(in U.S. dollars unless otherwise noted)
Dividend Increased for 13th Consecutive
Year
David Harquail
appointed Chair
Paul Brink
appointed CEO
TORONTO, May 6, 2020 /PRNewswire/ - "Franco-Nevada's
diversified portfolio performed very well in the first quarter
adding strong free cash flow to our debt-free balance sheet,"
stated David Harquail, CEO. "Going
forward, we are seeing COVID-19 related production curtailments to
a portion of our mining portfolio which will temporarily defer some
of our mining revenues. In our energy portfolio, we have seen a
sharp drop in commodity prices and drilling activity and an
impairment has been taken to reflect our reduced expectations for
those assets. Energy is expected to be less than 10% of our
revenues this year and weakness in this sector is expected to be
more than offset by strength in our gold equivalent assets. It is a
testament to our ongoing confidence in both the portfolio and
business model that today the Board has increased the dividend for
the 13th consecutive year adding to the over $1.2 billion of dividends already paid."
At today's AGM, Pierre Lassonde
gave his last address as Chair before taking on the title of Chair
Emeritus. The Board thanked Mr. Lassonde for his great leadership
to both the industry and for his contribution in creating
tremendous value for Franco-Nevada shareholders over the past 12.5
years.
"After 35 years with Franco-Nevada, in one incarnation or
another, I would like to thank all of the analysts, brokers,
portfolio managers and shareholders who have believed in us and
helped us build this great company," stated Pierre Lassonde, Chair. "At a time when
financial markets are racked by uncertainty, volatility and violent
losses in the face of COVID-19, there is nothing that gives me
greater pleasure than to see our share price reach new highs and
give our thousands of shareholders that extra support and comfort
they deserve by having invested in Franco-Nevada. That, more than
anything else, is reward enough for me. Thank you."
Following the meeting, David
Harquail was appointed Chair and Paul Brink as President and CEO. Mr. Brink has
also joined the Board as a director along with Maureen Jensen who is the former Chair and CEO
of the Ontario Securities Commission and a geoscientist.
Q1/2020 Financial Highlights
- 134,941 Gold Equivalent Ounces1 ("GEOs")
sold
- $240.5 million in
revenue
- $98.8 million of Net Loss, or
$0.52 per share, reflecting after-tax
impairment charges of $207.4 million ($271.7 million pre-tax) related to the Company's
interests in the SCOOP/STACK and Weyburn
- $109.2 million of Adjusted Net
Income2, or $0.58 per
share
- $41.5 million in Cash
Costs3, or $308 per GEO
sold
- $192.7 million of Adjusted
EBITDA4, or $1.02 per
share
Revenue and
GEO Sales by Asset Categories
|
|
|
|
|
Q1/2020
|
|
Q1/2019
|
|
|
GEO
Sales
|
Revenue
|
|
GEO
Sales
|
Revenue
|
|
|
#
|
(in millions)
|
|
#
|
(in millions)
|
Gold
|
|
105,751
|
|
$
|
167.0
|
|
87,578
|
|
$
|
114.0
|
Silver
|
|
13,882
|
|
|
22.1
|
|
15,298
|
|
|
20.0
|
PGMs
|
|
13,879
|
|
|
22.6
|
|
14,629
|
|
|
19.1
|
Other Mining
Assets
|
|
1,429
|
|
|
2.3
|
|
4,544
|
|
|
5.9
|
Mining
|
|
134,941
|
|
$
|
214.0
|
|
122,049
|
|
$
|
159.0
|
Energy
|
|
—
|
|
|
26.5
|
|
—
|
|
|
20.8
|
|
|
134,941
|
|
$
|
240.5
|
|
122,049
|
|
$
|
179.8
|
For Q1/2020, revenue was sourced 89.0% from gold and gold
equivalents (69.4% gold, 9.2% silver, 9.4% PGM and 1.0% other
mining assets) and 11.0% from energy (oil, gas and NGLs). The
portfolio's objective is to maintain a focus on precious metals
(gold, silver and PGM) with a target of no more than 20% in revenue
from energy. Geographically, revenue was sourced 86.9% from the
Americas (48.9% Latin America,
18.7% U.S. and 19.3% Canada).
