Q3 2024 Franco-Nevada Corp Earnings Call

Operator: Good morning and welcome to Franco-Nevada's Corporation's 3rd Quarter 2024 Results Conference Call and Webcast. This call is being recorded on November 7th of 2024. At this time, all lines are in listen-only mode.

Good morning, and welcome to Franco Nevada Corporation third quarter 'twenty 'twenty four results conference call and webcast. This call is being recorded on November seven of 'twenty 'twenty four.

This time all my eggs are in a listen only mode. Following up it shouldn't they shouldn't be able to conduct a Q&A session, where you may ask a question through the phone line or a bad guy.

Operator: Following the presentation, we will conduct a Q&A session where you may ask a question through the phone line or webcast. If you are joining by webcast, you may submit the written questions for the Q&A session at any time during this call by typing your question in the Q&A section of the webcast platform. If you require immediate assistance during this call, please press star zero at any time for the operator.

Joining by webcast you may submit written questions for the Q&A session at any time during this call by typing. Your question in the Q&A section of the web cast Flashpoint.

Very quiet you may get the assistance during this call lease spread as far as you at any time for the operator.

Candida Hayden: I would now like to turn the conference over to your host, Candida Hayden, Senior Analyst, Investor Relations. Please go ahead.

I'd now like to turn the conference over to your host Canada Hayden Senior Analyst Investor Relations. Please go ahead.

Candida Hayden: Thank you, Chloe.

Canada Hayden: Thank you Kelly good morning, everyone. Thank you for joining us today to discuss Franco Nevada's third quarter 2024 results.

Candida Hayden: Good morning, everyone. Thank you for joining us today to discuss Franco-Nevada's third quarter 2024 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.

Company. This call is a presentation, which is available on our website at Franco hyphen, Nevada Dot Com, where you'll also find our full financial results.

The presentation is also available to view on the webcast.

Candida Hayden: 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 you may have. Participants may submit questions by telephone or via the web.

During our call. This morning, Paul Brink, President and CEO of Franco Nevada will provide introductory remarks, followed by Sandy Brenna, 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.

Candida Hayden: We'd 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.

Canada Hayden: 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 two of this presentation I will now turn over the call to Paul Brink, President and CEO of Franco Nevada.

Paul Brink: I will now turn over the call to Paul Brink, President and CEO of Franco-Nevada Corp.

Paul Brink: Candida and good morning. Our inflation-protected business model is working well. Record gold prices which generated high revenues, EBITDA, and earnings in Q3 compared Your sales were stable compared to Q2, although lower compared to Q3. The Court have benefited from deliveries from the newly commissioned Tocque de Zinho mine in Brazil and increased contributions from royalties on the recently completed Greenstone mine. And malaria reported an increase in copper and gold production for the quarter, with operations recovering after encountering underground voids. and the Leirios-Copper output is now ahead of its initial expectations. Gold grades have been below expectation in the period and Monday mining is revised at the 2024 Gold Production Guidance for Candelaria.

The Canadian and good morning.

Paul Brink: Our inflation protected business model is working well.

Record gold prices, we generated higher revenues EBITDA and earnings in Q3 compared to Q2 this year.

Speaker Change: Hey, guys sales was stable compared to Q2, a little lower compared to Q3 2023.

The contribution from Cobre Panama.

The quarter benefited from deliveries from the newly commissioned took it as in your mine in Brazil and increased contributions from royalties on the recently completed reached on mine.

The newly acquired Culturati.

Speaker Change: And Larry I reported an increase in copper and gold production for the quarter with operations recovering after encountering underground voids in the open pit.

Speaker Change: And then there is copper output is now ahead of its initial expectations.

Speaker Change: Bulk rates below expectation in the period.

Speaker Change: Monday mining has revised its 2020 for gold production guidance for candle area of lower.

Paul Brink: In addition, using record gold prices, revenue from our diversified assets translates into lower GF. We've adjusted our 2024 geo-guidance as a result of the COVID-19 pandemic. Full year revenue, however, is expected to be higher than when we provided our original guidance in March 2020.

Speaker Change: In addition, using retro gold prices revenue from our diversified asset translates into lower Geos, we've adjusted our 2024 Geo guidance as a result.

Speaker Change: Our full year revenue, however is expected to be higher than when we provided our original guidance in March 2024.

Speaker Change: 2024 revenue is expected to be between 1 billion and $1 $1 billion.

Paul Brink: Panama remains in preservation and safe management. President Molino took office in July this year and has indicated a willingness to discuss the reopening of the mine with the likely timing of discussions early in 2025. This administration is arranging for an audit of the mine by international experts. This is a good practical step to dispel some of the misconceptions about the mine that were touted during last year.

Speaker Change: Cobre, Panama remains in preservation and Safe management, President Malino took office in July of this year and has indicated a willingness to discuss the reopening of the mine with the likely timing of discussions early in 2025.

Speaker Change: This administration is arranging for an audit of the mind by international experts.

Speaker Change: This is a good practical step to dispel some of the misconceptions about the mine that without it during last year's protests.

Paul Brink: The new school year is starting in the quarter. We were proud to grant diversity scholarships to four new mining engineering students. Now I have a total of 13 students.

Speaker Change: So the new school year, starting in the quarter with a product crop diversity scholarships to for new mining engineering students.

Speaker Change: Now have a total of 13 students that were supporting through their mining engineering studies.

