Franco-Nevada Corporation

Thank you, Anita. Thank you all for attending, and thank you to the Denver Gold Group for hosting this awesome event. Please heed the cautionary statement. For many years now, the objective of Franco-Nevada has been to create a low-risk way to invest in the mining industry, but to participate in the incredible value that can be created through resource optionality as the industry mines deeper the incredible ore bodies that get revealed over time. That’s worked incredibly well for us. We started 18 years ago. Our IPO at the time when we bought the assets back out of Newmont was $1.2 billion, and our market cap today is pushing $50 billion US dollars.

There are a lot of players that are in the royalty streaming space. We feel that we play the game differently from others, and some of the key things there, the first is we’re owners. We own a lot of our stock, probably more than most of our peers. That gives us a particular focus. We’re not just interested in making the company bigger for the sake of being big. We’re interested in profitable growth. What we wanna make sure is every single deal that we do gets our share price higher.

The second is being flexible. Yes, royalty and streams are the core component of what we’re trying to achieve, but we’re not a bank. We’re not stuck with a cookie-cutter model. We’re open to how we structure our deals. Most of our conversations when we sit down with operators is to say, “How can we help you?” Our objective is, if we can make them successful, then we will be successful, and that has been the best way to grow our business.

Speaking about that profitable growth, and the key thing is not just buying assets, not just being a bigger company, but making sure when we invest a dollar that we get a good return on capital. Very proud that our track record is typically we do achieve the best return on capital. That has been the case, boosted by these fantastic gold and oil prices. The return on capital is looking even more attractive in the next couple of years.

That has translated into our share price performance. We show it on the chart here. It’s been 18 years since we’ve been public. The compound average annual return on our stock is 18% per annum. To put that in perspective, it’s outperformed all the benchmarks, the Nasdaq, the S&P 500. Gold itself has returned 9%. That’s a super return, but you can see the returns we’ve been able to deliver are about double what you’ve been able to achieve just through the gold price over that period, and that’s what you get by being exposed to that resource optionality.

Our business has changed over the years. Many of you will be familiar with the original Franco-Nevada, where we were buying third-party royalties mostly on gold assets through the eighties and nineties. That was a super successful business. We continue to do that. Streaming has then become the second avenue of growth, and doing gold streams on big copper assets has really boosted the rate that we’ve been able to grow the company at. Has been able to allow us to invest in some really long-dated copper assets.

And in recent years, there’s been another shift, another avenue that’s opened up for our growth and that has been positioning ourselves as a financial backer of strong teams. And so rather than just being a stream or royalty being one tranche of somebody’s capital raise, we’ve said, “Let’s find people. Let’s find really good operating teams, people who wanna partner with us, Franco-Nevada, and then we’ll put our financial muscle behind them and try and differentiate them from their peers.” Differentiate them through the endorsement that our technical team brings in reviewing their assets, in investing in their assets, but also differentiate them in terms of having our financial strength behind them.

That model has worked super well. Great examples of that have been with G Mining Resources, one of the best mine-building teams in the gold industry. We followed that up with backing Tony Makuch and the Discovery team at Porcupine. Both have been tremendous stories. The stocks are both ten-baggers since we made our investment, and that has had the backdrop of strong gold price as a tailwind, but nonetheless, they have outperformed their peers handsomely, both are market darlings.

The next tranche of that, there are a few deals that we’ve done through this year, and that has been with Ozone Resources. We supported Paddy Downey acquiring the Casa Berardi assets coming out of Hecla. We supported Richard Young and the I-Eighty team in recapitalizing that company so that they can advance the assets they have in Nevada.

And then probably most important of those deals is we decided a couple of years ago, “How do we crack the code in Australia and convince Australian shareholders that royalty and streaming is a good way for Australian companies to be building their mines?” And our approach was to say same thing. We gotta find a really good team that is gonna make us look good. Let’s put our financial muscle behind them. If we can make them successful, hopefully we can grow the idea of royalty and streaming in Australia. We did the deal with Minerals Two Sixty. The stock has doubled on the back of that. It’s been very well received. We’re very proud that they were awarded the Developer of the Year at the Kalgoorlie conference this year. We’ve just done a second tranche financing with them. So I think it really is getting some attention in the Australian markets and I think it will open up a big opportunity for us.

This is a brief snapshot of our growth outlook. We have got good growth over the next five years, but in particular, if and when Cobre Panama comes back online, that’ll push our growth up to in the order of 45% growth over the next five years. You’ll see a couple of arrows on the slide. We can sustain that growth for the long term. And there are three things that’ll drive that. The first is we’ve got a number of large longer-term options in our portfolio, I’ll speak to them briefly, that will drive the next leg of that growth beyond our five-year growth. We’ve got an extremely large exploration portfolio that is attracting a huge amount of drilling capital right now. We also have roughly $4.5 billion in available capital in what is a very active market, so we will be adding more assets.

