(in U.S. dollars unless otherwise noted)
Two new acquisitions increase growth outlook
TORONTO, March 10, 2021 /CNW/ - "In 2020, the
challenges of the COVID-19 pandemic highlighted the diversity of
our portfolio, the commitment of our staff, and the resolve of the
employees and communities at our assets," stated Paul Brink, CEO. "With record precious metals
prices through the year and the recovery of energy prices in the
second half of the year, Franco-Nevada generated record financial
results. We are pleased to announce a new precious metals stream on
the Condestable copper mine in Peru and the acquisition of a portfolio of
natural gas royalties in the Haynesville play in Texas. We expect strong growth in 2021 and
over the next 5 years, driven by the ongoing Cobre Panama ramp-up,
the two newly acquired assets and from broad organic growth across
the portfolio. On the strength of this outlook, we are increasing
the quarterly dividend to $0.30/share starting with our second quarter
dividend payment in June which will be declared in May. We are
proud that this 15.4% increase will mark our
14th annual dividend increase. We have also strengthened
our commitment to increase diversity at Franco-Nevada by adopting a
goal of at least 40% diverse representation at the Board and senior
management levels."
|
|
|
|
|
|
|
2020
|
|
Q4/2020
|
|
Record annual
results
|
vs
|
Strong Q4
results
|
vs
|
|
|
2019
|
|
Q4/2019
|
GEOs1
sold
|
521,564
|
+1%
|
147,476
|
-4%
|
Revenue
|
$1,020.2
million
|
+21%
|
$304.5
million
|
+18%
|
Net income
|
$326.2 million
($1.71/share)
|
-5%
|
$176.7 million
($0.93/share)
|
+56%
|
Adjusted Net
Income2
|
$516.3 million
($2.71/share)
|
+51%
|
$163.0 million
($0.85/share)
|
+47%
|
Adjusted
EBITDA3
|
$839.6
million
|
+25%
|
$253.7
million
|
+26%
|
Strong Financial Position
- Debt free and $1.9 billion in
available capital
- Generated >$800 million in
annual operating cash flow
- Quarterly dividend increased 15.4% to $0.30/share
Sector Leading ESG
- Ranked #1 by Sustainalytics, AA by MSCI and Prime by ISS
ESG
- Contributed to help communities through the COVID-19
crisis
- Committed to the World Gold Council's "Responsible Gold Mining
Principles"
- Signatory of the UN Global Compact and BlackNorth Initiative
pledge
Portfolio Growth
- Guiding to GEOs sales growth and Energy revenue growth in both
2021 and over 5 years
- Underpinned by long-life core assets (Cobre Panama, Candelaria,
Antapaccay and Antamina)
- Expansions (Cobre Panama, Detour, Stillwater, Tasiast)
- New mines (Salares Norte, Hardrock, Stibnite Gold, Valentine Lake)
- Condestable precious metal stream and Haynesville natural gas
royalties add immediate cash flow
Future Optionality
- Exploration success (Detour, Duketon, Guadalupe, Canadian
Malartic, Macassa, South Arturo)
- New gold mine potential (Valentine
Lake, Monument Bay, Eskay
Creek, Fenelon)
- Long-term growth options in copper (Rosemont, Alpala, Taca
Taca, NuevaUnión) and the Ring of Fire
|
|
|
|
|
|
|
Annual
revenue and GEOs Sold by commodity
|
|
2020
|
2019
|
|
GEOs
Sold
|
Revenue
|
GEOs
Sold
|
Revenue
|
|
#
|
(in millions)
|
#
|
(in millions)
|
Gold
|
405,033
|
$
|
718.1
|
387,663
|
$
|
545.8
|
Silver
|
59,606
|
|
106.4
|
58,906
|
|
83.2
|
PGMs
|
47,038
|
|
86.2
|
52,813
|
|
75.6
|
Other Mining
Assets
|
9,887
|
|
17.8
|
17,056
|
|
23.6
|
Mining
|
521,564
|
$
|
928.5
|
516,438
|
$
|
728.2
|
Oil
|
—
|
|
55.7
|
—
|
|
87.5
|
Gas
|
—
|
|
24.4
|
—
|
|
18.0
|
NGL
|
—
|
|
11.6
|
—
|
|
10.4
|
|
521,564
|
$
|
1,020.2
|
516,438
|
$
|
844.1
|
|
|
|
|
|
|
|
Quarterly
revenue and GEOs Sold by commodity
|
|
Q4/2020
|
Q4/2019
|
|
GEOs
Sold
|
Revenue
|
GEOs
Sold
|
Revenue
|
|
#
|
(in millions)
|
#
|
(in millions)
|
Gold
|
110,815
|
$
|
208.4
|
117,698
|
$
|
174.8
|
Silver
|
20,403
|
|
38.0
|
15,427
|
|
22.8
|
PGMs
|
11,162
|
|
20.9
|
16,271
|
|
24.6
|
Other Mining
Assets
|
5,096
|
|
9.4
|
4,000
|
|
5.9
|
Mining
|
147,476
|
$
|
276.7
|
153,396
|
$
|
228.1
|
Oil
|
—
|
|
15.7
|
—
|
|
23.6
|
Gas
|
—
|
|
9.3
|
—
|
|
3.7
|
NGL
|
—
|
|
2.8
|
—
|
|
2.7
|
|
147,476
|
$
|
304.5
|
153,396
|
$
|
258.1
|
For Q4/2020, revenue was sourced 90.9% from gold and gold
equivalents (68.4% gold, 12.5% silver, 6.9% PGM and 3.1% other
mining assets). Geographically, revenue was sourced 88.4% from the
Americas (55.0% Latin America,
14.5% U.S. and 18.9% Canada).