Paul Brink: © The Bulletproof Executive 2013 Business Development Team has been very busy. The Strong Deal Pipeline and I'm confident we can add attractive precious metal assets to the portfolio. There's also good potential to add incremental diversity.

Speaker Change: Business development team has been very busy we.

Speaker Change: A strong deal pipeline and are confident we can add attractive precious metal assets to the portfolio in the coming months.

Speaker Change: Also good potential to add incremental diversified assets.

Paul Brink: With that, I'll hand the call over to Sandy.

Speaker Change: With that I'll hand, the call over to Sandy.

Sandip Rana: Thank you, Paul.

Sandip Rana: Good morning, everyone. I will turn to slide four to give an overview of the financial results for the quarter. Overall, GEOs sold were $110,110 for Q3 2024. This compares to $160,848 for the prior quarter and $125,882 for the prior quarter when Cobre Panama GEOs are available. As you are aware, Colbray-Panama continues to be in preservation. In terms of operating assets and GOs delivered and sold for the quarter, the main drivers of lower GOs were Candelaria and Candelaria Geos delivered and sold in Q3 2024 were lower than those sold in prior years. In the first half of this year, mining rates were impacted by the interface of the open pit and historic underground mining stopes, requiring more stockpiled ore to be processed, which reduced grades and recovery.

Sandy Brenna: Thank you Paul good morning, everyone.

Sandy Brenna: I will turn to slide four to give an overview of the financial results for the quarter.

Sandy Brenna: Overall Geo sold were 110100 <unk> for Q3 2024. This compares to 160 860848 for the prior year quarter and 125882 for the prior year quarter, when Cobra, Panama Geos are excluded.

Sandy Brenna: You are aware of Cobra, Panama continues to be on preservation and safe management.

Sandy Brenna: In terms of operating assets in Geos delivered and sold for the quarter. The main drivers of lower Geos, where candidly <unk>.

Sandy Brenna: <unk> has delivered and sold in Q3 2024 were lower than those sold in prior year in the first half of this year mining rates were impacted by the interface of the open pit and historic underground mining stopes recurring more stockpiled ore to be process, which reduced grades and recoveries while production in third.

Sandip Rana: While production in third quarter increased significantly due to accessing higher grade ore and improved run time of the SAG mill, GO deliveries were still lower than prior year. However, this was partially due to timing of shipments, as delivery of gold and silver was carried over into fourth quarter. We do expect a stronger quarter for Geos delivered and sold from Candidary. At Antipa Chi, although GEOs sold were lower in Q3 2024 compared to prior year, we did see a recovery of GEOs delivered compared to second quarter 2020. As a result, we expect full-year deliveries to be between 50,000 to 60,000 Chios, as originally guided.

Sandy Brenna: Quarter increased significantly to accessing higher grade ore and improved run time of the Sag mill Geo deliveries were still lower than prior year. However, this was partially due to timing of shipments as delivery of gold and silver was carried over into the fourth quarter. We do expect a stronger quarter for Geos delivered and sold from <unk>.

Sandy Brenna: <unk> for Q4.

Sandy Brenna: At amplify Cai, although geos sold were lower in Q3 2024 compared to prior year, we did see a recovery of Geos delivered compared to second quarter 2024. As a result, we expect full year deliveries to be between 50 to 60000 Geos as originally guided for the year.

Sandip Rana: The Hamlow NPI was again weaker than expected, our visibility is limited, and it continues to be difficult to estimate what the NPI will be. With respect to new mines, we did receive our initial ounces from token Zinio during the quarter and expect a stronger quarter from both token Zinio and Greenstone. For the quarter, Precious Metal GOs were 84,377. This compares to 90,370 in prior year when Cobrave Panama GOs are. Precious metal geos represented approximately 77% of total geos. were diversified. Total geo sold were $25,733 compared to $35,511 in prior years. Iron ore GEOs sold were slightly lower year over year, while energy GEOs were lower at 19,130.

Sandy Brenna: The hemlo NPI was again weaker than expected our visibility is limited and it continues to be difficult to estimate what the NPI will be going forward.

Sandy Brenna: With respect to new minds, we did receive our initial ounces from toll continue during the quarter and expect a stronger quarter from both token Xenia and greenstone in Q4.

Sandy Brenna: For the quarter precious metal Geos were 84377. This compares to $93 seven in prior year when cooperate Panama Geos are excluded.

Sandy Brenna: Precious metal Geos represented approximately 77% of total deals for the quarter.

Sandy Brenna: We're diversified total Geos sold were 25 733 compared to 35511 and prior year.

Sandy Brenna: Iron ore Geo sold were slightly lower year over year, while energy Geos were lower at 19137.

Sandip Rana: The decrease in energy GEOs is a combination of lower production and revenue due to weaker natural gas prices, as well as the impact of converting energy revenue to GEOs by higher As we looked at total revenue, revenue was $275.7 million for Q3 2024 compared to $309.5 million in prior years. However, when you exclude Colbray-Panama from prior year revenue, revenue was higher by $33.5 million or $4 billion. Q3 2020-4 saw continued volatility in average commodity prices. As you see on slide 5, gold and silver average prices were significantly higher for the quarter and year-to-date when compared to prior years.

Sandy Brenna: The decrease in <unk> as a combination of lower production and revenue due to weaker natural gas prices as well as the impact of converting energy revenue to geos by higher gold prices.

