Q2 2021 Franco-Nevada Corp Earnings Call
[music].
Okay.
Good morning, ladies and gentlemen, and welcome to the Franco Nevada Corporation Q2, 2021 results conference call.
This call is being recorded today August 12, 2021 and at this time all lines are in a listen only mode.
Following the presentation, we will conduct a question and answer session.
And if any time during this call you require immediate assistance. Please press star zero for the operator.
I would now like to turn the conference over to your host born of eat Jack. Please go ahead.
Thank you Michele good morning, everyone.
Thank you for joining us today to discuss Franco Nevada second quarter 2021 results.
Accompanying this call is a presentation available on our website at Franco Nevada Dot 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 Sandeep Rana CFO of Franco Nevada will provide a brief review of our results. This will be followed by a Q&A period and were fully 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'll now turn the call over to Paul Brink, President and CEO of Franco Nevada.
Good morning, and thanks for joining our call.
We are delighted to announce a record second quarter that builds on the momentum from our first quarter.
Records for the quarter include GSO revenues, adjusted EBITDA and adjusted net income.
We also continued to operate at near record margins.
In Q2, we received our first payment under the newly acquired <unk> on all debentures.
The ongoing ramp up at Cobre, Panama at high deliveries from our Guadalupe screen when the other main drivers for the increase in Geo sold.
The second half of 2021, we expect our portfolio to continue its strong performance.
Low deliveries and revenues from Tasiast as it recovers from the mill fire and hemlo with less production on our royalty ground.
We're raising the lower end of our Geo guidance for the year based on the strong performance of our mining assets year to date.
And with the recovery in oil and gas prices energy revenues for the quarter were well again ahead of our guidance run rate and.
And as a result, we've made a meaningful increase to our energy revenue guidance for the year.
The theme for this reporting season has been cost inflation labor materials and energy.
This is a stage in the cycle, where our business model really distinguishes itself.
Our revenue base royalties and streams aren't impacted by cost inflation.
We operate with small head count and low G&A.
Price increases flow directly to our bottom line.
We have leverage to inflation as energy and steel prices increase we benefit through our portfolio of energy in iron ore royalties.
Turning to our growth outlook.
We expected 2021 to be a strong growth year, driven mostly by increasing contribution from cobre Panama.
Added to that growth with three new acquisitions totaling $850 million this year Haynes.
Haynesville current desktop layer on <unk>.
The timing of the Haynesville addition is looking for <unk> with strong natural gas prices.
<unk> offers immediate precious metal cash flow and long term upside.
And the Vale interests that base of low risk long life cash flow and also increase our asset diversity.
With the additions to the portfolio remains more than 80% precious metals focused.
We're guiding to 25% growth in the business over five years from our 2020 level.
With both organic mine expansions and new mines as the growth drivers.
Cobre, Panama Detour, Stillwater, and Tasiast will be an expanded over the period.
Kirkland Lake Gold with graciously hosted our board visit to the Detour Lake mine. This week, we came away very impressed with their team.
The optimizations that are driving the output expansion.
And the potential for the ore body to become far bigger over time.
As a first step we expect youll see a meaningful increase to the resource based on the drilling that they're doing this year.
In terms of new gold mines Goldfields reports that Soliris Nordic construction is on track and.
And we expect the development of Hardrock Valentine Lake instead, Mike Gould to follow.
With an impressive PFS recently published Skeena resources SK Creek is likely the next in the development timeline.
Continued strong copper prices bode well for our pipeline of long term copper development projects Paula tack.
<unk> and <unk> amongst others.
One of the larger long term options in our portfolio our royalties on the ring of fire Chrome and Eagle nickel deposits.
We agreed acquisition by BHP of nor on resources is a big step to making development of those deposits are reality.
In summary, Franco Nevada continues to deliver with record financial results built in growth and tremendous long term optionality.
We are cash positive.
Once again have no debt.
$1.4 billion in available capital and generating operating cash flow at a rate close to $1 billion per year.
We're focused on precious metal acquisitions, and we see a good pipeline of opportunities.
Sandeep over to you. Thanks, Paul Good morning, everyone.
The financial results for Q2, 2021 to continue to showcase the strength of Franco Nevada portfolio.
