Good morning. My name is Stephanie and I will be your conference operator today. At this time, I would like to welcome everyone to the Franco-Nevada 2016 results conference call. All lines have been placed on mute to avoid any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. Stefan Axell, you may begin your conference.

Thank you, Operator. Good morning everyone. Thank you for joining us either in person or over the phone to discuss Franco-Nevada's 2016 results and Company outlook. Today's presentation will be a little bit longer than usual as we will be providing many updates on the Franco-Nevada portfolio. Accompanying our call today is a presentation which is available on our website at Franco-Nevada.com, where you will also find our full financial results as well as an updated version of our asset handbook. Before we begin formal remarks, we would like to remind participants that some of today's commentary may contain forward-looking information and refer you to the detailed cautionary note on Slide 2 of the presentation. Sandip Rana, CFO of Franco-Nevada, will discuss the results, followed by several members of the team providing key updates on the Company. This will be followed by a Q&A session. I'll now turn the call over to Sandip Rana, CFO of Franco-Nevada.

Thank you, Stefan. Good morning everyone. As you will have seen from the press release that we issued last night, the Company continued the momentum that was built during the first nine months of the year, reporting strong Q4 and year-end 2016 financial results. If you turn to Slide 6, we have a comparison here of, year-over-year, how the guidance and the actual performance was compared to 2015 and to the guidance levels. A year ago, in March of 2016, we did issue guidance for gold equivalent ounces or GEOs as we like to call them, of 425,000 to 445,000 and oil and gas revenue of $15 million to $25 million. On the GEO guidance, it was a significant increase over 2015 and that was going to be due to the benefit of having Antamina for the full year as well as the Antapaccay transaction that we completed a year ago. Well, based upon the performance that we achieved during the first nine months of the year, we did raise our guidance in November. The new range for GEOs was 445,000 to 455,000 and oil and gas was increased to $25 million to $30 million. We're pleased to say that we exceeded both of these guidance levels, achieving GEOs of 464,383 with oil and gas revenue just over $30.1 million. If you turn to Slide 7, just to show you the GEO growth over the last number of years, you can see that, in 2011, the Company was generating approximately 230,000 gold equivalent ounces. And if you move forward to 2016, we did over 460,000. That was a 100% increase over this time frame and just year-over-year over 2015, a 29% increase in gold equivalent ounces. Slide 8 highlights through a waterfall chart really where the movement was year-over-year. So…

Thanks Sandip. Good morning everybody. Our business keeps evolving with new avenues of growth. Initially, it was royalties. Then we were into streams. As you know, there are different types of assets we've invested in. A lot of those were copper mines with a gold byproduct stream. We've also done gold mines and gold streams in gold mines and different types of transactions, project financing, assets like Cobre Panama, M&A when we got [indiscernible] finance Candelaria, recapitalization with Glencore and Teck with Antamina and Antapaccay. The latest avenue of growth that we've been spending our time on has been commodity diversification. And as you know, our target over time is to be about 80% precious metals and the other 20% can be oil and gas or other non-gold. It doesn't mean our preference is to do those other commodities. Our view is always we will only do them if we think we can get better returns than we could get in the gold space. But what that diversification does give us is, when the gold market gets too expensive, we're not forced to be chasing gold assets; we've got the ability to look in other areas and achieve value. assets: The assets in particular -- themselves have been great performers. So Candelaria, if you think about it from the time of acquisition, Lundin has increased the production profile over the first five years by more than 20%. If you look at their 2016 reserve statement now, their reserves, including depletion since the time we've done the acquisition, are now 50% higher than when we had done the additional deal. And add to that they are looking at further debottlenecking of the mill and that could add another 15% to 20% to the production profile. So, it's been a tremendous performer.…

