Good morning, ladies and gentlemen, and welcome to the Franco-Nevada Corporation Q2 2019 Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we'll conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Thursday, August 8th, 2019. I would now like to turn the conference over to Candida Hayden. Please go ahead.

Thank you, Brittney. Good morning, everyone. Thank you for joining us today to discuss Franco-Nevada's second quarter 2019 financial results. Accompanying this call is a presentation which is available on our website at franco-nevada.com where you will also find our full financial results. Sandip Rana, CFO of Franco-Nevada will provide a brief review of our results followed by Paul Brink, President and COO of Franco-Nevada who will provide the closing summary. This will be followed by a Q&A period. Representatives from our Toronto office are present to answer any questions. Before we begin formal 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 you all have seen from press release issued yesterday, the company delivered another quarter of strong financial results. As you turn to Slide 3, you can see the key financial results for the three and six months ended June 30th, 2019 compared to the same period in 2018. The company had a strong quarter with increases across all financial metrics when comparing the two quarters. For the six months ended June 30th, 2019 the company has achieved a number of financial records compared to the six months ended June 30th, 2018 these are all highlighted. 2019 is off to a very strong start. With the increase in revenue and due to the lower cost nature of our business model, adjusted EBITDA and adjusted net income were also significantly higher in Q2 2019 versus Q2 2018. Adjusted EBITDA was $137.9 million or $0.74 per stared and adjusted net income for Q2 2019 was $64 million or $0.34 per share. These strong financial results continue to showcase the strength of the Franco-Nevada business model in particular the quality and diversity of the assets. From an operational standpoint, our royalty and stream assets continue to perform well. As you turn to Slide 4, the chart illustrates the gold and gold equivalent ounces for each of the last five quarters. The GEOs earned for Q2 2019 were 107,774 compared to 107,333 in Q2 2018. It was a flat over year-on-year. Although GEOs were stable year-over-year, the company did have strong performance from its gold NPI such as Hemlo and Goldstrike as well as strong contributions from its PGM assets. However, the strong performance was somewhat negated by lower GEO deliveries by Guadalupe-Palmarejo and Antapaccay. Turning to Slide 5, we have two charts on the page. The first…

Thanks Sandip. I'll start with our mining assets and in particular Cobre Panama. Our team just returned from a latest visit to site and report that the ramp up is progressing well. The first two trains each a SAG mill and two ball mills are fully operational, all four in-pit crushers are also operational. The first copper concentrates were shipped in June and along with second quarter reporting First Quantum reiterated their 2019 production guidance of Cobre Panama. Payment timing and as a result timing of our GEO deliveries has been quicker on initial concentrate sales contracts and what we expect as longer-term sales contracts. As a result we're anticipating the GEOs delivered to Franco-Nevada will be towards the upper end of our prior guidance of 20,000 to 40,000 GEOs in 2019. On other items the business development team are actively pursuing new transactions and we have good prospects for acquiring additional precious metals assets this year. Turning to energy on slide 12. Franco-Nevada has acquired a 1% overriding royalty interest on a portion of Range Resources acreage in the Marcellus basin for $300 million. Our strategy has been to focus on the core of the best Oil & Gas basins that approve and they attract capital throughout the commodity cycle. The Marcellus is one of the most prolific and active gas and liquid space in North America Range's acreage has good exposure to the liquids rich portion of the Marcellus, given it a very competitive cost position. The assets are strong cash flow assuming gas prices of $2.40 per mcf. 2020 revenue's expected to be $25 million. Range has a strong track record for growing reserves and production form these assets. And our revenue is expected to grow to approximately $30 million per annum in five years. These are…

Thank you. Ladies and gentlemen, we’ll now being the question-and-answer session. [Operator Instructions] Your first question comes from Chris Terry from Deutsche Bank. Please go ahead.

Hi, guys. It's Chris here. I had a couple of questions today. The first one, just in terms of the precious potential opportunities. What's your best estimates or what are you seeing in terms of divestments that you expect from the majors? And how do you think that the M&A cycle may play out on that front from how you're viewing it? Thanks.

Chris, it's Paul. We expect that the run-up in the gold prices here will be a very good thing for those divestments. I think for the seniors looking to monetize some of those assets, they need a stronger environment where buyers of those assets can access more capital. So I think as we move into September, I think, you'll see the pace of those divestments pick up.

Okay. Thanks. Do you think it could be before the end of the year rather than 2020?

Yes. I think that prospects this year.

