6-K

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934

For the month of May 2017

Commission File Number 001-35286

FRANCO-NEVADA CORPORATION

(Translation of registrant’s name into English)

199 Bay Street, Suite 2000, P.O. Box 285, Commerce Court Postal Station, Toronto, Ontario, Canada M5L 1G9

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F

Form 20-F   ☐ Form 40-F   ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

NOTE

Exhibits 99.2 and 99.3 to this current report on Form 6-K are hereby incorporated by reference into our registration statements on Form F-3 (file no. 333-210295), on Form S-8 (file no. 333-176856) and on Form F-10 (file no. 333-210878) (collectively, the “Registration Statements”).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FRANCO-NEVADA CORPORATION
	/s/ Lloyd Hong
Date: May 9, 2017	Lloyd Hong
	Chief Legal Officer & Corporate Secretary

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INDEX TO EXHIBITS

99.1	Press Release dated May 9, 2017 – Franco-Nevada Reports Strong Q1 Results
99.2	Management’s Discussion and Analysis for the first quarter ended March 31, 2017
99.3	Interim Consolidated Financial Statements for the three months ended March 31, 2017
99.4	Certification of Chief Executive Officer
99.5	Certification of Chief Financial Officer

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EX-99.1

Exhibit 99.1

NEWS RELEASE

Toronto, May 9, 2017

(in U.S. dollars unless otherwise noted)

Franco-Nevada Reports Strong Q1 Results

Dividend Increased for 10th Consecutive Year

“Franco-Nevada’s diversified portfolio and business model continues to deliver with record Gold Equivalent Ouncesand revenue being realized in the first quarter” commented David Harquail, CEO. “Recent acquisitions are performing well and we continue to benefit from increased activity on many of our properties. It is a testament to both the portfolio and our business model that Franco-Nevada has again declared a dividend increase.  This marks Franco-Nevada’s 10th consecutive year of dividend increases since it went public in late 2007.  Franco-Nevada remains debt free with increasing cash balances and we continue to see investment opportunities across various commodities.”

Q1/2017 Financial Highlights

· 131,578 Gold Equivalent Ounces1  (GEOs) sold – a new record and a 23.4% increase year-over-year

· $172.7 million in revenue – a new record and a 30.8% increase year-over-year

· $128.5 million of Adjusted EBITDA2 or $0.72 per share

· $45.6 million of net income or $0.26 per share

· $44.8million of Adjusted Net Income3 or $0.25 per share

· $283.0 million in cash and cash equivalents at quarter-end and no debt

Revenue and GEOs by Asset Categories
		Q1/2017			Q1/2016
		GEOs	Revenue		GEOs	Revenue
		#	(in millions)		#	(in millions)
Precious Metals:
	Gold	100,540	$	122.9	76,753	$	91.5
	Silver	19,746		24.4	22,627		26.8
	PGMs	8,224		10.7	5,196		7.6
Precious Metals  -	Total	128,510	$	158.0	104,576	$	125.9
Other Minerals		3,068		3.8	2,045		2.5
Oil & Gas		—		10.9	—		3.6
		131,578	$	172.7	106,621	$	132.0

For Q1/2017, revenue was sourced 91.5% from precious metals (71.2% gold, 14.1% silver and 6.2% PGM) and 81.0% from the Americas (13.9% U.S., 16.9% Canada and 50.2% Latin America).  Operating costs and expenses increased year-over-year in-line with the increase in the number of GEOs sold during the quarter.  Oil & gas revenue increased three-fold year-over-year, reflecting higher prices and lower capital expenses year-over-year on the Company’s Canadian assets, as well as the addition of the STACK portfolio of royalties in Q4/2016.  Cash provided by operating activities was $119.8 million, a decrease of 3.5% compared to Q1/2016, as increased gross profits were offset by changes in non-cash working capital.

Corporate Updates

· Dividend Increase: Franco-Nevada is pleased to declare a  quarterly dividend of $0.23 per share. The dividend is a 4.5%  increase from the previous $0.22 per share quarterly dividend and marks the tenth consecutive annual dividend increase for Franco-Nevada shareholders.

· 2017 Warrants:   At the beginning of the year, Franco-Nevada had 6,510,280 common share purchase warrants outstanding. The warrants have an exercise price of C$75.00 per warrant and expire on June 16, 2017. Subsequent to March 31, 2017, Franco-Nevada received proceeds of C$157.6 million from the exercise of 2,100,718 common share purchase warrants. At May 9, 2017, there remains 4,407,675warrants outstanding.

