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Franco Nevada
Corporate Profile

Last updated April 1, 2014

Our Business

Franco-Nevada Corporation is a gold-focused royalty and streaming company. We do not operate mines, develop properties or conduct exploration. Instead, we own and continue to grow a large, diversified portfolio of royalties and streams that for Franco-Nevada:  

Maximum Minimum Business Model

Royalties and streams expose Franco-Nevada to the exploration and price optionality inherent with geologically favourable properties. They can often be registered on title to a property or in a secure fashion with less exposure to government resource nationalism. They are not subject to operating or capital cash calls making this a free cash flow business. We believe this business model provides favourable attributes between that of a gold ETF and an operating company. Franco-Nevada can provide yield along with more upside than a gold ETF with less risk than an operating company.

Risk Benefit Business Model

Our track record 

Since our IPO in December 2007, Franco-Nevada’s share price has outperformed both gold and other gold equities. Over those six years our margins have remained high, our overhead has remained low and our effective tax rate has remained stable. As a result, Franco-Nevada’s share price has demonstrated a high correlation to gold as demonstrated in the chart below. The Company has been able to increase dividends in each of the past six years.

Correlation to Gold 

Six Year Results

 

5 year history

Our Company and How We Operate

Franco-Nevada is a Canadian company headquartered in Toronto with additional offices in the U.S., Australia and Barbados, all of which are used to manage our asset portfolio and pursue new investment opportunities. Franco-Nevada shares trade on the Toronto Stock Exchange and New York Stock Exchange under the symbol "FNV" and are part of the S&P/TSX Composite Index. Our shareholders consist of mostly large generalist institutional funds in the United States, Canada, Europe and Australia. Management and directors are significant shareholders, and are dedicated to the sustainable maximization of the Company's share price. 

We currently operate with a small organization of approximately twenty full-time employees and contractors.  Our management team is made up of experienced and proven professionals some of whom have been continuously associated with our royalty and investment portfolio for over 20 years. We operate with a flat management structure similar to that of a small merchant bank.  As we do not have any material operational responsibilities, our focus is on new investments and our flat management structure allows many of our team members to take multidisciplinary roles for corporate development opportunities. Our board of directors includes directors associated with Old Franco and the board has significant experience in mining, oil and gas and corporate finance. 

Our Vision and Business Model

Our vision is to be the leading gold-focused royalty and stream company while maximizing exposure to potential new discoveries. We believe we can achieve this through sound management of our current portfolio and through accretive transactions that also provide exploration optionality. Our business model is to grow the royalty portfolio with acquisitions of high quality, high margin assets limiting our downside exposure but retaining the full upside potential of higher commodity prices and/or new exploration discoveries. Our growth strategy is predicated on increasing net asset value ("NAV") on a per share basis, as we strongly believe that sustainable growth in per share NAV will be reflected in growth in our share price. Accordingly, NAV accretion per share is one of our key acquisition metrics. We are firm believers that maintaining a strong precious metals focus will allow us to preserve our premium valuation. However, we will remain vigilant for opportunities in all resources. Maintaining and managing a diversified, high-margin portfolio with low overheads provides the strong free cash flow required to fuel organic growth. We believe in maintaining a strong balance sheet to allow us to be opportunistic in any environment. We do not hedge any of our commodity revenue exposures.

Our History

The royalty portfolio was assembled starting in 1985 by Franco-Nevada Mining Corporation Limited ("Old Franco") and predecessor companies. In 2002, Old Franco was acquired by Newmont Mining Corporation ("Newmont"). A number of Old Franco employees remained with Newmont and managed the royalty portfolio as well as created additional royalties on the property portfolio of Newmont and Normandy Mining. In late 2007, a team including some Old Franco employees formed Franco-Nevada Corporation and on December 20, 2007, acquired a portfolio of Newmont royalties and other interests, completed an initial public offering ("IPO"), completed a bank debt facility and listed on the Toronto Stock Exchange. Franco-Nevada has continued to acquire and create new royalties and streams to supplement original portfolio and in September, 2011 listed on the NYSE.

2013

  • Market capitalization of $6 billion
  • Dividend increased
  • Added to GDX and Aristocrat indices

2012

  • Market capitalization > $7 billion
  • Dividend increased
  • $1 billion Cobre Panama precious metals stream deal
  • C$400 million Weyburn oil acquisition

2011

  • Market capitalization > $5 billion
  • Dividend increased
  • $1.2 billion invested in new precious metals assets
  • Listed on the NYSE

2010

  • Market capitalization > $4 billion
  • Dividend increased and paid monthly
  • Detour and Tasiast now +20 million ounce projects
  • $350 million Prosperity gold stream deal

2009

  • Market capitalization > $3 billion
  • Dividend increased
  • Palmarejo gold stream acquisition
  • Subika royalty acquisition

2008

  • Market capitalization > $2 billion
  • Start of semi-annual dividends
  • Gold Quarry acquisition

2007

  • Dec. 20th IPO for $1.2 billion