FNV - Earnings call transcript Q1 2022 | Franco-Nevada Corporation

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Operator

Good morning, ladies and gentlemen, and welcome to the Franco-Nevada Corporation’s First Quarter 2022 Results Conference Call and Webcast. This call is being recorded on May the 5th, 2022. 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. [Operator Instructions] I would now like to turn the conference call over to your host, Bonavie Tek, Vice President of Finance. ahead. go Please

Bonavie Tek

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

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

Paul Brink

offset nature quarter by once energy Thanks, morning. QX our that to high somewhat metal ore I'm prices. again iron and benefited was The of margin strong, demonstrate lower contribution announce Bonavie, results business. particularly from strong the metal strong pleased good and precious deliveries. energy The precious

accelerated None The per strong. $X the Mcf, guidance. per were of to almost constraints. Haynesville in likely remain annual Cobre, track are With lower getting to guidance timing payback Oil particular Sudbury. XXX totaled gas used Our prices expected from impact our on production. and Gas natural annual are investments. we our Marcellus We're prices shipment gas issues compile been and planned deliveries with. double and have Mcf impacts meet above from to precious slightly yields Candelaria the and maintenance, transport metals than

producing year annual progress for our ESG the made fourth comprehensive year our was of published we assets. grows. quarter addition diversity our this our highlight further report. the team During mining for We've A as disclosure goals on emissions

to Citizens. XX last be Knights were we Best Corporate Canadian List Corporate recognized, continue efforts of Our month, named in through

Our business world. in today's inflationary out stands

Our are effectively NSR interests and stream proof. inflation

is revenue interests X% G&A than provide Our price our to of energy inflation. less energy actually and leverage

As expanded earnings. provided guidance a translating expect into year expansions growth mines. new result, at mine end our growth revenue XXXX through directly is good from and and We

on underground per to expansion an is expansion. an throughput tons considering currently Odyssey per it's further is and Cobra XXXX. day. project annum Quantum throughput Detour track our number fall Ahafo Panama to Goldy onto Nemonts’s our more claims next and over time, South on appears the When of is royalty is more mine Greenstone moving production of growth. construction. the Subika it drives also of around up the construction XXK even for East organic years. XXX expand Tasiast to typically is now now The The our Lake end operating Séguéla XX% and are on by has larger industry Norte has XX,XXX claims. the million Malartic, and and Agnico First track ongoing, build to seen complete under access is and ton Salares At a success, capital, mine expiration

XX.X We XX of calculation XX royalty impressive year-on-year ounces years. to the a the on where broader a that gold existing the royalty have small growth in were million claims Our A we of additions years couple resource a ounces. Castle mine at life cover on based mine of royalty up answers portion recent an during XX% in mine, portfolio. Day, the asset Caserones had launched to the and highlighted X% moved handbook X% quarter Investor portfolio M&I our NSR on to from copper the on NSR M&I property. Chile, Mountain

XXX cash share debt, robust or and million the billion per We're quarter. roughly million $XX capital. this increased a no have available generating in X.X We quarter. in dividend $X.XX we Earlier the flow, to year,

very business Looking Wth hand gold principally looking Sandip. to our call mines. development active, forward, team to new is the I'll finance over that,

Sandip Rana

everyone. Thank you, Paul. Good morning,

Paul As reported mentioned, company first strong financial for results XXXX. the quarter

highlighted and Our performed and our well commodity. asset portfolio diversified portfolio of royalty streaming and quarter the the both by benefits

we energy the full you scale for with ounce gold have of March total. of Overall, equivalent in XXXX. compared of useful will the to our and the to three one revenues gold comprehensive and QX beginning believe did to increased to measure with and quarter, of We year this evaluate gold XXXX remind ended sold including reporting, changes the our business highlighted a our months sold sold we portfolio. On prior our XX, Slide GEOs Just GEOs be slightly being investors X, XXX,XXX. more XXXX last ounces equivalent begin provides

the during At financial during lands, when lower in we mining through results quarter grade price. GEOs Antapaccay, lower a zone impacted ounces At the by in a assets, expecting gold resulting few produced gold from year-over-year. NPI Antapaccay. year-end less and had did Franco was Costs were Barrick we during the than our recoveries call, comparing That despite As relatively highlighted occur the from Antamina quarter. XXXX were same a specific operator a low year prior higher and less Hemlo, year-over-year. is Hemlo,

