(in U.S. dollars unless otherwise noted)
Record earnings margin and strong organic growth
TORONTO, Nov. 4, 2020
/PRNewswire/ - Franco-Nevada delivered record revenue, EBITDA and
net earnings in the third quarter with all material Mining assets
having returned to normal operations through the quarter. The
Company continued to lead its royalty and streaming peers with the
highest EBITDA margins and, in particular, with a record earnings
margin of 55% in the quarter. "It is exciting for the future to see
the level of organic growth across our portfolio of producing,
advanced and exploration assets," stated Paul Brink, CEO. During the third quarter, 25
new royalties were added to the portfolio bringing the number of
mining related assets to 316. The Company's Energy assets
also benefitted from a rebound in oil and gas prices.
Franco-Nevada expects to be near
the high end of its previously announced guidance ranges for 2020,
assuming that the recent strike action at Candelaria is resolved
and operations resume in the near term.
Financial Highlights – Q3/2020 vs Q3/2019
- 134,817 Gold Equivalent Ounces1 ("GEOs") sold
(+1%)
- $279.8 million in revenue – a new
record (+19%)
- $153.9 million of Net Income, or
$0.81 per share – a new record
(+51%)
- $39.1 million in Cash
Costs3, or $290 per GEO
sold
- $235.1 million of Adjusted
EBITDA4, or $1.23 per
share – a new record (+22%)
- Debt free
|
Revenue and
GEO Sales by Asset Categories
|
|
Q3/2020
|
Q3/2019
|
|
GEO
Sales
|
Revenue
|
GEO
Sales
|
Revenue
|
|
#
|
(in millions)
|
#
|
(in millions)
|
Gold
|
108,709
|
$
|
206.1
|
101,781
|
$
|
151.1
|
Silver
|
13,691
|
|
26.1
|
15,903
|
|
23.8
|
PGMs
|
10,630
|
|
21.3
|
11,373
|
|
17.2
|
Other Mining
Assets
|
1,787
|
|
3.5
|
4,162
|
|
6.1
|
Mining
|
134,817
|
$
|
257.0
|
133,219
|
$
|
198.2
|
Energy
|
—
|
|
22.8
|
—
|
|
37.5
|
|
134,817
|
$
|
279.8
|
133,219
|
$
|
235.7
|
For Q3/2020, revenue was sourced 91.9% from gold and gold
equivalents (73.7% gold, 9.3% silver, 7.6% PGM and 1.3% other
Mining assets) and 8.1% from energy (oil, gas and NGLs). The focus
of the portfolio is on precious metals (gold, silver and PGM) with
a target of no more than 20% in revenue from energy.
Geographically, revenue was sourced 85.3% from the Americas (48.9%
Latin America, 16.0% U.S. and
20.4% Canada).
Corporate Updates
- Amendment of Sabodala Gold Stream Agreement: On
September 25, 2020, Franco-Nevada
amended its existing Sabodala gold purchase and sale agreement with
Teranga Gold to compensate the Company for displacement from the
processing of Massawa ore through the Sabodala processing
facilities and to provide for certain protocols for the commingling
of Sabodala and Massawa ores.
- Alpala Royalty Interest: On September 11, 2020, the Company completed its
previously announced transaction to acquire a 1% NSR with reference
to all minerals produced from the Alpala copper-gold-silver project
in northern Ecuador for
$100.0 million.
- Freeport Royalty Portfolio Interests: On September 1, 2020, the Company acquired a
portfolio of 24 royalties from Freeport-McMoRan for $30.6 million in cash. The portfolio includes
prospective royalties over Wallbridge Mining's Fenelon (1%
royalty), Martiniere (2% royalty) and Northway-Noyon (1% royalty)
projects. It also includes producing royalties on Peñoles'
Milpillas copper mine in Sonora,
Mexico ($0.04/lb copper), and on
Ormat Technologies' Neal Hot Springs geothermal operation in
Oregon (2-3% royalty).
- Rio Baker (Salares Norte) Royalty Interest: On
September 23, 2020, the Company
acquired a 2% NSR on all mineral production from Gold Fields' Rio
Baker concessions in Chile for
$5.0 million cash with contingent
payments of up to $8.0 million. The
Rio Baker claims cover the North-West extension of the Salares
Norte deposit and the royalty acquisition now provides
Franco-Nevada with exposure to 100% of the Salares Norte
project.
