Good morning. My name is Jodie and I will be your conference operator today. At this time, I would like to welcome everyone to the Franco-Nevada Corporation Third Quarter Results Conference Call. All lines have been placed mute to prevent 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, Jodie. Good morning everyone. I want to thank you for joining us today to discuss Franco-Nevada's Q3 2017 results. Accompanying our call today 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; Paul Brink, Senior Vice President, Business Development will provide an update on Cobre Panama; and Jason O'Connell, VP, Oil and Gas will highlight our recent oil and gas transactions. This will be followed by a Q&A period. 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 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. Third quarter 2017 was another strong quarter for Franco-Nevada with the portfolio continuing to perform well and the Company benefiting from the diversity of our asset portfolio, both by the number producing assets as well as by commodity. As you turn to Slide 3, you'll see the overall gold equivalent ounces earned for each of the last five quarters. The number of yields earned has been relatively constant over this period as in first quarter 2017 when we had our Guadalupe stream deliver a higher number of gold ounces due to timing of deliveries. The Company currently has 47 producing mineral assets generating revenue. For the quarter the strong performers were Candelaria which continued to perform well. The asset delivered approximately 50% more stream GEOs in Q3 2017 compared to Q3 2016. Lundin Mining has done a great job since taking over this asset. MWS had a very good quarter for the Company also with GEOs delivered higher by 37% year-over-year. In fact, MWS is having its best year since we acquired the asset in 2011. In addition the Company benefited from a full quarter of deliveries in sales of gold from Guadalupe when compared to Q3 2016. You may recall that last year during Q3 Palmarejo reached its 400,000 ounce of gold minimum with Guadalupe not contributing until Q4 2016. The asset contributed 9,400 GEOs during Q3 2017. To see further detail of the movement in GEOs from Q3 2016 to Q3 2017, please turn to Slide 4. There was a decrease in silver GEOs as less silver ounces were delivered and sold from Antamina this quarter compared to a year ago; however, this was expected. The asset is still delivering more silver ounces than what was forecasted at the time of acquisition.…

Thanks, Sandip. As reported previously, we are participating in a 178 million stream financing for First Quantum to partly finance increasing the Cobre Panama ownership. Franco Barbados will be funding a 119 million or 67% of the total and our syndication partner CEF will fund the other 59 million. CEF is an investor in significant resource assets globally. The Company is owned 50% by CK Hutchison Holdings and 50% by CIBC. Many of you will be familiar with CK Hutchison, the publically listed flagship of the CK Hutchison Group, a Hong Kong conglomerate with a combined market cap greater than 100 billion. The project is now 63% complete and scheduled for phase commissioning during 2018 with continued ramp up over 2019. We have included a couple of recent photos of the progressive site in the slide deck. I will hand it over to Jason O'Connell who will discuss our recent oil and gas investments.

Thanks Paul. Turning to Slide 13, in September we completed a transaction with a company called Osum Oil Sands Corporation for 4% gross overriding royalty on their Orion project. The purchase price was CAD92.5 million and the acquisition has an effective date of September 1, 2017. The royalty applies to the Clearwater Formation which is the key bitumen producing formation and is calculated on gross sales less costs for transportation and diluent. The Orion project is SAGD oil sands asset which is located in the Cold Lake region of Alberta. It’s just south of Imperial’s Cold Lake operations. Its location provides favorable access to markets that’s further south and as well as high quality bitumen which commands favorable oil pricing. The operations currently produces between 7,500 and 8,000 barrels per day, however the Company is implementing a phased expansion of the asset. The first phase of that expansion Phase 2A is just finishing and will ramp up production to between 9,000 and 9,500 barrels per day over the course of the next year. Phase 2B is now currently underway which when complete will bring production to between 12,000 and 12,500 barrels per day by the end of 2019. And the Company is also targeting other expansion phases which would bring production up to approximately 20,000 barrels per day which is the current limit under the regulatory approvals. To provide some context for royalty revenue, we received the first payment for the month of September in the amount of CAD415,000. That payment provides an indicative monthly run rate at current production levels, so all else being equal that monthly revenue rates should expand by roughly 50% or so or up to $600,000 per month after the ramp up of Phase 2A, and we'll continue to grow at those expansions are moving…

[Operator Instructions] Your first question comes from the line of Cosmos Chiu of CIBC. Your line is open.