Portfolio Additions
- Condestable Stream: On March 8,
2021, Franco-Nevada closed a $165
million precious metals stream with reference to the gold
and silver production from the Condestable mine, an operating
underground copper-gold-silver mine near Lima, Peru. The Condestable mine is owned and
operated by a majority-owned subsidiary of Southern Peaks Mining LP
("SPM"), a private company. Effective January 1, 2021, Franco-Nevada will receive
deliveries of 8,760 ounces of gold and 291,000 ounces of silver
annually until December 31, 2025,
followed thereafter by variable deliveries based on a percentage of
gold and silver in concentrate. Franco-Nevada will pay 20% of the spot price for gold
and silver for each ounce delivered under the stream.
- Haynesville Royalty Portfolio: On December 29, 2020, Franco-Nevada acquired a
royalty portfolio in the Haynesville natural gas play, in
Texas, from Mesa Minerals Partners
LLC, a Quantum Energy Partners portfolio company, for $135 million. The Haynesville represents one of
the most active gas plays in North
America owing to its strong underlying economics and
proximity to the U.S. Gulf Coast, which reduces transport costs.
The royalty portfolio was assembled in partnership with upstream
operator, Rockcliff Energy II LLC, and with the benefit of
prioritization under the Rockcliff's near-term drilling schedule.
The royalties generated royalties of $4.2
million in Q4/2020, providing immediate cash flow and
increasing the weighting of natural gas within the energy
portfolio. Based on Rockcliff's current drilling activity, royalty
production is expected to be sustained at current levels in
2021.
2021 Guidance
In 2021, we expect attributable royalty and stream sales to
total 555,000 to 585,000 GEOs from our Mining assets and additional
revenue of $115 to $135 million from our Energy assets. Of the
royalty and stream sales from mining assets, we expect 375,000 to
405,000 GEOs from our various stream agreements. For 2021 guidance,
silver, platinum and palladium prices have been converted to GEOs
using commodity prices of $1,750 Au,
$25.00 Ag, $1,100 Pt and $2,200
Pd. The WTI oil price and Henry Hub natural gas price are assumed
to average $55 per barrel and
$2.50 per mcf. We estimate depletion
expense to be $250 to $280 million. The 2021 guidance and 5-year
outlook below are based on public forecasts and other disclosure by
the third-party owners and operators of our assets or our
assessment thereof.
5-Year Outlook
Franco-Nevada expects its
existing portfolio to produce between 600,000 and 630,000 GEOs by
2025, and additional revenue of $150
and $170 million from our Energy
assets. This outlook assumes that the Cobre Panama project will
have expanded its mill throughput capacity to 100 million tonnes
per year during 2023. It also assumes continued deliveries from
Sudbury into 2025, the
commencement of production at Salares Norte, Hardrock, Stibnite
Gold and Valentine Lake, and that
the stream at MWS will have reached its cap. It is expected the
remaining committed capital of $114.0
million for the Royalty Acquisition Venture with Continental
will be funded. The commodity price assumptions are the same as
those used for our 2021 guidance and assume no other acquisitions
other than the Condestable stream.
Corporate Updates
Franco-Nevada is pleased to
announce that its Board of Directors has decided to raise its
quarterly dividend to $0.30 per
share, effective for the second quarter of 2021. The dividend will
be a 15.4% increase from the previous $0.26 per share quarterly dividend and will mark
the 14th consecutive annual dividend increase for
Franco-Nevada shareholders. Canadian investors in Franco-Nevada's
IPO in December 2007 will be
receiving an effective 10.0% yield on their cost base. The Board of
Directors plans on formally declaring the second quarter dividend
of $0.30 per share in May 2021 with payment by the end of June 2021.
Franco-Nevada is also pleased
to announce that its Board of Directors has adopted a goal of 40%
diverse representation at the Board and senior management level by
2025. The new goal affirms Franco-Nevada's commitment to improve
the representation of women, black people, indigenous peoples,
racial minorities, people with disabilities, and members of the
LGBTQ+ community at the leadership level. The Company recognizes
that diversity and inclusion are critical to its success and is
striving to build on the progress it has already made.
