Franco-Nevada Reports First Quarter Results and Increases Dividend



    
    /NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR DISSEMINATION IN THE
    UNITED STATES/

        This press release contains forward-looking statements. Reference
       should be made to the "Cautionary Statement on Forward-looking
               Information" at the end of this press release.

    -------------------------------------------------------------------------
    Highlights (US dollars)
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    -   Royalty Revenue(1) of $29.2 million compared to $27.5 million in Q1
        2008.

    -   Contribution from precious metals increased to 77% of Royalty
        Revenue.

    -   Free cash flow(3) of $24.9 million ($0.25 per share) or 85% of
        Royalty Revenue.

    -   Acquisition of a gold royalty stream interest in Coeur d'Alene
        Mines' Palmarejo project in Mexico and first revenue receipts from
        the Gold Quarry royalty acquired in December 2008.

    -   Strong financial position at March 31, 2009 with working capital of
        $185.2 million, marketable securities valued at $52.2 million and an
        undrawn $150 million revolving term credit facility.

    -   Semi-annual dividend to be increased from Cdn$0.12 per share to Cdn
        $0.14 per share and to be paid on June 30, 2009 to shareholders of
        record on June 16, 2009.
    -------------------------------------------------------------------------
    

    TORONTO, May 11 /CNW/ - Franco-Nevada Corporation (TSX: FNV) today
reported its financial results for the three months ended March 31, 2009. All
figures are in US dollars unless otherwise noted. The complete Financial
Statements and Management's Discussion and Analysis can be found today on
Franco-Nevada's website at www.franco-nevada.com and by tomorrow on
www.sedar.com.

    
    Selected Quarterly Financial Information:
    (Thousands of US dollars, except per share amounts)

                                                            Q1            Q1
                                                          2009          2008
    -------------------------------------------------------------------------
    Royalty Revenue(1)                             $    29,217   $    27,456
    Total revenue                                       33,116(2)     27,548
    Net income                                           3,797         5,201
    Basic earnings (loss) per share                $      0.04   $      0.06

    -------------------------------------------------------------------------
    Free cash flow(3)                              $    24,885   $    23,373
    Free cash flow(3) per share                    $      0.25   $      0.26
    -------------------------------------------------------------------------

    Total assets                                   $ 1,491,921   $ 1,579,871
    Total shareholders' equity                     $ 1,423,078   $ 1,528,840
    -------------------------------------------------------------------------

    (1) Royalty Revenue is defined by the Company as cash received or
        receivable from operating royalty assets earned during the period.

    (2) Includes a fair value gain on the Palmarejo Gold Royalty Stream.

    (3) Free cash flow is defined by the Company as operating income plus
        depletion and depreciation, non-cash gains and charges and any
        impairment of investments and royalty interests.

    Revenues

    Key aspects of the Company's total revenue for the first quarter of 2009
are as follows:

    -   Royalty Revenue of $29.2 million increased from Q1 2008 level of
        $27.5 million. Total revenue of $33.1 million includes a $3.7 million
        fair value gain on the Palmarejo Gold Royalty Stream.

    -   77% of Royalty Revenue was attributable to precious metals (65% from
        gold and 12% from platinum group metals) and 19% from oil and gas
        (10% oil and 9% gas). The balance was from base metals and other
        minerals. The contribution from precious metals was 59% of Royalty
        Revenue in Q1 2008.

    -   Royalty Revenue from Goldstrike increased 51.5% in Q1 2009 compared
        to Q1 2008. The Goldstrike operation performed better than expected
        due to higher open-pit grades, producing 0.40 million oz at total
        cash costs of $435/oz.

    -   Gold Quarry's first contribution to Royalty Revenue was $2.8 million.
        Gold Quarry was acquired on December 29, 2008.

    -   88% of Royalty Revenue was sourced from the United States, Canada and
        Australia.

    -   62% of Royalty Revenue was from revenue based royalties, 30% was from
        profit based royalties with the balance of revenues from working
        interests and other.

    -   The Company was negatively impacted by substantially lower average
        spot prices for oil, gas, platinum and palladium in Q1 2009. Prices
        for these commodities were down 49%, 38%, 46% and 55%, respectively,
        compared to the average spot prices realized in Q1 2008. Largely due
        to these price impacts the Stillwater royalty payment of $1.9 million
        was reduced from $4.1 million in Q1 2008 and oil and gas royalties of
        $5.5 million were reduced from $10.9 million in Q1 2008. In addition,
        the Canadian dollar decreased by 20% relative to the US dollar which
        negatively impacted the Company's revenues from its oil and gas
        royalties. Franco-Nevada's revenues are completely unhedged.

    -   Royalty Revenues also included a $1.7 million contribution from the
        Pandora platinum project, an annual royalty paid following the
        completion of the operator's year end, and $0.96 million from Kasese.

