Pursuant to the Palmarejo Acquisition Agreement, on January 21, 2009 Franco-Nevada acquired, for a total consideration of $84.9 million, comprised of $75 million in cash and special warrants to receive 316,436 Common Shares, a gold stream interest on the 29,000 acre Palmarejo property in Mexico. The Company acquired from Coeur d’Alene Mines Corporation (“Coeur”) an interest in 50% of the gold produced from the Palmarejo project which is paid on the difference between the spot gold price and $400 per ounce, increasing by 1% per annum after the fourth anniversary following closing. The attributable gold ounces is the greater of actual production and a minimum amount. The minimum amount is 50,000 ounces per annum until payments have been made on 400,000 ounces. The special warrants were exercised on September 22, 2010.

At current commodity prices, project revenues are expected to be split approximately 40:60 between gold and silver.

The gold and silver deposits at the Palmarejo project, typical of many other silver and gold deposits in the Sierra Madre, are classified as epithermal deposits, and are hosted in multiple veins, breccias and fractures. The Palmarejo property includes three areas of defined resources: Palmarejo, Guadalupe and La Patria. Initial mining, by open pit and underground methods, is focused on the Palmarejo deposit while the Guadalupe deposit has been the subject of engineering and geological studies and infrastructure and initial mine development is planned to commence in 2011.

On February 28, 2011, Coeur announced that Palmarejo produced 5.9 million ounces of silver and 102,440 ounces of gold in 2010, its first full year of production, at an average cash operating cost of $4.10 per silver ounce. Palmarejo produced in excess of 30,000 oz of gold in the fourth quarter of 2010. Capital expenditures for Guadalupe in 2011 are budgeted at $6.0 million for construction of the haul road from Palmarejo to Guadalupe and for the initiation of the North Portal development drift.

The Palmarejo property was the major focus of Coeur’s exploration program in 2010. Drilling expanded the length of the Guadalupe deposit to over 2.7 km and Coeur anticipates Guadalupe mineral reserves and resources have potential to expand with further exploration drilling. 2010 exploration included initial testing of several new targets with favorable results from the La Victoria and the San Juan de Dios structures.

Updated: April 14, 2011