Good morning, ladies and gentlemen, and welcome to the Franco-Nevada Corporation Q4 2018 Earnings Announcement. [Operator Instructions] This call is being recorded on Wednesday, March 20, 2019. And I would now like to turn the conference over to Candida Hayden. Please, go ahead.

Thank you, Joanna. Good morning, everyone. Thank you for joining us today to discuss Franco-Nevada's 2018 results and company outlook. Today's presentation will be a little longer than our typical conference call as we are providing an update on many aspects of the Franco-Nevada portfolio. Accompanying this call is the presentation which is available on our website at franco-nevada.com where you will also find our full financial results. Sandip Rana, our CFO will provide a brief review of our 2018 results followed by Paul Brink, our President and COO, who will provide a business development update, followed by Jason O'Connell, our VP, Energy, providing the energy guidance, and David Harquail, our CEO, discussing the company's outlook. This will be followed by Q&A period. Our entire management team is present to answer any questions. Before we begin on following remarks, we would 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. I will now turn over the call to Sandip Rana, CFO of Franco-Nevada.

Thank you, Candida. Good morning, everyone. As we look back at 2018, there are two main items which impacted the financial results of the company for the year. The first being Candelaria with the processing of lower grade ore from stockpiles resulted in lower precious metal deliveries to the company which impacted the amount of gold equivalent ounces sold. And the second being the strong performance of our energy assets due to higher oil prices and increased production from our royalties. As you turn to Slide 5, you can see how the company performed against the guidance levels that were issued for 2018. The initial guidance provided by the company was $460,000 to 490,000 GEOs. We had guided to lower deliveries and sales from Candelaria for the year due to the pit-slide that occurred in late 2017. With the processing of stockpile ore we were expecting a reduction in gold and silver ounce deliveries in 2018. As the year proceeded, we realized that the deliveries would be lower than initial estimates and we revised our GEO guidance to 440,000 to 470,000. The GEOs earned for 2018 were 447,902, which is within the revised guidance range. The processing of lower-grade stockpile at Candelaria is only a timing issue. We look forward to increased deliveries in 2019. The asset has been a great addition to our streams as the gold reserves have increased 100% since the asset was acquired in 2014. With respect to our energy assets, the company had guided revenue of $50 million to $60 million for the year using a $55 per barrel oil price. Based on higher production at our assets and higher WTI prices, the company raised energy guidance twice during the year with Q3 2018 revised guidance being $75 million to $85 million. Revenue for energy…

Thank you, Sandip, and good morning everyone. Over the last 3 years we've been investing in growth at Franco. We've contributed our $1.36 billion portion alongside First Quantum and KORES of the more than $6 billion construction of Cobre Panama. In February the project reached an exciting milestone with first ore processed through the mills. Page 16 has a photo of the opening ceremony attended by President Varela. The required pre-strip is now completed, the tailings management facility erstwhile saw 87% complete. The second power unit is in full commissioning and was synchronized to the grid in January. Process plant commissioning and testing are ongoing. First Quantum recently provided guidance for the year and rampup through 2022. Shown on the chart on Slide 18 is a bar chart of the expected production of copper and concentrate. You will recall that the amount of gold and silver attributable to Franco is indexed off the copper and concentrate; in 2019 that amounts to just less than 60,000 ounces of gold equivalent assumed using the midpoint of the expected copper production. Deliveries to Franco are due when the operator receives payment for concentrate sales, and as a result, our deliveries will lag a couple of months the production of concentrate due to inventory build, the timing of shipments, and the timing of payments for those shipments. We've included in our guidance for 2029 an estimated 20,000 to 40,0000 ounces from Cobre. In the following years, deliveries to Franco should more closely approximate the production. Turning to Slide 19, we've recently added a couple of royalties to our portfolio. The first is a 2% NSR on Gold Fields' feasibility stage Salares Norte's project. Salares is a high-grade open pit gold and silver deposit in northern Chile, the royalty was purchased from a third-party for…

