FNV - Earnings call transcript Q1 2021 | Franco-Nevada Corporation

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Operator

Good morning, ladies and gentlemen, and welcome to the Franco-Nevada Corporation Q1 2021 Results Conference Call. [Operator Instructions]. I would now like to turn the conference over to your host, Jason [indiscernible]. Please go ahead.

Unidentified Company Representative

Thank you, Chris. everyone. morning, Good joining XXXX for to Franco-Nevada's discuss Thank us Quarter Results. First you today call which find Accompanying our a is this presentation, franco-nevada.com, results. you financial website is where will full also our at on available Paul Brink, will introductory a Franco-Nevada, followed remarks, brief of of review Sandip CFO results. will provide Rana, some by who and President CEO Franco-Nevada, provide of our a This period. followed by Q&A be will

Franco-Nevada. answer today's any participants full may questions. this would Slide turn available executive over Paul now Our and remind of team X the will like to cautionary to information, that forward-looking Brink, to some you our commentaries of are contain to of refer and note President I call We we presentation. detailed on CEO

Paul Brink

Good Jason. Thanks, morning.

outperformed for generating near quarter, ahead made portfolio quarter diversified gold XXXX. Panama, XX% record adjusted margin and first prices ounces the largest leverage margins, to of record expectations. ongoing net deliveries Hemlo and in equivalent the increases Cobre and adjusted Gold EBITDA for over from at a XX% at Antamina, an Strong ramp-up were the our QX margin. revenues income Our

due handbook, through diversity high operating responsible our Along the Cobre our for our our contribution report. expect gold committed ESG our each we the in sector-leading allocation, Highlights to Panama well stakeholders, the Board our and rankings, are our ongoing the our with progress We're we throughput were grades, interest quarter of partners increased increased top some shareholders, higher and annual from published and our contributions is we of that ESG mining As the respectively. commitment report our and year, drivers. ahead leadership. guided through promoting works Energy ensuring Permian for prices Candelaria to to and annual communities. of revenues communities strong capital recently all Franco-Nevada investment our asset initial wells including in high were higher run from Haynesville, that A contribution rate. and energy to the

quarter we added with further Vale Debentures. end in to a tranche to the d'Ivoire assets royalty, a metal Labrador Roxgold, Ore along on Peru. long-life in Ore were assets, delighted Both upside Royalty During Vale attractive of enhances We project Company Royalty mine precious and with our potential. development stream Séguéla copper a of excellent acquire interest, two our the With low-risk, diversity metal portfolio. Iron flows base Iron and Côte precious Condestable add cash investment post on of quarter, the our royalty gold

remains portfolio the precious metal additions, the With focused. more than X%

-- the iron Our extend both recently in long-reserve reserves ore published measures. asset The handbook and our assets long-life will and growth highlights further year-on-year lives.

with and year Franco-Nevada, Turning now to XXXX our new to strong new is be a contributing. expected all acquisitions, for mine mines expansions growth outlook.

pipeline year. amongst Taca the Lake development deposit. East We Skeena's portfolio. step-out the Detour likely at recently, copper expansions success provided and latest Gold drilling week, Malartic deposit, the the at The update The boosting a interest. continue of for Copper Creek of exploration expansion Eskay Fenelon Canadian to Kirkland are of copper projects others. the numerous a to prices see Hardrock, program and holes at for satellite This XXX,XXX Lake. projects, deposit, Taca and of and prices the Most Strong copper should ongoing stock our successes resource gold Rosemont Valentine near-record Gouldie be meter expansion Alpala high-grade in Wallbridge's catalyst Detour and and this drill World at outlook to our on Stibnite gold the Lake

results and The outstanding X Director years. like dividend for an XX we The XX% growth Panama. increased our a than the over dividends share. A is business leadership ESG Cobre our stepped of note our Following year-end I than Compensation the growth in and revenue At David the Franco-Nevada. and was June has outlook and the Peterson first due of to would Honourable XX. Committee down Board many the announced increase. those increase Royalty now the acquisition, payable our declared successive as meeting, succession now $X.XX his reflects and thank dividend expect the revised annual XX% quarterly Vale the XXth The on annual next after and This of years larger more Debenture to of years as Board service. to with Chair and David in renewal. Board guidance We typical yesterday's

no will Board. doubt building unity the within for miss We his abilities unique

capital see I'll of recall available you'll optionality. are at Board up, We're a our for Maureen portfolio at led our to CFO, renewal, over continues in long-term last adding and has cash year. a it in year. this now billion background, the sum prospects having of precious joined Securities time of terms previously outperform. on hand good the and Ontario In EBITDA acquisitions position that growth net metal generating governance to billion strong Jensen and a Commission. the focused rate $X.X built-in tremendous It Sandip per has $X Rana. now Maureen To We're to portfolio.