- At-the-Market Equity Program ("ATM Program"): In
Q3/2020, the Company issued 144,900 shares under its ATM Program
for net proceeds of $21.4
million.
2020 Guidance
Franco-Nevada expects
attributable royalty and stream sales from its Mining assets to be
near the high end of the previously provided 475,000 to 505,000
GEOs guidance, assuming that Candelaria operations resume in near
term. Revenue from Energy assets is expected to be near the
high end of our previously provided guidance of $60 to $75 million.
The Company expects depletion expense to approximate $225 million - $245
million for 2020. For this guidance, silver, platinum and
palladium metals have been converted to GEOs using assumed
commodity prices of $1,800/oz Au,
$20.00/oz Ag, $900/oz Pt and $2,200/oz Pd. The WTI oil price and Henry Hub
natural gas price are assumed to average $40 per barrel and $2.00 per mcf, respectively. The 2020 guidance is
based on public forecasts and other disclosures by the third-party
owners and operators of our assets or our assessment thereof.
COVID-19 Updates
Franco-Nevada supports measures
to address the COVID-19 pandemic. There are no known cases in the
Company. The Company continues to monitor the impact of the
COVID-19 pandemic on its portfolio of assets. As a result of the
COVID-19 pandemic, temporarily reduced or curtailed production was
announced in early 2020 by a number of operators of our Mining
assets; however, all operations with the exception of Golden
Highway have since resumed operations. Franco-Nevada has expanded its social commitments
during the COVID-19 pandemic, with new programs to support mental
health at the communities around Candelaria and water
infrastructure for communities around Palmarejo-Guadalupe.
Q3/2020 Portfolio Updates
Gold Equivalent Ounces Sold: GEOs sold for the quarter
were 134,817 an increase of 1.2% from the 133,219 sold in Q3/2019.
Higher contributions from Hemlo
and Candelaria were partly offset by lower contributions from Cobre
Panama and Sabodala.
Latin America:
- Cobre Panama (gold and silver stream) – On October 28, 2020, First Quantum Minerals Ltd.
("First Quantum") reported that Cobre Panama was back into full
production well ahead of schedule. Production guidance for 2020 has
been updated by First Quantum. Copper production guidance for 2020
has been increased to 190,000 – 205,000 tonnes. Gold production
guidance for 2020 has been increased to 75,000 – 85,000 ounces.
Franco-Nevada sold 16,350 GEOs
from the asset in Q3/2020.
- Candelaria (gold and silver stream) – Franco-Nevada sold
20,204 GEOs from the asset in Q3/2020. On October 28, 2020, Lundin Mining reported the
temporary suspension of operations at Candelaria due to labour
strikes by the Candelaria AOS Union and the Candelaria Mine Workers
Union are currently on strike. Candelaria guidance was withdrawn by
Lundin Mining on October 18,
2020.
- Antapaccay (gold and silver stream) – GEOs delivered and
sold were lower quarter-over-quarter due to anticipated lower
grades based on the life of mine plan.
- Antamina (22.5% silver stream) – GEOs delivered and sold
were lower quarter-over-quarter due to lower copper grades. On
October 27, 2020, Teck reported that
Antamina operations performed at full production rates during
Q3/2020 following a temporary shutdown due to the COVID-19
pandemic.
- Guadalupe-Palmarejo (50% gold stream) – Sales from
Guadalupe-Palmarejo were higher quarter-over-quarter. On
October 28, 2020, Coeur Mining
reported strong quarterly production and improved operational
performance at Palmarejo.
- Cerro Moro (2% royalty) – Operations at Cerro Moro are
back to the standard throughput expectation of 1,000 tpd following
a COVID-19 curtailment, with productivity trending higher.
Increasing production from the Zoe underground higher-grade mine in
the fourth quarter is expected to position Cerro Moro for its
highest gold production quarter of the year.
