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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Franco Nevada Corporation | TSX:FNV | Toronto | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
3.17 | 1.92% | 168.57 | 167.22 | 168.89 | 168.65 | 164.36 | 166.56 | 272,892 | 21:14:58 |
Strong portfolio performance leads to increase in guidance. $100 million agreement to acquire oil & gas royalties.
TORONTO , Nov. 7, 2016 /PRNewswire/ - Franco-Nevada's CEO, David Harquail, commented: "Our overall portfolio is performing very well. We now expect to exceed the high end of our previous guidance range for both Gold Equivalent Ounces1 ("GEOs") and oil & gas revenues. In addition, we are benefiting from higher commodity prices. Even with our ongoing Cobre Panama contributions and industry leading dividend, Franco-Nevada is growing its cash balances and has no debt. We are also seeing investment opportunities across a range of commodities. Franco-Nevada has just agreed to acquire for $100 million oil & gas royalty assets in the U.S."
Financial results for Q3/2016 are reported in U.S. dollars unless otherwise noted. The highlights include:
Revenues and GEOs by Asset Categories Q3/2016 Q3/2015 Revenue GEOs Revenue GEOs (in millions) # (in millions) # Precious Metals Gold $ 113.4 85,127 $ 81.9 72,908 Silver 36.2 27,337 4.0 3,522 PGM 12.1 9,098 7.0 6,506 Precious Metals - Total $ 161.7 121,562 $ 92.9 82,936 Other Minerals 2.0 1,503 3.0 2,701 Oil & Gas 8.3 — 7.8 — $ 172.0 123,065 $ 103.7 85,637 For Q3/2016, revenue was sourced 94% from precious metals (66% gold, 21% silver and 7% PGM) and 83% from the Americas (15% U.S., 19% Canada and 49% Latin America). Costs and expenses increased year-over-year due to higher depletion and cost of sales, reflecting deliveries from the Antamina and Antapaccay stream acquisitions which were completed in October 2015 and February 2016, respectively. Oil & gas production levels and prices were stable year-over-year. Cash provided by operating activities was $121.6 million, an increase of 67% compared to Q3/2015.
Portfolio Updates
Guidance
Franco-Nevada realized record growth from its mineral assets for the first nine months of 2016. Mineral assets contributed 342,473 GEOs, while Franco-Nevada's Oil & Gas assets contributed $19.7 million in revenue in the nine months ended September 30, 2016. As a result, Franco-Nevada is pleased to raise its guidance for 2016 as follows:
Previously announced |
Revised guidance |
||||||||||
Mineral assets - GEO production1 |
(oz) |
425,000 - 445,000 GEOs |
445,000 - 455,000 GEOs |
||||||||
Oil & Gas assets - Revenue2 |
($) |
$15.0 million - $25.0 million |
$25.0 million - $30.0 million |
1 |
In forecasting GEOs for the remainder of 2016, gold, silver, platinum and palladium metals have been converted to GEOs using commodity prices of $1,300/oz Au, $18.00/oz Ag, $950/oz Pt and $650/oz Pd. |
2 |
In forecasting revenue from Oil & Gas assets for the remainder of 2016, the WTI oil price is assumed to average $50 per barrel with a $3.50 per barrel price differential for Canadian oil. |
Of the 445,000 to 455,000 GEOs, Franco-Nevada expects to receive 315,000 to 325,000 GEOs under its various stream agreements. For the first nine months of 2016, 243,896 GEOs have been received from stream agreements, while 222,670 GEOs were received for full year 2015.
Dividend Declaration
Franco-Nevada is pleased to announce that its Board of Directors has declared a quarterly dividend of $0.22 per share. The dividend will be paid on December 22, 2016 to shareholders of record on December 8, 2016. The Canadian dollar equivalent is determined based on the noon rate posted by the Bank of Canada on November 4, 2016. Under Canadian tax legislation, Canadian resident individuals who receive "eligible dividends" are entitled to an enhanced gross-up and dividend tax credit on such dividends.
The Company has a Dividend Reinvestment Plan ("DRIP"). Participation in the DRIP is optional. The Company will issue additional common shares through treasury at a 3% discount to the Average Market Price, as defined in the DRIP. However, the Company may, from time to time, in its discretion, change or eliminate the discount applicable to treasury acquisitions or direct that such common shares be purchased in market acquisitions at the prevailing market price, any of which would be publicly announced. The DRIP and enrollment forms are available on the Company's website at www.franco-nevada.com. Registered shareholders may also enroll in the DRIP online through the plan agent's self-service web portal at www.investorcentre.com/franco-nevada. Beneficial shareholders should contact their financial intermediary to arrange enrollment.