Thanks, Paul and good morning everyone. So, before we go on to talk about reserves and resources, I want to use this opportunity to introduce our 2017 asset handbook. This is a book we've been producing for five or six years now, is intended to give investors and analysts a better understanding of our business and the asset portfolio. It's a great read and we certainly encourage you to take it away and read it. The contents include descriptions on and updates on all of our producing and advanced assets. We've got details on mineral reserves and resources, oil and gas reserves and resources. This year, we have a new section on environmental, social and governance and there's a bunch of other corporate information there. You can get a hard copy here in the office or you will be able to download it from our website. Moving on to Slide number 36, the slide shows the growth in reserves and resources referenced to 2007 when we IPO'ed. As you can see, the reserves have continued steady growth and as might be expected, the resources have been a little bit more volatile. However, we do expect that, as metal prices increase and exploration picks up, we see the upward trend on the resources resume. Now, I do need to emphasize that this chart is based on 100% of the operators' disclosure for properties where we have an interest and is not Franco's attributable share. So why do we show it? Firstly, it's based entirely on public data, so it's very easy to verify. And secondly, it involves the fewest assumptions, estimates and adjustments by management and yet it still gives a good indication of growth in the portfolio, the disadvantage being that it's very difficult to tell Franco's attributable share from…

Thanks Phil. So we don't spend a lot of time speaking about oil and gas, so I want to start off on Slide 42 just with a quick overview of the portfolio. We've got a map on the left showing the location of our Canadian assets, as well as a map on the bottom right which shows the location of our U.S. assets. Oil assets are shown here in green and gas in red. We have in total 1.8 million acres or gross acres, of royalty exposure in both Canada and the U.S. We have 61 producing assets and 19 nonproducing or exploration assets. And in total, we have an interest in approximately 8,000 wells, mostly in Western Canada but also in the U.S. The key assets here in Canada, we have the Weyburn and Midale units in Saskatchewan and the Edson GORR which is located in Alberta. And then in the U.S., we have the STACK royalties in Oklahoma and recently we've acquired a set of assets or royalties in the Midland Basin in Texas. This year, the portfolio produced $30 million of revenue, of which, in Q4, about 6.7% of the -- or I guess 6.7% of the total corporate revenue was oil and gas. So with the fall in the oil and gas price here in the last couple of years, combined with the addition of gold assets, we now have room to add oil and gas to the portfolio and we've done that with a couple of transactions over the last couple of quarters here. Slide 43, this just shows the table of the different royalty types or ownership structures that we have within the portfolio. For new deals, we're targeting mostly the GORR or gross override royalties and mineral title. Those are the non-cost bearing…

Thank you, Jason. And I promised a shout out to Cary McGruary. He took the picture here at Antamina three weeks ago. This is from Gringo Hill looking east across the pit. So it's the best quality picture we have of Antamina. I apologize for all you mining types. We just took you through an extensive oil and gas discussion, but it is kind of sort of our new area of activity and we expect to be doing more of these and so we thought it was important to get you somewhat educated and give you the range of what we think are the possibilities. We think this is actually an exciting new area for us to expand the royalty business and as I said, we expect to do more of these. So, in terms of my role here is to wrap up before lunch and to give you an outlook for the Company. And I have great pleasure in doing that once again this year. But to do that, I think it's worth reviewing first Franco-Nevada's performance over the nine full years now that we've reported results since our IPO. And you can see that we've had this ongoing growth in GEOs and revenue and market capitalization. Sandip has done a great job in terms of the drivers behind that growth. And you can see 2016 was a particularly good year for growth in this Company. I'm also pleased the Company continues to perform very efficiently. When you look at the bottom left chart, what we've done now is we've put G&A as a percentage of our market capitalization, because we know a lot of the fund managers here measure their performance in terms of their costs relative to the value of the portfolio. So we said let's do…

It's Cosmos here from CIBC. Maybe first off, looking at -- I noticed last night in the press release that you put in a $100 million line of credit through your Franco-Nevada Barbados subsidiary. Is that an indication that you are going to look towards doing more streams and transactions through Barbados? And I guess, Sandip, you've already indicated that about 37% of your revenue or your streams at this point in time are coming from Barbados.

Thanks, Cosmos, for the question. Yes, we did put in place a $100 million facility. It's for one year. A bit of background, the board for Barbados didn't want to just be dependent on the Canadian parent to fund, that they want some independence to fund transactions themselves. Historically, our streams have been through Barbados, so as more streams come into play and we're successful on transactions, if it's an international stream, the likelihood is we would be doing it through Barbados. So, I would expect that facility at some point will be drawn, but, again, it's all dependent upon what opportunities come in front of us.