Our royalty and stream assets, both mining and energy continue to perform well either in line or ahead of expectations as Paul mentioned the company achieved many financial records for second quarter with Geo sold revenue adjusted EBITDA and adjusted net income all reaching new highs.
As you turn to slide three of the presentation, we've highlighted the gold and gold equivalent ounces sold for the three and six months ended June 32021 and 2020.
Overall geos sold increased significantly over prior year as operations that were impacted by the Covid 19 pandemic in 2020 are now back to normal operations.
For the quarter Geo sold of 166856 was 60% higher.
Sure.
For the quarter, we had strong performance from a number of key assets main contributors, where Cobra, Panama, Guadalupe and <unk> and to me now all of which produced ahead of expectations.
Also the company recorded its first Geos sold from the recent valley royalty purchase the company accrued $28 million in revenue or 15493 Geos sold. This represented six months of revenue from January one to June 32021.
The actual royalty premium payment will be declared on September 30 at which time, we will true up the amount we have accrued.
As a result of recording six months of revenue for the valley royalty our precious metals revenue was it was 75% for the quarter, we do expect to be back above 80% in the third quarter.
One asset, which did underperform for the quarter was hemlo, we recorded last Geos sold at the NPI amount was lower than expected at combination of last mining on our royalty lands along with higher operating costs resulted in 70% last year was being recorded during the quarter compared to prior year.
We did expect the NPI to decrease as the year progressed, but the Q2 payment is lower than expected.
Slide four highlights our total revenue and adjusted EBITDA amounts for the three and six months ended June 32020 and 2021.
As you can see from the bar charts revenue and adjusted EBITDA has increased significantly year over year.
The $347.1 million in revenue in the quarter as a record as is the adjusted EBITDA of $290 million a margin of 83, 5% was achieved.
Gold and silver revenue increased from $156.8 million in Q2, 2020 to $239.9 million in Q2.2021 at 53% increase the increase was due to an increase in gold and silver ounces sold combined with an increase in commodity prices.
Second quarter also saw a strong contribution from the energy assets as revenue increased from $14.6 million a year ago to $47.3 million. This quarter. The increase was due to the recovery in energy prices as in Q2.2020, we saw record low double UTI prices.
We also benefited from the recent Haynesville acquisition, which contributed $7.2 million in revenue during the quarter.
As you turn to slide five Youll see the key financial results for the company.
As mentioned the increase in revenue and adjusted EBITDA was due predominantly to the increase in Geo sold.
And an increase in commodity prices.
Both precious metals and energy.
On the cost side cost of sales was higher at $47.3 million versus $28 million a year ago. The increase was due to more stream ounces being delivered 109000 versus.
Versus 64000 in Q2.2020 dip.
Depreciation was also higher quarter over quarter due to the increase in Geo sold.
Large portion of it being from higher depletion stream asset.
As well as the company recorded the first depletion associated with the valet royalty.
Adjusted net income and adjusted net income per share increased significantly in second quarter of 2021.
Adjusted net income was $182.6 million or <unk> 96 per share increases of approximately 100% for both over prior year.
Franco Nevada has both the royalty and streaming company slide six breaks down to mix between streams in our royalty revenue for second quarter of 2021.
The streams that Franco Nevada has added have been very successful for the company, adding significant topline growth.
We have become the largest component of our revenue generating $199.5 million or 57% of revenue during the quarter. 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 $147.6 million in revenue generated by royalties. We believe our diversified business model of both stream and royalty assets will allow us to achieve continued to achieve peer leading EBITDA margins.
With respect to margin 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 ounce includes our cost of sales less cost associated with the energy business, which are minimal.
Cash cost per ounce, usually ranges between 250 to $300 per Geo sold.
In a rising gold price environment, we expect to benefit fully at the cost per ounce should not increase significantly in fact back in Q2.2019, the gold price averaged $13 <unk> per ounce and our cash cost per ounce was $238. The average gold price is now $18.16 per ounce, having increased almost 40% while the <unk>.
Cash cost per ounce increased marginally.
Strong margins is one of the strengths of our diverse portfolio.
Yes.
The other cash component of the company. Besides the cost of sales as our corporate administration costs.
Our board and management are very proud of our focus on cost management, we would 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 have highlighted our quarterly revenues and our quarterly general general and administrative expenses since our IPO.