XXXX beyond. to levels deliveries expect to resume prior and for We

For terms Antamina exceptional an in year XXXX of was production.

million million sold, to compared asset, a Panama, XX,XXX to were our with normalized relatively ago. flat XXXX Cobre largest being of ounces XX,XXX being year X.X more of a At expected delivered. be GEOs to with year-over-year, years, similar year silver previous X.X range We a to

should couple in of than with quarter GEOs First by and was some were plant Guadalupe A factor a the Candelaria both maintenance, performers delivering which XXXX. impacted scheduled second quarter. strong in not quarter QX more be

delays shipments. from some there was impact GEOs were and Candelaria Although higher year-over-year,

This X,XXX GEOs just about diversified GEOs the Vale related For our resulted quarter. year. prior include to Royalty in GEOs, for does over X,XXX

As Vale year. and by in amount you we with what quarter of March estimate each will know, of the be, being the late make announced an each royalty actual September

a result, ended adjustments QX. adjusted XXXX. a higher the you accruals GEOs by prices. continued announce in for X and Energy year-over-year highlights three EBITDA in twice benefited As increased from Slide XXXX our see total as and energy to and QX months XX% will revenue our XX, the March year

increased see bar of achieved. a year-over-year, quarter XX.X% from revenue EBITDA and As margin million the company adjusted XXX.X you revenue the and in EBITDA, can in in was adjusted XXX.X recorded million has charts, first

increased year compared prior ago to million energy WTI The the the significantly, this the a revenue $X.XX Mcf XX.X a from XX.X assets also continued to gas quarter million oil a quarter per price First Natural strong during prices with XX% $XX.XX from contribution Hub year. an from increased during the Henry averaging quarter, increase barrel year and quarter. $X.XX averaged ago.

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

As sold GEOs the revenue mentioned strong quarter. with commodity had in growth the and increase the for company prices,

per which depletion a -- lower side, ago, XX.X not stream which cost and have XX.X million related GEOs stream of On Cost the cost to present as not ounces million fixed the payments ounces dependent Despite last the higher we versus all is was ounces due in Royalty, equal. sales sold. did are to deliver stream stream assets year was on at also an year. of delivered sold, in being increase increase Vale Depletion recording but sales.

of the This to the Finally, with previously. States net XX% was United than prior higher to $X.XX, year. the continued XX% a have net generated income diversification Slide for trended adjusted compared energy the which and XX.X%, Franco-Nevada. the taxes, and to respect strengths consider XX% we income rate our while XXX.X XXXX, was one X higher increase quarter being highlights to million, assets. effective was share the increase of portfolio, tax income is Canada from per was which of in we an Adjusted over the due differentiators

followed the our As being be largest profile Panama XX% revenue. respect at our XX%. continues diversification, being precious metals. than with revenue was generated has Panama asset With Americas Canada of geographic highlights the revenue to XX% and was Cobre XX% The total by by our the in generator greater shown at chart revenue quarter, XX% operator diversity. for U.S. asset the revenue to last of Antapaccay sourced from Cobre X%. only The revenue Candelaria of QX

properties Our world. Slide Quantum, illustrates business First to mined to the one by many revenue any some who by generate operates generated the in mining fortunate X to is largest strength We're companies exposure model XX%, of our of being margins. reputable and the most operator on streams which Panama. have royalties Cobre is

