Gresham "Group 150" - June 2011

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Gresham "Group 150" - June 2011

  1. 1. JUNE 2011 Gresham Group 150 June 2011 Darren Martin Gresham Advisory Partners dmartin@gresham.com.au +61 8 9486 7077 +61 412 144 719 ASX RESOURCES - GROUP 150 We are pleased to present the June edition of ‘Group 150’, a ranking of the top 150 ASX listed resources companies (excluding oil and gas), by market capitalisation. May was a scrappy month for equities as renewed concerns around European debt and the Federal Reserve’s lack of solutions for the structural deficit received global attention. A majority of commodity prices fell during the month, with the exception of gold. The cumulative market value of Group 150 decreased 1.8% from $591.5 billion to 580.7 billion at the end of May. Like April, two-thirds of the Group 150 recorded a fall in market value. For the first time in a while, the entry point into the Group 150 fell to $122.6 million, down from $130.6 million for the previous month. The ASX/S&P 200 Resources Index decreased 1.5% for the month, while both the ASX All Ordinaries and ASX/S&P 200 Index decreased 2.2% and 2.4% respectively. May recorded a steady month in M&A with only a handful of transactions announced, with the largest being the offer for South African gold miner, Gold One. Papillon lead the “Winners” for May (in terms of growth in market capitalisation), entering the Group 150 in position 147, after recording a 94.2% increase in value. Others included: Indo Mines (+71.8%), Minemakers (+50.4%), Iluka (+25.0% - adding a further $1.3b to the market cap), and Catalpa (+23.8%) after the approach from St Barbara. This month includes an article on the virtual mining company - “Generating Returns while Protecting the Downside - The Franco Nevada Story” Founded in 1982, Franco-Nevada had grown to a US$3 billion company by the time it was acquired by Newmont in 2002. The concept was to build a company from the cash flow stream of gold royalties which provide yield and more upside than a gold Exchange Traded Fund “ETF” but with less risk than a mine operator - a virtual mining company with no operating risk or capital expenditure commitments. In late 2007, a team including some Old Franco employees formed Franco-Nevada Corporation and on 20 December 2007, acquired a portfolio of Newmont royalties and other interests, completed a US$1.2 billion initial public offering, completed a bank debt facility and listed on the Toronto Stock Exchange. The current portfolio includes over 340 assets covering properties at various stages from operations to early stage exploration. Royalties are mostly revenue-based but the portfolio also includes profit-based and stream-based royalties. Gresham Advisory Partners Limited Gresham Advisory Partners is a leading Australian mergers and acquisitions/corporate advisoryEdition 15 business and one of Australia’s largest and highest ranking independent corporate advisors. 1
