Earnings Call Transcript - FNV Q3 2021

Operator, Operator

Good morning, ladies and gentlemen, and welcome to the Franco-Nevada Corporation Q3 2021 Results Conference Call. This call is being recorded today, November 4th, 2021. At this time, all lines are in a listen-only mode and following the presentation, we will conduct a question-and-answer session. I would now like to turn the conference over to your host, Bonavie Tek. Please go ahead.

Bonavie Tek, Host

Thank you, Michelle. Good morning everyone. Thank you for joining us today to discuss Franco-Nevada's third quarter 2021 results. Accompanying this call is a presentation available on our website at franco-nevada.com, where you will also find our full financial results. Paul Brink, President, and CEO of Franco-Nevada will provide some introductory remarks, followed by Sandip Rana, CFO of Franco-Nevada, 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. We would like to remind participants that some of today's commentary may contain forward-looking information, and we refer you to a detailed cautionary note on slide two of the presentation. I will now turn the call over to Paul Brink, President, and CEO of Franco-Nevada.

Paul Brink, CEO

Thanks, Bonavie. Good morning and thank you all for attending our call. Our business delivered a strong third quarter, setting the stage for a record year. Our diversified portfolio served us well with good contributions across precious metals, energy, and iron ore. I'm proud of the top BSG rankings we received, and this quarter, we again achieved a prime rating from the ISS rating agency. We recently added to our community programs, committing to fund water supply infrastructure to communities around Antapaccay. We're also partnering with Continental Resources to fund the project for solar-powered water recycling. 2021 is a strong growth year for the company, driven by the ramp-up of Cobre Panama and the new contributions from Haynesville, Condestable and the Vale iron ore royalty. Of our core assets, Antamina was a standout performer for the quarter, with Cobre Panama also generating record quarterly production. Despite volatile iron ore prices, we're well on our way to achieve our guidance for the Vale royalty this year. The energy shortage playing out globally has pushed up both oil and gas prices. Our energy revenues are two and a half times larger this quarter than a year ago. This includes the recently acquired Haynesville natural gas royalty package, where we're getting the benefit of drilling on some higher royalty interest sections. The energy price spike highlights the power of diversification in our portfolio. We expect to meet our GEO sales guidance range for the year and, with higher energy prices, have raised our energy guidance for the second time this year. Cost inflation continues to take its toll in the gold sector, particularly with the high energy prices. On the contrary, though, our margins have widened due to the inflation-protected nature of our business model. I believe the only time we've had higher margins was before we started streaming, which was right after our IPO. Our growth for the next number of years will come from both mine expansions and new mines. Cobre Panama is the largest driver. Last week, First Quantum provided more detail on its construction and commissioning plans to expand the mine from its current 85 million tons per annum to achieve 100 million tons per annum by the end of 2023. Detour Lake was in the news this quarter, first, with a 10 million-ounce increase to its M&I resource, taking it up to 30 million ounces, including reserves and then with the merger between Agnico Eagle and Kirkland Lake. In terms of new mines, Salares Norte construction is on track. Construction of Hard Rock started this week and we expect Valentine Lake, Eskay Creek and Stibnite Gold Mines will follow in the next few years. We've seen exploration success on two of our pipeline of longer-term copper royalties. SolGold published a maiden resource on the Tandayama-America deposit on the same concession as Alpala, which appears to be a viable large-scale open pit. And Hudbay reported ongoing success in its drilling at the copper ore targets at Rosemont. They expect initial resource by year-end and a PEA in the first half of 2022. We've seen multiple bids from Wyloo and BHP for control of Noront and their Ring of Fire nickel and chrome deposits. Either would be a great partner to develop the region, and their interest is a terrific endorsement of its potential. Our current business development priority is precious metals, and our team is active generating opportunities to finance the development and construction of new mines. We're also open to adding other mining commodities with good assets that come to market. In summary, Franco-Nevada continues to deliver with record financial results, built-in growth, and tremendous long-term optionality. The company is debt-free, has total available capital of $1.6 billion and is growing its cash balances. I'll now hand it over to Sandip.