Just briefly on those three things then that’ll help us sustain that growth for the long term. This is a snapshot of the assets that are in our portfolio. These are the bigger ones. You can see in total, the annual contribution could boost our GEOs another 222,000 GEOs. They’re not all gonna operate at the same time, but it’s an indication of the amount of gas that’s in the tank. To put that in perspective, we’re roughly this year about 550,000 GEOs. In five years’ time, we’ll be closer to 750. So these assets alone can help push us close to a million ounces of GEOs, if you look out over a ten-year timeframe.

Second point then is our exploration portfolio. And the incredible thing about this kind of market where you’ve got strong gold prices, strong copper prices, is everybody is able to raise capital. There’s been a huge capital infusion to the industry in the last year or two. What does that mean? It means so many operators are saying, “How do we expand our mills? How do we increase our production?” Everybody’s got the drills turning, increasing the reserves and resources on their assets. We’ve got the biggest royalty portfolio in the space. We’ve been a huge beneficiary of all that drilling activity. We’re seeing green shoots all over the portfolio. Organic growth is gonna be a big driver for us over the next period.

And the last point I made already, in terms of available capital, we’re sitting north of a billion dollar of cash. We’ve got very significant equity investments, those companies that have done so well for us, plus our debt capacity. So we’re extremely well-heeled, and we’ll be participating in what is currently an extremely active pipeline for stream and royalty deals. With that, I’m gonna take a seat and take questions from Anita. Thank you.

Yeah. Thanks, Paul. So let’s start with Cobre Panama. The government has allowed stockpile processing and set up a commission to look at the long-term future of the mine. What’s your current base case scenario for how this situation resolves, and what’s the timeframe that you expect that resolution?

The direction of travel on Cobre Panama is all positive. You’ll be familiar, the Molino government has taken various steps to advance towards making a decision on the reopening of the mine. That was the processing of the concentrates, restart of the power plant. Now they’ve sanctioned the restart of the mills so that First Quantum can process the existing stockpiles. First Quantum at their low point had a thousand employees when the mine was in care and maintenance. They’ve now hired another 2,000 employees, so they’re up to 3,000. That’s relative to a full complement, which is between 6,000 and 7,000 employees. They’ve restarted one of the mill trains already, so they’re able to operationalize.

The government has completed the environmental review. They’ve put that out for comment. They’ve pulled together the Council of Ministers, as you mentioned, that will provide a recommendation to President Molino. And those ministers in recent weeks and months have been out consulting with the stakeholders. They’ve been in the local communities. They’ve been speaking to the unions. They’ve been speaking to the local suppliers. So every couple of weeks, you’ve seen a report that comes out that says, “Local community really wants to see a mine restart. Unions are really supportive of mine restart. Stakeholders are really pushing to say you need to restart the mine.” So I think the government is doing a good job of making the case in Panama for the benefits that the mine will bring. So I am confident that they’re doing everything they can to advance this to a mine restart.

In terms of timing, I think realistically where we are, you could see an announcement by the government this year on a decision to proceed. These processes can take longer, so that timeline could be extended, but I think it’s realistic that we could get to that point.

So you mentioned powerful organic growth in your pipeline. So over the next two to three years, which assets could be the biggest needle movers there?

The ones that’ll have the biggest impact are obviously the biggest assets. Colibri Panama, we’ve spoken about. Next up would be Antaboka. On the Antaboka concession, it’s run a big copper mine. It’s run by Glencore. There is another deposit, Corocoraico. It is almost the size of Antaboka itself. It’s actually higher grade than Antaboka. They’ve been advancing that project for the last number of years. Glencore, it is the first of the likely projects that Glencore would pursue. They have said later this year, perhaps early next year, they would sanction a decision to build Corocoraico. That’d be a big boost for us.

Next up is Candelaria. The also big copper gold asset run by Lundin Gold in Chile. It is principally an open pit, but also with an underground component. They are currently expanding the underground to increase the throughput from that. But also significant earlier this year, they are now evaluating a deeper pushback on the pits at Candelaria that would extend the life of the pits. They also are discoveries on the concession of other open pitable resources, La Española and Portuguesa. They’ve now started speaking about those. So Candelaria has many, many decades of life ahead of it. It continues to get better.

And then on the royalty front, the biggest of the royalties that we have is Detour. I’m sure many of you would have heard Agnico speak about it earlier on today. It’s Canada’s biggest deposit. When they bought it, it was about 30 million ounces in resource, 650,000 ounces of production a year. They’ve had great success with their exploration at depth, drilling out the strike extent as it goes deeper to the west. They’ve already started with the underground development. They’ll add an underground component to that. They’ve got more than 40 million ounces in resource now. They have a plan that will take them to a million ounces per year of production. And with the success that they’re having on the underground, I wouldn’t be surprised that they actually push that and that they in time exceed more than a million ounces per year of production from Detour.