Sandy Brenna: As we look at total revenue revenue was $275 7 million for Q3, 2024 compared to $309 5 million in prior year.

Sandy Brenna: However, when you exclude Cobra Panama from prior year revenue revenue was higher by $33 5 million or 14% year over year.

Sandy Brenna: Q3 saw Q3 2024 saw continued volatility in average commodity prices as you see on slide five gold and silver average prices were significantly higher for the quarter and year to date when compared to prior year.

Sandip Rana: Slide 6 highlights the financial results for the quarter and year-to-date 2024. As mentioned, GEOs sold were lower at $110,110 compared to prior year, and revenue was also lower year-over-year. Adjusted EBITDA was $236.2 million, while adjusted net income was $153.9 million. compares to $255.1 million in adjusted EBITDA in Q3 2023 and adjusted net income of $175.1 million. On a per share basis, adjusted net income was $0.80 for the... On the cost side, we did have a decrease in cost of sales compared to Q3 2023 as we did not incur the ongoing fixed cost for ounces delivered by Cobre Panama and had lower geos delivered and sold from Candelaria, NN.

Sandy Brenna: Slide six highlights the financial results for the quarter and year to date 2024 as mentioned Geos sold were lower at 110110 compared to prior year and revenue was also lower year over year.

Sandy Brenna: Adjusted EBITDA was $236 2 million, while adjusted net income was $153 9 million as.

Sandy Brenna: This compares to $255 $1 million and adjusted EBITDA in Q3, 2023, and adjusted net income of $175 1 million in Q3 2023.

Sandy Brenna: On a per share basis, adjusted net income was <unk> 80 for the quarter.

Sandy Brenna: On the cost side, we did have a decrease in cost of sales compared to Q3 2023, as we did not incur the ongoing fixed cost per ounce is delivered by Cobra, Panama and had lower geos delivered and sold from cancel area in <unk>.

Sandip Rana: Also, cost of sales is dependent on which assets deliver stream ounces, as not all fixed payments per stream ounce are. With respect to the arbitration costs for Cobre Panama, the company incurred a cost of $1.9 million in Q3 2024, and have incurred $4.2 million year-to-date. We expect approximately $1.5 million to be incurred for the rest of the year. Depletion decreased to 54.2 million versus 68.1 million a year ago. The decrease was due to zero depletion recorded for Cobre, Panama, as well as lower depletion recorded for Candelaria because of the lower... Our effective tax rate was 21.6% in the quarter.

Sandy Brenna: Also cost of sales is dependent on which assets deliver stream ounces as not all fixed payments per stream ounce are equal.

Sandip Rana: is expected to average around 20%.

Sandip Rana: Slide 7 highlights the continued diversification of the portfolio. From the charts, you can see that 77% of our third quarter 2024 revenue was generated by precious metals, with revenue being sourced 81% from the American economy. Slide 8 illustrates the strength of our business model to generate high margins. For Q3 2024, the cash cost per GEO, which is essentially cost of sales divided by gold equivalent ounces sold, was $290 per GEO. This compares to $304 per GEO in 2020. This amount will fluctuate depending on the mix of royalty versus stream geos, including mining and energy. But as you can see, at current average gold prices, the company generates significant margins.

Sandip Rana: Margin was approximately $2,200 per ounce. When you compare 2324 to 2320.23, the average gold price increased 28% year-over-year. However, the margin per ounce Franco-Nevada achieved increased 35%. A rising commodity price environment, Franco-Nevada benefits fully as the cost per geo sold will not increase. As we turn to available capital, the company is $2.3 billion as of September 30, 2024. Company continues to be dead. Finally, with respect to guidance, we have benefited from record gold prices in the first nine months of 2024, with revenue exceeding our initial expectation. However, lower-than-expected gold deliveries from Candelaria and slower ramp-ups at our newly contributing mines has resulted in fewer precious metal geos than originally anticipated.

Sandip Rana: In addition, record gold prices in the current year have impacted the conversion of our known gold revenue. Our original guidance for 2024 was total geos sold of 480,000 to 540,000. Of this total, precious metal geos were estimated to be 360,000 to 400,000. Based on performance of the portfolio year date as well as the increase in gold price. We now estimate total GEO sold for 2024 to be 445,000. 465,000. Of this total, precious metal geos are estimated to be 340,000 to 300,000.

Operator: And with that, I will now pass it over to the operator, and we're happy to answer any questions. During the Q&A session, if you would like to ask a question, simply press star then the number 1 on your telephone keypad. If you would like to withdraw your question, please press the pound key.

Operator: If you are joining us on the webcast, please submit your questions through the Q&A section of the webcast platform. Again, if you would like to ask a question, simply press star then the number 1 on your telephone keypad.

Speaker Change: Joining us on the webcast Lisa meet your questions through the Q&A section of the webcast.

Speaker Change: Again, if you would like to ask a question simply press Star then the number one on your telephone.

Cosmos Chiu: Your first question comes from the line of Cosmos Chiu from CIDC. Your line is open. Thanks, Paul and Sandip.

Speaker Change: Your first question comes from the line of Cosmos <unk> from CIBC. Your line is open.

Cosmos: Thanks, Paul and Sandeep, maybe if I can ask you on guidance first.