U.S.:
- Stillwater (5% royalty)
– Stillwater benefited from strong
palladium prices during the quarter. On August 27, 2020, Sibanye-Stillwater announced
that the U.S. PGM operations continued to operate largely
uninterrupted.
- South Arturo (4-9% royalty) – Very positive drill
results from expansion drilling at the El Nino underground mine
were reported on September 21,
2020.
- Castle Mountain (2.65% royalty) – On October 15, 2020, Equinox reported that first
gold was poured from the Castle Mountain mine. The Phase 1
operation is expected to produce on average 45,000 ounces of gold
annually with a feasibility study for the Phase 2 expansion
targeted for completion in Q4/2020. Annual average production of
200,000 ounces is expected for Phase 2.
- Mesquite (0.5-2% royalty) – On October 8, 2020, Equinox announced that it had
increased mineral reserves by 28% and measured and indicated
mineral resources by 94% at its Mesquite mine in California.
- Stibnite (1.7% royalty) – In August 2020, the U.S. Forest Service released the Draft Environmental
Impact Statement on the Stibnite Gold Project for public comment.
On October 28, 2020, Midas Gold
reported that the comment period on the Draft Environmental Impact
Statement had been completed.
Canada:
- Detour Lake (2% royalty) – Production from the Detour
Lake mine totaled 140,067 ounces in Q3/2020, a 6% increase compared
to the previous quarter due to an increase in mining rates as well
as a higher average grade. During the quarter Kirkland Lake announced additional high-grade
intersections at the Detour Lake Saddle Zone. The new holes form
part of the recently announced 250,000 metres exploration program.
Kirkland Lake plans completion of
the program by the end of 2021 to collect information for updated,
and potentially expanded resource and reserve estimates.
- Kirkland Lake (1.5-5.5%
royalty & 20% NPI) – Production at Macassa totaled 38,028
ounces in Q3/2020. Mine production was affected by limited
operating development being completed during reduced operations due
to COVID-19 and by unscheduled downtime in the mill. On
October 19, 2020, Kirkland Lake reported that it had intersected
exceptional gold grades from underground exploration drilling at
Macassa near the contact of the South Mine Complex and Amalgamated
Break.
- Hemlo (3% royalty & 50%
NPI) – Revenue from Hemlo
increased significantly quarter-over-quarter as the 50% NPI on
Interlake benefitted from higher gold prices and increased
production. In addition, the Company recorded NPI royalties of
$13 million related to prior periods
during the quarter. Q3/2020 production from Hemlo totaled 55,000 ounces. Barrick reported
that it plans to extend the life of the Hemlo gold mine by transitioning it to a
purely underground operation, as open pit mining at the mine starts
winding down. Franco-Nevada's
royalties relate only to the downdip of the orebody accessed
through the underground mine.
- Golden Highway (Holt, Holloway and Taylor mines) (various
royalty rates) – Golden Highway operations remain on suspension
while Kirkland Lake continues to
assess options for the future of the assets. On August 17, 2020, Kirkland Lake announced it had entered into a
strategic alliance with Newmont Canada with respect to exploration
and development opportunities around the Golden Highway
operations.
- Canadian Malartic (1.5%
royalty) – Production at Canadian Malartic totaled 76,398
ounces in Q3/2020 and was above plan due to increased throughput.
During the quarter Agnico Eagle announced 10 drill rigs are
currently targeting the East Gouldie Zone and the exploration
budget for 2020 has been increased to 107,000 metres. A resource
upate is expected by year-end.
- Island Gold (0.62% royalty) – On October 28, 2020, Alamos Gold reported record
quarterly production of 39,600 ounces from Island Gold. Positive
results of its Phase III expansion study on Island Gold is expected
to drive a 72% increase in average annual production to 236,000
ounces. During the quarter Alamos announced drill holes at Island
East that extended high-grade gold mineralization up to 100 metres
down-plunge from the nearest inferred resource block over
significantly greater widths.
- Valentine Lake (2%
royalty) – In September
2020, Marathon Gold filed its Environmental Impact Statement
for the Valentine Lake Project and on October 21, 2020 released further drill results
for the Berry Zone. Marathon Gold is planning an initial mineral
resource estimate at Berry by the first quarter of next year. The
Berry Zone is located in the 6km long Sprite Corridor between the
Marathon and Leprechaun deposits.
