Franco-Nevada Corp. Q3 FY2024 earnings call

• The inflation-protected business model is working well, with higher revenues, EBITDA, and earnings in Q3 2024 compared to Q2.
• GEO sales were stable compared to Q2 but lower than Q3 2023 without Cobre Panama.
• Benefited from deliveries from the newly commissioned Tocantinzinho mine, royalties from Greenstone and Yanacocha.
• Candelaria had increased copper and gold production after Q2 issues, but gold grades were below expectation, and Lundin Mining revised its 2024 gold production guidance for Candelaria downward.
• Adjusted 2024 GEO guidance due to record gold prices and lower gold deliveries from Candelaria.
• Full-year revenue expected between $1 billion and $1.1 billion, higher than initial March guidance.
• Cobre Panama is in preservation, President Mulino is willing to discuss reopening in early 2025, with an audit by international experts arranged.
• Granted diversity scholarships to 4 new mining engineering students, with 13 total supported.
• Busy business development team with a strong deal pipeline for precious metal and diversified assets.

In Q3 2024, precious metals contributed approximately 77% of revenue. Precious metal GEOs were 84,377 out of total GEOs sold of 110,110. Diversified assets had GEOs sold at 25,733. Candelaria saw increased copper and gold production post-Q2 issues, but gold grades were below expectation, and Lundin Mining revised its 2024 gold production guidance for Candelaria downward. The quarter benefited from deliveries from the Tocantinzinho mine in Brazil and increased royalties from Greenstone and Yanacocha.

• Original 2024 GEOs sold guidance was 480,000 to 540,000, with precious metal GEOs estimated at 360,000 to 400,000.
• Revised 2024 GEOs sold to 445,000 to 465,000, with precious metal GEOs estimated at 340,000 to 360,000.
• Lower GEOs due to lower gold deliveries from Candelaria and slower ramp-ups at new mines, but higher gold prices offset some.

• Uncertainty in the contribution of Hemlo's NPI.
• Potential issues with Cobre Panama's reopening negotiations.
• Transfer pricing exposure with the Canada Revenue Agency.
• Volatility in commodity prices affecting revenue and GEOs.

Q: On revised guidance, what could be a driver for hitting the higher or lower end of the range?

A: Diversified GEOs are affected by gold price, and timing of deliveries (e.g., whether Candelaria's production is delivered in Q4 or carries over).

Q: Longer-term guidance maintained, implying short-term issues?

A: The portfolio overall is performing well; Candelaria had a tough start but improved in Q3, Antapaccay is on track, and new mines are ramping up, so longer-term confidence remains.

Q: Potash investment, future deals?

A: Open to all commodities; current potash deal is one, with longer-term openness to other potash deals and other commodities.

Q: Deal size, pricing, structures?

A: Deals are in the mid to high range, structures like equity/debt used, and there's a slightly more muted competitive environment conducive to better pricing.

Q: Cobre Panama adjustments, proactive measures?

A: President Mulino is open to discuss reopening in early 2025, First Quantum is engaging with the government, and an audit by international experts is arranged.

Q: Cobre Panama sale potential?

A: Hopeful for the mine to return to operation, still a valuable asset with potential to significantly increase GEOs and revenues if operational.

Q: U.S. election impact?

A: Potential positive impacts on permits for Stibnite and Copper World mines, and Haynesville gas interests.