Franco-Nevada Reports First Quarter Results

TORONTO, May 12 /CNW/ --
Q1 2011 Highlights (US dollars unless otherwise noted)

    --  Revenue of $73.1 million, a 56% increase year-over-year.
    --  Adjusted Net Income((1)) of $21.4 million (or $0.18 per share),
        a 157% increase year-over-year.
    --  Adjusted EBITDA((2)) of $50.6 million (or $0.43 per share), a
        38% increase year-over-year.
    --  Acquisition of Gold Wheaton completed, adding to 2011 growth
        outlook.

TORONTO, May 12 /CNW/ - Franco-Nevada Corporation (TSX: FNV) today
reported its financial results for the three months ended March 31,
2011.  Effective January 1, 2011, Franco-Nevada adopted International
Financial Reporting Standards ('IFRS') with comparative financial
information restated in accordance with IFRS. All figures are in US
dollars unless otherwise noted. The complete interim Financial
Statements and Management's Discussion and Analysis can be found today
on Franco-Nevada's website at www.franco-nevada.com and by tomorrow on SEDAR at www.sedar.com.

Selected Quarterly Financial Information:


(Millions of US dollars, except per share amounts)

                                                 Q1              Q1
                                               2011            2010

Revenue                            $           73.1 $          47.0

Operating income                               33.0            17.5

Net Income                                     21.2            15.0

Basic Earnings per Share           $           0.18 $          0.13

                                                                   

Adjusted Net Income((1))           $           21.4 $           8.3

Adjusted Net Income((1)) per share             0.18            0.07

Adjusted EBITDA((2))                           50.6            36.7

Adjusted EBITDA((2)) per share     $           0.43 $          0.32

                                                       As at

                                     March 31, 2011   Dec. 31, 2010

Working Capital                               305.9           576.5

Total Assets                                2,528.6           2007.0

Total Shareholders' Equity                  2,444.6           1980.6

(1)      Adjusted Net Income is defined by the Company as net income
         excluding foreign exchange gains and losses, gains and losses
         on investments, impairment charges related to royalties,
         streams, working interests and investments; unusual
         non-recurring items; and the impact of taxes on all these
         items.

(2)      Adjusted EBITDA is defined by the Company as net income
         excluding income tax expense, finance costs and income,
         foreign exchange gains and losses, gains and losses on
         investments, income/losses from equity investees, depletion
         and depreciation and impairment charges related to royalty and
         stream interests and investments.

(3)      EBITDA is defined by the Company as net income excluding
         income tax expense, finance costs, finance income and
         depletion and depreciation.

Portfolio Highlights

This press release contains forward-looking statements. Reference should
be made to the Cautionary Statement in Forward-looking Statements.

Details of the individual revenue contributions by asset and commodity
for the first quarter can be found in our Management's Discussion and
Analysis available on our web site.  Portfolio highlights include:

    --  Palmarejo's revenue of $20.8 million was a new quarterly record
        for Franco-Nevada from any asset.   Palmarejo benefitted from
        both higher gold prices and stronger production than prior
        quarters.  Under IFRS, Franco-Nevada is now accounting for
        Palmarejo on a historical cost basis rather than on a fair
        value basis as was previously done under Canadian GAAP.

    --  Goldstrike's revenue of $10.8 million for the quarter was
        generated 60% from profit royalties and 40% from revenue
        royalties.  To date, higher grades and gold prices have
        compensated for an expectation of a temporary period of lower
        production and increased waste stripping in 2011.

    --  Gold Wheaton's assets contributed $8.8 million in revenue for
        the quarter which represented only a short period of
        contribution from March 14, 2011 to March 31, 2011. At the
        Sudbury Basin, the ramp up of Morrison continued on schedule. 
        In South Africa at First Uranium's MWS operation, the tailings
        storage facility was commissioned in April, one month ahead of
        schedule, enabling the 3(rd) gold module to begin its
        completion testing.  Also in South Africa, the Ezulwini
        operation had several production interruptions in the quarter
        and since reported that shaft hoisting and material handling
        capacity have now significantly improved.