  2. 2. Group 150 Top 150 asX LisTed resource companies - may By Market Capitalisation Mkt Cap (A$m) % Mkt Cap (A$m) % May Apr Company 31-May-11 30-Apr-11 Change May Apr Company 31-May-11 30-Apr-11 Change 1 1 BHP Billiton Ltd. (ASX:BHP) $243,791.5 $252,878.2 (3.6%) 51 50 Allied Gold Ltd. (ASX:ALD) $598.2 $647.2 (7.6%) 2 2 Rio Tinto Ltd. (ASX:RIO) $157,819.0 $159,889.3 (1.3%) 52 58 Discovery Metals Ltd. (ASX:DML) $570.4 $555.1 2.8% 3 3 Newcrest Mining Ltd. (ASX:NCM) $30,386.7 $31,726.1 (4.2%) 53 56 Metminco Limited. (ASX:MNC) $561.0 $575.8 (2.6%) 4 4 Fortescue Metals Group Ltd. (ASX:FMG) $20,300.0 $19,145.4 6.0% 54 51 Alkane Resources Limited (ASX:ALK) $556.9 $602.6 (7.6%) 5 5 Coal & Allied Industries Ltd. (ASX:CNA) $9,645.5 $9,662.0 (0.2%) 55 57 Aditya Birla Minerals Limited (ASX:ABY) $556.2 $564.1 (1.4%) 6 6 Equinox Minerals Ltd. (ASX:EQN) $6,754.5 $6,824.9 (1.0%) 56 67 Guildford Coal Limited (ASX:GUF) $545.9 $467.3 16.8% 7 8 Iluka Resources Ltd. (ASX:ILU) $6,498.1 $5,197.7 25.0% 57 52 Bougainville Copper Ltd. (ASX:BOC) $545.4 $601.6 (9.3%) 8 7 Alumina Ltd. (ASX:AWC) $5,636.8 $5,514.8 2.2% 58 55 Gujarat NRE Coking Coal Limited (ASX:GNM) $545.0 $579.7 (6.0%) 9 9 OZ Minerals Limited (ASX:OZL) $4,576.1 $4,663.5 (1.9%) 59 61 CuDeco Ltd. (ASX:CDU) $543.3 $520.5 4.4% 10 10 New Hope Corp. Ltd. (ASX:NHC) $4,400.2 $4,068.1 8.2% 60 50 Summit Resources Ltd. (ASX:SMM) $534.1 $549.3 (2.8%) 11 11 Riversdale Mining Ltd. (ASX:RIV) $4,047.8 $4,033.1 0.4% 61 62 Sphere Minerals Limited (ASX:SPH) $531.2 $513.4 3.5% 12 12 Lynas Corporation Limited (ASX:LYC) $4,035.1 $3,533.8 14.2% 62 60 Resolute Mining Ltd. (ASX:RSG) $526.1 $547.1 (3.8%) 13 13 MacArthur Coal Ltd. (ASX:MCC) $3,594.9 $3,504.3 2.6% 63 63 Beadell Resources Ltd (ASX:BDR) $525.9 $513.3 2.5% 14 14 Aquila Resources Ltd. (ASX:AQA) $3,331.9 $3,399.3 (2.0%) 64 66 Gryphon Minerals Ltd. (ASX:GRY) $512.9 $472.2 8.6% 15 16 Atlas Iron Limited (ASX:AGO) $3,050.7 $2,883.4 5.8% 65 53 OM Holdings Limited (ASX:OMH) $474.5 $595.0 (20.3%) 16 15 Whitehaven Coal Limited (ASX:WHC) $2,829.5 $3,170.2 (10.7%) 66 64 Cockatoo Coal Limited (ASX:COK) $472.5 $503.0 (6.1%) 17 18 Aquarius Platinum Ltd. (ASX:AQP) $2,453.8 $2,317.5 5.9% 67 70 Ampella Mining Limited (ASX:AMX) $466.9 $437.1 6.8% 18 17 Paladin Energy, Ltd. (ASX:PDN) $2,448.2 $2,566.4 (4.6%) 68 77 Rex Minerals Limited. (ASX:RXM) $428.4 $404.3 6.0% 19 19 PanAust Limited (ASX:PNA) $2,403.7 $2,283.1 5.3% 69 68 Murchison Metals Limited (ASX:MMX) $427.2 $457.7 (6.7%) 20 21 Aston Resources Limited (ASX:AZT) $2,028.9 $1,943.0 4.4% 70 72 Panoramic Resources Ltd. (ASX:PAN) $418.2 $426.5 (1.9%) 21 20 Mount Gibson Iron Ltd. (ASX:MGX) $2,008.2 $2,035.2 (1.3%) 71 73 Kagara Ltd (ASX:KZL) $418.1 $418.1 0.0% 22 22 Extract Resources Ltd. (ASX:EXT) $1,975.5 $1,675.7 17.9% 72 71 Arafura Resources Limited (ASX:ARU) $417.7 $430.5 (3.0%) 23 23 Medusa Mining Limited (ASX:MML) $1,639.5 $1,511.5 8.5% 73 86 Gold One International Limited (ASX:GDO) $411.9 $339.1 21.5% 24 24 Gloucester Coal Ltd. (ASX:GCL) $1,476.1 $1,452.2 1.6% 74 65 Aspire Mining Limited (ASX:AKM) $410.4 $482.4 (14.9%) 25 25 Ivanhoe Australia Limited (ASX:IVA) $1,376.5 $1,344.1 2.4% 75 80 Ramelius Resources Ltd. (ASX:RMS) $404.2 $389.6 3.7% 26 27 Zimplats Holdings Ltd. (ASX:ZIM) $1,345.5 $1,291.7 4.2% 76 83 Moly Mines Ltd. (ASX:MOL) $402.2 $367.7 9.4% 27 26 Independence Group NL (ASX:IGO) $1,234.9 $1,333.7 (7.4%) 77 75 Kingsrose Mining Limited (ASX:KRM) $400.2 $414.2 (3.4%) 28 28 Perseus Mining Ltd. (ASX:PRU) $1,160.3 $1,242.4 (6.6%) 78 78 Integra Mining Ltd. (ASX:IGR) $399.7 $399.7 0.0% 29 29 Western Areas NL (ASX:WSA) $1,146.7 $1,206.0 (4.9%) 79 76 Mineral Deposits Ltd. (ASX:MDL) $398.0 $407.1 (2.2%) 30 30 Sundance Resources Ltd. (ASX:SDL) $1,133.9 $1,089.0 4.1% 80 81 Hunnu Coal Limited (ASX:HUN) $363.1 $374.0 (2.9%) 31 32 Kingsgate Consolidated Limited (ASX:KCN) $1,060.6 $1,049.3 1.1% 81 79 Metals X Limited (ASX:MLX) $348.2 $396.0 (12.1%) 32 31 Sandfire Resources (ASX:SFR) $1,053.5 $1,061.0 (0.7%) 82 88 Perilya Ltd. (ASX:PEM) $344.1 $325.7 5.6% 33 34 Regis Resources Limited (ASX:RRL) $1,017.7 $1,034.9 (1.7%) 83 85 Elemental Minerals Limited (ASX:ELM) $336.7 $343.3 (1.9%) 34 35 Mirabela Nickel Ltd. (ASX:MBN) $1,007.7 $968.4 4.1% 84 84 Saracen Mineral Holdings Limited (ASX:SAR) $334.6 $344.4 (2.8%) 35 36 Intrepid Mines Limited (ASX:IAU) $989.2 $950.1 4.1% 85 82 Silver Lake Resources Limited (ASX:SLR) $322.9 $373.9 (13.6%) 36 40 Mantra Resources Limited $947.3 $912.1 3.9% 86 74 Tiger Resources Ltd. (ASX:TGS) $321.1 $414.6 (22.6%) 37 33 Energy Resources of Australia Ltd. (ASX:ERA) $944.2 $1,039.5 (9.2%) 87 103 Catalpa Resources Limited (ASX:CAH) $319.6 $258.1 23.8% 38 37 Gindalbie Metals Ltd. (ASX:GBG) $898.2 $940.3 (4.5%) 88 91 Troy Resources NL (ASX:TRY) $318.4 $315.8 0.8% 39 38 Bandanna Energy Limited (ASX:BND) $895.7 $938.3 (4.5%) 89 90 Marengo Mining Limited (ASX:MGO) $303.5 $318.4 (4.7%) 40 41 Minara Resources Ltd. (ASX:MRE) $865.4 $900.5 (3.9%) 90 96 South Boulder Mines Ltd. (ASX:STB) $297.1 $285.9 3.9% 41 39 CGA Mining Limited (ASX:CGX) $863.2 $936.5 (7.8%) 91 92 Adamus Resources Ltd. (ASX:ADU) $295.2 $306.5 (3.7%) 42 43 Coalspur Mines Limited (ASX:CPL) $856.9 $863.1 (0.7%) 92 100 Galaxy Resources (ASX:GXY) $284.5 $264.9 7.4% 43 48 Bathurst Resources Ltd (ASX:BTU) $846.0 $718.1 17.8% 93 95 Cape Lambert Resources Limited (ASX:CFE) $283.1 $285.9 (1.0%) 44 42 Jupiter Mines Ltd. (ASX:JMS) $842.6 $873.8 (3.6%) 94 99 BC Iron Limited (ASX:BCI) $281.3 $268.0 5.0% 45 49 OceanaGold Corporation (ASX:OGC) $687.9 $700.0 (1.7%) 95 89 Conquest Mining Limited (ASX:CQT) $271.2 $323.7 (16.2%) 46 45 Grange Resources Limited (ASX:GRR) $680.4 $755.1 (9.9%) 96 102 Nucoal Resources NL (ASX:NCR) $268.5 $258.8 3.7% 47 47 ST Barbara Ltd. (ASX:SBM) $636.6 $722.9 (11.9%) 97 87 Indophil Resources NL (ASX:IRN) $266.4 $330.0 (19.3%) 48 54 Northern Iron Limited (ASX:NFE) $616.7 $591.5 4.3% 98 93 Flinders Mines Limited. (ASX:FMS) $264.0 $291.3 (9.4%) 49 44 White Energy Company Limited (ASX:WEC) $614.8 $850.3 (27.7%) 99 98 Carabella Resources Limited (ASX:CLR) $260.2 $270.1 (3.7%) 50 46 Brockman Resources Limited (ASX:BRM) $608.2 $739.9 (17.8%) 100 115 Iron Ore Holdings Limited (ASX:IOH) $245.8 $223.5 10.0%Includes ASX Resource companies excluding oil and gas 2
  3. 3. JUNE 2011 Mkt Cap (A$m) % Mkt Cap (A$m) % May Apr Company 31-May-11 30-Apr-11 Change May Apr Company 31-May-11 30-Apr-11 Change 101 97 Focus Minerals Limited (ASX:FML) $244.3 $271.8 (10.1%) 126 130 Peninsula Energy Limited (ASX:PEN) $177.6 $171.2 3.7% 102 107 Equatorial Resources Limited (ASX:EQX) $239.6 $241.0 (0.6%) 127 124 Resource and Investment NL (ASX:RNI) $173.2 $192.5 (10.0%) 103 104 Noble Mineral Resources Ltd. (ASX:NMG) $238.4 $256.3 (7.0%) 128 131 Astron Ltd. (ASX:ATR) $169.5 $165.2 2.6% 104 116 Exco Resources Ltd. (ASX:EXS) $233.5 $220.0 6.1% 129 128 Azumah Resources Ltd (ASX:AZM) $166.1 $173.4 (4.2%) 105 94 Straits Resources Limited (ASX:SRQ) $232.1 $287.1 (19.2%) 130 140 Altona Mining Limited (ASX:AOH) $165.2 $148.7 11.1% 106 101 Greenland Minerals and Energy Ltd (ASX:GGG) $232.0 $260.4 (10.9%) 131 132 Alcyone Resources Ltd (ASX:AYN) $157.9 $164.1 (3.8%) 107 106 Orocobre Limited (ASX:ORE) $225.2 $249.8 (9.8%) 132 135 Stanmore Coal Limited (ASX:SMR) $157.1 $155.8 0.8% 108 108 Mincor Resources NL (ASX:MCR) $224.7 $240.7 (6.6%) 133 148 Australasian Resources Ltd (ASX:ARH) $157.1 $139.4 12.7% 109 113 Tanami Gold NL (ASX:TAM) $221.8 $227.1 (2.3%) 134 145 Cobar Consolidated Resources Ltd (ASX:CCU) $154.3 $142.5 8.3% 110 111 African Energy Resources Limited (ASX:AFR) $220.7 $231.1 (4.5%) 135 122 Platinum Australia Limited (ASX:PLA) $153.0 $200.1 (23.5%) 111 105 Hillgrove Resources Ltd. (ASX:HGO) $218.3 $254.0 (14.1%) 136 127 Continental Coal Limited (ASX:CCC) $151.8 $176.6 (14.0%) 112 110 Resource Generation Limited (ASX:RES) $216.9 $236.4 (8.2%) 137 136 YTC Resources Limited (ASX:YTC) $146.4 $155.0 (5.5%) 113 109 Atlantic Ltd (ASX:ATI) $216.2 $237.7 (9.0%) 138 134 Tribune Resources Limited (ASX:TBR) $143.4 $157.0 (8.7%) 114 129 WPG Resources Ltd (ASX:WPG) $201.9 $173.1 16.6% 139 144 Reed Resources Ltd. (ASX:RDR) $142.9 $144.2 (0.9%) 115 114 Northern Energy Corporation Ltd (ASX:NEC) $196.6 $221.8 (11.4%) 140 199 Indo Mines Limited (ASX:IDO) $141.4 $82.3 71.8% 116 118 NKWE Platinum Ltd. (ASX:NKP) $196.1 $214.8 (8.7%) 141 138 Pluton Resources Limited (ASX:PLV) $139.9 $154.4 (9.4%) 117 125 FerrAus Ltd. (ASX:FRS) $194.5 $182.1 6.8% 142 137 Robust Resources Limited (ASX:ROL) $137.6 $154.6 (11.0%) 118 121 Kula Gold Limited (ASX:KGD) $193.7 $202.7 (4.4%) 143 146 Ausgold Limited (ASX:AUC) $137.1 $140.8 (2.6%) 119 117 Gold Road Resources Limited (ASX:GOR) $193.3 $217.6 (11.2%) 144 147 Northern Minerals Limited (ASX:NTU) $136.6 $139.9 (2.4%) 120 123 Red 5 Ltd. (ASX:RED) $192.6 $199.0 (3.2%) 145 126 Blackgold International Hold. Ltd (ASX:BGG) $131.6 $135.0 (2.5%) 121 112 Highlands Pacific Limited (ASX:HIG) $192.1 $229.8 (16.4%) 146 142 IMX Resources Ltd. (ASX:IXR) $131.3 $147.1 (10.7%) 122 119 Deep Yellow Ltd. (ASX:DYL) $191.7 $214.2 (10.5%) 147 232 Papillon Resources Limited (ASX:PIR) $127.8 $65.8 94.2% 123 - Sylvania Platinum Ltd. (ASX:SLP) $188.7 $212.9 (11.4%) 148 141 Kentor Gold Limited (ASX:KGL) $127.5 $148.7 (14.3%) 124 133 Kangaroo Resources Limited (ASX:KRL) $180.7 $158.1 14.3% 149 158 Northern Star Resources Ltd. (ASX:NST) $124.9 $117.4 6.4% 125 120 Cerro Resources NL (ASX:CJO) $179.6 $211.9 (15.2%) 150 201 Minemakers Limited (ASX:MAK) $122.6 $81.5 50.4%Source: Capital IQnew enTranTs - may eXiTs - may123 Sylvania Platinum Ltd. (ASX:SLP) (previously Sylvania Resources) Jabiru Metals Limited (ASX:JML)140 Indo Mines Limited (ASX:IDO) Golden West Resources Limited (ASX:GWR)147 Papillon Resources Limited (ASX:PIR) African Iron Limited (ASX:AKI)149 Northern Star Resources Ltd. (ASX:NST) Sihayo Gold Limited (ASX:SIH)150 Minemakers Limited (ASX:MAK) Berkeley Resources Ltd. (ASX:BKY)Based on market capitalisation as at 31 May vs 30 AprilGroup 150 Leaders and LaGGers - markeT capiTaLisaTion performance - may Leaders Laggers * Included material placement, acquisition and/or option conversion during month 3
