Franco-Nevada - Earnings Call - Q4 2024

Transcript

Speaker 1

Good morning and welcome to Franco-Nevada Corporation's 2024 Year-End Results Conference Call and Webcast. This call is being recorded on March 10th, 2025. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a Q&A session where you may ask a question through the phone line or webcast. If you are joining by webcast, you may submit a written question for the Q&A session at any time during this call by typing your question in the Q&A section of the webcast platform. If you require immediate assistance during this call, please press star zero at any time for the operator. I would now like to turn the conference over to your host, Candida Hayden, Senior Analyst in Vesta Relations. Please go ahead.

Speaker 2

Thank you, Joanna. Good morning, everyone. Thank you for joining us today to discuss Franco-Nevada's Year-End 2024 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. The presentation is also available to view on the webcast. During our call this morning, Paul Brink, President and CEO of Franco-Nevada, will provide introductory remarks, followed by Sandip Rana, Chief Financial Officer, who will provide a brief review of our results. This will be followed by a Q&A period. Our full executive team is available to answer any questions. Participants may submit questions by the telephone or via the webcast. 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 two of this presentation.

I will now turn over the call to Paul Brink, President and CEO of Franco-Nevada.

Speaker 0

Thanks, Candida. Good morning. First of all, welcome to Daniel Melchuk, who joined our board in January. Daniel's an experienced director and spent much of his executive career at BHP, including roles heading operations in the Americas, running the copper, aluminum, and nickel and manganese businesses, and heading the exploration division. Daniel's Chilean, based out of Santiago, and I'm sure will add valuable perspectives on many of the assets and the countries in which we invest. We ended the year well with a strong fourth quarter. GEO sales for the year were near the top end of our revised GEO guidance range. With a tailwind from rising gold prices, we had higher quarterly revenue, adjusted EBITDA, and adjusted net income compared to Q4 2023, even without a contribution from Cobre Panama. 2024 was the most active year in our history for business development.

Ian and the team entered into more than $1.3 billion in acquisitions and commitments during the year. Transactions included gold stream investment in Cascabel in Ecuador, a royalty on the Yanacocha gold mine in Peru, and a principal gold stream on Sibanye-Stillwater's Western Limb PGM operations in South Africa. All of them high-quality ore bodies with potential to be very long-life mines. One of our largest portfolio successes in 2024 was the completion of construction and commercial operation of Tocantinzinho in Brazil, where we have a 12.5% gold stream. No surprise, the mine built by the G Mining team was on time and on budget. Rather than just providing stream financing, Franco-Nevada is the financial backer of G Mining Ventures, having provided stream, debt, and equity components. This is only the first of many mines that G Mining will build, and Franco will provide strong financial backing for the full journey.

In January, we announced a second partnership based on the same principles, a financing package to support Discovery Silver's acquisition of Newmont's Porcupine Complex in Timmins, including a royalty credit facility and backing for their equity raise. Tony McCooch and team are absolutely the right group to revitalize the Porcupine assets and realize the tremendous potential that still remains in the camp. This is possibly only the first move to consolidate operations in the camp, and with financial backing from Franco-Nevada, Discovery is well positioned for those next steps. The acquisitions of the last 12 months have the potential to add 85,000-95,000 GEOs per annum for a medium-term production profile, almost all gold ounces. With these new additions, along with organic growth from our existing portfolio, these drive the growth outlined in our 2025 guidance and outlook for the next five years.

For 2025, the new contributions from Sibanye-Stillwater's Western Limb operations and Porcupine, and full-year contributions from Yanacocha, Tocantinzinho, Greenstone, and Solaris Norte will have a big impact. Some of the highlights for the longer-term outlook are higher silver contributions from Antamina and new gold ounces from the startup of Valentine Gold, Escape Creek, and Stibnite Gold. With Sandip's management of our balance sheet, all the acquisitions were or will be when the Discovery deal closes, funded from our cash balances, and we'll still have no debt and a substantial cash balance. Our growing operating cash flows will allow us to increase dividends for the 18th consecutive time in January this year. Cumulative dividends since IPO are now greater than $2.5 billion. Our business development team could do with a break after all the activity in the last 12 months, but I don't think that's going to happen.

We have actual opportunities that could add more attractive assets this year. Finally, I'm very encouraged by the developments in Panama. President Molino has indicated a willingness to discuss Cobre Panama this year, and sentiment in Panama now appears more supportive of restarting the mine. I think there are good odds we'll see positive progress this year. With that, I'll hand the call over to Sandip.

Speaker 3

Thank you, Paul. Good morning, everyone. As Paul mentioned, Franco-Nevada ended the year with a strong fourth quarter, which was the result of both strong production from our asset base and higher precious metal prices. Precious metal prices, with gold in particular, reached record highs in 2024. On slide four, you will see the comparison of commodity prices for both fourth quarter and full year 2024. Gold and silver prices increased significantly for both periods, with gold higher by 34.7% in the quarter and 22.9% for the year. Prices for palladium, iron ore, and oil continue to be volatile and were lower year over year. Slide five provides a recap of the company's performance against the revised guidance provided for last year. The updated guidance for 2024 provided for a range of 445,000-465,000 total GEOs sold.

