2021 Guidance Increased
(in U.S. dollars unless otherwise noted)
TORONTO, Aug. 11, 2021 /PRNewswire/ - "Franco-Nevada is on
track to achieve record results in 2021, thanks to both organic
growth and the acquisitions completed in the first half of the
year. The diversified portfolio performed well in the second
quarter and, with the first Vale Royalty Debenture contribution,
delivered record GEOs, revenue, Adjusted EBITDA and Adjusted Net
Income", stated Paul Brink,
President & CEO. "Franco-Nevada generated Adjusted EBITDA of
$290.0 million in the quarter, has no
debt and has $197.7 million in cash
and cash equivalents. Our revenue-based business model is
particularly attractive during periods of industry cost inflation,
as reflected in earnings, Adjusted EBITDA and Margins that are at
or close to record highs. We have raised the bottom end of our GEOs
sold guidance and, with the recovery in energy prices, have
materially increased our Energy revenue guidance for the year."
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H1/2021
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Q2/2021
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Record H1
results
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vs
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Record Q2
results
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vs
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H1/2020
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Q2/2020
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GEOs1
sold
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316,431
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+32%
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166,856
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+60%
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Revenue
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$656
million
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+50%
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$347.1
million
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+78%
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Net income
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$346.8 million
($1.82/share)
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+$351.2
million
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$175.3 million
($0.92/share)
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+86%
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Adjusted Net
Income2
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$343.5 million
($1.80/share)
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+71%
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$182.6 million
($0.96/share)
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+99%
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Adjusted
EBITDA3
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$552.7
million
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+58%
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$290
million
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+83%
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Margin4
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84.3%
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+5%
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83.5%
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+3%
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Strong Financial Position
- No debt and $1.4 billion in
available capital as at June 30,
2021
- Generated $245.2 million in
operating cash flow for the quarter
- Quarterly dividend of $0.30/share
Sector-Leading ESG
- Ranked #1 gold company by Sustainalytics, AA by MSCI and Prime
by ISS ESG
- Committed to the World Gold Council's "Responsible Gold Mining
Principles"
- Contributing to help communities through the COVID-19
crisis
- Goal of 40% diverse representation at the Board and top
leadership levels
Diverse, Long-Life Portfolio
- Most diverse portfolio by asset, operator and country
- Core assets outperforming
- Growth in long-life reserves
Growth and Optionality
- Guiding to 25% growth in revenue over 5 years
- Acquisitions, mine expansions and new mines driving growth
- Long-term options in gold, copper and nickel
- BHP aims to advance Ring of Fire properties
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Quarterly revenue
and GEOs sold by commodity
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Q2/2021
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Q2/2020
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GEOs
Sold
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Revenue
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GEOs
Sold
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Revenue
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#
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(in millions)
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#
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(in millions)
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Gold
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109,064
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$
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194.9
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79,758
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$
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136.6
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Silver
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24,884
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45.0
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11,630
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20.2
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PGMs
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11,989
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22.0
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11,367
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21.4
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Other Mining
Assets
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20,919
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37.9
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1,575
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2.6
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Mining
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166,856
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$
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299.8
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104,330
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$
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180.8
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Oil
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—
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25.2
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—
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6.7
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Gas
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—
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18.0
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—
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5.4
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NGL
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—
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4.1
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—
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2.5
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166,856
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$
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347.1
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104,330
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$
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195.4
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H1 revenue and
GEOs sold by commodity
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H1/2021
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H1/2020
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GEOs
Sold
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Revenue
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GEOs
Sold
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Revenue
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#
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(in millions)
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#
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(in millions)
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Gold
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216,069
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$
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384.9
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185,509
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$
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303.6
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Silver
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52,350
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92.7
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25,512
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42.3
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PGMs
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23,487
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41.5
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25,246
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44.0
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Other Mining
Assets
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24,525
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44.5
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3,004
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4.9
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Mining
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316,431
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$
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563.6
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239,271
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$
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394.8
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Oil
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—
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51.1
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—
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23.9
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Gas
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—
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32.5
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—
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11.2
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NGL
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—
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8.8
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—
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6.0
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316,431
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$
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656.0
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239,271
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$
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435.9
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For Q2/2021, revenue was sourced 86.4% from Mining assets (56.2%
gold, 13.0% silver, 6.3% PGM and 10.9% other mining assets).
Geographically, revenue was sourced 91.7% from the Americas (33.4%
South America, 25.9% Central America & Mexico, 19.1% U.S. and 13.3% Canada).
Portfolio Additions
Vale Royalty Debentures: As previously announced, on
April 16, 2021, the Company acquired
57 million of Vale S.A.'s ("Vale") outstanding participating
debentures ("Royalty Debentures") for $538
million. Royalty payments are made on a semi-annual basis on
March 31st and
September 30th of each
year reflecting sales in the preceding half calendar year period.
Franco-Nevada has estimated its
attributable royalty payment for the six-month period from
January 1, 2021 to June 30, 2021 to be $28.0
million. This amount represents our accrual estimate for two
quarters' worth of royalty payments. The first payment for the
H1/2021 period will be payable to the Company on September 30, 2021.