Since 2008, our revenues have grown from approximately $25 million to almost $350 million this quarter.
This while our G&A has remained fairly stable over this time period, Q2, 2021, corporate administration, including stock compensation expense was 3% 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 86% of our Q2.2021 revenue was generated by mining assets.
Geographic revenue profile has revenue being sourced 92% from the Americas with South America being the largest at 34%.
With respect to asset diversification Cobre, Panama was our largest revenue generator at 19% of total revenue for the quarter, followed by <unk> at 10%.
No other single asset generated more than 10% of revenue.
The last chart highlights our operator diversity, our largest exposure to revenue being generated by any one operator is it gained 19% which is first quantum who operates cobre Panama.
Okay.
On slide 10, we have provided updated guidance for 2021 as you will recall, we had previously raised our Geos sold guidance to 580000 to 615000 with the acquisition of the valley royalty.
With the strong performance for the first six months of 2021, we are increasing the bottom end of that range to 590000. So the new Geos sold guidance range is 590000 to 615 Allison.
For the second half of 2021, we expect to continue to benefit from the ramp up at Cobre, Panama and strong production from <unk> at all.
So with continued strong iron ore prices to valley royalty should perform well. However, we do expect lower revenue for the hemlo NPI as the operator of mines less on our NPI land.
As you saw the Q2.2021, hemlo revenue was significantly lower than prior periods.
For muscle White, one of our other NPI, we do not expect to record any revenue until 2022 as the calculation is still in a deficit position and.
And we do not forecast any revenue from Tasiast in the second half as it recovers from the mill fire that occurred during Q2.
For Goldcorp and Goldstrike, we did record revenue in the first six months of 2021 that related to prior periods. Thus revenue from both is forecast to be slightly lower in the second half of 2021.
For the energy business, we are pleased to raise our revenue guidance significantly to $155 to $170 million from the previous $115 million to $135 million.
This increase in guidance is due to strong rebound in energy prices. We've seen this year, we've assumed $60 a barrel <unk> and $2.75, Mcf natural gas for the remainder of 2021.
As of today as seen on slide 11 with respect to available capital on hand, the company had liquidity of $1.4 billion.
We did fund the valley royalty acquisition of $538 million with a combination of cash on hand, and $150 million draw on our credit facility. During second quarter that drawdown has been fully repaid and the company is again debt free.
With that I will turn it over to Michelle happy to take any questions.
Thank you ladies and gentlemen, we will now begin the question and answer session.
I would like to ask a question. Please press the star followed by the one on your Touchtone phone.
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One moment. Please for your first question.
Yeah.
Your first question comes from Gregg Brian.
TD Securities. Please go ahead.
Thank you Greg Barnes.
Sandy.
On the.
Vale accrual of 24 million I think.
8 million, that's a bit lower than I was expecting closer to $40 million.
Yes.
<unk> oil pricing adjustments that go into this and how should we model that going forward.
Hi, Greg it's Ian here.
Yes, I guess, a couple of things first to keep in mind is.
Payments are originating from the northern system, which has a fair bit of seasonality in the first half.
Historically, it's been somewhere around 45% of sales occur in the first half versus 55 in the second half just looking at historical numbers.
This year, that's probably.
Exacerbated a little bit by the fire at the Northern system Court. So we've made a conservative estimate estimate there in terms of what actually got sold in the first half.
So that's probably the most.
Salient point, there and then secondarily.
There are some deductions for transportation.
So with the rising oil price we've made.
Provision for that as well.
Then finally, yes, given the volatility and run up in prices volumes as a number of different pricing conventions.
We've made a provision.
For that as well to account for the likely lag.
We will get the actual determination at the end of September and from there should be able to make any any true up that is necessary to the $28 million.
Hopefully thats helpful. If you have any specific questions. We can follow up directly on those.
Okay.
That is helpful.
In terms of the pricing.
You said there was some lags.
How does that work.
Okay.
It's just the contracting for the sales of iron ore.
They are contracted not just spot.
But both with provisional pricing than historical or earlier pricing determining sales.
So prior periods pricing will apply.
Some of the sales that occurred.
In the first half, which will bring down the realized price.
Is there any rule of thumb, we couldnt use on that Ian.