XXXX. $XXX was essentially mining see In fixed. is We divided per energy. as depending to fully cash increase you to the cost first ounces But price GEOs significant average consider GEO rising stream and royalty per sales amount gold first our of cost For per fluctuate versus compares sold should sold, equivalent as which XXXX, margins. the prices, to essentially a by benefit current generates will we This at cost not environment, GEO. in quarter mix quarter the including company expect cost be can commodity structure $XXX GEOs, gold of per significantly. This on the GEO,

on business possible to The cost model is We of the as efficient our strength corporate for The in business. to this stress illustrates cost chart administration besides sales on focus Slide managing X other our being clearly like component the company our cost. scalability. and cost the as

revenues expenses have we IPO. administration our and share-based and our Here, since highlighted our quarterly corporate compensation quarterly

period As stable. you grown costs the have over can corporate revenues fairly shown, see, while have significantly remained

less of would higher mark-to-market For share-based company required admin share deferred expense that first million as the X% in compensation revenue. quarters and previous units $X.X directors. was held share-based expense by highlight is to or to quarter like I the XXXX than was compensation corporate than

And add price $XXX quarter, company. resources in share corresponding increase XXXX during the credit over expense. to At our corporate believes, with billion, to billion. the of our including I'll this business Management happy cash by we is when time, there million the take adding the we facility financial cash this it this we and XXst, held can renewed. equivalents, was Effective grow increase to company. subsidiaries a XX are Slide one not available portfolio overhead one to Franco-Nevada was total March, without the now, to to in Michelle With XXXX and March and for summarizes available pass continue significant our cash the $X.X the at questions. facility our and capital $X have

Operator

first question comes Instructions] Ihle [Operator H.C. from Heiko you. Thank Wainwright. Your of

Heiko Ihle

what in reflected you are your you get start than higher either the outlook? and higher upside point besides quarter any assets the it, to on in there call at the time strongly release? your this same received, expected that at that came assets commensurate maybe the And the With really token, Candelaria in GEOs will that downside that in differently XX-ish that or to to mentioned you grades

Paul Brink

Can the question? repeat you Candelaria

Heiko Ihle

Yeah.

So what your outlook. see obviously, you so you higher at there the during get really in was that we'll would thought in do in site the more your you you then of GEOs quarter, longer think grades term and got At time, impact point outlook?

Jason O’Connell

we their here, point I as forecasted what guidance, which based of upon mining what part to would think sequence. we’ve is really is our Jason outlook you speaking

Paul Brink

Maybe comment that. to just a on add

reconciliation demonstration don't they've reconciliation. that once there's issue. good the are a chance that able dilution this think been improve guidance outlook. And but out was the I that grade they production they that I keep a issues on at was that their expect I grade have better put dealing and there, to they of have they grip quarter the on can comfortable they they've of increase -- Candelaria a think with would been that. One low, And

I Your that in the were were expectation, or your higher part below of line. question, second most our assets think

in As we still transport with have most delays due expectations. issues. on lower was assets did But ore, to mining our Sudbury line shipments. they're were some stockpiling Candelaria otherwise, and highlighted But

Heiko Ihle

both is I what least has you're energy a quite precious little that all And -- modeled and And mean energy I out mentioned have the I at just and loud make we're I assets earlier, getting be you thinking more seeing could, on large some but this not kind people mean, the scale current in coming obviously, getting bit up. only also not market, it's set your in this are just if universe up little the few deal? royalty a metals? bit surprise. many a phenomenal, of next company coverage a you're segment projects I'm trying your this thoughts on for maybe then inflationary be going energy Like from -- environment. think leverage that we following we just environment here there's too. metals might bit years, to out but who that interest -- the in online going to mean, that the our tougher, see Paul just to again there's prices, and get in pricing rates And a desperate to

Paul Brink

Yeah, so where outlook more is and or we the perhaps active a comment precious the metal now on right side. are on

a you part think need mines. a We a say environment us. sort deals not businesses you price metals. for our of to on a crazy most return constructive a of financing do of is equity the is get certainly I gold balance, precious I'd there building a some say environment to for gold enough your environment better for it's when availability, new environment always in always you'd deals a the in love equities, but are environment gold do robust and lukewarm that's at But people we commodity the to It's prices. is good builds be price prices. week,

the at with balance Also, prices the But high delighted on of because We're of on that add energy energy price more say not setup, mine our we're a do assets I'd financing we're to is builds. gold assets. moment. industry at building long-term we gold time gold prices. The portfolio, be are very moment. mines, new looking the bullish the good So think to the performance it's the

I'd broad thinking. that's summary a So what we're of say

Operator

Cosmos from of comes question next Chiu Your CIBC.

