Franco-Nevada Corporation

Good morning and welcome to Santo Nevada Corporation's third quarter 2025 results conference call. This call is being recorded on November 4, 2025. At this time, all lines are in lesson-only mode. Following the presentation, we will conduct a Q&A session where you may ask a question through the phone line. If you require immediate assistance during this call, please press star zero at any time for the operator. I would like to turn the conference over to your host, Tanita Hayden, Senior Analyst, Investor Relations. Thank you. Please go ahead. Thank you, Ina. Good morning, everyone. Thank you for joining us today to discuss Franco Nevada's third 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. During our call this morning, Paul Brink, President and CEO of Franklin 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. 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 day to all. For the third time this year, we're announcing record quarterly results. The new benchmark set this quarter was driven by high gold prices, strong operations, new acquisitions, and the sale of Cobre Panama stockpiles. Over the last 18 months, we've made six acquisitions of meaningful new gold interests. Yanacocha, Cascavel, Sabanier's Western Limb, Porcupine, Cote, and Arthur. All larger bodies that will contribute to our growth for many decades. Of the six, Porcupine, Yanacocha, and Western Limb are also producing. They'll impact our five-year growth and have boosted our gold price exposure. Eighty-five percent of our revenue was from precious metals in the course. The last of the acquisitions in July this year was a royalty on the Arthur Gold project in Nevada, operated by Angry Gold. We did draw an appropriate revolver to fund the acquisition, but with our strong cash flow generation and the proceeds from equity sales, the company was once again debt-free by quarter end. During the quarter, we saw progress on the ground at Cobra Panama, completion of the concentrate shipments, Pre-commissioning of the power plant for restart will be aimed to provide power to the Panamanian grid and formal notice to SGS to commence the environmental water work. Perhaps just as important, we're encouraged by the recent constructive comments by the President of Panama towards resolution of the Cobre mine closure. If Cobre does come back online, And with the contributions from our recent acquisitions, we're positioned for roughly 50% growth in geos over five years compared to last year. With the long-term assets we've added, we can then maintain that level of production for many years thereafter. Our deal pipeline remains very active. Although with this run-up in gold prices, we're also expecting good organic growth. With roughly half our revenue coming from principal gold assets, We expect this to be a powerful driver. Operators have strong cash flow for mine expansions, some ongoing like Detour, and others now planned at Cote, Maginot, and Valentine. Developers have been able to raise capital for new builds. In particular, Skeena and Perpetua were both successful tapping the equity markets to ensure that they can advance Escape Creek and Stipnite Gold. And the drills are turning on our large portfolio of exploration stage royalties. Recognition of the importance of critical minerals has also unlocked a number of permitting processes, giving the green light to construction to copper world and stiplite gold. Castle Mountain is also now included in the U.S. Fast 41 permitting process. On that same note, I've been impressed to see the profile that the Ring of Fire is getting in the Ontario government's critical mineral strategy. In the last few years, we've added new avenue to grow our company, That is finding good teams and good projects and not just providing wealthier screen financing, but being their financial backer. The first was Game and Ventures with Poker Designio, and the second, the Discovery team with Poker Time. Both are best in class and are proving to be highly successful. We're delighted to have played a role in their success. We're looking forward to supporting them going forward and to find other strong teams to back. With that, I'll hand the call over to Sandy to discuss the quarter.