Hi, thanks Sandip, Paul, Jason and David. I would imagine David is around somewhere as well. Hi, David. Congrats on a very good quarter, your stock price is up 4%. Maybe first off on a tax question here. Sandip, I noticed that taxes were quite low in Q3 above 5% to earnings I would imagine. Cash taxes were about the same as well. Can you maybe talk a bit more about that in terms of what we should be looking at on a go forward basis for taxes?

So, Cosmos on the face of the income statement, yes, the effective tax rate was above 5%. There were some unusual items that flowed through this quarter which we did adjust for and coming up with the adjusted earnings number, as we finalized some tax returns in the United States. So there were some one-time only adjustments, but really the main reason is the source of the income this quarter. As I mentioned, we did get more stream ounces and stream ounces coming out of our subsidiary in Barbados was much higher than it was last year, resulting in a lower effective tax rate even when you do adjust for those one-time adjustments. So, on a go forward basis, I would say that 17% to 18% effective tax rate is probably more in line with what to expect going forward.

And then maybe switching gears a little bit, Jason, in terms of oil and gas, the Orion acquisition that you made in Calgary, what sort of like the reserve life? What kind of production -- how many years should I be modeling at this point in time?

Yes, Cosmos because the asset is owned by a private company, they don't want to disclose [Indiscernible]. But if you think about -- it all depends on production rates. So at the current production rate, there would be many-many decades of reserve life even at an expanded rate of upto 20,000 barrels per day which is more than double where we are today. That reserve life is several decades long, so that’s an asset that's going to continue to produce for many-many years.

And Jason, this is the producing bitumen so that's heavy oil right. So I would imagine there to be some kind of differential here compared to the WTI or any other sort of benchmark price there is. How should we look at in terms of the realized price?

Yes, you're correct Cosmos. So the differential right now between WTI and WCS is about just under $10 a barrel. So, you have to take that into account when you're calculating your revenues. When you're calculating revenues for this royalty, there're deductions for costs and that's why we provided sort of a monthly revenue figure to kind of give you an easy way to look at what revenues should look like going forward, but there are deductions for the cost of diluent and also the cost for transportation.

And Jason in the case - it's good that you've given us the revenue, but in the case where oil prices go up by quite a bit like what sort of sensitivity am I looking at?

It won't be quite one-to-one because there's that cost component at $50 oil, which is where we're approximately right now. The cost component of the royalty is about 30% or so. There will be some levers to the oil price.

And then maybe looking at the Delaware, the Permian Basin here Jason, thanks for giving us the 4 million to 5 million. To confirm, is that U.S. 4 million to 5 million?

Yes, so the Delaware [Indiscernible] for in U.S. dollars, that’s $4 million to $5 million.

And what's the situation right now in the Permian Basin? I know there was quite a bit of flooding in Texas earlier this year. You also have other players in the Permian Basin. Could you give us an update in terms of what's sort of happening?

Yes, the flooding that happened as a result of the hurricane was -- did not have a large effect on the Permian itself. It impacted oil fields further to the South in the area of the Eagle Ford, so the assets that we've got were not that affected. There was a short term impact to refining capacity and pipelines, but that's something that's been largely overcome. And just the in terms of the -- what's happening in the Permian in general, it is an incredibly quickly growing resource play in U.S. It’s attracting now about 50% of all the active rigs in the United States. You are continuing to see capital poured into the basin. It’s becoming more and more of a manufacturing play and so production levels are expected to rise here over the coming years. And so again, the royalties that we have purchased apply for different pieces of acreage throughout that play, but on the whole we expect our royalties will grow over the next 5 to 10 years here.

Maybe one last question from me herein on Cobre Panama, when we saw First Quantum release their production or their financial results earlier this month, they had a slight increase in the CapEx at Cobre Panama. Paul, any kind of concern from your perspective? And then also to confirm, this doesn’t impact at all Franco’s commitment. Is that correct?