Volume does provide some disclosure.
As to the various pricing systems that its using.
I don't have an exact number for you but.
We can we can follow up on that.
Okay. Thanks.
Great Thats it from me thank you.
Okay.
Your next question comes from Josh Wolfson of RBC. Please go ahead.
Thank you just another question on the guidance for.
For the energy Division just wanted to confirm.
It does not include any potential top up payments.
Is that correct.
Okay.
Thanks, Josh it's Jason here.
What exactly are you referring to when you when you mentioned top up payments, maybe just clarify the question.
The catch up payments you historically have reported that I think historically have not been included in your in your guidance I'm not sure what the terminology you guys historically JV sorry.
Okay, Yes.
Yes, I think probably what you're referring to as sort of prior period adjustments, which sometimes impact our financials for the forecast that we've provided what we've done is we've taken the actual revenue on our financial statements for the first half of the year, which does include some prior period adjustments.
But the back half of the year that forecast is based just on the production that we expect to receive.
For the next six months and the commodity prices that we've provided so there arent any sort of onetime catch up payments.
The rest of the forecast.
Okay is it fair to say that the prior period adjustments tend to increase.
In a rising price environment.
Yes.
Somewhat yes, if we if we have accrued.
A lower revenue than we actually received due to higher commodity prices you can see some prior period adjustments oftentimes, though those prior period adjustments are related to new wells that come online that we haven't budgeted for.
Very little visibility into.
Future wells that are drilled on our land because there are many.
Many operators drilling those wells.
So when they come on unexpectedly what happens as we get a an adjustment.
That we have to make retroactively.
So those are hard to know when theyre going to come through that.
That is the major driver behind those prior period adjustments.
So youre right in a rising commodity price environment.
If we have accrued a lower revenue you can see an adjustment or true up.
Okay.
Okay. Thank you.
On the on the gold side of the business for guidance.
On hemlo.
I guess the prior guidance earlier. This year was that we were expected to see this transition I think more so in the second half of the year.
Ignoring I guess the impact of the margin component for the NPI should we assume that the portion of the mine that Barrick. It's on now is going to reflect what the second quarter type of.
Volumes would be attributable to Franco would be going forward.
Yes, Josh and Thats, our best estimate we're looking at second quarter, it was lower than we expected and sooner.
With the.
The lower amount so going forward I think it's safe to say, that's what we're expecting.
As we know with the NPI.
It can change quarter by quarter, depending on how Costco and where they mine, but they've publicly stated that they are trying to find other areas to mine at hemlo. So.
I think to be conservative Thats, what I would estimate.
Okay. Thanks, and then.
Maybe final question.
The team members are able to comment on this going back to the the detour Lake visits.
I'm curious to know any thoughts on what the potential opportunity would be to volumes to Franco with.
With the new mine plan their upcoming and new resource. If there is anything that can be kind of commented on.
Josh I think I'd, just reiterate some of the stuffs that Cook on Lake has been saying as you know they had put out.
New mine plan.
Yes.
There are couple of things there. The next step is with a drilling this year they expect to put out a new resource on the back of that.
But also doing work once they know what that new resource looks like.
How they can improve on that expanded mine plan and a few years out there is a dip in the production one of the main aims as how do they fill in that dip in the production and it sounds like they have some good ideas on how they can do that.
Great. Those are all my questions. Thank you very much.
Okay.
Your next question comes from Brian Macarthur of Raymond James. Please go ahead.
Hi, Good morning, Sorry, My question goes back to the valley true up as well.
So are we truing up all six months going forward I mean, I get it there's lags a three to six 3% to four five months and contracts but.
But as we have a rising price here.
And that's sort of where you book you know what Q1 is that we're just truing up Q2 volumes or is it a total.
Grew up over the.
Six months and then my second part of the question that is.
On that part.
The iron ore price rolled over have we provisionally priced stuff that potentially the peak at six months and we'll actually have.
Lower prices going forward, because we will have the original contract stuff, which is moving forward, but then will have provisional pricing stuff on the Q2 and quarters going down but can you give any guidance because like Greg said.
The price that was only $28 million this quarter.
Yes, so Brian yes, as Ian highlighted we were a little conservative on that in terms of the true up theyre going to declare what that dividend premium payment and on September 30th.
