Franco-Nevada Corporation

Good morning ladies and gentlemen and welcome to the Franco Nevada Corporation Q2 2021 results conference call. This call is being recorded today August 12th 2021 and at this time all lines are in a listen only mode. Following the presentation we will conduct a question and answer session and if any time during this call you require immediate assistance please press star zero for the operator. I would now like to turn the conference over to your host, Bona Vitek. Please go ahead.

Thank you, Michelle. Good morning, everyone. Thank you for joining us today to discuss Franco Nevada's second quarter 2021 results. Accompanying this call is a presentation available on our website at franco-nevada.com, where you will also find our full financial results. Paul Brink, President and CEO of Franco Nevada, will provide some introductory remarks, followed by Sandeep Rana, CFO of Franco Nevada, 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. We would like to remind participants that some of today's commentary may contain forward-looking information, and we refer you to a detailed cautionary note on slide two of this presentation. I will now turn the call over to Paul Brink, President and CEO of Franklin, Nevada.

Thanks, Bonnevie. Good morning, and thanks for joining our call. We're delighted to announce the record second quarter that builds on the momentum from our first quarter. Records for the quarter include geo-sold, revenues, adjusted EBITDA, and adjusted net income. We also continue to operate at near-record margins. In Q2, we received our first payment under the newly acquired Vale A&O Ventures. The ongoing ramp up at Cobre Panama and higher deliveries from our Guadalupe stream were the other main drivers for the increase in geo salt. For the second half of 2021, we expect our portfolio to continue its strong performance, but expect lower deliveries and revenues from TASGEST as it recovers from the mill fire and HEMLO with less production on our royalty ground. We're raising the lower end of our geo guidance for the year based on the strong performance of our mining assets here today. And with the recovery in oil and gas prices, energy revenues for the quarter were well again ahead of our guidance run rate, and as a result, we've made a meaningful increase to our energy revenue guidance for the year. A theme for this reporting season has been cost inflation, labor, materials, and energy. This is a stage in the cycle where our business model rarely distinguishes itself. Our revenue-based royalties and streams aren't impacted by cost inflation. We operate with small headcount, and low G&A. Commodity price increases flow directly to our bottom line. In fact, we have leveraged inflation as energy and steel prices increase. We benefit through our portfolio of energy and iron ore royalties. Turning to our growth outlook, we expected 2021 to be a strong growth year driven mostly by increasing contribution from Cobre Panama. We've added to that growth with three new acquisitions, totaling $850 million this year, Haynesville, Contestable, and Vale de Benches. The timing of the Haynesville addition is looking fortuitous with strong natural gas prices. Contestable offers immediate precious metal cash flow and long-term upside, and the Vale interests add to our base of low-risk, long-life cash flow and also increase our asset diversity. With the additions, the portfolio remains more than 80% precious metal focused. We're guiding to 25% growth in the business over five years from our 2020 level, with both organic mine expansions and new mines as the growth drivers. Cobre Panama, Detour, Stillwater, and Tassius are all being expanded over the period. Kirkland Lake Gold graciously hosted our board to visit to the Detour Lake mine this week. We came away very impressed with their team the optimizations that are driving the output expansion, and the potential for the ore body to become far bigger over time. As a first step, we expect you'll see a meaningful increase to the resource based on the drilling that they're doing this year. In terms of new gold mines, Goldfields reports that Solaris Norte construction is on track, and we expect the development of Hard Rock, Valentine Lake, and Stipnite Gold to follow. With an impressive PFS recently published, Skeena Resources' SK Creek is likely the next in the development timeline. Continued strong copper prices bode well for our pipeline of long-term copper development projects, Alpala, Takatak, and Nueva Union, amongst others. One of the larger long-term options in our portfolio are our royalties on the Ring of Fire chrome and Eagle nickel deposits, the agreed acquisition by BHP of Noron Resources is a big step to making development of those deposits a reality. In summary, Frankenvata continues to deliver with record financial results, built-in growth, and tremendous long-term optionality. We are cash positive, once again have no debt, have $1.4 billion in available capital, and are generating operating cash flow at a rate close to $1 billion per year. We're focused on precious metal acquisitions, and we see a good pipeline of opportunities. Cindy, over to you.