Maybe switching gears a little bit and I guess, Paul, you talked quite a bit about Cobre Panama. You've paid about $500 million as of the end of 2016. I believe you're forecasting another $200 million in 2017, the remainder of that making up the entire $1 billion? Is the remainder going to be paid in 2018 or is it going to be 2018 and 2019?

We're expecting as to guidance is $200 million to $220 million for 2017, something similar for 2018 with the balance in 2019. So you won't see a lump sum, catch-up all in 2018. We do expect some funding in 2019.

And how does that work? Because I think production starts sort of in 2018, so you don't fully pay the $1 billion before production starts?

It's based on their percentage spend, so as they spend, we put in one of every $4.00 that First Quantum puts in.

Okay. So there is the -- Sandip is right, we do keep funding that 1-in-4 ratio. But when they do -- when they get to first production, they are able to call the rest of the amount. So I don't think there will be much of a catch-up, but there could be a small catch-up that comes and we're not certain on the exact timing on it.

Okay. Maybe one last question for Jason. In terms of -- thanks for the teach-in on oil and gas. I am just wondering. When you look at these oil and gas royalties, who are you buying these royalties from and who's your major competitors in terms of bidding for these royalties?

It depends on the type of royalty that we're sort of seeking. There's different categories, so in Canada right now, as I mentioned, the main source of royalties are these manufactured GORRs and so that's companies putting royalties in place as a financing tool. For those royalties, we would look to buy directly from the operator. The U.S. royalties that we're looking at are primarily these mineral title royalties and they are -- we're buying those from groups that have assembled packages of royalties over many, many years. And so those are generally private companies. Oftentimes, those private companies are backed by private equity groups. So, the types of bidders for those are private equity groups themselves; they are other companies. They are not typically royalty companies, mostly because the types of assets that we're buying are sort of growth assets which fit with our strategy as a long term investor. The royalty companies that do exist in the U.S. really are chasing yield, so they find it hard to buy these growth opportunities. And so that's why we're focused down there. We feel we're well-positioned to compete and we're competing against people with short term horizons or people that are chasing yield. And so we feel we have a bit of a niche.

Maybe along the same lines that I commented about yield and your strategy in oil and gas, I think right now you're in the mid-90s% for gold and silver and you talk about, long term, wanting to be at 80%. With the last two transactions you've done, they've had I guess $210 million committed but negligible impact to your revenues. So, I guess, knowing that you're ultimately looking for 80/20, what's the right capital to invest in the oil and gas space or non-gold space to sort of right-size that balance?

It's a good question. That's from Josh Wolfson of Eight Capital, so I'll have to get used to the new name. And in terms of if you look at the projections, actually it's very little revenue impact right now, but it has a huge impact five to 10 years out. And so one of the things is we're, constantly, we're management portfolio dynamically. So if you remember, this Company was almost 50% oil and gas at our IPO. We said we're going to be majority precious metals and we were able to do that within about four years of this Company. But even five, four years ago, we were still a little over 20% and so we said we can only do gold deals. We've now overshot on the gold side, but that's a Hollywood problem on our side. Now we have some cushion but we're realizing we probably could spend $1 billion plus right now and still stay within the 80/20 rule, but it could blow out on us in the next four or five years. So, we're constantly asking Paul Brink here, how many more precious metal deals are you going to be able to deliver? So, we're kind of looking at that pipeline saying really we have a five-year window to keep rebalancing that portfolio and the nice thing about it is we do expect to be financing future gold mines and creating new gold royalties and streams. So, we can always say, okay, let's measure it against our other investment opportunities; that tells us how much more we can invest in these other assets that could grow quite dynamically for us. So, it's going to be a bit of an art, no question.

But that $0.5 billion, $2 billion would not be out of the sort of spectrum --

In our own minds, we're thinking about $1 billion is about our limit in terms of making sure we don't go offside on the 80/20 rule. Any other questions in this room before -- Greg please.

Greg Barnes. That raises the obvious question, Paul. What does the pipeline look like on the gold/precious metal front and how do you stay within that 80/20 rule?