Of this total, the company guided 340,000-360,000 precious metal GEOs, with the balance being from diversified assets. With a strong finish to the end of the year, the company ended the year with 463,334 GEOs sold, which was near the top end of the guidance range. We were also at the top end of the guidance range for precious metals with 355,280 GEOs sold. The diversified assets, which include our non-precious metal mining assets and energy assets, resulted in just over 108,000 GEOs sold for the year. I'd like to point out that the revenue generated from our diversified assets was actually in line with our expectations for the year.

However, with a 37% higher average gold price in 2024 than our $1,950 budgeted gold price, when converting to GEOs sold, it actually resulted in a loss of 21,000 GEOs than if the gold price had remained at our budget prices. Turning to slide six, you'll see the 2023 and 2024 fourth quarter comparisons for GEOs sold, revenue, and adjusted EBITDA. Total GEOs sold were 120,063 in fourth quarter, compared to 152,351 in fourth quarter 2023. Precious metal GEOs sold in fourth quarter 2024 were 95,565, higher by 5% compared to prior year when excluding Gold Rate Panel. For the fourth quarter, we received strong contributions from Candelaria and benefited from the continued ramp-up of new mines Tocantinzinho and Greenstone. Candelaria delivered 26,891 GEOs for the quarter, which was almost 70% higher than prior year and twice as many GEOs as Q3 2024.

Diversified GEOs sold were 24,298 for the quarter, compared to 32,770 for prior year, despite diversified revenue being flat year over year. The approximate 8,000 GEOs sold difference is due to the impact of GEO conversion using higher gold prices. Total revenue for the quarter was $321 million, compared to $303.3 million last year, a 5.8% increase. Precious metals accounted for 79% of revenue. Adjusted EBITDA was 9% higher for the quarter at $277.4 million, compared to $254.6 million in fourth quarter 2023. As you turn to slide seven, you'll see a new measure that we have presented in our year-end financial results. It is called net GEOs. As we look at our royalty and streaming business, we think it's important to evaluate contributions from assets based on margin contribution and not necessarily top-line measures.

Royalty GEOs are higher margin GEOs as there is minimal cost associated with each GEO sold versus a stream where an ongoing fixed payment is required. The measure net GEOs removes the cost-to-sales component for all GEOs so that all GEOs sold are represented after cost. For Q4 2024, net GEOs were 107,140 for Franco-Nevada, compared to 129,527 in Q4 2023. Slide eight highlights the key financial metrics used by the company. As mentioned, total GEOs sold were 120,063, generating $321 million in revenue in fourth quarter. With respect to costs, we did have a decrease in cost-to-sales compared to Q4 2023 due to less stream ounces sold, which is predominantly related to the absence of Cobre Panama. Depletion decreased to $60 million versus $68.9 million a year ago. Depletion is based on actual mining GEOs sold and barrels of oil equivalent received on the energy side of the business.

As we received less GEOs from Cobre Panama and Antapaccay, this impacted depletion as those assets are higher per ounce depletion assets. Adjusted net income was $183.3 million, or $0.95 per share for the quarter, up 6% and 5% respectively versus prior year. Slide nine highlights the continued diversification of the portfolio. 76.5% of our full year 2024 revenue was generated by precious metals, with revenue being sourced 83.9% from the Americas. Our largest contributor to revenue was Candelaria at 14.6% for the full year. Slide 10 illustrates the strength of our business model to generate high margins. For full year 2024, cash cost per GEO, which is essentially cost-to-sales divided by gold equivalent ounces sold, is $278 per GEO. This compares to $286 per GEO in 2023. For the quarter, the cash cost per ounce was $287 compared to $296 in fourth quarter 2023.

As the gold price has risen, Franco-Nevada has seen a significant increase in our margin per GEO. Margin was $2,375 per GEO in Q4 2024. We've always stated that in a rising commodity price environment, we expect to benefit fully as the cost per GEO sold should not increase significantly. With respect to the company's GEO sold guidance for 2025, please refer to slide 11. For 2025, we are guiding total GEO sold of between 465,000-525,000, which is a 7% increase over 2024. If we use constant pricing between 2025 and 2024, the increase would be 13% year over year. Of this range, we are guiding 385,000-425,000 precious metal GEOs for the year. This is a 14% increase in precious metal GEOs over 2024.

The overall main drivers for GEOs year over year are for precious metals, will benefit from contributions from recent acquisitions: Sibanye-Stillwater Western Limb mining operation stream, Porcupine Complex royalty, and Yanacocha royalty. We will continue to benefit from the ramp-up of new mines that began production in 2024: Tocantinzinho, Greenstone, and Solaris Norte. We will begin to receive initial ounces from the currently under construction Valentine Gold mine in the second half of 2025. Please note we will no longer be receiving gold ounces from Minewave Solutions as the cap was reached in October 2024. Our guidance has been calculated using $2,800 per ounce for gold, $31 for silver, $950 platinum, $950 for palladium, and $100 iron ore. Obviously, prices are volatile, and as they change, it will impact the conversion of non-gold commodities to GEOs.

