/NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR DISSEMINATION IN THE
This press release contains forward-looking statements. Reference
should be made to "Forward-looking Statements" at the end of
this press release.
Highlights (US dollars)
- Franco-Nevada's second quarter financial results were significantly
stronger compared to the first quarter. Revenues for the second
quarter increased to $41.0 million (+49%), Free Cash Flow(*)
increased to $35.3 million ($0.35 per share) and Net Income was
$9.9 million ($0.10 per share).
- The Company is benefiting from solid operating results from its key
royalties and strong commodity prices.
- During the quarter, Franco-Nevada paid dividends of $11.8 million and
at quarter end had no debt, working capital of $310.8 million and an
available Credit Facility of $150.0 million.
- Franco-Nevada's board welcomed Derek W. Evans, previously President
and CEO of Focus Energy Trust, as a new director today.
TORONTO, Aug. 8 /CNW/ - Franco-Nevada Corporation (TSX:FNV) today
reported its financial results for the three months ended June 30, 2008. All
figures are in US dollars unless otherwise noted. The complete Financial
Statements and Management's Discussion and Analysis can be found on
www.sedar.com and on Franco-Nevada's web site at www.franco-nevada.com.
On December 20, 2007, Franco-Nevada completed its initial public
offering, listed on the Toronto Stock Exchange and purchased its royalty
portfolio and other assets. As Franco-Nevada was established only in
late-2007, there are no year-over-year comparable figures.
Selected Financial Information:
(thousands of US dollars except per share amounts)
Three months ended Six months ended
June 30, 2008 June 30, 2008
Statement of Operations
Total revenue $ 40,987 $ 68,535
Depletion and depreciation 20,630 36,167
Net income 9,876 15,077
Basic and fully diluted EPS 0.10 0.16
Statement of Cash Flows
Net cash provided by operating
activities before changes in
non-cash assets and liabilities 33,492 56,145
Dec 31, 2007 June 30, 2008
Cash and cash equivalents $ 12,894 $ 204,553
Short-term investments - 88,706
Total assets 1,336,656 1,591,763
Total shareholders' equity 1,287,054 1,537,078
Second quarter revenues were $41.0 million which was a 49% increase from
$27.5 million in revenues in the first quarter of 2008. Key aspects of the
second quarter revenue stream from the Corporation's revenue producing assets
were as follows:
- Revenues were 54% from precious metals (39% from gold and 15% from
platinum group metals) and 43% from oil and gas (27% oil and 16%
gas). The balance was from base metals and other minerals.
- 97% of revenues in the first quarter were sourced from the
geopolitically secure areas of North America and Australia.
- 71% of revenues were from revenue based royalties, 18% were from
profit based royalties with the balance of revenues coming from
working interests or dividends.
Franco-Nevada has no commodity price hedges. During the quarter,
Franco-Nevada benefited from strong operating performances at its key
producing royalties and higher commodity prices with average spot prices for
the second quarter increasing 28% for both oil and gas and 8% for platinum
compared to average spot prices in the first quarter.
Revenue from our Goldstrike royalties was $11.9 million, an increase of
44%, as the waste stripping phase neared completion and ore started to be
mined. Revenues from our Goldstrike royalties are expected to increase
significantly in the second half of 2008 with production expected to be
weighted towards the last quarter of the year as, upon completion of a planned
waste stripping effort, higher grade ore is sourced from the Betze-Post pit.
The Stillwater royalty generated $6.0 million benefiting from continued
strong platinum group metal prices. Oil and gas revenues were very strong at
$17.6 million as a result of stronger oil and gas prices and new wells that
came onstream at the end of the first quarter at the Edson Property. Revenues
from the Robinson royalties are expected to increase as some key annual
production thresholds have now been exceeded.
Costs, Expenses and Taxes
An advantage of Franco-Nevada's royalty portfolio is that it requires
relatively limited capital and minor direct operating costs. Most costs are
related to production taxes and administration. Cost of operations was
$2.3 million in the quarter and $4.1 million for the six months and was mostly
comprised of oil and gas production taxes, operating costs on oil and gas
working interests and net proceeds taxes on mineral royalties. General and
administrative costs in the quarter were $2.9 million and $5.0 million for the
six months. Business development costs were an additional $0.4 million for the
quarter and $0.7 million for the six months. Income tax expense in the quarter
was $4.8 million and $7.3 million for the six months.
Net Income & Non-GAAP Measures
For the second quarter of 2008, net income was $9.9 million ($0.10 per
share). Free Cash Flow(*) was $35.3 million ($0.35 per share) representing a
margin of 86% of revenue. EBITDA(*) was $34.3 million ($0.34 per share), which
represents a margin of 84% of revenue. Our definitions for both of these
non-GAAP financial measures can be found in the MD&A.
