Brighthouse Financial, Inc.

Good morning and welcome to Franco Nevada Corporation's first quarter 2025 results conference call and webcast. This call is being recorded on May 9, 2025. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session, where you may ask a question through the phone line or webcast. If you are joining by webcast, You may submit a written question for the Q&A session at any time during this call by typing your question in a Q&A section of the webcast platform. If you require immediate assistance during this call, please press star zero at any time for the operator. I would now like to turn the conference call over to your host, Candida Hayden, Senior Analyst, Investor Relations. Please go ahead.

Thank you, Jenny. Good morning, everyone. Thank you for joining us today to discuss Franco Nevada's first quarter 2025 results. Accompanying this call is a presentation, which is available on our website at franco-nevada.com, where you will also find our full financial results. The presentation is also available to view on the webcast. During our call this morning, Paul Brink, President and CEO of Franco Nevada, will provide introductory remarks, followed by Sandy Brana, Chief Financial Officer, who will provide a brief review of our results. This will be followed by a Q&A period. Our full executive team is available to answer any questions. Participants may submit questions by telephone or via the webcast. We would like to remind participants that some of today's commentary may contain forward-looking information, and we refer you to our detailed cautionary note on slide two of this presentation. I will now turn over the call to Paul Brink, President and CEO of Franco Nevada.

Thank you, Candida, and good morning, everyone. Today we're reporting our best financial results ever. We achieved record quarterly top and bottom line results, and that without any contributions from Cobre Panama. The results benefited from elevated gold prices, a good contribution from Hemlo NPI, and strong production from iEnergy. We're looking forward to added contributions through the year, in particular, from the ongoing ramp up of Tocantinsinho and Greenstone, and the startup of Valentine Gold, as well as contributions from the new Porcupine Royalty. On the topic of Cobre Panama, President Malino of Panama continues to indicate a willingness to hold discussions about the mine this year, and we're encouraged by his recent statements in this regard. It was an active quarter for our community support program, and we funded contributions for a waste management initiative at Cascabel Sogo, the reopening of the Museum of Northern History in Kirkland Lake with Agnico Eagle and Alamos, and a contribution to the Sioux Saint, the Sioux Area Hospital Foundation with Alamos. During the quarter, we closed the previously announced $500 million acquisition of a stream on Savania Stillwaters, Western Limb Mining Operations, and we received the initial payment, which relates to operations in the last four months of last year. We ended the quarter debt-free and with $2.1 billion in available capital. And post-quarter end, we closed the acquisition of a 4.25% NSR royalty for $300 million with Discovery Silver on the Poker Fine Complex. You'll recall as part of that financing package, we also provided a $100 million loan facility, and we had a roughly, we provided a roughly $70 million Canadian lead order in their equity issues. Needless to say, we're delighted with the roughly triple in value of the shares from our purchase price. We remain well capitalized to add further growth, and our business development team have a number of actual opportunities that could add further attractive assets this year. With that, I'll hand the call to Sandy.