Sandip Rana

Thanks, Paul. everyone. Good morning,

XXXX continued on XXXX Franco-Nevada that the momentum ended build to with. First positive quarter

and Our stream and of well continues to portfolio perform ahead expectations. royalty

ounces to XX% of Overall, March being compared Antamina and Condestable. GEOs X during The gold based higher XXXX like to Franco-Nevada I'd quarter was Although We for sold the deliveries silver and Antamina, over XXX,XXX. silver a that increased during very the Slide year, prior quarter the price higher on a along months financial number gold X, GEOs a weaker XXXX sold production. we strong gold adjusted still sold ended and is EBITDA. XXXX revenue QX silver highlighted than for XXXX. a for of highlight Hemlo, XX, quarter, contributors performance lag record delivered strong little On a Antamina, with in quarter; of Franco-Nevada ounces have Cobre with record combination and delivered X fourth for was prices first equivalent strong quarter. with quarter Panama had the the

silver to for ground. in from the production million For to anticipate X.X provided GEOs ounces Antamina million the had fourth year. XXXX. do quarter, example, half to production first a end quarter from the X.X for of XXXX. Cobre benefit second to Hemlo, we company line sold XX,XXX with GEOs related range We silver full continues for for ounce received the GEOs were XX,XXX, of continue at in We the previously to GEOs QX which year were related our expect be guidance quarter strong NPI deliveries project with sold ground The to to X,XXX Antamina the Panama we from just up. XXX,XXX XXXX prior previously recorded XX% The ramp periods. the on over sold mining of we decrease Franco-Nevada on as have of provided. mining to XXX,XXX in the At NPI high

stream delivered for gold were we Finally, Condestable our ounces first transaction. and the silver recent

Guadalupe. over less which versus quarter. as year for Sudbury quarter the and in GEOs deliver GEOs revenue Just sold prior reported the did Two were assets X,XXX were

of the KGHM a first years, number be rate, has sold XXXX. will for an quarter decided of mining it McCreedy GEOs reflected additional at in production which Although at the to in lower West continue was

for GEOs a the lower our X and grades because XXXX. the XXXX year received for QX Slide adjusted sold As in total fewer ago. and quarter highlights Guadalupe, revenue of company QX EBITDA than and

ounce increased quarter EBITDA bar see from ago, the XX% revenue the you the record has company, million the to compared ounce for price a gold adjusted the $X,XXX per $XXX.X charts, for million. a As per a significantly of increase. was as and in $XXX.X is adjusted is The $X,XXX revenue EBITDA The average can year-over-year. in year quarter

$XXX.X Gold margin As million Paul XX% year million achieved. $XXX.X was revenue of mentioned, in QX silver to quarter in a and last increase. from the XX% XXXX, increased

in increased gas from year million $XX.X Haynesville the First well million and quarter. quarter transaction. recorded assets increase saw to an $X.X revenue also natural as also to recently company energy rebound announced a from million was ago oil production. contribution strong revenue from increase The gas as prices a The in $XX.X due this a in as the

As the results financial key the company. X, for Slide to see turn you will you

increase an increase in and adjusted GEOs EBITDA commodity both As in revenue mentioned, and due the was metals sold in increase and predominantly precious the prices, to energy.

share delivered the On ago. per to higher is Condestable been over streaming ounce $XX.X per income at year. adjusted a streams. the these part to of revenue income $X.XX cost lower due evolved share, is $XX.X $XXX.X largest from XX.X%, in increases business a less that topline and was quarter. sold $XXX.X and sales been Panama quarter. Sudbury cost become due we've for million breaks XX% or was and and Antapaccay, significantly million side, or higher Cobre streams depletion revenue Slide of our at per during We XXXX. the Depreciation growth. for the source the prior of was of and energy pay increased quarter but always very million cost compared during mining net between have X revenue, for ounces first company, $XX.X The $XX.X Adjusted higher net X The million increase million has has The versus XXXX. decrease million Guadalupe. for we mix from QX successful quarter, include in of and as income the was to model. component net the respectively, have royalty XX.X% Adjusted company recorded are to The quarter. generating the and significant a derived. year Franco-Nevada added adding that the streams down first revenue company, royalty They

However, thus it from cash margin flow higher mining and energy, is or whether which operations. royalties, generate