Increased 2021 Guidance
Based on the strong results year-to-date, Franco-Nevada now
anticipates GEO sales for 2021 to be near the higher end of the
previously announced guidance and has revised the GEOs sold
guidance range to 590,000 to 615,000 GEOs. Franco-Nevada is also pleased to raise its Energy
revenue guidance to reflect higher commodity prices. Energy revenue
guidance is now expected to range from $155 to $170
million, an increase from the prior range of $115 to $135
million. Commodity prices used in our revised guidance are
the following: $1,800/oz Au,
$25.00/oz Ag, $1,000/oz Pt, $2,700/oz Pd, $150/t Fe 65% CFR China, $60/barrel WTI and $2.75/mcf Henry Hub.
Please see our annual MD&A for more details on our guidance
and see "Forward-Looking Statements" below.
Q2/2021 Portfolio Updates
Gold Equivalent Ounces Sold: GEOs sold for the
quarter were 166,856, an increase of 59.9% from the 104,330 sold in
Q2/2020. Higher contributions from our largest streams as well as
the additions of the Vale Royalty Debentures and Condestable stream
were slightly offset by lower production from Hemlo. Further, the impact of COVID-19 on our
assets continued to be minimal this quarter, in comparison to
Q2/2020, where a number of our assets were impacted by suspensions
of production.
South America:
- Antamina (22.5% silver stream) – GEOs delivered and sold
were significantly higher in Q2/2021 than in Q2/2020, which was
impacted by a temporary suspension of production. In addition,
higher silver prices in the current period have resulted in a more
favourable GEO conversion ratio. We expect Antamina silver
deliveries to remain strong for the remainder of 2021.
- Antapaccay (gold and silver stream) – GEOs delivered and
sold greatly increased in Q2/2021. Concentrate shipments in the
prior year period were delayed due to the COVID-19 pandemic.
- Candelaria (gold and silver
stream) – GEOs delivered and sold increased in Q2/2021 relative
to Q2/2020. Production at Candeleria was higher this quarter than
in the same quarter in the previous year due to higher mill
throughput. Lundin reported that due to changes in mine sequencing,
it reduced 2021 copper and gold production guidance. Gold
production guidance is now 85,000-90,000 ounces on a 100% basis,
down from 95,000-100,000 ounces. Lundin is also reviewing the
impacts of changes on the operation's life of mine plan.
Preliminary plans anticipate production forecasts to be 10-15%
lower for 2022 and 2023.
- Condestable (gold and silver stream) – Franco-Nevada
received its second quarter of deliveries from the recently
acquired stream, with the asset contributing an incremental 3,246
GEOs in Q2/2021.
- Vale Royalty Debentures (iron ore royalty) –
Franco-Nevada accrued an estimated $28.0
million, or 15,493 GEOs, for its attributable royalty
payment for the six-month period from January 1, 2021 to June
30, 2021. Due to the timing of the acquisition, this initial
accrual represents two quarters' worth of royalties. Payment is due
on September 30, 2021. Future
accruals will be on a quarter-by-quarter basis.
Central America &
Mexico:
- Cobre Panama (gold and silver stream) – GEOs delivered and sold
more than doubled relative to one year earlier, which was impacted
by a suspension of operations due to COVID-19. Cobre Panama's
production in Q2/2021 was a near record of 81.7 kt of copper
produced due to increased mill availability, throughput rates and
ore grade. Mining is expected to transition to softer ore later in
the year and First Quantum is targeting 85 Mtpa of throughput for
2021. First Quantum increased copper production guidance for Cobre
Panama to 310,000-335,000 tonnes from 300,000-330,000
tonnes.
- Guadalupe-Palmarejo (50% gold stream) – GEOs sold from
Guadalupe-Palmarejo were significantly higher than in the same
quarter in 2020. Production in the prior year period reflected a
temporary suspension at the operation to comply with COVID-19
government-mandated measures.
U.S.:
- Stillwater (5% royalty)
– GEOs from Stillwater increased
from one year earlier, as higher platinum and palladium prices more
than offset lower PGM production during the quarter. For our
revised 2021 guidance, we adjusted our price assumptions from
$2,200/oz Pd to $2,700/oz Pd, and from $1,100/oz Pt to $1,000/oz Pt.
- Goldstrike (2-6% royalties) – Production was impacted by
planned maintenance shutdowns as well a mechanical failure at the
Goldstrike roaster. The roaster is currently working at a reduced
rate and work to repair the mill is expected to be completed in
Q3/2021. The impact from the reduced production was offset by
$7 million in royalties related to
prior periods.
Canada:
- Sudbury (50% gold and PGM
stream) – In February 2021, KGHM
approved an updated life of mine plan which extends mining
operations at the McCreedy West mine for another 5 years. To
support this extension of operations, Franco-Nevada agreed to
increase its purchase price per GEO effective June 1, 2021, from $800 per ounce to 60% of the prevailing monthly
average gold spot price during periods when monthly average gold
prices exceed $1,333/oz. When the
gold spot price is greater than $2,000/oz, the purchase price is $1,200/oz.