    -   The Company recorded a $3.7 million gain in the fair value of the
        Palmarejo Gold Royalty Stream due to an increase in consensus gold
        price assumptions from the date of acquisition. It is anticipated
        that fluctuations in the fair value of the minimum royalty associated
        with the Palmarejo Gold Royalty Stream will become a recurring item
        on the Company's statement of operations.

    -   For the remainder of 2009, the Company expects Royalty Revenue from
        gold to increase from 2008 levels if gold prices continue to average
        above the $872/oz average price experienced in 2008. The acquisition
        of Palmarejo in January 2009 is expected to make a significant
        contribution to Royalty Revenue by the third quarter of 2009.
    

    Costs, Expenses, Taxes and Capital

    An advantage of Franco-Nevada's royalty portfolio is that it requires
relatively limited capital and minor direct operating costs.
    Costs of operations were $1.4 million in Q1 2009, a decrease of 22% over
Q1 2008 level of $1.8 million. The reduction is due to lower oil and gas
production taxes offset by higher Nevada state taxes for Goldstrike and Gold
Quarry. General and administrative costs in the quarter were $2.7 million and
business development costs were an additional $0.4 million. General and
administrative costs are expected to be lower for the balance of the year.
Income tax expense in the quarter was $1.7 million.

    Net Income & Non-GAAP Measures

    Net income for the first quarter of 2009 was $3.8 million ($0.04 per
share) compared with $5.2 million ($0.06 per share) for the first quarter of
2008. Free Cash Flow for the quarter was $24.9 million ($0.25 per share)
representing a margin of 85% of Royalty Revenue and an increase from Q1 2008
of $23.4 million. Our definitions of these non-GAAP financial measures can be
found in the Company's interim Management's Discussion and Analysis.

    Balance Sheet and Capital Structure

    As at March 31, 2009, the Company had cash and cash equivalents of $99.6
million, short-term investments of $55.9 million, no debt and working capital
of $185.2 million. In addition, Franco-Nevada holds shares in marketable
securities valued at $52.2 million as at March 31, 2009 and had an undrawn
$150 million revolving term credit facility.
    As at May 11, 2009, Franco-Nevada has 100.3 million common shares
outstanding, 5.75 million warrants, and options exercisable to purchase 2.89
million shares.

    Dividend Declaration

    The Board of Directors of Franco-Nevada today declared a semi-annual
dividend of Cdn$0.14 per share. The dividend is a 16.7% increase from the
Cdn$0.12 per share dividend declared for the same period in 2008. The dividend
will be paid on June 30, 2009 to shareholders of record on June 16, 2009.

    
    Recent Royalty Portfolio Highlights

    -   Palmarejo - On January 21, 2009, Franco-Nevada acquired a gold
        royalty stream on 50% of the gold produced from Coeur d'Alene Mines'
        Palmarejo property in Mexico. The gold royalty stream is paid on the
        difference between the spot gold price and $400/oz (inflation
        adjusted). On March 30, 2009, Coeur announced the on-time
        commencement of the Palmarejo mine and the first pour of gold/silver
        dore and reiterated its guidance to produce 5.3 million oz of silver
        and 72,000 oz of gold in 2009. Franco-Nevada expects to receive its
        first royalty payments from Palmarejo in Q2 2009.

    -   Gold Quarry - Newmont disclosed in its February 2009 earnings call
        that the Gold Quarry West Wall Layback Study has advanced to Stage
        Gate 3, and is a major exploration target with the potential for 2.5-
        million and 3.5-million oz of additional reserve conversion expected
        in 2009. This should add significant life to the Gold Quarry Mine, as
        well as to the Gold Quarry Royalty. In addition, Franco-Nevada was
        able to increase its 2009 guidance to 14,400 oz per annum
        attributable to this royalty interest - an increase of 29% from its
        earlier guidance.

    -   Tasiast - On March 23, 2009, Redback announced a 39% increase in
        reserves and a 32% increase in resources over their previously
        reported numbers. The measured, indicated and inferred resource
        currently stands at 4.5 Moz of Au(1). The current resources are
        contained in a six kilometer strike length of a structure that has
        been traced over 70 km via aerial geophysics. Franco-Nevada's royalty
        on Tasiast will begin after 600,000 oz of gold has been produced from
        the property.

    -   Hollister - Great Basin announced further high grade exploration
        drilling results at its Hollister property in Nevada for the quarter
        ending March 31, 2009. The drill results continued to expand the size
        of the Hatter Graben discovery which falls on ground on which Franco-
        Nevada has a 5% NSR. Franco-Nevada is currently receiving revenue
        from the toll-treating of ore from Hollister at nearby facilities.

