Good morning, and welcome to Franco-Nevada Corporation's First Quarter 2025 Results Conference Call and Webcast. This call is being recorded on May 9, 2025. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. I would now like to turn the conference call over to your host, Candida Hayden, Senior Analyst, Investor Relations. Please go ahead.

Thank you, Jenny. Good morning, everyone. Thank you for joining us today to discuss Franco-Nevada's first quarter 2025 results. Accompanying this call is a presentation which is available on our website at franco-nevada.com, where you will also find our full financial results. The presentation is also available to view on the webcast. During our call this morning, Paul Brink, President and CEO of Franco-Nevada will provide introductory remarks followed by Sandip Rana, Chief Financial Officer, who will provide a brief review of our results. This will be followed by a Q&A period. Our full executive team is available to answer any questions. Participants may submit questions by telephone or via the webcast. We would like to remind participants that some of today's commentary may contain forward-looking information and we refer you to our detailed cautionary note on Slide 2 of this presentation. I will now turn over the call to Paul Brink, President and CEO of Franco-Nevada.

Thank you, Candida, and good morning, everyone. Today, we're reporting our best financial results ever. We achieved record quarterly top and bottom line results, and that was without any contributions from Cobre Panama. The results benefited from elevated gold prices, a good contribution from Hemlo NPI, and strong production from our Energy interests. We're looking forward to added contributions through the year, particularly from the ongoing ramp-up of Tocantinzinho and Greenstone and the startup of Valentine Gold, as well as contributions from the new Porcupine royalty. On the topic of Cobre Panama, President Mulino of Panama continues to indicate a willingness to hold discussions about the mine this year, and we're encouraged by his recent statements in this regard. It was an active quarter for our community support program, and we funded contributions for a waste management initiative at Cascabel with SolGold; the reopening of the Museum of Northern History in Kirkland Lake with Agnico Eagle and Alamos and a contribution to the Sault Area Hospital Foundation with Alamos. During the quarter, we closed the previously announced $500 million acquisition of a stream on SibanyeStillwater's Western Limb Mining Operations, and we received the initial payment, which relates to operations in the last four months of last year. We ended the quarter debt-free and with $2.1 billion in available capital, and post quarter end, we closed the acquisition of a 4.25% NSR royalty for $300 million with Discovery Silver on the Porcupine Complex. You'll recall as part of that financing package, we also provided a $100 million loan facility and we had a roughly $70 million Canadian lead order in their equity issue. Needless to say, we're delighted with the roughly triple increase in the value of the shares from our purchase price. We remain well-capitalized to add further growth, and a business development team has a number of actionable opportunities that could add further attractive assets this year. With that, I'll hand the call to Sandip.