- Detour Lake (2% royalty) – Kirkland Lake Gold reported continued
exploration success, with significant potential for mineral
resource growth between the existing Main Pit and planned West Pit,
and progress on key growth projects during Q2/2021. A new technical
report and life of mine plan is targeted for release during
H1/2022.
- Hemlo (3% royalty & 50%
NPI) – Revenue from Hemlo was
significantly lower than in Q2/2020 reflecting a decrease in
production from grounds where Franco-Nevada has royalty interests
and higher costs.
- Kirkland Lake (1.5-5.5%
royalty & 20% NPI) – Kirkland Lake
Gold reported that the Macassa #4 Shaft is on track for
completion in late 2022. Once completed, production at Macassa is
targeted to grow to over 400,000 ounces of gold per year,
compared to targeted production of 220,000-255,000 ounces of
gold for 2021.
- LIORC (0.7% royalty) – LIORC declared a cash dividend of
C$1.75 per common share, compared to
C$0.45 per common share in the prior
year quarter. Including this dividend, Franco-Nevada has recouped
its initial investment.
- Canadian Malartic (1.5%
royalty) – Agnico Eagle and Yamana reported record quarterly
production due to higher grade and recoveries from the ore found
deeper in the Malartic pit.
Throughout 2021, the mine will continue its transition from the
Malartic pit to the Barnat pit.
The Odyssey underground project, which is expected to extend the
life of the complex to at least 2039, is progressing as planned.
Surface drilling is ongoing to infill and expand the East Gouldie
zone, where Franco-Nevada's royalty claims cover a portion of the
deposit.
- Eskay Creek (1% royalty)
– In July 2021, Skeena Resources
announced a positive pre-feasibility study, outlining average
annual production of 249,000 ounces of gold and 7.2 million ounces
of silver over a 10-year mine life. Skeena anticipates further
increases to the annual production profile as part of a feasibility
study expected in Q1/2022.
- Ring of Fire (1-3% royalties) – In July 2021, BHP and Noront announced a
board-supported take-over bid by BHP to acquire all of Noront's
issued and outstanding common shares. The transaction represents a
premium offer relative to the indicative offer proposed by Wyloo in
May 2021.
- Red Lake (Bateman) (2% royalty) – In May 2021, Evolution Mining completed the
acquisition of all of the issued and outstanding shares of Battle
North. The acquisition is expected to create synergies between the
Bateman project and Evolution's
existing operations in the region.
- Valentine Lake (2%
royalty) – In July 2021, Marathon
Gold announced it had entered into an indicative non-binding term
sheet for a project financing facility of $185 million to fund the construction of the
project. Marathon also reported positive exploration results from
ongoing in-fill drilling of the Berry Deposit.
Rest of World:
- Tasiast (2% royalty) – In June
2021, Kinross announced a
temporary suspension of mill operations due to a fire at its
Tasiast mine. Kinross expects to
re-start the mill in Q4/2021. The Tasiast 24k project remains on schedule to be completed
in mid-2023.
- Aği Daği (2% royalty) – In April
2021, Alamos announced its
filing of an investment treaty claim against the Republic of
Turkey for failing to grant
routine renewals of key licenses and permits for Alamos' Kirazli gold mine. Though
Franco-Nevada does not have a royalty on the Kirazli mine,
cessation of development activities at Kirazli are expected to
negatively impact the advancement of the Aği Daği project.
Franco-Nevada wrote-off the entire
carrying value of $7.5 million
associated with this royalty in Q2/2021.
Energy: Revenue from the Energy assets increased to
$47.3 million in Q2/2021 compared to
$14.6 million in Q2/2020. Revenues
were positively impacted by higher realized prices across the
portfolio compared to Q2/2020 which were historically low. Revenue
in Q2/2021 also reflects the addition of royalty interests in the
Haynesville shale play at the end of 2020.
U.S.:
- Haynesville (various royalty rates) – The portfolio of
assets contributed $7.2 million of
incremental revenue in Q2/2021, of which $1.2 million was attributable to prior
periods.
- SCOOP/STACK (various royalty rates) – Royalties
from SCOOP/STACK more than doubled compared to Q2/2020 with
higher realized pricing more than offsetting the impact of reduced
drilling by the operators on royalty lands.
- Permian Basin (various royalty rates) – Royalties from
the Permian increased significantly due to higher realized prices
offsetting a production decrease from operators in the basin.
- Marcellus (1% royalty) – Revenue from the Marcellus
asset, operated by Range Resources, generated $7.4 million in Q2/2021 versus $4.9 million in Q2/2020, where higher realized
NGL and natural gas prices offset slightly lower production
volumes.
Canada:
- Weyburn (NRI, ORR, WI)
– Revenue from the Weyburn Unit was $10.6
million in Q2/2021 compared to a loss of $0.6 million in Q2/2020. Revenue in Q2/2020 was
negative due to the operating and capital costs in Q2/2020
exceeding sales from the NRI interest due to the low price
environment in 2020.