Thanks, Paul. I'll start up on Slide 24 by providing a quick overview of our energy assets and how they've been performing. Our legacy Canadian assets continue to perform very well, these are generally long-life low-decline assets which have provided consistent production for many years. Weyburn represents a significant portion of our Canadian asset revenue through contributions from our net revenue interest, working interest and royalties, the asset comprising about 75% of Canadian revenue. Because a portion of our Weyburn revenue is derived from a net profit interest and revenues that have recorded net of cost, there is increased revenue volatility from changes in capital spending and commodity price. Towards the end of 2018 revenues were impacted by increased capital for new wells and from a widening price differential in Western Canada; these factors are expected to normalize in 2019 as the oil market regains balance, and capital of the operation is reduced. In U.S. our assets had a strong year as operators continue development of our land base. This trend is expected to continue as those operators evolved to pad drilling and a more efficient approach to manufacturing development. As an example, Encana is now a significant operator of our stack [ph] acreage following their recent acquisition of Newfield Exploration. Encana [indiscernible] their cube-head drilling technology in the play which should more rapidly develop our lands. The U.S. assets also benefited from lease bonuses this year which are derived from leasing at our lands and our acreage to operators in exchange for a one-time upfront payment in addition to the ongoing royalty. Our newest contributor to the energy portfolio is the Continental royalty acquisition venture which closed in the fourth quarter of 2018. While the venture is still in it's early days, we are very encouraged by Continental's success…

Thank you, Jason and good morning on this first day of spring. I'm going to build on what Sandip, Paul and Jason have presented and provide you with the overall outlook for Franco-Nevada. First, Slide 27; this is a snapshot of Franco-Nevada's performance over the past 11 years. Sandip has walked you through the one-off factors for the dip in GEOs and revenues in 2018. I'll be showing you that beyond 2018, we're expecting a return to our longer term secular growth trend for at least the next 5 years. More importantly, adjusted EBITDA, adjusted net income remain close to record levels, that is the lifeblood of our company. I'm also very proud of the team here and how efficiently this portfolio is being managed. G&A was even lower last year and is less than 20 basis points versus the value of the assets that we manage. We are more than twice as efficient as the GLT Gold ETF. I feel that our absolute G&A spending of less than $25 million compared to our peers is even more impressive when you consider that we are in both, the mining and energy businesses which require separate teams. But what I'm most proud of is our dividend track-record shown on Slide 28. Some companies highlight their yields, I like to point out how much we are paying in absolute dividends; we pay close to $180 million last year, have now paid out over a $1 billion since our IPO. I'm highly confident I will be able to announce our 12th consecutive increase to our dividend at an upcoming AGM in May. Our Canadian IPO investors are now receiving 8% yield on their cost base. On Slide 29 is our 2019 guidance. I won't deliver the GEO and energy detail which you've already…

[Operator Instructions] And your first question is from Chris Terry from Deutsche Bank.

I have two this morning. The first one relates to 2019 guidance, 465,000 to 500,000 GEOs for the year. I just wondered if you could talk a little bit to the quarterly progression and the 20,000 to 40,0000 ounces expected from Cobre Panama. When we should expect the first ounces to come through, is that the second half or is there something in the second quarter there? And then my second question is just around the opportunities you mentioned for 2019, particularly on the mining side. Just interested whether those relate to Greenfield projects, Brownfield, whether it's the consolidation that we're seeing within the gold space recently or divestments etcetera? If you could just talk to that in a little bit more detail. Thank you.

I'll take the first question and then I'll go to Paul for answering the second one. With respect to the guidance for 2019, you'll see more ounces come in for the second half of the year. Obviously, Candelaria as we've mentioned is kind of resumed normal operations in the second half of this year, so you'll see an uptick there, and then obviously, Cobre Panama. As Paul mentioned, we're not completely sure on timing but there is potential to receive some gold and silver ounces towards the end of second quarter, and from there it should ramp up towards the end of the year. And if you wanted to know quarter-by-quarter, the weighting is more towards the second half of the year than the first.

Chris, on the outlook in terms of business development we're seeing a good pipeline and a good range of opportunities in the pipeline, so some of that on the gold side is principal gold strains and gold assets, some of that is looking at byproduct streams on -- or gold streams on byproduct assets. And also a combination of Greenfields and also some Brownfields opportunities, we're also seeing some opportunities that are mining opportunities but not gold opportunities, so it should be an active year.

Any clues on the copper jurisdictions you're looking at there? Thanks.

Nothing different from the usual spread in the portfolio, we like to try and keep most of most our money invested in good mining countries.

Thank you. Your next question comes from Greg Barnes from TD Securities.

Jason, can you get us some idea of what the lease bonus payments were in 2018?

Yes, in 2018 they are a little bit over $3 million. And as I mentioned in my comments, the lease bonus revenue may occur again in 2019 but it is something that is unpredictable as to when different operators will look to [indiscernible] land, so it's not something that we're comfortable putting in our guidance.

