Franco-Nevada Reports Q1 2014 Results and Declares Increased Quarterly Dividend

May 7, 2014

TORONTO, May 7, 2014 /PRNewswire/ – Franco-Nevada Corporation (TSX: FNV; NYSE:
FNV) today reported first quarter 2014 results realizing 65,836 Gold
Equivalent Ounces((1)) and $18.7 million in revenue for its oil & gas assets. Net income and
Adjusted Net Income((2)) were both $35.4 million, or $0.24 per share and Adjusted EBITDA((3)) was $84.8 million, or $0.58 per share.

“Franco-Nevada’s diversified portfolio continues to deliver dependable
top and bottom line results,” said David Harquail, President & CEO.
“Our revenue, cash flow and net income have held up well despite
significantly lower gold prices. This has allowed us to continue the
tradition of increasing dividends each year with our previously
announced 11% increase being formally declared effective this quarter.
On the business development front, we closed a number of previously
announced deals during the quarter and another small deal so far in the
second quarter. We were particularly pleased that our Sabodala
investment was able to contribute in the same quarter it was
acquired. Franco-Nevada remains financially strong and debt-free and we
expect to continue to grow with further investments.”

Financial Results

For the first quarter of 2014, Gold Equivalent Ounces((1)) (“GEOs”) were 65,836 representing an 11.8% increase over the same
period of 2013. Despite a 20.6% lower average gold price and a 12.6%
lower average platinum price for the quarter compared to last year, the
Company saw growth in its GEOs from recent acquisitions and higher
production levels from international and Canadian gold assets and other
minerals, partially offset by lower production from U.S. gold assets
and PGM assets. In addition, our oil & gas assets generated $18.7
million in revenues during the quarter. Revenue was earned 79% from
precious metals (67% gold and 12% PGMs) and 78% from North America and
Australia (35% Canada, 21% U.S., 17% Mexico and 5% Australia).

The breakdown of revenue and GEOs for the quarter is as follows:

                             For the three months ended
                                   March 31, 2014

                                   Revenue      GEOs(3)  

                             (in millions)            #  

    Gold - United States      $       16.5       13,216  

    Gold - Canada                     10.9        8,411  

    Gold - Australia                   2.1        1,636  

    Gold - Rest of World              40.5       31,308  

    Gold - Total                      70.0       54,571  

    PGM                               12.2        8,690  

    Other minerals                     3.2        2,575  

    Oil & gas                         18.7            -  

                               $     104.1       65,836  

Corporate & Portfolio Updates

        --  Business Development:During the quarter, Franco-Nevada closed
            the transactions with Teranga Gold Corporation (Sabodala) and
            Klondex Mines Ltd. (Fire Creek/Midas) for $135.0 million and
            $35.0 million, respectively. Subsequent to the quarter, the
            acquisition of an existing 2.0% net smelter return ("NSR")
            royalty on Yamana Gold Inc.'s ("Yamana") Cerro Moro project
            located in Argentina closed for $19.6 million. On April 29,
            2014, Yamana released details of its updated feasibility study
            on Cerro Moro which included annual production of 150,000 gold
            equivalent ounces over a ten-year mine life. If Yamana makes a
            positive construction decision later this year, production is
            expected to begin in the first half of 2016.

        --  Credit Facility:On March 19, 2014, Franco-Nevada's existing
            credit facility was extended by two years to March 19, 2019.
            The facility is currently undrawn and Franco-Nevada remains

        --  Gold - U.S.:GEOs from Barrick Gold Corporation's ("Barrick")
            Goldstrike mine increased by 25.3% in the period due to lower
            capital being allocated to the Company's net profits interest
            ("NPI") royalty and higher production levels with associated
            revenue being lower due to the decrease in the average gold
            price. GEOs from Gold Quarry, Marigold and Bald Mountain were
            lower in the quarter. The newly acquired Fire Creek/Midas
            royalty is expected to start generating GEOs and revenue late
            in the second quarter of 2014. Augusta Resource Corporation
            released an update on the permitting progress at its Rosemont
            project in Arizona where Franco-Nevada holds a 1.5% NSR on all

        --  Gold - Canada:OverallGEOs from Canadian gold assets increased
            by 20.8% with the largest increases coming from Detour, an
            asset that began generating GEOs in February 2013 and achieved
            commercial production in August 2013, and Kirkland Lake, a
            recent addition to the Canadian portfolio. The increases were
            partially offset by lower production from the Hemlo NPI, due to
            capital spending and a lower gold price, and the Sudbury
            assets, due to lower production. Pretium Resources Inc., the
            developer of the Brucejack project, announced plans to file an
            environmental assessment application and produce an updated
            feasibility study expected later this year.