On the energy side, we're using a price of $70 per barrel WTI and $3 MCF natural gas. Using our budgeted gold price of $2,800 per ounce and the midpoint of our total GEOs guidance range, we expect a 25% increase in 2025 revenue over 2024. Also, with respect to timing, we do expect to see better performance as the year progresses, so a stronger second half is expected. As we look forward over the next few years, we do forecast 2028 as the current high for GEOs sold based upon the information we have to date. For 2029, our outlook is 490,000-550,000 GEOs sold. Of this range, precious metals will be 375,000-415,000 GEOs.

Main contributors will be higher production from Antamina due to access to higher-grade ore based on the latest mine plan, full-year contributions from Valentine Gold, and new mine starts from Stibnite Gold, Escape Creek, Castle Mountain, and Copper World. We've also assumed the startup of Taka Taka with a partial year contribution. We assume mine expansions for Candelaria, Coroccohuayco, and Antapaccay, and Magino. For the energy assets, we do assume an increase in production over the next five years, resulting in an increase in GEOs. Also, we've held energy prices flat at $70 a barrel WTI and $3 in MCF natural gas. Overall, when you look at the outlook for GEOs sold, the company has approximately 12% built-in organic growth from 2024 to 2029 at budgeted commodity prices, excluding Cobre Panama. This also assumes that no additional assets are added to the portfolio.

Please note that for all outlook ranges, we have excluded Cobre Panama in our GEO sold numbers. Had Cobre Panama remained in production, we would have expected deliveries and sales of between 130,000 and 150,000 GEOs annually. One additional item to note: with the legal proceedings that will move forward related to Cobre Panama, we're expecting to incur annual costs of approximately $10 million per year. These costs will continue to be disclosed separately in our financials. Slide 13 summarizes the financial resources available to the company. When including our credit facility of $1 billion, total available capital at December 31 was $2.4 billion. After year-end, we have funded the $500 million Sibanye Western Limb complex acquisition and expect to fund the Porcupine royalty acquisition during second quarter. The company remains well capitalized to continue to add long-life, high-quality assets to the portfolio.

Now I'll pass it over to Jonah, and we're happy to answer any questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. As a reminder, you may type your question in the Q&A section of the webcast platform. For those on the phone who wish to ask a question, please press star one on your touchtone phone. If you are using a speakerphone, please lift the handset before pressing any keys. The first question comes from Lawson Winder at Bank of America Securities. Please go ahead. Yeah, thank you very much, Operator. Good morning, Paul and Sandip. I wanted to start off with a couple of questions on Cobre Panama, if I might. One would be just related to President Mulino and some comments that he's made publicly.

President Molino of Panama, he indicated that he would require all arbitrations to be halted prior to entering into discussions with First Quantum. I just want to confirm that that also included the Franco arbitration. And does Franco have the ability to put its arbitration on hold or just temporarily put it aside in order to facilitate those negotiations if needed? Thank you, Lawson. That's Paul. A couple of things there. Yes, separate arbitration processes and separate regimes. There is the ability under each of those processes that you can put the arbitration on hold for a fixed time frame. That is a possibility, although we haven't had any asks from any of the parties to put ours on hold yet. Okay, perfect. And then thanks for that, Paul.

Another comment that President Molino had made was just speaking about the economics of the prior deal negotiated under the Cortizo government relating to Cobre Panama and noting that it was unfavorable for Panama. Has Franco-Nevada had any messages delivered or has any understanding what that could potentially mean for the Franco stream or whether it means anything at all? For example, there's been some discussion of a potential change in the ownership position, so a potential ownership position going to the country of Panama. I mean, can you comment on any potential implications for Franco there? I know it's highly speculative, but it has been mentioned many times in the Panamanian press. We'd just like to get your views.

Yeah, so first off, in terms of the economics, I think that the deal that was negotiated a couple of years back was positive, was a good deal for Panama. You'll recall, in particular, it had the provisions that provided minimum payments in the order of $375 million a year, which I think for any country is a particularly strong provision. I think there were good economics for Panama in that deal. I know there has been discussion of the country potentially wanting to get a better deal. Not surprised by that. In terms of where that may go for Franco-Nevada, we're financiers here, not owners. On the legalities of it, any change in ownership doesn't change the way that our stream is calculated. Any increase in taxes in country or any increase in royalties, none of that changes the way that our royalty is written. Yeah, okay.

