Diversified Portfolio Outperformed
(in U.S. dollars unless otherwise noted)
TORONTO, March 15,
2023 /PRNewswire/ - "Franco-Nevada is reporting
strong fourth quarter and annual results for 2022. Our Diversified
assets outperformed due to elevated energy prices in the year,
stated Paul Brink, CEO. We are
pleased that First Quantum and the Government of Panama have agreed on terms for a refreshed
concession contract and look forward to Cobre Panama achieving its
expanded throughput capacity later this year. Precious metal GEOs
and Diversified production in 2023 are expected to be consistent
with 2022. We are however guiding to lower total GEOs for the year
as current energy prices are below 2022 levels. The organic growth
in our 5 year outlook comes from both mine expansions and new
mines. Franco-Nevada is debt-free,
is growing its cash balances and has an active pipeline of growth
opportunities."
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Q4
2022
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2022
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Q4
results
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vs
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Annual
results
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vs
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Q4
2021
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2021
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Total GEOs1
sold (including Energy)
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183,886 GEOs
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+1 %
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729,960 GEOs
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+0.2 %
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Precious Metal
GEOs1 sold
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129,642 GEOs
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-7 %
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510,385 GEOs
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-9 %
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Revenue
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$320.4
million
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-2 %
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$1,315.7
million
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+1 %
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Net income
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$165.0 million
($0.86/share)
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-25 %
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$700.6 million
($3.66/share)
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+5 %
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Adjusted Net
Income2
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$164.9 million
($0.86/share)
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+1 %
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$697.6 million
($3.64/share)
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+4 %
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Adjusted
EBITDA2
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$262.4 million
($1.37/share)
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-3 %
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$1,106.9 million
($5.78/share)
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+1 %
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Adjusted EBITDA
Margin2
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81.9 %
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-0.5 %
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84.1 %
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+0.1 %
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Strong Financial Position
- Earned record GEOs, revenue, Adjusted Net Income, Adjusted
EBITDA and operating cash flow in 2022
- No debt and $2.2 billion in
available capital as at December 31,
2022
- Generated close to $1 billion in
operating cash flow in 2022
- Quarterly dividend increased 6.25% to $0.34/share effective Q1 2023
Sector-Leading ESG
- Ranked #1 gold company by Sustainalytics, AA by MSCI and Prime
by ISS ESG
- Named on the Corporate Knights' 2022 list of the Best 50
Corporate Citizens in Canada
- Committed to the World Gold Council's "Responsible Gold Mining
Principles"
- Partnering with our operators on community and ESG
initiatives
- Goal of 40% diverse representation at the Board and top
leadership levels as a group by 2025
Diverse, Long-Life Portfolio
- Most diverse royalty and streaming portfolio by asset, operator
and country
- Core assets outperforming since time of acquisition
- Long-life reserves and resources
Growth and Optionality
- Acquisitions, mine expansions and new mines driving future
growth
- Long-term optionality in gold, copper and nickel and to some of
the world's great mineral endowments
- Strong pipeline of precious metal opportunities
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Quarterly
revenue and GEOs sold by commodity
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Q4
2022
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Q4
2021
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GEOs
Sold
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Revenue
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GEOs
Sold
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Revenue
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#
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(in millions)
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#
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(in millions)
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PRECIOUS
METALS
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Gold
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102,583
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$
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178.2
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109,637
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$
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196.5
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Silver
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18,493
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32.7
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21,479
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38.6
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PGM
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8,566
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15.5
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7,683
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14.0
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129,642
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$
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226.4
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138,799
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$
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249.1
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DIVERSIFIED
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Iron ore
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6,230
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$
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10.8
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8,600
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$
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15.5
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Other mining
assets
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301
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0.5
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656
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1.1
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Oil
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19,619
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34.2
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16,148
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28.9
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Gas
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24,630
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42.5
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14,569
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26.3
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NGL
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3,464
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6.0
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3,771
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6.8
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54,244
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$
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94.0
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43,744
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$
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78.6
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183,886
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$
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320.4
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182,543
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$
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327.7
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Annual revenue and
GEOs sold by commodity
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2022
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2021
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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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PRECIOUS
METALS
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Gold
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401,756
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$
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723.1
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420,535
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$
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750.6
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Silver
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77,232
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139.9
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97,234
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172.7
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PGM
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31,397
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56.7
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40,628
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72.4
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510,385
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$
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919.7
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558,397
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$
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995.7
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DIVERSIFIED
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Iron ore
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30,803
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$
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55.5
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49,748
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$
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89.6
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Other mining
assets
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3,760
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6.9
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2,836
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5.2
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Oil
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86,068
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156.0
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60,447
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108.1
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Gas
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84,227
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150.9
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44,685
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79.8
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NGL
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14,717
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26.7
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12,124
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21.6
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219,575
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$
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396.0
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169,840
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$
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304.3
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729,960
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$
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1,315.7
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728,237
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$
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1,300.0
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In Q4 2022, we earned $320.4
million in revenue, down 2.2% from Q4 2021. The decrease was
driven by lower contributions from our Precious Metal and Iron Ore
assets, largely offset by our Energy assets due to higher realized
oil and gas prices. Precious Metal revenue accounted for 70.7% of
our revenue (55.6% gold, 10.2% silver, 4.9% PGM). Revenue was
sourced 90.5% from the Americas (26.8% South America, 22.8% Central America & Mexico, 27.0% U.S. and 13.9% Canada).