    -   Holloway/Hislop - St Andrew Goldfields announced plans to put its
        Holloway mine into production and to advance exploration and mine
        development of its Hislop Project. St Andrew aims to attain annual
        gold production of approximately 120,000 oz from the properties and
        believes it will take approximately 6 months to complete the required
        pre-production activities at the Holloway mine. Franco-Nevada has
        agreed to amend the sliding scale on its existing royalty on the
        Holloway property which will be less onerous at current gold prices
        and will increase with higher prices. At a gold price of $900/oz the
        royalty will now be a 4% NSR. Franco-Nevada also recently purchased a
        4% NSR royalty on the Hislop property for US$4 million and obtained a
        further 1% NSR royalty on the Aquarius property above a gold price of
        $1,000/oz.

    ---------------
    (1) Resources stated in Franco-Nevada AIF

    Shareholder Information

    The complete Financial Statements and Management's Discussion and Analysis
can be found today on Franco-Nevada's website at www.franco-nevada.com and by
tomorrow on www.sedar.com. Management will host a conference call today at
2:00pm Toronto time to review the results. Interested investors are invited to
participate as follows:

    -   Conference Call: Local: 416-644-3418; Toll-Free: 800-731-6941;
        Conference call title: Franco-Nevada First Quarter 2009 Financial
        Results

    -   Conference Call Replay: A recording of the conference call will be
        available until May 19, 2009 at the following numbers: Local: 416-
        640-1917; Toll-Free: 877-289-8525; Pass code: 21305622 followed by
        the number sign.

    -   Webcast: A live audio webcast of the conference call will be
        accessible on the Company's website

    -   Slides: A presentation to accompany the conference call will be
        available on the Company's website
    

    Corporate Summary

    Franco-Nevada Corporation (TSX: FNV) is a gold focused royalty company
with additional interests in platinum metals, oil & gas and other assets. It
is the leading gold royalty company as measured by gold revenues, number of
gold royalties and free cash flow margins. Its portfolio of high-margin cash
flow producing assets is located principally in the United States, Canada and
Australia. The Company also holds a pipeline of potential future cash flowing
assets that are under development or being explored.

    CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
    Certain information contained in this Press Release, including any
information as to future financial or operating performance and other
statements that express management's expectations or estimates of future
performance, constitute "forward-looking statements". All statements, other
than statements of historical fact, are forward-looking statements. The words
"estimate", "expect", "expects", "expected" and similar expressions identify
forward-looking statements. Forward-looking statements are necessarily based
upon a number of estimates and assumptions that, while considered reasonable
by management, are inherently subject to significant business, economic and
competitive uncertainties and contingencies. The Company cautions the reader
that such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual financial results,
performance or achievements of Franco-Nevada to be materially different from
the Company's estimated future results, performance or achievements expressed
or implied by those forward-looking statements and the forward-looking
statements are not guarantees of future performance. These risks,
uncertainties and other factors include, but are not limited to: fluctuations
in the prices of the primary commodities that drive the Company's royalty
revenue (gold, platinum group metals, copper, nickel, oil and gas);
fluctuations in the value of the Canadian and Australian dollar, and any other
currency in which the Company generates revenue, relative to the US dollar;
changes in national and local government legislation, including taxation
policies; regulations and political or economic developments in any of the
countries where the Company holds interests in mineral and oil and gas
properties; influence of macroeconomic developments; business opportunities
that become available to, or are pursued by us; reduced access to debt and
equity capital; litigation; title disputes related to our interests or any of
the properties; operating or technical difficulties on any of the properties
underlying; risks and hazards associated with the business of development and
mining on any of the properties, including, but not limited to unusual or
unexpected geological formations, cave-ins, flooding and other natural
disasters or civil unrest. The forward-looking statements contained in this
Press Release are based upon assumptions management believes to be reasonable,
including, without limitation, the ongoing operation of the properties by the
owners or operators of such properties in a manner consistent with past
practice, the accuracy of public statements and disclosures made by the owners
or operators of such underlying properties, no material adverse change in the
market price of the commodities, and any other factors that cause actions,
events or results to differ from those anticipated, estimated or intended.
Accordingly, Readers should not place undue reliance on forward-looking
statements because of the inherent uncertainty. For additional information
with respect to risks, uncertainties and assumptions, please also refer to the
"Risk Factors" section of our most recent Annual Information Form filed with
the Canadian securities regulatory authorities on www.sedar.com, as well as
our Annual and interim MD&A. The forward-looking statements herein are made as
of the date of this Press Release only and Franco-Nevada does not assume any
obligation to update or revise them to reflect new information, estimates or
opinions, future events or results or otherwise, except as required by
applicable law.





For further information:

For further information: please go to our website at
www.franco-nevada.com or contact David Harquail, President & CEO, (416)
306-6300; Alex Morrison, Chief Financial Officer, (303) 317-6335


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