And Cote? [laughs]

Cote would add to that. Yeah. With Cote, the mine plan and the mill was sized on the original Cote deposit, roughly 10 million ounces. They then discovered the Gosselin deposit. It’s also another 10 million ounces, so a total 20. So that mill is clearly undersized. Renaud Adams, the CEO there, is undertaking technical studies. They need to expand that mill. In my mind, the right size for that mill is probably close to double the size what they currently at. They have pushed back the timing on the technical studies, I believe, so they can consider that bigger case. So I think we’ll see a far greater output coming out of Cote in due course.

Which are some of the smaller, lesser-known hidden gems within the portfolio that you’re most excited about?

Well, there are a few of them, and you probably by the end of this, you won’t remember all the names. There’s only one thing that you gotta remember, and that is 10 million ounces, ’cause you’re gonna see this is a consistent theme. These are small royalties in our portfolio. Many of them are not valued by the analysts.

But I will start with Ormac. Ormac is a deposit. It’s in the Yukon. It’s owned by Banyan. Currently, they’ve got roughly 7 million ounces in resource at Ormac. They have two deposits, Astrip and Powerline. They are drilling very aggressively on that. They have had great results from that drill program, in particular, in between the two deposits where it’s a swamp area that hasn’t seen a lot of drilling before. I’m confident they will fill that in. I think that deposit will soon reach the 10 million ounce mark.

The next one I’ll speak about is Rogozna. Rogozna is a property. We have a royalty on it, obviously. It’s in Serbia. The company is Strickland Metals. You’re probably familiar in Serbia, there are some very big copper gold deposits. There’s Bor, there’s the Timok deposit, both of them owned by Zijin. Zijin is actually a strategic shareholder in Strickland Metals. They have gone over the last couple of years from zero. They now have 10 million ounces of gold equivalent in those copper gold deposits. They actually had to pull back on their drilling. They were asked by the government to do that ahead of the Serbian elections so that it wasn’t a point of contention in the elections. I expect they’ll re-accelerate it. If you haven’t looked at that stock, you should.

And the third one that I’ll mention is a deposit called Vulcan. It’s in Chile. It was in the Hochschild group. They’ve now spun it off into a separate public company, Tiernan Gold. Tiernan is gearing up so that they can advance Vulcan. Vulcan is already 10 million ounces in resource. They’ll be advancing their studies. And I think putting that asset into a separate company that can now raise funds to advance it, at these gold prices, it is a very attractive project.

Okay. Your financial backer strategy, you talked about that a little bit, and some of the success that you’ve had to date. Can you talk about other up-and-coming ones that you think will pan out this year and next year?

Well, I [laughs] I can’t tell you who the next ones are gonna be. We obviously keep that information close at hand. But as I spoke about through my slides, that strategy has worked super well for us. Is there more to come from those companies? Yeah, absolutely.

The first one on the list is Jemin. We had helped them finance the Tocantinzinho deposit. It’s up and running. They had put out an exploration update recently. They got very nice drill intercepts beneath the pit. So Tocantinzinho is getting even better. We’ll have a longer mine life. The next asset they’re developing is Ocoesque. We unfortunately do not have a royalty on it. But following that build, the next asset that they have in their portfolio is Garupi. Garupi is also in Brazil. They are currently exploring it. It had a few million ounces of resource. They’re getting great results. But in particular, what they’ve found is a parallel structure which is completely new. They’re very excited about their drill results that they’re getting on Garupi. It is gonna be a very big resource.

The next of the companies there is Discovery. And of them, right now it is the one that has the most momentum. When we did that deal, we financed Discovery buying the Porcupine assets from Newmont. They’re in Timmins. The asset’s producing about 275,000 ounces a year. Two underground mines, Hoyle and Borden, and one open pit, Pamor. The big option at the time is the mill that that all goes through is the Dome Mill, which actually sits by the old Dome Mine. The Dome Mine itself has a remaining resource of more than 10 million ounces. Their issue was the mill was full. They didn’t have the ability to process that resource. They have unlocked that by buying the adjacent Kidd Creek Mine from Glencore that was shut down, base metal mine. That Kidd Creek Mill allows them now to process the ore from the other mines through the Kidd Creek Mill. It’ll ultimately free up the Dome Mill. They can now process 10 million ounces from that Dome open pit.

But that’s just the start of it. They’ve been drilling. They’ve had tremendous success right across the portfolio, but mostly at the Pamor open pit. Pamor today is, I think, roughly 3 million ounces of total resource. They’ve had great success drilling Pamor strike extent, both to the east and to the west. But more important, they have found a parallel structure on Pamor that is to the north of the pit. They’ll put out a new resource perhaps later this year, maybe early next year. I think that they will hit 10 million ounces at the Pamor pit. And I think that’s just on the current resource. They feel that this is an extremely large resource.

And to put it in context, you’ve got the biggest gold ore bodies in Canada. You’ve got Detour at 40 million ounces. You’ve got Malartic and Cote, as we mentioned, that are both above 20 million ounces. Tony and his team at Discovery feel that Pamor will ultimately rival some of those as one of the biggest deposits in Canada. So a very, very, very exciting story.

Thank you very much. We’re up on time. That was great.

Thank you, Anita. Thank you. Thank you all. [audience applauding]