TSX:FNV 87.37 -0.11 -0.13%
Volume 221,756
August 21, 2018
NYSE:FNV 67.06 +0.00 +0%
Volume 191,156
August 21, 2018
Gold 1,193.93 +1.30 +0.11%
Volume
August 21, 2018
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TMX 10th Anniversary bell ringing – December 20, 2017

Dear Shareholders: March 22, 2018

This letter marks the completion of our 10th full year since Franco-Nevada was reborn as a public company with our Initial Public Offering (“IPO”) in late 2007. Over those 10 years, our business model has created true shareholder value. Franco-Nevada’s share price has outperformed both gold and all the relevant comparable gold equity benchmarks. Over those 10 years, our shareholders have realized a compounded annual total return of 19.5%. In 2017, we increased dividends for the tenth consecutive year and dividends reached US$168 million. This is the largest payout in the gold industry and speaks to the strength of our business model and quality of our portfolio. Our year-end market capitalization of over US$14 billion ranks us among the largest global gold companies. We are proud to continue to showcase 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. Even though we believe the gold price will trade higher in the longer term, this will always be a cyclical business with periods of consolidation. We have created a great deal of value over the years by being counter-cyclical and making investments when others could not.

Our portfolio became stronger and more diversified with the addition of streams over major long-life and low-cost mines during the 2014-2016 commodity downturn. In 2017 and early this year we increased our gold & silver from the Cobre Panama project. We expect this investment will generate further growth for Franco-Nevada as production ramps up starting in 2019. We have also added to our oil & gas royalties both in Canada and in the Permian and Anadarko shale basins in the U.S. In the past 18 months, Franco-Nevada has invested over US$1 billion to expand its portfolio using available cash on-hand and its strong free cash-flow. Franco-Nevada remains debt free.

Our aspiration is to make Franco-Nevada the “go to” gold stock for any 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 want. In a world confronted by political volatility and financial market instability, making Franco-Nevada a low risk gold investment, with a dividend and leverage to gold, is the right strategy.

Franco-Nevada operates with a small team of highly dedicated professionals. Even though we have experienced substantial growth in the number of 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 company and act as owners.

Graham Farquharson has served as a director for over 10 years and will not be standing for reelection at the upcoming annual meeting. He has been an outstanding director, and happily, he has agreed to take on the role of “honorary director”. We look forward to the ongoing benefit of his wise counsel.

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
Chairman

David Harquail
President & CEO