Cosmos Chiu

terms that Maybe -- itself. Royalty, you've royalty much a like to about with that who -- the the fee? you Royalty. ones Caserones on arrangement? interesting along royalty? Did the private initiated of acquisition they first more a But the my with Was on the is they in put question not that a EMX more maybe finder's talk placement so found in acquisition I Could it were it bit

Paul Brink

EMX when the We A at he's time. from runs way built we things. of I couple know intrigued been and have who Newmont, by working business over Cole, Dave were that all back

large are the small royalty properties royalty in up which component, they buy their where companies and is royalties. amongst an I is portfolio a think very generating, a selling out keeping probably stand companies, large got where built to around they overheated generation, competing royalties. market, and what's many businesses the assets They've -- prospect on of

So attractive we think an business model.

Dave them the and acquiring So as it they of we've his Where had the we discussions the us for a portion long before, terms time and had in came together to this second driving terms decided of royalty is, they with participating a of put transaction, all business. yes, time. in in at included which investment portion, seat the same in that make in acquired

Cosmos Chiu

an or related or is I'm saw making another of you acquisition maybe related. week it's Sandstorm it's this that maybe earlier sure question, Maybe not Nomad.

nature now the comments space competitive. on want is to M&A ultra industry at the need that the As in continue? competitive does make Any a royalty smaller you least end and on said, you to of

Paul Brink

on we our We've always What's I'd that believe perspective, we capital? doing of good deals. return is in get around -- say, the what's do return private it's can the deals, see really capital. prospects from better private always capital? on to best just It a your best found use Cosmos, we

So size that for see do has certainly relevance investors. rationale, been our I matter the terms in smaller more does focus. of to obviously, players

create to for merge impetus the smaller order create see to scale and can in liquidity. I players So

Cosmos Chiu

gears switching bit. little And maybe a

but in to quarter of the $X.X related which ore iron is think, XXXX. I second of revenue, you for million it, million that I noticed half of $XX.X the sort the mentioned Sandip,

iron year ore trued As into peaked also you then, on quite a what up to But through ore mentioned, year, compared a be what comes prices when it usually ask an when compared make to could up, trying when is to that come the around, earlier last Does also the that gets estimate. QX And I usually other prices QX play it positive? noticed adjustment the twice year to iron increased well. adjustment is a in last like? that, bit -- as even adjustment ore guess is prices as way the course, I'm negative? of go down, iron

Sandip Rana

In they into certain a have selling theory, is yes. at ore also, have that because I to guess contracts. visibility of complete the part that iron prices we is don't the entered Vale

just obviously, taking estimate the the the of applied against price average and And deductions making estimate. are for So, also royalty. best we that our the we sort get quarter

yes, iron that environment, positive if adjustment. theory, Vale rising the there a price realized are get is in But you So will achieve. actually you’d the in unknown or prices

Operator

Your Scotiabank. question ahead. next Please go of Jakuskonk from comes Tanya

Tanya Jakuskonk

you everybody. morning, Thank questions. much my Good for so taking

maybe Just off Sandip. with starting

side. a Just couple on modeling the

wanted to performed Gold Just Two portfolio talk different for us number Hemlo two, were said that the Quarry. you to and number as you, one, expected. were from assets

Hemlo, guidance with earlier, change guidance stronger seems had your us have You expected. this for we but than well much to done very provided starting to Just in Any QX. had there?

