Franco-Nevada Announces Record Q2 Results, New Royalties and NYSE Listing

TORONTO, Aug. 9, 2011 /CNW/ --
Q2 2011 Highlights (US dollars)

    --  Record quarterly revenue of $106.3 million, a 112% increase
        year-over-year
    --  Record quarterly Adjusted EBITDA((2)) of $82.6 million (or
        $0.65 per share)
    --  Royalties acquired on Perseus Mining's Central Ashanti and
        Osisko's Canadian Malartic projects
    --  New unsecured credit facility with lower costs to replace
        previous arrangement
    --  Commencement of trading on the NYSE expected September 8, 2011

TORONTO, Aug. 9, 2011 /CNW/ - Franco-Nevada Corporation (TSX: FNV) today
reported its financial results for the three and six months ended June
30, 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)

                           Three months ended          Six months ended

                               Q2          Q2        Q2              Q2
                              2011       2010      2011            2010

Revenue                    $ 106.3  $    50.3 $   179.5 $          97.2

Operating income              45.3       16.2      78.2            33.7

Net income                    33.3       22.3      54.5            37.3

Basic earnings per share   $  0.27  $    0.20 $    0.45 $          0.33

                                                                       

Adjusted Net Income((1))   $  33.2  $     6.3 $    54.6 $          15.0

Adjusted Net Income per    $  0.26  $    0.06 $    0.45 $          0.13
share((1))

Adjusted EBITDA((2))       $  82.6  $    39.0 $   140.9 $          75.7

Adjusted EBITDA per share( $  0.65  $    0.34 $    1.16 $          0.66
(2))

                                                                       

                                                 As at            As at
                                          June 30, 2011   Dec. 31, 2010

Working capital                               $   337.1 $         572.7

Total assets                                    2,548.7         2,007.0

Total shareholders' equity                    $ 2,478.7 $       1,980.6

(1)   Adjusted Net Income is defined by the Company as net income
      excluding foreign exchange gains/losses, gains/losses on the sale
      of 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 income and costs, foreign exchange
      gains/losses, gains/losses on the sale of investments,
      income/losses from equity investees, depletion and depreciation
      and impairment charges related to royalty and stream interests
      and investments.

This press release contains forward-looking statements.  Reference
should be made to the Cautionary Statement on Forward-Looking
Information at the end of this press release.

CEO Commentary


David Harquail, President and CEO, made the following comments in relation to the
second quarter 2011 results:

'Franco-Nevada's royalty and stream business model is proving itself. 
Higher precious metal prices are translating into proportionately
higher earnings and cash flow as there are no material offsets from
operating or capital cost inflation.  The business has also proven
scalable.  Despite a significant expansion in the portfolio since the
beginning of the year, our ongoing overhead costs have remained
steady.  Our revenues are now 90% from precious metals and if recent
commodity prices continue, we expect the contribution from precious
metals to rise further. Assuming continuing steady state operations and
commodity prices similar to what we experienced in the second quarter,
we now expect 2011 revenues to be between $375 million to $400
million.'

'This continues to be a very good environment to grow our royalty
business. Since the first quarter, assets in our existing royalty
portfolio have continued to benefit from increased investment in
exploration and development. In addition, we added two new gold royalty
assets that are just starting production this year. Franco-Nevada now
has 208 mineral assets of which 39 are producing in 2011 and another 24
are advanced projects. Franco-Nevada has a solid pipeline of
opportunities and expects to add further royalties and streams.'

'At June 30, 2011, Franco-Nevada had over $335 million in cash and
marketable securities available to invest in new opportunities.  In
addition, we replaced our available $175 million credit revolver with a
new $175 million facility that is unsecured, more flexible and has
lower cost terms.  Finally, Franco-Nevada has received authorization to
list its common shares on the New York Stock Exchange. We anticipate
commencement of trading on the NYSE on September 8 under the same
symbol of FNV, subject to the completion of all regulatory filings and
authorizations. This is the ideal time to present Franco-Nevada to US
investors as a growth and dividend paying alternative to the gold ETF.'

Portfolio Highlights


Details of the individual revenue contributions by asset and commodity can be
found in our Management's Discussion and Analysis available on our web
site.  Asset details are also available on our web site and in our
Annual Information Form.

