Franco-Nevada Corporation

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 -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 Hamlo, NPI, and strong production from IEnergy. We're looking forward to added contributions through the year, in particular from the ongoing ramp up of Tocotazeño and Greenstone, and the start up of Valentine Gold, as well as contributions from the new Poker Pine Royalty. On the topic of Cobre, Panama, President Molino 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 Cascavel, the reopening of the Museum of Northern History in Kirkland Lake with Niko Eagle and Alamos, and a contribution to the Sioux area hospital foundation with Alamos. During the quarter, we closed the previously announced $500 million acquisition of the stream on Cervonia Stillwater's 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 .25% NSR royalty for $300 million with Discovery Silver on the Poker Pine 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 issue. Needless to say, we're delighted with the roughly tripling value of the shares from our purchase price. We remain well capitalized to add further growth, and a business development team have a number of actionable opportunities that could add further attractive assets this year. With that, I'll hand it over to Sandy.

Thanks, Paul. Good morning, everyone. As Paul mentioned, Franklin Nevada reported record financial results for first quarter end in 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, oil, 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 geos sold and net geos sold for Q1 2025, Q1 2024. Total geos sold were $126,585 in the quarter compared to $122,897 in first quarter 2024, 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 Candleria and benefited from the recent acquisitions made, Yanacocha, and Western Lynn mining operations. As Paul mentioned, we did receive our first geos from Western Lynn in the quarter, which were related to the production period September 1st to December 31st of last

year.

Geos 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 Candleria and receiving geos from recent acquisitions, we also benefited from the continued ramp-up of operations that knew mining tokens in Yale and Greenstone. I look forward to increasing contributions from these assets. One of the key outperformers versus our expectations was the Hemlow MTI. We did record a patch-up accrual related to 2024 that was recorded in first quarter, but the Hemlow MTI 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 geos sold were $25,962 for the quarter compared to $29,879 for prior year, despite diversified revenue being higher by 21% -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 stream 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 Frank, 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 6, 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 Frank, Nevada. This compares to $256.8 million last year, a 43% increase. Precious metals accounted for 79% of revenue. Adjusted EBITDA also records 49% higher for the quarter at $321.9 million compared to $216.1 million in Q1 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 equivalent received from the Energy Division. As we received more geos from Candleria and began depleting our recent transactions, Janet Coach, and Western LIM mining operations, this impacted depletion as those assets are currently higher per ounce depletion assets. Adjusted net income was $205.6 million, or $1.07 per share for the quarter, both at 51% versus prior year. Slide 8 highlights the continued diversification of the portfolio. 79% of our Q1 2025 revenue was generated by precious metals, with revenue being sourced 84% from the artist. Alarmist contributor to revenue was Candleria. Slide 9 illustrates the strength of our business model to continue to generate high margins. For the 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 2024. 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 of the $300 million funded after quarter end for the porcupine cruelty. 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 give ad. 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 line? Your first question is from Hiko Illa from H.C. Wainwright. Your line is now open.

Hey, good morning, Paul Sundyton team. Happy Friday. Hi, Hiko. 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 all the operators have more cash flow than they probably had a year ago?

I don't see a theme at the moment. That conversion was just a function of the transaction that we did. We're still what 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 a 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 the Occidental Petroleum. And essentially it said the investment didn't really work out. In contrast, your US energy interests actually did quite okay with, you know, obviously higher royalty rates in the Parmian. I 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 OXIE did. We are an asset investor in royalties in the US. So we don't have the cost structure, et cetera, that OXIE would have and some of the performance issues that they may have had. I think our exposure in the US is fairly broad. We've got access to most of the major shale place, including both the Parmian and Onondarko on the oil side, as well as the Haynesville 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 world practices that 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 2 from CIBC. Your line is now open.

Thanks, Paul, Dandib and team. And congrats on the record earnings. It's well deserved. Maybe a quick question first on the MPI at Hemlo. Dandib, as you mentioned, there is a bit of a catch up in the quarter. So to confirm, we should not 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 leveraged to higher commodity prices, but likely would be to the same sort of level.

Yeah. Hi Cosmos. Yeah. So the catch up related to last year was about five million US. So the Q1 MPI was about 12 million US. You know, as you said, it's very hard to predict MPI, especially at Hemlo where we don't cover the entire line. We're just on one portion of the underground. But at current commodity prices, you know, 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 MPI, as we talked about, very leveraged to higher commodity prices. If I scan through your portfolio, the other MPI's in Kirkland Lake. So is there any way that you can kind of talk about the potential here at MPI 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 color that you can give us on the Kirkland Lake MPI?

Sure. So the Kirkland Lake MPI is a 20 percent 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 White, where we have a five percent MPI. And with Orlet taking over that asset from Newmont, we're looking forward to seeing what they do with that asset in terms of more efficient mining, 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.

And the Muscle White MPI, does that cover the entire property? Yes. OK, 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 thought you received six thousand five hundred forty 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. So 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 Cranker 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 twenty thousand GEOs. You know, five thousand five hundred five hundred, so roughly five thousand 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 COVID 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 up, you know, what is going on in

Panama at the moment? The you would have seen that President Molino 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 Molino had made to say he would he would like to see that they can get the 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, Sandy and team. Those are 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, Sandy. Thanks. Thanks for the questions. First one, just to follow up again on Cobra Panama, looking at the commentary from Molino, I mean, I think he quoted that he is 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 Corez, 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 financiator to this project. We don't have a seat at the table. As 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. OK, 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.

OK, that's useful. Thank you. And then the second question, 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 per min assets from new wells that came online during the quarter. Going forward, you know, expected it will see a reasonably flat profile, although it will depend 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 prices sort of stabilize in and around where they were last year. I would expect a fairly flat profile if prices continue to weak. We are waiting to see some modest volume

decline associated with a pullback activity.

OK, thanks. One more, if I could, just thinking about your pipeline of projects and where your focus is at the moment. Can you give us any steer? Most of the transactions have been more focused on gold assets in the space. 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. Sean Gray speaking. I would make the first overall comment that the gold market is very active in terms of royalties and streams. So we're spending 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. Thank you.

Thank you. Your next question is from Tanya 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, right. I have three questions if I could. I'm going to start with Sandy, just the easier one on just on the modeling side. So thank you for that modeling on the Hemlo. And also, 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 percent 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'm wondering how that is that still what you're looking at based on what you know today?

Yeah, I think I think that's a fair profile. You know, the caveat is that the gold price has gone higher. Like our our guidance was done at twenty eight hundred dollars an ounce and close over three thousand now and energy prices have pulled back from especially oil from where we had budgeted. So, you know, on an overall profile, I think that's fair. You're you're probably 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.

OK, 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 correct 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 from 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 time frame 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 to react to lower prices by reducing their capital budgets 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.

OK, thanks for that, Jason. Maybe I can come to Paul on my second question just back on Cobre Panama and the arbitration. So I actually maybe just on the next step. 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 we should see all those things go ahead.

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

Not that I'm aware

of. OK, 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. You know, what would lead you to do 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 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 they, you know, with still with the rights that that could pursue. So I'd say you put 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.

OK. OK, 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 goal 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, just 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, it's 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?

There's really a wide range from very small to larger transactions. So we're looking at a full spectrum of

sort of quantum.

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 zero to plus 500 billion.

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

Thank you. Your next question is from John Tomazzo from John Tomazzo 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 world decent streams. Where in getting deals done, it's 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 and 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 raised it 18 years ago. 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.

Happy hunting. Thank you. Thank you. There

are no further questions on the phone line. I will now turn to Q&A session over to Candida Hayden, who will 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 9. 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.