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Franco-Nevada Reports First Quarter 2013 Results

May 8, 2013

TORONTO, May 8, 2013 /PRNewswire/ – Franco-Nevada Corporation (TSX: FNV; NYSE:
FNV) today reported its financial results for the first quarter of
2013. Highlights include:

        --  $108.8 million in revenue;

        --  $35.4 million of net income, or $0.24 per share;

        --  Adjusted Net Income(1) of $40.6 million, or $0.28 per share;

        --  $1.4 billion in available capital;

        --  Agreements to acquire royalties on two promising new gold
            projects; and

        --  Release of our 2013 Asset Handbook.

“Franco-Nevada’s diversified portfolio and business model continue to
deliver dependable top and bottom line results,” said David Harquail,
President and CEO.  “First quarter revenues exceed those of the same
quarter last year and we were pleased to see the start of gold payments
from the Detour Lake project.  Franco-Nevada has a very strong balance
sheet and is well positioned in this opportunity-rich environment to
add to its portfolio.  We have started 2013 with two new gold royalty
acquisitions in North America, both of which have very good exploration
upside potential.  We expect to add further assets over the year.”

Financial Results

Gold Equivalent Ounces((2)) (“GEOs”) earned by Franco-Nevada from its royalty and stream mineral
interests was 58,289 GEOs in the quarter compared to 55,466 GEOs in the
prior year, an increase of 5.1%. In addition, the oil & gas assets
generated $13.9 million in revenues during the quarter compared to
$10.5 million a year ago. Revenue was earned 85% from precious metals
(71% gold and 14% PGMs) and 82% from North America and Australia (33%
Canada, 24% U.S., 21% Mexico and 4% Australia).

The Company earned net income of $35.4 million, or $0.24 per share,
compared to $46.8 million, or $0.33 per share, for 2012.  Adjusted Net
Income((1)) for the quarter was $40.6 million, or $0.28 per share, compared to
$43.6 million, or $0.31 per share, for 2012. Revenue increased 3.6% to
$108.8 million from $105.0 million. The increase was due to higher
revenue from gold, oil and other mineral assets. Adjusted EBITDA((3)) was $89.1 million, or $0.61 per share, compared to $85.4 million, or
$0.61 per share.

As at March 31, 2013, Franco-Nevada had a strong financial position with
cash, cash equivalents and short-term investments totaling $825.8
million and working capital((4)) of $867.0 million.  In addition, the Company has available an undrawn
$500.0 million unsecured revolving credit facility bringing available
capital to approximately $1.4 billion.

New Royalty Acquisitions

        --  Brucejack - Canada:Franco-Nevada has agreed to acquire an
            existing 1.2% NSR royalty covering Pretium Resources' Brucejack
            gold project in northwestern British Columbia for $45.0 million
            in cash. The NSR becomes payable after approximately 500,000
            ounces of gold have been produced.  The project includes two
            principal deposits, the Valley of the Kings and the West Zone,
            both with exploration potential.

        --  Golden Meadows - U.S.:Franco-Nevada has agreed to acquire a
            newly created 1.7% NSR royalty covering Midas Gold's project in
            Idaho for $15.0 million subject to an option by Midas Gold to
            re-acquire one-third of the royalty for $9.0 million.  As part
            of the transaction, Franco-Nevada also subscribed for 2,000,000
            Midas Gold warrants having an exercise price of C$1.23 per
            warrant and a ten year term. This project benefits from a large
            resource base with upside potential.

Portfolio Highlights

        --  Gold - U.S.: Gold revenue increased by 9.3% to $21.2 million
            driven by increases at Gold Quarry due to an increase in the
            minimum royalty provision, and the Goldstrike NPI as lower
            capital than expected was spent during the quarter, and higher
            production at Marigold. These increases were partially offset
            by anticipated lower production at Bald Mountain and Mesquite.

        --  Gold - Canada:Canadian assets earned $11.0 million in revenue,
            an increase of 13.4%, due to higher production from the Golden
            Highway assets, higher Hemlo NPI payments as it was in capital
            recovery mode during 2012 and the start of the Detour royalty
            with the pour of first gold in February 2013.