Sandip Rana: Maybe if I can ask you on guidance first. You've revised guidance. We've now gone through about nine months of production, but for the revised four-year guidance, you've still given us a range of 20,000 ounces. I'm just wondering, you know, what could be a measurement driver for you to either hit the higher end of that range or, you know, come in on the lower end? I think you mentioned that Candelaria will likely have a better Q4. Is that the driver or are there any other key assets that we should be aware of?

Cosmos: Your revised guidance.

Speaker Change: We've now gone through about nine months production.

Speaker Change: The revised full year guidance Youre still given us a range.

Speaker Change: $20 analysis I'm just wondering.

Speaker Change: Albeit as a driver.

Speaker Change: For you to either hit the higher end of that range or.

Speaker Change: Comment on the lower end I think you mentioned that candle area will likely have a better Q4 is that the driver or are there any other.

Speaker Change: Yes.

Speaker Change: Whereas as well.

Sandip Rana: Hey Cosmos, it's Sandip. Yeah, so the range is 20,000. In terms of, you know, where we come in at the higher or lower end, one is obviously on the diversified with the gold price, depending on how gold price performs, that will either increase or reduce the diversified geos. So there is obviously variability there. The other is timing of deliveries. As you would have seen, Lundin had a really 29,000 ounces of gold produced but it is timing of delivery so whether you get that in the production in Q4 or if it carries on into 2025 that can impact up what you know what we realize And then longer term, I noticed that, you know, despite the changes in 2024 guidance, you've maintained your guidance five years out, or four years out, 2028, at 540 to 600,000 ounces.

Speaker Change: Hey, Cosmos Sandeep, yes.

Speaker Change: The range is 20 <unk> in terms of where we come in at the higher and lower end. One is obviously on the diversified with the gold price depending on how gold price performance that will either increase or reduce the diversified geo. So there is obviously variability there. The other is timing of deliveries as you would.

Speaker Change: Have seen lending had a really good Q3 29000 ounces of gold produced but it is timing of delivery. So whether you get that in the production in Q4 in Q4 or if it carries on into 2025 that can impact up what what we realize in terms of Geos sold.

Speaker Change: Okay great.

Speaker Change: And then longer term.

Speaker Change: This debt.

Speaker Change: <unk> the changes in 2020 guidance.

Speaker Change: Maintained your guidance five years out.

Speaker Change: Four years out 2028.

Speaker Change: $540 to 600000 ounces. So I guess, that's implying some of these issues that you've experienced in Q4 or in 2024 will be more short term.

Sandip Rana: So I guess that's implying some of these issues that you've experienced in Q4 or in 2024 will be more short term, and it shouldn't impact your longer term sort of profile.

Speaker Change: It shouldn't impact your longer term sort of profile is my sort of deduction correct.

Sandip Rana: Is my sort of deduction correct?

Sandip Rana: Yes, the portfolio overall is performing well. Candelaria had an upstart to the year, but as you saw in Q3, it's done well. Antibakai is going to meet its guidance from what we can see so far. And the new mines, they're ramping up. And as you know, there's always issues when mines ramp up.

Good luck.

Speaker Change: Yes, the portfolio overall is performing well candy, Larry you had I'll start to the year, but as you saw in Q3, it's done well and <unk> is going to meet its guidance.

Sandy Brenna: Yes, you know, the portfolio overall is performing well. Candidaria had an upstart to the year, but as you saw in Q3, it's done well. Antibakai is going to meet its guidance from what we can see so far.

Sandy Brenna: From what we can see so far so.

Sandy Brenna: And the new mines that are ramping up and as you know there is always issues when when the mines ramp up so longer term, we have full confidence in our portfolio, we will be providing updated guidance in March when we release our year end results for 2029, and we'll update at that time.

Sandy Brenna: You know, and the new mines, they're ramping up and as you know, there's always issues when mines ramp up. So, longer term, we have full confidence in our portfolio. We will be providing updated guidance in March when we release our year-end results for 2029 and we'll update at that time.

Sandip Rana: So longer term, we have full confidence in our portfolio.

Sandip Rana: We will be providing updated guidance in March when we release our year-end results for 2029, and we'll update at that time.

Paul Brink: Paul, you kind of touched on it, you know, diversification for the company, but maybe can you remind us in terms of, you know, Franco-Nevada's thinking and other commodities other than gold and I guess in this case more specifically potash and maybe if you can comment on the opportunity, you know, potential opportunities out there, you mentioned the corporate world is very busy and potential size of somebody's contract. Sure, Cosmos. And... In terms of our interest in other commodities, we always like to be supportive. and with assets as you've seen with iron ore and potentially with potash.

Sandy Brenna: Great.

Mm-hmm, great.

Speaker Change: And then maybe one last question switching gears, a little bit I saw that.

Sandy Brenna: And then maybe one last question, it's twitching gears a little bit. I saw that you've invested 1 million for an option to potentially acquire something in potash.

Sandy Brenna: <unk> 1 million for enough.

Sandy Brenna: To potentially acquire something in potash.

Speaker Change: Paul you kind of touched on it does voice application for the company.

Speaker Change: Paul, you kind of touched on it, you know, diversification for the company. But maybe can you remind us in terms of, you know, Frank Navarro's thinking in other commodities other than gold, and I guess in this case more specifically potash.

Speaker Change: And can you remind us in terms of.

Speaker Change: Franco Nevada.

Speaker Change: And other commodities other than gold.

Speaker Change: And.

Speaker Change: In this case more specifically potash.

Speaker Change: And maybe if you can comment on the opportunity.