2023 Guidance
Please see our MD&A for the year ended December 31, 2022 for more details on our
guidance and see "Forward-Looking Statements" below.
For 2023, we expect GEO sales from our Precious Metal assets to
range between 490,000 and 530,000 GEOs, consistent with 2022, but
anticipate total GEOs sales to be between 640,000 and 700,000 GEOs,
a reduction from 2022 primarily based on lower assumed oil and gas
prices. With respect to Cobre Panama, based on First Quantum's most
recent 2023 guidance of between 350,000 and 380,000 tonnes of
copper, our attributable GEO production would be between 131,000
and 142,000 GEOs. Following the restriction of concentrate
shipments in February, we have made a larger allowance for the
impact of shipment timing for the year. We have estimated GEOs
delivered and sold from Cobre Panama to be between 115,000 and
135,000 GEOs. We expect higher production from Antapaccay, MWS and
Musselwhite, and initial contributions from new mines including
Magino, Séguéla and Salares Norte, partly offset by anticipated
decreases in GEO sales from Antamina, Hemlo and Candelaria. For our Diversified assets, we are
guiding to lower GEOs, reflecting lower assumed oil and gas prices,
partly offset by higher GEO contributions from our Iron Ore and
Other Mining assets.
We estimate depletion expense to be between $275 and $305
million. Our remaining capital commitment to the Royalty
Acquisition Venture with Continental is $79.4 million. In addition, we expect to commence
funding of our $250 million stream on
the Tocantinzinho project at the end of Q1 2023.
5-Year Outlook
We expect our portfolio to produce between 760,000 and 820,000
GEOs in 2027, of which 565,000 to 605,000 GEOs are expected to be
generated from Precious Metal assets. This outlook assumes the
expansion of the mill throughput capacity to 100 million tonnes per
year at Cobre Panama, increased attributable production from Vale's
Northern and Southeastern systems, production growth from the
continued development of our U.S. Energy assets, and assumes the
commencement of production at Stibnite, Copper World and
Eskay Creek. In our 5-year outlook,
we also anticipate that our attributable portion of gold and silver
production from Candelaria will
step down from 68% to 40%, and that our stream at MWS will have
reached its cap in 2024.
For both our 2023 guidance and 5-year outlook, when reflecting
revenue earned from gold, silver, platinum, palladium, iron ore,
oil and gas commodities to GEOs, we assumed the following prices:
$1,800/oz Au, $21/oz Ag, $900/oz
Pt, $1,500/oz Pd, $120/tonne Fe 62% CFR China, $80/bbl WTI oil and $3.00/mcf Henry Hub natural gas. In addition, we
do not assume any other acquisitions and do not reflect any
incremental revenue from additional contributions we may make to
the Royalty Acquisition Venture with Continental as part of our
remaining commitment of $79.4
million. The 2023 guidance and 5-year outlook are based on
public forecasts and other disclosure by the third-party owners and
operators of our assets and our assessment thereof.
Environmental, Social and Governance (ESG) Updates
During the quarter, we partnered with Glencore at Antapaccay to
help fund the Alto Huarco community potable water project in
Espinar, Peru and also fulfilled
our charitable commitment under our BlackNorth pledge. We continue
to rank highly with leading ESG rating agencies. We were awarded a
Sustainalytics Global 50 Top Rated rating, given to the top 50
companies in the Sustainalytics ratings universe, and received our
2022 CDP score of "B-".
Portfolio Additions
- Acquisition of Gold Royalties – Australia: Subsequent to year-end, on
February 22, 2023, we acquired a
portfolio of five primarily gold royalties from Trident Royalties
Plc, which includes a 1.5% NSR on Ramelius Resources' Rebecca gold
project located in Western
Australia, for total consideration of $15.6 million.
- Acquisition of Additional Royalty on Eskay Creek: On December 30, 2022, we acquired an additional 0.5%
NSR on Skeena's Eskay Creek
gold-silver project for total consideration of $21.0 million (C$28.5
million). We now hold a 1.5% NSR over Eskay Creek covering the majority of the
project's land package, including the known Mineral Resource.