Thank you very much for those comments. Very helpful. Just two of the other streams that I'd like to ask about, it'd just be helpful to get a little bit of color on specifics. With the SSW or the Sibanye-Stillwater South African PGM stream, it is closed. Congratulations. For Q1, when we think about the 7,000 GEOs from 2024 and then the 45-day delay before any GEOs are actually delivered to Franco-Nevada, how should we think about when the first delivery might occur, whether it would be Q1 or Q2, or what would you recommend us modeling with respect to that particular stream? Lawson and Sandip. It has closed. It closed a couple of weeks ago. The delivery from September to December for 2024, we will receive in Q1.

You're correct, the next delivery related to 2025 production, there's a 45-day time delay. That will come in in Q2. For Q1, you should only be budgeting or estimating the delivery related to 2024. Okay, fantastic. Just longer-term, thanks for that, Sandip. Just longer-term, thinking about the 2028 and 2029 guidance, Magino and Island are now sort of moving in the direction of becoming one operation. With Magino, there's a 3% royalty, and then with Island, there's a 0.62% royalty. How is that delineated? Is there the potential for those to become a combined royalty, or would it strictly depend on from where the ore comes? The context here is that the idea is to eventually close the Island mill and process Island ore at Magino.

Is there an additive benefit here, or is it just we have to figure out what the mix is between the two ore sources going forward to get to the right royalty level? Yeah, so right now on Island, we only cover a portion of the deposit. And at Magino, we cover the full land package. You're right. They are talking about shutting the Island Gold mill and expanding the Magino mill to 15,000 tons per day. Alamos is reviewing that right now. Once they do that, it'll just be a question of where does the ore come. When we did our deal, we had budgeted 11,500 tons per day coming from Magino. I think at a minimum, that's what we should be receiving on any production going forward once they do expand the mill.

In your current 2028 and 2029 guidance, that is the 11,500 tons per day. Is that correct? Correct. Correct. Thank you very much, guys. I appreciate it. Thank you. The next question comes from Cosmos Chu at CIBC. Please go ahead. Thanks, Paul and Sandip. Maybe my first question is on GEOs and how you calculate it. Could you remind us each and every quarter how you calculate GEOs, how you convert commodities, not gold, into gold equivalent ounces? Is that based on the spot prices during that quarter, or is it based on your assumption that you have put out beginning of the year, like today, $2,800 and $31 an ounce? Hi, Cosmos. Yeah, we will adjust at each quarter. Essentially, at a high level, we will take our non-gold revenue, and we will divide by the average gold price for the quarter.

Obviously, you saw last year gold prices increased, and it impacted the number of GEOs or diversified assets generated, even though the revenue was the same as what we had expected for the year. Yeah. And Sandip, as you mentioned last year, you had to change it because gold prices clearly fluctuated quite a bit beyond what you had expected beginning of 2024. For 2025 guidance, I guess my question is, could you share with us how much buffer you've put into that guidance? I guess my question is, how much can it withstand in terms of volatility and commodity prices? Just given that last year when you had to change your guidance in 2024, it was not exactly too well received. I'm just trying to see if that could happen again in 2025.

If it does happen, it's actually a great thing because that means the gold price has gone up significantly. But our guidance range is a 60,000-ounce range. You take the midpoint, so we've got 30,000 GEOs to the downside. If gold price went up around 20%, I think we'd still be okay. But obviously, it's a risk that's part of the way we calculate guidance. Certain years, you benefit when other commodities outperform gold prices. But obviously, gold outperforming now, it is impacting the conversion. But we did run a number of sensitivities. At this stage, we're comfortable with the range. Of course. Yeah. I agree. Higher gold prices is always better. In the end, it's revenue that really matters. It's cash flow that really matters. I think you're correct, Sandip. Maybe moving on to Cobre Panama.

Paul, as you mentioned, the international arbitration seems to be under different regimes. I think I noticed that your meeting is October 2026. I think First Quantum had mentioned that their meeting is February 2026. Could you maybe—is there any importances that we should be aware of, of the different timing, of the different sort of regimes that the arbitration is going under, or is it pretty much the same? I do not think there is anything to read into the timing there, Cosmos. First Quantum has the option of going either under the ICC, which they are going under. They could also go under the Canada-Panama Free Trade Agreement, which is what we are going under. It is MPSA that is pursuing it under the ICC. We do not have that option. Our only option is under the Canada-Panama. The different tribunals have different timeframes that they work under.

The difference in timing is just because of the different processes. Okay. But as you said, Paul, this is really plan B. I think your preferred alternative is for the operator and the government to work out something on their own, right? Absolutely. That's always the best outcome. Of course. One last question, Porcupine. Could you maybe talk about how that deal came about? Clearly, this is the only royalty streaming involvement in the Newmont divestitures. And so how did the parties come together? What's the evolution of that deal? My other part of the question is that I see that you are providing a credit facility, Paul, as you mentioned, and an equity investment as well, more sort of full-service financing. Is that the type of deal we could expect on a go-forward basis or service on a go-forward basis? Hi, Cosmos. It's Ian here. Hi, Ian.