Sandip Rana, CFO

Thanks, Paul. Good morning everyone. The company reported strong financial results for Q3 2021 yesterday, which continued to showcase the strength of Franco-Nevada's diverse portfolio. Our royalty and stream assets, both mining and energy, continued to perform well, either in line or ahead of expectations. As Paul mentioned, a strong third quarter has set the stage for a record financial year for the company. As you turn to slide three of the presentation, we have highlighted the gold and gold equivalent ounces sold for the three and nine months ended September 30, 2021 and 2020. Overall, GEO sold increased over the prior year for both periods. For the quarter, GEO sold of 146,495 was 9% higher than the prior year. For the quarter, we had strong performance from a number of key assets. For precious metals, the main contributors were Cobre Panama, Antamina and Guadalupe, all of which produced ahead of expectations. In addition, we benefited from GEOs delivered and sold from the Condestable precious metal stream acquisition completed earlier this year. We did have a weaker quarter from Candelaria, which was expected based on the revised guidance issued by Lundin Mining for a change in mine sequencing. At Antapaccay, GEOs sold were lower based on lower grades as anticipated. Also, in the third quarter last year, Antapaccay deliveries did benefit from the resolution of logistical issues that had arisen because of the pandemic. One precious metal asset, which contributed significantly less GEOs this quarter than the prior year, is Hemlo. As you know, we have a 3% royalty and a 50% net profit interest on a portion of the underground mine. This asset had a tough third quarter with significantly lower production. This lower production, along with lower gold prices and higher operating costs, resulted in a sharp decrease in GEOs and revenue recorded for the quarter. As previously disclosed, we did expect the NPI revenue received by Franco-Nevada to decrease as the year progressed, but the third quarter payment is lower than expected. We do expect the Hemlo NPI to be minimal for fourth quarter 2021 as well. With respect to other mining asset GEOs, our iron ore investments delivered strong results. The company recorded $21.7 million in revenue related to the Vale iron ore royalty. This was a combination of $16.1 million in revenue accrued for third quarter 2021 and an additional $5.6 million related to an under-accrual from the second quarter. In total, the company recognized just over 12,000 GEOs for the Vale royalty during the quarter. The first cash payment received by the company from the royalty was actually on October 1st post quarter end. Our investment in Labrador Iron Ore Royalty Corporation continued to pay strong dividends, with a dividend of CAD2.10 being declared for the third quarter, which resulted in $10.5 million being recorded as revenue, just under 6,000 GEOs. Slide four highlights our total revenue and adjusted EBITDA amounts for the three and nine months ended September 30th, 2020, 2021. As you can see from the bar charts, revenue and adjusted EBITDA have increased significantly year-over-year. The company recorded $316.3 million in revenue in the third quarter and $269.8 million in adjusted EBITDA. A margin of 85.3% was achieved. Third quarter continued the strong contribution from the energy assets as revenue increased from $22.8 million a year ago to $55.1 million this quarter. The increase was due to the rebound in energy prices from a year ago. West Texas Intermediate oil price averaged $70.52 per barrel during the quarter, a 72% increase from the prior year. Natural gas prices also increased significantly with Henry Hub Mcf averaging $4.32 in the third quarter compared to $2.14 in Mcf a year ago. Our last two energy transactions were focused on natural gas, the Range Resources acquisition in 2019 and the recent Haynesville acquisition. These assets contributed $21.1 million in revenue for the quarter. As you turn to slide five, you will see the key financial results for the company. We have achieved many records on a year-to-date basis, which we expect to continue for the full year. As mentioned, the increase in revenue and adjusted EBITDA was due predominantly to the increase in GEOs sold along with a significant increase in energy revenue. On the cost side, for the quarter, cost of sales was higher at $42 million versus $40.5 million a year ago. The increase was due to an increase in stream ounces being delivered year-over-year. Depreciation was also higher at $73 million versus $56.8 million last year due to the increase in GEOs sold, a large portion being from higher depletion stream assets. In addition, the third quarter 2021 does include depletion on the new acquisitions made this year, Condestable, Haynesville, and the Vale royalty. Adjusted net income and adjusted net income per share increased to $165.6 million or $0.87 per share in the third quarter, increases of approximately 8.7% for both over the prior year. Franco-Nevada is both a royalty and a streaming company. Slide six breaks down the mix between streams and royalty revenue for the third quarter 2021. Streams are the largest component of revenue, generating $176.2 million or 55.7% of revenue for Franco-Nevada. However, it is royalties, whether mining or energy, which generate higher margin and thus cash flow from operations. As you can see, the costs related to royalties are minimal with a combined cost of $3.1 million related to the $140.2 million in revenue generated by royalties. We believe our diversified business model of both stream and royalty assets will allow us to continue to achieve peer-leading EBITDA margins. With respect to margins, the chart on slide seven illustrates how the margin for the company increases as the gold price increases. Our mining cost structure, which we reflect in our cash cost per GEO sold includes our cost of sales less cost associated with the energy business, which are minimal. Cash cost per GEO sold was $269 this quarter compared to $290 per GEO in the prior year. In a rising gold price environment, we expect to benefit fully as the cost per GEO sold should not increase significantly. In fact, back in Q3 2019, the gold price averaged $1,474 per ounce, and our cash cost per GEO was $276. The average gold price is now $1,789 per ounce, having increased over 20%, while the cash cost per GEO has actually decreased. Strong margins is one of the strengths of our diverse portfolio. The other cash component for the company besides cost of sales is our corporate administration costs. We like to stress the strength of our business model and the scalability. The chart on slide eight clearly illustrates our focus on being as cost-efficient as possible in managing this business. Here, we've highlighted our quarterly revenues and our quarterly corporate administration expenses since our IPO. As you can see, revenues have grown significantly over the period shown, while corporate costs have remained stable. Q3 2021 corporate admin costs, including stock compensation, was $4.6 million or less than 2% of revenue. Management believes we can continue to add to our portfolio and grow our business without adding significant overhead to the company. Slide nine highlights the diversification of the portfolio, which we consider one of the strengths and differentiators of Franco-Nevada. As shown, 83% of our Q3 2021 revenue was generated by mining assets. The geographic revenue profile has revenue being sourced 91% from the Americas, with South America being the largest at 33%. With respect to asset diversification, Cobre Panama was our largest revenue generator at 17% of total revenue for the quarter, followed by our other three core assets, Candelaria, Antapaccay, and Antamina, all being at 8%. No other single asset generated more than 8% of revenue. The chart also highlights our operator diversity. Our largest exposure to revenue being generated by any one operator is, again, 17%, which is First Quantum, who operates Cobre Panama. On slide 10, we have provided updated guidance for 2021. As you will recall, we had previously narrowed our GEOs sold guidance to 590,000 to 615,000. With the strong start to the year from our mining assets, we are maintaining this range. For the fourth quarter, we expect to continue to benefit from the ramp-up at Cobre Panama and strong production from Antamina. With respect to the energy business, we're pleased to again raise our revenue guidance by over 20% to $195 million to $205 million from the previous $155 million to $170 million. This increase in guidance is due to the strong rebound in energy prices we have seen this year and the strong performance from our assets. We've assumed a $70 per barrel WTI price and $4 Mcf natural gas price for the remainder of 2021. As of today, as seen on slide 11, with respect to available capital on hand, the company has liquidity of $1.6 billion. We have a strong cash position that continues to grow and remain debt-free. And now, I will turn it over to Michelle. Happy to take any questions.