New Royalties

    --  Central Ashanti is an effective 1.5% gross royalty on Perseus
        Mining's gold project in Ghana. Perseus has announced that
        construction of the $160 million open-pit project is well
        advanced with production expected to begin in the current
        quarter and reach an average of 290,000 ounces per year by
        Perseus' fiscal year 2014. Perseus has reported reserves of
        over 3.3 million ounces and in late July significant new drill
        intercepts were reported by Perseus indicating likely reserve
        additions. Franco-Nevada's acquisition cost was $35 million
        paid in cash.
    --  Canadian Malartic is a 1.5% gross royalty on part of Osisko
        Mining's open pit gold project in Quebec.  Osisko has announced
        commercial production was achieved in June and that it is
        targeting to produce an average of 575,000 ounces per year over
        a 16 year mine life. The royalty covers 7 claims including the
        eastern portion of the original reserve pit, part of the South
        Barnat zone and exploration potential east of the pit. 
        Franco-Nevada's acquisition cost was approximately $10 million
        which was paid in common shares.

Producing Assets

    --  Palmarejo's second quarter revenue of $25.8 million was
        significantly stronger due to higher gold prices and
        production.
    --  Sudbury Basin mines include the Levack, McCreedy and Podolsky
        mines.  In their first full quarter in Franco-Nevada's
        portfolio, the three mines generated $21.7 million in revenues
        split $17.4 million from PGM's and $4.3 million from gold. 
        Stronger precious metals prices in the quarter helped this
        performance. Quadra FNX announced that the McCreedy mine may
        begin focusing on nickel rich ores which could reduce precious
        metals production from that mine.
    --  Goldstrike's revenue of $10.7 million for the quarter was
        almost evenly generated between profit and revenue royalties
        and is performing better than anticipated.
    --  MWS also had its first full quarter in Franco-Nevada's
        portfolio and generated $8.1 million in revenues. First Uranium
        has announced that the 3(rd) gold module has started production
        and is undergoing its completion tests. Production was
        interrupted for approximately one week in late July over
        environmental reporting concerns.
    --  Ezulwini generated $7.9 million in its first full quarter in
        Franco-Nevada's portfolio but this was achieved through minimum
        royalty provisions.  First Uranium has reported that the mine
        continues to experience a slow ramp up in both production
        volumes and recovered grades.
    --  Stillwater benefited from strong PGM prices in the quarter and
        generated $5.9 million in revenue.  Combined with the PGM
        contributions now coming from the Sudbury Basin, PGM revenues
        represented 22% of overall revenues in the second quarter.
        Anglo Platinum has reported that its Pandora mine is in a shaft
        deepening phase and will likely not generate new revenue until
        next year.
    --  Oil & Gas assets generated $9.3 million of revenue in the
        quarter.  Higher oil prices helped but production volumes have
        been impacted by wet conditions in southern Saskatchewan
        following the spring floods.  This has temporarily impacted
        production volumes which may continue through the balance of
        the year.

Future New Revenues

    --  Kinross Gold announced cumulative production at Tasiast
        surpassed 600,000 ounces in July 2011 which is the trigger for
        Franco-Nevada's 2% royalty payments to begin. Kinross Gold has
        stated that it is aggressively advancing an expansion project
        with the potential for 1.5 million ounces per annum.  At
        $1,500/oz gold, this royalty has the potential to generate $45
        million per annum for Franco-Nevada.
    --  Detour is a 2% revenue royalty covering both the Detour Gold
        and Trade Winds Ventures projects which have collectively
        reported 23 million Measured and Indicated resource ounces. 
        Detour Gold completed a C$428 million bought deal in July which
        fully finances its $1.3 billion project.  Detour has announced
        that it is now in full construction and production is expected
        to begin by early 2013.
    --  Subika is a 2% revenue royalty that begins once 1.2 million
        ounces have been produced from the royalty property which is
        expected by 2013.  Newmont announced in the quarter that it
        expects to invest $200 million to expand Subika's annual
        production by 250,000 ounces by 2013 through a larger open pit,
        underground development and an expanded mill.
    --  Garden Well is a new gold project on the Duketon tenement in
        Western Australia which is operated by Regis Resources and on
        which Franco-Nevada has a 2% revenue royalty.  On June 16(th),
        Regis announced approval to construct a four million tonnes per
        annum project capable of producing 1.57 million ounces of gold
        over the mine life.  Permitting and long lead items have
        already been advanced and Regis expects commercial production
        in the second half of 2012 with first full year production of
        247,000 ounces.  We believe other resource opportunities within
        trucking distance exist on these royalty tenements.
    --  Peculiar Knob is a new iron ore project in South Australia
        operated by WPG Resources on which Franco-Nevada has a
        production payment comparable to a 2% gross royalty. WPG states
        that at 63.2% iron, the project is Australia's highest grade
        undeveloped iron ore deposit and can be produced as a direct
        shipping ore. On July 8(th), WPG announced permits had been
        achieved to allow the start of capital expenditures of A$170
        million for mine and port facilities, supplemented by another
        A$250 million of capital expenditures for contractor mobile
        plant and equipment.  WPG expects to be in production by June
        2012 with project capacity of 3.3 million tonnes per annum for
        a minimum of 6 years.
    --  Agi Dagi is a development project in Turkey operated by Alamos
        Gold on which Franco-Nevada has a 2% royalty. In June, Alamos
        Gold announced that strong intercepts at Camyurt indicated the
        potential for a new project just 3 km away. Franco-Nevada's 2%
        revenue royalty at Agi Dagi includes the most recent reported
        intercepts at Camyurt.
    --  Other Projects - Net profits royalties at Hemlo and Musselwhite
        are expected to reach their payout thresholds soon. Eldoraldo
        Gold now anticipates a construction decision in Q1 2012 for
        Perama Hill on which Franco-Nevada has a 2% revenue royalty. A
        revised proposal for the New Prosperity copper-gold project has
        been submitted by Taseko Mines which, if permitted, would
        represent a material new gold stream for Franco-Nevada.  In
        April, Augusta Resource Corporation delivered the preliminary
        environmental impact statement for Rosemont on which
        Franco-Nevada has a 1.5% revenue royalty on all commodities.   
        At La Mancha Resources' Ity mine, cumulative production has
        surpassed the 13 tonnes of gold production threshold so that
        our royalty will become payable in the third quarter of 2011. A
        new preliminary economic assessment on Courageous Lake by
        Seabridge Gold indicates the potential to produce over 6
        million ounces. St Andrew Goldfields expects to complete a
        prefeasibility study on Taylor by the end of the year. Jaguar
        Mining has announced that it has received a preliminary license
        for its Gurupi project.