Hope you're having a good day. Happy to answer that question. I guess, first off, in terms of how it came together, Tony McCooch, we know well. A number of people within Franco-Nevada have a strong relationship with Tony. When those assets came for sale, the obvious strategy was to work with the ideal person to revitalize them. We quickly spoke with Tony and formed a strategy together as to how we would back him in doing that. The rest is history. We did provide multiple tranches. I think that's what you will see going forward. When we can do that, we find a suitable human asset, we'll provide flexibility because capital markets aren't always the most efficient around these kinds of things. When we see good ability to get a good return for our shareholders, we'll utilize other elements of the capital structure.

It is not going to be all of what we do, but certainly, we hope it is a component going forward. We are very pleased with the result of that transaction. Great. Those are all the questions I have. Thanks once again, Paul, Sandip, and Ian. Thank you. Thank you. The next question comes from Josh Wilson at RBC Capital Markets. Please go ahead. Yeah, thanks very much. First question on the five-year guidance. I noticed the inclusion of the underground production expansion at Candelaria and then also Taka Taka. We do not have a lot of insights as to what the production contribution could be for those opportunities. Is the company able to provide a bit more disclosure there and maybe what the volume contribution would be? Sure. Candelaria underground expansion, they have talked about it going from 14,000 tons per day to 22,000 tons per day.

They will likely make a decision later this year. Obviously, we've made the assumption that they will go ahead with that, but they have to disclose whether they will or not. On Taka Taka, we just looked at where First Quantum is, and with everything going in Argentina, it would likely be their next project that they develop. In 2029, we've assumed a partial ramp-up. It works out to about 4,000 GEOs to Franco-Nevada in total, so it's not significant. Got it. Thank you very much. Just a couple of sort of small details. For Palmarejo, the disclosures talk about production declining in 2029. Should we assume that production stays steady through 2028 versus some of the very high levels this year? That's correct. From 2025 to 2028, it's pretty consistent, and then it's about a 50% drop in 2029.

Josh, those operations have had a great history of being able to replace ounces. That is what is in the mine plan today. We hope that in the interim, there will be the ability to extend that mine plan. Got it. Thank you. One last small housekeeping question. For Bald Mountain, and I know it is not a huge asset in terms of the overall production, but just because the royalty has come up pretty strongly in recent years, and the royalty can vary quite a bit depending on what land is being mined. For these new Redbird pits, any sort of idea what the royalty rate would be? Off the top of my head, Josh, I cannot recall. I will have to get back to you on that one. Okay. Thanks very much. Thank you. The next question comes from Heiko Ihle at HC Wainwright. Please go ahead.

Hey there, Paul, Sandip, and team. Thanks for taking my questions. Recent market volatility has been quite rocky. I mean, today is another fun day in the markets. It gets a bit of an open-ended question. I mean, do you already see some impact of what's going on just in pretty much every stock index out there flowing down into your M&A discussions? Is this essentially offset because gold's still sitting at $2,900? Everyone is impacted by volatility in some form. I got to say that the gold mining industry is very fortunate in terms of in most places, you can put your gold on a plane and fly it to wherever you want and sell it wherever you want. I'd say of all the industries, it's probably the least impacted. Good job.

It does not come up in conversation where people are like, "I want to get out now or soon"? No. Nope. No. Certainly, we have not had any conversations like that. Okay. Building on what you almost just answered a little bit, have there been rumblings of countries trying to, your words, put stuff on planes and get it out of there, make that a little bit tougher given what is going on geopolitically right now? Not in a sense of operations cycle, although I am sure you are familiar that there has been a huge movement in stocks, particularly gold stocks, out of London and into the US. I believe there is some of that happening in terms of copper stocks as well. Other than that, I have not heard of any of that in other jurisdictions. Fair enough. That is reassuring. I will get back to you. Thank you.

The next question comes from Daniel Major at UBS. Please go ahead. Hi, there. Thanks for the question. Can you hear me okay? Yes. Great. Thanks. Just the first question, and you I think have partially answered already, but can you just run us through the delta, the key driver for the moderation in the guidance 2029 versus 2028? Sure. Hi, Daniel. Sandip here. Really, the main adjustment is Guadalupe-Palmarejo, where you essentially, based on the mine plan that we have right now, and as Paul mentioned, the mine continues to be extended over time. You know, we're hopeful that the mine life will continue to be extended. You get a 50% drop in GEOs. And that's essentially the drop in 2029. Thank you. That's clear. And then the second question, just thinking slightly bigger picture about the Sibanye deal and the profile that you've provided.

I mean, when we look at this kind of asset towards the upper end of the cost curve, obviously a large reserve life, but in the context of a commodity with potentially challenging longer-term fundamentals, Ivanhoe has the plans to bring on the Platreef towards the end of the decade. I mean, how concerned are you about the longevity of production basis, the kind of cost position of the asset, and the fundamental outlook for the market? Hi, Daniel. It's Ian Gray again. Happy to meet you. In terms of the assets, I actually think that when you look at the cost curve, you'll see they're more towards the middle, especially when you account for byproducts. Relative to the Platreef, you have very significant non-PGM byproducts coming out of the UG2, which Sibanye is focused on. So things like chrome, iridium, ruthenium have kind of non-catalytic uses.