Operator, Operator

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. Your first question comes from Adam Josephson of KeyBanc. Please go ahead.

Adam Josephson, Analyst

Paul and Sandip, good morning. Thank you for taking my questions.

Paul Brink, CEO

Good morning, Adam.

Adam Josephson, Analyst

Good morning. Sandip, one question on your GEOs guidance. Has your thinking in terms of where you'll fall within that range changed at all compared to last quarter given your experience at Hemlo and the other issues you mentioned?

Sandip Rana, CFO

Yes, I think, Adam, we've kept the guidance range the same. Typically, the midpoint is sort of where everybody estimates the company coming in. I think the beauty of our model is our portfolio has a lot of assets. So, even though Hemlo might underperform or another asset might underperform, there's always other assets that outperform. So, we're expecting to be somewhere in that range, probably closer to the higher end, but we'll see how it all plays out.

Adam Josephson, Analyst

I appreciate it. Paul, you mentioned the energy shortage. I know this came up on your last call, but have you heard anything about what some of the oil and gas producers are planning for capital expenditures next year? Those companies have been focused on being more disciplined than in the past. How do you see this situation developing? What impact do you expect it to have on your business over the next year or beyond?

Paul Brink, CEO

Adam, we've got Jason O'Connell here, who heads up the energy side of our business. So I'll hand that to him.