        --  Gold - Australia:Gold revenue from Australian assets was
            slightly higher generating $3.0 million with Duketon being the
            most significant contributor ($2.2 million).

        --  Gold - Rest of World:These assets generated $42.2 million in
            revenue for the quarter, a decrease of 1.6%, due to a lower
            average gold price. On April 2, 2013, First Quantum Minerals
            Ltd. ("First Quantum") announced the successful completion of
            its acquisition of Inmet Mining Corporation ("Inmet"). Inmet
            holds an 80% interest in the Cobre Panama project which is
            subject to a $1.0 billion precious metals stream commitment
            from Franco-Nevada. First Quantum is currently reviewing
            development plans for the project which may impact the timing
            of Franco-Nevada's contributions. On April 29, 2013, Kinross
            Gold Corporation announced that it is proceeding with a
            feasibility study on an expanded Tasiast operation with a
            38,000 tonnes per day ("tpd") mill compared to its existing
            8,000 tpd mill.

        --  PGM Assets:Revenue from PGM assets was $15.5 million with the
            Sudbury assets contributing $10.3 million.

        --  Oil & Gas Assets:Oil & gas assets generated $13.9 million in
            revenue, an increase of 32.4%, primarily due to the Q4 2012
            Weyburn Unit acquisition.

2013 Guidance

For the three months ended March 31, 2013, attributable royalty and
stream production was in-line with the Company’s expectations.  The
Company expects to receive a total of 215,000 to 235,000 GEOs from its
mineral assets and $55.0 to $65.0 million in revenue from its oil & gas
assets in 2013. Gold equivalent royalty and stream ounces are estimated
for gross ounces, and in the case of stream ounces, before the payment
of approximately $400 per gold equivalent ounce paid by the Company.
Platinum and palladium metals have been converted to GEOs using
commodity prices of $1,400/oz Au, $1,425/oz Pt and $675/oz Pd. The WTI
oil price is assumed to average $90 per barrel with similar price
discounts for Canadian oil as experienced in 2012.

Dividend Declaration

The Board of Directors of Franco-Nevada declared the monthly dividend of
$0.06 per share for each of July, August and September 2013.  The July
dividend will be paid on July 25, 2013 to shareholders of record on
July 11, 2013, the August dividend will be paid on August 29, 2013 to
shareholders of record on August 15, 2013 and the September dividend
will be paid on September 26, 2013 to shareholders of record on
September 12, 2013.

The Canadian dollar equivalent is determined based on the noon rate
posted by the Bank of Canada on May 6, 2013.  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.

Shareholder Information

The complete Consolidated Condensed Interim Financial Statements and
Management’s Discussion and Analysis can be found today on
Franco-Nevada’s website at www.franco-nevada.com, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

Management will host a conference call later today, Wednesday, May 8,
2013 at 3:00 p.m. Eastern Time to review the results. Interested
investors are invited to participate as follows:

        --  Q1 Conference Call - 3:00 pm ET:Local: 647-427-7450; Toll-Free:
            1-888-231-8191

        --  Webcast:A live audio webcast will be accessible at
            www.franco-nevada.com.

A conference call replay will be available until May 15, 2013 at the
following numbers: Local: 416-849-0833; Toll-Free: 1-855-859-2056; Pass
code: 57109893

The Company’s 2013 Asset Handbook can also be found today on the
Company’s website. The 2013 Asset Handbook provides further details on
many of the Company’s producing and advanced assets, including an
estimation of the Royalty Equivalent Units which have more than doubled
from the prior year.

Corporate Summary

Franco-Nevada is a gold-focused royalty and stream company.  The Company
has a diversified portfolio of cash-flow producing assets and interests
in some of the largest new gold development and exploration projects in
the world.  Its business model benefits from rising commodity prices
and new discoveries while limiting exposure to operating and capital
cost inflation.  Franco-Nevada has substantial cash with no debt and is
generating cash flow from its portfolio that is being used to expand
its portfolio and pay monthly dividends.  Franco-Nevada’s common shares
trade under the symbol FNV on both the Toronto and New York stock
exchanges.

Prepared in accordance with IFRS and expressed in U.S. dollars (unless
otherwise noted).