- Red Lake (Bateman) (2% royalty) – On October 21, 2020, Battle North Gold announced the
feasibility study results for the Bateman Gold Project. The base
case study outlines life of mine payable gold production of 602,987
ounces, averaging 73,835 ounces per year for 8.2 years from initial
production.
Rest of World:
- MWS (gold stream) – Harmony
Gold completed its acquisition of MWS from AngloGold Ashanti
on September 30, 2020.
- Sabodala (gold stream) – Teranga Gold announced on
August 21, 2020 the results of the
pre-feasibility study for its Sabodala-Massawa gold complex. The
pre-feasibility study supports the combined mineral reserve
estimates and mine plan of Sabodala and the Massawa Project and
includes a mine plan for the combined assets with average
production for the first five years of 384,000 ounces of gold per
year.
- Duketon (2% royalty) – Production at Duketon totaled
81,567 ounces in its most recent quarter. On October 23, 2020 Regis Resources announced that
the Rosemont underground continued
to increase its production levels and that the drilling completed
at the Garden Well Underground Project confirmed a wide, robust
high-grade mineralised zone beneath the pit. Work on the Garden
Well PFS is expected to be completed in the December quarter.
Energy: Revenue from the Energy assets decreased to
$22.8 million in Q3/2020 compared to
$37.5 million in Q3/2019. Revenues
were negatively impacted by lower realized commodity prices and
lower volumes associated with a reduction in drilling by
operators.
U.S.:
- Marcellus (1% royalty) – The royalty contributed
$4.8 million to revenue in Q3/2020
reflecting consistent production volume and a NYMEX gas price of
$2.14/mcf.
- SCOOP/STACK (various royalty rates) – Royalties
from SCOOP/STACK decreased quarter-over-quarter due to lower
realized commodity prices and lower volumes due
to reduced drilling by the operators within the play and on
royalty lands. These factors offset contributions from additional
royalties acquired under the Royalty Acquisition Venture with
Continental, where the pace of acquisition has slowed in 2020.
- Permian Basin (various royalty rates) – Revenue from
Franco-Nevada's interests in the Permian Basin decreased
quarter-over-quarter due to lower realized prices.
Canada:
- Weyburn (NRI, ORR, WI)
– Revenue from Weyburn contributed
$7.2 million in Q3/2020 compared to
$7.9 million in Q3/2019 due mostly to
lower contribution from the Working Interest as a result of lower
realized prices.
- Orion (4% GORR) – Revenue from Orion decreased
quarter-over-quarter due to lower realized prices. Production
levels at the asset are now consistently ~20,000 bbls/day after a
drop in the spring owing to low commodity 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 will be paid on December 17,
2020 to shareholders of record on December 3, 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, November 5, 2020 at 10:00 a.m. Eastern Time to review Franco–Nevada's
Q3/2020 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 November
12, 2020: Toll-Free (888) 390-0541; International (416)
764-8677; Code 064744 #
- 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 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 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 Q3/2020, the average
commodity prices were as follows: $1,911 gold (Q3/2019 - $1,474), $24.39
silver (Q3/2019 - $17.02),
$903 platinum (Q3/2019 - $883) and $2,170
palladium (Q3/2019 - $1,533).
- 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, and costs
not attributable to GEO sales such as our Energy operating costs.