Thanks, Paul. Good morning, everyone. As Paul mentioned, Franco-Nevada reported record financial results for the first quarter ended March 31, 2025. This was the result of both strong production from our asset base and higher precious metal prices. Precious metal prices, with gold in particular, were very strong in the first quarter. On Slide 4, you'll see a comparison of commodity prices for Q1 2025 and Q1 2024. Gold and silver prices increased significantly year-over-year, with the average gold price being higher by 38% in the quarter and average silver price being higher by 37%. Prices for palladium, iron ore, and oil continue to be volatile and were lower compared to the prior year. However, you did see a significant increase in natural gas prices. On Slide 5, we highlight total GEOs sold and net GEOs sold for Q1 2025 compared to Q1 2024. Total GEOs sold were 126,585 in the quarter compared to 122,897 in the first quarter of 2024, a 3% increase. Precious metal GEOs sold in the quarter were $100,623 higher by 8% compared to the prior year. For the quarter, we received strong contributions from Candelaria and benefited from the recent acquisitions made at Yanacocha and Western Limb Mining Operations. As Paul mentioned, we did receive our first GEOs from Western Limb in the quarter, which were related to the production period from September 1 to December 31 of last year. GEOs related to January 2025 were delivered in April, and it's important to note there's a three-month delay between production and delivery to Franco-Nevada. In addition to better performance from Candelaria and receiving GEOs from recent acquisitions, we also benefited from the continued ramp-up of operations at new mines, Tocantinzinho and Greenstone. I look forward to increasing contributions from these assets. One of the key outperformers versus our expectations was the Hemlo NPI. We did report a catch-up accrual related to 2024 that was recorded in the first quarter, but the Hemlo NPI again showed its leverage to higher gold prices. Revenue reported for the quarter was $17.7 million compared to $4.8 million a year ago. Diversified GEOs sold were 25,962 for the quarter compared to 9,879 for the prior year. Despite diversified revenue being higher by 21% year-over-year, $74.8 million versus $61.6 million, the approximate 4,000 GEOs sold reduction is due to the impact of higher gold prices when converting revenue to GEOs. As we look at our royalty and streaming business, we think it's important to evaluate contributions from assets based on margin contribution and not necessarily top-line measures. Royalty GEOs are higher margin GEOs, as there's minimal cost associated with each versus stream GEOs where an ongoing fixed payment is required. The measure net GEOs removes the cost of sales component for all GEOs, so that GEOs sold are represented after cost. For Q1 2025, net GEOs were 113,138 for Franco-Nevada compared to 106,681 in Q1 2024, a 6% increase. I think it's important to note that when looking at our growth going forward, the majority of that growth comes from high margin royalty GEOs versus streams. As you turn to Slide 6, we have highlighted our revenue and adjusted EBITDA results for the last five quarters. Total revenue for the quarter was $368.4 million, which is a record for Franco-Nevada. This compares to $256.8 million last year, a 43% increase. Precious metals accounted for 79% of revenue. Adjusted EBITDA, also a record, was 49% higher for the quarter at $321.9 million compared to $216.1 million in the first quarter of 2024. Slide 7 highlights the key financial metrics used by the company. As mentioned, total GEOs were approximately 126,585, generating $368.4 million in revenue during the quarter. With respect to cost, we did have an increase in cost of sales compared to Q1 2024, due to higher stream ounces sold. Cost of sales was $38.5 million versus $33.6 million last year. Depletion did increase as well to $68.4 million versus $58.2 million a year ago. Depletion is based on actual mining GEO sold and barrels of oil equivalent received from the Energy division. As we received more GEOs from Candelaria and began depleting our recent transactions, Yanacocha and Western Limb Mining Operations, this impacted depletion as those assets are currently higher per ounce depletion assets. Adjusted net income was $205.6 million or $1.07 per share for the quarter, both up 51% versus the prior year. Slide 8 highlights the continued diversification of the portfolio. 79% of our Q1 2025 revenue was generated by precious metals, with revenue being sourced 84% from the Americas. Our largest contributor to revenue was Candelaria. Slide 9 illustrates the strength of our business model that continues to generate high margins. For the first quarter 2025, the cash cost per GEO, which is essentially cost of sales divided by gold equivalent assets sold, was $304 per GEO. This compares to $273 per GEO in Q1 2024. As the gold price has risen, Franco-Nevada has seen a significant increase in our margin per GEO, with it being over $2,500 per GEO in Q1 2025. As we've always said, in a rising commodity price environment, we expect to benefit fully as the cost per GEO should not increase significantly. And lastly, Slide 10 summarizes the financial resources available to the company, when including our credit facility of $1 billion. Total available capital at March 31 is $1.9 billion. However, this is net of the $300 million funded after the quarter end for the Porcupine royalty. The company remains well capitalized to continue to add long-term, high-quality assets to the portfolio. And now, I'll pass it back over to Jenny and we're happy to answer any questions.

Thank you. Your first question is from Heiko Ihle from H.C. Wainwright. Your line is now open.

Hey. Good morning, Paul, Sandip, and team. Happy Friday.

Hey, Heiko.

Likewise.

You did the conversion of the net profit interest on Pandora into a net smelter return royalty. Out of curiosity, given current commodity pricing, is that something where you're getting more and more operators approaching you on some sort of conversion or amendment to streams? Because I was always under the impression that, in general, once a stream is there, it sort of stays and it doesn't really get renegotiated. Is there more seen right now with people trying to do things, given that a lot of the operators have more cash flow than they probably thought a year ago?

I don't see a theme at the moment. That conversion was just a function of the transaction we did with Stillwater at that time, and it did make more sense to convert that into an NSR, which is a more predictable instrument for us. So I'd say, it's more just related to the particular transaction.

Fair enough. So, we shouldn't expect anything else like this in Q2 and beyond, really?

Yeah. No conversions expected.

Okay. There was an article in the Wall Street Journal a couple of days ago about Warren Buffett and his investment in Occidental Petroleum, which indicated that it didn't go as planned. In contrast, your U.S. energy interests have performed well, particularly with the increased royalty rates in the Permian. I would like to know what you are doing differently, and with the current pricing, what are you observing regarding new royalty investments in that area?