Speaker Change: and maybe if you can comment on the opportunity, you know, potential opportunities out there. You mentioned the corporate world is very busy and potential size of some of these transactions.

Speaker Change: Potential opportunities out there you mentioned.

Speaker Change: Very busy.

Speaker Change: The potential size of some of these kind of options.

Speaker Change: Sure Cosmos.

Let's short-cause loss

Speaker Change: Sure.

Speaker Change: Hey.

Speaker Change: In terms of our interest in other commodities, we always like to be strategic.

Speaker Change: In terms of our interest in other commodities, where we always like to be strategic.

Sandy Brenna: I think opportunities both when there's a downturn in commodity prices.

Speaker Change: Thanks, Jen and April when there is a downturn in commodity prices.

Sandy Brenna: It gets us a good entry point into other commodities, but the other thing we look for is what can we get in other commodities that you cant get in gold.

Sandy Brenna: That gets us a good entry point into other commodities. But the other thing we look for is, you know, what can we get in other commodities that you can't get in gold? And with assets, as you've seen, with iron ore and potentially with potash.

Sandy Brenna: And with assets as you've seen with iron ore and potentially with potash.

Paul Brink: And you get interests on some very large deposits that have got reserved lives that are. Many, many decades. So we would be interested in getting into potash for that. I think that would complement the gold portfolio quite nicely. What we're contemplating here is an option that if and when that project goes ahead, we'd be able to buy a royalty on it.

Sandy Brenna: Get interests from some very large deposits that have got reserve lives that are.

Sandy Brenna: You get interests on some very large deposits that have got reserved lives that are.

Sandy Brenna: Many many decades.

many, many decades.

Sandy Brenna: So we would be interested in getting into potash for that reason.

Sandy Brenna: So we would be interested in getting into Potash for that reason. I think that would complement the gold portfolio quite nicely.

Sandy Brenna: That would complement the golf portfolio quite nicely.

Sandy Brenna: And.

And uh, the-

Sandy Brenna: <unk>.

Sandy Brenna: What we're contemplating here is an option that if and when that project goes ahead would be able to buy a royalty on it which I think would be a great addition to the portfolio.

Sandy Brenna: What we're contemplating here is an option that if and when that project goes ahead, we'd be able to buy a royalty on it, which I think would be a great addition to the portfolio.

unknown: Great.

unknown: Thanks, Paul and Sandip. Those are all the questions I have. Thanks once again.

Speaker Change: Great. Thanks, Paul and Sandy if those are all the questions I had thanks once again.

Sandy Brenna: Great. Thanks, Paul and Sandip. Those are all the questions I have. Thanks once again.

Tanya Jakusconek: Our next question comes from the line of Tanya Jakusconek from Scotiabank. Your line is open. Thank you so much, Jeff, for my questions.

Speaker Change: Our next question comes from the line of Danielle <unk> from Scotiabank. Your line is open.

Sandy Brenna: Our next question comes from the line of Tanya Jakuskonek from Scotiabank. Your line is open.

Tanya Jakuskonek: Thanks, so much.

Sandy Brenna: Thank you so much, Jeff, for my questions. Paul, I wanted to continue on the potash here. Just wondering if this is just a foothold and on, or could we see other potash deals as well?

Tanya Jakusconek: Paul, I wanted to continue on the potash here. Just wondering if this is just a foothold and on, or could we see other potash deals as well?

Tanya Jakuskonek: My question, Paul I wanted to continue on the potash here.

Sandy Brenna: Just wondering if this is Joseph Hull and.

Sandy Brenna: Or could we see that their potash deals as well.

Paul Brink: You know, long-term Tanya, we're open to all commodities, you know, as I said, the... You know, those bulk commodities, iron ore, copper, potash, we like them because of the long-dated nature, you know, in terms of what's in front of us at the moment. The only immediate potash thing, but...

Long-term, Tonya, we're open to all commodities.

Sandy Brenna: Long term Tanya.

Sandy Brenna: Open oil commodities as I said.

Sandy Brenna: Those those bulk commodities iron ore copper potash.

Sandy Brenna: Because the long dated nature.

Sandy Brenna: <unk>.

Sandy Brenna: In terms of what's in front of us at the moment.

Sandy Brenna: As the only immediate potash thing but.

Tanya Jakusconek: open of The Long. And what sort of deal size would those ones be? I think when I asked last time, it was in the 50 to 400 million range. Is that still the range for these non-gold transactions or precious metal transactions? Yes, that's an accurate range there. We've got a couple of things that may be actionable, but those sort of things. Okay.

Sandy Brenna: Open over the longer term.

open over the longer term.

Sandy Brenna: And what sort of it.

Speaker Change: And what sort of deal size would those ones be? I think when I asked last time it was in the 50 to 400 million range. Is that still the range for these non-gold transactions or precious metal transactions?

Sandy Brenna: Deal size with dose one day I think when I asked last time it was in the $50 million to $400 million range is that still the.

Speaker Change: The range for these non core trends are.

Speaker Change: That's just natural transaction.

Speaker Change: Yes, that's an accurate range there.

Speaker Change: Yes, that's an accurate range. We've got a couple of things that may be actionable, but those are the sort of sizes.

Speaker Change: Yes.

Speaker Change: Couple of things that may be actionable.

Speaker Change: Those are in Florida sizes.

