Last updated June 6, 2012
Franco-Nevada Corporation is a gold-focused royalty and stream company with additional interests in platinum metals and other resource assets. It is the leading gold royalty and stream company by both gold revenues and number of gold assets.
The Company trades under the symbol FNV on the Toronto Stock Exchange, New York Stock Exchange and is part of the S&P/TSX Composite Index. Since its IPO in late 2007, Franco-Nevada has delivered superior returns to investors through its diversified portfolio of high-margin, cash flow producing assets located principally in North America. The Company also has a growing pipeline of development projects and interests in some of the largest new gold discoveries in the world.
Franco-Nevada provides more yield and upside than a gold ETF with less risk than an operating gold company. Its proven business model provides exposure to exploration discoveries while providing protection from cash calls and cost inflation. Franco-Nevada has a strong debt-free balance sheet and is generating growing cash flows that are being used to add to the portfolio and to increase dividends.
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.
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.
We continue to remain focused on growing our gold royalty and stream business. Since our IPO, we have been very successful in both acquiring existing royalties and streams(Gold Quarry, Subika, Gold Wheaton) and creating new royalties and streams to help finance mines into production (Palmarejo, Hislop, Prosperity). Over 95% of our investments to date have been for precious metals assets. As of March 26, 2012, we have a total of approximately 342 assets in all commodities at all stages of development. For our gold division, we have 170 gold assets of which 39 are in production, 20 are advanced with the potential of production in the next five years and 117 are exploration stage royalties.