Corporate Updates
- Island Gold Royalty Interest: On March 20, 2020, Franco-Nevada acquired an
existing 0.62% NSR on Alamos Gold Inc.'s Island Gold project in
Finan Township in the Province of Ontario for C$19.0
million ($13.4 million).
- New Independent Director: At today's annual meeting,
Maureen Jensen was elected to
Franco-Nevada's Board of Directors. Ms. Jensen has had a
distinguished career in senior regulatory and business positions,
most recently as Chair and Chief Executive Officer of the Ontario
Securities Commission from 2016 to 2020. Ms. Jensen is also a
Registered Professional Geoscientist and brings extensive
experience and knowledge both in regulatory and governance matters
and in geology and mining matters. Franco-Nevada's Board now has three women directors
representing one-third of independent directors.
- At-the-Market Equity Program ("ATM Program"): In
Q1/2020, the Company issued 435,000 shares under its ATM Program
for net proceeds of $45.5 million.
The ATM Program was established under the Company's 2018 base shelf
prospectus which was due to expire in July 2020. On
April 28, 2020, the Company renewed
its base shelf prospectus. As a result, the old base shelf
prospectus and associated ATM Program was terminated. The
Company intends to establish a $300
million at-the-market program under the new base shelf
prospectus subject to regulatory and stock exchange
approval.
- Credit Facilities: On February
14, 2020, the Company made full repayment of the
$80.0 million it had outstanding
under its non-revolving credit facility. On March 10, 2020, the Company amended the
Franco-Nevada (Barbados)
Corporation revolving credit facility to extend its term by an
additional year to March 20,
2021.
COVID-19 Updates
Franco-Nevada supports measures
to address the COVID-19 pandemic. All of our employees continue to
work remotely and there are no known cases in the Company. The
Company is closely monitoring the impact of the COVID-19 pandemic
on its portfolio of assets.
- Gold and Gold Equivalent Mining Assets:
Franco-Nevada has a diversified
portfolio that includes 56 producing assets consisting of four
larger cash-flowing assets, Antamina, Antapaccay, Candelaria and
Cobre Panama and 52 smaller cash-flowing assets. Operations at
Cobre Panama and Antamina have been temporarily suspended.
Antapaccay and Candelaria continue to operate at normal levels. 11
of the 52 cash-flowing assets have announced temporarily reduced or
curtailed production, 5 of which have since resumed
activities.
- Energy Assets: The Company has also undertaken a review
of the carrying value of its Energy assets. As a result of reduced
production and capital spend by the operators of the Company's
Energy assets due to lower market expectations for oil and gas
prices, the Company recorded after-tax impairments of $207.4 million ($271.7
million pre-tax) related to its interests in the SCOOP/STACK
and Weyburn.
- 2020 Guidance: As previously announced, the Company has
withdrawn its GEO sales guidance and energy revenue guidance for
2020 and will provide new guidance once operations in the mining
industry and energy markets stabilize.
Q1/2020 Portfolio Updates
Gold Equivalent Ounces Sold: GEOs sold for the
quarter were 134,941, an increase of 10.6% from the 122,049 sold in
Q1/2019. Cobre Panama, Guadalupe-Palmarejo and Hemlo contributed to the quarter-over-quarter
increase, partly offset by lower contributions from Candelaria,
Antapaccay and Sabodala.
Latin America:
- Cobre Panama (gold and silver stream) – Franco-Nevada
sold 25,307 GEOs from the mine in Q1/2020. Production in the
quarter was impacted by downtime in the crusher circuit. Due to
COVID-19, First Quantum placed the Cobre Panama operation on care
and maintenance on April 7, 2020.
First Quantum now expects Cobre Panama to produce between 210,000 –
235,000 tonnes of copper, compared to 285,000 – 310,000 tonnes
previously, assuming a restart of operations by the end of
May 2020.
- Candelaria (gold and silver stream) – Although copper
production at the Candelaria mine was higher quarter-over-quarter
due to higher copper head grades as more ore was sourced directly
from the open-pit and underground mines as opposed to stockpiles,
GEOs sold decreased due to the timing of deliveries to
Franco-Nevada in Q1/2020.