        --  Gold - Australia:Regis Resources Ltd. reported strong
            production at its Moolart Well operation and the restart of
            mining activities at the end of March 2014 at both Garden Well
            and Rosemont following the previously announced flooding.

        --  Gold - Rest of World:GEOs from international gold assetssaw the
            highest growth with the addition of the Sabodala gold stream in
            the quarter which immediately contributed to GEOs and revenue.
            Higher production from Mine Waste Solutions, Tasiast and
            Palmarejo offset lower production at other assets.
            Franco-Nevada expects to fund approximately $200.0 million
            later in 2014 under its precious metals stream agreement on the
            Cobre Panama project. On March 31, 2014, Kinross Gold
            Corporation released a feasibility study on its Tasiast
            expansion project which included an increase in estimated
            mineral reserves by nearly 50% and projected an expanded mill
            capacity to 38,000 tonnes per day from the current 8,000 tonnes
            per day. A final decision to proceed is not expected until 2015
            at the earliest.

        --  PGM Assets:PGM assetssaw a 13.6% decline in GEOs in the quarter
            due to lower production from the Sudbury assets partially
            offset by higher production from Stillwater.

        --  Oil & Gas: Revenue from oil & gas assets for the quarter was
            $18.7 million, an increase of 34.5% over 2013. The increase is
            due to higher realized oil and gas prices. Price and quality
            differentials were comparable to last year with production
            constrained due to cold weather.

Dividend Information

The Board of Directors of Franco-Nevada is pleased to announce that
today it has declared an increased quarterly dividend of $0.20 per
share. The dividend is an 11.1% increase from the previous $0.06 per
share monthly dividend. The dividend will be paid on June 26, 2014 to
shareholders of record on June 12, 2014. The Canadian dollar equivalent
is determined based on the noon rate posted by the Bank of Canada on
May 6, 2014. 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 adopted a Dividend Reinvestment Plan (“DRIP”) commencing
with the October 2013 dividend. Participation in the DRIP is optional.
The Company will issue the 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. Registered shareholders may also enroll in the DRIP online through the
plan agent’s self-service web portal at www.investorcentre.com/franco-nevada. Beneficial shareholders should contact their financial intermediary
to arrange enrollment.

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 http://www.sec.gov.

Shareholder Information

The complete Condensed Interim 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, May 8, 2014
at 8:30 a.m. Eastern Time to review the results. Interested investors
are invited to participate as follows:

        --  Via Conference Call:  Toll-Free: (888) 231-8191; International:
            (647) 427-7450; Title: Franco-Nevada Q1 2014 Results.

        --  Webcast: A live audio webcast will be accessible at

Conference call replay: A recording will be available until May 15, 2014
at the following numbers: Toll-Free (855) 859-2056; International (416)
849-0833; Pass code 31908888.

