Stillwater Mining Company (“Stillwater”) owns and operates the Stillwater mine and the East Boulder mine in Montana. Production began in 1986 at the Stillwater mine and in 2002 at East Boulder mine (together, the “Stillwater complex”). Franco-Nevada’s royalty is a 5% NSR payable on all commercially recoverable metals produced from 813 of the 995 claims that cover the Stillwater complex. The amount of the royalty is reduced by permissible “onward processing” deductions, which have averaged 10-12% of revenue over the last several years.

Based on management’s estimates, Franco-Nevada’s Stillwater complex royalty covers 80-85% of the combined reserves and resources of the deposit. Historically, the percentage of ore mined from the royalty ground has been significantly lower than the 80-85% reserve/resource estimate. However, in recent years the annual percentage of production on the royalty ground has increased, averaging 85% since 2005.

Prior to 2006, Stillwater was successful in replacing reserves net of depletion at the Stillwater complex. As a result of what Stillwater describes as the unique PGM enrichment of the J-M Reef, management believes that reserve replacement will not be a function of discovery but, instead, will depend on Stillwater’s ability to complete adequate definition drilling, fund adequate infrastructure development and successfully manage capital and operating cost pressures.

In its January 12, 2011 press release of 2010 results, Stillwater reported mine production of 485,100 PGM ounces, which was a slight decrease from 2009. This decrease reflects a lower-than-planned ore grade in the off-shaft area at the Stillwater Mine and a limitation on available mining stopes at the East Boulder Mine. Stillwater estimated approximately 83% of this 2010 production was sourced from royalty lands and also provided production guidance for 2011 of 500,000 ounces from the Stillwater complex.

In early 2010, Stillwater assembled a team to evaluate the potential of various undeveloped areas along the J M Reef. Nine separate projects were considered and two projects quickly emerged as the preferred options. The first, known as the Blitz project, extends the existing Stillwater Mine development an additional 20,000 feet while the other, the Graham Creek project, extends the existing East Boulder Mine development about 8,200 feet. Although both are being engineered as five-year projects which currently do not contribute to production until completion, Stillwater will evaluate opportunities to bring on the production earlier if possible.

Capital expenditures were $50.3 million in 2010 and, based on Stillwater’s year-end guidance, are expected to be $120 million in 2011 with $20 million being attributable to the Blitz, Graham Creek and other development opportunities.