- Antapaccay (gold and silver stream) – GEOs sold from
Antapaccay were slightly lower quarter-over-quarter due to
anticipated lower grades based on the life of mine plan.
- Antamina (22.5% silver stream) – GEOs sold from Antamina
were lower quarter-over-quarter, reflecting lower copper grades,
in-line with the life of mine plan. Due to a higher gold-to-silver
ratio, the conversion of silver ounces to GEOs was also negatively
impacted. On April 13, 2020, Teck
Resources announced that the operation was being temporarily
suspended due to COVID-19. Timing on the resumption of operations
is uncertain at this time.
- Guadalupe-Palmarejo (50% gold stream) – Sales from
Guadalupe-Palmarejo increased quarter-over-quarter, due to higher
grades and sales from inventory carried over from Q4/2019. As a
result of COVID-19, operations at the mine have been suspended
since April 7, 2020.
- Cerro Moro (2% royalty) – Due to COVID-19, operations at
Cerro Moro were temporarily suspended from March 20, 2020 to April 3,
2020.
U.S.:
- Stillwater (5% royalty)
– Stillwater benefited from strong
palladium prices and the continued ramp-up of the Blitz project in
Q1/2020. On March 23, 2020,
Sibanye-Stillwater announced the deferral of non-essential growth
capital expenditure at the mine in response to COVID-19, which may
impact the development schedule of the Blitz project.
- South Arturo (4-9% royalty) – South Arturo had a strong
quarter of production due to the El Nino underground mine achieving
commercial production in October 2019
and processing of ore stockpiles. Additional development of the
Phase 1 and Phase 3 open-pit projects and the potential for an
on-site heap leach operation are being evaluated.
- Castle Mountain (2.65% royalty) – Phase 1 production is
targeted by Equinox for Q3/2020, which anticipates production of
45,000 ounces per year for 3 years. Phase 1 construction was 50%
complete at the end of 2019. Feasibility and permitting for Phase 2
is underway, which anticipates production increasing to
approximately 200,000 ounces per year.
Canada:
- Detour Lake (2% royalty) – Kirkland Lake Gold, which acquired Detour Gold
Corporation in January 2020, plans to
optimize the Detour Lake mine plan, improve productivity, manage
costs and expand production. Due to COVID-19, on March 23, 2020, Kirkland
Lake Gold transitioned the mine to reduced operations and
suspended exploration drilling. Kirkland
Lake has now commenced a gradual recall of its workers at
Detour Lake.
- Kirkland Lake (1.5-5.5%
royalty & 20% NPI) – Kirkland Lake
Gold reported that construction of the #4 Shaft is
continuing at a reduced level, but remains on schedule and budget.
Although exploration drilling has been suspended in response to
COVID-19, Kirkland Lake still
expects to carry out extensive exploration drilling in 2020.
Kirkland Lake has now commenced a
gradual recall of its workers at Macassa.
- Hemlo (3% royalty & 50%
NPI) – Royalties from Hemlo
increased quarter-over-quarter as the operation was modernized and
refocused in 2019.
- Golden Highway (Holt, Holloway
and Taylor mines) – Kirkland Lake announced the temporary
suspension of operations at the Holt Complex on April 2, 2020.
- Valentine Lake (2% royalty)
– Marathon Gold announced a positive pre-feasibility study,
which supports a 12-year open-pit operation with average gold
production of 175,000 ounces per year in the first 9 years,
reducing to 54,000 ounces per year in the last 3 years.
- Canadian Malartic (1.5%
royalty) – Due to COVID-19, operations at Canadian Malartic
were temporarily suspended from March 24,
2020 to April 15, 2020.
Rest of World:
- MWS (gold stream) – Due to COVID-19, operations at MWS
were suspended on March 26, 2020. On
April 15, 2020, AngloGold Ashanti
announced it had been granted permission for a limited restart,
with a third of its usual workforce.
- Tasiast (2% royalty) – The Tasiast 24k project currently remains on schedule and on
budget and is expected to double capacity by mid-2023. However,
timing may be challenged by COVID-19 related restrictions.