Q4/2020 Portfolio Updates
Gold Equivalent Ounces Sold: GEOs sold for the quarter
were 147,476, a decrease of 3.9% from the 153,396 sold in Q4/2019.
Higher contributions from Hemlo,
Cobre Panama, Antapaccay and Antamina were partly offset by lower
contributions from Candelaria and Gold Quarry.
Latin America:
- Cobre Panama (gold and silver stream) – GEOs delivered
and sold were higher in Q4/2020 than one year earlier, as the mine
continues its ramp-up. Earlier in the year, First Quantum suspended
operations at Cobre Panama from April to July 2020 due to the COVID-19 pandemic and
restarted full production levels in August ahead of schedule. For
2021, First Quantum expects Cobre Panama to produce between 300,000
and 330,000 tonnes of copper as it continues to ramp up.
Franco-Nevada expects sales in
2021 to be between 105,000 and 125,000 GEOs, up from 76,348 GEOs in
2020.
- Candelaria (gold and silver stream) – GEOs delivered and
sold decreased in Q4/2020 relative to the same quarter in 2019. The
operation was suspended in October
2020 due to labour strikes but returned to full production
in December after reaching new collective agreements. With the
Candelaria Mill Optimization Project now complete, Franco-Nevada
expects sales in 2021 to be between 65,000 and 75,000 GEOs, up from
59,655 GEOs in 2020.
- Antapaccay (gold and silver stream) – GEOs delivered and
sold were higher in Q4/2020 than one year earlier. In 2021,
Franco-Nevada expects sales to be between 55,000 and 65,000 GEOs,
down from 65,901 GEOs in 2020 due to planned lower grades based on
the life of mine plan. Infill drilling in 2020 at Coroccohuayco has
increased confidence in the mineral resources available and the
project has been rescoped as an open pit with mine planning reset
to the conceptual level.
- Antamina (22.5% silver stream) – GEOs delivered and sold
were higher in Q4/2020, reflecting an increase in ounces sold and
higher silver prices than one year earlier. The operation resumed
full production levels in the second half of 2020 following a
temporary shutdown due to COVID-19. Franco-Nevada expects production in 2021 to be 3.0
million to 3.2 million ounces of silver, up from 2.8 million ounces
sold in 2020.
- Guadalupe-Palmarejo (50% gold stream) – Sales from
Guadalupe-Palmarejo were higher than in the same quarter in 2019,
reflecting higher grades and recoveries. Coeur reported positive
results from its infill drilling at the Guadalupe deposit.
- Cerro Moro (2% royalty) – Production at Cerro Moro was
impacted by changes in COVID-19 restrictions imposed in
Argentina near the end of the
year. Yamana reported that it expects operational challenges to
continue in the first half of 2021, but to normalize as the
vaccination program ramps up in Argentina.
- Salares Norte (2% royalty) – Gold Fields reported that
construction of the Salares Norte mine commenced in 2020, and
pre-stripping of the pit and construction of the processing plant
started in January 2021. Gold Fields
reported that the project is on schedule for first production in
the first quarter of 2023.
- Taca Taca (1% royalty) –
In November 2020, First Quantum filed
an updated NI 43-101 Technical Report and declared a maiden mineral
reserve of over 7.7 million tonnes of contained copper. First
Quantum is continuing with the project pre-development and
feasibility activities.
U.S.:
- Stillwater (5% royalty)
– Stillwater benefited from strong
palladium prices during the quarter. Sibanye-Stillwater reported
that production at its U.S. PGM operations improved in the second
half of 2020 but were impacted by COVID-19 in Q4/2020. A meaningful
increase in PGM production is forecasted for 2021.
- South Arturo (4-9% royalty) – In December 2020, Premier Gold announced that the
South Arturo property will be spun out to a newly created company
called i-80 Gold Corp. In January
2021, Premier reported increased mineral reserves and
resources and released a positive pre-feasibility study which
includes the underground El Niño mine and the proposed Phase 1 open
pit.
- Castle Mountain (2.65% royalty) – Commercial production
at Castle Mountain was reached in November
2020. The Phase 1 operation is expected to produce on
average 40,000 ounces of gold annually. A feasibility study for the
Phase 2 expansion, where annual average production is expected to
increase to 200,000 ounces, is targeted for completion in
H1/2021.
- Gold Quarry (7.29% royalty) – Franco-Nevada recorded an
adjustment in Q4/2020 due to its royalty payments no longer being
based on the minimum payment obligations tied to mineral reserves
and stockpiles. The adjustment resulted in a credit of 2,442 GEOs,
compared to 4,184 GEOs being earned in Q4/2019. Going forward,
Franco-Nevada expects its royalty from Gold Quarry to decrease to
approximately 5,500 GEOs in 2021, and to 1,350 per annum
thereafter.