Financial Results Discussion

Revenues

Revenue was $106.3 million in the second quarter of 2011 compared with
$50.3 million for the second quarter of 2010. The increase in revenue
was attributable to assets acquired in the Gold Wheaton transaction
which contributed $37.8 million to the Company's second quarter
revenue. In addition, revenue from Palmarejo and Stillwater was higher
due to increases in average commodity prices and production levels at
these mines. Revenue from Gold Quarry was also higher in the quarter
due to a change in accounting for the minimum royalty provision clause
in 2011 when compared to 2010. The Company will recognize a portion of
the minimum ounce true-up in each quarter in 2011 whereas the minimum
ounce true-up was recognized in the fourth quarter in previous years.

Revenue for the second quarter of 2011 was earned 90% from precious
metal assets (68% gold and 22% PGMs), 8% from oil and gas (5% oil and
3% gas) and 2% from other assets.  Geographically, 80% of revenue came
from North America (23% US, 31% Canada and 26% Mexico), Africa (15%),
Australia (4%) and Other (1%).The components of revenue were earned as
follows: 32% revenue-based, 60% streams, 5% profit-based, 2% working
interests and 1% other.

Revenue for the six months ended June 30, 2011 was $179.5 million, an
increase of 85%, over $97.2 million in revenue for the six months ended
June 30, 2010. Increases were driven by assets acquired in the Gold
Wheaton transaction, higher average commodity prices and organic growth
within the portfolio.

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. Costs of
sales for the second quarter of 2011 were $18.6 million which included
$15.8 million for the cost of stream ounces. Depletion and depreciation
were $37.3 million, an increase of 64%, over $22.8 million recorded in
the second quarter of 2010. Depletion was higher due to the Gold
Wheaton assets, Palmarejo and Gold Quarry partially offset by lower
depletion on oil & gas assets and Goldstrike due to lower production
levels.

For the six months ended June 30, 2011, costs of sales were $29.6
million compared to $13.5 million for the six months ended June 30,
2010. Depletion and depreciation of $62.7 million and $42.1 million
were recorded for the six months ended June 30, 2011 and 2010,
respectively. The increase was attributable in part to the streams
acquired in the Gold Wheaton acquisition, and Palmarejo and Stillwater,
due to higher production levels. The increase was partially offset by
lower depletion on oil & gas assets and Goldstrike due to lower
production.

As part of the Gold Wheaton acquisition, the Company recorded a $13.5
million mark-to-market gain offset by $7.8 million in transaction costs
in the six months ended June 30, 2011. Under IFRS, transactions costs
associated with business combinations are expensed rather than
capitalized as was done under Canadian GAAP.

Income tax expense was $12.8 million and $21.9 million for the three and
six months ended June 30, 2011, respectively.