It's Jason O'Connell here. I don't think we have a similar interest as Oxy did. We are a passive investor in royalties in the U.S. So we don't have maybe the cost structure, etc., that Oxy would have and some of the performance issues that they may have had. I think our exposure in the U.S. is fairly broad. We've got access to most of the major shale plays, including both the Permian and Anadarko on the oil side, as well as the Haynesville and Appalachia on the gas side. So, we're very well exposed both in terms of our footprint in the different basins as well as the different commodities. We are continuing to evaluate different opportunities in oil and gas. We look at good quality assets and royalty packages as they become available. We'll continue to assess those. If there's something that is of good quality and value, we may look at doing that in the future.

Fair enough. Thank you, guys. I'll get back in queue.

Thank you. Your next question is from Cosmos Chiu from CIBC. Your line is now open.

Thanks, Paul, Sandip, and team, and congrats on record earnings. It's well deserved. Maybe quick question first on the NPI at Hemlo. Sandip, as you mentioned, there is a bit of a catch-up in the quarter. So to confirm we shouldn't expect the same sort of elevated level in terms of earnings from Hemlo for future quarters. It'd still be good because as we know, NPI is very levered to higher commodity prices, but likely wouldn't be to the same sort of level?

The catch-up related to last year was about $5 million. The NPI for Q1 was approximately $12 million. Predicting NPIs is quite challenging, especially at Hemlo where we only cover a portion of the underground mine. However, at current commodity prices, I would anticipate something similar in terms of revenue unless there is a significant change. As mentioned, you don’t really know until the numbers come in, but I think that's a reasonable estimate moving forward.

What, it's a good surprise. So I think that's a positive. And then, in terms of NPIs as we talked about very leveraged to higher commodity prices. If I scan through your portfolio, the other NPIs in Kirkland Lake. So, is there any way that you can kind of talk about the potential here at NPI at Kirkland Lake? Because it didn't see the same degree in terms of increase in Q1. So again, maybe it's just based on the area that you cover, but is there any more additional colors that you can give us on the Kirkland Lake NPI?

The Kirkland Lake NPI represents a 20% accounting profit, but it currently applies to just a couple of claims at Kirkland Lake that are not being mined, so we are not receiving any benefits from it at this time. However, there have been strong exploration results, and the focus is shifting toward those claims. I expect that in the coming years, we will finally begin to receive payments, but there won't be anything this year. On the other hand, the Musselwhite NPI, where we hold a 5% interest, is worth mentioning. With Orla taking over the asset from Newmont, we are eager to see their approach to improving mining efficiency and productivity, especially with the current higher commodity prices, and I believe this will provide us with some leverage.

And the Musselwhite NPI, does that cover the entire property?

Yeah.

Okay. That's good to know. Maybe switching gears just quickly on the Western Limb, the fairly recent acquisition. Could you maybe talk about the timing again in terms of, I saw that you received 6,540 GEOs in the quarter, but that was for the four months ended last year. So, I would have expected it to be all the way to March or the end of Q1 in terms of payments. So again, maybe there's a lag. Could you walk me through the timing in terms of, I guess what should we expect in terms of receipts in say Q2 and then Q3 for Franco-Nevada into 2025?

Sure. So what we received in Q1 was related to last year, for the last four months of the year, and we didn't receive anything related to 2025. There's basically a one-quarter lag. So January got delivered in April, February will be May. So, as we guide it to on an annual basis, it's roughly 20,000 GEOs, divide that by more so roughly 5,000 GEOs a quarter.

Great. And then maybe one last question, bigger picture. Paul, you had kind of mentioned Cobre Panama. But again, based on your point of view and your interpretation, maybe give us a bit more color in terms of what do you think is kind of happening in Panama, how that relates to Cobre Panama and as we all know, First Quantum discontinued their international arbitration process. I think yours is still active, so maybe you can talk a little bit about that as well.

Maybe starting, what is going on in Panama at the moment? Currently, you would have seen that President Mulino for a while has said, he's open to a discussion on the mine this year. He did late in March give instructions to his team to say he wanted them to turn their minds to how they might address the mine. The country has been completing the process on Social Security. They've also had to deal with the U.S. in terms of the Panama Canal. So those have all been items on the agenda. Very hopeful that negotiations can start fairly soon with the company. I was also encouraged by some comments that Mulino had made to say, he would like to see that they can get the situation with the mine resolved by year-end. So I think that is the setup. In terms of our own arbitration process and suspending, we have had discussions with representatives of the government. Those have been productive, but we don't have anything to report on that at this stage.

Great. Thanks, Paul, Sandip, and team. Those are all the questions I have. Have a good weekend.

Thanks, Cosmos.

Thank you. Your next question is from Daniel Major from UBS. Your line is now open.

