Good afternoon. My name is Jody and I will be your conference operator today. At this time, I would like to welcome everyone to the Franco-Nevada Corporation's Third 2016 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. Mr. Stefan Axell, you may begin your conference.

Thank you, Jody. Good morning, everyone. I want to thank you for joining us this morning to discuss Franco-Nevada's Q3 2016 results. Accompanying our call is a presentation which is available on our website at Franco-Nevada.com, where you’ll also find our full financial results. Sandip Rana, CFO of Franco-Nevada will provide a brief review of our results and Jason O'Connell, Vice President of Oil and Gas will be provide an overview of our oil and gas acquisition in the United States, this followed by a Q&A period. Before we begin the formal remarks, I'd like to remind participants that some of today's commentary may contain forward-looking information, and refer you to our detailed cautionary note on slide 2 of the presentation. I'll now turn the call over to Sandip Rana, CFO of Franco-Nevada.

Thank you, Stefan. Good morning everyone. Thank you for joining us this morning. As you all have seen from the press release issued yesterday the company had another strong quarter with solid financial results. In fact, there were a number financial records achieved, this is a second quarter in a row. It’s a testament to the quality and strength of our portfolio and overall success of our business model. The portfolio continues to deliver growth and generate significant cash flow with it being further enhanced in 2016 by the Antamina and Antapaccay stream transactions. With respect to our financial results, third quarter 2016 was another quarter of records. The company reported its highest amount for Gold Equivalent Ounces, revenue, and adjusted EBITDA this quarter, which was due to a combination of higher deals received, as well as stronger gold and silver prices. Turning to slide three, the chart illustrates the GEO breakdown by commodity for third quarter of 2016 compared to third quarter 2015. You can see that GEOs in total have increased over 44% compared to prior year. This increase is due to increases in both gold and silver ounces received, primarily the result of the Antamina and Antapaccay transactions, but also the commencement of the Karma stream. Actual gold ounces increased 19% versus the third quarter 2015, while GEOs were up over 600%. Slide four provides a breakdown of where the GEO growth arose when compared to third quarter 2016. Our core gold and silver assets did produced less GEOs during the quarter, which is partially due to the timing of production and recognition of revenue by the company. A large portion of the decrease is due to Palmarejo. During the quarter Palmarejo reached its 400,000 ounce minimum requirement and typical quarter of the company would receive 12,500…

Thanks, Sandip. So turning to slide 10, we have entered into an agreement to purchase package of royalties located in the shale play in Oklahoma's Anadarko basin for total purchase price of US$100 million. The effective date for the transaction is October 1, and we expect to close before the end of the year. The royalties we are buying consist of mineral title, whereby we only underlying mineral rights and gross overriding royalties where those royalties are tied to underlying leases. The royalties covered area of 16,865 acres at royalty rate of 7.15%. However, that acreage is subject to cooling and utilization by operators and effect is that our royalties are actually spread across a larger area approximately 75,000 acres, but at a reduced royalty rate of about 1.6%. The annualized revenue for the royalties as of September of this year was $3 million. However, that number is expected to grow significantly as operators carry out development of royalty acreage. The stack is an emerging play and drilling is only recently begun on royalty lands. Turning to slide 11, slide 11 provide some context for stack play and it’s meant placement to demonstrated still lot quality. The chart in the upper left shows horizontal rig activity in the United States by county, Balean [ph] and Kingfisher County's which contain the royalty acreage are two of the top 10 county's by rig activity as measured by Baker Hughes attracts more than 250 county's across the US. The chart on the top right also looks at drilling activity and shows that the stack is the only play in US to see an increase in drilling activity, since the oil price drop in 2014. While other plays at a fraction of the 2014 levels, the stack is actually 28% more rig activity to…

Thank you. [Operator Instructions] Your first question comes from Josh Wolfson from Dundee Capital Markets. Your line is open.

Hey, good morning. I guess, I suppose most of my questions are for Jason. I understand that $3 million annualized September number how many wells were currently online on your land for your loyalties?

Thanks, Josh. So its about $3 million number includes, about 25 producing and paying wells, as of today there is about – its closer to 45 wells that have actually been drilled on royalty lands that have not yet reached pay status. So we expect as those wells come online over the course of the next few months and hits pay status, our revenue will increased significantly.

Okay. And then in terms of your expectations for full-field development in 2017, what is that sort of number of our producing wells look like I guess, in your sort of plan next year and maybe thereafter if you have any serving site?

It’s very hard to put a specific number on the amount wells that will come in online next year. It obviously depends on the amount of capital that the operators to put to the field and also where those wells are drilled relative to royalty ground. We expect that - because these lands are in the core of play that we will receive more than our fair share of that capital, but we'll just leave at the fact that revenue is expected to grow significantly. But it's hard to put an exact number on how many wells will get drilled.

All right. But I guess, knowing that $1 billion is going to be spent in 2017 and assuming flat oil prices at $50 a barrel, is there any sort of range of expectations that would be reasonable, if went from 25 to 45 in a 3 month, 4 month period, is it reasonable to see that double or triple into 2017 or is that just far too aggressive?