- Mesquite (0.5-2% royalty) – Equinox Gold plans to invest
in a stripping program to access a higher-grade deposit, a leach
pad expansion and a new truck fleet to support a longer life of
mine. In October 2020, Equinox
announced that it had increased mineral reserves by 28% and
measured and indicated mineral resources by 94%.
- Stibnite (1.7% royalty) – Perpetua Resources, formerly
Midas Gold, released a positive feasibility study in December 2020. A record of decision from the U.S.
Forest Service with respect to the
final Environmental Impact Statement is expected in late 2021.
Canada:
- Detour Lake (2% royalty) – In December 2020, Kirkland
Lake Gold announced plans to grow production to
approximately 800,000 ounces in 2025 within the current mine plan.
In addition, the operator plans to present a new mine plan in 2022
which it believes could significantly improve the longer-term
outlook for Detour Lake, with the establishment of a "super pit"
concept based on the potential existence of a much larger,
continuous deposit around the existing pit locations.
- Hemlo (3% royalty & 50%
NPI) – Revenue from Hemlo
increased significantly relative to the same quarter in 2019 as the
50% NPI on Interlake benefited from higher gold prices and
increased production from grounds where Franco-Nevada has royalty
interests. In addition, the Company recorded royalties of
$8 million related to prior periods
during the quarter. In 2021, Franco-Nevada expects royalties from
the Hemlo NPI to range from 20,000 to 30,000 GEOs, down from a
record 40,155 GEOs in 2020.
- Kirkland Lake (1.5-5.5%
royalty & 20% NPI) – Macassa achieved its best quarter of
production in 2020 in Q4/2020, after production having been
affected by reduced operations due to COVID-19 and by unscheduled
downtime in the mill. Production at Macassa is expected to ramp up
over the next three years, reaching 400,000 ounces in 2023
following completion of the #4 Shaft.
- Musselwhite (2% royalty and 5% NPI) – Franco-Nevada
anticipates payments from its NPI royalties from Musselwhite to
resume in 2021, after Newmont announced in December 2020 that the mine has been ramping up
to full operations after the commissioning of its conveyor and
material handling systems. Operations had been reduced since
March 2019 due to a fire at the mine
and COVID-19 restrictions.
- Canadian Malartic (1.5%
royalty) – In February 2021,
Agnico Eagle and Yamana announced a positive construction decision
for the Odyssey underground project. Ramp development started in
December 2020. Production at Odyssey
South and East Gouldie, where Franco-Nevada has royalty claims, is
expected to begin in late 2023 and 2027, respectively.
- Island Gold (0.62% royalty) – Alamos announced that it
began construction of the Phase III expansion in December 2020. The expansion is expected to
increase average annual production by 72% to 236,000 ounces
starting in 2025.
- Hardrock (3% royalty) – In December 2020, Orion Mine Finance agreed to
acquire Centerra's 50% interest in the project and Equinox agreed
to acquire Premier Gold. Subsequently, in March 2021, Equinox announced it had entered into
an agreement with Orion to acquire an additional 10% interest in
the project, increasing its stake to 60%. Orion will hold the
remaining 40% interest in the project.
- Red Lake (Bateman) (2% royalty) – In February 2021, Battle North Gold announced that
it is proceeding with the construction of the Bateman gold project. Based on the current
construction schedule, processing of ore is targeted at the end of
2021 and commercial production at the end of 2022.
- Ring of Fire (various royalties) – In December 2020, Wyloo Metals, a private company,
acquired Resource Capital Funds' investment interests in Noront
Resources including a 22% ownership stake and a $15 million convertible loan. Andrew Forrest, founder of Fortescue Metals
Group, is the principal investor in Wyloo Metals.
Rest of World:
- Sabodala (gold stream) – In February 2021, Endeavour Mining completed the
acquisition of Teranga Gold. Endeavour is targeting a definitive
feasibility study for the Sabodala-Massawa plant expansion in late
2021.
- Tasiast (2% royalty) – Kinross expects production at Tasiast to
increase in 2021 as mining accesses higher grade ore zones and the
Tasiast 24k project to increase
throughput capacity continues.
- Subika (Ahafo) (2% royalty) – Production from Ahafo is
expected to increase in 2021 due to the Subika Underground
delivering higher tonnes. Newmont has reported Subika as having
significant underground potential for near-mine exploration
opportunities. Franco-Nevada
expects more production from the Subika royalty as mining at Ahafo
returns to royalty grounds.
- Duketon (2% royalty) – In December 2020, Regis Resources announced its
approval of the Garden Well South underground mine. Development is
expected to commence in March 2021.
Processing of first underground development ore is scheduled by
December 2021 and stope production by
June 2022. Exploration below Garden
Well, Rosemont and Gloster
continues to define new mineralisation extensions.
Energy: Revenue from the Energy assets decreased to
$27.8 million in Q4/2020 compared to
$30.0 million in Q4/2019. Revenues
were negatively impacted by lower realized commodity prices and
lower volumes associated with a reduction in drilling by operators.