Thanks, Paul. Good morning, everyone. As Paul mentioned, Franklin, Nevada reported record financial results for first quarter ended March 31st, 2025. This was the result of both strong production from our asset base and higher precious metal prices. Precious metal prices with gold in particular were very strong in first quarter. On slide four, you'll see a comparison of commodity prices for Q1 2025 and Q1 2024. Gold and silver prices increased significantly year over year with the average gold price being higher by 38% in the quarter and average silver price being higher by 37%. Prices for palladium, iron ore, and oil continue to be volatile and were lower compared to prior year. However, you did see a significant increase in natural gas prices. On slide five, we highlight total GEO sold and net GEO sold for Q1 2025, Q1 2024. Total GEO sold were 126,585 in the quarter, compared to 122,897 first quarter of 2074, a 3% increase. Precious metal geos sold in the quarter were 100,623, higher by 8% compared to prior year. For the quarter, we received strong contributions from Candelaria and benefited from the recent acquisitions made, Yanacocha and Western Wind Mining Operations, As Paul mentioned, we did receive our first GOs from Western Limb and the Quarter, which were related to the production period September 1st to December 31st of last year. GOs related to January 2025 were delivered in April, and it's important to note there's a three-month delay between production and delivery to Franklin, Nevada. In addition to better performance from Candelaria and receiving GOs from recent acquisitions, We also benefited from the continued ramp-up of operations at new mines, Tokens Inyo and Greenstone. I look forward to increasing contributions from these assets. One of the key outperformers versus our expectations was the Hemlo MPI. We did record a catch-up accrual related to 2024 that was recorded in the first quarter, but the Hemlo MPI again showed its leverage to higher gold prices. Revenue recorded for the quarter was 17.7 million compared to 4.8 million a year ago. Diversified GEO sold were 25,962 for the quarter compared to 29,879 for prior year, despite diversified revenue being higher by 21% year-over-year, 74.8 million versus 61.6 million. The approximate 4,000 geos sold reduction is due to the impact of higher gold prices when converting revenue to geos. As we look at our royalty and streaming business, we think it's important to evaluate contributions from assets based on margin contribution and not necessarily top line measures. Royalty geos are higher margin geos as there's minimal cost associated with each versus streamed geos where an ongoing fixed payment is required. The measure net geos removes the cost of sales component for all geos so that geos sold are represented after cost. For Q1 2025, net geos were $113,138 for Franklin, Nevada, compared to $106,681 in Q1 2024, a 6% increase. I think it's important to note that when looking at our growth going forward, the majority of that growth comes from high-margin royalty geos versus streams. As you turn to slide six, we have highlighted our revenue and adjusted EBITDA results for the last five quarters. Total revenue for the quarter was $368.4 million, which is a record for Franklin, Nevada. This compares to $256.8 million last year, a 43% increase. Precious metals accounted for 79% of revenue. Adjusted EBITDA, also a record, was 49% higher for the quarter at $321.9 million, compared to $216.1 million in the first quarter of 2024. Slide 7 highlights the key financial metrics used by the company. As mentioned, total GEOs were approximately $126.5 million, generating $368.4 million in revenue during the quarter. With respect to cost, we did have an increase in cost of sales compared to Q1 2024 due to higher stream ounces sold. Cost of sales was $38.5 million versus $33.6 million last year. Depletion did increase as well to $68.4 million versus $58.2 million a year ago. Depletion is based on actual mining geos sold and barrels of oil equipment equivalent received from the Energy Division. As we received more geos from Candelaria and began depleting our recent transactions, Janet Coach and Western Limb Mining Operations This impacted depletion as those assets are currently higher per ounce depletion assets. Adjusted net income was $205.6 million, or $1.7 per share for the quarter, both up 51% versus prior year. Slide 8 highlights the continued diversification of the portfolio. 79% of our Q120-25 revenue was generated by precious metals, with revenue being sourced 84% from the output. Alarmist's contributor to revenue was Candelaria. Slide 9 illustrates the strength of our business model to continue to generate high margins. For first quarter 2025, the cash cost per geo, which is essentially cost of sales divided by hold equivalent assets sold, was $304 per geo. This compares to $273 per geo in Q1 2020. As the gold price has risen, Franklin, Nevada has seen a significant increase in our margin per geo, with it being over $2,500 per geo in Q1 2025. As we've always said, in a rising commodity price environment, we expect to benefit fully as the cost per geo should not increase significantly. And lastly, slide 10 summarizes the financial resources available to the company. When including our credit facility of $1 billion, Total available capital at March 31st is $1.9 billion. However, this is net the $300 million funded after quarter end for the port-to-client royalty. The company remains well-capitalized to continue to add long-life, high-quality assets to the portfolio.

And now I'll pass it back over to Jenny, and we're happy to answer any questions.

Thank you.

If you would like to ask a question, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star two. If you are joining us on the webcast, please submit your question through the Q&A section of the webcast platform. Once again, that is star one should you wish to ask a question on the phone lines. Your first question is from Heiko Illa from HC Wainwright. Your line is now open.