- Financing Package with Argonaut Gold on the Magino Gold
Project: As previously announced, on October 27, 2022, we acquired a 2% NSR on
Argonaut Gold Inc.'s ("Argonaut") construction-stage Magino gold
project for a purchase price of $52.5
million. We also completed a private placement with Argonaut
of $10.0 million (C$13.6 million).
Cobre Panama Update
As previously announced on February 23,
2023, ore processing operations at Cobre Panama were
suspended while negotiations between First Quantum and the
Government of Panama on a
refreshed concession contract were ongoing. On March 8, 2023, First Quantum and the Government
of Panama agreed and finalized the
draft of a concession contract for Cobre Panama. The proposed
concession contract is subject to a 30-day public consultation
process and approvals by the Panamanian Cabinet, Comptroller
General of the Republic and the National Assembly. MPSA has
received authorization from the Panama Maritime Authority and
concentrate loading operations at the Punta Rincón port have
resumed. Cobre Panama processing operations have resumed to normal
levels with all three trains operating. MPSA continues to
remobilize the workforce to full staffing levels.
Q4 2022 Portfolio Updates
Precious Metal assets: GEOs sold from our Precious
Metal assets were 129,642, compared to 138,799 GEOs in Q4 2021.
Higher contributions from Hemlo,
Tasiast and Subika (Ahafo) were more than offset by lower
deliveries from Antapaccay, Cobre Panama and
Guadalupe-Palmarejo.
South America:
- Candelaria (gold and silver
stream) – GEOs delivered and sold in Q4 2022 were relatively
consistent with those sold in Q4 2021. For 2023, we forecast GEO
sales of between 60,000 and 70,000 GEOs, a decrease compared to
69,854 GEOs sold in 2022 due to sequencing of the open pit.
- Antapaccay (gold and silver stream) – GEOs delivered and
sold were lower in Q4 2022 compared to Q4 2021 due to anticipated
lower grades in 2022 based on sequencing of the mine. For 2023, we
anticipate GEOs sold to increase from 53,023 GEOs in 2022 to
between 57,500 and 67,500 GEOs reflecting higher expected
production based on the mining sequence.
- Antamina (22.5% silver stream) – GEOs delivered and sold
were lower in Q4 2022 compared to Q4 2021, partly due to a less
favourable silver to gold conversion ratio. For 2023, we anticipate
between 2.4 to 2.8 million silver ounces, compared to 3.1 million
silver ounces sold in 2022, due to silver grades which are
forecasted to be lower than average in 2023.
- Salares Norte (1-2% royalties) – Gold Fields reported
total project completion of 87% for the construction of Salares
Norte at the end of December 2022.
With the commencement of commercial production at Salares Norte now
expected in Q4 2023, we do not anticipate meaningful royalty
payments until 2024.
- Tocantinzinho (gold stream) – G Mining Ventures reported
that, as of December 31, 2022, the
project continues to be on track and on budget for commercial
production to start in H2 2024.
- Cascabel (1% royalty) – In February 2023, SolGold and Cornerstone Capital
Resources completed the previously announced friendly merger,
consolidating the ownership of the Cascabel project under one
combined entity.
- Cerro Moro (2% royalty) –
In January 2023, shareholders of
Yamana and Pan American Silver approved the acquisition of Yamana
by Pan American Silver. The transaction is expected to close in Q1
2023.
- Posse (Mara Rosa) (1%
royalty) – Construction of Mara
Rosa is advancing on schedule and reported to be 50%
complete as of the end of December
2022, with first production anticipated in H1 2024.
Central America & Mexico:
- Cobre Panama (gold and silver stream) – First Quantum
reported strong production in Q4 2022, with copper production of
90,000 tonnes and mill throughput of 22.4 million tonnes. New
weekly and monthly throughput records were also set in December 2022. Our GEO deliveries were lower in
Q4 2022 than in the prior year period due to the timing of
shipments.
- Guadalupe-Palmarejo (50% gold stream) – GEOs sold from
Guadalupe-Palmarejo decreased in Q4 2022 compared to the same
quarter in 2021 due to a lower proportion of production being
sourced from ground covered by our stream.
U.S.:
- Stillwater (5% royalty)
– We expect higher PGM production in 2023 than in 2022, with
production rates normalizing since the regional flood that occurred
in June 2022. However, production
from Stillwater West is expected to be temporarily affected
following an incident reported in March
2023 that damaged shaft infrastructure. Additionally, we
expect a less favourable conversion ratio to GEOs based on the
commodity prices assumed in our 2023 guidance.
- Marigold (0.5-5% royalties) – SSR Mining plans
significant waste stripping activities at the Red Dot deposit with
an aim to optimize the longer-term production profile. For 2023,
production is forecasted to increase based on the mine
sequencing.