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
|
For the nine
months ended
|
|
September 30,
|
September 30,
|
(expressed in
millions, except per GEO amounts)
|
2020
|
2019
|
2020
|
2019
|
Total costs of
sales
|
$
|
97.3
|
$
|
109.4
|
$
|
285.6
|
$
|
289.0
|
Depletion and
depreciation
|
|
(56.8)
|
|
(70.7)
|
|
(173.5)
|
|
(190.5)
|
Energy operating
costs
|
|
(1.4)
|
|
(1.9)
|
|
(4.5)
|
|
(5.1)
|
Cash Costs
attributable to GEOs sold
|
$
|
39.1
|
$
|
36.8
|
$
|
107.6
|
$
|
93.4
|
GEOs
|
|
134,817
|
|
133,219
|
|
374,088
|
|
363,042
|
Cash Costs per GEO
sold
|
$
|
290
|
$
|
276
|
$
|
288
|
$
|
257
|
|
|
For the three
months ended
|
For the nine
months ended
|
|
September 30,
|
September 30,
|
(expressed in
millions, except per share amounts)
|
2020
|
2019
|
2020
|
2019
|
Net
Income
|
$
|
153.9
|
$
|
101.6
|
$
|
149.5
|
$
|
230.8
|
Income tax expense
(recovery)
|
|
25.2
|
|
17.9
|
|
(8.2)
|
|
44.6
|
Finance
expenses
|
|
0.8
|
|
3.5
|
|
2.7
|
|
8.5
|
Finance
income
|
|
(1.1)
|
|
(0.8)
|
|
(3.0)
|
|
(2.7)
|
Depletion and
depreciation
|
|
56.8
|
|
70.7
|
|
173.5
|
|
190.5
|
Impairment of royalty,
stream and working interests
|
|
—
|
|
—
|
|
271.7
|
|
—
|
Foreign exchange
(gains)/losses and other (income)/expenses
|
|
(0.5)
|
|
—
|
|
(0.3)
|
|
—
|
Adjusted
EBITDA
|
$
|
235.1
|
$
|
192.9
|
$
|
585.9
|
$
|
471.7
|
Basic weighted
average shares outstanding
|
|
190.3
|
|
187.7
|
|
189.9
|
|
187.3
|
Adjusted EBITDA
per share
|
$
|
1.23
|
$
|
1.03
|
$
|
3.09
|
$
|
2.52
|
|
|
For the three
months ended
|
For the nine
months ended
|
|
September 30,
|
September 30,
|
(expressed in
millions, except per share amounts)
|
2020
|
2019
|
2020
|
2019
|
Net
Income
|
$
|
153.9
|
$
|
101.6
|
$
|
149.5
|
$
|
230.8
|
Impairment of royalty,
stream and working interests
|
|
—
|
|
—
|
|
271.7
|
|
—
|
Foreign exchange
(gains)/losses and other (income)/expenses
|
|
(0.5)
|
|
—
|
|
(0.3)
|
|
—
|
Tax effect of
adjustments
|
|
(1.1)
|
|
—
|
|
(67.6)
|
|
—
|
Adjusted Net
Income
|
$
|
152.3
|
$
|
101.6
|
$
|
353.3
|
$
|
230.8
|
Basic weighted
average shares outstanding
|
|
190.3
|
|
187.7
|
|
189.9
|
|
187.3
|
Adjusted Net
Income per share
|
$
|
0.80
|
$
|
0.54
|
$
|
1.86
|
$
|
1.23
|
FRANCO-NEVADA
CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
(unaudited, in millions of U.S. dollars)
|
|
At
September 30,
|
At
December 31,
|
|
2020
|
2019
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents (Note 4)
|
$
|
466.8
|
$
|
132.1
|
Receivables
|
|
93.5
|
|
97.8
|
Prepaid expenses and
other (Note 6)
|
|
40.7
|
|
48.8
|
Current
assets
|
$
|
601.0
|
$
|
278.7
|
|
|
|
|
|
Royalty, stream and
working interests, net (Note 7)
|
$
|
4,512.4
|
$
|
4,797.8
|
Investments and loan
receivable (Note 5)
|
|
189.6
|
|
183.2
|
Deferred income tax
assets
|
|
45.8
|
|
6.8
|
Other assets (Note
8)
|
|
8.7
|
|
14.1
|
Total
assets
|
$
|
5,357.5
|
$
|
5,280.6
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
37.0
|
$
|
41.8
|
Current income tax
liabilities
|
|
4.8
|
|
11.6
|
Current
liabilities
|
$
|
41.8
|
$
|
53.4
|
|
|
|
|
|
Debt (Note
9)
|
$
|
—
|
$