Royalty the respect can assets chart to both as on We $XXX the $X.X Slide to generated of the the with cost revenue see, will million by increases allow royalties. to related margin the are continue illustrates us our -- the margin, business peer-leading As on achieve price stream margins. in of related and model a With you million the company for royalties believe minimal, EBITDA combined costs slide how increases. gold X to to the

ounce cash but depending decrease expect usually result our was cost per of Cash with increase cost gold of recognized average decrease sales, Our seen price a reflect we ranges approximately The cash ounce costs to ounce the between environment, price fully minimal. our quarter, should a year-over-year, includes significantly, gold decreased sold. revenue per of the $XXX per are per be which on lower cost increased cost fixed in rising cost being benefit less not per This cost business, XXXX. energy ounces actually we in In ounce $XXX the royalty as GEO XX% versus can mining streams. cost XX%. in which first associated and sold as could and the more royalties to mix GEOs with QX the structure, as

of having One of a diverse the portfolio. strengths

The other the besides cash component cost our for sales of corporate is administration costs. the company

like Our possible We are our strength our The focus Board Management the to of focus on very model being business. management. clearly stress as this on and our scalability. the and illustrates chart cost-efficient Slide in cost managing proud business on X as of

QX period. which approximately XXXX Here, our one million over to and we X This, to IPO. is revenues quarterly of grow diversification to a remained Corporate highlights Since grown we of our and increase. was than differentiators adding while more time $XXX and business our administrative can from strengths or revenues that of stable portfolio our quarter, company. without our this G&A believes fairly portfolio, XXXX, revenue. $X.X to the overhead Administration we $XX have this has highlighted continue the Slide our consider add of the million expenses X% and significant quarterly the general Management our XX-fold Franco-Nevada. have since million

total of assets at South shown, XXXX X by of diversity. by being profile the for asset that revenue. XX%. revenue revenue largest QX Panama respect the being was and revenue only the Americas, The chart Antapaccay was The last XX% our gold of quarter, our XX% diversification, With the followed operator more Cobre Those XX%. are XX% revenue America than As largest revenue sourced with our has gold generator generated to highlights geographic at at our from equivalents. generated XX%

is being exposure operates which XX%, largest revenue Our generated any by Cobre who is Panama. operator one First Quantum, to

Brazilian expects Vale premium million $XXX sold was the end April net to XXXX, Royalty debentures on million. XX mines. As on allow XX,XXX disclosed sales Franco-Nevada subsequent quarter Vale's XXXX. to full The purchased to acquisition, this XX, payment to a based of GEOs holders With company year recognize from receive Debentures number for for a XX,XXX

this the we additional to in the With XXX,XXX over received XXX,XXX to actuals. XXXX be guidance previous of guidance our XXX,XXX. range from to XXXX, to XXX,XXX for increase GEOs XX% a The revised have increased the year midpoint is

guidance Our the at energy million. remains $XXX disclosed of same million $XXX year-end revenue as to

second revenue, January For the will be for we XX. for Royalty the quarter ending the the XX, Vale accruing June royalties June X to period revenue XXXX,

will be of revenue in we months' second quarter. essentially, So worth accruing X

will The Thereafter, will we months X until not September the accrue payment end cash and quarterly. every be of actual received thereafter. then

be QX, If quarter, Royalty, quarter of production first that X be half lower how versus The depending expect upon a is does the revenue that precious above for there assets could recognition precious of year the below possibility typically in is half. in metals With second we occur, with to the of there again Vale the months the revenue metal thus XX:XX. XX% do the precious perform. our and XX% is production sales the XXXX. being Also for on seasonality in revenue metals split third

on cash will a today, billion. hand, be on net the to did of We $XXX $XXX to a company capital Vale the to of our liquidity acquisition draw credit respect happy We with take continue facility, million $X.X as of to fund Royalty I seen were questions. but and Slide million As of XX, position. in now cash combination back on available on it turn with Chris. we hand has

Operator

Instructions]. [Operator

from comes JPMorgan. Tyler question Langton, first Your

Tyler Langton

they are, kind revenues Could to the revenues in prices. of quarter. kind sort with hold guidance? if just track you're benefited you on of look kind million obviously, production like $XX this of starting and maybe guess, just the what the a us, mentioned the current I where Just energy given, of give of know from the you I hit prices well year, could sense

Jason O’Connell

here. appreciate question. the Yes. I Tyler, it's O’Connell Jason

a higher revenue number QX, energy. prior for revenue did For from Part number from have we that of than normal came periods.

period the so. the revenue, If number quarter $XX you prior closer for been or that about have for adjust to million would

but year. had it year, So were producing coming $X wells last -- we million that this was received we from really only about payment