    --  Stillwater benefited from strong PGM prices in the quarter and
        generated $7.3 million in revenue.  Combined with the PGM
        contributions now coming from the Sudbury Basin, PGM revenues
        could represent 15% to 20% of overall revenues in 2011.

    --  Tasiast produced 51,321 ounces in the first quarter bringing
        cumulative production to over 550,000 ounces.  Franco-Nevada
        has a 2% revenue-based royalty that becomes payable once
        600,000 ounces have been produced.  According to Kinross'
        guidance, this is now expected to be early in the third quarter
        of 2011.  Kinross has announced that it is aggressively
        drilling Tasiast and expects to complete the expansion
        feasibility study by mid-2011.  Kinross expects the expanded
        project to commence operation early in 2014 with annual
        production potentially reaching 1.5 million ounces per annum. 
        At $1,400 gold, this royalty has the potential to generate $42
        million per annum for Franco-Nevada.

    --  Subika is another 2% revenue-based royalty that begins once 1.2
        million ounces have been produced from the royalty property. 
        This threshold is expected to be crossed in late 2012 or early
        2013.  In April, 2011, Newmont announced it expects to invest
        $200 million to expand Subika's annual production by 250,000
        ounces per year by 2013 through both a larger open pit and
        underground development.

    --  Detour - Franco-Nevada has a 2% revenue-based royalty covering
        both the Detour Gold and Trade Winds Ventures projects.  During
        the quarter, Detour Gold reported updated Measured and
        Indicated Resources totaling 23 million ounces on both
        projects.  Detour Gold has now begun construction and has
        announced that it expects to be in production by 2013.

    --  Other Projects - Xstrata restarted Falcondo in February and
        announced at the end of March 2011 that it had ramped up to an
        annualized rate of 14,000 tonnes of nickel in ferronickel. 
        Franco-Nevada has a 4.1% equity interest in Falcondo. At
        Ontario's Golden Highway, Franco-Nevada receives royalties from
        the Holloway, Hislop and most recently the Holt mines, operated
        by St. Andrew Goldfields.  In April, Holt was declared by St.
        Andrew Goldfields to be in commercial production where
        Franco-Nevada has a 10% revenue royalty at current gold
        prices.  On April 14, 2011, Augusta Resource Corporation
        announced that its record of decision for the Rosemont project
        is scheduled for January 2012.  Franco-Nevada has a 1.5%
        revenue royalty on all minerals from this large potential
        copper/moly/silver/gold development project in Arizona.

Gold Wheaton Acquisition

On March 14, 2011, the Company closed its previously announced
acquisition of Gold Wheaton. The transaction is valued at approximately
$1.1 billion and provides the Company with higher leverage to precious
metal commodity prices through contributions from the Sudbury Basin,
Ezulwini and MWS precious metal streams.  As part of the acquisition,
Franco-Nevada issued 11.7 million common shares and paid $259.5 million
in cash to Gold Wheaton shareholders. In addition, the Company had
previously purchased a block of shares from Quadra FNX Mining Ltd. for
$262 million.

As at May 12, 2011, the Company had 126.3 million shares outstanding,
approximately $270 million in cash and no debt or hedges.

Financial Results Discussion

Revenues

Revenue was $73.1 million in the first quarter of 2011 compared with
$47.0 million for the first quarter of 2010. The increase in revenue
was attributable, in part to, higher contributions from Palmarejo,
Stillwater and other gold assets due to higher production and commodity
prices. In addition, with the acquisition of Gold Wheaton, revenues
benefitted from $8.8 million from the assets acquired. Revenue also
benefitted from a change to quarterly accrual for the Gold Quarry
minimum royalty provisions, which was previously trued-up in the fourth
quarter.

Revenue for the quarter was earned 86% from precious metal assets (72%
gold and 14% PGMs), 12% from oil and gas (8% oil and 4% gas) and 2%
from other assets.  Geographically, 88% of revenue came from North
America (38% US, 20% Canada and 30% Mexico), Africa (7%), Australia
(4%) and Other (1%).The components of revenue were earned as follows:
46% revenue-based, 40% streams, 9% profit-based, 4% working interests
and 1% other.