Unionized employees at the Tasiast mine also initiated a strike
action on May 5, 2020.
Energy: Revenue from the energy assets increased to
$26.5 million in Q1/2020 compared to
$20.8 million in Q1/2019, reflecting
contributions from new investments in the Marcellus and in the
SCOOP/STACK by the Royalty Acquisition Venture with Continental but
offset by lower commodity prices compared to Q1/2019.
U.S.:
- Marcellus (1% royalty) – The recently acquired royalty
contributed $5.8 million to revenue
in Q1/2020 and the asset will benefit from its first full year of
revenue in 2020.
- SCOOP/STACK (various royalty rates) – Royalties from
SCOOP/STACK increased quarter-over-quarter due to additional
contributions from the Royalty Acquisition Venture with
Continental. In Q1/2020, Franco-Nevada recorded contributions
of $16.8 million to the Royalty
Acquisition Venture and its remaining commitment is $127.0 million to be funded in future periods.
For 2020, in order to account for recent weakness in the commodity
price environment, Franco-Nevada and Continental have collectively
agreed to reduce their capital funding commitments to the Royalty
Acquisition Venture by approximately half, with Franco-Nevada's
share being approximately $35 million
for the remainder of 2020. The reduced funding level will target
lower prices for acquiring acreage, which will allow the Royalty
Acquisition Venture to bolster the land base and provide a stronger
platform for a potential future rebound in commodity prices and a
resumption of development activity by Continental.
- Permian Basin (various royalty rates) – Revenue from
Franco-Nevada's interests in the Permian Basin increased
quarter-over-quarter due to an increase in drilling activity on
royalty lands, partly offset by lower realized prices.
Canada:
- Weyburn (NRI, ORR, WI)
– Revenue from Weyburn decreased
quarter-over-quarter due to lower realized prices and higher
capital and operating costs in the quarter.
- Orion (4% GORR) – Revenue from Orion decreased
quarter-over-quarter due to lower realized prices.
Dividend Declaration
Franco-Nevada is pleased to
announce that its Board of Directors has declared a quarterly
dividend of $0.26 per share.
The dividend is a 4.0% increase from the previous $0.25 per share quarterly dividend and marks the
13th consecutive annual dividend increase for
Franco-Nevada shareholders. Canadian investors in
Franco-Nevada's IPO in December 2007
are now receiving an effective 9.6% yield on their cost base.
The dividend will be paid on June 25,
2020 to shareholders of record on June 11, 2020 (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 Consolidated Interim Financial Statements and
Management's Discussion and Analysis can be found today on
Franco‑Nevada's website at www.franco-nevada.com, on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov.
Management will host a conference call tomorrow, Thursday, May 7, 2020 at 10:00 a.m. Eastern
Time to review Franco‑Nevada's Q1/2020 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 May 14,
2020: Toll-Free (888) 390-0541; International (416)
764-8677; Code 621893 #
- 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 at-the-market ("ATM") program, and
the Company's expected use of the net proceeds of the ATM program.
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 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 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 production from our Mining assets 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 Q1/2020, the average
commodity prices were as follows: $1,583 gold (Q1/2019 - $1,304), $16.90
silver (Q1/2019 - $15.57),
$903 platinum (Q1/2019 - $823) and $2,284
palladium (Q1/2019 - $1,435).
- 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.
- Cash Costs attributable to GEOs sold and Cash Costs per GEO
sold are non-IFRS financial measures. Cash Costs
attributable to GEOs sold is calculated by starting with total
costs of sales and excluding depletion and depreciation, costs not
attributable to GEO sales such as our Energy operating costs, and
other non-cash costs of sales such as costs related to our prepaid
gold purchase agreement. Cash Costs is then divided by GEOs sold,
excluding prepaid ounces, to arrive at Cash Costs per GEO
sold.