Jason O’Connell, Energy Head

Thanks, Adam, for the question. In terms of what we're seeing from the operators and their capital spending on our assets. I think what you've seen over the course of the last year is quite an increase in activity rates, particularly in the shale plays in the U.S. If you look at what happened to rig counts in the primary basins, they fell to a very low level following the COVID shock, and they've since returned to levels that are probably 50% of the highs that we saw in 2019. So, we're keeping a close eye on how that rebound continues. There's obviously a theme with energy companies to maintain capital discipline and return cash to shareholders. So that's another important element in how it all plays out. But we're encouraged to see the activity coming back. Obviously, it's a benefit to our assets over the longer term, and we'll watch it play out here over the next couple of years.

Adam Josephson, Analyst

I appreciate that. And just one more for you, Jason. In terms of the sensitivity to changes in oil and gas prices, I know you were asked about this on the last call as well, but can you remind us what your sensitivity is to changes in WTI and Henry Hub prices? I know you're assuming $70 and $4, respectively, for the year.

Jason O’Connell, Energy Head

Sure. And I think when you're thinking about sensitivity, you need to consider the fact that our energy mix is about 50% oil right now, about 40% gas, and the remainder is NGLs. For the gas assets, the sensitivity is roughly 1:1. There's not a lot of leverage in those assets. So, a dollar change in NYMEX is commensurate with an increase in revenue for the gas assets. For our oil assets, the overall leverage to the oil assets is about 1.3:1. That comes mostly from our Canadian assets where we have the waiver and NRI, which has capital and operating cost exposure, whereas the remainder of our U.S. assets is they're mostly 1:1 as well. So, on the oil side, it's about 1.3:1 on a blended basis. On the gas side, it's roughly 1:1.

Adam Josephson, Analyst

Thanks very much, Jason.

Jason O’Connell, Energy Head

Sure.

Operator, Operator

Your next question comes from Tyler Langton of JPMorgan. Please go ahead.

Tyler Langton, Analyst

Good morning. Thanks for taking my questions. Maybe just a follow-up on energy. In terms of the increased guidance and sort of improved results, is that more just sort of the benefit of higher prices? Or are the higher prices sort of also translating into sort of higher production at the assets where you have the royalties?

Paul Brink, CEO

Thank you, Tyler. The increase in our guidance is mainly due to rising prices at this point. If prices remain at their current levels, we anticipate seeing enhanced activity from additional capital spending, though that will take some time to materialize. Therefore, the guidance we have provided is mainly a result of the rise in commodity prices, assuming our volumes remain steady.

Tyler Langton, Analyst

Okay. Thanks. And then just on the Vale royalty. I mean I know this quarter, you had some benefit from revenues from previous quarters. Can you just give us some, I guess, guidance in terms of how to think about revenues from the royalty going forward? Obviously, sort of iron ore prices have come down. But obviously, there's some lag. And then I don't know if you'd still get sort of any sort of, I guess, revenues from previous quarters? Just some color there would be great.

Eaun Gray, Analyst

Sure, Tyler. It's Eaun here. I think going forward into Q4, we have seen pretty high freight costs and overall deductible transportation for the royalty on top of very volatile iron ore prices. So, I don't think at this point we're expecting any carryover. But in terms of our guidance for the year overall, it should be for the higher end of our guidance for Vale royalty debentures.

Operator, Operator

Your next question comes from Cosmos Chiu of CIBC. Please go ahead.

Cosmos Chiu, Analyst

Thanks Paul, Sandip, and team. Regarding the iron ore asset, I noticed that for Q3, 3,100 GEOs were related to the first half as an accrual. Sandip, was this due to prices or final variances on production?

Sandip Rana, CFO

So, Cosmos, it's a combination of both Vale released on September 30th, their dividend amount. And it's a combination of production as well as sales price for us for that accrual, again, it was just an estimate. And obviously, we were conservative in our estimate, and there was the adjustment for $5.6 million.

Cosmos Chiu, Analyst

Okay, for sure. How do you account for the accrual? Is it based on average spot prices during the quarter that you use to estimate the iron ore royalty and to determine payments? Will we expect another adjustment as we approach the March 31st, 2022 payment date?

Sandip Rana, CFO

Yes. We have recorded the accrual for the third quarter and will do another for the fourth quarter. On March 31st, Vale will adjust or release the dividend amount for that six-month period, and we will then modify what we have recorded for those six months. There will likely be an adjustment since we cannot predict the exact dividend payment. Pricing is determined by taking the average for the quarter, and then we make deductions to arrive at the net revenue amount.

Cosmos Chiu, Analyst

For sure. Maybe switching gears a little bit on taxes, our favorite topic here. Global minimum taxes looks like it is kind of moving ahead. Any comments that you can make in terms of global minimum taxes and how that could impact Franco-Nevada?

