TSX:FNV 90.77 +0.06 +0.07%
Volume 446,787
April 20, 2018
NYSE:FNV 71.21 -0.38 -0.53%
Volume 566,791
April 20, 2018
Gold 1,335.88 -10.47 -0.78%
April 20, 2018
Contact Share

At the Cobre Panama Project

Dear Shareholders: March 22, 2017

This is our ninth annual letter to shareholders since Franco-Nevada was reborn as a public company with our IPO in late 2007. Over those nine years to year-end 2016, our business model has created real shareholder value. Franco-Nevada’s share price has outperformed both gold and all relevant comparable gold equity benchmarks. Our market capitalization today of over $11 billion ranks us among the largest global gold companies. In 2016, our dividend per share was increased for the ninth consecutive year and dividend declarations reached $157 million. This is the largest payout in the gold industry and speaks to the strength of our portfolio. We are proud to continue to describe Franco-Nevada as the gold investment that works.

During the bull commodity market, many mining companies financed growth projects and acquisitions with debt. In the downturn, they were forced to retrench and sell assets which provided opportunities for Franco-Nevada. We believe the gold price will trade higher in the longer term but that this will always be a cyclical business with periods of consolidation. Value is created by being counter-cyclical and making investments when others cannot.

Franco-Nevada was very active during the latest downturn and invested over $2 billion in new cornerstone assets such as Candelaria, Antamina, Antapaccay and Cobre Panama, as well as other assets with high potential upside. Our portfolio has become even stronger and more diversified with the addition of streams on major long-life and low-cost mines. Thanks to the support of our shareholders, we were able to maintain our conservative balance sheet. A $920 million equity issue completed in early 2016 allowed the Corporation to again have no debt and the liquidity to take advantage of further opportunities. Late in 2016, we bolstered our Oil & Gas division acquiring royalties on one of the premier U.S. shale oil basins in Oklahoma and in March 2017, we entered into an agreement to acquire additional royalties in the Midland Basin in the Permian Basin in Texas.

Our aspiration is to make Franco-Nevada the “go to” gold stock for the generalist investor. We believe that our emphasis on paying dividends, avoiding debt, minimizing risk through a diversified royalty and stream portfolio and maintaining high governance standards is what generalist investors require. In a world of political volatility and financial market instability, Franco-Nevada is a lower risk gold investment with a sustainable dividend and leverage to gold.

Franco-Nevada operates with a small team of highly dedicated professionals. Even though we have experienced substantial growth in our assets and revenues, our overheads have remained low. Franco-Nevada’s success is a reflection of the hard work of the team guided by an experienced and engaged board of directors. All of them have a material stake in the Corporation and act as owners. We are confident about the prospects for
Franco-Nevada’s future.

To our shareholders, we thank you for your continuing support and investment with us. Please consider the resolutions in this circular for our upcoming shareholders’ meeting. We look forward to meeting many of you personally on May 9th.

Pierre Lassonde

David Harquail
President & CEO