Now that’s not too aggressive. Just to put in context, right now there are three rigs that are drilling on royalty lands, if you assume, for example a rig will drill one hole every three months or so, when well every three months, sorry, one well every month or so, and so if those wells continue to drill on royalty lands for the course of the year they would add roughly $4.5 million in revenue in that first year.

Okay. I apologize for all these questions. This is a very narrow focused gold analyst that’s having – dig into oil and gas. I have a couple of more questions just on understanding the structure, for the gore of structure, just to clarify is that is net of costs and that includes that operating cost, transfer costs and depreciation or CapEx as well?

No there are essentially no costs associated with those gores, other than a very small processing fee which is minimal. So those gores are just the top line revenue royalty.

Okay. I guess, that please me asking what the cost structure would be and that is about it for all my questions. Thank you very much.

Okay.

Your next question comes from Kevin Chiew from CIBC. Your line is open.

Hi. Good morning, guys. Congratulations on a solid quarter. I also have some questions on the oil and gas acquisition. Maybe just to clarify is the gore and the mineral title royalty rate of 7.15%, is that recaptured within the 1.6% royalty rate that covers the 70s - roughly 75,000 acres?

Yet, it is. So the 7.15% is the royalty rate, its actually attributable to the lease acreage that we hold, but what happens as I mentioned, is the lands and the leases get cooled as operators drilled their wells, so get cooled with other lands and it effectively spreads out the royalty rig acreage to a larger area and in doing so reduces the royalty rate sort of on a pro rata basis. So that 7.15% yes, that's sort of included within the 1.6% average royalty across a larger area.

Okay. And I think you mentioned that the acquisition is effective October 1, so should we be expecting catch-up in Q1 of 2017, is that how it works?

Yes, we'll be paid starting October 1, so we'll receive three months of revenue for the end of the year here which should be paid in I guess, in Q1 probably.

Okay. And maybe you on a bigger picture basis, could you maybe provide a little bit of background on acquisition in terms of you know, if there was competitive process and how you kind of view this commodity space in terms of future acquisitions?

It was an awesome process that was being run through the banks. This is one of several opportunities that are in front of us right now, particularly in the United States. There are some packages that are being marketed. The competition in Canada has been relatively robust over the last couple of years with people like Prairie Sky and Freehold and then pension funds bidding on sort of larger royalty packages. But the US competitive landscape is a little bit different and that there aren't as many strict royalty players down there, and there are, as I said, there are opportunities that we're looking at on the fee land side which we hope to participate in those options going forward.

Great. Thanks very much, I appreciate it.

Thanks, Kevin.

Your next question comes from Greg Barnes from TD Securities. Your line is open.

Yes, thank you. I just want to switch to the out performance to Antamina, actually performed above your expectations and I assume that the silver mineralization is associated with the zinc, I am not sure if that’s correct. And my understanding zinc production can't cut Antamina next year, its going to almost double. So can we expect much higher silver production at Antamina next year from your understanding?

Greg, we are – in terms of the outlook, I think we're having a fantastic year in terms of the silver production. We don’t have anything to show at this stage that it will continue into next year. So I think we expect to be at the average, we are down visiting site in a few weeks, we hope to get a better view of why it is that they've out performed so much this year and hopefully we can speak more about it then.

Okay. So you are not unaware whether the zinc is or the silver is associated with zinc or moving going forward how that plays out in 2017 itself?

Yes, most of we get paid on the silver and copper comps and in the lead comps, we dong get paid on the silver and zinc comps, so I don’t think that particularly is driving it, always I say we hope to get a better understanding in the coming weeks.

Okay. That makes sense. Thanks.

Your next question comes from Steve Butler from GMP Securities. Your line is open.

Good morning, guys. Question Paul [ph] for you I guess, what's driving the increase in GEO guidance for the year, would it be predominantly Antamina or is there a second asset to Antamina that drives the guidance increase? Thanks.

So its particularly two assets, one is obviously Antamina which has out performed, the other is [indiscernible] and which is the JV between Premier and Berrick [ph] which started mining earlier this year. We – at the time when we issued our guidance we weren’t fully aware of what was happening with the property in terms of when do it get pay out. They some paid some minimum amount every single year, a few hundred thousand dollars, so that was minimum, that has been recouped and so we did receive our first payment for a delivery of royalty revenue in Q3 an now we expect some in Q4 as well. So between those two, the main reason for the increase in GEO guidance.

Okay. Thank you. So Sepra [ph] had $3 million of revenues in the quarter and you said here on the first page net of $3.1 million of advance royalty, was that suggesting that the number would be $6 million or I mean, something?

Yes. So they were able to recover the amount that they paid us over the last number of years since mining had fees and yes it would have been $6 million.

Okay. And you guys have bold down your royalty ranges all over the place, but that’s weight is 275% to.5% as Kinross get to the vantage hit over the next couple of years, is there any – how does royalty landscape looks like if we were down a pole amount in units and vast property, what should we do for modeling [indiscernible] midpoint of royalties or any guidance there?