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 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, 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. In addition, statements (including data in tables)
relating to GEOs are forward looking statements as they involve implied
assessment, based on certain estimates and assumptions, and no
assurance can be given that the estimates 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”, “budget”, “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 & 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 US dollar, changes in national and local
government legislation, including permitting and licensing regimes and
taxation policies, regulations and political or economic developments
in any of the countries where properties in which Franco-Nevada holds a
royalty, stream or other interest are located or through which they are
held, risks related to the operators of the properties in which
Franco-Nevada holds a royalty, stream or other interest, including
changes in the ownership and control of such operators, influence of
macroeconomic developments, business opportunities that become
available to, or are pursued by Franco-Nevada, reduced access to debt
and equity capital, litigation, title, permit or license disputes
related to interests on any of the properties in which Franco-Nevada
holds a royalty, stream or other interest, whether or not the Company
is determined to have PFIC status, 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, rate and timing of production
differences from resource estimates, 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 or civil unrest, 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 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 adverse development in
respect of any significant property in which Franco-Nevada holds a
royalty, stream or other interest, 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 and readers 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. Accordingly,
readers 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 Annual Information Form,
as well as Franco-Nevada’s most recent Management’s Discussion and
Analysis filed with the Canadian securities regulatory authorities on
SEDAR at www.sedar.com and Franco-Nevada’s most recent Form 40-F filed with the U.S.
Securities and Exchange Commission on EDGAR at 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.


    FRANCO-NEVADA CORPORATION

    CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 

    (unaudited, in millions of U.S. dollars)

                                    March 31, 2013       December 31, 2012

    ASSETS                                                                

    Cash and cash equivalents
    (Note 3)                      $          718.5     $             631.7

    Short-term investments
    (Note 4)                                 107.3                   148.2

    Receivables (Note 5)                      76.1                    83.4

    Prepaid expenses and
    other                                     14.4                    15.9

      Current assets                         916.3                   879.2

    Royalty, stream and
    working interests, net                 2,172.1                 2,223.6

    Investments (Note 4)                      93.6                   108.4

    Deferred income tax
    assets                                    10.7                     8.7

    Other                                     26.5                    24.0

      Total assets                $        3,219.2     $           3,243.9

    LIABILITIES                                                           

    Accounts payable and
    accrued liabilities (Note
    9(b))                         $           41.4     $              44.0

    Current income tax
    liabilities                                7.9                    12.8

      Current liabilities                     49.3                    56.8

    Deferred income tax
    liabilities                               39.1                    38.0

      Total liabilities                       88.4                    94.8

    SHAREHOLDERS' EQUITY
    (Note 9)                                                              

    Common shares                          3,117.1                 3,116.7

    Contributed surplus                       48.0                    47.2

    Deficit                                (110.4)                 (120.6)

    Accumulated other
    comprehensive income                      76.1                   105.8

      Total shareholders'                  3,130.8                 3,149.1
      equity                                            

      Total liabilities and                3,219.2                 3,243.9
      shareholders' equity        $                    $

The condensed notes to these unaudited interim financial statements,
which are contained in the 2013 First
Quarter Report available on our website, are an integral part of these
consolidated financial statements.


    FRANCO-NEVADA CORPORATION

    CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

    (unaudited, in millions of U.S. dollars, except per share amounts)    

                                       For the three months ended March 31,

                                         2013                          2012

    Revenue (Note 5)                 $  108.8     $                   105.0

    Costs and expenses                                                     

      Cost of sales (Note 6)             15.1                          15.6

      Depletion and depreciation         34.4                          31.7

      Corporate administration
      (Note 7 & 9(c))                     3.7                           3.6

      Business development                0.9                           0.4

      Impairment of investments
      (Note 4)                            1.4                             -

                                         55.5                          51.3

      Operating income                   53.3                          53.7

      Foreign exchange gains/
      (losses) and other income/
      (expenses)                        (4.7)                           3.9

    Income before finance items
    and income taxes                     48.6                          57.6

    Finance items                                                          

      Finance income                      0.9                           2.2

      Finance expenses                  (0.7)                         (0.4)

    Net income before income
    taxes                            $   48.8     $                    59.4