Hi, Paul. Hi, Sandeep. Thanks for the questions. The first one, just to follow-up again on Cobre Panama, just looking at the commentary from Mulino. I mean, I think he quoted that he is open to forming an association with First Quantum with respect to the new Cobre Panama license not being based on contract law, but he wants to see all arbitration suspended. Is this something that the Panamanian government has approached you about dropping your arbitration claim to facilitate an engagement on the licensing agreement, or is this just purely a negotiation between First Quantum and the Government of Panama?

In terms of ownership, First Quantum and KORES are the owners of the assets. Therefore, any negotiation involves those parties. We are merely financing this project and do not have a seat at the table. As previously mentioned, we do have our arbitration rights. We have had some discussions with government representatives, but there is nothing to report at this time.

Okay. So at this stage, you're not looking to drop your arbitration claim?

Our discussions have indicated that we are open to suspending it under the right conditions, and we have had conversations about that.

Okay. That's useful. Thank you. And then the second question, strong performance from the oil and gas component of the portfolio this quarter, can you give us a steer on the distribution of expected GEO sales from the diversified portion of the business through the balance of the year?

I think in terms of the energy performance, we did have a strong quarter. Part of that was helped by prices. The other piece was, we had some strong performance in our Permian assets from new wells that came online during the quarter. Going forward, I expect that we'll see a reasonably flat profile, although, it will depend on where prices go. You would have seen last year when the gas price was weak, some of our volumes on our gas assets came off as operators pulled back on activity. We are waiting to see how the operators on our lands react to what has been a lower oil price. So, you can expect that if prices stay lower for a longer period of time, there may be some reduction in activity, which could translate into slightly lower volumes. So, it is largely a function of price. If prices sort of stabilize in and around where they were last year, I would expect a fairly flat profile. If prices continue to weaken, we may see some modest volume decline associated with a pullback in activity.

Okay. Thanks. And then, one more if I could. Just thinking about your pipeline of projects and where your focus is at the moment, can you give us any steer? Most of the transactions have been more focused on gold assets in the space. Are you seeing any pickup in interest in the base metal space, and have there been any negotiations in Argentina that you can make any comments on?

Hi, Daniel. It's Eaun Gray speaking. I would make the first overall comment that the gold market is very active in terms of royalties and streams. So we're spending the majority of our time there, and we're quite pleased with the conditions. There are opportunities outside of gold, but relatively few compared to what we're seeing in gold. And no specific commentary I can provide on Argentina.

All right. Thanks. Very useful. Have a nice weekend.

Great. Thank you.

Thank you. Your next question is from Tanya Jakusconek from Scotiabank. Your line is now open.

Hi, good morning, everyone. Congratulations on a solid quarter and a promising start to the year. The Hemlo new product introduction continues to show potential, though it's difficult to predict. I have three questions. I'll begin with Sandip regarding the modeling for Hemlo, which I appreciate. Additionally, I’d like to get a clearer understanding of the company's overall profile for the year. We started with a strong Q1 and discussed a profile of 47% in the first half and 53% in the second half, anticipating a similar trend in Q3 and Q4, based on the ramp-up of some operations that Paul mentioned at the start of the presentation. Is this still the outlook you have based on your current knowledge?

Yeah, Tanya. I think that's a fair profile. The caveat is that the gold price has increased. Our guidance was based on a price of $2,800 an ounce, and now gold is over $3,000 an ounce, while energy prices, particularly oil, have decreased from what we had originally budgeted. Overall, I think the GEO profile is reasonable. You may see some of the gains on the mining side offset during the conversion process, but for your modeling purposes, I believe it's still a fair profile.

Okay. And just on the energy side, and I know we touched a little bit on it. Can you just remind me the lag in terms of pricing that are felt? I thought there was about a six-month lag, is that correct, in terms of what they're doing today versus where you're going to see this in your financials? Is it about six months?

Tanya, it really depends on your perspective. In terms of price impact, we earn royalties, which typically come in anywhere from one month to maybe three months after production. Additionally, there's a longer-term effect related to drilling activity. Operators generally want to see price stabilization before making decisions. So, I would estimate that six months is a reasonable timeframe to observe how this plays out. If you look at some disclosures from our operating companies, many are already responding to lower prices by cutting their capital budgets. Therefore, we are seeing some initial effects. You will likely notice more news next quarter if prices remain low.

Thanks for that, Jason. I’d like to ask Paul my second question. Regarding Cobre Panama and the arbitration, what is the current status of the concentrate? Have they started up the power plant? I believe they received instructions to activate the power plant, and there was concentrate on site that was supposed to be sold. Can you clarify what is happening on site and if there is a timeline for selling this concentrate?