These factors were partly offset by the incremental royalties we
recognized on our newly acquired interests in the Haynesville shale
play of $4.2 million.
U.S.:
- Marcellus (1% royalty) – The royalty contributed
$4.9 million to revenue in Q4/2020,
flat relative to Q4/2019, reflecting consistent production volume.
In 2021, we expect drilling activity levels to remain consistent
with those in 2020.
- SCOOP/STACK (various royalty rates) – Royalties from
SCOOP/STACK decreased compared to Q4/2019 due to lower realized
commodity prices and lower volumes due to reduced drilling by the
operators within the play and on royalty lands. In 2021, additional
royalties acquired under the Royalty Acquisition Venture with
Continental are expected to provide additional volume
contribution.
- Permian Basin (various royalty rates) – Revenue from
Franco-Nevada's interests in the Permian Basin decreased compared
to the same quarter in the prior year due to lower realized prices.
In 2021, we expect a rebound in drilling activity as commodity
prices recover.
Canada:
- Weyburn (NRI, ORR, WI)
– Revenue from Weyburn contributed
$5.2 million in Q4/2020 compared to
$8.1 million in Q4/2019 due mostly to
lower contribution from the NRI as a result of lower realized oil
prices. In 2021, we anticipate an increase in revenue, reflecting
the NRI royalty's leverage to oil prices.
- Orion (4% GORR) – Revenue from Orion decreased compared
to Q4/2019 due to lower realized prices. Production levels at the
asset are now consistently ~20,000 bbl/day.
Shareholder Information
The complete Audited 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, March 11, 2021 at 10:00 a.m. Eastern Time to review Franco–Nevada's
2020 results, as well as discuss its 2021 and five-year
outlook.
Interested investors are invited to participate as follows:
- Via Conference Call: Toll-Free: (888) 390-0546;
International: (416) 764-8688
- Conference Call Replay until March
18, 2021: Toll-Free (888) 390-0541; International (416)
764-8677; Code 525504 #
- 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 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 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 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 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; 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 Company is determined
to have "passive foreign investment company" ("PFIC") status as
defined in Section 1297 of the United States Internal Revenue Code
of 1986, as amended; potential changes in Canadian tax treatment of
offshore streams; excessive cost escalation as well as development,
permitting, infrastructure, operating or technical difficulties on
any of the properties in which Franco-Nevada holds a royalty,
stream or other interest; access to sufficient pipeline capacity;
actual mineral content may differ from the reserves and resources
contained in technical reports; rate and timing of production
differences from resource estimates, other technical reports and
mine plans; risks and hazards associated with the business of
development and mining on any of the properties in which
Franco-Nevada holds a royalty, stream or other interest, including,
but not limited to unusual or unexpected geological and
metallurgical conditions, slope failures or cave-ins, flooding and
other natural disasters, terrorism, civil unrest or an outbreak of
contagious disease; the impact of the COVID-19 (coronavirus)
pandemic; and the integration of acquired assets. The
forward-looking statements contained in this press release are
based upon assumptions management believes to be reasonable,
including, without limitation: the ongoing operation of the
properties in which Franco-Nevada holds a royalty, stream or other
interest by the owners or operators of such properties in a manner
consistent with past practice; the accuracy of public statements
and disclosures made by the owners or operators of such underlying
properties; no material adverse change in the market price of the
commodities that underlie the asset portfolio; the Company's
ongoing income and assets relating to determination of its PFIC
status; no material changes to existing tax treatment; the expected
application of tax laws and regulations by taxation authorities;
the expected assessment and outcome of any audit by any taxation
authority; no adverse development in respect of any significant
property in which Franco-Nevada holds a royalty, stream or other
interest; the accuracy of publicly disclosed expectations for the
development of underlying properties that are not yet in
production; integration of acquired assets; and the absence of any
other factors that could cause actions, events or results to differ
from those anticipated, estimated or intended. However, there can
be no assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Investors are
cautioned that forward-looking statements are not guarantees of
future performance. In addition, there can be no assurance as to
the outcome of the ongoing audit by the CRA or the Company's
exposure as a result thereof. Franco-Nevada cannot assure investors that actual
results will be consistent with these forward-looking statements.
Accordingly, investors should not place undue reliance on
forward-looking statements due to the inherent uncertainty
therein.
For additional information with respect to risks,
uncertainties and assumptions, please refer to Franco-Nevada's most
recent Annual Information Form filed with the Canadian securities
regulatory authorities on www.sedar.com and Franco-Nevada's most
recent Annual Report filed on Form 40-F filed with the SEC on
www.sec.gov. The forward-looking statements herein are made as of
the date of this press release only and Franco-Nevada does not
assume any obligation to update or revise them to reflect new
information, estimates or opinions, future events or results or
otherwise, except as required by applicable law.