Hey, good morning, Paul Sandeep and team. Happy Friday. Likewise. You did the conversion of the net profit interest on Pandora into a net smelter return royalty. Out of curiosity, given current commodity pricing, is that something where you're getting more and more operators approaching you on some sort of conversion or amendment to streams? Because I was always under the impression that, you know, In general, once a stream is there, it sort of stays and it doesn't really get renegotiated. Is there more seen right now with people trying to do things, given that a lot of the operators have more cash flow than they probably thought a year ago?

I don't see a theme at the moment. That conversion was just a function of the transaction that we did with Stillwater at the time. And it did make more sense in doing that to convert that into an NSR, which is a more predictable instrument for us. So I'd say it's more just related to the particular transaction.

Fair enough. So we shouldn't expect anything else like this in Q2 and beyond, really? Yeah, no conversions expected. Okay. And then something completely different. There was an article in the Wall Street Journal a couple of days ago with Warren Buffett and his stake in Occidental Petroleum. And essentially, it said the investment didn't really work out. In contrast, your U.S. energy interests actually did quite okay with, you know, obviously higher royalty rates in the Permian. Just want to see what have you been doing better. And given current pricing, what are you seeing with new royalty investments in that space?

Jason O'Connor here. You know, I don't think we have a similar interest as Oxy did. We are a passive investor in royalties in the U.S., so we don't have the cost structure, et cetera, that Oxy would have and some of the performance issues that they may have had. I think our exposure in the U.S. is fairly broad. We've got access to most of the major shale plates, including both the Permian and Anadarko on the oil side, as well as the Hainesville and Appalachian on the gas side. So we're very well exposed both in terms of our footprint in the different basins, as well as the different commodities. We are continuing to evaluate different opportunities in oil and gas. We look at good quality assets and road packages as they become available. We'll continue to assess those.

If there's something that is of good quality and value, we may look at doing that in the future. Fair enough. Thank you, guys. I'll get back to you.

Thank you. Your next question is from Cosmos Chen from CIBC.

Your line is now open.

Thanks, Paul, Sandeep, and team, and congrats on the record earnings. It's well-deserved. Maybe a quick question first on the MPI at Hemlo. Sandeep, as you mentioned, there is a bit of a catch-up in the quarter, so to confirm, we should expect the same sort of elevated level in terms of earnings from Hemlo for future quarters. It should still be good because, as we know, MPI is very levered to higher commodity prices, but likely wouldn't be to the same sort of level?

Yeah, hi Cosmos. Yeah, so the catch-up related to last year was about 5 million US. So, you know, the Q1 MPI zone was about 12 million US. You know, as you said, it's very hard to predict MPIs, and especially at Hamelow where we don't cover the entire mine. We're just on one portion of the underground. But at current commodity prices, I'd expect something similar in terms of revenue, unless something drastic happened. But as I said, until you get the numbers, you don't really know. But I think that's a fair estimate going forward.

You know what? It's a good surprise. So I think that's a positive. And then in terms of MPIs, as we talked about, very leveraged to higher commodity prices. If I scan through your portfolio, the other MPIs in Kirkland Lake. So is there any way that you can kind of talk about the potential here at the MPI at Kirkland Lake? Because it didn't see the same degree in terms of increase in Q1. So again, maybe it's just based on the area that you cover. But is there any more additional colors that you can give us on the Kirkland Lake MPI?

Sure. So the Kirkland Lake MPI is a 20% accounting profit MPI, but it's only on a couple of claims at Kirkland Lake where they're not mining right now. So we're not getting, but they've had very good expiration results there and they're moving towards those claims. So in the years going forward, I do expect to finally start receiving payments on those, but there won't be anything this year. The one MPI I will mention is Muscle Whites. where we have a 5% MPI. And, you know, with Orlet taking over that asset from Newmont, you know, we're looking forward to seeing what they do with that asset in terms of more efficient mining, you know, improving productivity and just these higher commodity prices, just see how that plays out. So that is one where I think we do have some leverage.