This press release is not an offer to sell or a solicitation of an offer of securities. A registration statement relating to the DRIP has been filed with the U.S. Securities and Exchange Commission and may be obtained under the Company's profile on the U.S. Securities and Exchange Commission's website at www.sec.gov.
Shareholder Information
The complete Condensed Interim Consolidated Financial Statements and Management's Discussion and Analysis can be found today on Franco-Nevada's website at www.franco-nevada.com, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
Management will host a conference call tomorrow, Tuesday, November 8, 2016 at 10:00 a.m. Eastern Time to review Franco-Nevada's Q3/2016 results. Interested investors are invited to participate as follows:
Corporate Summary
Franco-Nevada Corporation is the leading gold-focused royalty and stream company with the largest and most diversified portfolio of cash-flow producing assets. Its business model provides investors with gold price and exploration optionality while limiting exposure to many of the risks of operating companies. Franco-Nevada is debt free and uses its free cash flow to expand its portfolio and pay dividends. It trades under the symbol FNV on both the Toronto and New York stock exchanges. Franco-Nevada is the gold investment that works.
Forward Looking Statements
This press release contains "forward looking information" and "forward looking statements" within the meaning of applicable Canadian securities laws and the United States Private Securities Litigation Reform Act of 1995, respectively, which may include, but are not limited to, statements with respect to future events or future performance, management's expectations regarding Franco-Nevada's growth, results of operations, estimated future revenues, carrying value of assets, future dividends and requirements for additional capital, mineral reserve and mineral resource estimates, production estimates, production costs and revenue, future demand for and prices of commodities, expected mining sequences, business prospects and opportunities. In addition, statements (including data in tables) relating to reserves and resources and gold equivalent ounces ("GEOs") are forward looking statements, as they involve implied assessment, based on certain estimates and assumptions, and no assurance can be given that the estimates and assumptions are accurate and that such reserves and resources and GEOs will be realized. Such forward looking statements reflect management's current beliefs and are based on information currently available to management. Often, but not always, forward looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budgets", "scheduled", "estimates", "forecasts", "predicts", "projects", "intends", "targets", "aims", "anticipates" or "believes" or variations (including negative variations) of such words and phrases or may be identified by statements to the effect that certain actions "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Forward looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Franco-Nevada to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. A number of factors could cause actual events or results to differ materially from any forward looking statement, including, without limitation: fluctuations in the prices of the primary commodities that drive royalty and stream revenue (gold, platinum group metals, copper, nickel, uranium, silver, iron-ore and oil and gas); fluctuations in the value of the Canadian and Australian dollar, Mexican peso, and any other currency in which revenue is generated, relative to the U.S. dollar; changes in national and local government legislation, including permitting and licensing regimes and taxation policies and the enforcement thereof; regulatory, political or economic developments in any of the countries where properties in which Franco-Nevada holds a royalty, stream or other interest are located or through which they are held; risks related to the operators of the properties in which Franco-Nevada holds a royalty, stream or other interest, including changes in the ownership and control of such operators; influence of macroeconomic developments; business opportunities that become available to, or are pursued by Franco-Nevada; reduced access to debt and equity capital; litigation; title, permit or license disputes related to interests on any of the properties in which Franco-Nevada holds a royalty, stream or other interest; whether or not the Corporation is determined to have "passive foreign investment company" ("PFIC") status as defined in Section 1297 of the United States Internal Revenue Code of 1986, as amended; potential changes in Canadian tax treatment of offshore streams; excessive cost escalation as well as development, permitting, infrastructure, operating or technical difficulties on any of the properties in which Franco-Nevada holds a royalty, stream or other interest; actual mineral content may differ from the reserves and resources contained in technical reports; rate and timing of production differences from resource estimates, other technical reports and mine plans; risks and hazards associated with the business of development and mining on any of the properties in which Franco-Nevada holds a royalty, stream or other interest, including, but not limited to unusual or unexpected geological and metallurgical conditions, slope failures or cave-ins, flooding and other natural disasters, terrorism, civil unrest or an outbreak of contagious diseases; and the integration of acquired assets. 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 in which Franco-Nevada holds a royalty, stream or other interest 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 asset portfolio; the Corporation's ongoing income and assets relating to determination of its PFIC status; no material changes to existing tax treatment; no adverse development in respect of any significant property in which Franco-Nevada holds a royalty, stream or other interest; the accuracy of publicly disclosed expectations for the development of underlying properties that are not yet in production; integration of acquired assets; and the absence of any other factors that could 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. Investors are cautioned that forward looking statements are not guarantees of future performance. Franco-Nevada cannot assure investors that actual results will be consistent with these forward looking statements and investors 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 refer to the "Risk Factors" section of Franco-Nevada's most recent Annual Information Form filed with the Canadian securities regulatory authorities on www.sedar.com and Franco-Nevada's most recent Annual Report filed on Form 40-F filed with the SEC on www.sec.gov. 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.