That'll be the royalty rate times, the revenue that they achieved for that six month period and depending upon what that is we will then adjust accordingly.
As for the iron ore price rolling over.
At the end of the day, we'll look at what their volumes are for Q3.
And make our best estimate on what we think their average price sales will be on booked that amount I think the reality here is theres going to be adjustments every quarter.
It's not exactly an NPI, but just because of the way the calculation works with all the various components that are used to calculate the amount.
Having true ups every quarter, whether positive or negative I think is going to be the norm.
And even though you only get paid every six months Youll true it up every quarter going forward is that right or are we just kind of do it every six months when you actually know what you actually got now.
We will do whatever it we'll do it every quarter.
Perfect. Thank you very much and my second question Jeff.
I noticed you changed the.
Sudbury.
<unk> payments, so at 60% as opposed to 800 above a certain price I think it was $13.33, just to be clear, though if the gold price were to go back down below $13.33 does it go back to a hard floor of $800 or is that 60%.
A function all the way down as well so if the gold prices between $800 to $13.33 were paying $800 an ounce.
It's above $13.33, we paid 60% of the average spot price of.
Up to a maximum of 200 and if the gold prices below 800, we just pay what the gold prices.
Great. Thank you very much sandeep, that's very clear.
Your next question comes from Cosmo Chu.
CIBC. Please go ahead.
Good morning, Paul Sandeep and team and thanks for taking my questions here, maybe my first question is back to the.
Energy guidance core revenue.
SEDAR youll be increased debt.
But I also noticed that.
You'll meet increased dwt.
Assumption by little bit $55 up to $60 a barrel.
So to confirm I guess the increase in your revenue guidance is based on more than just a commodity price increase I would imagine theres some in.
Increase in drilling activity, that's been factored in as well.
Hi, Cosmos, it's Jason here Hi, Jonathan.
The bulk of that increase really is commodity price related.
You mentioned, we did the forecast at $60 of UTI and $2.75 for gas.
Currently sitting.
Above that for both commodities.
But in terms of production what we're assuming for the back end of the year is reasonably flat production across most of the assets.
We do in our longer term forecast that we provided earlier in the year.
I assume that there will be an increase in drilling over time over the course of the next several years.
But for the for the balance of 2021, we're assuming sustained rates reasonably current levels, which would deliver.
Basically a flat a reasonably flat volume production profile.
Great I guess I guess my follow up question on that Jason is there at all as you mentioned.
Function right now of $60 a barrel, we're sitting higher than that now.
Could you remind us what's the sensitive sensitivity in terms of.
Your revenue to potentially higher.
Commodity prices compared to what you've assumed.
Okay.
Yes, Cosmos I don't have the numbers in front of me I believe that we provided that earlier on in the year I think off memory that.
If we have a 10% increase across both oil and gas that would result in somewhere around a 13% increase in energy revenue.
Greg and Jason I think you and I have talked about this in the past as well in terms of drilling activity in terms of capex budgets for the energy companies. It gets updated I guess, maybe once a year.
What youre seeing right now.
Are you expecting.
Capex or drilling activity as you mentioned to increase.
Are you seeing that.
Some of those green shoots coming out.
So far I guess, if you rewind back to early 2020 when prices collapsed at that point in time, we actually took an impairment on some of our U S assets.
For the valuation around that impairment testing, what we did is we assumed a rebound in drilling activity from what was at the time of a very very low level.
That rebound, we assumed would take place over five years.
And we assumed it would rebound to around 70% to 80% of the 2019 levels. What we've seen so far is that drilling rates have been rebounding along the sort of trajectory that we had assumed at the time.
So so far we haven't had to make any significant adjustments to our forecast.
What we are.
The jury is still out on go forward drilling rates.
U S oil companies and show companies in particular have been.
Very disciplined in their capital budgets.
And they are signaling to shareholders that the focus is going to be on dividends.
Returns to shareholders.
So we will see over the next couple of years.
What amount of capital.
Put towards drilling programs and that will ultimately.
We will have to update I guess are our activity rate assumptions based on how it plays out over the next couple of years.
Of course, and maybe one last question on the energy patch here.
The increase in energy prices oil prices are you seeing opportunities in the oil patch running dry no pun intended.