For the six months ended June 30, 2008, net income was $15.1 million
($0.16 per share). Free Cash Flow(*) was $58.7 million ($0.61 per share)
representing a margin of 86% of revenue. EBITDA(*) was $57.6 million ($0.60 per
share), which represents a margin of 84% of revenue.
Balance Sheet and Capital Structure
During the quarter, Franco-Nevada declared and paid its initial
semi-annual dividend to shareholders of C$0.12 (US$0.1195) per share for a
total payment of $11.8 million.
As at June 30, 2008, Franco-Nevada had no debt, cash and cash equivalents
of $204.6 million and short term investments of $88.7 million. Working capital
on that date was $310.8 million. In addition, Franco-Nevada holds shares in
Newmont Mining Corporation valued at $46.7 million at June 30, 2008. A $150
million revolving term credit facility remains unutilized and fully available
to the Corporation.
Franco-Nevada has outstanding 100.3 million common shares, 5.75 million
warrants, and options outstanding to purchase 2.8 million shares.
The Board of Directors of Franco-Nevada today welcomed Derek W. Evans as
a new member of the board. This appointment brings to Franco-Nevada added
experience in the Canadian oil and gas sector. Derek is based in Calgary and
was recently President and CEO of Focus Energy Trust. He has over 25 years of
experience in the oil and gas business in Western Canada, spending the
majority of his career helping to build Renaissance Energy Limited in a
variety of management and senior management roles. Derek currently serves as
the Chairman of Endurance Energy, a private oil and gas company, as well as a
director of a number of not-for-profit organizations. Derek has a Bachelor of
Science degree in Mining Engineering from Queen's University in Ontario, is a
registered Professional Engineer in the Province of Alberta and is a member of
the Institute of Corporate Directors.
The complete Management's Discussion and Analysis and Consolidated
Financial Statements have been posted on Franco-Nevada's web site at
www.franco-nevada.com. A new investor presentation incorporating the financial
results reported with this release will be posted on August 11, 2008.
Conference Call and Webcast
Management will host a conference call on Tuesday, August 12, 2008 at
11:00am ET to provide a business update and review second quarter results.
Analysts and interested investors are invited to participate as follows:
Conference Call: Local: 416-644-3426; Toll-Free: 800-588-4490;
Conference call title: Franco-Nevada
Conference Call Replay: A recording of the conference call will be
available until August 20, 2008 at the following numbers:
Local: 416-640-1917; Toll-Free: 877-289-8525;
Pass code: 21279531 (followed by the number sign).
Webcast: A live webcast of the conference call will be accessible on
Franco-Nevada's website at www.franco-nevada.com.
Franco-Nevada Corporation (TSX: FNV) is a resource royalty and investment
company. The Corporation owns a diversified portfolio of precious and base
metal royalties, oil and gas royalties and other interests. The portfolio
includes assets in production, under development or in the exploration phase
mostly located in geopolitically secure countries. Franco-Nevada intends to
use its Free Cash Flow(*) to further expand its portfolio in the resource sector
and to pay dividends.
(*) Free Cash Flow and EBITDA are financial performance measures with no
standardized meaning under GAAP. See our definitions in the Corporation's
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information contained in this Press Release, including any
information as to our strategy, plans or 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 "believe", "expect", "will", "anticipate",
"contemplate", "target", "plan", "continue', "budget", "may", "intend",
"estimate" 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: adverse fluctuations in the prices of the
primary commodities that drive the Company's royalty revenue (gold, platinum
group metals, copper, nickel, oil and gas); adverse 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 underlying
the Royalty Portfolio; operating or technical difficulties on any of the
properties underlying the Royalty Portfolio; risks and hazards associated with
the business of development and mining on any of the properties underlying the
Royalty Portfolio, 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 underlying the
Royalty Portfolio 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 that underlie
the Royalty Portfolio, and any other factors that cause actions, events or
results to differ from those anticipated, estimated or intended. However,
there can be no assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ materially from
those anticipated in such statements. Franco-Nevada cannot assure investors
that actual results will be consistent with these forward-looking statements
and readers are cautioned that forward-looking statements are not guarantees
of future performance. Accordingly, readers should not place undue reliance on
forward-looking statements due to the inherent uncertainty therein. 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 MD&A and our recent quarterly MD&As. 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: David Harquail, President & CEO, (647)
477-2778; Alex Morrison, Chief Financial Officer, (303) 317-6335