Net Income

Net income for the second quarter of 2011 was $33.3 million, or $0.27
per share, and Adjusted Net Income((1)) for the second quarter was $33.2 million, or $0.26 per share.

EBITDA and Adjusted EBITDA were $83.6 million, or $0.66 per share, and
$82.6 million, or $0.65 per share, respectively, for the three months
ended June 30, 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 Q2 2011 and at the
end of this press release.

Balance Sheet and Capital Structure

As at June 30, 2011, Franco-Nevada had a strong financial position with
no debt or hedges, working capital of $337.1 million, and investments
valued at $87.2 million, of which $55.2 million are held in liquid
publicly listed equity investments. In addition, the Company has an
undrawn $175 million unsecured revolving term credit facility
available.

As at August 8, 2011, the Company had 127.0 million shares outstanding,
19.6 million warrants (including 6.2 million assumed from the
acquisition of Gold Wheaton), 2.6 million stock options and 0.5 million
other.

Dividend Declaration

In July 2011, the Company began the payment of an increased monthly
dividend of $0.04 per share compared to C$0.025 per share in the prior
months. Today, the Board of Directors of Franco-Nevada declared the
monthly dividends for October, November and December 2011.  The October
dividend will be paid on October 27, 2011 to shareholders of record on
October 13, 2011, the November dividend will be paid on November 24,
2011 to shareholders of record on November 10, 2011 and the December
dividend will be paid on December 22, 2011 to shareholders of record on
December 8, 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 August 10, 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 Second Quarter Results.
    --  Conference Call Replay: A recording will be available until
        August 17, 2011 at the following numbers:
  o Local: 416-849-0833; Toll-Free: 1-855-859-2056; Pass code:
    83363229.
    --  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. The Company has a diversified portfolio of high
margin assets along with a growing pipeline of development assets with
exposure to some of the largest gold discoveries in the world. Its
business model benefits from rising commodity prices and new
discoveries while limiting operating and capital cost inflation.
Franco-Nevada is generating growing free cash flow and increasing
dividends and is the gold investment that works.

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', 'anticipated',
'believes', 'plans', 'estimate', 'expect', 'expects', 'expected',
'forecasted', 'targeted' 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; operating or technical difficulties
on any of the properties; 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; completion of regulatory
approvals as planned; 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; 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 SEDAR at 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 June Six months ended June 30,
                                       30,

(Expressed in         2011            2010     2011             2010
millions except
per share amounts)

Net Income         $  33.3 $          22.3 $   54.5 $           37.3

  Income tax          12.8            12.2     21.9             22.6
  expense

  Finance costs        1.3             0.6      1.9              1.1

  Finance income     (1.1)           (0.7)    (1.6)            (2.2)

  Depletion and       37.3            22.8     62.7             42.1
  depreciation

EBITDA             $  83.6 $          57.2 $  139.4 $          100.9

Basic Weighted       126.3           114.0    121.6            113.9
Average Shares
Outstanding

EBITDA per share   $  0.66 $          0.50 $   1.15 $           0.89

Net Income         $  33.3 $          22.3 $   54.5 $           37.3

  Income tax          12.8            12.2     21.9             22.6
  expense

  Finance costs        1.3             0.6      1.9              1.1

  Finance income     (1.1)           (0.7)    (1.6)            (2.2)

  Depletion and       37.3            22.8     62.7             42.1
  depreciation

  Foreign exchange   (1.0)          (12.5)      5.5            (3.0)
  gains/losses and
  other expenses

  Loss from equity       -               -      1.7                -
  investee

  Gain on                -           (5.7)    (5.7)           (22.2)
  investments

Adjusted EBITDA    $  82.6 $          39.0 $  140.9 $           75.7

Adjusted EBITDA    $  0.65 $          0.34 $   1.16 $           0.66
per share

  Net income       $  33.3 $          22.3 $   54.5 $           37.3

  Foreign exchange   (0.3)          (10.8)      3.9            (3.3)
  loss and other
  expenses, net of
  income tax

  Gain on                            (5.2)   (11.5)           (19.0)
  acquisition of
  Gold
  Wheaton/sale of
  investments, net
  of income tax

  Mark-to-market     (0.4)               -      0.3                -
  changes on
  derivative

  Loss from equity       -               -      1.2                -
  investee, net of
  income tax

  Transaction            -               -      5.6                -
  costs of Gold
  Wheaton, net of
  income tax

  Credit facility      0.6               -      0.6                -
  costs written
  off, net of
  income tax

Adjusted Net       $  33.2 $           6.3 $   54.6 $           15.0
Income

Adjusted Net       $  0.26 $          0.06 $   0.45 $           0.13
Income per share

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