And then secondly, on Slide 24, the schematic you provided on the -- I don't remember what is called; anyway, the increase in production that Continental is expecting, how is that going to impact you in terms of revenue?

That should significantly increase our revenue over the course of the year, it's not a one-to-one relationship. We have royalties that cover Continental's really their entire operative position and the schematic that you're seeing and the production rates that are mentioned on the slide are just one small part of their overall production base. But in general, what you should expect from our Continental assets over the course of the year is continued growth and that project springboard is an area where we have been really concentrating on our acquisitions, so it's going to be a big part of that growth driver.

Is there a way for you to provide us a breakdown in the oil and gas revenue by Canada versus U.S. versus SCOOP/STACK versus the other regions that you're doing, it's some kind of way we can track how this revenues is growing from these various regions or changing from these various regions?

We do in our assets handbook break it out into different areas, and so you'll be able to see Canadian revenue there broken out into Weyburn and the rest of Canada, you also will be able to see our U.S. revenue broken out into Oklahoma which is our traditional SCOOP/STACK assets, Texas which is our Permian assets, and then the Continental royalty acquisition venture. So if you look into the asset handbook you'll be able to see how those revenues are evolving over time.

Your next question comes from Josh Wolfson from Desjardins.

Thanks for providing Slide 18, it helps us I guess model out the gold production for Franco. With regards to the Cobre Panama, I guess difference between production and deliveries to FNV, what would that factor be after 2019?

Josh, I expect it will be less. You've obviously got a carryover year-on-year but as the production rate of the asset is ramping up you're still going to have a little bit of a lag. So I expect a bit of a lag in 2020 but obviously much less than we've got in 2019.

And I guess with regards to -- I guess, potential investments that are being evaluated a number of other royalty companies or other competitors have sort of attempted to become one-stop shops, and even some public entities are relaxing constraints it seems lending and participating in equity. I guess what's Franco's view in terms of looking at other sort of financing options when consummating transactions to stay competitive in the market?

It is a big issue in the market and no surprise to anybody that the constraint on mines getting financed in this market really is the lack of equity capital. and so there are a number of mine sitting on the sidelines because people can't raise the full financing package. Our approach to that is to try to be to partner with other providers so that we can provide a seamless package as possible to an operator. But we're still -- our model has always been, we're a passive investor in these properties, so we don't want to be all of the capital that's provided. And so I think we'll stop short of doing anything that's like a one-stop shop.

But it sounds like Franco would be somewhat -- I guess, in the past it has invested in equity but it would be somewhat relax constraints to provide other sort of forms of financing?

Yes, and looking at [indiscernible] often the conversation we have with people is in doing a transaction the bulk of what we need to receive in the transaction as a royalty or stream, where we can help with other pieces of the capital structure for some of the juniors we've offered up to say we could provide a bit of equity as a lead order in an equity financing if that's what they want to do alongside a royalty deal. So we want to be creative in helping them to raise the full amount of equity or full amount of capital without exposing ourselves too much to the other elements of the capital structure.

Your next question is from Carey MacRury from Canaccord.

Another question for Jason on the oil and gas side; the 5-year guidance is to get to $140 million to $160 million in oil and gas revenue. Just wondering given decline rates how sustainable is that number and is there an attributable reserve number that we can compare the production rates against in terms of thinking about the ultimate reserve life of these assets?

The Reserve life of most of these assets is quite long and the sustainability of that 5-year number should be on the order of -- probably a couple of decades, it's comprised of our Canadian assets where again Weyburn is the biggest contributor there. Weyburn is a fairly long life asset, it's got another -- at least decade in front of it at current production rates and thereafter will slowly decline and that will be offset by our Orion asset which will continue to grow and be a steady contributor for many decades. In the U.S., what we expect to see there and what you'll see in the 5-year guidance is a ramp up of production over a 5-year time period, that will hopefully continue to ramp up as those fields are continually developed. And those should again be producing for many years to come. There is a huge amount of drillable inventory in the assets that we've acquired, and so as those assets are drilled out they will continue to produce revenue for 10, 20, 30 years. So we don't have a formal reserve to give you but they are -- those 5-year outlook numbers are very sustainable over a long period of time.

And just on the reserve; is that something that you have internally or is it -- like how do you get comfort on valuing on these assets over the over the long run?

