Pursuant to the Gold Quarry Acquisition Agreement, on December 29, 2008 Franco-Nevada acquired for total consideration of $103.5 million in cash an effective 7.29% net smelter returns royalty interest on the Gold Quarry Royalty Property. The Gold Quarry Royalty Property is a 522 acre portion of the Gold Quarry operation of Newmont in the Carlin District of north-central Nevada. The Gold Quarry Royalty is paid on (i) a 7.29% NSR based on production, or (ii) a minimum annual royalty payment obligation tied to unpaid reserves and stockpiles on the Gold Quarry Royalty Property. Based on historic reported payment data, Franco-Nevada expects to continue to receive, on average and based on minimum obligations, at least 11,200 gold royalty ounces per annum.

The Gold Quarry operation has been in production since 1985 and continues to be an important contributor to Newmont’s Carlin Trend Complex. It operates as part of an integrated unit with different mines supplying variable ore types and grades to a variety of processing facilities situated throughout the complex. For 2010, based on the minimum annual royalty payment obligation tied to stockpiles, Franco-Nevada received royalty revenues based on approximately 16,557 net attributable royalty ounces. Newmont currently reports reserves and production numbers by area and does not publicly quote separate Gold Quarry numbers.

Newmont has announced plans for a West Wall layback and beyond that is considering an even larger Greater Gold Quarry layback. As a result, Franco-Nevada expects its Gold Quarry royalty will have a very long life.

Production at Gold Quarry was impacted dramatically by a December 2009 slope failure. This failure limited access to ore originally scheduled to be mined in 2010 and 2011. During 2010, Newmont mined through the impacted area and expects to re-establish access to ore in the first half of 2011. Franco-Nevada’s royalty revenues from Gold Quarry have been and are expected to continue to be based on minimum annual royalty payments tied to unpaid royalty property reserves and stockpiles. Because of the December 2009 geotechnical event and the resulting access restrictions to Gold Quarry in-pit ores, Newmont began an accelerated campaign of processing Gold Quarry stockpiled ores to make up the shortfall. As a result, the royalty property stockpile, upon which our 2009 and 2010 minimum annual royalty payments were based, was significantly depleted. Franco-Nevada expects that for 2011 the Gold Quarry royalty net attributable ounces payable to Franco-Nevada will be at least 11,200 ounces, based on the minimum royalty calculation tied to royalty property unpaid reserves.

Updated: April 14, 2011