NON-IFRS MEASURES: Adjusted Net Income and Adjusted EBITDA are intended to provide additional information only and do not have any standardized meaning prescribed under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate these measures differently. For a reconciliation of these measures to various IFRS measures, please see below or the Company's current MD&A disclosure found on the Company's website, on SEDAR and on EDGAR. Comparative information has been recalculated to conform to current presentation.
1 |
GEOs include our gold, silver, platinum, palladium and other mineral assets. GEOs are estimated on a gross basis for NSR royalties and, in the case of stream ounces, before the payment of the per ounce contractual price paid by the Company. For NPI royalties, GEOs are calculated taking into account the NPI economics. Platinum, palladium, silver and other minerals were converted to GEOs by dividing associated revenue, which includes settlement adjustments, by the average gold price for the period. For Q3 2016, the average commodity prices were as follows: $1,335 gold (2015 - $1,124), $19.62 silver (2015 - $14.91), $1,084 platinum (2015 - $988) and $676 palladium (2015 - $615). |
2 |
Adjusted EBITDA and Adjusted EBITDA per share are non-IFRS financial measures, which exclude the following from net income and EPS: income tax expense/recovery; finance expenses; finance income; depletion and depreciation; non-cash costs of sales; impairment charges related to royalty, stream and working interests and investments; gains/losses on the sale of investments; and foreign exchange gains/losses and other income/expenses. |
3 |
Adjusted Net Income and Adjusted Net Income per share are non-IFRS financial measures, which exclude the following from net income and earnings per share ("EPS"): foreign exchange gains/losses and other income/expenses; gains/losses on the sale of investments; impairment charges related to royalty, stream and working interests and investments; unusual non-recurring items; and the impact of income taxes on these items. |
Reconciliation to IFRS measures:
Three months ended September 30, |
|||||||||
(expressed in millions, except per share amounts) |
2016 |
2015 |
|||||||
Net Income (Loss) |
$ |
54.4 |
$ |
15.2 |
|||||
Income tax expense (recovery) |
12.9 |
8.5 |
|||||||
Finance expenses |
0.7 |
0.6 |
|||||||
Finance income |
(0.5) |
(1.3) |
|||||||
Depletion and depreciation |
72.9 |
49.7 |
|||||||
Non-cash costs of sales |
1.8 |
1.7 |
|||||||
Impairment of investments |
— |
1.9 |
|||||||
Foreign exchange (gains)/losses and other (income)/expenses |
— |
1.2 |
|||||||
Adjusted EBITDA |
$ |
142.2 |
$ |
77.5 |
|||||
Basic Weighted Average Shares Outstanding |
178.1 |
156.9 |
|||||||
Adjusted EBITDA per share |
$ |
0.80 |
$ |
0.49 |
|||||
Three months ended September 30, |
|||||||||
(expressed in millions, except per share amounts) |
2016 |
2015 |
|||||||
Net Income (Loss) |
$ |
54.4 |
$ |
15.2 |
|||||
Foreign exchange (gains)/losses |
0.2 |
1.3 |
|||||||
(Gain) on sale of investments |
(0.2) |
— |
|||||||
Impairment of investments |
— |
1.9 |
|||||||
Tax effect of adjustments |
0.3 |
1.0 |
|||||||
Other tax related adjustments: |
|||||||||
Valuation allowance |
(1.2) |
— |
|||||||
Adjusted Net Income |
$ |
53.5 |
$ |
19.4 |
|||||
Basic Weighted Average Shares Outstanding |
178.1 |
156.9 |
|||||||
Adjusted Net Income per share |
$ |
0.30 |
$ |
0.12 |
|||||
FRANCO-NEVADA CORPORATION |
|||||||||
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