Okay. Okay, thanks. And then, on slide six where you've got the revenue mix in energy at 16%, just thinking about the mix going forward, you obviously had Cobre Panama, which increases the percentage of the precious space. From here though, if you were to do more Oil & Gas deals and you get closer to that overall level, does that mean you have to do, I guess, precious deals at the same time that you would Oil & Gas deals, or do you think naturally that Cobre Panama will just take up the slack and you can still get -- you still have room for one or two more Oil & Gas deals? Thanks.

With the growth in Cobre and also the run-up in gold prices, I guess, there is a little more room for non-gold transactions. So the focus of the company is on precious metal at the moment. And in terms of active deals, I think, it's most likely that the next transactions would be precious-metal related.

Okay. Thanks, Paul. The last one from me. Just on Cobre into 2020 and the timing, should we expect any delays at the start of 2020, or we just take the First Quantum guidance and run that straight through for what you should expect. Is guess is there any difference in timing versus the production for the Franco share? Thanks.

As we've pointed out there is a difference in timing when they produce concentrate to when we get our deliveries and it depends on when they get paid for those concentrate sales. Obviously, while they're still ramping up production, we get some of that lag. So I expect a bit of the lag in 2020, but it shouldn't be a substantial item.

Okay. That’s it for me. Thank you.

Your next question comes from Cosmos Chiu from CIBC.

Hi. Thanks, Sandip and Paul. Congrats on a very good quarter. Maybe next time, for next quarter, I'll just take what I think earnings is going to be, take on 10% and call that my new estimate. But maybe my first question is on Cobre Panama. 20,000 to 40,000 ounces guidance for 2019, that hasn't changed, but now you're saying that, you're going to be trending closer to 40,000 ounces up at the top. Is that once again just due to timing? And then on that, say, it's going to be 40,000 ounces how much higher is Q4 going to be compared to Q3?

So, Cosmos, yes. We'll adjust this timing. The part of it that we didn't know was what the timing of most payments would be. We had factored in roughly two months, which I think is a good estimate for over the longer term, what that timing will be with longer-term sales contracts. For the initial contacts, it's been just less than a month. And so, that's what's made up the difference. But I think, obviously, Q4 is going to greater than Q3 as we ramp up. I don't have the particular numbers on two quarters.

Okay. Maybe sticking with the guidance here. On the energy guidance, you've increased it in part due to the recent acquisition. But I also see that the assumption right now is $55 per barrel WTI. We're not there right now. It's -- had some decrease in the past few days. Could you give us some sensitivity in terms of like $1 per barrel change? What does that mean to your potential revenue? Jason O’Connell: Hey Cosmos, it's Jason O’Connell here.

Hi Jason Jason O’Connell: In terms of sensitivity, the biggest area of sensitivity is in regard to the Weyburn NRI, which is about you call it 20% of our overall revenue. And the last time we ran the sensitivities, I believe there was 10% change in the price of WTI resulted in about 100 -- sorry 1.1% -- sorry 10% change in WTI is sort of a 12% change in revenue.

Okay. And maybe sticking with energy here and the recent lower oil price. Do you see that as an opportunity to acquire more energy assets, or is the volatility right now a bit too much? And you'll rather wait for that to die down little bit? Jason O’Connell: No Cosmos. I think the volatility is less important on the energy side. I think there's lots of opportunity for us regardless of where the oil and gas prices are. There are a number of assets that are -- as we've discussed before that are available to us in the U.S. in particular. I don't think the commodity price is really what's driving the availability of those assets right now. I think the issue for us is more strategically, I mean where does our energy ratio sit relative to precious metals. As Paul mentioned I think the focus for the company right now is really more on precious metal side than the energy side. So while there are plenty of opportunities I think the focus on -- we really are focused right now on the precious metal side of the business.

And then on the partnership with Continental here, it always sounds like it's -- there's a favorable pace in terms of acquisitions and you've increased the commitment from $100 million to $120 million. Sandip, can you remind us in terms of how much more needs to be spent to get to that $120 million in 2019? And then how much is committed -- I guess $100 million in 2020 and then how much in 2021?

I can't -- off the top of my head Cosmos, I can't remember how much is left for this year. We did fund $37.5 million in the second quarter. It would be $100 million again in 2020 and approximately $40 million in 2021.

I got it. Okay, I can back that up. Great. And then in terms of the quarter here, I guess we've seen -- we saw some pretty good results coming out of Goldstrike, some pretty good results coming out of MWS quarter-over-quarter. Could you maybe comment on those two and more specifically on Goldstrike? Is that sustainable?

Sure. So first with MWS it's all about timing of when we get deliveries. But on an annual basis they typically do about 25,000 GEOs in term of deliveries to Franco. With respect to Goldstrike, part of the amount was some adjustments to the NPI calculation as we reviewed it and we found some errors that needed to be corrected so that was part of the increase related to Goldstrike so it's not sustainable going forward. Although we do expect a better NPI just based upon where the gold price is today.