Costs and expenses

Costs of sales include the costs of ounces purchased under stream
agreements, oil & gas production taxes, operating costs on oil & gas
working interests and net proceeds taxes on mineral interests. Cost of
sales for the quarter was $11.1 million which included $9.0 million for
the cost of stream ounces. Depletion and depreciation was $25.4 million
which reflects higher depletion on Palmarejo, Stillwater and the Gold
Wheaton assets driven by higher revenues earned from those interests.

During the quarter, the Company recorded a $13.5 million mark-to-market
gain offset by $7.7 million in transaction costs associated with the
Gold Wheaton transaction. Under IFRS, transactions costs associated
with business combinations are expensed rather than capitalized as was
done under Canadian GAAP.

Income tax expense decreased to $9.1 million from $10.4 million due to a
deferred tax recovery related to the Mexican and Gold Wheaton
operations.

Net Income

Net income for the first quarter of 2011 was $21.2 million, or $0.18 per
share, which included the $5.6 million gain, described above, $6.5
million in foreign exchange losses and $1.7 million in losses recorded
from the equity accounting of our investment in Gold Wheaton, prior to
the acquisition. Adjusted Net Income((1)) for the first quarter was $21.4 million, or $0.18 per share, compared
with $8.3 million, or $0.07 per share, for the same period of 2010.

EBITDA((3)) and Adjusted EBITDA((2)) were $55.9 million, or $0.48 per share, and $50.6 million, or $0.43 per
share, respectively, for the three months ended March 31, 2011. Our
definitions of these non-IFRS financial measures and the
reconciliations to IFRS measures can be found in the Company's
Management's Discussion and Analysis for Q1 2011 and at the end of this
press release.

Balance Sheet and Capital Structure

As at May 12, 2011, Franco-Nevada had a strong financial position with
no debt or hedges, working capital of $305.9 million, and marketable
securities valued at $54.5 million. In addition, the Company has an
undrawn $175 million revolving term credit facility available.

As at May 12, 2011, the Company has 126.3 million shares outstanding,
17.6 million warrants (including 6.2 million assumed from the
acquisition of Gold Wheaton), 2.7 million stock options and 0.8 million
other.

Dividend Declaration

Today, the Board of Directors of Franco-Nevada declared the monthly
dividend of US$0.04 per share for each of August and September.   The
August 2011 dividend will be paid on August 25, 2011 to shareholders of
record on August 11, 2011 and the September 2011 dividend will be paid
on September 29, 2011 to shareholders of record on September 15, 2011.

Shareholder Information

The complete Financial Statements and Management's Discussion and
Analysis can be found today on Franco-Nevada's website at www.franco-nevada.com and by tomorrow on SEDAR at www.sedar.com. Management will host a conference call on May 13, 2011 at 10:00 am
Eastern Time to review the results. Interested investors are invited to
participate as follows:

    --  Conference Call: Local: 647-427-7450; Toll-Free:
        1-888-231-8191; Title: Franco-Nevada First Quarter Results.
    --  Conference Call Replay: A recording will be available until May
        20, 2011 at the following numbers:
  o Local: 416-849-0833; Toll-Free: 1-800-642-1687; Pass code:
    39121280.
    --  Webcast: A live audio webcast will be accessible at
        www.franco-nevada.com.
    --  Slides: A presentation to accompany the conference call will be
        available on the Company's website prior to the call.

Corporate Summary

Franco-Nevada Corporation (TSX: FNV) is a gold-focused royalty and
stream company with additional interests in platinum group metals, oil
& gas and other assets. Its portfolio of high-margin cash flow
producing assets is located principally in North America. The Company
also holds interests in a growing pipeline of development assets and
has exposure to some of the largest gold discoveries in the world.