When we value the assets we do have internal reserves that we run on the assets, we have separate reserve initiatives that we do for our Canadian assets from time to time, and then on our U.S. assets we have -- technically important to how those reserves are calculated. We used to publish reserves for Canadian assets when they were more material for the company but we stopped doing that a couple of years ago just because the various energy assets individually were no longer material to the overall company.

And then maybe one question on taxes; in light of the [indiscernible] settlement and the CRA auditing of your financials or taxes; has there been any discussion with the CRA post the lean settlement?

No, all we've received as mentioned is the reassessment on the Mexican income which they are saying is -- should be taxed to Canada and we're given -- we're back to filing a notice of objection with respect to the other jurisdictions, the audits are ongoing, and nothing has been raised at this time.

And I assume there is nothing to infer that the settlement or the outcome would be any different than what we would have -- I wouldn't think.

I think it's a precedent that's been set but first, we have to get reassessed by CRA, not [indiscernible].

Your next question is from Alex [ph] from CIBC.

I'm looking for some clarity on the 2023 guidance; to reach that growth are you guys looking at all of your development projects on Slide 21 contributing to sales growth or can you give us any more color on which of those assets grows on [indiscernible] are actually part of that sales growth?

So the majority of those assets, for example, Salares Norte, Rosemont, Valentine Lake; assets that the operator or the developer has public disclosure that the mines will be operating. We'll verify that jurisdiction, that certify that timeline, it has been included in our gains.

And then maybe just one more; we expect 2019 to be a busy year with the divestments from the senior producers; do you guys have any handle on the timeline for when some of the assets might come up for sale and when you guys might be involved in any of those transactions?

It's an area that a lot of people are looking at, we have to -- I'm sure we'll be involved in some of that. The -- I don't expect that those producers would sell everything all at the same time, I totally expect that they will stop with some of the assets and then slowly work through their portfolio. So I think it's going to play out over a number of years.

Your next question is found Fahad Tariq from Crédit Suisse.

Just a follow-up on the 2023 outlook; that guidance includes First Quantum getting throughput of 85 million tons per annum. In previous presentations you had talked about potentially reaching 100 million tons per annum throughput, at that rate can you give some color as to what the expected GEOs could be? How the guidance would change?

Yes. So we have previously -- obviously, we're going to where the assets has been disclosed at this time by First Quantum. And if you increase it upto 100 million tons per day, I guess it increased by 25%. So I think you would see 140,000 plus GEOs per year.

And just as a follow-up on Slide 29, the updated depletion estimate; any color on that -- that was just an error or is there something related to maybe the Cobre rampup?

No, it's just -- it was an error on our part in the press release yesterday that we're just rectifying this morning.

Your next question comes from Mike Jalonen from Bank of America.

Just a question for Paul. Paul, with Valentine Lake, have basically -- you got a NSR for financing the prefeasibility study. Says to me they don't have much money, the operator -- I guess, this kind of falls on Josh's question, more specifically on this project, would Franco look at [indiscernible] project to help them out because -- if they're doing a royalty for their pre-fees, what's next for the feasibility study, you know what I mean, kind of -- just need to keep raising money. So just wondering what Franco's view here is?

So the overall view is, we really like the asset, Mike, in terms of projects in North America that are open pittable, that have got grades that are this high, it really does stand out. We're -- so the first thing I'd say in terms of -- in this market where equity is so constrained, I think this is a good way to help developers to move to the feasibility stage, and so we're looking to do the royalty type deals like this. And then second, when it comes to the point of potentially putting the mine in the production, if we can be helpful to the company and provide more of the capital to move that forward, I would love to do something like that.

Okay, thank you for that. Maybe just a quick question for Sandip; just on how he feels after the balance sheet now, it's -- I've been covering Franco I think since '88, 1988 for those out there. Thanks to David to get me on it and I can remember Dave at least the balance sheet being net debt, I guess if I don't exclude the investments, so just wondering what the view is there?

Mike, your memory is too short; so if you remember back in 2015 we had a little over $500 million in debt, and that's why when we were doing the [indiscernible] deal, we did our first use of proceeds issue to be able to bring that on because we couldn't tolerate going to $1 billion worth of debt. So we have used it, we consider the debt facility like our credit card, we don't want to have it out there for too long but when there is good assets out there, we've got the ability to buy them.

Thank you. Your next question is from Brian MacArthur from Raymond James. Brian, please go ahead.

