note 6)
|
|
|
42.0
|
|
|
|
52.6
|
|
Current assets
|
|
$
|
949.6
|
|
|
$
|
751.4
|
|
|
|
|
|
|
|
|
|
|
Royalty, stream and
working interests, net (Note 7)
|
|
$
|
5,095.1
|
|
|
$
|
5,149.3
|
|
Investments (Note
5)
|
|
|
260.6
|
|
|
|
235.9
|
|
Deferred income tax
assets
|
|
|
48.2
|
|
|
|
49.4
|
|
Other assets (Note
8)
|
|
|
46.9
|
|
|
|
23.9
|
|
Total assets
|
|
$
|
6,400.4
|
|
|
$
|
6,209.9
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
36.8
|
|
|
$
|
33.6
|
|
Current income tax
liabilities
|
|
|
6.9
|
|
|
|
9.6
|
|
Current liabilities
|
|
$
|
43.7
|
|
|
$
|
43.2
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax
liabilities
|
|
$
|
145.1
|
|
|
$
|
135.4
|
|
Other
liabilities
|
|
|
5.9
|
|
|
|
6.1
|
|
Total liabilities
|
|
$
|
194.7
|
|
|
$
|
184.7
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Share capital (Note
16)
|
|
$
|
5,647.2
|
|
|
$
|
5,628.5
|
|
Contributed
surplus
|
|
|
16.2
|
|
|
|
16.1
|
|
Retained
earnings
|
|
|
605.3
|
|
|
|
484.9
|
|
Accumulated other
comprehensive loss
|
|
|
(63.0)
|
|
|
|
(104.3)
|
|
Total shareholders' equity
|
|
$
|
6,205.7
|
|
|
$
|
6,025.2
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
|
$
|
6,400.4
|
|
|
$
|
6,209.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The condensed consolidated financial statements and accompanying
notes can be found in our Q1 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
|
|
|
|
March 31,
|
|
|
|
2022
|
|
|
2021
|
|
Revenue (Note
10)
|
|
$
|
338.8
|
|
|
$
|
308.9
|
|
|
|
|
|
|
|
|
|
|
Costs of
sales
|
|
|
|
|
|
|
|
|
Costs of
sales (Note 11)
|
|
$
|
43.6
|
|
|
$
|
40.6
|
|
Depletion
and depreciation
|
|
|
74.6
|
|
|
|
71.2
|
|
Total costs of
sales
|
|
$
|
118.2
|
|
|
$
|
111.8
|
|
Gross profit
|
|
$
|
220.6
|
|
|
$
|
197.1
|
|
|
|
|
|
|
|
|
|
|
Other operating
expenses (income)
|
|
|
|
|
|
|
|
|
General
and administrative expenses
|
|
$
|
5.6
|
|
|
$
|
4.2
|
|
Share-based compensation expenses (Note 12)
|
|
|
4.3
|
|
|
|
2.0
|
|
Gain on
sale of gold bullion
|
|
|
(1.3)
|
|
|
|
(0.6)
|
|
Total other operating
expenses (income)
|
|
$
|
8.6
|
|
|
$
|
5.6
|
|
Operating
income
|
|
$
|
212.0
|
|
|
$
|
191.5
|
|
Foreign
exchange gain (loss) and other income (expenses)
|
|
$
|
6.2
|
|
|
$
|
(0.1)
|
|
Income before finance
items and income taxes
|
|
$
|
218.2
|
|
|
$
|
191.4
|
|
|
|
|
|
|
|
|
|
|
Finance items (Note
14)
|
|
|
|
|
|
|
|
|
Finance
income
|
|
$
|
0.7
|
|
|
$
|
0.7
|
|
Finance
expenses
|
|
|
(0.9)
|
|
|
|
(0.8)
|
|
Net income before
income taxes
|
|
$
|
218.0
|
|
|
$
|
191.3
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(Note 15)
|
|
|
36.0
|
|
|
|
19.8
|
|
Net
income
|
|
$
|
182.0
|
|
|
$
|
171.5
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to profit and loss:
|
|
|
|
|
|
|
|
|
Currency
translation adjustment
|
|
$
|
22.2
|
|
|
$
|
9.4
|
|
|
|
|
|
|
|
|
|
|
Items that will not
be reclassified subsequently to profit and loss:
|
|
|
|
|
|
|
|
|
Gain on changes in the fair value of equity
investments
|
|
|
|
|
|
|
|
|
at fair
value through other comprehensive income ("FVTOCI"),
|
|
|
|
|
|
|
|
|
net of
income tax (Note 5)
|
|
|
19.7
|
|
|
|
18.6
|
|
Other comprehensive
income
|
|
$
|
41.9
|
|
|
$
|
28.0
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