Cool. And the muscle white MPI, does that cover the entire property? Okay, that's good to know. Maybe switching gears just quickly on the Western Limb, the fairly recent acquisition. Could you maybe talk about the timing again in terms of, I saw that you received 6,540 geos in the quarter, but that was for the four months ended last year. So I would have expected it to be all the way to March or the end of Q1 in terms of payments. Again, maybe there's a lag. Could you walk me through the timing in terms of what should we expect in terms of receipts in, say, Q2 and then Q3 for Crank of Nevada into 2025? Sure.

So what we received in Q1 was related to last year, the last four months of the year. We didn't receive anything related to 2025. There's basically a one-quarter lag. So January got delivered in April. February will be May. So as we guide it to on an annual basis, it's roughly 20,000 geos. You know, by that, we're so roughly 5,000 geos a quarter.

Great. And then maybe one last question, bigger picture. Paul, you had kind of mentioned COVID Panama. But Again, based on your point of view and your interpretation, maybe give us a bit more color in terms of what do you think is kind of happening in Panama, how that relates to Kobe, Panama. And as we all know, First Quantum discontinued their international arbitration process. I think yours is still active. So maybe you can talk a little bit about that as well.

Maybe starting off, what is going on in Panama at the moment? You would have seen that President Molina for a while has said he's open to a discussion on the mine this year. He did, late in March, give instructions to his team to say he wanted them to turn their minds to how they might address the mine. The country has been completing the process on social security. They've also had to deal with the US in terms of the Panama Canal. So those have all been items on the agenda. Very hopeful that negotiations can start fairly soon with the company. I was also encouraged by some comments that Molina had made to say he would like to see that they can get situation with the mine resolved by year end. So I think that is the setup. In terms of our own arbitration process and suspending, we have had discussions with representatives of the government. Those have been productive, but we don't have anything to report on that at this stage.

Great. Thanks, Paul, Sandeep, and team. Those are all the questions I have. Have a good weekend.

Thanks, Paul.

Thank you. Your next question is from Daniel Major from UBS. Your line is now open.

Hi, Paul. Hi, Sandeep. Thanks for the questions. The first one, just to follow up again on Cobra Panama, just looking at the commentary from Melina, I mean, I think he quoted that he's open to forming an association with First Quantum with respect to the new Cobra Panama license. not being based on contract law, but he wants to see all arbitration suspended. Is this something that the Panamanian government have approached you about dropping your arbitration claim to facilitate an engagement on the licensing agreement? Or is this just purely a negotiation between First Quantum and the government of Panama?

In terms of the ownership, as you well know, it is first Quantum and also Kores, the Koreans, who are the owners of the assets. So in terms of any negotiation, it's a negotiation with those parties. We're a financier to this project. We don't have a seat at the table. As I outlined and mentioned before, we obviously do have our arbitration rights, as I said, We have had some discussions with government representatives, but don't have anything to report on it.

Okay, so at this stage, you're not looking to drop your arbitration claim?

Our discussions have been we're open to suspending it under the right conditions, and so we've had discussions around that.

Okay, that's useful. Thank you. And then the second question, a strong performance from the oil and gas component of the portfolio this quarter. Can you give us a steer on the distribution of expected GEO sales from the diversified portion of the business through the balance of the year?

I think in terms of the energy performance, we did have a strong quarter. Part of that was helped out by prices. The other piece was we had some strong performance in our firming assets from new wells that came online during the quarter. Going forward, you know, I expect that we'll see a reasonably flat profile, though it will depend, you know, on where prices go. You would have seen last year when the gas price was weak, some of our volumes on our gas assets came off as operators pulled back on activity. We are waiting to see how the operators on our lands react to what has been a lower oil price. So you can expect that if prices stay lower for a longer period of time, there may be some reduction in activity, which could translate into slightly lower volumes. So it is largely a function of price. If prices sort of stabilize in and around where they were last year, I would expect a fairly flat profile. If prices continue to weaken, they see some

Modest volume decline associated with a pullback activity Okay, thanks one more if I could just thinking about your pipeline of projects and You know what where your focus is at the moment. Can you give us any steer? you know most of the transactions have been more focused on gold assets in the in the space and Are you seeing any pickup in interest in the base metal space? And is there any negotiations in Argentina that you can make any comments on?