    Income tax expense (Note 8)          13.4                          12.6

    Net income                       $   35.4     $                    46.8

    Other comprehensive income
    (loss):                                                                

    Items that may be
    reclassified subsequently to
    profit and loss:                                                       

      Unrealized gain (loss) in
      market value of
      available-for-sale
      investments, net of income
      tax of $0.8 (Note 4)              (5.5)                           6.0

      Currency translation
      adjustment                       (24.2)                          18.0

      Other comprehensive income
      (loss)                           (29.7)                          24.1

    Total comprehensive income       $    5.7     $                    70.8

    Basic earnings per share
    (Note 10)                        $   0.24     $                    0.33

    Diluted earnings per share
    (Note 10)                        $   0.24     $                    0.33

The condensed notes to these unaudited interim financial statements,
which are contained in the 2013 First Quarter Report available on our
website, are an integral part of these consolidated financial
statements.


    FRANCO-NEVADA CORPORATION

    CONSOLIDATED STATEMENTS OF CASH FLOWS

    (unaudited, in millions of
    U.S. dollars)                      For the three months ended March 31,

                                           2013                        2012

    Cash flows from operating
    activities                                                             

    Net income                         $   35.4      $                 46.8

    Adjustments to reconcile net
    income to net cash provided by
    operating activities:                                                  

      Depletion and depreciation           34.4                        31.7

      Impairment of investments
      (Note 4)                              1.4                           -

      Other non-cash items                  0.4                         0.1

      Deferred income tax expense
      (Note 8)                              0.2                         1.3

      Share-based payments (Note 9
      (c))                                  1.2                         0.9

      Unrealized foreign exchange
      loss                                  0.3                         0.2

      Mark-to-market on warrants            4.0                       (4.1)

      Changes in non-cash assets
      and liabilities:                                                     

        Decrease in receivables             7.4                        11.7

        Increase in prepaid
        expenses and other                (1.0)                       (1.8)

        Decrease in accounts
        payable and accrued
        liabilities                       (7.2)                       (2.7)

    Net cash provided by operating
    activities                             76.5                        84.1

    Cash flows from investing
    activities                                                             

      Proceeds on sale of
      short-term investments               55.2                        67.6

      Purchase of short-term
      investments                        (14.6)                     (160.0)

      Acquisition of working
      interest in oil & gas
      properties                          (0.7)                      (43.9)

      Acquisition of interests in
      mineral properties                  (0.1)                      (39.6)

      Purchase of investments                 -                      (15.0)

      Return of capital on
      investments                           1.8                           -

      Purchase of property and
      equipment                           (0.2)                           -

      Purchase of oil & gas well
      equipment                           (2.2)                      (11.9)

    Net cash provided by (used in)
    investing activities                   39.2                     (202.8)

    Cash flows from financing
    activities                                                             

      Payment of dividends               (26.1)                      (17.0)

      Proceeds from exercise of
      warrants                                -                       179.3

      Proceeds from exercise of
      stock options                         0.3                         1.2

    Net cash provided by (used in)
    financing activities                 (25.8)                       163.5

    Effect of exchange rate
    changes on cash and cash
    equivalents                           (3.1)                         8.1

    Net increase in cash and cash
    equivalents                            86.8                        52.9

    Cash and cash equivalents at
    beginning of period                   631.7                       794.1

    Cash and cash equivalents at
    end of period                      $  718.5      $                847.0

    Supplemental cash flow
    information:                                                           

    Cash paid for interest expense
    and loan standby fees during
    the period                         $    0.3      $                  0.1

    Income taxes paid during the
    period                             $   17.5      $                 13.0

The condensed notes to these unaudited interim financial statements,
which are contained in the 2013 First Quarter Report available on our
website, are an integral part of these consolidated financial
statements.