|||||||||
(unaudited, in millions of U.S. dollars) |
|||||||||
September 30, 2016 |
December 31, 2015 |
||||||||
ASSETS |
|||||||||
Cash and cash equivalents (Note 4) |
$ |
277.6 |
$ |
149.2 |
|||||
Short-term investments (Notes 5 & 8) |
— |
18.8 |
|||||||
Receivables (Note 8) |
72.4 |
65.1 |
|||||||
Prepaid expenses and other (Notes 6 & 13) |
34.8 |
41.6 |
|||||||
Current assets |
384.8 |
274.7 |
|||||||
Royalty, stream and working interests, net |
3,684.7 |
3,257.5 |
|||||||
Investments (Notes 5 & 8) |
131.7 |
94.8 |
|||||||
Deferred income tax assets |
23.3 |
16.1 |
|||||||
Other assets (Notes 7 and 13) |
26.5 |
31.2 |
|||||||
Total assets |
$ |
4,251.0 |
$ |
3,674.3 |
|||||
LIABILITIES |
|||||||||
Accounts payable and accrued liabilities |
$ |
19.5 |
$ |
18.0 |
|||||
Current income tax liabilities |
7.7 |
2.8 |
|||||||
Current liabilities |
27.2 |
20.8 |
|||||||
Debt (Note 13) |
— |
457.3 |
|||||||
Deferred income tax liabilities |
35.7 |
33.2 |
|||||||
Total liabilities |
62.9 |
511.3 |
|||||||
SHAREHOLDERS' EQUITY (Note 14) |
|||||||||
Common shares |
4,654.0 |
3,709.0 |
|||||||
Contributed surplus |
43.2 |
44.3 |
|||||||
Deficit |
(292.6) |
(302.2) |
|||||||
Accumulated other comprehensive loss |
(216.5) |
(288.1) |
|||||||
Total shareholders' equity |
4,188.1 |
3,163.0 |
|||||||
Total liabilities and shareholders' equity |
$ |
4,251.0 |
$ |
3,674.3 |
|||||
Subsequent events (Note 17) |
|||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements and can | |||||||||
FRANCO-NEVADA CORPORATION |
||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) |
||||||||||||||
(unaudited, in millions of U.S. dollars, except per share amounts) |
||||||||||||||
For the three months ended |
For the nine months ended |
|||||||||||||
September 30, |
September 30, |
|||||||||||||
2016 |
2015 |
2016 |
2015 |
|||||||||||
Revenue (Note 9) |
$ |
172.0 |
$ |
103.7 |
$ |
454.9 |
$ |
322.3 |
||||||
Costs and expenses |
||||||||||||||
Costs of sales (Note 10) |
28.0 |
22.4 |
80.1 |
68.8 |
||||||||||
Depletion and depreciation |
72.9 |
49.7 |
206.6 |
150.5 |
||||||||||
(Gain) loss on sale of gold bullion (Note 16(a)) |
(0.7) |
0.5 |
(2.8) |
0.5 |
||||||||||
Impairment charges |
— |
— |
— |
0.1 |
||||||||||
Corporate administration (Notes 11 & 14(c)) |
3.8 |
4.0 |
14.9 |
12.2 |
||||||||||
Business development |
0.5 |
1.0 |
1.1 |
2.8 |
||||||||||
104.5 |
77.6 |
299.9 |
234.9 |
|||||||||||
Operating income |
67.5 |
26.1 |
155.0 |
87.4 |
||||||||||
Foreign exchange gain (loss) and other income (expenses) (Notes 5 & 16(a)) |
— |
(1.2) |
4.2 |
(2.4) |
||||||||||
Impairment of investments |
— |
(1.9) |
— |
(1.9) |
||||||||||
Income before finance items and income taxes |
67.5 |
23.0 |
159.2 |
83.1 |
||||||||||
Finance items |
||||||||||||||
Finance income |
0.5 |
1.3 |
2.6 |
3.2 |
||||||||||
Finance expenses (Note 13) |
(0.7) |
(0.6) |
(2.8) |
(1.5) |
||||||||||
Net income before income taxes |
67.3 |
$ |
23.7 |
159.0 |
84.8 |
|||||||||
Income tax expense (Note 12) |
12.9 |
8.5 |
32.3 |
28.8 |
||||||||||
Net income |
$ |
54.4 |
$ |
15.2 |
$ |
126.7 |
$ |
56.0 |
||||||
Other comprehensive income (loss): |
||||||||||||||
Items that may be reclassified subsequently to profit and loss: |
||||||||||||||
Unrealized gain (loss) in the market value of available-for-sale |
8.1 |
0.1 |
34.7 |
(4.3) |
||||||||||
Realized change in market value of available-for-sale investments |
(0.2) |
(1.9) |
(4.5) |
(2.8) |
||||||||||
Currency translation adjustment |
(4.1) |
(67.3) |
41.4 |