  4. 4. Group 150Group 150 markeT capiTaLisaTion 700.0 +61.4% 359.8 580.7 606.3 605.4 603.8 591.5 589.2 580.7 600.0 564.7 572.4 9.9 10.2 9.4 23.4 9.9 21.9 21.7 9.5 8.9 528.8 524.8 7.6 8.3 21.6 21.0 20.3 522.3 Market Valuation (A$b) - Group 150 19.4 20.5 5.7 503.5 494.1 5.4 12.8 486.0 13.7 470.8 485.5 6.6 17.8 500.0 5.9 14.5 467.0 5.5 153.7 151.1 150.0 148.2 5.2 12.1 13.8 5.8 14.8 144.5 147.2 149.9 5.1 13.1 4.8 12.3 142.2 111.6 113.1 114.9 133.2 101.7 113.0 121.2 400.0 108.1 109.5 3.1 8.4 167.7 164.9 166.6 165.3 159.9 152.5 153.8 162.2 161.3 157.8 300.0 88.0 138.2 141.4 138.5 150.6 131.7 130.8 137.5 67.1 200.0 240.0 228.7 242.6 233.3 237.8 251.6 245.6 255.6 257.3 252.9 243.8 100.0 226.8 212.8 209.5 223.3 206.2 216.6 193.2 0 Jun-09 Dec-09 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 BHPBilliton Rio Tinto Company 3 - 50 Company 51 - 100 Company 101 - 150asX indeX performance - may Group 150 mkT cap - By commodiTymerGer & acquisiTions - announced in may Percent Premium - Premium - Date Value Consideration Target Acquirer Sought 1 Day Prior 1 Month Prior Announced (A$m) Offered (%) (%) (%) 25-May-2011 Goldminco Corp. (TSXV:GCP) Straits Resources Limited (ASX:SRQ) 13.5 29 81.8 100.0 Cash 23-May-2011 Territory Resources Limited (ASX:TTY) Exxaro Resources Limited (JSE:EXX) 148.2 100 64.3 67.3 Cash 23-May-2011 70% of RioAD LLC and Rio Gobi LLC Hunnu Coal Limited (ASX:HUN) 40.0 100 - - Cash 19-May-2011 New Hope Corp. Ltd., Lenton Project Mai-Liao Power Corporation 58.0 10 - - Cash 16-May-2011 Donaldson Coal Pty Ltd. Gloucester Coal Ltd. (ASX:GCL) 590.5 100 - - Cash; Equity China Development Bank Corporation; Baiyin Nonferrous Metal (Group) Co., Ltd.; 16-May-2011 Gold One International Limited (ASX:GDO) 510.5 100 27.9 26.4 Cash China-Africa Development Fund; Long March Capital GroupSource: Capital IQAnnounced Australian Resources (excluding oil and gas) Mergers and Acquisitions >A$10m4
  5. 5. JUNE 2011GeneraTinG reTurns whiLe proTecTinG The downside - The franco-nevada sToryFounded in 1982, Franco-Nevada had grown to a US$3 billion company by the time it was acquired by Newmont in 2002.Franco-Nevada (“Franco”) and Euro-Nevada were founded in 1982 by two Canadian entrepreneurs, Pierre Lassonde andSeymour Schulich. In 1986, Old Franco made its first royalty acquisition, and acquired or created additional royalties andresource investments from 1986 to 2002.The concept was to build a company from the cash flow stream of gold royalties which provide yield and more upside thana gold ETF but with less risk than a mine operator - a virtual mining company with no operating risk or capital expenditurecommitments.While Franco focussed on North American gold royalties (with some interests in oil and gas and platinum), sister companyEuro-Nevada focussed on building a portfolio of international gold royalties. The royalty portfolio was substantially madeup of interests in significant assets, operated by industry leaders in regions of low political risk and is balanced across anumber of commodities and stages of development.Historically, Franco and Euro-Nevada were kept separate for tax efficiency. In September 1999, however, the two companiestook the inevitable step and merged under the name Franco-Nevada (“Old Franco-Nevada”).Old Franco-Nevada was one of Canada’s most successful