Franco-Nevada Corporation Q1 FY2026 earnings call

Leadership and Governance Changes

• David Harcroft stepped down as Chair after 18 years, becoming Chair Emeritus, and Tom Albanese, former lead independent director with deep mining industry experience, assumed the Chair role.

Financial and Portfolio Achievements

• Q1 2026 delivered all-time record results for revenue, operating cash flow, adjusted EBITDA (up 84% YoY to 591.9 million USD), and adjusted net income (up 123% YoY to 458.3 million USD, or 2.38 USD per share).
• Record results were driven by significantly higher commodity prices: average gold price up 70% YoY, silver up 165% YoY, platinum up 128% YoY, combined with contributions from recent acquisitions.
• Franco-Nevada recorded a 63.8 million USD net gain from the partial buyback of its Cascabel stream by Jangshi Copper, which is not included in GEO revenue or adjusted EBITDA; 10,000 gold ounces received as proceeds are held in inventory as of quarter-end.
• Completed four new accretive acquisitions in Q1, all located in stable mining jurisdictions: a gold stream with Orzone on Casa Berardi, royalty financings for I-80 Gold in Nevada and Minerals 260 in Western Australia, and a third-party royalty on Banyans on Mac.
• The company holds 121 cash flow-producing assets, the world's most diversified portfolio of streams and royalties. Measured and Indicated resources support 34 years of mining at current production rates, with Inferred resources adding a further 12 years. Total attributable gold equivalent ounces have a market value of 124 billion USD at current prices, nearly three times the company's current market capitalization.

Project Progress

• At Cobre Panama, both power plant units have restarted, coal shipments have been received, and the Panamanian government approved processing of stockpiled ore, allowing mill restart and increased local employment. The SGS Global environmental audit is ongoing, with five interim reports published to date showing no material deficiencies, and the final report due in Q2 2026.

Sustainability and ESG

• Upgraded from AA to AAA by MSCI ESG Ratings, placing Franco-Nevada in the top tier of global mining and precious metal companies.
• Published the 2025 annual sustainability report outlining accomplishments and sustainability commitments, and expanded community and education initiatives in Peru and Nevada, alongside growing diversity scholarship programs.

Balance Sheet and Capital

• As of March 31, 2026, the company held 3.4 billion USD in total available capital, comprised of 715 million USD in cash, 1.5 billion USD on the parent credit facility (including accordion capacity), and 1.2 billion USD in liquid marketable securities. Subsequent to quarter-end, subsidiary Franco Nevada International established a new 500 million USD credit facility in Barbados with an additional 250 million USD accordion, adding further financial flexibility.
• The company increased its quarterly dividend by 16% in January 2026 to 0.44 USD per share (1.76 USD annualized), marking the 19th consecutive year of dividend increases.

Franco-Nevada operates two primary segments: Precious Metals and Diversified Commodities. Total company revenue for Q1 2026 reached a record 650.7 million USD, a 77% increase year-over-year (YoY). The Precious Metals segment accounted for 85% of total revenue, with precious metal gold equivalent ounces (GEO) sold totaling 117,980, a 17% increase YoY. Key contributors included Antemina, which saw revenue grow from 21.3 million USD to 82.3 million USD YoY on higher silver prices and deliveries; South Otoro, which posted a 322% increase in GEO from phase one open pit production; Hemlo, which included a 10 million CAD 2025 adjustment; and 2025 acquisitions Cote and Porcupine, which contributed 6,500 GEO and 31.5 million USD in revenue. The Diversified Commodities segment generated 82.6 million USD in revenue, a 10.4% increase YoY, despite diversified GEO sold falling to 18,373 from 25,962 YoY (the decline is due to a new fixed conversion price of 4,500 USD per ounce for GEO conversion). Revenue in the segment has been boosted by sharp oil price increases following the Middle East conflict, which will benefit Q2 results. Geographically, 87% of total revenue is sourced from the Americas.