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 development projects in the world. Its business
model provides investors with exploration optionality while limiting
exposure to operating and capital cost risks. 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
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 presented 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 U.S. 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, 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 reserves and resources and gold equivalent ounces 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”, “budgets”, “scheduled”, “estimates”,
“forecasts”, “predicts”, “projects”, “intends”, “targets”, “aims”,
“anticipates” or “believes” or variations (including negative
variations) of such words and phrases or may be identified by
statements to the effect that certain actions “may”, “could”, “should”,
“would”, “might” or “will” be taken, occur or be achieved. Forward
looking statements involve known and unknown risks, uncertainties and
other factors, which may cause the actual results, performance or
achievements of Franco-Nevada to be materially different from any
future results, performance or achievements expressed or implied by the
forward looking statements. A number of factors could cause actual
events or results to differ materially from any forward looking
statement, including, without limitation: fluctuations in the prices of
the primary commodities that drive royalty and stream revenue (gold,
platinum group metals, copper, nickel, uranium, silver, iron-ore and
oil and gas); fluctuations in the value of the Canadian and Australian
dollar, Mexican peso and any other currency in which revenue is
generated, relative to the U.S. dollar; changes in national and local
government legislation, including permitting and licensing regimes and
taxation policies; 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
Corporation 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 such
underlying properties; no material adverse change in the market price
of the commodities that underlie the asset portfolio; the Corporation’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; 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 and investors are cautioned that forward looking statements
are not guarantees of future performance. Franco-Nevada cannot assure
investors that actual results will be consistent with these forward
looking statements. 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 the “Risk Factors”
section of Franco-Nevada’s most recent Annual Information Form as well
as Franco-Nevada’s most recent annual Management’s Discussion and
Analysis 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: Adjusted Net Income and Adjusted EBITDA 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.

    (1)  GEOs include our gold, platinum, palladium and other mineral
         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. Platinum,
         palladium and other minerals were converted to GEOs by dividing
         associated revenue by the average gold price for the period. For
         Q1 2014, the average commodity prices were as follows: $1,294/oz
         gold (2013 - $1,630/oz); $1,428/oz platinum (2013 - $1,634/oz) and
         $744/oz palladium (2013 - $740/oz).

    (2)  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.

    (3)  Adjusted EBITDA is defined by the Company as net income (loss)
         excluding income tax expense/recovery, 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.

Reconciliation to IFRS measures:

                                                       Three months ended

    (Expressed in millions except per share          March 31,   March 31,
    amounts)                                              2014        2013

    Net Income                                     $      35.4 $      35.4

      Income tax expense                                  14.4        13.4

      Finance costs                                        0.4         0.7

      Finance income                                     (0.7)       (0.9)

      Depletion and depreciation                          36.1        34.4

      Impairment of investments                              -         1.4

      Foreign exchange (gains)/losses and other          (0.8)         4.7

    Adjusted EBITDA                                $      84.8 $      89.1

    Basic Weighted Average Shares Outstanding            147.2       146.7

    Adjusted EBITDA per share                      $      0.58 $      0.61

    Net Income                                     $      35.4 $      35.4

      Impairment of investments, net of income tax           -         1.4

      Foreign exchange (gains)/losses and other          (1.1)         3.5
      (income)/expenses, net of income tax

      Indexation tax adjustment                            1.1           -

      Credit facility costs, net of income tax               -         0.3

    Adjusted Net Income                            $      35.4 $      40.6

    Adjusted Net Income per share                  $      0.24 $      0.28

    FRANCO-NEVADA CORPORATION                                              


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

                                      March 31, 2014      December 31, 2013


    Cash and cash equivalents       $          669.9    $             770.0
    (Notes 4 & 6)

    Short-term investments                      10.3                   18.0
    (Notes 5 & 6)

    Receivables (Note 6)                        72.6                   78.0

    Prepaid expenses and other                  38.8                   46.3

      Current assets                           791.6                  912.3

    Royalty, stream and working              2,121.1                2,050.2
    interests, net

    Investments (Notes 5 & 6)                   45.9                   38.2

    Deferred income tax assets                  13.6                   15.8

    Other                                       55.0                   28.4

      Total assets                  $        3,027.2    $           3,044.9


    Accounts payable and accrued    $           17.6    $              46.1
    liabilities (Note 11(b))

    Current income tax                           3.6                    5.0

      Current liabilities                       21.2                   51.1

    Deferred income tax                         33.4                   30.0

      Total liabilities                         54.6                   81.1


    Common shares                            3,137.8                3,133.0

    Contributed surplus                         45.9                   45.8

    Deficit                                  (176.4)                (212.5)

    Accumulated other                         (34.7)                  (2.5)
    comprehensive loss

      Total shareholders' equity             2,972.6                2,963.8

      Total liabilities and         $        3,027.2    $           3,044.9
      shareholders' equity

     The notes are an integral part of these interim consolidated financial
    statements and can be found in our 2014 Q1 Report available on our