companies, building a quality portfolio of royalties and deliveringsuperior returns to shareholders in the process.In 2000, an attempt to merge Old Franco-Nevada with Gold Fields Limited failed when the deal did not receive SouthAfrican regulatory approval.Old Franco-Nevada discovered, developed and brought into production the Midas mine in Nevada and sold its interest inthis mine together with certain other assets to Normandy in the first half of 2001, in exchange for a 19.9% equity interest inNormandy and a continuing 5-10% NSR royalty interest on the Midas mine. At the same time Old Franco-Nevada’s royaltiesover Henty and New Celebration were transferred to Normandy.Franco-Nevadas Asset Portfolio (March 2001) Recognising the value of the company, Newmont Mining Operator Interest Corporation successfully acquired Old Franco-Nevada in FebruaryUS Operations 2002 as part of its three-way merger with Normandy and Franco.Midas Franco-Nevada 5-10% NSRBetze-Post Barrick Gold 0-4% NSW, 5-6% NPI Franco’s key strategy was to use the investment flexibility thatMeikle-Rodeo Barrick Gold 4% NSR, 5% NPIGetchell Placer Dome 2% NSR royalties offer to acquire direct interests in major ore bodiesRosebud Newmont/Hecla 4% NSR operated by the best companies in the business.Castle Mtn. Viceroy 1-5% NSRBriggs Canyon 2% NSR A key driver of Franco’s growth was its investment in early stageMaggie Creek Newmont/Hecla 2-8% NSR developments, gaining the right to participate in any futureStillwater Stillwater Mining 5% NSRCanadian Operations growth of properties without being responsible for developmentEskay Creek Homestake 1% NSR costs or environmental liabilities.Mouska Cambior 2% NSRHolt-McDermott Barrick Gold 0-4% NSR For example, when Franco bought the Goldstrike royalty, theAustralian & International OperationsHenty Goldfields 1-10% NSR project was operated by a relatively small company. A year laterNew Celebration Newcrest 1-4% NSR Barrick took it over, and had invested over US$1 billion to boostBrowns Creek Hargraves 2.25% NSR reserves from 600,000oz Au when the acquisition was made inMt. Muro Aurora 3-7% NSRProjects 1986, to around 20Moz Au at the time of Old Franco-NevadaCarlin Trend Franco-Nevada 100% WI being acquired by Newmont. In 2010, the Goldstrike royaltyNevada Exploration Franco-Nevada 100% WI contributed US$50m in revenue to Franco-Nevada.Canada Exploration Franco-Nevada 50-100% WIAustralia Exploration Franco-Nevada 100% WI The table illustrates the calibre of Franco’s portfolio in 2001 andPandora, South Africa Angloplat 5% NSRCerro San Pedro, Mexico Metallica/Cambior 2% NSR the large number of Net Smelter Return (“NSR”) royalties. TheMara Rosa, Brazil Metallica 1% NSR strategy of acquiring NSR royalties provided Franco with a cashMara Rosa, Brazil Metallica 1% NSRDivisions flow independent of the margin of the project, thereby providingOil & Gas Franco-Nevada 100% WI some protection from adverse commodity price movements.Metals Franco-Nevada 100% WIInvestmentsVoiseys Bay Inco Limited 9.2% NPIDiavik Rio Tinto 3.5% NPIWI - Working interest (projects operated by Franco-Nevada)NSR - Net smleter returns, NPI - Net profit interestSource: Webisite, Bloomberg, Capital IQ 5