Tanya Jakusconek: And then on the precious metal front, can you talk a little bit about sort of the size that you're seeing there and has there been any change from the last quarter in terms of what else you're looking at in terms of funding for projects or operating cash flow assets that are coming up and or any other structures that you're seeing out there that you may have to look and change? And I guess that's the question as well.

Tanya Jakuskonek: Okay, and then on the precious metal front can you talk a little bit about sort of the size that youre seeing there and has there been any change.

Speaker Change: And then on the precious metal front, can you talk a little bit about sort of the size that you're seeing there and has there been any change from the last quarter in terms of?

Speaker Change: From the last quarter in terms of what else you're looking at in terms of funding for projects, our operating cash flow.

Sandy Brenna: What else you're looking at in terms of funding for projects or operating cash flow? Assets that are coming up and or any other structures that you're seeing out there

Sandy Brenna: Assets that are coming up and or any other structures that you are seeing out there.

Sandy Brenna: That you may have to deal can change and I guess, that's the question that as well.

Sandy Brenna: that you may have to look and change. And I guess that's the question as well. Are you looking at having to change some of the structure of your deals given the competitiveness of this environment?

Tanya Jakusconek: Are you looking at having to change some of the structure of your deals given the competitiveness of this environment? I'm going to hand that over to you Tanya.

Sandy Brenna: Looking at having to change sometimes some of the structure of new deals given the competitiveness.

Sandy Brenna: <unk>.

Speaker Change: I'm going to hand that over to Ian Good morning, Jeff.

I'm going to hand that over to you, Antonia.

Tanya Jakusconek: I would say overall, a number of market and structural factors, you know, lend itself to this being a pretty active year on the precious metal side. I think you've probably seen it already, there have been a number of deals that have taken place. I see that continuing, Tanya, it remains quite robust, as Paul mentioned earlier, in terms of potential transactions. Pretty, you know, meaningful, meaningful size. Our structure, you know, we have already evolved a little bit, but we continue to do that. Backing the team at GMIN has been a very successful transaction and it's great to see that go into operation.

Ian: I would say overall number of market and structural factors lend itself to this being a pretty active year on the precious metal side, I think you've probably seen it already.

Sandy Brenna: I would say overall, a number of market and structural factors, you know, lend itself to this being a pretty active year on the precious metal side. I think you've probably seen it already.

Sandy Brenna: There've been a number of deals that have taken place I see that continuing Daniel.

Speaker Change: There have been a number of deals that have taken place. I see that continuing, Tanya. It remains quite robust, as Paul mentioned earlier, in terms of potential transactions.

Speaker Change: It remains quite robust as Paul mentioned earlier in terms of potential transactions.

Pretty, you know, meaningful, meaningful size.

Speaker Change: Meaningful meaningful size.

Speaker Change: Our <unk>.

Speaker Change: Our structure, we have already evolved a little bit, but we continue to do that.

Speaker Change: Structure.

Speaker Change: We have already evolved a little bit.

Speaker Change: We continue.

Speaker Change: To do that.

Speaker Change: Backing the.

Speaker Change: backing the team at GMIN. It's been a very successful transaction and it's great to see that go into operation. So that's something we continue to look to replicate.

Speaker Change: The team at <unk> has been a very successful transaction.

Speaker Change: And it's great to see that go into operation. So that's something we continue to look to replicate.

Tanya Jakusconek: So that's something we continue to look to replicate and it's been quite constructive, I think, for the portfolio. So going forward, expect to be quite active on the precious metals side with kind of pretty meaningful-sized transactions. And those meaningful transactions for you. We usually talk about the $300 million, but that's not meaningful. I'm not sure. Yeah, I would say, you know, 300 is kind of a good medium sized transaction. We're seeing more towards the mid to higher end at the moment, but it's a spectrum. We, you know, we look at smaller deals where I think it was a good point that you raised, Tanya, you know, we do transactions where we see excellent optionality, but we're also quite focused on areas where we can add immediate cash flow, and there's good opportunities.

Speaker Change: And it's been quite constructive, I think, for the portfolio. So going forward, expect to be quite active on the precious metals side, with kind of pretty meaningful sized transactions overall.

and those meaningful transactions for you.

Speaker Change: We usually talk about the $300 million, but that's not meaningful. I'm not sure. Yeah, I would say, you know...

Speaker Change: 300 is kind of a good medium-sized transaction we're seeing more towards the mid to higher end at the moment but it's a spectrum we you know we look at smaller deals where we see

Speaker Change: potential. I think it was a good point that you raised Tanya, you know we do transactions where we see excellent optionality but we're also quite focused on areas where we can add immediate cash flow and there's some good opportunities there as well.

Tanya Jakusconek: Okay, and when you said It's too hot. Would that mean plus $300 million? as if you put made that 300 million upper end should be higher than that. There are opportunities about that, yeah. And I wouldn't be surprised to see you, you know, in some of these competitive situations still take equity interest provide that financing and potentially I saw a deal that had callers involved as well in the initial startup with that. as well.