- 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
|
|
|
March 31,
|
(expressed in
millions, except per GEO amounts)
|
|
2020
|
|
|
2019
|
Total costs of
sales
|
|
$
|
108.0
|
|
|
$
|
93.3
|
Depletion and
depreciation
|
|
|
(64.4)
|
|
|
|
(60.9)
|
Energy operating
costs
|
|
|
(2.1)
|
|
|
|
(1.4)
|
Cash Costs
attributable to GEOs sold
|
|
$
|
41.5
|
|
|
$
|
31.0
|
GEOs, excluding
prepaid ounces
|
|
|
134,941
|
|
|
|
122,049
|
Cash Costs per GEO
sold
|
|
$
|
308
|
|
|
$
|
254
|
|
|
|
|
For the three
months ended
|
|
|
|
|
March 31,
|
(expressed in
millions, except per share amounts)
|
|
|
|
2020
|
|
|
2019
|
Net (Loss)
Income
|
|
|
|
$
|
(98.8)
|
|
|
$
|
65.2
|
Income tax (recovery)
expense
|
|
|
|
|
(44.9)
|
|
|
|
13.0
|
Finance
expenses
|
|
|
|
|
1.1
|
|
|
|
2.5
|
Finance
income
|
|
|
|
|
(0.9)
|
|
|
|
(0.7)
|
Depletion and
depreciation
|
|
|
|
|
64.4
|
|
|
|
60.9
|
Impairment of royalty,
stream and working interests
|
|
|
|
|
271.7
|
|
|
|
—
|
Foreign exchange
(gains)/losses and other (income)/expenses
|
|
|
|
|
0.1
|
|
|
|
—
|
Adjusted
EBITDA
|
|
|
|
$
|
192.7
|
|
|
$
|
140.9
|
Basic weighted
average shares outstanding
|
|
|
|
|
189.4
|
|
|
|
187.0
|
Adjusted EBITDA
per share
|
|
|
|
$
|
1.02
|
|
|
$
|
0.75
|
|
|
For the three
months ended
|
|
|
March 31,
|
(expressed in
millions, except per share amounts)
|
|
2020
|
|
|
2019
|
Net (Loss)
Income
|
|
$
|
(98.8)
|
|
|
$
|
65.2
|
Impairment of royalty,
stream and working interests
|
|
|
271.7
|
|
|
|
—
|
Foreign exchange
(gains)/losses and other (income)/expenses
|
|
|
0.1
|
|
|
|
—
|
Tax effect of
adjustments
|
|
|
(63.8)
|
|
|
|
—
|
Adjusted Net
Income
|
|
$
|
109.2
|
|
|
$
|
65.2
|
Basic weighted
average shares outstanding
|
|
|
189.4
|
|
|
|
187.0
|
Adjusted Net
Income per share
|
|
$
|
0.58
|
|
|
$
|
0.35
|
FRANCO-NEVADA
CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
(unaudited, in millions of U.S. dollars)
|
|
At
March 31,
|
|
|
At
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents (Note 4)
|
|
$
|
209.8
|
|
|
$
|
132.1
|
|
Receivables
|
|
|
83.1
|
|
|
|
97.8
|
|
Prepaid expenses and
other (Note 6)
|
|
|
47.2
|
|
|
|
48.8
|
|
Current
assets
|
|
$
|
340.1
|
|
|
$
|
278.7
|
|
|
|
|
|
|
|
|
|
|
Royalty, stream and
working interests, net (Note 7)
|
|
$
|
4,449.4
|
|
|
$
|
4,797.8
|
|
Investments and loan
receivable (Note 5)
|
|
|
130.9
|
|
|
|
183.2
|
|
Deferred income tax
assets
|
|
|
52.8
|
|
|
|
6.8
|
|
Other assets (Note
8)
|
|
|
8.5
|
|
|
|
14.1
|
|
Total
assets
|
|
$
|
4,981.7
|
|
|
$
|
5,280.6
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
38.6
|
|
|
$
|
41.8
|
|
Current income tax
liabilities
|
|
|
2.0
|
|
|
|
11.6
|
|
Current
liabilities
|
|
$
|
40.6
|
|
|
$
|
53.4
|
|
|
|
|
|
|
|
|
|
|
Debt (Note
9)
|
|
$
|
—
|
|
|
$
|
80.0
|
|
Deferred income tax
liabilities
|
|
|
60.4
|
|
|
|
82.4
|
|
Other
liabilities
|
|
|
4.3
|
|
|
|
2.6
|
|
Total
liabilities
|
|
$
|
105.3
|
|
|
$
|
218.4
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY (Note 15)
|
|
|
|
|
|
|
|
|
Share