Sandip Rana, CFO

Sure. You're right. It's gained lots of momentum. The country signed on to it, I believe, on the weekend. For us, obviously, we do have a business, a legal entity in a lower tax jurisdiction in Barbados, which holds a number of our international streams. So, if it does get passed, and I think it will take a bit of time because each country has to pass the legislation, it would apply to us there. And so there would be that top-up. And so we'll just have to wait and see what the detail is between what all the countries do release and how it's going to work. From our perspective, when we look at the company, we try to manage risk. And one way to do that is to have a diverse corporate structure. So Barbados is the one entity that would be impacted, but it is less than 50% of our revenue. We have legal entities in Canada, United States, and Australia, where we have our royalties, where we pay higher taxes. So, those will not be impacted. But our revenue and our income from Barbados will be impacted.

Cosmos Chiu, Analyst

For sure. Maybe one last question from me. Paul, as you mentioned, the beauty of the royalty model is that you're protected from inflation. Inflation clearly is a concern to a lot of investors and just ordinary people these days. Could you confirm or remind us, it's really only the NPIs within your portfolio that would be impacted and really nothing else, you are truly inflation protected.

Paul Brink, CEO

Absolutely, Cosmos. I think in terms of people investing in gold, one of the major reasons that they're doing it in the first place is they are seeking inflation protection. So, I think it's a tremendous strength of our business model. You're absolutely right, there are a couple of NPIs on the gold side. Also, we do have the Weyburn net profit interest. But they are fairly small in the context of the overall portfolio.

Cosmos Chiu, Analyst

Great. Those are the questions I had. Thanks Paul, Sandip and team.

Operator, Operator

Your next question comes from John Tumazos of John Tumazos Research. Please go ahead.

John Tumazos, Analyst

Thank you very much. Congratulations on all the great results. Of course, you're focused on precious metals, but some of your most important precious metals contracts are part of a bigger copper base metals property. I'm a little alarmed at the political and economic changes in China in the last few months. I don't know exactly what their plans are, but they've idled the equivalent of 100 blast furnaces or 100 basic oxygen furnaces or 100 or 200 rolling mills in steel. It's like 292 million metric tons capacity. So, like the biggest peace time not cyclical, voluntary industrial production cut I've ever witnessed. Do you raise the discount rate you use for investments in base metals projects going forward? I'm a little unnerved that the biggest base metals consumer is sort of a weird economy at word itself.

Paul Brink, CEO

John, I think there are a couple of factors playing out there, and I absolutely agree with you in terms of the cuts in China and their impact. But a bunch of other factors there. And the one is all of this is driven by climate change. And to achieve that, there has to be massive investments in many of these metal commodities. So, in many of the base metals, copper and in the battery metals, I think a lot of capital will have to be spent in order to affect that change. So, all you know is that you've got two moving parts there. I don't think we've contemplated changing our discount rates at this stage. And that's in terms of investing directly in those other commodities. As you point out, much of our precious metal comes from copper mines. Do we have a concern on those mines? Not at the moment. All of the copper mines that we have are good, low-cost producers. So, I expect, regardless of what the copper price environment is that they will be resilient producers and we'll get good production over time.

John Tumazos, Analyst

I wish I believed things they say, but I don't. And they do preach about return to socialism and not liking speculation and commodities or real estate. But I think they were really mad that the Australians or Brazilians were making $125 billion more on the iron ore price. And for some reason, they don't like to bring the Australians anymore. So, I don't believe any of the green statements on iron ore are less true than their statements on the virus.

Paul Brink, CEO

There are a lot of moving parts there, John.

John Tumazos, Analyst

Right, right. So, I'm not green sold, but good luck with it.

Paul Brink, CEO

Yes, great. Thank you.

Operator, Operator

Your next question comes from Tanya Jakusconek of Scotiabank. Please go ahead.

Tanya Jakusconek, Analyst

Good morning everyone. It's Tanya. Thanks for taking my question. I have two, and if I could start with Paul. I wanted to follow up on a comment you made about the transaction, which was also mentioned in the press release. I noticed you're considering the addition of other commodities if assets become available in the market. I wanted to ask if you're seeing more non-gold assets come to market compared to a quarter ago.