• The sharp rise in oil prices (current WTI near 100 USD per barrel) following the late February U.S. attack on Iran will positively impact Q2 2026 results and full-year performance; a 10 USD per barrel increase above the 70 USD per barrel guidance assumption is expected to boost annual oil revenue by approximately 12%.
• Full-year 2026 results are expected to be stronger than Q1, with Q2 2026 projected to be particularly strong; after Q2, results are expected to remain at a similar level to Q2 for the remainder of the year, driven by ramp-up of production at assets like Cote and rescheduled deliveries of Condestable production that were delayed to Q2.
• The stream step-down at Candelaria is scheduled for mid-2027, when the stream will drop from 68% to 40%. If the operator approves the underground expansion project, first production is expected towards the end of the 2020s.
• The 10,000 gold ounces held from the Cascabel buyback are expected to be sold over the remainder of 2026, with any gains or losses booked outside of revenue and GEO metrics.

• Cobre Panama remains subject to regulatory and political uncertainty, with ongoing negotiations between the mine operator and the Panamanian government; Franco-Nevada, as a stream holder not involved in operations, is not party to discussions and faces uncertainty around the final outcome of regulatory review, though management views a material change to stream terms as unlikely.
• New Canadian federal transfer pricing rules for 2026 and beyond remain under evaluation, though management notes the company's existing international structure is robust and a prior tax dispute with the Canada Revenue Agency was settled successfully with no outstanding obligations.
• Deal execution depends on market conditions and seller willingness to transact, and large transactions may require syndication to manage single-asset exposure risk. Exploration and project development face permitting and social license risks, most notably at Yanacocha where community concerns around water management have delayed project development.

Q: Recent deals have focused on mid-tier developers. Is this a strategic pivot, and are more large portfolio stream sales like BHP's Antamina transaction expected? / A: More deals with mid-tier developers are an observed market trend, not a deliberate pivot. High gold prices give large operators strong organic cash flow, while mid-tier developers still need to access capital to advance projects. Large miners are also vending out smaller non-core assets, and the positive market reception to BHP's Antamina stream sale has encouraged other large players to consider similar transactions, so more such deals are expected in 2026.

A: Most deal sizes for mid-tier developer projects fall between 200 million and 500 million USD, while potential deals from large miners could be far larger. The company has enough capital to close a 4 billion USD deal on its own if it meets risk requirements, but will use syndication if needed to balance exposure. Most pipeline opportunities are precious metals-focused, but the company is open to diversified non-precious metal deals across a similar size range.

Q: What is the company's strategy for its equity investment portfolio, and will it monetize holdings like peers have done? / A: The company's strategy is to partner long-term with high-quality mine development and operating teams, providing both royalty/stream financing and equity support to differentiate the company as a preferred financing partner and build long-term relationships. The two largest holdings (Gmin and Discovery Silver) have significant near-term value creation potential as they advance projects, so the company plans to hold these positions for the long term, but will monetize when it makes sense to deliver shareholder returns.

A: No equity was taken in the Orzone Casa Berardi deal because Orzone did not require equity capital and had other existing funding sources, so Franco only took the stream. Franco will fully benefit from any exploration upside at Casa Berardi, as it has a variable stream after the first five fixed-ounce years, and management sees significant potential from ongoing drilling to extend mine life.

Q: Have there been board discussions about a special dividend given the strong balance sheet and high gold prices? / A: The board does discuss capital return, but the company's consistent long-term strategy prioritizes deploying capital to acquire high-quality long-life assets first. The core dividend policy is to maintain a sustainable, progressive annual increase, which the company has delivered for 19 consecutive years through all commodity price cycles. Management does not expect to implement a special dividend in the current environment, as the capital is better deployed to grow the portfolio for long-term shareholder value.

A: Management sees more relative value in smaller private transactions than in acquiring other public royalty/streaming companies, which typically trade at a valuation premium, so the company will continue focusing on individual asset transactions rather than large sector consolidation.