Tanya Jakusconek: You know, we have used, you know, the balance sheet to kind of provide a full package, like we did with GMIN, and it's been quite successful, so as I said, I think that is the model on some transactions, not all, but where we can use that type of structure to help a company and you know with that case study the equity in debt has been quite complimentary and provided Okay, thank you.

unknown: I can move over to you and just have Forecasts of Hemlo made by the Hemlo contribution. Is there anything else within the portfolio that, you know, like I think that would be very, like it's very hard for me to forecast that, so I appreciate that. But any other one within the portfolio that, you know, we talked about looking at longer term. I saw the still water numbers as well. That looks like that asset is gonna be down for a bit, for a while. So is that something when you thought, think about your five-year outlook that you kind of assume that mine comes back onto a normal rate or we're back at that 255,000 ounce GEO?

unknown: I'm just trying to think of how. Ah, that's a better heart.

unknown: Sure, so obviously the MPIs are always the most difficult to predict. Gold strike is probably more easier to estimate just based on past history. Hemel has always been the one that fluctuates a lot, just because the MPI doesn't cover all the land or all the deposits, as well as the cost impact there for development because it's underground. So it's tough to estimate for that. As for other assets, you mentioned still water. Yes, you know, savannia for water came out and has reduced their guidance for next year to around 265,000 ounces. Longer term, we do expect that to get back up to the half million mark.

Speaker Change: Easier to estimate just based on past history, Pamela Carbo expanded upon that fluctuates a lot just because the MPI doesn't cover all the land where all the deposits as well as the cost impact there for development because it is underground.

Speaker Change: So it's tough to estimate for that as for other asset you mentioned Stillwater, yes. So Daniel for water came out and has reduced their guidance for next year to around 265000 ounces longer term, we do expect that to get back up to the 5 million Mark.

unknown: And unless savannia still water guides differently, that's... But other than that, the rest of the portfolio, there shouldn't be really any.

Speaker Change: And unless <unk> Stillwater guidance differently, that's what we've estimated but doesn't have the rest of the portfolio there shouldnt be really any major surprises.

unknown: Yeah, obviously the only other one would be when Cobrake Panama comes into production. And I think the operator has mentioned that when it does come up into production, it's going to take a six-month ramp up. that you're under. I think that's reasonable if that's what first quantum.

Speaker Change: The only other one would be when that Cobra Panama comes into production.

Speaker Change: Okay.

Speaker Change: The operator has mentioned that when it does come up.

Speaker Change: Production is going to take a six month ramp up.

Speaker Change: Thank you Randy.

Speaker Change: I think thats reasonable if thats, what first quantum has disclosed.

unknown: Okay, thank you so much for helping me. Appreciate it.

Speaker Change: Okay.

Speaker Change: Okay. Thank you so much for helping me I appreciate it.

Speaker Change: Yes.

Derick Ma: Our next question comes from the line of Derick Ma from TD Codwin. Your line is open. Thank you.

Speaker Change: Our next question comes from the line of Derek <unk> from DD card when Youre line is open.

Derick Ma: I just want to point a clarification in terms of the CRA and tax liability exposure with the GMT now in place, is there still potential tax exposure in terms of transfer pricing in 2024 or everything you're showing in the financial reports, basically everything we're going to be looking at? In the financials, we've disclosed up until the end of 2023, our exposure in terms of transfer pricing, we had three audit issues outstanding with CRA, two of dropped by CRA, that was earlier in the year. With respect to transfer pricing, that process is still ongoing. So that has nothing to do with.

Derek <unk>: Thank you I just wanted to point of clarification in terms of the CRA has talked a lot of exposure with the gem T. Now in place is there still potential tax exposure in terms of transfer pricing in 2024 or everything youre showing.

Derek <unk>: In the financial reports basically everything we're going to be looking at.

Speaker Change: So in the financials, we've disclosed up until the end of 2023 Rx exposure in terms of transfer pricing, we had three audit issues outstanding with CRA to have been dropped.

Derek <unk>: Dropped by CRA that was earlier in the earlier in the year with respect to transfer pricing that process is still ongoing.

Speaker Change: So that has nothing to do with the GMT.

Derick Ma: So would there still be potential exposure in terms of transfer pricing in 2024, or does the GMT cover that? No, there still wouldn't. Yes, there would be. Okay. Got it. They're independent. Independent Issues. Okay. Understood. Thank you.

Speaker Change: So would there still be potential exposure in terms of transfer pricing in 2024 or does the GMT cover that.

Speaker Change: No theres still would be.

Speaker Change: Okay.

Speaker Change: They are independent.

Speaker Change: Independent issues, Okay understood.

Speaker Change: Thank you.

Heiko: Our next question comes from the line of Heiko from H.E. Wainwright. Your line is open. Hey, good morning. Thanks for taking my question. The first two things I have for you have already been answered, but just following up from an earlier question. You said there are some deals with immediate cash flow earlier in this Q&A session. Size-wise, how much will these deals move the New York, not just for you, but also for the operators that are offering them up? And have you seen, and just following up on that, have you seen any improvements in pricing for these deals in the current market environment?

Speaker Change: Our next question comes from the line of Heiko from H C. Wainwright. Your line is now open.

Speaker Change: Hey, good morning, Thanks for taking my questions.

Speaker Change: Turning first to the first two things.

Speaker Change: We have been answered, but just following up from an earlier question. You said there were some deals with immediate cash flow earlier on this Q&A session.

Speaker Change: <unk>, Portugal these deals move the needle so just for you, but also for the operators that are offering them up.

Speaker Change: <unk> seen and then just following up on that have you seen any improvement in pricing for these deals and the current market environment.

Heiko: Or are the high gold prices that we've seen pretty much—well, I was going to say all the way through yesterday, but all the way through today, really, just too good to—and everyone's trying to get in? So in terms of near term cash flow deals, you know, as I said, across the spectrum, we've done some transactions that had more optionality.