capital
|
|
$
|
5,448.7
|
|
|
$
|
5,390.7
|
|
Contributed
surplus
|
|
|
15.2
|
|
|
|
14.2
|
|
Deficit
|
|
|
(310.3)
|
|
|
|
(164.4)
|
|
Accumulated other
comprehensive loss
|
|
|
(277.2)
|
|
|
|
(178.3)
|
|
Total shareholders'
equity
|
|
$
|
4,876.4
|
|
|
$
|
5,062.2
|
|
Total liabilities and
shareholders' equity
|
|
$
|
4,981.7
|
|
|
$
|
5,280.6
|
|
The accompanying notes are an integral part of
these consolidated financial statements and can be found in our
Q1/2020 Report available on our website
FRANCO-NEVADA
CORPORATION
CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND
COMPREHENSIVE (LOSS) INCOME
(unaudited, in millions of
U.S. dollars and shares, except per share amounts)
|
|
For the three months ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Revenue (Note 10)
|
|
$
|
240.5
|
|
|
$
|
179.8
|
|
|
|
|
|
|
|
|
|
|
Costs of
sales
|
|
|
|
|
|
|
|
|
Costs of sales
(Note 11)
|
|
$
|
43.6
|
|
|
$
|
32.4
|
|
Depletion and
depreciation
|
|
|
64.4
|
|
|
|
60.9
|
|
Total costs of
sales
|
|
$
|
108.0
|
|
|
$
|
93.3
|
|
Gross
profit
|
|
$
|
132.5
|
|
|
$
|
86.5
|
|
|
|
|
|
|
|
|
|
|
Other operating
expenses (income)
|
|
|
|
|
|
|
|
|
Impairment of royalty,
streams and working interests (Note 7)
|
|
$
|
271.7
|
|
|
$
|
—
|
|
General and
administrative expenses
|
|
|
6.2
|
|
|
|
6.9
|
|
Gain on sale of gold
bullion
|
|
|
(2.0)
|
|
|
|
(0.4)
|
|
Total other operating
expenses (income)
|
|
$
|
275.9
|
|
|
$
|
6.5
|
|
Operating
(loss) income
|
|
$
|
(143.4)
|
|
|
$
|
80.0
|
|
Foreign exchange gain
(loss) and other income (expenses)
|
|
$
|
(0.1)
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
finance items and income taxes
|
|
$
|
(143.5)
|
|
|
$
|
80.0
|
|
|
|
|
|
|
|
|
|
|
Finance items
(Note 13)
|
|
|
|
|
|
|
|
|
Finance
income
|
|
$
|
0.9
|
|
|
$
|
0.7
|
|
Finance
expenses
|
|
|
(1.1)
|
|
|
|
(2.5)
|
|
Net (loss) income
before income taxes
|
|
$
|
(143.7)
|
|
|
$
|
78.2
|
|
|
|
|
|
|
|
|
|
|
Income tax (recovery)
expense (Note 14)
|
|
|
(44.9)
|
|
|
|
13.0
|
|
Net (loss)
income
|
|
$
|
(98.8)
|
|
|
$
|
65.2
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive (loss) income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to profit and loss:
|
|
|
|
|
|
|
|
|
Currency translation
adjustment
|
|
$
|
(63.6)
|
|
|
$
|
14.0
|
|
|
|
|
|
|
|
|
|
|
Items that will
not be reclassified subsequently to profit and loss:
|
|
|
|
|
|
|
|
|
(Loss) gain on changes
in the fair value of equity investments at fair
|
|
|
|
|
|
|
|
|
value through other
comprehensive income (loss) ("FVTOCI"),
|
|
|
|
|
|
|
|
|
net of income tax
(Note 5)
|
|
|
(35.3)
|
|
|
|
22.9
|
|
Other comprehensive
(loss) income
|
|
$
|
(98.9)
|
|
|
$
|
36.9
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
(loss) income
|
|
$
|
(197.7)
|
|
|
$
|
102.1
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per
share (Note 16)
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.52)
|
|
|
$
|
0.35
|
|
Diluted
|
|
$
|
(0.52)
|
|
|
$
|
0.35
|
|
Weighted average
number of shares outstanding (Note 16)