Dividend declaration
Franco-Nevada is pleased to
announce that its Board of Directors has declared a quarterly
dividend of $0.30 per share. The
dividend will be paid on September 30,
2021 to shareholders of record on September 16, 2021 (the "Record Date"). The
Canadian dollar equivalent is to be determined based on the daily
average rate posted by the Bank of Canada on the Record Date. Under Canadian tax
legislation, Canadian resident individuals who receive "eligible
dividends" are entitled to an enhanced gross-up and dividend tax
credit on such dividends.
The Company has a Dividend Reinvestment Plan (the "DRIP").
Participation in the DRIP is optional. The Company will issue
additional common shares through treasury at a 3% discount to the
Average Market Price, as defined in the DRIP. However, the Company
may, from time to time, in its discretion, change or eliminate the
discount applicable to treasury acquisitions or direct that such
common shares be purchased in market acquisitions at the prevailing
market price, any of which would be publicly announced. The DRIP
and enrollment forms are available on the Company's website at
www.franco-nevada.com. Canadian and U.S. registered shareholders
may also enroll in the DRIP online through the plan agent's
self-service web portal at www.investorcentre.com/franco-nevada.
Canadian and U.S. beneficial shareholders should contact their
financial intermediary to arrange enrollment. Non-Canadian and
non-U.S. shareholders may potentially participate in the DRIP,
subject to the satisfaction of certain conditions. Non-Canadian and
non-U.S. shareholders should contact the Company to determine
whether they satisfy the necessary conditions to participate in the
DRIP.
This press release is not an offer to sell or a solicitation of
an offer 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
www.sec.gov.
Shareholder Information
The complete unaudited 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, August 12, 2021 at 10:00
a.m. Eastern Time to review Franco–Nevada's Q2/2021
results.
Interested investors are invited to participate as follows:
- Via Conference Call: Toll-Free: (888) 390-0546;
International: (416) 764-8688
- Conference Call Replay until August
19, 2021: Toll-Free (888) 390-0541; International (416)
764-8677; Code 467266 #
- Webcast: A live audio webcast will be accessible at
www.franco-nevada.com
Corporate Summary
Franco-Nevada Corporation is the leading gold-focused royalty
and streaming company with the largest and most diversified
portfolio of cash-flow producing assets. Its business model
provides investors with gold price and exploration optionality
while limiting exposure to cost inflation. Franco-Nevada is
debt-free and uses its free cash flow to expand its portfolio and
pay dividends. It trades under the symbol FNV on both the
Toronto and New York stock exchanges. Franco-Nevada is the gold investment that works.
Forward-Looking Statements
This press release contains "forward-looking information" and
"forward-looking statements" within the meaning of applicable
Canadian securities laws and the United States Private Securities
Litigation Reform Act of 1995, respectively, which may include, but
are not limited to, statements with respect to future events or
future performance, management's expectations regarding
Franco-Nevada's growth, results of operations, estimated future
revenues, performance guidance, carrying value of assets, future
dividends and requirements for additional capital, mineral reserve
and mineral resource estimates, production estimates, production
costs and revenue, future demand for and prices of commodities,
expected mining sequences, business prospects and opportunities,
the performance and plans of third party operators, audits being
conducted by the Canada Revenue Agency, the expected exposure for
current and future assessments and available remedies, the remedies
relating to and consequences of the ruling of the Supreme Court of
Panama in relation to the Cobre
Panama project, the aggregate value of Common Shares which may be
issued pursuant to the Company's at-the-market equity program (the
"ATM Program"), and the Company's expected use of the net proceeds
of the ATM Program, if any. In addition, statements (including data
in tables) relating to reserves and resources including reserves
and resources covered by a royalty, stream or other interest, GEOs
or mine lives are forward-looking statements, as they involve
implied assessment, based on certain estimates and assumptions, and
no assurance can be given that the estimates and assumptions are
accurate and that such reserves and resources, mine lives and GEOs
will be realized. Such forward-looking statements reflect
management's current beliefs and are based on information currently
available to management. Often, but not always, forward-looking
statements can be identified by the use of words such as "plans",
"expects", "is expected", "budgets", "potential for", "scheduled",
"estimates", "forecasts", "predicts", "projects", "intends",
"targets", "aims", "anticipates" or "believes" or variations
(including negative variations) of such words and phrases or may be
identified by statements to the effect that certain actions "may",
"could", "should", "would", "might" or "will" be taken, occur or be
achieved. Forward-looking statements involve known and unknown
risks, uncertainties and other factors, which may cause the actual
results, performance or achievements of Franco-Nevada to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. A number of factors could cause actual events or
results to differ materially from any forward-looking statement,
including, without limitation: the price at which Common Shares are