- Stibnite Gold (1.7% royalty) – With the comment period
on the Supplemental Draft Environmental Impact Statement for the
Stibnite project closed in January
2023, Perpetua Resources anticipates a draft Record of
Decision in mid-2023. In December, the Stibnite Gold project was
also awarded up to $24.8 million
under the U.S. Defense Production Act.
- Copper World/East Pit (Rosemont) (2.085% royalty) – Hudbay
continues to advance the pre-feasibility study for Phase I of
Copper World, which is now expected in H1 2023, with a definitive
feasibility study anticipated in 2024.
Canada:
- Detour Lake (2% royalty) – Detour Lake had record
production of over 732,000 gold ounces in 2022. In 2023, the focus
remains on optimizing mill processes and improving runtime to
achieve and potentially surpass mill throughput of 28 million
tonnes per year. Exploration efforts are expected to focus on
extending mineralization to the west and establishing an initial
underground mineral resource. Agnico Eagle also expects to provide
an update on the pathway to potentially increase production to one
million ounces of gold per year.
- Hemlo (3% royalty & 50%
NPI) – Revenue from our Hemlo
royalties was higher than in Q4 2021 reflecting improved operating
performance. Barrick announced that it expects production from
Hemlo to increase in 2023 relative
to 2022, but we expect a lower proportion to be sourced from our
royalty ground.
- Brucejack (1.2% royalty) – Newcrest Mining is advancing
a debottlenecking concept study to potentially increase the process
plant capacity, with a permit application expected in H1 2023.
Drilling continued to confirm the potential for resource growth at
the Valley of the Kings deposit and surrounding area.
- Kirkland Lake (1.5-5.5%
royalty & 20% NPI) – Agnico Eagle reported the completion
of Shaft #4 and of a new ventilation system at Macassa. Drilling is
planned to continue at AK in 2023 from the underground platforms
that were developed in 2022, with a focus on continuing to upgrade
and increase the indicated mineral resources. Franco-Nevada has multiple royalties at Macassa that
include AK.
- Canadian Malartic (1.5%
royalty) – Agnico Eagle reported that the Odyssey underground
project, which is expected to extend the life of the complex to at
least 2039, is progressing on schedule and on budget, with shaft
sinking activities expected to commence in March 2023.
- Greenstone (Hardrock) (3% royalty) – Equinox Gold
reported that construction of the project is on schedule and
budget, with the Greenstone project 65% complete as of the end of
December 2022 with the first gold
pour expected in H1 2024.
- Magino (2% royalty) – Argonaut reported that the
construction of the project is approximately 80% complete as of the
end of December 2022, with the first
gold pour expected in H1 2023.
- Valentine Gold (1.5%
royalty) – Marathon Gold reported that the project remains on
schedule for first ore to be delivered to the mill by the end of
2024 and first gold production in Q1 2025, with overall completion
at 21% as of the end of January 2023.
In February 2023, Marathon Gold
exercised its option for a partial buy-back of our royalty,
reducing our NSR to 1.5%.
- Eskay Creek (1.5%
royalty) – Skeena Resources announced the discovery of new
mineralization east of the 22 Zone in an area with no historical
drilling, beyond the extents of Eskay
Creek's currently defined pit-constrained resources.
- Ring of Fire (1-3% royalties) – Ring of Fire Metals
announced it had signed a Memorandum of Understanding with Webequie
First Nation, detailing how the two parties will work together to
progress ongoing exploration activities as well as negotiations on
a partnership agreement for the proposed Eagle's Nest mine.
Rest of World:
- MWS (25% stream) – We expect an increase in GEOs from
our stream at MWS in 2023 compared to in 2022, where production in
2022 was impacted by material and water supply constraints.
- Tasiast (2% royalty) – We anticipate increased
production at Tasiast, with Kinross reporting that the Tasiast
24k project is progressing on
schedule to reach a throughput capacity of 24,000 tonnes per day by
mid-2023, with ramp-up to operate consistently at this designed
tonnage by the end of 2023.
- Séguéla (1.2% royalty) – Fortuna Silver Mines reported
that construction activities are progressing on time and on budget
with the overall project 90% complete as of the end of January 2023, with the first gold pour expected
in mid-2023.
Diversified assets: Our Diversified assets,
primarily comprising our Iron Ore and Energy interests, generated
$94.0 million in revenue, up from
$78.6 million in Q4 2021, reflecting
higher realized oil and gas prices relating to our Energy
assets.
Iron Ore:
- Vale Royalty (iron ore royalty) – Revenue from the Vale
royalty decreased compared to Q4 2021 due to lower iron ore prices
and attributable sales. In 2023, we anticipate an increase in GEOs,
reflecting the ramp-up of production at S11D and a more favourable
GEO conversion ratio based on the prices we have assumed for our
2023 guidance.