It's good. We're active. As I'd mentioned before, it's across the board, different types of opportunities. Some of that is by existing royalties that are out there in some portfolios that are available. And then the second is new gold financing. And so we think we will participate as the sector picks up here, both with gold, new gold mines, being built and once we also get into the construction cycle on base metals. And we're starting to see that with some midsize projects coming up. We think there's a big role for streaming going forward in the project financing space, not as lenders but as participants. And a good part of that is just we've seen a lot of capital that's moved out of the bank sector. And part of that has been restrictions that have come on then because of BASEL and other constraints. But we see a lot of appetite from CFOs that are looking to build new mines or streaming to be a component of that and I think that will be a good avenue for long term growth.

And just to show you how dynamic things are too, is don't forget Cobre Panama is coming in in a couple of years. That opens up more space in terms of balancing our commodity portfolio and also commodity prices change. So, whenever that oil price collapses, of course we can go buy more oil and gas assets. So, actually, you don't need a smart CEO in this Company. It's whenever commodity is most depressed, our portfolio is telling us those are the ones we should be buying and reweighting on our portfolio. So, it's not a complicated business. Any other questions in this room? Perhaps, operator, we could open it up for questions for anyone that's on the line.

[Operator Instructions]. Your first question comes from Adrian Day with Adrian Day Asset Management. Please go ahead.

Good afternoon. David, with regard to this issue of sort of gold and other assets, the perception, certainly, that I have is that you change the emphasis a little bit from a minimum of 80% gold to a sort of 80% gold/20% other. And I'm wondering if, first of all, if my perception is correct. But secondly, if you change the emphasis because you see better returns elsewhere, because you want more diversification or because, frankly, you're just not seeing good streams, good royalties, available on good assets in the gold space.

I appreciate the question and you are right. Our intention is to be minimum 80% precious metals. And so our intent is always to proactively manage the portfolio. We don't mind right now being 94% precious metals. We consider that as a good thing. But it gives us the flexibility, when we need to, to go do those other commodities, but we intend to stay minimum 80%. And the fact -- right now we have the most flexibility we've ever had. One reason why we're doing these deals right now I think we started off the oil and gas presentation saying, right now, it's been competitive in Canada. We've had pension fund competition, private equity competition in the Western Canadian oil space, but we've also been having -- I guess our main competition is not so much our peer companies in this business but it's been the brokerage community and the bought deals. And generally what we find is that we can't get really acceptable rate of returns when the markets are open for companies to do bought deals and also if the debt markets are wide open as well to the majors. And what's happened is of course we've seen, with the super majors, the Glencores, the Tecks, etc., the debt markets have opened up completely. And then for the mid-tier gold companies where last year, midyear, we were putting out all kinds of term sheets, just about every term sheet the team worked on last year, those companies end up doing a bought deal instead. And so what we need to do is our business is we tend -- we have to be counter-cyclical. I think, right now, we're seeing it's actually too expensive to chase deals with the gold companies at this stage. There's a few select opportunities, but we actually see a whole suite of probably higher return opportunities available that are actionable right now. We're just following that opportunity. As you can see, at the beginning of Paul's presentation, it tends to be -- everything we do tends to have these 18-month windows where we can actually sort of exploit them, apply a lot of capital and -- but eventually that window closes as other people get into the game or the commodity prices change. And I think we have an 18-month window here to do this particular investment. I expect the next window will be financing that next generation of gold mines that are going to need that extra leg of capital to get those mines constructed and I expect that will be our next phase. But what we want to do is -- I think what we're trying to demonstrate is we've got a very flexible and entrepreneurial team here. We're just moving to where we see the best returns and opportunities for our business.

There are no further questions at this time.

Thank you, Operator. I'll just open it up to this room again, if there's any other further questions. And if not, it's lunchtime. For our visitors here, we have some sandwiches available. And we will be having our annual meeting in May. We will be announcing our first quarter results on the same day that we have our annual meeting, plus an update on our dividend declaration. Thank you very much for coming here. Thank you for bearing through the whole oil and gas lecture here. So, come, please join us.

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