Speaker Change: Or are the high gold prices that we see pretty much wells, you'll see all the way through yesterday.

Speaker Change: Way through today really just too good too.

Speaker Change: Everyone's trying to get at.

Speaker Change: So in terms of near term cash flow deals.

Speaker Change: As I said, it's across the spectrum, we have done some transactions that are more optionality, but.

Heiko: But, you know, I do see potential for meaningful transactions, both for us and Transcription by Trans-Expert at Fiverr.com I'm sorry, Heiko, the second part of your question was... Price-wise, is gold price just king and everyone's savoring to get in, or have people been a little bit more willing to negotiate prices? You know, again, you know, it varies, but I do see overall. a slightly more muted, competitive environment at the moment, which is conducive to prices. And pricing depends on geopolitical risks, as in maybe slightly more challenging places are easier to get in, or is it just however desperate the operator is?

Speaker Change: I do see potential for meaningful transactions, both for us and the people that we would potentially be transacting with.

Speaker Change: Going forward.

Speaker Change: Sorry, Heiko the second part of your question.

Speaker Change: Price wise have you.

Speaker Change: Pricewise gold price shift keying in everyone's favorite to get in there and have people been.

Speaker Change: A little bit more willing to negotiate pricing.

Speaker Change: Yes.

Speaker Change: Again, it varies but I do see overall.

Speaker Change: Slightly more muted competitive environment at the moment, which is conducive to pricing.

Speaker Change: Better.

Speaker Change: And pricing depends on geopolitical risks.

Speaker Change: Maybe slightly more challenging places are easier to get in.

Speaker Change: Or is it just slow however, however, desperate operators maybe.

Heiko: Maybe desperate is the wrong word. It's a bit different, and it's important to do your diligence and then price the risk and upside appropriately. So, you know, we get the opportunity to review assets. site visits, and then we assess prices. in light of what we see as the risk. and the upside.

Speaker Change: Maybe a desk So award.

Tycho: It's another good question Tycho I would say first off every deal is a bit different.

Tycho: It's important to do your diligence and then price.

Tycho: Risks and upside appropriately.

Speaker Change: So we get the opportunity to review asset to do site visits and then we assess pricing.

Speaker Change: In light of what we see as the risks and the upside. So it's a really balanced approach and we're very thoughtful about that and each transaction.

Operator: So it's a really balanced approach and we're very thoughtful about that in each transaction. Very well. I'll get back in queue. Thank you, guys. Again, if you'd like to ask a question via phone, simply press star then the number one on your telephone keypad. There are no further questions on the phone.

Speaker Change: Alright, well ill get back in queue. Thank you guys.

Candida Hayden: I will now turn the Q&A session over to Candida Hayden who will take questions from the webcast. Thank you.

Diego Termitera: Our first question comes from Diego Termitera from Nostra Capital Management. Can you clarify a bit more what does adjusting the Cobre Panama mine in early 2025 Are there any proactive measures you or First Quantum are taking? Try and sit down with President Molina.

Paul Brink: Thanks Diego, it's Paul. President Malino has made comments to say he is open to discuss the mine. First item on his agenda, though, is pension reform, which they are currently trying to address. I believe there's a bill that's now in front of Parliament to address that. So expect any discussions on the mind. early next year.

Paul Brink: Your first quantum is being proactive on a couple of fronts. is trying to familiarize Panamanians with the mine, with the professional operation that they run in country. I think that is going well. I think that is impacting sentiment in the country towards mining. They also are engaging with the government on a couple of fronts. Obviously, there are two things there, both for them and for us. © The Bulletproof Executive 2013 So there are interactions on that front. It's not plan A for either of us. Plan A is to get the mine up and operating again.

Paul Brink: So they are engaging with the government on that. We are, they're obviously the driver in this. We're very supportive of their efforts.

Paul Brink: And the second part of Diego's question, if Cobra Panama remains in preservation and safe management mode for several years, is there anything you might consider doing with that? We're very hopeful that the mine will return to operation, and it has the potential to be a tremendous contributor to us. If and when it comes back at its full operating rate, that would be roughly a 30%. We still believe it's a tremendously valuable asset. The full value of it has been taken out of our stock, so I think... Probably the best optionality you can get in the royalty industry today.

Paul Brink: reoption on corporate Panama coming back.

unknown: And our last question is from Heiko. I wanted to see if you anticipate any near-term or long-term impacts from the U.S. election, given some of the geopolitical changes that may occur. Spring around the world. The, I think, potential for some positive impacts for us, most immediately, we have a royalty on Stipnite Mine, it's been moving through the permitting process, got notice that they should be receiving their record of decision by the end of this year, I think that is even more likely now, a second mine that we got a royalty on is Copper World, also moving through permitting process, I think has Water permit now in hand, just waiting for one more permit, so I think this change will be positive.

unknown: I hope that it will impact that side of our portfolio. As you know, we also have quite substantial oil and gas interests in the U.S. In particular, we have gas interests in the Haynesville. One of the drivers for that industry is LNG, or to take off the Gulf Coast. going into Europe, I think this can be potentially positive.

Operator: Unknown Speaker, Unknown Speaker, Unknown Speaker, There are no further questions from the Web.

Operator: This concludes our third quarter results conference call and webcast. Thank you for your interest in Franco-Nevada.