Thanks, Paul. Good day, everyone. As Paul mentioned, Franklin, Nevada reported record financial results for third quarter ended September 30th, 2025. Our diverse portfolio of realty and stream assets performed ahead of recent expectations, and we continue to benefit from higher precious metal prices. Precious metal prices, with gold in particular, continue to be strong. On slide four, you will see the comparison of commodity prices for Q3 2025 and Q3 2024. Gold and silver prices increased significantly year-over-year, with the average gold price higher by 40% in the quarter and average silver price higher by 34%. We also saw a rebound in prices for platinum and palladium, while prices for iron ore remained flat year-over-year, lower for oil, but we saw a significant increase in natural gas prices year-over-year. On slide five, we highlight some of the key financial metrics used to measure performance. Total GEO sold, net GEO sold, revenue, and adjusted EBITDA. Total GEO sold increased 26% to 138,772 in the quarter compared to 110,110 in third quarter 2024. Precious metal GEO sold in the quarter were 119,109, higher by 41% compared to prior year. Also, just under 50% of total GEO sold were sourced directly from mines where precious metals are the primary commodity. For the quarter, we received strong contributions from a number of our key assets, Cobre Panama, Guadalupe, and Candelaria, and we also benefited from our recent acquisitions, Western Limb, Llanacocha, Porcupine, and Cote. This quarter, we recorded our first full quarter of revenue for both Porcupine and Cote. Approximately 11,000 geos were delivered and sold from Cobre, Panama as we received geos related to the concentrate that had been stored on site since November 2023. In addition to better performance from Guadalupe and Candelaria and receiving geos from recent acquisitions, we also benefited from the continued ramp-up of operations at new mines, Tocantins, Greenstone, and Solaris-Notay. With respect to the Hemel MPI, the MPI was not as strong this quarter compared to earlier quarters this year. due to lower production on Franco's intralate claims on the property. Barrick is in the process of selling Hemlo, and we look forward to seeing what improvements the new team has planned for the month. Diversified DOs sold were 19,663 for the quarter, compared to 25,733 for prior year, despite diversified revenue being higher year over year, 67.1 million versus 61.2 million. The GEO sold reduction is due to the impact of higher goal prices when converting revenue to GEOs. For Q3 2025, net GEOs were 125,115 for Franco compared to 97,232 in Q3 2024. Net GEOs removes the cost of sales component for all GEOs so that GEOs sold are represented after cost. As you know, wealthy GEOs are higher margin than stream GEOs. As you can see from the chart, total revenue increased by 77% for the quarter to $487.7 million, which is a record for Franklin, Nevada. Precious metals accounted for 85% of revenue. Adjusted EBITDA, also a record, was 81% higher for the quarter at $427.3 million compared to $236.2 million in third quarter 2024. Slide six details the key financial metrics reported by the company. As mentioned, total GEO sold were 138,772, generating $487.7 million in revenue in third quarters. With respect to cost, we did have an increase in cost of sales compared to prior year due to higher stream ounces sold, particularly Colbury Panama. Cost of sales was $47.2 million versus $31.9 million last year. Depreciation increased to $87 million versus $54.2 million, As we received more DOs from Candelaria, Cobre, Panama, and began depleting our recent transactions, this impacted depletion as those assets are currently higher per ounce depletion assets. Adjusted net income was $275 million, or $1.43 per share for the quarter, both up 79% versus prior year. One other transaction that did occur during the quarter was the sale of some equity investments. We sold a portion of our equity investment in Discovery Silver, and received total proceeds of $84.4 million, with a gain of $67.4 million recorded on the sale. Under our accounting policies, these gains are reported in other comprehensive income and not reflected in our earnings per share. However, the gain would have generated an additional earnings per share of $0.30. Slide 7 highlights the continued diversification of the portfolio. As mentioned, 85% of our revenue was generated by precious metals, with revenue being sourced 88% from the Americas. No asset contributed more than 10% of our revenue. Slide 8 illustrates the strength of our business model to continue to generate high margins. For third quarter 2025, the cash cost per geo is $340 per geo. This compares to $290 per geo last year. As the gold price has risen, Franco has seen a significant increase in our margin per geo. Margin was 3,116 per geo in the quarter, an increase of 42% year-over-year. Slide nine summarizes our updated guidance. We have benefited from an increase in geos from Colbury, Panama, and Cote during the first nine months of 2025. That, along with record gold prices, has resulted in record financial results for the first nine months. Based on geos sold to date and what our expectations are for Q4 2025, we expect to be at the higher end of our initial guidance range, which was $465,000 to $525,000. We've narrowed this range to the higher end and now expect total geo-sold to be between $495,000 to $525,000. With respect to precious metals geo-sold guidance, our original guidance range was $385,000 to $425,000. With asset performance to date and precious metal geos received from Cobre Panama and Cote, we now expect to exceed the top end of the original guidance range. As a result, our updated guidance range for precious metal geos is $420,000 to $440,000. Slide 10 summarizes the financial resources available to the company. The company has $236.7 million in cash and cash equivalents on hand at the end of the quarter. When including our credit facility of approximately $1 billion and our equity investments, total available capital at September 30, 2025 is in excess of $1.8 billion. As well, we continue to be debt-free. And before I turn it over to the operator, I would just like to summarize the recent CRA settlement that we achieved. On September 11, 2025, we reached a settlement with the Canada Revenue Agency, which provided for a final resolution of Franklin, Nevada's tax dispute in connection with the reassessments under transfer pricing rules for the years 2013 to 2019 for our Mexican and Barbadian subsidiaries. Under the terms of the settlement, no payment of any tax in Canada is required on these foreign earnings for the subsidiaries for this period. We're glad to have this matter behind us and are very pleased with the settlement reached. And with that, I will pass it over to the operator, and we're happy to answer any questions.