sold in the ATM Program and the aggregate net proceeds received by
the Company as a result of the ATM Program; fluctuations in the
prices of the primary commodities that drive royalty and stream
revenue (gold, platinum group metals, copper, nickel, uranium,
silver, iron-ore and oil and gas); fluctuations in the value of the
Canadian and Australian dollar, Mexican peso and any other currency
in which revenue is generated, relative to the U.S. dollar; changes
in national and local government legislation, including permitting
and licensing regimes and taxation policies and the enforcement
thereof; the adoption of a global minimum tax on corporations;
regulatory, political or economic developments in any of the
countries where properties in which Franco-Nevada holds a royalty,
stream or other interest are located or through which they are
held; risks related to the operators of the properties in which
Franco-Nevada holds a royalty, stream or other interest, including
changes in the ownership and control of such operators;
relinquishment or sale of mineral properties; influence of
macroeconomic developments; business opportunities that become
available to, or are pursued by Franco-Nevada; reduced access to
debt and equity capital; litigation; title, permit or license
disputes related to interests on any of the properties in which
Franco-Nevada holds a royalty, stream or other interest; whether or
not the Company is determined to have "passive foreign investment
company" ("PFIC") status as defined in Section 1297 of the United
States Internal Revenue Code of 1986, as amended; potential changes
in Canadian tax treatment of offshore streams; excessive cost
escalation as well as development, permitting, infrastructure,
operating or technical difficulties on any of the properties in
which Franco-Nevada holds a royalty, stream or other interest;
access to sufficient pipeline capacity; actual mineral content may
differ from the reserves and resources contained in technical
reports; rate and timing of production differences from resource
estimates, other technical reports and mine plans; risks and
hazards associated with the business of development and mining on
any of the properties in which Franco-Nevada holds a royalty,
stream or other interest, including, but not limited to unusual or
unexpected geological and metallurgical conditions, slope failures
or cave-ins, flooding and other natural disasters, terrorism, civil
unrest or an outbreak of contagious disease; the impact of the
COVID-19 (coronavirus) pandemic; and the integration of acquired
assets. The forward-looking statements contained in this press
release are based upon assumptions management believes to be
reasonable, including, without limitation: the ongoing operation of
the properties in which Franco-Nevada holds a royalty, stream or
other interest by the owners or operators of such properties in a
manner consistent with past practice; the accuracy of public
statements and disclosures made by the owners or operators of such
underlying properties; no material adverse change in the market
price of the commodities that underlie the asset portfolio; the
Company's ongoing income and assets relating to determination of
its PFIC status; no material changes to existing tax
treatment; the expected application of tax laws and
regulations by taxation authorities; the expected assessment and
outcome of any audit by any taxation authority; no adverse
development in respect of any significant property in which
Franco-Nevada holds a royalty, stream or other interest; the
accuracy of publicly disclosed expectations for the development of
underlying properties that are not yet in production; integration
of acquired assets; and the absence of any other factors that could
cause actions, events or results to differ from those anticipated,
estimated or intended. However, there can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Investors are cautioned that
forward-looking statements are not guarantees of future
performance. In addition, there can be no assurance as to the
outcome of the ongoing audit by the CRA or the Company's exposure
as a result thereof. Franco-Nevada
cannot assure investors that actual results will be consistent with
these forward-looking statements. Accordingly, investors should not
place undue reliance on forward-looking statements due to the
inherent uncertainty therein.
For additional information with respect to risks,
uncertainties and assumptions, please refer to Franco-Nevada's most
recent Annual Information Form filed with the Canadian securities
regulatory authorities on www.sedar.com and Franco-Nevada's most
recent Annual Report filed on Form 40-F filed with the SEC on
www.sec.gov. The forward-looking statements herein are made as of
the date of this press release only and Franco-Nevada does not
assume any obligation to update or revise them to reflect new
information, estimates or opinions, future events or results or
otherwise, except as required by applicable law.
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 Q2/2021, the average commodity prices were as follows:
$1,816/oz gold (Q2/2020 -
$1,711), $26.69/oz silver (Q2/2020 - $16.38), $1,180/oz
platinum (Q2/2020 - $790) and
$2,788/oz palladium (Q2/2020 -
$1,965), $232/t Fe 65% CFR China (Q2/2020 - $109). For H1/2021 prices, the average
commodity prices were as follows: $1,805/oz gold (Q2/2020 - $1,645), $26.47/oz
silver (Q2/2020 - $16.65),
$1,170/oz platinum (Q2/2020 -
$848) and $2,593/oz palladium (Q2/2020 - $2,128), and $212/t
Fe 65% CFR China (H1/2020 - $106).
- 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.
- Margin is a non-IFRS financial measure which is
defined by the Company as Adjusted EBITDA divided by revenue.