Paul Brink, CEO

Tanya, yes. As we said, the focus of our team is very much on precious metals, but we are seeing the metals opportunities coming to market. We are open to those opportunities. So, what does that mean in terms of our commodity mix? I do expect our commodity mix will evolve over time. As we grow larger, there is the possibility that the diversified assets would make up a larger part of the portfolio. That doesn't take away from precious metals being the current focus. It will always be the number one focus. But we are open to those other mining commodities. And that's it's base, it's battery metals, it's the bulks, right? A bit of the comment there with John was just to see a lot of capital. We'll need to go into what I'll call the re-metals, if that's battery and base metals together. I think that we will be seeing good opportunities in that area. On the energy side, no current plans to increase energy as part of our portfolio. But we'll see longer term if the portfolio grows larger. Potentially, there may be more room. If we do that, it's more likely on the natural gas side.

Tanya Jakusconek, Analyst

Okay. Regarding the precious metals, you mentioned in the last quarter that you were identifying opportunities in the $100 million to $300 million range in this sector. Is that still accurate?

Paul Brink, CEO

I've got to hand that to Eaun.

Eaun Gray, Analyst

Hi, Tanya. That is still the case, Tanya, in terms of the bracket where we're looking at things. The team is very focused on precious metals right now. We actually think it's a great environment for us to do some precious metals deals. People are backing to the point where they're looking to build mines. So, that's quite exciting. And we also have, as you probably know, a fairly tepid equity market for gold companies. So, that is a good backdrop for us to hopefully add on the precious metals side.

Tanya Jakusconek, Analyst

Eaun, on the other metals, what sort of deal range are you seeing there?

Eaun Gray, Analyst

It certainly is less of a focus right now, Tanya, but in that medium-sized bucket as well.

Tanya Jakusconek, Analyst

Again, is medium-sized around $500 million, $300 million to $500 million?

Eaun Gray, Analyst

Yes. Up to $500 million.

Tanya Jakusconek, Analyst

Lastly, Paul, when you mentioned that you assess your portfolio and consider its diversification over time, you previously mentioned that precious metals represent over 80% and non-precious metals make up under 20%. Are you considering changing that mix now?

Paul Brink, CEO

Yes, I expect an evolution in that commodity mix, Tanya. Longer term, I expect that commodity mix would at least be 80% mining assets. But in the short-term and as we well know, there are two things: commodity prices move up and down. The advantage of a diversified portfolio is you get the benefit of when prices move up and down. So, we know that it will fluctuate in the short-term. The other aspect is we don't control the timing on when good assets come to market. You want to acquire the good assets when they are available and then manage the commodity mix over time.

Tanya Jakusconek, Analyst

Okay, I appreciate that. And I understand it's just looked like it was a little bit of a change when I read that piece in your quarterly. Maybe if I could turn to Sandip and just follow back on the global minimum tax. And I know Cosmos asked you about it. We have seen more wells come out on it by the 136 countries. We've seen more details with respect to some of the information with tangible assets and whether streams would be considered tangible assets because we do get a bit of a tax relief there, if that's the case, how are you interpreting that for Franco?

Sandip Rana, CFO

Right now, we're examining the situation, Tanya. To be honest, we haven't concluded whether the streams would qualify as tangible assets eligible for the 8% deduction. Therefore, we are taking a conservative approach, assuming that the incremental tax of 15% minus what we pay in Barbados will apply. However, we need to wait and see what legislation is actually passed by each country before making a final assessment.

Tanya Jakusconek, Analyst

Just from our work and I just want to see if we're in the ballpark on this, we have an impact if we assume the worst-case scenario, which is going to the 15% minimal tax rate in your offshore subsidiary that the impact would be about 3% to NAV? Are we in the ballpark on that?

Sandip Rana, CFO

Yes, on a conservative basis, if you assume the full difference between the $15 million and what we pay in Barbados, you're in the ballpark.

Tanya Jakusconek, Analyst

Okay. And then if we were to implement the tangible asset streams of tangible assets, it's probably going to be half of that impact. Would that be fair?

Sandip Rana, CFO

I haven't looked at it myself, but definitely less, yes.

Tanya Jakusconek, Analyst

Okay, great. Thanks a lot, Sandip.

Operator, Operator

There are no further questions from the phone lines. I will turn the conference back over to your host for final remarks.

Bonavie Tek, Host

Thank you, Michelle. We expect to release our 2021 year-end results after market close on March 9th, 2022, with a conference call held the following morning. Thank you for your interest in Franco-Nevada.

Operator, Operator

Ladies and gentlemen, that concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.