Hi, Daniel. Dean Gray speaking. I would make the first overall comment that the gold market is very active in terms spending the majority of our time there, and we're quite pleased with the conditions. There are opportunities outside of gold, relatively few compared to what we're seeing in gold, and no specific commentary I can provide on Argentina.

All right, thanks. Very useful. Have a nice weekend. Great, thank you.

Thank you. Your next question is from Tanya Yekoskonek from Scotiabank.

Your line is now open. Great.

Good morning, everybody. Congrats on a good quarter and good start to the year. And that Hemlo NPI is the one that just keeps on giving. So hard to forecast. Anyhow... I have three questions, if I could. I'm going to start with Sandeep, just the easier one on the modeling side. Thank you for that modeling on the Hemlo. I just wanted to have a little bit of an idea on how the overall profile for the company shapes out during the year. We had started, obviously, with a good Q1. We had talked about a profile of 47% in the first half, 53% in the second, with a similar Q3, Q4, and that was based on the ramp-up of some of the operations that Paul mentioned in the beginning of the presentation. I was wondering, is that still what you're looking at based on what you know today?

Yeah, Tanya, I think that's a fair profile. You know, the caveat is that, you know, the gold price has gone higher. Like, our guidance was done at $2,800 an ounce, and coal's over $3,000 now. And energy prices have pulled back from, especially oil, from where we had budgeted. So... You know, on an overall geo profile, I think that's fair. You might see some of the gains on the mining side negated on the conversion when we're converting the diversified side. But for your modeling purposes, I still think it's a fair profile.

Okay. And just on the energy side, and I know we touched a little bit on it, can you just remind me the lag in terms of pricing that are felt? I thought there was about a six-month lag. Is that? in terms of what they're doing today versus where you're going to see this in your financials? Is it about six months?

It depends on how you look at it. From a pure price impact, we get paid on our royalties typically, they range, but anywhere from one month to maybe three months following production, so there's that impact. The other impact that I spoke about earlier is an impact to drilling activity. That is a longer lag. Operators typically will want to see where prices are going to sort of flatten out a little bit. So oftentimes, yeah, I'd say six months is probably a reasonable timeframe to see how that unfolds. You would see if you look at some of the disclosure around our operating companies, some of them are starting to react to lower prices by October. producing their capital budget somewhat, so there is already a little bit of impact. I would say the majority, likely you'll see some news next quarter if prices continue to be lower.

Okay, thanks for that, Jason. Maybe I can come to Paul on my second question, just back on Cobre Panama and the arbitration. So actually, maybe just on the next steps, where do we stand on The concentrate. I mean, we've been told that they fired up the power plant or have they fired up the power plant? I think they were given direction to fire up the power plant. And then there was a concentrate on site that was supposed to be sold. So maybe just where what exactly is happening on site? And have we a timeline on selling this concentrate?

No timeline yet, Tanya. Really three moving pieces there. One is the approval of the preservation and safe maintenance. The other is shipping of the concentrate, and the third is restarting the power plant. The indications, again, from the government is that they're open to all those things going ahead, but they haven't actually gone ahead at this stage, so I'm hopeful that in the coming months that we should see all those things go ahead.

Okay. So on the mine, I guess on the property mine site, they're just keeping it on care and maintenance with the normal care and maintenance procedures that are in place and there's nothing else that is going on?

Not that I'm aware of.

Okay. And then just in your comments, you said you'd be open to dropping the arbitration under certain conditions with your discussions. not into the details, but just from a bigger picture, what would lead you to drop the arbitration? Would it be that you're progressing ahead, the concentrate is sold, or are there anything that you can provide some color on what would help you with your decision on the arbitration?