That stands to benefit these operations relatively compared to some of the others. The infrastructure, this is a market that, as you I'm sure are well aware, offtake of concentrates is very limited as to where it could go. Sibanye is fully integrated. A lot of these other operations, it's unclear whether they have all of the offtake or other things such as water and other key elements for production that are necessary. Whereas these are very much a fully integrated operation. We take a lot of comfort that long-term, they'll be strong producers from that basket and fully integrated nature of the operations. Okay. Thanks for that. Just final one. In the last couple of calls, you've fielded the questions, and there's been some talk about fertilizers, potash. I see you acquired a small option from Brazil Potash Corp.

Can you give us any sense of how advanced are you in this segment of the market with other potential deals and how they rank relative to other opportunities out there? Thanks. Maybe on the strategy overall, you know our objective is to be the go-to gold stock. That means always the focus is on gold and precious metals. I have always said also, sometimes you can take advantage of good opportunities in other commodities when they come along. Hence, we have had a diversified component over time. The opportunity with Brazil Potash there is for a very low entry point. We were able to get an option to write a royalty if and when that very large potash project does get developed. I think it is a high likelihood it does. This is a very attractive deposit. It is very close to the huge agricultural area in Brazil.

Its cost advantages in terms of logistics are very substantial. I am very hopeful that we will get to excite that option over time. Other than that, as we look at the pipeline, as usual, there is a mix of what we are looking at, precious metal and diversified. By far, most of it is precious metal. I expect that is most likely what you will see as we go forward the next number of months. Great. Thanks so much. I will go back in a gear. Thank you. The next question comes from Brian McArthur at Raymond James. Please go ahead. Hi, good morning. Thank you for taking my questions. Most of them answered. Can I go back to the delta between 2028 and 2029? I get it. Guadalupe comes down. I guess you are saying it is the full 25,000 ounces.

Can I confirm then on the Antapaccay, you talk about it cutting back in 2028. Is that at the beginning of the year, or is that partially through the year? I'm still trying to make up the difference between 2028 and 2029. Yeah. So Brian, it's partway through 2028. You'll have a full year drop in 2029. You do lose ounces from Antapaccay in 2029. Between Guadalupe and Antapaccay, you lose some ounces. On the other side, you've got Copper World, you've got Taka Taka. That'll pick up some of that difference. Great. Thanks. Just on Candelaria, while I'm at it, the step down from 68 to 40, again, is that partially through the year in your assumptions in 2027 or at the beginning of the year? A partial year. Great. Thanks very much. Thank you.

The next question comes from Tanya Jakusconek at Scotiabank. Please go ahead. Oh, great. Good morning, everyone. Thank you so much for taking my three questions. I just wanted to follow again on this guidance. A lot of it's been answered. What I just would like to clarify with you is that Palmarejo last year is 2029. Mine Waste Solutions is gone. Is there anything else that is sort of in the timeframe not contributing or is dying out over the timeframe that we should be aware of? From a materiality standpoint, Tanya, those are the two largest. Okay. Perfect. You mentioned I wanted to understand, what is your assumption for Stillwater? Because as you are aware, we have quite a drop in 2025. Yeah. Go ahead. Sorry.

Stillwater, as the operator has guided, it's 265,000 PGM ounces for 2025. We've assumed that for three years. Then it ramps back up subsequent to that. Back to that 500,000 or 600,000 GEO range? 500,000. Okay. Thank you. Continuing on the guidance, you mentioned the energy division is increasing over this timeframe. You used to provide guidance on what the energy contribution is. If I think of your 2029 or 2028 guidance, we were able to see what percentage, 79%, 80% gold, or even 76% gold. What would you put the energy as a percentage within your 2025, 2028, and 2029 guidance? I think for 2025, we did disclose what the percentage would be energy. For 2029, off the top of my head, I'd say around 16%, 17% of GEOs. Okay. All right. That's helpful. Thank you.

Just the final one on guidance is you mentioned that, Sandip, that it is going to be a stronger second half. We understand about the Sibanye deal. Obviously, there are some mine ramp-ups occurring. How should I be thinking first half, second half? Is it a very big difference? Is it a 45-55? This assumes your price forecast and assuming them to be flat without movement in commodities. If I think of it that way, is it a 45-55? Just numbers I have looked at in our budgeted assumptions, I would say it is 47-53. Okay. Is it quarter-over-quarter improvement? Should I be thinking of it that way as well? Second quarter will be better than Q1 just because of the timing of the Sibanye. I looked at Q3 and Q4 not too far off from each other. Okay. All right.