Reconciliation to IFRS measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
|
For the six months
ended
|
|
|
June 30,
|
|
|
June 30,
|
(expressed in
millions, except per share amounts)
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
Net income
(loss)
|
|
$
|
175.3
|
|
|
$
|
94.4
|
|
|
$
|
346.8
|
|
|
$
|
(4.4)
|
Impairment
charges
|
|
|
7.5
|
|
|
|
—
|
|
|
|
7.5
|
|
|
|
271.7
|
Foreign exchange loss
and other (income)/expenses
|
|
|
1.2
|
|
|
|
0.1
|
|
|
|
1.3
|
|
|
|
0.2
|
Tax effect of
adjustments
|
|
|
(1.4)
|
|
|
|
(2.7)
|
|
|
|
(1.5)
|
|
|
|
(66.5)
|
Other tax related
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognition of
previously unrecognized deferred tax assets
|
|
|
—
|
|
|
|
—
|
|
|
|
(10.6)
|
|
|
|
—
|
Adjusted Net
Income
|
|
$
|
182.6
|
|
|
$
|
91.8
|
|
|
$
|
343.5
|
|
|
$
|
201.0
|
Basic weighted
average shares outstanding
|
|
|
191.0
|
|
|
|
190.2
|
|
|
|
191.0
|
|
|
|
189.6
|
Adjusted Net
Income per share
|
|
$
|
0.96
|
|
|
$
|
0.48
|
|
|
$
|
1.80
|
|
|
$
|
1.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
|
For the six months
ended
|
|
|
June 30,
|
|
|
June 30,
|
(expressed in
millions, except per share amounts)
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
Net income
(loss)
|
|
$
|
175.3
|
|
|
$
|
94.4
|
|
|
$
|
346.8
|
|
|
$
|
(4.4)
|
Income tax expense
(recovery)
|
|
|
29.4
|
|
|
|
11.5
|
|
|
|
49.2
|
|
|
|
(33.4)
|
Finance
expenses
|
|
|
1.1
|
|
|
|
0.8
|
|
|
|
1.9
|
|
|
|
1.9
|
Finance
income
|
|
|
(1.7)
|
|
|
|
(1.0)
|
|
|
|
(2.4)
|
|
|
|
(1.9)
|
Depletion and
depreciation
|
|
|
77.2
|
|
|
|
52.3
|
|
|
|
148.4
|
|
|
|
116.7
|
Impairment
charges
|
|
|
7.5
|
|
|
|
—
|
|
|
|
7.5
|
|
|
|
271.7
|
Foreign exchange loss
and other (income)/expenses
|
|
|
1.2
|
|
|
|
0.1
|
|
|
|
1.3
|
|
|
|
0.2
|
Adjusted
EBITDA
|
|
$
|
290.0
|
|
|
$
|
158.1
|
|
|
$
|
552.7
|
|
|
$
|
350.8
|
Basic weighted
average shares outstanding
|
|
|
191.0
|
|
|
|
190.2
|
|
|
|
191.0
|
|
|
|
189.6
|
Adjusted EBITDA
per share
|
|
$
|
1.52
|
|
|
$
|
0.83
|
|
|
$
|
2.89
|
|
|
$
|
1.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
|
For the six months
ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
(expressed in
millions, except Margin)
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Net income
(loss)
|
|
$
|
175.3
|
|
|
$
|
94.4
|
|
|
$
|
346.8
|
|
|
$
|
(4.4)
|
|
Income tax expense
(recovery)
|
|
|
29.4
|
|
|
|
11.5
|
|
|
|
49.2
|
|
|
|
(33.4)
|
|
Finance
expenses
|
|
|
1.1
|
|
|
|
0.8
|
|
|
|
1.9
|
|
|
|
1.9
|
|
Finance
income
|
|
|
(1.7)
|
|
|
|
(1.0)
|
|
|
|
(2.4)
|
|
|
|
(1.9)
|
|
Depletion and
depreciation
|
|
|
77.2
|
|
|
|
52.3
|
|
|
|
148.4
|
|
|
|
116.7
|
|
Impairment
charges
|
|
|
7.5
|
|
|
|
—
|
|
|
|
7.5
|
|
|
|
271.7
|
|
Foreign exchange loss
and other (income)/expenses
|
|
|
1.2
|
|
|
|
0.1
|
|
|
|
1.3
|
|
|
|
0.2
|
|
Adjusted
EBITDA
|
|
$
|
290.0
|
|
|
$
|
158.1
|
|
|
$
|
552.7
|
|
|
$
|
350.8
|
|
Revenue
|
|
|
347.1
|
|
|
|
195.4
|
|
|
|
656.0
|
|
|
|
435.9
|
|
Margin
|
|
|
83.5
|
%
|
|
|
80.9
|
%
|
|
|
84.3
|
%
|
|
|
80.5
|
%
|
FRANCO-NEVADA
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
(unaudited, in millions of U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
At
June 30,
|
|
|
At
December 31,
|
|
|
2021
|
|
|
2020
|
ASSETS
|
|
|
|
|
|
|
|
Cash and cash
equivalents (note 4)
|
|
$
|
197.7
|
|
|
$
|
534.2
|
Receivables
|
|
|
115.7
|
|
|
|
93.4
|
Prepaid expenses and
other (note 6)
|
|
|
45.5
|
|
|
|
36.1
|
Current
assets
|
|
$
|
358.9
|
|
|
$
|
663.7
|
|
|
|
|
|
|
|
|
Royalty, stream and
working interests, net (note 7)
|
|
$
|
5,222.4
|
|
|
$
|
4,632.1
|
Investments and loan
receivable (note 5)
|
|
|
308.2
|
|
|
|
238.4
|
Deferred income tax
assets
|
|
|
46.7
|
|
|
|
45.1
|
Other assets (note
8)
|
|
|
18.9
|
|
|
|
13.6
|
Total
assets
|
|
$
|
5,955.1
|
|
|
$
|
5,592.9
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
32.8
|
|
|
$
|
40.8
|
Current income tax