- LIORC – LIORC declared a cash dividend of C$0.70 per common share in Q4 2022, reflecting
lower iron ore prices, compared to C$1.15 per common share in Q4 2021. Iron Ore
Company of Canada reported
significant capital expenditures to upgrade existing infrastructure
at the Carol Lake mine.
Energy:
- Marcellus (1% royalty) – Revenue from the Marcellus
asset increased compared to Q4 2021. Revenues benefited from higher
NGL and natural gas prices and a slight increase in
production.
- Haynesville (various royalty rates) – Revenue from the
Haynesville portfolio increased compared to Q4 2021, as the asset
benefited from higher natural gas prices and increased production
from new wells.
- SCOOP/STACK (various royalty rates) – Revenue from the
SCOOP/STACK increased compared to Q4 2021 due to higher prices and
increased production from our interests earned through the Royalty
Acquisition Venture with Continental Resources. In November 2022, Continental Resources completed
the previously announced merger agreement with an entity
privately-owned by the family of Harold G.
Hamm, Continental Resources' founder. The transaction does
not directly impact our Royalty Acquisition Venture with
Continental.
- Permian Basin (various royalty rates) – Revenue from the
Permian Basin increased compared to Q4 2021. The increase in
revenue in the current period reflects higher realized prices and
higher production from new wells.
- Weyburn (NRI, ORR, WI)
– Revenue from the Weyburn Unit was higher compared to Q4 2021,
reflecting the increase in commodity prices, which more than offset
higher operating and capital expenditures incurred through our NRI
and working interest.
Shareholder Information
The complete audited Consolidated Financial Statements and
Management's Discussion and Analysis can be found on our website at
www.franco-nevada.com, on SEDAR at www.sedar.com and on EDGAR at
www.sec.gov.
We will host a conference call to review our 2022 results.
Interested investors are invited to participate as follows:
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2022 Results
Release:
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March 15th
after market close
|
Conference Call and Webcast:
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March
16th 10:00 am ET
|
Dial–in Numbers:
|
Toll–Free: 1–888–390–0546
International: 416–764–8688
|
Conference Call
URL (This allows participants to
join
the conference call by phone without operator assistance.
Participants will receive an automated call back after
entering their name and phone number):
|
https://bit.ly/3F7jRqB
|
|
|
Webcast:
|
www.franco–nevada.com
|
Replay (available until March
23rd):
|
Toll–Free: 1–888–390–0541
International: 416–764–8677
Pass code: 932372
#
|
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 resource
and mineral reserve 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 CRA, the expected exposure for current and future
assessments and available remedies, the completion of the public
consultation process and obtaining all required Panamanian
approvals for the proposed concession contract with the Government
of Panama for the Cobre Panama
mine and the terms of the proposed concession contract. In
addition, statements relating to resources and reserves, gold
equivalent ounces ("GEOs") and mine life 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 resources and
reserves, GEOs or mine life 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: 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 resources and reserves 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, sinkholes, 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.
ENDNOTES:
- GEOs: Starting in Q4 2021, revenue from Franco-Nevada's
Energy assets is included in the calculation of GEOs. GEOs for
comparative periods have been recalculated to conform with the
current presentation. GEOs include Franco-Nevada's attributable
share of production from our Mining and Energy assets after
applicable recovery and payability factors. GEOs are estimated on a
gross basis for NSRs 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, iron ore, oil, gas and
other 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 commodity was produced or sold. For Q4 2022, the
average commodity prices were as follows: $1,729/oz gold (Q4 2021 - $1,795), $21.20/oz
silver (Q4 2021 - $23.32),
$971/oz platinum (Q4 2021 -
$998) and $1,940/oz palladium (Q4 2021 - $1,935), $98/t Fe
62% CFR China (Q4 2021 - $108),
$82.65/bbl WTI oil (Q4 2021 -
$77.19) and $6.09/mcf Henry Hub natural gas (Q4 2021 -
$4.85). For 2022 prices, the average
commodity prices were as follows: $1,801/oz gold (2021 - $1,800), $21.75/oz
silver (2021 - $25.17), $961/oz platinum (2021 - $1,091) and $2,107/oz palladium (2021 - $2,397), $122/t Fe
62% CFR China (2021 - $160),
$94.23/bbl WTI oil (2021 -
$67.91) and $6.51/mcf Henry Hub natural gas (2021 -
$3.72).
- NON-GAAP FINANCIAL MEASURES: Adjusted Net Income
and Adjusted Net Income per share, Adjusted EBITDA and Adjusted
EBITDA per share, and Adjusted EBITDA Margin are non-GAAP financial
measures with no standardized meaning under International Financial
Reporting Standards ("IFRS") and might not be comparable to similar
financial measures disclosed by other issuers. For a quantitative
reconciliation of each non-GAAP financial measure to the most
directly comparable IFRS financial measure, refer to the following
tables. Further information relating to these Non-GAAP financial
measures is incorporated by reference from the "Non-GAAP Financial
Measures" section of Franco-Nevada's MD&A for the year ended
December 31, 2022 dated March 15,
2023 filed with the Canadian securities regulatory
authorities on SEDAR available at www.sedar.com and with the U.S.