No cosmos theres plenty of opportunities.
In the oil and gas space, both in oil and gas.
The pace of opportunities.
Slowed down after prices collapsed.
In early 2020, but they are a good amount of opportunities that are available and actionable at this point.
Given the amount of investment that we've done recently into energy and iron ore our focus though is on precious metals.
And so despite the fact that there are opportunities available we'll be very selective.
About pursuing those oil and gas opportunities.
And then on that front.
With the recent.
<unk>.
Pressure on gold and questions metals prices.
Are you seeing better opportunities in terms of.
Potential acquisitions in precious metals, maybe thats a question for Ian.
Sure Hi Cosmos.
On the gold side I would say, yes were seeing a pretty healthy pipeline.
Primary gold projects kind of moving towards the development development phase and so.
In that kind of medium size deal bracket.
There are more opportunities of that type I would say overall.
<unk> past quarters.
Great.
And then maybe one last question on the financial front.
In terms of your dividend.
As I work it out right now and I'm sure you know better than I do to a share price of Franco Nevada has done really well year to date.
And so now you're sitting at about a dividend yield of seven.
Seven 8%.
In the past you had always had sort of underwritten target to have at least a 1% dividend yield.
Paul maybe could you maybe comment on that is that something that you're still sort of target.
Right now.
Yes.
Cosmos.
For the question.
Sure.
The most fundamental things as I've always said when our board looks at dividends is number one they want to make sure that frankly, they never have to reduce the dividend payout is going is it going to be conservative.
Second is tremendously proud of the record they have of increasing the dividend every year and so making it sustainable.
Any discussion those are the two main points, we do look at that yield as well in fact as into that decision.
Typically it's been at the start of each year that the board will consider the dividend level for the year and those are all the factors that will go into it when they think about the dividends.
At the start of next year.
In the current environment.
With a strong cash flow that the company is generating I think theres lots and lots of room to move on the dividend.
Of course, and then passes all having you here maybe I'll ask you another question.
As you brought it up I am excited as well.
<unk> potentially go into the ring of fire.
As close to it.
I think the royalty ranges from 1% to 3% and so could you remind us.
Overall, most of it is 2%, but certain parts of 3% could you just remind us.
The percentages in the different areas.
I always like to ask you. This question is this one royalty that will make the next clinical CEO look good or is that one that will make you look good.
Yeah.
Yeah.
Yes.
I don't know the answer to that question.
I hope, it's going to make both of US look good alright.
And in terms of.
The various deposits up there as you know there are a number of chrome deposits.
And.
Between them, we're at 3%.
<unk>, 2% on others.
I need to put out the asset Handbook to give you the names of which of which but we do give the detail in there.
And then also a 2% royalty on the <unk>.
Sorry, a 1% royalty on the Eagle mix of deposits.
Which I think is the first positive.
Great. Thanks, again, Paul Sandeep, Ian Jason those are all the questions I had.
Thank you.
Okay.
Yeah.
Your next question comes from Mike <unk>.
Bank of America. Please go ahead.
Oh, good morning, Paul Sandeep.
Whoever else is in the Franco room.
Cosmos stole my Thunder I was going to ask you about the ring of fire and maybe I'll.
Alright.
A different way.
Maybe the next year or two Paul what would be the plans for BHP and if you talk to them.
Do they plan to do this.
This with I just saw some news.
Trudeau is going to call a snap election cover 20th.
Uh huh.
Four.
Reuters.
And Paul BOE announced that it comes Sandra do you think.
<unk> will be.
Something I'll be discussing the election and Doug.
Thanks.
Mike I don't have a view directly from BHP yet.
I suspect in the short term no change from the current plant.
As you're probably well aware the first step is getting the road built up there.
No Ron has already been working with the first nations on.
On the permitting of that road and the work has been getting the first nations to be the proponents to the environmental assessment, so that the world can get permitted.
So.
That work is in progress I think once those patents in place I think thats. The time, then that youll see more political activity around the funding of that road.
Mike I don't know, but my guess is appropriate but premature for the selection.
Okay, I guess Franconian bulldozer to help that road along I guess.
And.
Alright, well, thank you and good luck.
Your next question comes from Tyler Langton.
J P. Morgan. Please go ahead.
Good morning, Thanks for taking my question.