    FRANCO-NEVADA CORPORATION

    CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

    (unaudited, in millions of U.S. dollars)

                                                   Accumulated                         

                                                        other                          

                                  Contributed     comprehensive                        

                        Share                                                     Total
                      capital        Surplus           income       Deficit      Equity

                       (Note
                        9)                                                             

    Balance at
    January 1, 2013   3,116.7            47.2             105.8     (120.6)     3,149.1

      Net income            -               -                 -        35.4        35.4

      Other
      comprehensive
      loss                  -               -            (29.7)           -      (29.7)

      Total
      comprehensive
      income                -               -                 -           -         5.7

      Exercise of
      stock options       0.4           (0.3)                 -           -         0.1

      Exercise of
      warrants              -               -                 -           -           -

      Share-based
      payments              -             1.2                 -           -         1.2

      Vesting of
      restricted
      share units           -               -                 -           -           -

      Adjustment to
      finance costs         -           (0.1)                 -           -       (0.1)

      Dividends
      declared              -               -                 -      (25.2)      (25.2)

    Balance at
    March 31, 2013    3,117.1            48.0              76.1     (110.4)     3,130.8

    Balance at
    January 1, 2012   2,803.6            99.5              66.6     (135.5)     2,834.2

      Net income            -               -                 -        46.8        46.8

      Other
      comprehensive
      income                -               -              24.0           -        24.0

      Total
      comprehensive
      income                -               -                 -           -        70.8

      Exercise of
      stock options       1.7           (0.5)                 -           -         1.2

      Share-based
      payments              -             0.9                 -           -         0.9

      Exercise of
      warrants          201.5          (22.2)                 -           -       179.3

      Adjustment to
      finance costs     (0.1)               -                 -           -       (0.1)

      Dividends
      declared              -               -                 -      (18.0)      (18.0)

    Balance at
    March 31, 2012    3,006.7            77.7              90.6     (106.7)     3,068.3

The condensed notes to these unaudited interim financial statements,
which are contained in the 2013 First Quarter Report available on our
website,
are an integral part of these consolidated financial statements.

 

NON-IFRS MEASURES:  Adjusted Net Income, Adjusted EBITDA and Working Capital 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 and on SEDAR and on EDGAR.


    (1)   Adjusted Net Income is defined by the Company as net income
          (loss) excluding foreign exchange gains/losses, gains/losses on
          the sale of investments, impairment charges related to royalties,
          streams, working interests and investments, unusual non-recurring
          items, and the impact of taxes on all these items.

    (2)   For Q1 2013, Gold Equivalent Ounces are calculated using
          commodity prices of $1,630/oz Au (2012 - $1,691/oz Au), $1,634/oz
          Pt (2012 - $1,606/oz Pt) and $725/oz Pd (2012 - $682/oz Pd).

    (3)   Adjusted EBITDA is defined by the Company as net income (loss)
          excluding income tax expense, finance income and costs, foreign
          exchange gains/losses, gains/losses on the sale of investments,
          income/losses from equity investments, depletion and depreciation
          and impairment charges related to royalties, streams, working
          interests and investments.

    (4)   Working capital is defined by the Company as current assets less
          current liabilities.

Reconciliation to IFRS measures


                                                    Three months ended

    (Expressed in millions
    except Margin and per
    share amounts)                   March 31, 2013           March 31,2012

    Net Income                     $           35.4     $              46.8

      Income tax expense                       13.4                    12.6

      Finance costs                             0.7                     0.4

      Finance income                          (0.9)                   (2.2)

      Depletion and
      depreciation                             34.4                    31.7

      Impairment of
      investments                               1.4                       -

      Foreign exchange
      (gains)/losses and other
      (income)/expenses                         4.7                   (3.9)

    Adjusted EBITDA                $           89.1     $              85.4

    Basic Weighted Average
    Shares Outstanding                        146.7                   139.9

    Adjusted EBITDA per share      $           0.61     $              0.61

    Net Income                     $           35.4     $              46.8

      Impairment of
      investments, net of
      income tax                                1.4                       -

      Foreign exchange
      (gains)/losses and other
      (income)/expenses, net
      of income tax                             3.5                   (3.2)

      Credit facility costs                     0.3                       -

    Adjusted Net Income            $           40.6     $              43.6

    Adjusted Net Income per
    share                          $           0.28     $              0.31

                                                             As at

                                     March 31, 2013       December 31, 2012

    Current assets                 $          916.3     $             879.2

    Current liabilities                      (49.3)                  (56.8)

    Working Capital                $          867.0     $             822.4

 

 

 

 

SOURCE Franco-Nevada Corporation


Source: PR Newswire