    FRANCO-NEVADA CORPORATION                                              


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

                                       For the three months ended March 31,

                                              2014                     2013

    Revenue (Note 7)                     $   104.1    $               108.8

    Costs and expenses                                                     

      Costs of sales (Note 8)                 14.6                     15.1

      Depletion and depreciation              36.1                     34.4

      Corporate administration (Notes          4.2                      3.7
      9 & 11(c))

      Business development                     0.5                      0.9

      Impairment of investments                  -                      1.4

                                              55.4                     55.5

      Operating income                        48.7                     53.3

      Foreign exchange gain (loss) and         0.8                    (4.7)
      other income (expenses)

     Income before finance items and          49.5                     48.6
    income taxes 

    Finance items                                                          

      Finance income                           0.7                      0.9

      Finance expenses                       (0.4)                    (0.7)

    Net income before income taxes            49.8                     48.8

    Income tax expense (Note 10)              14.4                     13.4

    Net income                           $    35.4    $                35.4

    Other comprehensive loss:                                              

    Items that may be reclassified
    subsequently to profit and loss:  

      Unrealized gain (loss) in market
      value of available-for-sale              5.9                    (5.5)
      investments, net of income tax
      of $0.9 (Note 5)

      Currency translation adjustment       (38.1)                   (24.2)

      Other comprehensive loss              (32.2)                   (29.7)

    Total comprehensive income           $     3.2    $                 5.7

    Basic earnings per share (Note 12)   $    0.24    $                0.24

    Diluted earnings per share (Note     $    0.24    $                0.24

    The notes are an integral part of these interim consolidated financial
    statements and can be found in our 2014 Q1 Report available on our

    FRANCO-NEVADA CORPORATION                                              


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

                                            2014                       2013

    Cash flows from operating

    Net income                       $      35.4    $                  35.4

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

      Depletion and depreciation            36.1                       34.4

      Impairment of investments                -                        1.4
      (Note 5)

      Other non-cash items                   0.1                        0.4

      Deferred income tax expense            5.6                        0.2
      (Note 10)

      Share-based payments (Note             1.2                        1.2

      Unrealized foreign exchange            0.8                        0.3

      Mark-to-market on warrants           (2.0)                        4.0
      (Note 5)

      Changes in non-cash assets
      and liabilities:

        Decrease in receivables              5.4                        7.4

        Decrease (increase) in
        prepaid expenses and              (15.2)                      (1.0)

        Decrease in accounts
        payable and accrued                (3.8)                      (7.2)

      Net cash provided by                  63.6                       76.5
      operating activities

    Cash flows from investing

      Proceeds on sale of                   17.6                       55.2

      Purchase of investments             (10.0)                     (14.6)

      Proceeds from the sale of             30.0                          -
      gold bullion

      Acquisition of working
      interest in oil & gas                    -                      (0.7)

      Acquisition of interests in        (137.0)                      (0.1)
      mineral properties

      Acquisition of other assets         (33.8)                          -

      Return of capital on                     -                        1.8

      Purchase of property and             (0.1)                      (0.2)

      Purchase of oil & gas well           (1.3)                      (2.2)

    Net cash provided by (used           (134.6)                       39.2
    in) investing activities

    Cash flows from financing

      Credit facility amendment            (0.7)                          -

      Payment of dividends (Note          (22.5)                     (26.1)

      Proceeds from exercise of              0.2                          -
      warrants (Note 11(a))

      Proceeds from exercise of              0.7                        0.3
      stock options (Note 11(a))

    Net cash used in financing            (22.3)                     (25.8)

    Effect of exchange rate
    changes on cash and cash               (6.8)                      (3.1)

    Net change in cash and cash          (100.1)                       86.8

    Cash and cash equivalents at           770.0                      631.7
    beginning of period

    Cash and cash equivalents at     $     669.9    $                 718.5
    end of period

    Supplemental cash flow

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

    Income taxes paid during the     $       5.9    $                  17.5

    The notes are an integral part of these interim consolidated financial
    statements and can be found in our 2014 Q1 Report available on our

SOURCE Franco-Nevada Corporation

Source: PR Newswire

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