Yeah, so first, it's suspending rather than dropping, so that just would be putting it on hold for a period to allow that there is a negotiation, but still with the rights that that could pursue. So I'd say you're putting it on hold is a good word. I don't want to get into the details of you know, what those conditions would be. But, you know, the broad is, you know, want to know that the table is set for negotiation and that both parties are ready to go.

Okay. Okay, thank you for that. And my last question, I just wanted to circle back on the transaction opportunities. I want to start by asking, you know, last quarter when we talked about the transaction opportunities, we talked about a pipeline in the 100 to 500 million range. Some of your peers have mentioned that that range now has moved up in size. So I'm just wondering, are you seeing larger opportunities out there and are those opportunities mainly in base metal producers that are trying to crystallize on this higher gold price. I'm just trying to understand whether that's something that has increased in sort of transaction opportunities. And then I just wanted to ask about the royalties versus the stream. How do those look in terms of opportunities? Are you seeing more royalties, more streams?

Hi, Tanya. It's Ian again. And I would say, first off, we're seeing similar conditions to what we saw last year in terms of overall volume of deals and also on size. That's probably the best guidance I can give you in terms of deal volume and sizing. In terms of royalties versus streams, similar to last year, it's a mix. And we're seeing good opportunities in both.

Okay. And Ian, you came back and talked a little bit about you have some opportunities in the non-precious metals. Would that be outside of energy?

Hey Tanya, it's Jason.

We're looking at opportunities both within energy and outside of energy. So it's a pretty broad universe of things that we're looking at. Overall, A little bit about the commodity, but a lot of it is just what assets are available and which are the best quality opportunities. And those are the ones that will focus our time.

Okay. And in the non-gold opportunities, what size would those be at?

You know, there's really a wide range from very small to larger transactions. So we're looking at a full spectrum of sort of quantum transactions.

Okay. When you say large, is that small from like 50 to 500 or is it up to a billion? I don't know what your large is.

You know, large is a spectrum from, you know, zero to plus 500.

Okay.

All right. That's helpful. Thank you so much for taking my questions and good luck and have a good quarter. Thank you.

Okay.

Thank you.

Your next question is from John Tommaso from John Tommaso Independent Research. Your line is now open.

Thank you. I noticed that Newmont sold 40 million shares of Discovery Silver overnight. First question, would Franco want to buy the next block that Newmont wants to sell, to have more, or would Franco be a seller?

John, we're a very happy supporter of the team at Discovery. We're delighted with the shares that we hold. But our strategy, as you know, is principally around royalties and streams. where in getting deals done, it's helpful for us to do some equity, in particular to be a lead order in an equity deal is something that we do. And one of the things we're trying to do is not put money in, but leverage the dollars that we're putting in. So if we can help the company raise more capital by providing that endorsement, that's a good part of the strategy. But just buying a block of shares is not really part of the strategy.

Following up on the earlier question, as the gold price rises, it's easier for the exploration and development companies to raise money. Could we expect Franco to have a larger dividend payout in view of the booming gold price?

Hi, John.

Sandy here. As you know, we have always highlighted our dividend strategy as being sustainable and progressive, where we always want to be in a position where we are raising the dividend. And we're proud of the fact that we've raised it 18 years in a row. In terms of a higher dividend payout, our priority is always adding assets, good long life assets, whether royalty or stream. And we see lots of opportunities right now. So I think you'd see our focus for capital deployment on adding those types of assets to the portfolio, but still raising the dividend. But I wouldn't expect an unusually higher increase in the dividend than we normally have done.

Happy hunting. Thank you.

Thank you. There are no further questions on the phone line.

I will now turn the Q&A session over to Candida Hayden and we'll take questions from the webcast.

Thank you, Jenny. There are no further questions from the webcast. This concludes our first quarter 2025 results conference call and webcast. We expect to release our second quarter 2025 results after market close on August 9th. Thank you for your interest in Franco, Nevada.

Thank you. Ladies and gentlemen, that concludes our conference call for today. Thank you all for participating.

You may now disconnect your lines.