liabilities
|
|
|
3.6
|
|
|
|
12.4
|
Current
liabilities
|
|
$
|
36.4
|
|
|
$
|
53.2
|
|
|
|
|
|
|
|
|
Deferred income tax
liabilities
|
|
|
115.1
|
|
|
|
91.5
|
Other
liabilities
|
|
|
4.1
|
|
|
|
4.4
|
Total
liabilities
|
|
$
|
155.6
|
|
|
$
|
149.1
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
Share capital (note
15)
|
|
$
|
5,600.0
|
|
|
$
|
5,580.1
|
Contributed
surplus
|
|
|
17.1
|
|
|
|
14.0
|
Retained earnings
(deficit)
|
|
|
212.9
|
|
|
|
(34.4)
|
Accumulated other
comprehensive loss
|
|
|
(30.5)
|
|
|
|
(115.9)
|
Total shareholders'
equity
|
|
$
|
5,799.5
|
|
|
$
|
5,443.8
|
Total liabilities and
shareholders' equity
|
|
$
|
5,955.1
|
|
|
$
|
5,592.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies (notes 20 and 21)
|
|
|
|
|
|
|
|
Subsequent
events (note 22)
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of
these condensed consolidated financial statements and can be found
in Q2/2021 Quarterly Report available on our website
FRANCO-NEVADA
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(LOSS) AND COMPREHENSIVE INCOME (LOSS)
(unaudited, in
millions of U.S. dollars and shares, except per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
|
For the six
months ended
|
|
|
June 30,
|
|
|
June 30,
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
Revenue (note
10)
|
|
$
|
347.1
|
|
|
$
|
195.4
|
|
|
$
|
656.0
|
|
|
$
|
435.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of sales (note
11)
|
|
$
|
47.3
|
|
|
$
|
28.0
|
|
|
$
|
87.9
|
|
|
$
|
71.6
|
Depletion and
depreciation
|
|
|
77.2
|
|
|
|
52.3
|
|
|
|
148.4
|
|
|
|
116.7
|
Total costs of
sales
|
|
$
|
124.5
|
|
|
$
|
80.3
|
|
|
$
|
236.3
|
|
|
$
|
188.3
|
Gross
profit
|
|
$
|
222.6
|
|
|
$
|
115.1
|
|
|
$
|
419.7
|
|
|
$
|
247.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating
expenses (income)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment charges
(note 7)
|
|
$
|
7.5
|
|
|
$
|
—
|
|
|
$
|
7.5
|
|
|
$
|
271.7
|
General and
administrative expenses
|
|
|
5.4
|
|
|
|
4.9
|
|
|
|
9.6
|
|
|
|
9.8
|
Share-based
compensation expenses (note 12)
|
|
|
5.0
|
|
|
|
6.8
|
|
|
|
7.0
|
|
|
|
8.1
|
Gain on sale of gold
bullion
|
|
|
(0.6)
|
|
|
|
(2.4)
|
|
|
|
(1.2)
|
|
|
|
(4.4)
|
Total other operating
expenses (income)
|
|
$
|
17.3
|
|
|
$
|
9.3
|
|
|
$
|
22.9
|
|
|
$
|
285.2
|
Operating income
(loss)
|
|
$
|
205.3
|
|
|
$
|
105.8
|
|
|
$
|
396.8
|
|
|
$
|
(37.6)
|
Foreign exchange loss
and other income (expenses)
|
|
$
|
(1.2)
|
|
|
$
|
(0.1)
|
|
|
$
|
(1.3)
|
|
|
$
|
(0.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
finance items and income taxes
|
|
$
|
204.1
|
|
|
$
|
105.7
|
|
|
$
|
395.5
|
|
|
$
|
(37.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance items
(note 14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
income
|
|
$
|
1.7
|
|
|
$
|
1.0
|
|
|
$
|
2.4
|
|
|
$
|
1.9
|
Finance
expenses
|
|
|
(1.1)
|
|
|
|
(0.8)
|
|
|
|
(1.9)
|
|
|
|
(1.9)
|
Net income (loss)
before income taxes
|
|
$
|
204.7
|
|
|
$
|
105.9
|
|
|
$
|
396.0
|
|
|
$
|
(37.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(recovery) (note 15)
|
|
|
29.4
|
|
|
|
11.5
|
|
|
|
49.2
|
|
|
|
(33.4)
|
Net income
(loss)
|
|
$
|
175.3
|
|
|
$
|
94.4
|
|
|
$
|
346.8
|
|
|
$
|
(4.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to profit and loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation
adjustment
|
|
$
|
17.7
|
|
|
$
|
29.4
|
|
|
$
|
27.1
|
|
|
$
|
(34.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that will
not be reclassified subsequently to profit and loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on changes in the
fair value of equity investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at fair value through
other comprehensive income ("FVTOCI"),
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of income tax
(note 5)
|
|
|
46.7
|
|
|
|
37.0
|
|
|
|
65.3
|
|
|
|
1.7
|
Other comprehensive