NON-IFRS MEASURES: Cash Costs, Adjusted EBITDA, and
Adjusted Net Income are intended to provide additional information
only and do not have any standardized meaning prescribed under IFRS
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with
IFRS. These measures are not necessarily indicative of
operating profit or cash flow from operations as determined under
IFRS. Other companies may calculate these measures
differently. For a reconciliation of these measures to various IFRS
measures, please see below or the Company's current MD&A
disclosure found on the Company's website, on SEDAR and on EDGAR.
Comparative information has been recalculated to conform to current
presentation.
- GEOs include Franco-Nevada's attributable share of
production from our Mining assets, after applicable recovery and
payability factors, and do not include Energy assets. GEOs are
estimated on a gross basis for NSR royalties and, in the case of
stream ounces, before the payment of the per ounce contractual
price paid by the Company. For NPI royalties, GEOs are calculated
taking into account the NPI economics. Silver, platinum, palladium
and other mining commodities are converted to GEOs by dividing
associated revenue, which includes settlement adjustments, by the
relevant gold price. The price used in the computation of GEOs
earned from a particular asset varies depending on the royalty or
stream agreement, which may make reference to the market price
realized by the operator, or the average price for the month,
quarter, or year in which the mining commodity was produced or
sold. For Q4/2020, the average commodity prices were as follows:
$1,873 gold (Q4/2019 - $1,480), $24.39
silver (Q4/2019 - $17.31),
$939 platinum (Q4/2019 - $907) and $2,348
palladium (Q4/2019 - $1,800). For
2020, the average commodity prices were as follows: $1,770 gold (2019 - $1,392), $20.55
silver (2019 - $16.20), $884 platinum (2019 - $863) and $2,194
palladium (2019 - $1,539).
- Adjusted Net Income and Adjusted Net Income per
share are non-IFRS financial measures, which exclude the
following from net income and earnings per share ("EPS"):
impairment charges related to royalty, stream and working interests
and investments; gains/losses on the sale of royalty, stream and
working interests and investments; foreign exchange gains/losses
and other income/expenses; unusual non-recurring items; and the
impact of income taxes on these items.
- Adjusted EBITDA and Adjusted EBITDA per share are
non-IFRS financial measures, which exclude the following from net
income and EPS: income tax expense/recovery; finance expenses and
finance income; depletion and depreciation; non-cash costs of
sales; impairment charges related to royalty, stream and working
interests and investments; gains/losses on the sale of royalty,
stream and working interests and investments; foreign exchange
gains/losses and other income/expenses; and unusual non-recurring
items.
Reconciliation to IFRS measures:
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
For the year
ended
|
|
December 31,
|
December 31,
|
(expressed in
millions, except per GEO amounts)
|
2020
|
2019
|
2020
|
2019
|
Total costs of
sales
|
$
|
114.2
|
$
|
119.0
|
$
|
399.8
|
$
|
408.0
|
Depletion and
depreciation
|
|
(67.5)
|
|
(72.7)
|
|
(241.0)
|
|
(263.2)
|
Energy operating
costs
|
|
(1.9)
|
|
(2.2)
|
|
(6.4)
|
|
(7.3)
|
Cash Costs
attributable to GEOs sold
|
$
|
44.8
|
$
|
44.1
|
$
|
152.4
|
$
|
137.5
|
GEOs
|
|
147,476
|
|
153,396
|
|
521,564
|
|
516,438
|
Cash Costs per GEO
sold
|
$
|
304
|
$
|
287
|
$
|
292
|
$
|
266
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
For the year
ended
|
|
December 31,
|
December 31,
|
(expressed in
millions, except per share amounts)
|
2020
|
2019
|
2020
|
2019
|
Net
Income
|
$
|
176.7
|
$
|
113.3
|
$
|
326.2
|
$
|
344.1
|
Income tax
expense
|
|
21.5
|
|
17.2
|
|
13.3
|
|
61.8
|
Finance
expenses
|
|
0.8
|
|
2.1