  6. 6. Group 150 GeneraTinG reTurns whiLe proTecTinG The downside - The franco-nevada sTory Franco-Nevada Corporation - a new beginning In late 2007, a team including some Old Franco employees formed Franco-Nevada Corporation and on 20 December 2007, acquired a portfolio of Newmont royalties and other interests, completed a US$1.2 billion initial public offering, completed a bank debt facility and listed on the Toronto Stock Exchange. In 2008 and 2009, the company raised additional equity in order to grow the royalty and stream portfolio. In March 2011, Franco-Nevada acquired Gold Wheaton Corporation which added additional gold and PGM streams. The current portfolio includes over 340 assets covering properties at various stages from operations to early stage exploration. Royalties are mostly revenue-based but the portfolio also includes profit-based and stream-based royalties. Franco-Nevada Asset Portfolio - May 2011 Gold PGM Other Minerals Total Mineral Oil & Gas Total Producing 28 3 6 37 135 172 Advanced 19 0 4 23 0 23 Exploration 124 2 19 145 * 145 Total 171 5 29 205 135 340 * 157 undeveloped oil & gas interests not included in asset counts Details of the current portfolio can be found at www.franco-nevada.com/files/Asset%20Listing%202010AR.pdf Currently, Franco-Nevada’s market capitalisation is in excess of C$4.5 billion, and analyst consensus estimates indicate the company will generate NPAT of C$120m on revenues of C$340m in 2011, implying a margin of ~35% and a price to earnings ratio of ~39x. Franco-Nevada Share Price Since IPO 40 16 35 14 30 12 25 10 Share Price (C$) Volume (m) 20 8 15 6 10 4 5 2 0 0 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Volume (m) Franco Nevada Share Price (C$) Gold Price (Rebased)6
  7. 7. JUNE 2011Base meTaLs - secTor performance Share Price Performance - May 2011 Copper Nickel ZincShare Price Performance Share Price Performance - Since 31 December 2010Share Price Performance Share Price Performance - Since 30 June 2010Share Price Performance 7
  8. 8. Group 150coaL - secTor performance Share Price Performance - May 2011Share Price Performance Share Price Performance - Since 31 December 2010Share Price Performance Share Price Performance - Since 30 June 2010Share Price Performance8
  9. 9. JUNE 2011diversified - secTor performance indusTriaL mineraLs - secTor performance Share Price Performance - May 2011Share Price Performance Share Price Performance Share Price Performance - Since 31 December 2010Share Price Performance Share Price Performance Share Price Performance - Since 30 June 2010Share Price Performance Share Price Performance 9
  10. 10. Group 150GoLd - secTor performance Share Price Performance - May 2011Share Price Performance Share Price Performance - Since 31 December 2010Share Price Performance Share Price Performance - Since 30 June 2010Share Price Performance10
  11. 11. JUNE 2011iron ore - secTor performance Share Price Performance - May 2011Share Price Performance Share Price Performance - Since 31 December 2010Share Price Performance Share Price Performance - Since 30 June 2010Share Price Performance 11
  12. 12. Group 150pLaTinum - secTor performance uranium - secTor performance Share Price Performance - May 2011Share Price Performance Share Price Performance Share Price Performance - Since 31 December 2010Share Price Performance Share Price Performance Share Price Performance - Since 30 June 2010Share Price Performance Share Price Performance12