Cosmos, yes, so the first thing is our commitment is a fixed commitment. So any change in the capital doesn’t impact that. You would have seen the Company is reporting that they are looking at a potential to expand the operation and also other ways to enhance it. So I think as a result of that there may be some additional costs over and above the project that was originally scoped. But other than that in terms of progress of the site, we visit it regularly and see them making very good progress.

And then in terms of the syndication with CEF Holdings, certainly you get $58 million or you don’t have to pay the $58 million for that one-third, not a huge sum of money for Franco-Nevada. So I am just trying to figure out the long-term thinking behind some of these syndication agreements here?

You're right. In terms of dollars, it doesn’t make a difference. It really was trying to put in place a syndication partner and part doing this deal is we are working through the mechanisms of the agency agreements so that we know that if there are bigger transactions that come down the pipe that we are in a position to; one, bid on them, and two, act very quickly.

Your next question comes from the line of Steven Butler of GMP Securities. Your line is open.

Sandip, a question for you on Fire Creek in terms of the deferred or ounces unsold in the quarter. Maybe comment on what portion of revenues maybe -- will impact favorably upon Q4 there? And as well maybe explain to us the reason behind a slight earnings or a slight loss to revenues at Hemlo in the quarter? Thanks.

Sure, Steve. So with respect to Fire Creek, there is a fixed amount of ounces that come every month. And at the end of the quarter, just based on timing, we had approximately 1,300 gold ounces that were not sold in the quarter, so they will be sold now in Q4. So that will move forward into the next quarter. With respect to Hemlo, we had an accrual for the Hemlo NPI in Q2 which was provided by the operator but once numbers were finalized the [Indiscernible] was too high, so we had to reverse that out in the quarter.

[Operator Instructions] Your next question comes from the line of Greg Barnes of TD Securities. Your line is open.

Thank you. Jason, just want to revisit the Orion revenue that you talked about 415,000 for September that's going after 600,000 a month with 2A in place or 2B in place?

That’s the 2A and 2B. 2B is -- 2A is currently basically completed and 2B has been sanctioned by the Board and is now underway. So if you just do the on the 415,000 after 2B is completed, you should be up about 600,000 monthly.

By 2020 then?

No that’s by about 2019.

Your next question comes from the line of Adrian Day of Adrian Day Asset Management. Your line is open.

Yes, good morning. I had two quick questions, if I may. The first one is obviously you're watching the tax issue that Wheaton has, I'd say with the Canadian tax authorities. And I am wondering how this might affect you going forward as well as any previous years? And then secondly -- although I think I know to the previous years. And then secondly, do you have -- for the next several years, do you have the sort of minimum goal that you want to keep the gold assets or is it very flexible?

Adrian, it’s David Harquail here. Our stated philosophy in terms of commodity mix is to be 80% precious metals. So we see gold is sitting within that 80% and this quarter we are still 89% in precious metals. So, we still have room to grow our portfolio of doing a few more non-precious deals. We absolutely intend to continue to do precious metals deals. And on the tax side, I will let Sandip speak to that.

Adrian, with respect to the tax side, we are -- we do have an offshore tax subsidiary based out of Barbados. We have been doing deals through that subsidiary for a number of years. We think we have all the proper processes and steps in place, and we are doing everything within the regulations and what’s doable under CRA tax rules. At the end of the day all we can do is to what we think is the right thing and we are aware that one of our peers is under audit with CRA. But I don’t think anything that’s occurred this quarter in our financials draws any more attention to us. And in terms of historical liability, if you would apply the same fact pattern that is going on with our peers to Franco-Nevada, just the way the streaming business works and you are able to recoup your upfront deposits, the immediate pass liability to the Company is approximately $10 million to $15 million just because we did enter the streaming business much later than our peer.

There are no further questions in the queue at this time. I will turn the call back over to the presenters.

Thank you, operator. We expect to release our 2017 results and an updated Asset Handbook on March 7 of 2018, and thank you for your interest in Franco-Nevada.

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