TSX:FNV 99.05 -0.49 -0.49%
Volume 606,413
May 23, 2019
NYSE:FNV 73.50 -0.65 -0.88%
Volume 535,410
May 23, 2019
Gold 1,284.91 +0.41 +0.03%
Volume
May 23, 2019
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Franco-Nevada

Shareholders' Letter

Rig Tour

Dear Shareholders: March 20, 2019

We are proud to continue to showcase Franco-Nevada as the gold investment that works. We were reborn as a public company with our IPO in late 2007. Since then, our business model has created true shareholder value. Over these more than 11 years, our shareholders have realized a compounded annual total return of over 17% outperforming by a wide margin both gold and all relevant gold equity benchmarks. In 2018, we increased dividends for the eleventh consecutive year and declared $178 million in dividends. Cumulative dividends have now exceeded $1 billion. This speaks to the strength of our business model and the quality of our diversified portfolio. Our year-end market capitalization of over $13 billion ranks us among the largest gold companies in the world.

Our aspiration is to make Franco-Nevada the “go to” gold stock for all generalist investors. We believe that our emphasis on minimizing risk, paying dividends, maintaining a strong balance sheet and high governance standards is what generalist investors want. In a world confronted by political volatility and financial market instability, making Franco-Nevada a lower-risk gold investment, with a dividend and leverage to gold, is the right strategy.

In early 2018, we increased our gold and silver exposure to the Cobre Panama project by investing an additional $356 million on top of our original $1 billion investment. Construction is almost complete and we expect Cobre Panama to start delivering gold and silver to Franco-Nevada in the next few months, joining Antamina, Candelaria and Antapaccay as the foundational assets underpinning Franco-Nevada’s revenues for decades to come.

As well in 2018, we continued to expand our U.S. oil & gas royalty portfolio. We invested $101 million to acquire royalties on the Delaware side of the Permian basin in Texas. We then entered into a strategic relationship with Oklahoma-based Continental Resources, Inc. to leverage their technical and title expertise to acquire royalties on their leases in the burgeoning STACK and SCOOP plays in Oklahoma. We invested $262 million of a $520 million commitment to this venture in 2018 and expect to invest the balance over the next three years.

Franco-Nevada operates with a small team of 34 highly-dedicated professionals. Our unique business model has kept our overheads low while we have experienced substantial growth in the number of our assets and revenues. 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 Company and act as owners.

We are focused on both Board renewal and management succession as noted in our management information circular. We are pleased to welcome Jennifer Maki as a nominee to the Board. As part of our succession planning Paul Brink was promoted to President & Chief Operating Officer.

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 seeing many of you personally at our meeting on May 8th.

Pierre Lassonde
Chair of the Board

David Harquail
Chief Executive Officer