|
|
3.5
|
|
10.6
|
Finance
income
|
|
(0.7)
|
|
(0.8)
|
|
(3.7)
|
|
(3.5)
|
Depletion and
depreciation
|
|
67.5
|
|
72.7
|
|
241.0
|
|
263.2
|
Impairment charges
(reversals)
|
|
(9.6)
|
|
—
|
|
262.1
|
|
—
|
Foreign exchange
(gains)/losses and other (income)/expenses
|
|
(2.5)
|
|
(2.8)
|
|
(2.8)
|
|
(2.8)
|
Adjusted
EBITDA
|
$
|
253.7
|
$
|
201.7
|
$
|
839.6
|
$
|
673.4
|
Basic weighted
average shares outstanding
|
|
190.9
|
|
188.8
|
|
190.3
|
|
187.7
|
Adjusted EBITDA
per share
|
$
|
1.33
|
$
|
1.07
|
$
|
4.41
|
$
|
3.59
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
For the year
ended
|
|
December 31,
|
December 31,
|
(expressed in
millions, except per share amounts)
|
2020
|
2019
|
2020
|
2019
|
Net
Income
|
$
|
176.7
|
$
|
113.3
|
$
|
326.2
|
$
|
344.1
|
Impairment charges
(reversals)
|
|
(9.6)
|
|
—
|
|
262.1
|
|
—
|
Foreign exchange
(gains)/losses and other (income)/expenses
|
|
(2.5)
|
|
(2.8)
|
|
(2.8)
|
|
(2.8)
|
Tax effect of
adjustments
|
|
(1.6)
|
|
0.3
|
|
(69.2)
|
|
0.2
|
Adjusted Net
Income
|
$
|
163.0
|
$
|
110.8
|
$
|
516.3
|
$
|
341.5
|
Basic weighted
average shares outstanding
|
|
190.9
|
|
188.8
|
|
190.3
|
|
187.7
|
Adjusted Net
Income per share
|
$
|
0.85
|
$
|
0.59
|
$
|
2.71
|
$
|
1.82
|
FRANCO-NEVADA
CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
(in millions of U.S. dollars)
|
|
|
|
|
|
At
December 31,
|
At
December 31,
|
|
2020
|
2019
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents (note 5)
|
$
|
534.2
|
$
|
132.1
|
Receivables
|
|
93.4
|
|
97.8
|
Prepaid expenses and
other (note 7)
|
|
36.1
|
|
48.8
|
Current
assets
|
$
|
663.7
|
$
|
278.7
|
|
|
|
|
|
Royalty, stream and
working interests, net (note 8)
|
$
|
4,632.1
|
$
|
4,797.8
|
Investments and loan
receivable (note 6)
|
|
238.4
|
|
183.2
|
Deferred income tax
assets (note 16)
|
|
45.1
|
|
6.8
|
Other assets (note
9)
|
|
13.6
|
|
14.1
|
Total
assets
|
$
|
5,592.9
|
$
|
5,280.6
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Accounts payable and
accrued liabilities (note 10)
|
$
|
40.8
|
$
|
41.8
|
Current income tax
liabilities
|
|
12.4
|
|
11.6
|
Current
liabilities
|
$
|
53.2
|
$
|
53.4
|
|
|
|
|
|
Debt (note
11)
|
$
|
—
|
$
|
80.0
|
Deferred income tax
liabilities (note 16)
|
|
91.5
|
|
82.4
|
Other
liabilities
|
|
4.4
|
|
2.6
|
Total
liabilities
|
$
|
149.1
|
$
|
218.4
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY (note 17)
|
|
|
|
|
Share
capital
|
$
|
5,580.1
|
$
|
5,390.7
|
Contributed
surplus
|
|
14.0
|
|
14.2
|
Deficit
|
|
(34.4)
|
|
(164.4)
|
Accumulated other
comprehensive loss
|
|
(115.9)
|
|
(178.3)
|
Total shareholders'
equity
|
$
|
5,443.8
|
$
|
5,062.2
|
Total liabilities and
shareholders' equity
|
$
|
5,592.9
|
$
|
5,280.6
|
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies (notes 22 and 23)
|
|
|
|
|
Subsequent
event (note 24)
|
|
|
|
|
The accompanying notes are an integral part of
these consolidated financial statements and can be found in 2020
Annual Report available on our website
FRANCO-NEVADA
CORPORATION
CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND
COMPREHENSIVE INCOME
(in millions of U.S. dollars and
shares, except per share amounts)
|
|
|
|
|
|
For the year ended
|
|
December 31,
|
|
2020
|
2019
|
Revenue (note
12)
|
$
|
1,020.2
|
$
|
844.1
|
|
|
|
|
|
Costs of
sales
|
|
|
|
|
Costs of sales (note
13)
|
$
|
158.8
|
$
|
144.8
|
Depletion and
depreciation
|
|
241.0
|
|
263.2
|
Total costs of
sales
|
$
|
399.8
|
$
|
408.0
|
Gross
profit
|
$
|
620.4
|
$
|
436.1
|
|
|
|
|
|
Other operating
expenses (income)
|
|
|
|
|
Impairment charges and
reversals (note 8)
|
$
|
262.1
|
$
|
—
|
General and
administrative expenses
|
|
28.8
|
|
28.8
|
Gain on sale of gold
bullion
|
|
(7.0)
|
|
(2.9)
|
Total other operating
expenses
|
$
|
283.9
|
$
|
25.9
|
Operating
income
|
$
|
336.5
|
$
|
410.2
|
Foreign exchange gain
(loss) and other income (expenses)
|
$
|
2.8
|
$
|
2.8
|
|
|
|
|
|