I guess just to start on the guidance the Geo guidance for the year to $5.90 to 615, and I know you talked about sort of being on.
The higher end of that range I guess.
Through the first half year and around $3.16.
I guess, you kind of mentioned hemlo, but are there any other.
We're just going to ask us to look at in terms of whats, causing a slightly weaker.
Weaker second half, especially good.
Iron ore with a lag should probably be better in the second half.
Yes so.
Two in particular, one was gold quarry, where we accrued or we booked about 4500 geos in the first quarter that were related to 2020 and.
So we won't we won't have that in the second half of the year and in goldstrike, we booked a number.
About $7 million in revenue related to prior periods in the first half of the year as well, which we won't have in the second half second half of the year. So those are two mines that were where we had prior period adjustments.
That bridge booked in 2021 relating to 2020.
And then Tasiast, we don't expect any geos or revenue booked for tasiast as they recover from the fire at that.
In Mauritania, there with Kinross, so those are sort of the.
The adjustments that we've reflected.
Reflected in the guidance for the next six months.
Okay. That's helpful and then just.
With energy I think.
25 guidance for energy was sort of $150 million to $170 million, so you're kind of.
Theyre already this year kind of with even in the potentially higher this year with.
Current commodity prices.
When we think about 2025.
I mean, if current prices hold you to.
Would that number be higher.
Any color on how to think about sort of the 25.2025 number versus versus this year's guidance.
And in all likelihood if you did run higher prices.
Range will likely be higher we put out our five year guidance.
When we do our annual guidance in March so at that time, we'll be putting out five year guidance for 2026.
Got it alright, that's it for me thanks, so much.
Okay.
Your next question comes from Tanya Jackson.
Scotiabank. Please go ahead.
Great. Good morning, everyone and thank you very much for taking my question.
Just wanted to follow up and thank you Sandy first one other clarity on the guidance our second half of the year can I just got a bit more guidance on gold quarry you mentioned that there was a little bit of a top 4000 ounces.
And I think Q1 are we expecting any contribution from gold quarry in the second half of the year.
Yes, so it'll it'll be about 1000 ounces Tanya our projection for the full year, it's just over.
<unk> 5000 ounces.
It's based on at minimum it's a calculation in previous years, we were booking at 11250 Geos per year, it's dropped and then.
Half of that this year and then next year, where we're expecting 13.50 going forward.
That 13, <unk>, that's what we had seen.
Okay that makes sense. Thank you very much for that and then maybe just coming back to.
We talked a bit about it.
And transactions that are out there on the project financing on I think you said medium sized deal bracket, maybe can we just define the medium size deal bracket is it still within that $200 million to $500 million range that we're talking about.
Okay.
Hi, Tanya at Sea and here I would say 100 to 300 is more what I would define as mid sized.
Transactions at this stage.
That's more of a kind of deal size that we're looking at in the pipeline at the moment notebook are certainly are opportunities.
On either side of that.
And maybe Sandeep, just if I could come back to you and I know we've talked about this but I just wanted to come back to if you can share your views on the global minimum tax proposal, that's out there whether and when you're expecting it and have a slight impact you.
I'm sure as you.
No it's gaining momentum.
There is a 130.
139, OECD countries have signed on to it.
So.
It's a question of when it when it does get implemented how it is going to work I think it's still too early to determine and Theres a lot of work that has to be done with <unk> and in terms of the calculation. So we're watching it closely.
The one thing for Franco is that we do have a diversified corporate structure, so that global minimum tax would impact our international screen business, which is through Barbados.
It's not.
The majority of our business, we've got royalties within Canada, United States, Australia, where we we paid taxes above the amount that they're talking about political minimum tax. So it's just something that we will watch and at.
Adjusted for when the time comes.
Thank you.
Ladies and gentlemen, as a reminder, if you would like to ask a question. Please press star one now.
Okay.
There are no further questions. So I will turn the conference back over to Bobby.
Please go ahead.
Thank you Michelle we expect to release, our Q3.2021 results after market close on November 3rd with a conference call held the following morning. Thank you for your interest in Franco Nevada.
Okay.
Ladies and gentlemen that concludes your conference for today.
Thank you for participating and ask that you. Please disconnect your lines.
Okay.
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