Great. Thank you. That’s all I have.

Your next question comes from Greg Barnes from TD Securities. Please go ahead.

I think this is a question for Jason. As Cosmos pointed out, you have accelerated the payments on Continental. Is there a scope to extend that agreement or add to it and put more money into it? Jason O’Connell: Thanks Greg. There isn't specific plan to extend that agreement. It would be up to the two parties to jointly agree to do so. I think realistically what will happen is we'll evaluate once our full commitment is achieved we'll look at what the opportunities look like and how the assets are performing and decide at that point whether both parties have an appetite to extend the agreement further.

But given the pace of drilling you're seeing so far clearly there are opportunities beyond this. Jason O’Connell: Certainly on the acquisition side there have been. We are somewhat limited in terms of how much acreage Continental can actually buy on the ground that isn't in front of their drill schedule. So as they progress drilling up their acreage position it should become more, more difficult to acquire royalties. And so again we'll just have to evaluate once we get through in the next couple of years, how much of that royalty inventory is left to be acquired and what the prices look like at the time. And lastly how are the assets performing relative to our expectations. So I think we'll evaluate our little script today once we get through the initial commitment period and then likely make a decision alongside Continental at that point.

Okay. That’s good. Thank you.

Your next question comes from Carey MacRury from Canaccord Genuity. Please go ahead.

Hi good morning, guys. Just a question on the Goldstrike NPI. I think you mentioned in your press release like it potentially improved just given the synergies around the Newmont Barrick JV. I'm just wondering with all of the potential changes and overflows, do you have a sense on how that's going to work in Goldstrike and how that will be tracked going forward?

HI, Carey Sandip here. No visibility right now. We -- I think they're working there themselves, obviously and we will get information as it becomes available but we have no visibility right now. And then we do do annual site visit's audit, so I would say within the next six months, we should get some sort of visibility on what the impact will be.

And your NPI at the end of the day is based on the ore coming out of Goldstrike not the facility itself?

It's based on the -- so there's obviously the NSR which is a royalty based upon the various claim blocks within Goldstrike of which we get various royalty rates. And then you have the NPI where they get to deduct capital. So, what will happen is if they're allocating ore from other properties besides Goldstrike and getting processed at Goldstrike, we will get credit for operating cost related to those. So, it is a complicated calculation, but as I said once we get more visibility we can share it.

Okay. Thank you.

Your next question comes from Brian MacArthur from Raymond James. Please go ahead.

Hi, good morning. My question is also on oil and gas. For the first half you did very well. You sort of made about close to $50 million at give or take $55 oil which is what you're forecasting. But in the back half you should be similar I would think. Then on top of that you get some from the new Marcellus plus you got a ramp up more money at Continental. And then I think you get the $9 million catch up for the transaction. So, if you put that altogether, I'm surprised guiding this a little higher. Is there something else at the top being in the ramp up of the Marcellus deal so you sort of -- can you sort of indicate $25 million next year? So, if I just half that that's $12 million, plus my $9 million catch up it's $21 million right there is there something else going on somewhere else I'm missing? Jason O’Connell: Not entirely Brian. I think the big drivers for the difference there are Weyburn and generally Weyburn fluctuates quite a bit depending on the level of capital that's coming into operation. Oftentimes their capital allocation schedule is a bit back-end loaded in terms of back end of the year. And so you may see the Weyburn contribution come down a little bit. The biggest difference I think is just in way we look at most of the U.S. assets that we have that are outside of Range and outside of Continental. In terms of forecasting revenue there, it's very, very challenging to accurately budget for those assets. We just don't know when that acreage will be drilled and what the royalty rates on individual wells will be. And so our approach to budgeting there is arguably a little bit conservative in there -- we've sort of assumed our production will remain relatively flat or decline little bit from natural well decline. So, broadly speaking you're right if everything were to stay the same you'd be adding those elements on top, but I think the other elements if you think about are just again the capital at Weyburn oftentimes is backend loaded towards the end of the year. And then we have been a little bit conservative on the U.S. assets just because of that lack of visibility.

Great. Thanks very much. Jason O’Connell: I guess one other element Brian just I'm thinking about that there was also a bit of a catch-up payment early in 2019 from revenue that we under accrued for 2018. In other words, it was revenue in 2018 and 2019, so that's an another element just impacts that math.

Great. Thanks very much. That's very helpful.

[Operator Instructions] There are no further questions at this time. Please proceed.

Thank you, Brittany. We expect to release our third quarter 2019 results after market close on November 11th with a conference call held the following morning. Thank you for your interest in Franco-Nevada. Good bye.

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