(in U.S. dollars unless otherwise noted)
TORONTO, May 11, 2020 /CNW/ -
Alpala Royalty Acquisition
The Corporation today entered into an agreement with SolGold PLC
("SolGold") to acquire a 1% net smelter royalty ("NSR") with
reference to all minerals produced from the Alpala copper-gold
project in northern Ecuador for
$100 million. The Alpala project is
owned by Exploraciones Novomining SA, which is held 85% by SolGold
and 15% by Cornerstone Capital Resources Inc. The NSR will cover
the 4,979 hectare Cascabel concession and closing of the
acquisition is subject to on-site confirmatory due diligence which
will be completed once COVID-19 travel restrictions are lifted. In
the interim, the Corporation has agreed to provide SolGold with a
bridge loan of $15 million for a
period of up to 8 months.
SolGold has the option to increase the size of the transaction
to $150 million for a 1.5% NSR until
January 11, 2021 and also has the
option to buy-back 50% of the NSR for a period of time.
Franco-Nevada is entitled to
receive certain minimum royalty payments from 2028 and also has the
option to convert the NSR to a gold NSR for a period of time after
Alpala is producing.
As part of the royalty arrangements, the Corporation has agreed
to contribute $150,000 per year for
three years after closing to one or more of SolGold's local
Ecuadorian environmental and social initiatives. SolGold has agreed
to match or surpass such annual funding.
At-the-Market Equity Program
Franco-Nevada has established
an at-the-market equity program (the "ATM Program") that allows the
Corporation to issue up to $300
million worth of common shares from treasury ("Common
Shares") to the public from time to time at the prevailing market
price through the Toronto Stock Exchange, the New York Stock
Exchange or any other marketplace on which the Common Shares are
listed, quoted or otherwise traded. The volume and timing of
distributions under the ATM Program, if any, will be determined at
the Corporation's sole discretion, subject to applicable regulatory
limitations. The Corporation's previous at-the-market equity
program established July 19, 2019
that allowed the Corporation to issue up to $200 million worth of Common Shares was
terminated on April 28, 2020.
The ATM Program will be effective until May 28, 2022 unless terminated prior to such date
by the Corporation. Franco-Nevada
intends to use the net proceeds from the ATM Program, if any, for
funding royalty and stream acquisitions and/or other general
corporate purposes including the repayment of indebtedness. Sales
of Common Shares through the ATM Program will be made pursuant to
the terms of an equity distribution agreement dated May 11, 2020 with CIBC Capital Markets, BMO
Nesbitt Burns Inc., RBC Dominion Securities Inc., Scotia Capital
Inc., TD Securities Inc., Canaccord Genuity Corp., Credit Suisse
Securities (Canada), Inc.,
National Bank Financial Inc., Raymond James Ltd., and Industrial
Alliance Securities Inc., as Canadian agents, and CIBC Capital
Markets, BMO Capital Markets Corp., RBC Capital Markets, LLC,
Scotia Capital (USA) Inc., TD
Securities (USA) LLC, BofA
Securities, Inc., Canaccord Genuity LLC, Credit Suisse Securities
(USA) LLC, National Bank of Canada
Financial Inc., Raymond James
(USA) Ltd., Barclays Capital Inc.,
Deutsche Bank Securities Inc. and Stifel, Nicolaus & Company,
Incorporated, as U.S. agents.
The Corporation has filed a registration statement (including a
prospectus) and a prospectus supplement with the U.S. Securities
and Exchange Commission (the "SEC") for the ATM Program. Before you
invest, you should read the prospectus in that registration
statement, the prospectus supplement and other documents the issuer
has filed with the SEC for more complete information about the
issuer and the ATM Program. The Corporation has also filed
prospectus supplement dated May 11,
2020 to the Corporation's Canadian base shelf prospectus
dated April 28, 2020 with the
securities regulatory authorities in Canada. You may get these documents for free
by visiting EDGAR on the SEC website at www.sec.gov or on SEDAR at
www.sedar.com. Alternatively, any agent participating in the ATM
Program will arrange to send you the prospectus if you request it
by contacting, (i) in Canada: CIBC
World Markets Inc., attn: Michelene
Dougherty, by email at michelene.dougherty@cibc.ca or by
phone at 416-956-3636 or BMO Nesbitt Burns Inc., attn: Brampton
Distribution Centre C/O The DATA Group of Companies, 9195 Torbram
Road, Brampton, Ontario, L6S 6H2,
by email at torbramwarehouse@datagroup.ca or by phone at
905-791-3151 Ext. 4312; and (ii) in the U.S.: CIBC World Markets
Corp., 425 Lexington Ave, 5th Floor, New
York, NY, by email at useprospectus@cibc.com or by phone at
(800) 282-0822 or BMO Capital Markets Corp., attn: Equity Syndicate
Department, 3 Times Square, 25th Floor, New York, NY, 10036, by email at
bmoprospectus@bmo.com or by phone at 1-800-414-3627.
This news release does not constitute an offer to sell or the
solicitation of an offer to buy the Common Shares, nor shall there
be any sale of these securities in any jurisdiction in which such
an offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction.
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 many of the risks of operating
companies. 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, carrying value of assets, future dividends and
requirements for additional capital, mineral reserve and mineral
resource estimates, production estimates, production costs and
revenue, future demand for and prices of commodities, expected
mining sequences, business prospects and opportunities, audits
being conducted by the Canada Revenue Agency (the "CRA"), 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, statements with respect to
the aggregate value of Common Shares which may be issued pursuant
to the ATM Program, the Corporation's expected use of the net
proceeds of the ATM Program, if any, and the acquisition of the
SolGold royalty interest. In addition, statements (including data
in tables) relating to reserves and resources and gold equivalent
ounces ("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 and assumptions are
accurate and that such reserves and resources 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", "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 Corporation 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; regulatory, political or economic
developments in any of the countries where properties in which
Franco-Nevada holds a royalty, stream or other interest are located
or through which they are held; risks related to the operators of
the properties in which Franco-Nevada holds a royalty, stream or
other interest, including changes in the ownership and control of
such operators; influence of macroeconomic developments; business
opportunities that become available to, or are pursued by
Franco-Nevada; reduced access to debt and equity capital;
litigation; title, permit or license disputes related to interests
on any of the properties in which Franco-Nevada holds a royalty,
stream or other interest; whether or not the Corporation 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 diseases; 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 Corporation's
ongoing income and assets relating to determination of its PFIC
status; no material changes to existing tax treatment; risks
related to the completion of the acquisition of the SolGold royalty
interest; 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
Corporation'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.
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SOURCE Franco-Nevada Corporation