income (loss)
|
|
$
|
64.4
|
|
|
$
|
66.4
|
|
|
$
|
92.4
|
|
|
$
|
(32.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income (loss)
|
|
$
|
239.7
|
|
|
$
|
160.8
|
|
|
$
|
439.2
|
|
|
$
|
(36.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share (note 17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.92
|
|
|
$
|
0.50
|
|
|
$
|
1.82
|
|
|
$
|
(0.02)
|
Diluted
|
|
$
|
0.92
|
|
|
$
|
0.50
|
|
|
$
|
1.81
|
|
|
$
|
(0.02)
|
Weighted average
number of shares outstanding (note 17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
191.0
|
|
|
|
190.2
|
|
|
|
191.0
|
|
|
|
189.6
|
Diluted
|
|
|
191.4
|
|
|
|
190.6
|
|
|
|
191.3
|
|
|
|
189.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of
these condensed consolidated financial statements and can be found
in our Q2/2021 Quarterly Report available on our website
FRANCO-NEVADA
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(unaudited, in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
For the six
months ended
|
|
|
June 30,
|
|
|
2021
|
|
|
2020
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
346.8
|
|
|
$
|
(4.4)
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depletion and
depreciation
|
|
|
148.4
|
|
|
|
116.7
|
Share-based
compensation expenses
|
|
|
3.0
|
|
|
|
2.5
|
Impairment
charges
|
|
|
7.5
|
|
|
|
271.7
|
Unrealized foreign
exchange loss
|
|
|
0.3
|
|
|
|
0.4
|
Deferred income tax
expense (recovery)
|
|
|
11.9
|
|
|
|
(57.9)
|
Other non-cash
items
|
|
|
(2.4)
|
|
|
|
(5.6)
|
Acquisition of gold
bullion
|
|
|
(21.2)
|
|
|
|
(17.6)
|
Proceeds from sale of
gold bullion
|
|
|
17.5
|
|
|
|
28.1
|
Operating cash flows
before changes in non-cash working capital
|
|
$
|
511.8
|
|
|
$
|
333.9
|
Changes in non-cash
working capital:
|
|
|
|
|
|
|
|
(Increase) decrease in
receivables
|
|
$
|
(22.3)
|
|
|
$
|
19.4
|
(Increase) decrease in
prepaid expenses and other
|
|
|
(12.0)
|
|
|
|
2.3
|
Decrease in current
liabilities
|
|
|
(8.0)
|
|
|
|
(10.2)
|
Net cash provided by
operating activities
|
|
$
|
469.5
|
|
|
$
|
345.4
|
|
|
|
|
|
|
|
|
Cash flows used in
investing activities
|
|
|
|
|
|
|
|
Acquisition of
royalty, stream and working interests
|
|
$
|
(733.5)
|
|
|
$
|
(38.3)
|
Acquisition of energy
well equipment
|
|
|
(0.7)
|
|
|
|
(0.2)
|
Proceeds from sale of
investments
|
|
|
12.7
|
|
|
|
—
|
Issuance of loan
receivable
|
|
|
—
|
|
|
|
(15.0)
|
Net cash used in
investing activities
|
|
$
|
(721.5)
|
|
|
$
|
(53.5)
|
|
|
|
|
|
|
|
|
Cash flows used in
financing activities
|
|
|
|
|
|
|
|
Payment of
dividends
|
|
$
|
(87.0)
|
|
|
$
|
(76.0)
|
Proceeds from draw of
revolving credit facilities
|
|
|
150.0
|
|
|
|
—
|
Repayment of revolving
credit facilities
|
|
|
(150.0)
|
|
|
|
—
|
Repayment of term
loan
|
|
|
—
|
|
|
|
(80.0)
|
Proceeds from
at-the-market equity offerings
|
|
|
—
|
|
|
|
107.3
|
Credit facility
amendment costs
|
|
|
(0.1)
|
|
|
|
—
|
Proceeds from exercise
of stock options
|
|
|
0.3
|
|
|
|
6.0
|
Net cash used in
financing activities
|
|
$
|
(86.8)
|
|
|
$
|
(42.7)
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
$
|
2.3
|
|
|
$
|
(2.8)
|
Net change in cash
and cash equivalents
|
|
$
|
(336.5)
|
|
|
$
|
246.4
|
Cash and cash
equivalents at beginning of period
|
|
$
|
534.2
|
|
|
$
|
132.1
|
Cash and cash
equivalents at end of period
|
|
$
|
197.7
|
|
|
$
|
378.5
|
|
|
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
Dividend income
received
|
|
$
|
13.9
|
|
|
$
|
3.7
|
Interest and standby
fees paid
|
|
$
|
1.3
|
|
|
$
|
1.3
|
Income taxes
paid
|
|
$
|
51.3
|
|
|
$
|
33.5
|
The accompanying notes are an integral part of
these condensed consolidated financial statements and can be found
in our Q2/2021 Quarterly Report available on our website
View original
content:https://www.prnewswire.com/news-releases/franco-nevada-reports-record-q2-and-h1-results-301353703.html
SOURCE Franco-Nevada Corporation