|
80.0
|
Deferred income tax
liabilities
|
|
80.9
|
|
82.4
|
Other
liabilities
|
|
4.3
|
|
2.6
|
Total
liabilities
|
$
|
127.0
|
$
|
218.4
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY (Note 15)
|
|
|
|
|
Share
capital
|
$
|
5,565.4
|
$
|
5,390.7
|
Contributed
surplus
|
|
16.2
|
|
14.2
|
Deficit
|
|
(160.5)
|
|
(164.4)
|
Accumulated other
comprehensive loss
|
|
(190.6)
|
|
(178.3)
|
Total shareholders'
equity
|
$
|
5,230.5
|
$
|
5,062.2
|
Total liabilities and
shareholders' equity
|
$
|
5,357.5
|
$
|
5,280.6
|
|
|
|
|
|
|
|
|
|
|
Contingencies (Note 19)
|
|
|
|
|
The accompanying notes are an integral part of
these consolidated financial statements and can be found in our
Q3/2020 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
|
For the nine months ended
|
|
September 30,
|
September 30,
|
|
2020
|
2019
|
2020
|
2019
|
Revenue (Note 10)
|
$
|
279.8
|
$
|
235.7
|
$
|
715.7
|
$
|
586.0
|
|
|
|
|
|
|
|
|
|
Costs of
sales
|
|
|
|
|
|
|
|
|
Costs of sales
(Note 11)
|
$
|
40.5
|
$
|
38.7
|
$
|
112.1
|
$
|
98.5
|
Depletion and
depreciation
|
|
56.8
|
|
70.7
|
|
173.5
|
|
190.5
|
Total costs of
sales
|
$
|
97.3
|
$
|
109.4
|
$
|
285.6
|
$
|
289.0
|
Gross
profit
|
$
|
182.5
|
$
|
126.3
|
$
|
430.1
|
$
|
297.0
|
|
|
|
|
|
|
|
|
|
Other operating
expenses (income)
|
|
|
|
|
|
|
|
|
Impairment of royalty,
stream and working interests (Note 7)
|
$
|
—
|
$
|
—
|
$
|
271.7
|
$
|
—
|
General and
administrative expenses
|
|
6.3
|
|
5.6
|
|
24.2
|
|
18.1
|
Gain on sale of gold
bullion
|
|
(2.1)
|
|
(1.5)
|
|
(6.5)
|
|
(2.3)
|
Total other operating
expenses
|
$
|
4.2
|
$
|
4.1
|
$
|
289.4
|
$
|
15.8
|
Operating
income
|
$
|
178.3
|
$
|
122.2
|
$
|
140.7
|
$
|
281.2
|
Foreign exchange gain
(loss) and other income (expenses)
|
$
|
0.5
|
$
|
—
|
$
|
0.3
|
$
|
—
|
Income before finance
items and income taxes
|
$
|
178.8
|
$
|
122.2
|
$
|
141.0
|
$
|
281.2
|
|
|
|
|
|
|
|
|
|
Finance items
(Note 13)
|
|
|
|
|
|
|
|
|
Finance
income
|
$
|
1.1
|
$
|
0.8
|
$
|
3.0
|
$
|
2.7
|
Finance
expenses
|
|
(0.8)
|
|
(3.5)
|
|
(2.7)
|
|
(8.5)
|
Net income before
income taxes
|
$
|
179.1
|
$
|
119.5
|
$
|
141.3
|
$
|
275.4
|
|
|
|
|
|
|
|
|
|
Income tax expense
(recovery) (Note 14)
|
|
25.2
|
|
17.9
|
|
(8.2)
|
|
44.6
|
Net
income
|
$
|
153.9
|
$
|
101.6
|
$
|
149.5
|
$
|
230.8
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to profit and loss:
|
|
|
|
|
|
|
|
|
Currency translation
adjustment
|
$
|
13.6
|
$
|
(10.5)
|
$
|
(20.6)
|
$
|
17.6
|
|
|
|
|
|
|
|
|
|
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 (loss) ("FVTOCI"),
|
|
|
|
|
|
|
|
|
net of income tax
(Note 5)
|
|
7.5
|
|
(43.4)
|
|
9.2
|
|
4.3
|
Other comprehensive
income (loss)
|
$
|
21.1
|
$
|
(53.9)
|
$
|
(11.4)
|
$
|
21.9
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
$
|
175.0
|
$
|
47.7
|
$
|
138.1
|
$
|
252.7
|
|
|
|
|
|
|
|
|
|
Earnings per share
(Note 16)
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.81
|
$
|
0.54
|
$
|
0.79
|
$
|
1.23
|
Diluted
|
$
|
0.81
|
$
|
0.54
|
$
|
0.79
|
$
|
1.23
|
Weighted average
number of shares outstanding (Note 16)