|
|
|
|
|
|
|
|
|
Basic
|
|
|
189.4
|
|
|
|
187.0
|
|
Diluted
|
|
|
189.8
|
|
|
|
187.3
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of
these consolidated financial statements and can be found in our
Q1/2020 Report available on our website
FRANCO-NEVADA
CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(unaudited, in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(98.8)
|
|
|
$
|
65.2
|
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depletion and
depreciation
|
|
|
64.4
|
|
|
|
60.9
|
|
Share-based
payments
|
|
|
1.2
|
|
|
|
1.4
|
|
Impairment of royalty,
stream and working interests
|
|
|
271.7
|
|
|
|
—
|
|
Unrealized foreign
exchange loss (gain)
|
|
|
0.5
|
|
|
|
(0.1)
|
|
Deferred income tax
(recovery) expense
|
|
|
(59.3)
|
|
|
|
3.3
|
|
Other non-cash
items
|
|
|
(2.5)
|
|
|
|
0.3
|
|
Acquisition of gold
bullion
|
|
|
(8.8)
|
|
|
|
(7.6)
|
|
Proceeds from sale of
gold bullion
|
|
|
13.5
|
|
|
|
11.2
|
|
Operating cash flows
before changes in non-cash working capital
|
|
$
|
181.9
|
|
|
$
|
134.6
|
|
Changes in non-cash
working capital:
|
|
|
|
|
|
|
|
|
Decrease in
receivables
|
|
$
|
14.7
|
|
|
$
|
6.9
|
|
Decrease (increase) in
prepaid expenses and other
|
|
|
7.1
|
|
|
|
(1.5)
|
|
(Decrease) increase in
current liabilities
|
|
|
(8.5)
|
|
|
|
3.6
|
|
Net cash provided by
operating activities
|
|
$
|
195.2
|
|
|
$
|
143.6
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
|
Acquisition of
royalty, stream and working interests
|
|
$
|
(34.3)
|
|
|
$
|
(57.3)
|
|
Acquisition of energy
well equipment
|
|
|
(0.2)
|
|
|
|
(0.3)
|
|
Proceeds from sale of
investments
|
|
|
—
|
|
|
|
1.3
|
|
Net cash used in
investing activities
|
|
$
|
(34.5)
|
|
|
$
|
(56.3)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
|
Repayment of revolving
credit facilities
|
|
$
|
—
|
|
|
$
|
(50.0)
|
|
Repayment of term
loan
|
|
|
(80.0)
|
|
|
|
—
|
|
Proceeds from
at-the-market equity offering
|
|
|
37.5
|
|
|
|
—
|
|
Credit facility
amendment costs
|
|
|
—
|
|
|
|
(0.8)
|
|
Payment of
dividends
|
|
|
(36.2)
|
|
|
|
(34.9)
|
|
Proceeds from exercise
of stock options
|
|
|
1.2
|
|
|
|
1.0
|
|
Net cash used in
financing activities
|
|
$
|
(77.5)
|
|
|
$
|
(84.7)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
$
|
(5.5)
|
|
|
$
|
0.3
|
|
Net change in cash
and cash equivalents
|
|
$
|
77.7
|
|
|
$
|
2.9
|
|
Cash and cash
equivalents at beginning of period
|
|
$
|
132.1
|
|
|
$
|
69.7
|
|
Cash and cash
equivalents at end of period
|
|
$
|
209.8
|
|
|
$
|
72.6
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
|
Cash paid for
interest expense and loan standby fees
|
|
$
|
0.8
|
|
|
$
|
2.2
|
|
Income taxes
paid
|
|
$
|
18.4
|
|
|
$
|
7.0
|
|
The accompanying notes are an integral part of
these consolidated financial statements and can be found in our
Q1/2020 Report available on our website
View original
content:http://www.prnewswire.com/news-releases/franco-nevada-reports-strong-q1-results-301054352.html
SOURCE Franco-Nevada Corporation