$
|
223.9
|
|
|
$
|
199.5
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
(Note 17)
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.95
|
|
|
$
|
0.90
|
|
Diluted
|
|
$
|
0.95
|
|
|
$
|
0.90
|
|
Weighted average number
of shares outstanding (Note 17)
|
|
|
|
|
|
|
|
|
Basic
|
|
|
191.3
|
|
|
|
191.0
|
|
Diluted
|
|
|
191.7
|
|
|
|
191.3
|
|
|
|
|
|
|
|
|
|
|
The condensed consolidated financial statements and accompanying
notes can be found in our Q1 2022 Quarterly Report available on our
website
FRANCO-NEVADA
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
|
|
March 31,
|
|
|
|
2022
|
|
|
2021
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
182.0
|
|
|
$
|
171.5
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
Depletion and depreciation
|
|
|
74.6
|
|
|
|
71.2
|
|
Share-based compensation expenses
|
|
|
1.6
|
|
|
|
1.4
|
|
Unrealized foreign exchange (gain) loss
|
|
|
(6.2)
|
|
|
|
0.1
|
|
Deferred income tax expense (recovery)
|
|
|
7.0
|
|
|
|
(2.3)
|
|
Other non-cash items
|
|
|
(1.7)
|
|
|
|
(1.2)
|
|
Acquisition of gold bullion
|
|
|
(9.5)
|
|
|
|
(10.5)
|
|
Proceeds
from sale of gold bullion
|
|
|
16.1
|
|
|
|
7.5
|
|
Changes in
other assets
|
|
|
(23.4)
|
|
|
|
(5.6)
|
|
Operating
cash flows before changes in non-cash working capital
|
|
$
|
240.5
|
|
|
$
|
232.1
|
|
Changes in non-cash working capital:
|
|
|
|
|
|
|
|
|
Increase in receivables
|
|
$
|
(16.8)
|
|
|
$
|
(8.9)
|
|
Decrease in prepaid expenses and
other
|
|
|
5.3
|
|
|
|
3.4
|
|
Increase (decrease) in current
liabilities
|
|
|
1.6
|
|
|
|
(2.3)
|
|
Net cash provided by
operating activities
|
|
$
|
230.6
|
|
|
$
|
224.3
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in
investing activities
|
|
|
|
|
|
|
|
|
Acquisition of royalty, stream and working interests
|
|
$
|
(2.8)
|
|
|
$
|
(190.3)
|
|
Acquisition of energy well equipment
|
|
|
(0.3)
|
|
|
|
(0.3)
|
|
Proceeds
from sale of investments
|
|
|
1.5
|
|
|
|
12.2
|
|
Net cash used in
investing activities
|
|
$
|
(1.6)
|
|
|
$
|
(178.4)
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in
financing activities
|
|
|
|
|
|
|
|
|
Payment
of dividends
|
|
$
|
(50.1)
|
|
|
$
|
(41.8)
|
|
Credit
facility amendment costs
|
|
|
—
|
|
|
|
(0.1)
|
|
Proceeds
from exercise of stock options
|
|
|
2.5
|
|
|
|
—
|
|
Net cash used in
financing activities
|
|
$
|
(47.6)
|
|
|
$
|
(41.9)
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
$
|
2.0
|
|
|
$
|
0.3
|
|
Net change in cash
and cash equivalents
|
|
$
|
183.4
|
|
|
$
|
4.3
|
|
Cash and cash
equivalents at beginning of period
|
|
$
|
539.3
|
|
|
$
|
534.2
|
|
Cash and cash
equivalents at end of period
|
|
$
|
722.7
|
|
|
$
|
538.5
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
|
Dividend income
received
|
|
$
|
2.5
|
|
|
$
|
5.0
|
|
Interest and standby
fees paid
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
Income taxes
paid
|
|
$
|
22.5
|
|
|
$
|
21.6
|
|
The condensed consolidated financial statements and accompanying
notes can be found in our Q1 2022 Quarterly Report available on our
website
View original
content:https://www.prnewswire.com/news-releases/franco-nevada-reports-strong-q1-results-301540096.html
SOURCE Franco-Nevada Corporation