I think taking the midpoint is probably the best route to go at this stage.

Okay. Thanks, guys.

[Operator Instructions] Your next question comes from Jorge Beristain from Deutsche Bank. Your line is open.

Good morning, guys. Just on the guidance range, could you also give us some more color as to what's driving to guidance change in Antamina?

Antamina it’s just basically we had projected roughly 40,000 GEOs for the year and they've already surpassed it and we expect similar deliveries in Q4 and that’s basically what we mine. In terms of specifics why they are outperforming as Paul mentioned we're going to the site in a few weeks and will get a better understanding of the reason for out performance.

Okay. And maybe just a big picture question, what stage of the cycle do you think that we're in related to the both the pressures and the industrial mining metals companies in terms of deleveraging, it would seem that on the one hand we seems sort of an improvement in prices stabilization and balance sheet. So, our company still approaching you guys for new deals? And secondly, could you just comment on when you see sort of like the next generation of Greenfield projects starting to go ahead?

Sure. It’s Paul answering the question. I made a starting point as you know, our strategy is 80% precious metals, but we like to have diversification much of that's been oil and gas and possibility is also open to basin bulks and doing that. In terms of environment, you are absolutely right, many of the seniors have completed much of their deleveraging. So we see less amount on that front, but I would say there is demand. There still is some prospects – really it depends on the how the market plays out to see if those come to fruition. So the second category is in terms of gold development projects. They are – people are moving number of projects forward. So I think there is potential over the next 12 months that we may participate in and see some new gold projects. And then the other area that we are participating and the transaction that Jason has just completed here on the stack is a case and point is we are starting to see good value in upper sectors and our strategy, which is if we can get better value doing oil and gas or other metals, [indiscernible] and the gold sector then we would do that. And so we've seen good range of opportunities, both precious and non-precious across the board.

I don’t know if I am asking trade secret here but could you just maybe give us an order of magnitude of how much better you're seeing gold – sorry, oil and gas potential returns right now vis-à-vis your more traditional gold ones, are you talking like 1% bump or 2 percentage point bump, can you give some color on that?

I don’t know that could bring it down to a single number, and I say on the non-gold there when we say we are looking for better returns, sometimes that in terms of quality of projects and sometimes that's in terms of multiple returns. One of the big advantages is often you can get longer dated assets in the non-gold sector. So where we can get cash flowing, low-cost, long dated assets that what's attractive. Then the second areas just being able to get a multiple of the cash that you've invested. So I think the stack play, it is an early stage play, but if everything goes right and the momentum continues on the play, we can earn in many multiples of the cash that we've invested. So I think it's the potential return are very attractive.

Got it. Thanks very much.

Your next question comes from Tanya Jakusconek from Scotiabank. Your line is open.

Hi, yes. Good morning, everybody. Just going to come back to the oil and gas, actually I have two questions, one from the oil and gas and one from the M&A. Maybe Jason so that I just understood this correctly, again coming from a non-oil and gas analyst, you mentioned one well per month per rig, and then you mentioned in the first year when assume the 12 – 3 rigs on the property, $4.5 million in the first year per rig, so I you had 3, that would move you to about $13.5 million?

No..

From this 3, no.

No, the 4.5 was for the 3 in aggregate.

Okay. And the Jason maybe when you were looking at doing this acquisition, as you would in gold, you would obviously make an assumption on what you think you would have in the ground, what sort of mine life, et cetera. Could you give us a bit of color of how you thought about this to put out $100 million?

Yes, so we do look at it the same way we would have in our mining investment and that you're looking at resource and the ground. The difficult part in assessing the stack play is that just don't have certain young when the wells get drilled, so your profile is a little bit more uncertain. If you long term, over the life of these assets, there is probably 10 to 15 years of drilling inventory here that will get drilled over time and after that you are going to have a long decline on these assets over several decades and so what that allows you is exposure to a number of oil price cycles in a very long cash flow basis over time, as Paul mentioned, we expect to see many multiple of our investment return.

Okay. That’s very helpful. And then Paul, which is coming to you if I may, when you talked about the non-gold and investments, I know at point we had looked to coal, we had looked - looking at potash, et cetera, are those still on the table?

In terms of the bulk sector, both the base and the bulks, have been beaten up, certainly relative to the golden, so in those categories and particularly if we can invest in a good cash flowing assets, establish mines with long lives will also be attracted. And so we are seeing some transactions in that category and hopefully we can bring one or two of those to home in the next 12 months.

Okay. Well, thank you very much for that.

There are no further questions at this time. I'll turn the call back over to the presenters. Jason O'Connell Thank you, Jody. We expect to release our full year 2016 results, provide 2017 guidance, as well as issue an update asset handbook on March 22 of 2017 with a conference call held at following morning. I wan to thank you for your interest in Franco-Nevada.

This concludes today's conference call. You may now disconnect.