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

Certain information contained in this press release, including any
information as to future financial or operating performance and other
statements that express management's expectations or estimates of
future performance, constitute 'forward-looking statements'. All
statements, other than statements of historical fact, are
forward-looking statements. The words 'anticipates', 'believes',
'plans', 'estimate', 'expect', 'expects', 'expected', 'forecasted' and
similar expressions identify forward-looking statements.
Forward-looking statements are necessarily based upon a number of
estimates and assumptions that, while considered reasonable by
management, are inherently subject to significant business, economic
and competitive uncertainties and contingencies. The Company cautions
the reader that such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause actual
financial results, performance or achievements of Franco-Nevada to be
materially different from the Company's estimated future results,
performance or achievements expressed or implied by those
forward-looking statements and the forward-looking statements are not
guarantees of future performance. These risks, uncertainties and other
factors include, but are not limited to: fluctuations in the prices of
the primary commodities that drive the Company's royalty revenue (gold,
platinum group metals, copper, nickel, uranium, oil & gas);
fluctuations in the value of the Canadian and Australian dollar,
Mexican peso, and any other currency in which the Company generates
revenue, relative to the US dollar; changes in national and local
government legislation, including taxation policies; regulations and
political or economic developments in any of the countries where the
Company holds interests in mineral and oil & gas properties; influence
of macroeconomic developments; business opportunities that become
available to, or are pursued by us; reduced access to debt and equity
capital; litigation; title disputes related to our interests or any of
the properties; operating or technical difficulties on any of the
properties; and risks and hazards associated with the business of
development and mining on any of the properties, including, but not
limited to unusual or unexpected geological formations, cave-ins,
flooding and other natural disasters or civil unrest. The
forward-looking statements contained in this press release are based
upon assumptions management believes to be reasonable, including,
without limitation, the ongoing operation of the properties by the
owners or operators of such properties in a manner consistent with past
practice, the accuracy of public statements and disclosures made by the
owners or operators of such underlying properties, no material adverse
change in the market price of the commodities, and any other factors
that cause actions, events or results to differ from those anticipated,
estimated or intended. Accordingly, readers should not place undue
reliance on forward-looking statements because of the inherent
uncertainty. For additional information with respect to risks,
uncertainties and assumptions, please also refer to the 'Risk Factors'
section of our most recent Annual Information Form filed with the
Canadian securities regulatory authorities on www.sedar.com, as well as our annual and interim MD&A. The forward-looking statements
herein are made as of the date of this press release only and
Franco-Nevada does not assume any obligation to update or revise them
to reflect new information, estimates or opinions, future events or
results or otherwise, except as required by applicable law.

Non-IFRS Measures

Adjusted Net Income, EBITDA and Adjusted EBITDA are intended to provide
additional information only and do not have any standardized meaning
prescribed by International Financial Reporting Standards ('IFRS') and
should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with IFRS.  These measures are
not necessarily indicative of operating profit or cash flow from
operations as determined under IFRS.  Other companies may calculate
these measures differently. For a reconciliation of these measures to
various IFRS measures, please see the end of this press release or the
Company's current MD&A disclosure found on the Company's website and on
SEDAR.

Non-IFRS Financial Measures Reconciliation

                                                 Three months ended

(Expressed in thousands except per      March 31, 2011   March 31, 2010
share amounts)

Net Income                            $         21,224 $         14,986

  Income tax expense                             9,120           10,426

  Finance costs                                    615              518

  Finance income                                 (438)          (1,488)

  Depletion and depreciation                    25,411           19,240

EBITDA                                $         55,932 $         43,682

Basic Weighted Average Shares                  116,769          113,435
Outstanding

EBITDA per share                      $           0.48 $           0.39

                                                                       

Net Income                            $         21,224 $         14,986

  Income tax expense                             9,120           10,426

  Finance costs                                    615              518

  Finance income                                 (438)          (1,488)

  Depletion and depreciation                    25,411           19,240

  Foreign exchange loss and other                6,466            9,526
  expenses

  Loss from equity investee                      1,666                -

  Gain on investments                         (13,456)         (16,522)

Adjusted EBITDA                       $         50,608 $         36,686

Adjusted EBITDA per share             $           0.43 $           0.32

                                                                       

  Net income                          $         21,224 $         14,986

  Foreign exchange loss, net of                  4,938            7,509
  income tax

  Gain on sale of investments, net of         (11,569)         (14,181)
  income tax

  Loss from equity investee, net of              1,199                -
  income tax

  Transaction costs of Gold Wheaton,             5,595                -
  net of income tax

Adjusted Net Income                   $         21,387 $          8,314

Adjusted Net Income per share         $           0.18 $           0.07

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