  13. 13. JUNE 2011consensus commodiTy price forecasTs - may Gold (US$/oz) Silver (US$/OZ) $2,500 $60 $2,000 $50 $38.52 $1,536 $1,450 $1,400 $31.50 $1,231 $1,159 $40 $1,500 $25.58 $30 $20.00 $19.82 $1,000 $20 $500 $10 $0 $0 Spot 2011 2012 2013 2014 Spot 2011 2012 2013 2014 Copper (US$/lb) Nickel (US$/lb) $6.00 $16.00 $4.42 $4.68 $5.00 $4.18 $11.57 $3.87 $3.71 $10.70 $10.43 $10.29 $12.00 $9.75 $4.00 $3.00 $8.00 $2.00 $4.00 $1.00 $0.00 $0.00 Spot 2011 2012 2013 2014 Spot 2011 2012 2013 2014 Zinc (US$/lb) Lead (US$/lb) $1.50 $2.00 $1.09 $1.11 $1.11 $1.09 $1.03 $1.50 $1.14 $1.17 $1.20 $1.12 $1.00 $1.07 $1.00 $0.50 $0.50 $0.00 $0.00 Spot 2011 2012 2013 2014 Spot 2011 2012 2013 2014 Tin (US$/lb) Uranium (US$/lb) $20.00 $100 $17.50 $13.62 $14.06 $12.67 $64.50 $63.25 $60.00 $15.00 $75 $56.00 $10.36 $53.00 $12.50 $9.07 $10.00 $50 $7.50 $5.00 $25 $2.50 $0.00 $0 Spot 2011 2012 2013 2014 Spot 2011 2012 2013 2014 AUD:USD NYMEX (US$/bbl) $1.25 $1.07 $1.02 $200 $1.00 $0.94 $0.92 $1.00 $150 $108.00 $115.00 $102.37 $97.75 $102.00 $0.75 $100 $0.50 $0.25 $50 $0.00 $0 Spot 2011 2012 2013 2014 Spot 2011 2012 2013 2014Source: Bloomberg Consensus Estimates - Median / High / Low 13
  14. 14. recenT resources TransacTions Group 150 Mergers and Acquisitions Mergers and Acquisitions 2010 2009 GRAM 2009 2009 2008 2008 2006 Advised BHP Advised BG Advised Guandong Advised Allied Gold Advised Kalahari Advised Gem Advised IAMGOLD Billiton on its Group on its $1bn Rising on its $216m on its $54m Minerals on its Diamonds on its Corporation on its $204m offer for takeover offer for cornerstone acquisition of $140m proposed $300m acquisition $265m acquisition United Minerals Pure Energy investment in Pan Australian merger with of Kimberley of Gallery Gold. Corporation. Resources Aust. Solomons Gold. Extract Resources. Diamonds. Limited. TakeoverDefence Takeover Defence 2010 2010 2010 2009 2009 2007 2007 Advised Polaris Advised Indophil Advised Advised Energy Advised Brandrill Advised Summit Advised Tethyan on Metals NL on on $545m Centaurus Metals on its $86m Limited on its Resources on its its $220m $178m takeover recommended Resources on its proportional takeover $45m takeover A$1.2bn takeover competing takeover offer by Mineral offer from Zijin $20m merger offer by China offer by Ausdrill by Paladin Energy. offer by Crosby and Resources with Glengarry Guangdong Nuclear Limited. Antogafasta/Barrick. Limited. Resources. Power Group. Strategic Advisory, JointJoint Ventures and Capital Markets Strategic Advisory, Ventures and Capital Markets 2010 2010 2009 2008 2009/08 2008 2008 Advised BHP Introduced Advised BHP Advised Advised Iluka on its Advised Advised Iluka Billiton on its Denham Capital to Billiton on the Bannerman $114m Murchison Metals Resources on its US$116bn iron Trans Tasman disposal of the Resources on its institutional on its joint venture $54m Narama coal ore production Resources resulting Yabulu Nickel financing with placement and with Mitsubishi. divestment to joint venture with in NZ iron sands refinery. Resource Capital $353m accelerated Xstrata. Rio Tinto. investment. Funds. right issue. 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