Securities and Exchange Commission available on EDGAR at
www.sec.gov.
- Adjusted Net Income and Adjusted Net Income per share
are non-GAAP financial measures, which exclude the following from
net income and earnings per share ("EPS"): impairment charges and
reversal 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-GAAP 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 and reversals 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.
- Adjusted EBITA Margin is a non-GAAP financial measure
which is defined by the Company as Adjusted EBITDA divided by
revenue.
Reconciliation of Non-GAAP Financial Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
|
For the year
ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
(expressed in
millions, except per share amounts)
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Net
income
|
|
$
|
165.0
|
|
|
$
|
220.9
|
|
|
$
|
700.6
|
|
|
$
|
733.7
|
|
Impairment
reversals
|
|
|
—
|
|
|
|
(75.5)
|
|
|
|
—
|
|
|
|
(68.0)
|
|
Foreign exchange
(gain) loss and other (income) expenses
|
|
|
(0.1)
|
|
|
|
1.3
|
|
|
|
(3.6)
|
|
|
|
3.0
|
|
Finance income related
to repayment of Noront loan
|
|
|
—
|
|
|
|
—
|
|
|
|
(2.2)
|
|
|
|
—
|
|
Tax effect of
adjustments
|
|
|
—
|
|
|
|
19.3
|
|
|
|
2.8
|
|
|
|
17.8
|
|
Other tax related
adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognition of
previously unrecognized deferred tax assets
|
|
|
—
|
|
|
|
(2.3)
|
|
|
|
—
|
|
|
|
(12.9)
|
|
Adjusted Net
Income
|
|
$
|
164.9
|
|
|
$
|
163.7
|
|
|
$
|
697.6
|
|
|
$
|
673.6
|
|
Basic weighted average
shares outstanding
|
|
|
191.7
|
|
|
|
191.2
|
|
|
|
191.5
|
|
|
|
191.1
|
|
Adjusted Net Income
per share
|
|
$
|
0.86
|
|
|
$
|
0.86
|
|
|
$
|
3.64
|
|
|
$
|
3.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
|
For the year
ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
(expressed in
millions, except per share amounts)
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Net
income
|
|
$
|
165.0
|
|
|
$
|
220.9
|
|
|
$
|
700.6
|
|
|
$
|
733.7
|
|
Income tax
expense
|
|
|
30.0
|
|
|
|
44.7
|
|
|
|
133.1
|
|
|
|
124.1
|
|
Finance
expenses
|
|
|
0.7
|
|
|
|
0.9
|
|
|
|
3.2
|
|
|
|
3.6
|
|
Finance
income
|
|
|
(6.7)
|
|
|
|
(0.7)
|
|
|
|
(12.6)
|
|
|
|
(3.7)
|
|
Depletion and
depreciation
|
|
|
73.5
|
|
|
|
78.2
|
|
|
|
286.2
|
|
|
|
299.6
|
|
Impairment
reversals
|
|
|
—
|
|
|
|
(75.5)
|
|
|
|
—
|
|
|
|
(68.0)
|
|
Foreign exchange
(gain) loss and other (income) expenses
|
|
|
(0.1)
|
|
|
|
1.3
|
|
|
|
(3.6)
|
|
|
|
3.0
|
|
Adjusted
EBITDA
|
|
$
|
262.4
|
|
|
$
|
269.8
|
|
|
$
|
1,106.9
|
|
|
$
|
1,092.3
|
|
Basic weighted average
shares outstanding
|
|
|
191.7
|
|
|
|
191.2
|
|
|
|
191.5
|
|
|
|
191.1
|
|
Adjusted EBITDA per
share
|
|
$
|
1.37
|
|
|
$
|
1.41
|
|
|
$
|
5.78
|
|
|
$
|
5.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
|
For the year
ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
(expressed in
millions, except Adjusted EBITDA Margin)
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Adjusted
EBITDA
|
|
$
|
262.4
|
|
|
$
|
269.8
|
|
|
$
|
1,106.9
|
|
|
$
|
1,092.3
|
|
Revenue
|
|
|
320.4
|
|
|
|
327.7
|
|
|
|
1,315.7
|
|
|
|
1,300.0
|
|
Adjusted EBITDA
Margin
|
|
|
81.9
|
%
|
|
|
82.3
|
%
|
|
|
84.1
|
%
|
|
|
84.0
|
%
|
FRANCO-NEVADA
CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
(in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
At
December 31,
|
|
|
At
December 31,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents (Note 5)
|
|
$
|
1,196.5
|
|
|
$
|
539.3
|
|
