March 21, 2016
This is our eighth annual letter to shareholders since Franco-Nevada was reborn as a public company with our IPO in late 2007. Over those eight years to year-end 2015, our business model has created real shareholder value. Franco-Nevada’s share price has outperformed both gold and all the relevant comparable gold equity benchmarks. Our market capitalization today of over $10 billion ranks us among the largest global gold companies. In 2015, dividends per share were increased for the eighth consecutive year and dividend declarations reached $129 million. Franco-Nevada is the gold investment that works.
During the bull commodity market, many mining companies financed growth projects and acquisitions with debt. Now that commodity prices are weak, these same companies are retrenching. We believe the gold price will trade higher in the longer term but that this will always be a cyclical business with periods of consolidation. Value is created by making investments when others cannot. We are now in one of those times and are seeing and capitalizing on many opportunities.
In 2015, Franco-Nevada committed over $1 billion to new investments with the most material one being the Antamina mine in Peru. So far in 2016, we are off to an early start with a $500 million investment in the Antapaccay mine also in Peru. Our portfolio is becoming even more diversified and strong as we continue to add major long-life, low-cost and well-run mines. Thanks to the support of our shareholders, we have also been able to maintain our conservative balance sheet. A $920 million equity issue completed just a few weeks ago has allowed the Company to have no net debt and the liquidity to take advantage of further opportunities.
Franco-Nevada operates with a small team and our overhead has remained stable since our IPO despite substantial growth in our assets and revenues. Franco-Nevada’s success is a reflection of their hard work and discipline guided by an experienced and engaged board of directors. All of them have a material stake in the Company and act as owners. With this team and our assets, we are confident about the prospects for Franco-Nevada’s future.
To our shareholders, thank you for continuing your investment with us. Please consider the resolutions in this circular for our upcoming shareholders’ meeting. We look forward to meeting many of you personally on May 4th.
President & CEO