Income before finance
items and income taxes
|
$
|
339.3
|
$
|
413.0
|
|
|
|
|
|
Finance items
(note 15)
|
|
|
|
|
Finance
income
|
$
|
3.7
|
$
|
3.5
|
Finance
expenses
|
|
(3.5)
|
|
(10.6)
|
Net income before
income taxes
|
$
|
339.5
|
$
|
405.9
|
|
|
|
|
|
Income tax expense
(note 16)
|
|
13.3
|
|
61.8
|
Net
income
|
$
|
326.2
|
$
|
344.1
|
|
|
|
|
|
Other
comprehensive income
|
|
|
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to profit and loss:
|
|
|
|
|
Currency translation
adjustment
|
$
|
19.6
|
$
|
32.3
|
|
|
|
|
|
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 6)
|
|
43.8
|
|
9.9
|
Other comprehensive
income
|
$
|
63.4
|
$
|
42.2
|
|
|
|
|
|
Comprehensive
income
|
$
|
389.6
|
$
|
386.3
|
|
|
|
|
|
Earnings per share
(note 18)
|
|
|
|
|
Basic
|
$
|
1.71
|
$
|
1.83
|
Diluted
|
$
|
1.71
|
$
|
1.83
|
Weighted average
number of shares outstanding (note 18)
|
|
|
|
|
Basic
|
|
190.3
|
|
187.7
|
Diluted
|
|
190.7
|
|
188.0
|
The accompanying notes are an integral part of
these consolidated financial statements and can be found in our
2020 Annual Report available on our website
FRANCO-NEVADA
CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in millions of U.S. dollars)
|
|
|
|
|
|
For the year ended
|
|
December 31,
|
|
2020
|
2019
|
Cash flows from
operating activities
|
|
|
|
|
Net income
|
$
|
326.2
|
$
|
344.1
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depletion and
depreciation
|
|
241.0
|
|
263.2
|
Share-based
payments
|
|
5.6
|
|
4.9
|
Impairment charges and
reversals
|
|
262.1
|
|
—
|
Unrealized foreign
exchange loss
|
|
0.4
|
|
—
|
Deferred income tax
(recovery) expense
|
|
(35.2)
|
|
22.7
|
Other non-cash
items
|
|
(12.0)
|
|
(7.8)
|
Acquisition of gold
bullion
|
|
(37.9)
|
|
(31.8)
|
Proceeds from sale of
gold bullion
|
|
52.7
|
|
36.2
|
Operating cash flows
before changes in non-cash working capital
|
$
|
802.9
|
$
|
631.5
|
Changes in non-cash
working capital:
|
|
|
|
|
Decrease (increase) in
receivables
|
$
|
4.4
|
$
|
(22.3)
|
Decrease (increase) in
prepaid expenses and other
|
|
1.4
|
|
(14.3)
|
(Decrease) increase in
current liabilities
|
|
(4.8)
|
|
22.8
|
Net cash provided by
operating activities
|
$
|
803.9
|
$
|
617.7
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
Acquisition of
royalty, stream and working interests
|
$
|
(311.1)
|
$
|
(443.9)
|
Acquisition of energy
well equipment
|
|
(1.5)
|
|
(1.3)
|
Proceeds from sale of
investments
|
|
3.6
|
|
13.0
|
Acquisition of
investments
|
|
—
|
|
(3.9)
|
Net cash used in
investing activities
|
$
|
(309.0)
|
$
|
(436.1)
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
Proceeds from
at-the-market equity offerings
|
$
|
135.7
|
$
|
136.0
|
Repayment of term
loan
|
|
(80.0)
|
|
(80.0)
|
Proceeds from draw of
term loan
|
|
—
|
|
160.0
|
Repayment of revolving
credit facilities
|
|
—
|
|
(485.0)
|
Proceeds from draw of
credit facilities
|
|
—
|
|
275.0
|
Credit facility
amendment costs
|
|
—
|
|
(0.8)
|
Payment of
dividends
|
|
(154.9)
|
|
(138.2)
|
Proceeds from exercise
of stock options
|
|
7.4
|
|
13.2
|
Net cash used in
financing activities
|
$
|
(91.8)
|
$
|
(119.8)
|
Effect of exchange
rate changes on cash and cash equivalents
|
$
|
(1.0)
|
$
|
0.6
|
Net change in cash
and cash equivalents
|
$
|
402.1
|
$
|
62.4
|
Cash and cash
equivalents at beginning of year
|
$
|
132.1
|
$
|
69.7
|
Cash and cash
equivalents at end of year
|
$
|
534.2
|
$
|
132.1
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
Cash paid for
interest expense and loan standby fees
|
$
|
2.4
|
$
|
9.5
|
Income taxes
paid
|
$
|
51.2
|
$
|
38.6
|
The accompanying notes are an integral part of
these consolidated financial statements and can be found in our
2020 Annual Report available on our website
View original
content:http://www.prnewswire.com/news-releases/franco-nevada-announces-record-annual-results-and-dividend-increase-301245032.html
SOURCE Franco-Nevada Corporation