$X.XX we With expect guidance. The have mcf the above do in $XX prices per our were the prices revenue. WTI a we higher prices, that bit to better barrel used and per

we rest stay guidance If of So bit I would prices come higher we than benefited from that. would elevated the a in that year, for that expect the our we provided.

commodity provided During bit sensitivity our a prices. of Analyst to information Day, we the around

there about a of guidance associated higher XX% than the our So the we prices with revenue leverage increase portfolio. XX%. gave, energy If are average should by that is bit on

revenue of expect again, be be will So if that there remain revenues higher, prices bit a we and will leverage within number. higher,

Tyler Langton

year? And -- longer-term should for we I this that? I there -- the not this benefit of is Or with is a mean should more expect of that think production, when guidance, guess, this is sort I where temporary anything it

Jason O’Connell

is going when that the not at I benefit again, the you I would would period there prior quarter, of forward. that revenue the look within to expect say continue --

we But the addition think did we still the a quarter, or volume-wise. have beginning In we continue our guidance good relevant that at year. to to that production provided that, of is

those of decline made on assets that of those some a quarter year. some assets the wells -- the throughout to continue had good So will

to and from the just was not revenue cautioning So I that. take annualize quarter the

Tyler Langton

XX,XXX the a around I was And close of was a and Perfect. quarter, X,XXX-ounce GEOs -- benefit. guess, know Okay. around question on just then final in I it Hemlo. to there

mentioned half. sort know about XX,XXX- Makes contribution. quarter the should for that -- exceed last NPI the of the high results I hit XX,XXX-ounce year? I given to end could least the I guess, I just you at like in guidance -- guess, and decrease But think or talked second the that, it a you you QX of

Sandip Rana

expected, this we're that to of to middle you Obviously, early it there's in say now, it's I up related and on production not with end to stage second because it probably Right range. at and this narrow comfortable the going I this of is prior do in X,XXX as this period. the NPI, end be still the too towards that a year. position half of to that XX,XXX. should an the of impact there costs payment, But land year or lower said, the think as Still would range, narrow at it in stage.

Operator

Markets. from RBC question Wolfson, Josh Capital comes next Your

Joshua Wolfson

looking and Just transaction so the clearly. guidance, Vale I just at understand

started in that So planning production January, to you're correct? from the accrue have quarter, that is would second

Sandip Rana

XX, didn't XXXX, X. from own to Because until we're for them payments we that's but production April January correct. Yes, entitled

quarter months' So accruing sales. worth June of X end, we will for or be production

Joshua Wolfson

the was, Did from XX,XXX ounces. guidance forgot Okay. from or then XX,XXX the Jan number exact And -- the assume for production that to I what April?

Sandip Rana

year's production, January XX. That's a full X December to

Joshua Wolfson

on you acquired. company? thinking But dollar We looking than the at at get lot X-plus And share then understand those lift it the ago. could years which current ultimate never for shares, like Understood. least acquired didn't had investment what amount acquired shares higher sort Okay. we what's short-term the of Analyst large were position? back -- for here price We've a it disclosure. this, deal, that large sort always this share But started that is maybe Day. Obviously, goal about the that what's just where thank strategically, Franco of it looks be to this the at was, was this

Paul Brink

Labrador just investment very think royalty a G&A. Iron with run as of Ore is fund little income really holding. Josh, we the

So it's that effectively pass-through of straight just interest. a

the with well. current traded just very happy position But has So we stock we're very hold.

as on new attractive really the focus it is trading for consider But side. acquire not And was prices, would it on our precious assets more. asset. adding If looking a you these is know, far prices, metal anymore to lower at we ever so at adding an

Operator

[Operator Instructions].

comes CIBC. Cosmos Chiu, question next from Your

Cosmos Chiu

my in first your Latin America. is the here. of COVID-XX or situation LatAm, are a question streams royalty Certainly, assets Maybe on great isn't Latin and LatAm, number in America, and

has example, in that maybe how you now? Antamina. I For you of situation factored we're you guess, was a now? in so I understanding Could at of way the impacted think your far bit And or in? comment right on there QX, And an any outbreak QX into have it

Paul Brink

The absolutely by -- the Cosmos, is yet right. through year. terms aware Antamina, the heard heavily the you're production America assets, the of anything outbreak we rest in we're of only at Of either impacted the first been COVID. Latin impacting has of but year through quarter or this that haven't

So work, to impacting to far they're date, that able without as as manage production.