Those are my guidance questions. My second one has to do with Cobre Panama. Just wanted to confirm again, is there any further discussions on the concentrate on site and whether that may be dealt with ahead of these decisions and/or other in 2026? Maybe Paul, is there anything on the concentrate and remind me the size of this concentrate? Tanya, there are discussions. The company has been keen to be able to move initially what were the remaining explosives off-site. Second is to move that concentrate off-site. They do have an agreement that they have been able to move the explosives. Discussions continue on the concentrate. It is one of the first things I'd like to get moving as the government gets more willing to discuss progress on the mine.

In terms of the value of the concentrate, I think the value is in the order of $250 million. It is the total value of the concentrate. Okay. That would be good if we could at least deal with the concentrate. Just remind me again on your security on the asset. You have security at the asset level, but you do not have a parent guarantee, right? Just so that I remember this correctly. Our security, MPSA is the operating entity in Panama. We are secured on the shares of MPSA, that operating entity. When we look at all these deals, as any good bank will tell you, where you want to be is as close to the asset as possible. Very happy with the security structure that we have at Cobre. Okay.

Security of the asset, but you do not have a corporate guarantee, right? We have undertakings up the chain. The various entities would ensure that the undertakings of MPSA are fulfilled, which is those are the usual sort of provisions that you would get from a corporate. Maybe one thing to add, Tanya, in order to have the arbitration directly with Panama, it is very important that you are linked directly to the asset. In a lot of cases, if you were just a corporate obligation, you would not be able to avail yourself of that type of protection. It is one of the benefits of that structure. As I said, hopefully, we do not get there. Hopefully, all of this is resolved. That is for everybody here. Okay. Maybe my last question, and I will just continue on the M&A side, on the transaction side.

Done a lot of deals on the gold front. Potash was a smaller one. Where do we stand now on the commodity mix of the deals that you are currently looking at in the market? Maybe we can just review size-wise. Is it still this $300 million-$500 million? Is that still the deal size? Are you focused now more on precious metals, or have you done enough precious metals? Where are we on that mix? Tanya, seeing again. In terms of metals, I think Paul alluded earlier to the fact that we're still very much focused on precious metals. The vast majority of what we're looking at right now is precious metals. It does not mean that there are not good opportunities outside of that. In terms of just the deal flow, that is primarily what we're seeing at the moment. I think it's a good time.

In terms of the complexion of the deals, what I would really say is what you saw last year is a good reflection of kind of what we are seeing now. Last year, obviously, was also unprecedented in terms of total dollars that we deployed. Very happy about just how active we were and the investments that we made. In terms of what they look like, very similar in terms of whether it is size or reason for doing the deal. Okay. Would it also still be for asset for development of assets? Is it still that? Financing options for smaller companies. Is that still the case? Absolutely. I think a core pillar of our business development efforts is project finance. I think we have got a strong team to do that. We are well placed with our balance sheet.

We continue to focus very much on trying to do significant project financing deals. Okay. I wanted to ask if on the non-gold side, you said there could be opportunities come up. Are there opportunities in the non-gold side of your business? If so, what sort of size are those potential transactions? Certainly, there are opportunities that expand a range in terms of size, but probably similar to what we've been looking at on the precious metals side, Tanya. Some are smaller. Some are more medium-sized. Okay. That's $300 million-$500 million. Would we still continue to keep focusing on the sort of non-gold commodities that you have historically looked at? Or is energy back in the game? I guess what I'm asking. Would you consider energy in that non-gold component?

I know you had put a pause button on it for a while. Tanya, as usual, the diversified strategy is all around being opportunistic rather than starting with a particular commodity. Energy is, if the right opportunity's there, we would also add. We've got a better room currently, but nothing currently active. Okay. Thank you so much for taking my questions. I'll let someone else ask. I really appreciate it. Thank you. Thank you. The next question comes from Martin Preidio at Veritas. Please go ahead. Yes. Thank you for taking my question. Can you give us some precision on what do you expect from Tocantinzinho and Valentine Gold for 2025? Sure. For 2025, Valentine will be ramping up in the second half of the year. It's minimal. It's 1,500-2,000 GEOs. Tocantinzinho fully ramped up just over 20,000 GEOs. Okay.

Thank you. I've seen a lot about the CRA, and you continue having that. That is a recurring issue. Do you expect some kind of decision in this year, this coming year? Obviously, we're a large-cap taxpayer in the view of CRA. So we are constantly audited, no different than other large-cap taxpayers. Obviously, we had three audit issues outstanding. Two got resolved where they dropped the reassessments. We've got the transfer pricing dispute that's ongoing. We continue to work with CRA. Would I like to resolve it this year? Absolutely. With CRA, it's just a question of timing and what their views are. We continue to move forward, but no resolution at this time. Okay. The 2013, 2016, or something like that, isn't that part supposed to, aren't it supposed for them to reach a decision this year? Yeah.