(141.8) |
||||||||||
Other comprehensive income (loss) |
3.8 |
(69.1) |
71.6 |
(148.9) |
||||||||||
Total comprehensive income (loss) |
$ |
58.2 |
$ |
(53.9) |
$ |
198.3 |
$ |
(92.9) |
||||||
Basic earnings per share (Note 15) |
$ |
0.31 |
$ |
0.10 |
$ |
0.72 |
$ |
0.36 |
||||||
Diluted earnings per share (Note 15) |
$ |
0.30 |
$ |
0.10 |
$ |
0.72 |
$ |
0.36 |
||||||
The accompanying notes are an integral part of these condensed consolidated financial statements and can be found in our | ||||||||||||||
FRANCO-NEVADA CORPORATION |
|||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||
(unaudited, in millions of U.S. dollars) |
|||||||||
For the nine months ended September 30, |
|||||||||
2016 |
2015 |
||||||||
Cash flows from operating activities |
|||||||||
Net income |
$ |
126.7 |
$ |
56.0 |
|||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||
Depletion and depreciation |
206.6 |
150.5 |
|||||||
Proceeds from sale of gold bullion (Note 16(b)) |
59.4 |
36.6 |
|||||||
Acquisition of gold bullion (Note 16(b)) |
(47.8) |
(50.9) |
|||||||
Impairment charges |
— |
0.1 |
|||||||
Impairment of investments |
— |
1.9 |
|||||||
Other non-cash items |
(0.8) |
0.3 |
|||||||
Gain on sale of investments (Note 5) |
(4.5) |
(0.9) |
|||||||
Non-cash costs of sales (Note 10) |
5.3 |
5.0 |
|||||||
Deferred income tax expense (Note 12) |
2.6 |
8.0 |
|||||||
Share-based payments (Note 14(c)) |
3.7 |
4.1 |
|||||||
Unrealized foreign exchange loss |
0.3 |
3.0 |
|||||||
Mark-to-market on warrants (Note 5) |
— |
0.3 |
|||||||
Operating cash flows before changes in non-cash working capital |
351.5 |
214.0 |
|||||||
Changes in non-cash working capital: |
|||||||||
(Increase) decrease in receivables |
(7.3) |
22.1 |
|||||||
Increase in prepaid expenses and other |
(1.4) |
(6.8) |
|||||||
Increase in current liabilities |
6.3 |
0.1 |
|||||||
Net cash provided by operating activities |
349.1 |
229.4 |
|||||||
Cash flows from investing activities |
|||||||||
Proceeds from sale of investments |
24.0 |
24.7 |
|||||||
Acquisition of investments |
(1.6) |
(96.6) |
|||||||
Acquisition of royalty, stream and working interests |
(597.1) |
(44.2) |
|||||||
Acquisition of oil & gas well equipment |
(1.7) |
(2.3) |
|||||||
Acquisition of property and equipment |
(0.1) |
— |
|||||||
Net cash used in investing activities |
(576.5) |
(118.4) |
|||||||
Cash flows from financing activities |
|||||||||
Net proceeds from issuance of common shares (Note 14(a)) |
883.5 |
— |
|||||||
Repayment of Credit Facility (Note 13) |
(460.0) |
— |
|||||||
Credit facility amendment costs |
— |
(1.2) |
|||||||
Payment of dividends (Note 14(b)) |
(87.4) |
(70.4) |
|||||||
Proceeds from exercise of stock options (Note 14(a)) |
16.1 |
0.5 |
|||||||
Net cash provided by (used in) financing activities |
352.2 |
(71.1) |
|||||||
Effect of exchange rate changes on cash and cash equivalents |
3.6 |
(27.0) |
|||||||
Net change in cash and cash equivalents |
128.4 |
12.9 |
|||||||
Cash and cash equivalents at beginning of period |
149.2 |
592.5 |
|||||||
Cash and cash equivalents at end of period |
277.6 |
$ |
605.4 |
||||||
Supplemental cash flow information: |
|||||||||
Cash paid for interest expense and loan standby fees |
$ |
2.4 |
$ |
1.2 |
|||||
Income taxes paid |
$ |
27.1 |
$ |
24.2 |
|||||
The accompanying notes are an integral part of these condensed consolidated financial statements and can |
SOURCE Franco-Nevada Corporation
Copyright 2016 PR Newswire
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