|
|
|
|
|
|
|
|
|
Basic
|
|
190.3
|
|
187.7
|
|
189.9
|
|
187.3
|
Diluted
|
|
190.7
|
|
188.1
|
|
190.3
|
|
187.6
|
The accompanying notes are an integral part of
these consolidated financial statements and can be found in our
Q3/2020 Report available on our website
FRANCO-NEVADA
CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(unaudited, in millions of U.S. dollars)
|
|
For the nine months ended
|
|
September 30,
|
|
2020
|
2019
|
Cash flows from
operating activities
|
|
|
|
|
Net income
|
$
|
149.5
|
$
|
230.8
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depletion and
depreciation
|
|
173.5
|
|
190.5
|
Share-based
payments
|
|
3.8
|
|
3.9
|
Impairment of royalty,
stream and working interests
|
|
271.7
|
|
—
|
Unrealized foreign
exchange loss
|
|
0.5
|
|
—
|
Deferred income tax
(recovery) expense
|
|
(39.6)
|
|
19.4
|
Other non-cash
items
|
|
(9.2)
|
|
(4.0)
|
Acquisition of gold
bullion
|
|
(27.4)
|
|
(23.6)
|
Proceeds from sale of
gold bullion
|
|
42.3
|
|
28.2
|
Operating cash flows
before changes in non-cash working capital
|
$
|
565.1
|
$
|
445.2
|
Changes in non-cash
working capital:
|
|
|
|
|
Decrease (increase) in
receivables
|
$
|
4.3
|
$
|
(10.1)
|
Increase in prepaid
expenses and other
|
|
(1.0)
|
|
(16.2)
|
(Decrease) increase in
current liabilities
|
|
(10.8)
|
|
14.2
|
Net cash provided by
operating activities
|
$
|
557.6
|
$
|
433.1
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
Acquisition of
royalty, stream and working interests
|
$
|
(174.0)
|
$
|
(436.3)
|
Acquisition of energy
well equipment
|
|
(0.5)
|
|
(0.9)
|
Proceeds from sale of
investments
|
|
3.4
|
|
6.8
|
Acquisition of
investments
|
|
—
|
|
(3.9)
|
Net cash used in
investing activities
|
$
|
(171.1)
|
$
|
(434.3)
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
Repayment of revolving
credit facilities
|
$
|
—
|
$
|
(400.0)
|
Proceeds from draw of
credit facilities
|
|
—
|
|
275.0
|
(Repayment) proceeds
from draw of term loan
|
|
(80.0)
|
|
160.0
|
Proceeds from
at-the-market equity offerings
|
|
135.7
|
|
83.0
|
Credit facility
amendment costs
|
|
—
|
|
(0.8)
|
Payment of
dividends
|
|
(115.1)
|
|
(102.9)
|
Proceeds from exercise
of stock options
|
|
7.3
|
|
8.5
|
Net cash (used in)
provided by financing activities
|
$
|
(52.1)
|
$
|
22.8
|
Effect of exchange
rate changes on cash and cash equivalents
|
$
|
0.3
|
$
|
0.4
|
Net change in cash
and cash equivalents
|
$
|
334.7
|
$
|
22.0
|
Cash and cash
equivalents at beginning of period
|
$
|
132.1
|
$
|
69.7
|
Cash and cash
equivalents at end of period
|
$
|
466.8
|
$
|
91.7
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
Cash paid for
interest expense and loan standby fees
|
$
|
1.8
|
$
|
7.7
|
Income taxes
paid
|
$
|
46.0
|
$
|
33.1
|
The accompanying notes are an integral part of
these consolidated financial statements and can be found in our
Q3/2020 Report available on our website
View original
content:http://www.prnewswire.com/news-releases/franco-nevada-reports-record-financial-results-301166646.html
SOURCE Franco-Nevada Corporation