You have to, they reassessed us, reappealed, and then you have to go through a process and work your way towards a potential court date. We're working through that process. You have to go through discovery. We've done that. Now it's just a case of, can you resolve it yourselves, or do you end up in court? No decision at this time. Okay. Great. Thank you very much. Thank you. The next question comes from John Tumazos at John Tumazos Very Independent Research. Please go ahead. Congratulations on putting a billion dollars to work and for the $55 million in Discovery stock to basically double in a month. Well done. If you wanted to go to the beach or fish or play golf for the rest of the year, you've done a good job for the shareholders. You earned it.

In all seriousness, could you tell us your criteria in terms of minimum rate of return, gold price, or other in evaluating future deals to not reduce the average quality of the portfolio given some of the great deals you have in hand? Are your criteria primarily numerical, quantitative, or is qualitative geologic inference more important to you than an NPV? John, I think you've answered the question there. At the end of the day, you've got to be invested in good old bodies. Our overall objective is to make sure that we do that. Anything that we added to the portfolio is a great quality old body. Anytime we look at a deal, and our board constantly reminds us of this, whatever you put in your spreadsheet, it's not going to happen. The old bodies will develop and grow over time.

Commodity prices will change over time. The focus is on the quality of the ore bodies, getting the right ones in the portfolio. You know how we think about it, which is we're prepared to accept the low rate of return for what you can see today on those ore bodies. If you pick the ones that have got the best odds of getting bigger over time, that's really where we make our return. The focus is, what are ore bodies with great economics that can be very comfortable? We're going to get our money back. What are we exposing ourselves to? What's the potential optionality? What's the multiple of our money that we can make if our hopes and dreams come true for the expansion of the ore bodies? Thank you.

In terms of the new Discovery Silver investment, is it limited to exactly the land holdings bought from Newmont at closing and the existing Dome mill? For example, if Tony were to buy back his old company, Lakeshore Gold, from Pan American, should we assume that's excluded from your royalty? John, it's Ian here. Thank you for the kind words upfront. On the Discovery deal, I guess, first of all, what matters to us is relationships. We are very much trying to support Tony in his efforts. As he's alluded to, to the market, he has very ambitious plans for that camp. We want to be there to support him on those. We agreed some partnership clauses in the agreement to provide us certain rights in certain circumstances.

We are, I would say, more as a kind of commercial relationship, not very keen to help him as he looks at the one you. There are many other opportunities, not just one in the area. We are keen to help him evaluate how he may be able to maximize value for Discovery shareholders, of which, of course, we are one. It is an exciting opportunity for us. Thank you. Thank you. We have no further questions on the phone. I'll turn the call back over to Candida Hayden. Thank you. Our first question comes from Bernie Peachy at Palisade Capital Management. Traditionally, Franco-Nevada has avoided investments in certain places, Russia, China, for example. Rule of law is critical. I was surprised by your investment in Sibanye-Stillwater. Africa has generally not been an area of interest for Franco-Nevada. Can you explain this decision further?

Thanks for the question there. Our objective is to be a low-risk way that investors can invest in the industry, gold, and the benefit of exploration upside. Our approach geopolitically is you've got to make sure that most of your assets are in great countries. We're blessed to have so many assets: Canada, U.S., Australia. There are a lot of other good mining countries in the world. We're also exposed in Chile, Peru, Brazil. We do have assets in West Africa. We have had assets in South Africa. In particular, for many years, we've had an interest in mine waste. It wasn't planned this way, but actually, the mine waste deal has ended. It was about 20 plus thousand ounces a year in GEOs. We're able to do the Sibanye deal, similar amount over the long term.

Our exposure to South Africa is about the same as it was previously. South Africa is different from much of Africa. It is a very well-developed mining economy. It's got a long history. It's got a good labor force, good suppliers. It does have a good rule of law as opposed to foreign mining. In terms of the amount of exposure that we've got, roughly the $500 million, are comfortable in putting that in South Africa. It does have its risks and its political risks. I actually think it's on the uptick in recent years. You had the change in government. The ANC is still leading it. For the first time, it's a government of national unity. I think that's put some checks and balance on the ANC.

There is a good level of optimism in country that there's a change in direction in terms of the quality of government management. I think you've seen very practical results in terms of a turnaround in the power situation and also real good results on the ground in terms of improving the transportation infrastructure. Quite happy with that investment in South Africa. I think it's going to do us well over time. Our next question is also from Bernie Peachy at Palisade Capital Management. When you say there is $250 million of concentrate on site at Cobre Panama that you and First Quantum would like to move, how much of that is yours versus First Quantum's? I haven't done the math recently. It depends on what the gold price is at the time, obviously.

Roughly the value there that we are due to receive is $15 million-$20 million. Thank you, Paul. There are no further questions from the webcast. This concludes our 2024 year-end results conference call and webcast. We will host our Investor Day on Tuesday, March 25th, 2025. The in-person presentation will be hosted at the Loomi Experience Center in Toronto at 1:00 P.M. Eastern Time. The presentation will also be available to view virtually. Registration details are available on our website. We expect to release our first quarter 2025 results after market close on May 8th, with the conference call held the following morning. Thank you for your interest in Franco-Nevada. Goodbye. Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.