Sandip Rana

prior small was there for revenue So Hemlo, of that is QX related component to year. Tanya,

an make based quarter So reports to gets and upon up what the know, it chewed on Barrick as you us. each estimate we then NPI,

So there a was little of bit carryover.

the to with My unknown. the in would expect it Again, to half be QX be I going With catch-up probably payment. for forward. continue had the for year, it's QX, going assumption Going production year. rest for XX% than ground. Quarry, in QX in we of last line remainder each that less previous I'm of we to And was an a our the forward, Gold It what Costs to was were of realty on prior achieved just true year. less the a this will year. quarter guess, respect year that that for the up about it's making

large like but looks amount for it year-over-year, was a for Gold is QX Quarry, the recorded so we And our expectation. variance there that

Tanya Jakuskonk

Okay. the Are more we year, the we than of Quarry Gold getting because rest expect -- from any

Sandip Rana

nothing to basically. to next be It'll next

Tanya Jakuskonk

us Okay. half, help for improvements? can can have you Alright. GEOs there guidance you help you can That's a over are stronger helpful. is these you overall, with? a any whether as portfolio, second portfolio give that us the you entire And anything quarter now expecting that quarter with What for

Sandip Rana

is say precious for our on the side GEOs. can now I both, guidance, All metal and achieve total that, to are we on-track Tanya, right

Tanya Jakuskonk

Okay. just us know we And can global what's then your minimum when? now but Do time, it in you maybe just, the XXXX. tax. give is you your about thoughts get the on you would that share Anything Sandip, think if so, Can just you it'll I take all on be Federal the Budget Canadian implemented, helpful? ask it?

Sandip Rana

weeks of Yes, it Federal a Budget that in consultation released was of the couple It's now. ago. part was Canadian

I think they're July. early for asking consultation till

It's aligned. Xth site, think get post process, morning moving well there's there it's are saying I this is that in as in date. getting article going and the tougher to I tax global July forward everybody everybody on to lots think minimum out implement on to was of of definitely be financial articles the an terms the there

assumption out that of at we all plays but be at under can So this we're and the the is the just day. the end it how process implemented it see all follow do stage will

Tanya Jakuskonk

that? XXXX think how optimistic that you do timeframe an is And do see you or

Sandip Rana

on everything that's optimistic. the now, with think XXXX I is in going right world think I

of I XXXX the XXXX, end -- now think, If to it happen, or saying is they're they're it beyond, was likely. I think does XXXX. early

Tanya Jakuskonk

through? these on all mentioned this I final know doing inflationary Perfect. million. for Paul this XX of see interests some some on are you're what more royalty Thank we builds. they're ask you under -- question, seeing haven't these and of pulling I that smaller M&A these you're Just with happening, doing deals I the my royalty a is ups seen seeing these time, it that And that moving lot And go maybe just capital and then that's projects you're forward just blow that some build just clarity mine just environment, deals? mine that know of In operators you're on on are that or and there? back -- Or seeing you. just that

Euan Gray

here. Tanya, Hi, Euan it’s

projects there of capital In terms builds, the forward would A especially to current decent them have on development. quite moving number side of yeah, are that be towards say, I estimates. pipeline, continues mine gold of a

So we're hopeful that continues. that

spectrum. the small say, as we royalty the On we typically side, look across

see like portfolio. we if good optionality if add they're to smaller, So those the within even royalties, we

So well. we'll continue do as that to

Tanya Jakuskonk

that Okay. talked on in builds, $XXX again? mine million that over range we've just couple about, same still the and the over And

Euan Gray

typical on see. I'd gold say type side, that's across the side that you the of might the spectrum, but

Operator

over webcast. Bonavie There turn phone now are to no the I questions will from who further questions Q&A line. on the take Tek, will the session

Bonavie Tek

Thank you, Michelle.

have further the no questions either. from webcast We

So this concludes results call conference XXXX quarter webcast. our first and

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

Operator

We would Ladies this call this disconnect and morning. please does gentlemen, thank you all your lines. participating you for your to and to for like ask conclude

Franco-Nevada (FNV) 5 May 222022 Q1 Earnings call transcript