Receivables
|
|
|
135.7
|
|
|
|
119.8
|
|
Loan receivable (Note
6)
|
|
|
—
|
|
|
|
39.7
|
|
Prepaid expenses and
other (Note 7)
|
|
|
50.9
|
|
|
|
52.6
|
|
Current
assets
|
|
$
|
1,383.1
|
|
|
$
|
751.4
|
|
|
|
|
|
|
|
|
|
|
Royalty, stream and
working interests, net (Note 8)
|
|
$
|
4,927.5
|
|
|
$
|
5,149.3
|
|
Investments (Note
6)
|
|
|
227.2
|
|
|
|
235.9
|
|
Deferred income tax
assets (Note 17)
|
|
|
39.9
|
|
|
|
49.4
|
|
Other assets (Note
9)
|
|
|
49.1
|
|
|
|
23.9
|
|
Total
assets
|
|
$
|
6,626.8
|
|
|
$
|
6,209.9
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities (Note 10)
|
|
$
|
43.1
|
|
|
$
|
33.6
|
|
Current income tax
liabilities
|
|
|
7.1
|
|
|
|
9.6
|
|
Current
liabilities
|
|
$
|
50.2
|
|
|
$
|
43.2
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax
liabilities (Note 17)
|
|
$
|
153.0
|
|
|
$
|
135.4
|
|
Other
liabilities
|
|
|
6.0
|
|
|
|
6.1
|
|
Total
liabilities
|
|
$
|
209.2
|
|
|
$
|
184.7
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Share capital (Note
18)
|
|
$
|
5,695.3
|
|
|
$
|
5,628.5
|
|
Contributed
surplus
|
|
|
15.6
|
|
|
|
16.1
|
|
Retained
earnings
|
|
|
940.4
|
|
|
|
484.9
|
|
Accumulated other
comprehensive loss
|
|
|
(233.7)
|
|
|
|
(104.3)
|
|
Total shareholders'
equity
|
|
$
|
6,417.6
|
|
|
$
|
6,025.2
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
|
$
|
6,626.8
|
|
|
$
|
6,209.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The consolidated financial statements and accompanying notes
can be found in our 2022 Annual Report available on our
website
FRANCO-NEVADA
CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND
COMPREHENSIVE INCOME (LOSS)
(in millions of U.S. dollars
and shares, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
2022
|
|
|
2021
|
|
Revenue (Note
12)
|
|
$
|
1,315.7
|
|
|
$
|
1,300.0
|
|
|
|
|
|
|
|
|
|
|
Costs of
sales
|
|
|
|
|
|
|
|
|
Costs of sales (Note
13)
|
|
$
|
176.9
|
|
|
$
|
178.3
|
|
Depletion and
depreciation
|
|
|
286.2
|
|
|
|
299.6
|
|
Total costs of
sales
|
|
$
|
463.1
|
|
|
$
|
477.9
|
|
Gross profit
|
|
$
|
852.6
|
|
|
$
|
822.1
|
|
|
|
|
|
|
|
|
|
|
Other operating
expenses (income)
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
|
$
|
22.5
|
|
|
$
|
19.6
|
|
Share-based
compensation expenses (Note 14)
|
|
|
10.1
|
|
|
|
11.2
|
|
Impairment reversals
(Note 8)
|
|
|
—
|
|
|
|
(68.0)
|
|
Gain on sale of gold
bullion
|
|
|
(0.7)
|
|
|
|
(1.4)
|
|
Total other operating
expenses (income)
|
|
$
|
31.9
|
|
|
$
|
(38.6)
|
|
Operating
income
|
|
$
|
820.7
|
|
|
$
|
860.7
|
|
Foreign exchange gain
(loss) and other income (expenses)
|
|
$
|
3.6
|
|
|
$
|
(3.0)
|
|
Income before finance
items and income taxes
|
|
$
|
824.3
|
|
|
$
|
857.7
|
|
|
|
|
|
|
|
|
|
|
Finance items (Note
16)
|
|
|
|
|
|
|
|
|
Finance
income
|
|
$
|
12.6
|
|
|
$
|
3.7
|
|
Finance
expenses
|
|
|
(3.2)
|
|
|
|
(3.6)
|
|
Net income before
income taxes
|
|
$
|
833.7
|
|
|
$
|
857.8
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(Note 17)
|
|
|
133.1
|
|
|
|
124.1
|
|
Net
income
|
|
$
|
700.6
|
|
|
$
|
733.7
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
(loss) income, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to profit and loss:
|
|
|
|
|
|
|
|
|
Currency translation
adjustment
|
|
$
|
(92.0)
|
|
|
$
|
(4.0)
|
|
|
|
|
|
|
|
|
|
|
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 ("FVTOCI"),
|
|
|
|
|
|
|
|
|
net of income tax
(Note 6)
|
|
|
(36.7)
|
|
|
|
22.6
|
|
Other comprehensive
(loss) income, net of taxes
|
|
$
|
(128.7)
|
|
|
$
|
18.6