Cosmos Chiu

Okay.

from now West here. For to Africa sure. Maybe moving Antamina

upside You parts. made the One one a really could of lot number was of potential good a think have past didn't quarter. I my question guess acquisitions it's in here, I really get that although Séguéla. actually attention is in But small. But it's that X

The some a the Roxgold, is, the Royalty pits, package? here entire they've of of or [indiscernible] really Fortuna the want just confirm of to first part that and all combination Silver is of the some the and or recent different with ones. proposed talked of land potential on I combination other

Eaun Gray

It does all which mining Cosmos, you're of this is Eaun. right. targets prospects. cover license, covers and those Yes, the

Cosmos Chiu

Do Roxgold, Séguéla more with Great. upside merger a part or you excited Eaun, larger potential see here now with and are the acquisition Silver potentially And from getting onwards? Fortuna being then, of proposed now you company? more of

Eaun Gray

ends of deposit. We liked terms it. the It love the really team for technical us. And in starts geology and

company, also now to to and also And hope Fortuna happy happy picture. with so do at were keen And we something we're Roxgold And there needed. very relations ever maintain there. into the would partner lots of contact and to very be come the bigger good potential. if Bigger team see to we

Cosmos Chiu

down believe so And a within that us, -- Eaun then is it at Do on and get could company right to buy there's than that going side course. within the with the down you, is now? flip company, buy larger now a Of you confirm think works bigger Royalty. previously? How more I here, that exercised a

Eaun Gray

Sure.

of the existed down. so our was bit And background. little pre-existing that to royalty There a had a XXX% another properties buy prior it transaction, on and

acquisition which allow for the was diligence. deal equivalent half would there of to see predefined for were some obviously, at things time, parties, both price like Sunbird buyback made to company ahead we and that due price And the an which to a Our effectively we bought it do the worked And able of compelling you a arrangement us. in. at great that very

but So and bit project. of in the and cut we're with do and back still part it but at happy very negotiation, XX%, a we being it's royalty of forth of possible terms they'll it's that, the

Cosmos Chiu

Canada here. here. course. question Maybe back Of one last coming And to

haven't mentioned, royalty your can Paul, by opening potentially extent your sure comment not But your that made this within much the and fall Yamana how you asset new here As at and East Malartic. of grounds, terms of entire a new been time. through with Agnico you handbook in land on Gouldie at Canadian yet. Royalty that remarks, area? your of about Eagle gone at package you I'm in in the talk But point discovery I can discovery there's sort

Paul Brink

have Canadian think, it's full blocks a at position. property X We've The the that we cover that we Cosmos. into separate checkerboard. claims of don't a cover Malartic -- Thanks, bit I claim royalty got

extensions the We the that another claim our of the made covers they east. One block understanding is to that. claims do what have center that Gouldie to The of are the East deposit. of falls now the that east have

we're so like early on excited it's it other part claims, that extension looks And may of days, but of it. that about very one our be and so

Operator

comes question from Brian Raymond James. MacArthur, next Your

Brian MacArthur

guidance, And still just it know MWS going questions, to you Sudbury cap was There made expected. XXX,XXX-ounce question the is have earlier to the potentially the I comment about Is it related was guidance. XXXX lower remind today can in before call my that -- the continue being I the it XXXX me guidance just then. Sudbury, the the gave in both X-year case? And a two was is, X-year when then? second or originally that in in assumption than too the Royalty? when does out Is kick you

Sandip Rana

here. of continue the current mining is Sandip plan. it's life West yes, it's mine Sudbury, on Brian, the XXXX, to going McCreedy till

part at highlighted half end the we be XXXX. as of year-end, the will was our As it at it for rate

And look so QX, on profile. for you it's pace if at that

within So XXXX. for it's our expectations

So GEOs the it will be to about years. per year for X XX,XXX next XX,XXX

Brian MacArthur

Great.

So changed at that hasn't all...

Sandip Rana

That hasn't changed, that we that's at in a hasn't mine mining changed. XXXX. It's just was year-over-year. rate. be It's respect reached a because year, last solutions, waste they're the reduced lot reason With less than but it cap to expect the to

not So in included outlook. XXXX it our is X-year

Operator

time. questions further no proceed. are There at this Please

Paul Brink

you, Chris. Thank

expect with call following for XX, in release XXXX held August conference to our interest the after Thank you Franco-Nevada. results We close market the your QX on morning.

Operator

disconnect Thank your call for you you. you this please gentlemen, participating and Ladies ask concludes for lines. and your We conference that thank today.

Franco-Nevada (FNV) 6 May 212021 Q1 Earnings call transcript