No timeline yet, Tanya. Really three moving pieces there. One is the approval of the preservation and safe maintenance. The other is shipping of the concentrate, and the third is restarting the power plant. The indications again from the government is that they're open to all those things going ahead, but they haven't actually gone ahead at this stage. So I'm hopeful that in the coming months that we should see all those things go ahead.

Okay. So on the mine, I guess on the property mine site, they're just keeping it on care and maintenance with the normal care maintenance procedures that are in place. And there's nothing else that is going on?

Not that I'm aware of.

Okay. And then just in your comments you said, you'd be open to dropping the arbitration under certain conditions with your discussions. Not into the details, but just from a bigger picture, what would lead you to drop the arbitration? Would it be that you're progressing ahead, and the concentrate is sold, or are there anything that you can provide some color on what would help you with your decision on the arbitration?

Yeah. So first, it's suspending rather than dropping. So that just would be putting it on hold for a period to allow that there is a negotiation, but still with the rights that could pursue. So, I'd say you put it on hold is a good word. I don't want to get into the details of what those conditions would be, but the broad is, want to know that the table is set for negotiation and that both parties are ready to go.

Okay. Thank you for that. And maybe my last question, I just wanted to circle back on the transaction opportunities. I want to start by asking, last quarter, when we talked about the transaction opportunities, we talked about a pipeline in the $100 million to $500 million range. Some of your peers have mentioned that the range now has moved up in size. So I'm just wondering, are you seeing larger opportunities out there? And are those opportunities mainly in base metal producers that are trying to crystallize on this higher gold price? I'm just trying to understand whether that's something that has increased in sort of transaction opportunities. And then, I just wanted to ask about the royalties versus the stream. How do those look? In terms of opportunities, are you seeing more royalties, more stream?

Hi, Tanya. It's Eaun again. I would say, first-off, we're seeing similar conditions to what we saw last year in terms of overall volume of deals and also on size, that's probably the best guidance I can give you, in terms of deal volume and sizing. In terms of royalties versus streams, similar to last year, it's a mix, and we're seeing good opportunities in both.

Okay. And Eaun just, you came back and talked a little bit about you have some opportunities in the non-precious metals. Would that be outside of energy?

Hey, Tanya. It's Jason. We're looking at opportunities both within energy and outside of energy. So it's a pretty broad universe of things that we're looking at, and overall, it's a little bit about the commodity, but a lot of it is just what assets are available and which are the best quality opportunities, and those are the ones that we'll focus our time.

Okay. And in the non-gold opportunities, what size would those be at?

There's really a wide range from very small to larger transactions. So, we're looking at the full spectrum of sort of quantum.

Okay. When you say large, is that small from like 50 to 500 or is it up to a billion? I don't know what your large is.

Large is a spectrum from zero to plus $500 million.

Okay. All right. That's helpful. Thank you so much for taking my questions, and good luck on a good quarter. Thank you.

Thanks, Tanya.

Thank you. Your next question is from John Tumazos from John Tumazos Independent Research. Your line is now open.

Thank you. I noticed that Newmont sold 40 million shares of Discovery Silver overnight. First question, would Franco want to buy the next block that Newmont wants to sell to have more, or would Franco be a seller?

John, we're a very happy supporter of the team at Discovery. We're delighted with the shares we hold. But, our strategy, as you know, is principally around royalties and streams, where, in getting deals done, it's helpful for us to do some equity, and in particular to be a lead order in an equity deal is something that we do. And one of the things we're trying to do is put money in, but leverage the dollars that we're putting in. So if we can help the company raise more capital by providing that endorsement, that's a good part of the strategy. But just buying a block of shares is not really part of the strategy.

Following up on the earlier question, as the gold price rises, it's easier for the exploration and development companies to raise money. Could we expect Franco to have a larger dividend payout in view of the booming gold price?

Hi, John. It's Sandip here. As you know, we have always highlighted our dividend strategy as being sustainable and progressive, where we always want to be in a position where we are raising the dividend, and we're proud of the fact that we've raised it for 18 years in a row. In terms of a higher dividend payout, our priorities are always adding good long-life assets, whether royalty or stream. And we see lots of opportunities right now. So I think you'd see our focus for capital deployment on adding those types of assets to the portfolio, but still raising the dividend. But I wouldn't expect an unusually higher increase in the dividend than we normally have done.

Happy hunting. Thank you.

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

Thank you, Jenny. There are no further questions from the webcast. This concludes our first quarter 2025 results conference call and webcast. We expect to release our second quarter 2025 results after market close on August 9th. Thank you for your interest in Franco-Nevada.

Thank you. Ladies and gentlemen. That concludes our conference call for today. Thank you all for participating. You may now disconnect your lines.