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
$
|
571.9
|
|
|
$
|
752.3
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
(Note 19)
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
3.66
|
|
|
$
|
3.84
|
|
Diluted
|
|
$
|
3.65
|
|
|
$
|
3.83
|
|
Weighted average number
of shares outstanding (Note 19)
|
|
|
|
|
|
|
|
|
Basic
|
|
|
191.5
|
|
|
|
191.1
|
|
Diluted
|
|
|
191.9
|
|
|
|
191.5
|
|
|
|
|
|
|
|
|
|
|
The consolidated financial statements and accompanying notes
can be found in our 2022 Annual Report available on our
website
FRANCO-NEVADA
CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
2022
|
|
|
2021
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
700.6
|
|
|
$
|
733.7
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depletion and
depreciation
|
|
|
286.2
|
|
|
|
299.6
|
|
Share-based
compensation expenses
|
|
|
8.2
|
|
|
|
8.0
|
|
Impairment
reversals
|
|
|
—
|
|
|
|
(68.0)
|
|
Unrealized foreign
exchange loss
|
|
|
3.3
|
|
|
|
1.5
|
|
Deferred income tax
expense
|
|
|
37.4
|
|
|
|
37.1
|
|
Other non-cash
items
|
|
|
(3.5)
|
|
|
|
(3.0)
|
|
Acquisition of gold
bullion
|
|
|
(46.7)
|
|
|
|
(40.0)
|
|
Proceeds from sale of
gold bullion
|
|
|
51.6
|
|
|
|
27.5
|
|
Changes in other
assets
|
|
|
(26.7)
|
|
|
|
(10.7)
|
|
Operating cash flows
before changes in non-cash working capital
|
|
$
|
1,010.4
|
|
|
$
|
985.7
|
|
Changes in non-cash
working capital:
|
|
|
|
|
|
|
|
|
Increase in
receivables
|
|
$
|
(15.9)
|
|
|
$
|
(26.4)
|
|
Increase in prepaid
expenses and other
|
|
|
(3.2)
|
|
|
|
(2.4)
|
|
Increase (decrease) in
current liabilities
|
|
|
8.2
|
|
|
|
(1.5)
|
|
Net cash provided by
operating activities
|
|
$
|
999.5
|
|
|
$
|
955.4
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in
investing activities
|
|
|
|
|
|
|
|
|
Acquisition of
royalty, stream and working interests
|
|
$
|
(139.6)
|
|
|
$
|
(758.7)
|
|
Acquisition of
investments
|
|
|
(48.5)
|
|
|
|
(17.2)
|
|
Acquisition of energy
well equipment
|
|
|
(1.9)
|
|
|
|
(1.8)
|
|
Proceeds from
settlement of loan receivable
|
|
|
42.7
|
|
|
|
—
|
|
Proceeds from sale of
investments
|
|
|
1.8
|
|
|
|
12.7
|
|
Net cash used in
investing activities
|
|
$
|
(145.5)
|
|
|
$
|
(765.0)
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in
financing activities
|
|
|
|
|
|
|
|
|
Payment of
dividends
|
|
$
|
(197.6)
|
|
|
$
|
(179.6)
|
|
Proceeds from draw of
revolving credit facilities
|
|
|
—
|
|
|
|
150.0
|
|
Repayment of revolving
credit facilities
|
|
|
—
|
|
|
|
(150.0)
|
|
Credit facility
amendment costs
|
|
|
(0.9)
|
|
|
|
(1.0)
|
|
Proceeds from exercise
of stock options
|
|
|
9.5
|
|
|
|
0.4
|
|
Net cash used in
financing activities
|
|
$
|
(189.0)
|
|
|
$
|
(180.2)
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
$
|
(7.8)
|
|
|
$
|
(5.1)
|
|
Net change in cash
and cash equivalents
|
|
$
|
657.2
|
|
|
$
|
5.1
|
|
Cash and cash
equivalents at beginning of year
|
|
$
|
539.3
|
|
|
$
|
534.2
|
|
Cash and cash
equivalents at end of year
|
|
$
|
1,196.5
|
|
|
$
|
539.3
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
|
Dividend income
received
|
|
$
|
19.7
|
|
|
$
|
30.2
|
|
Interest and standby
fees paid
|
|
$
|
2.4
|
|
|
$
|
2.4
|
|
Income taxes
paid
|
|
$
|
95.1
|
|
|
$
|
93.5
|
|
The consolidated financial statements and accompanying notes
can be found in our 2022 Annual Report available on our
website
View original
content:https://www.prnewswire.com/news-releases/franco-nevada-reports-2022-results-301773492.html
SOURCE Franco-Nevada Corporation