Just philosophically falling a little bit on to the last question, and I see on Salares, as well which I think it was in place but some of these new deal you have an NSR and then there is buybacks going forward, is that something -- I realize you inherited sometimes, is that something structurally going forward we're going to see because people -- you put an NSR on and it, you obviously don't want to get it back but some people may want the option to buy it back, is that something you're willing to do going forward?

I don't know that it's a structural change, and Brian, you're right, the Salares Norte royalty was just an existing royalty; so that's the nature of the terms. But also in the current market it is such a shortage of capital, people are looking for meaningful capital, and so we're trying to be creative and finding ways where we can do that. Also on our royalty we always got to be cognizant, you don't want to put too big a burden on the property over the long-term. So more so, the takeaway would be -- we and other players in the industry are just trying to be creative to find ways to provide capital in the industry when -- where there really is a shortage of capital.

And I guess the second thing on that one; you actually used shares, is there anything magical about why that was done as opposed to just cash? Because I mean, to me that one -- I mean, it looks quite interesting deal. I mean, you've put out 32 and I assume that there is a 1% buyback, so you get that back and you issued some shares that's all covered, like -- is that just the way it had to be done to get done or is there anything magical about that?

Well, nothing magical there, it's just the individual who was selling the royalty was interested in taking Franco stock.

Perfect. And just another thing, there was a comment made earlier on the Sudbury assets that were going to $800, and then that was still 2021 or something; does it go back to the old rate of $400 [indiscernible] or what actually happens?

Yes. So, post 2021 it's serves mining recurring on the Sudbury assets, the CDA [ph] particular, it returns to $400, and I think it's around $420-something right now for GEO.

Your next question is from Tanya Jakusconek from Scotiabank.

Maybe the first one just on the 2023 guidance; thank you very much for clarifying some of the additional assets that were put into the 2023 guidance. Maybe just to confirm; Goldstrike, are we seeing something flattish from Goldstrike from now till 2023? I mean, obviously with the joint venture that may change but is that what you have in your guidance at this point?

I have to go back and check in detail Tanya but I believe it's pretty flat going forward.

And then, Gold Quarry, we've finished with a minimum at that point; do we still continue with Gold Quarry into 2023?

Yes, there is a minimum at 11,250 ounces, that's reduced to approximately 3,000 ounces going forward. So in that year that's what it would be.

Okay. And then the Sudbury complex, we -- does that continue in 2023 because we don't have it continuing beyond that?

Correct. So as we've stated, Morrison is being placed on Karen maintenance at the end of March of this year, and McCreedy will be lined into 2020 at which time there is nothing foreseeable.

And then maybe just for Paul; just coming back to the M&A side. You mentioned that you're seeing activity on the gold side and also on the non-gold side and oil and gas; and I know I ask you this every quarter but what sort of size deals are we seeing on the gold side, the non-gold and the oil and gas?

So on the gold side, I'd say continue to see mid-sized deals. For the mining, that's non-gold, there is some mid-size potential for some larger deals there. And on the oil and gas, we're seeing a lot of activity and so it can be really sort of selective; those could be anything from a $100 million to quite larger deals.

And when you define mid-size deals, what is mid-size for you Paul?

$200 million to $300 million, that's mid-size.

So fair to say then $200 million to $300 million on the gold and the non-gold side, and then the oil and gas $100 million to $500 million?

Those are the sort of things that are in the pipeline.

Your next question is from Steven Butler from GMP Securities.

Antapikai [ph], Guadalupe and [indiscernible], you talked about those assets in your guidance. I just wanted to be clear are all of those three assets going to show declines in GEOs from -- in '19 versus '18; is that what you would expect Sandip?

Yes. Not material but yes, there is a decline.

I mean, Antamina, you talked about it being below the midpoint of a long-term range; so I wonder, if that's just -- again, it sounds like these are sort of mine -- that's a mine plan the same. And because I was just looking to clarify because you talked about Candelaria coming back to better order in the second half of '19 offset by lower deliveries [indiscernible]. I'm wondering if that was also a second half thing but [indiscernible] you're seeing overall slight decline '19 versus '18 on those three assets?

Correct.

Thank you, ladies and gentlemen. [Operator Instructions] We have no further questions at this time. You may proceed.

Thank you, Joanna. We expect to release our first quarter 2019 results after market close on May 8, 2019 with the conference call held the following morning. Thank you for your interest in Franco-Nevada.

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