· Credit Facilities: On March 22, 2017, Franco-Nevada extended the term of its existing $1 billion credit facility from November 12, 2020 to March 22, 2022.  In addition, on March 20, 2017, Franco-Nevada’s subsidiary, Franco-Nevada (Barbados) Corporation, entered into an unsecured revolving credit facility which provides for the availability of up to $100.0 million in borrowings.

· Midland Oil & Gas Royalties:  On March 13, 2017, Franco-Nevada agreed to purchase a portfolio of oil & gas royalties in the Midland shale play of the Permian Basin of Texas for $110.0 million.  On March 14, 2017, Franco-Nevada advanced $11.0 million in an escrow account to be applied towards the purchase price upon closing. Closing is expected in Q2/2017 with revenue retroactive to Jan 1, 2017.

Q1/2017 Portfolio Updates

· Precious Metals — U.S.:  GEOs from U.S. precious metals assets increased by 37.9% year-over-year with increases at South Arturo and Stillwater more than offsetting the decrease from Goldstrike. 19,529 GEOs were received from the U.S. precious metal assets.

· South Arturo (4-9% royalty) – This project, operated by Barrick and Premier Gold, represented an increase of 4,309 GEOs year-over-year.  The partners are looking at a second open pit (Dee) on the property and are advancing permitting for the El Nino underground opportunity below the current pit. 

· Goldstrike (2-4% royalty & 2.4-6% NPI) – Barrick is integrating the Cortez and Goldstrike mines in an effort to reduce all-in sustaining costs which would benefit the profit royalties. 

· Stillwater (5% royalty) – Sibanye Gold successfully closed its acquisition of Stillwater Mining. The Stillwater project contributed an additional 2,004 GEOs compared to Q1/2016.  Stillwater is planning low risk organic growth with the Blitz project, which it expects to add between 270,000 and 330,000 PGM ounces of incremental production per annum by 2021.

· Rosemont (1.5% royalty) – Hudbay released results of a feasibility study for the Rosemont project which outlined a 19 year mine life with annual copper production over the first 10 years of 127,000 tonnes.  Hudbay expects the Record of Decision to be signed in June 2017. Franco-Nevada’s 1.5% royalty covers all commodities.

· Precious Metals — Canada:  GEOs from Canadian precious metals assets increased by approximately 3.3% to 12,652 GEOs compared with Q1/2016.

· Hemlo (3% royalty & 50% NPI) –  Barrick filed a Technical Report for Hemlo outlining the life of mine plan and providing additional detail of the increased reserves previously announced.

· Macassa (various royalties) – Reserves of gold ounces at the Macassa mine increased by 37% from the last estimate at December 31, 2014 which includes two years of depletion.  The reserve grade also increased by 7%.

· Detour (2% royalty) – Detour Gold provided an updated mine plan in response to near-term permitting constraints.  The updated plan assumes a longer mine life and increased life of mine gold production compared to the previous mine plan.  

· Brucejack (1.2% royalty) – Pretium Resources reports that it has stockpiled 187,000 tonnes of ore and has started introducing ore to the crusher.

· Timmins West (2.25% royalty)  – Tahoe Resources expects to provide a maiden reserve estimate for the Gap 144 zone in Q3/2017.

· Precious Metals — Latin America: GEOs from Latin American precious metals assets represented the largest year-over-year increase.  70,429 precious metal GEOs were earned from Latin America, an increase of 20.4% year-over-year due to higher deliveries from Antapaccay, Guadalupe and Candelaria.

· Antapaccay (gold and silver stream) – Antapaccay delivered 15,019 GEOs in Q1/2017,  an increase of 68% year-over-year due to only two months of deliveries in Q1/2016, when the stream transaction was closed.  

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· Antamina (22.5% silver stream) – 13,130 GEOs from Antamina were sold during the quarter, a decrease compared to 17,781 GEOs in Q1/2016. The year-over-year decrease was expected, as 2016 was an exceptionally strong year of silver production for Antamina.  

· Candelaria (gold and silver stream) – Candelaria earned 22,483 GEOs, compared to 18,626 GEOs in Q1/2016, as expected according to its mine plan. The Los Diques tailings facility construction is progressing on schedule and conceptual studies to increase production from five underground deposits to optimize life-of-mine plan are advancing. 

· Guadalupe (50% gold stream) – The Guadalupe agreement, which became effective in Q3/2016, delivered 19,300 GEOs in Q1/2017, compared to 12,501 under the Palmarejo agreement in Q1/2016, due to higher production year-over-year and a reduction of inventory that had built up from the prior quarter.  Under the Guadalupe agreement, Franco-Nevada pays an ongoing cost of $800 per gold ounce received versus the inflation adjusted cost of $400 per gold ounce under the prior Palmarejo agreement.

· Cerro Moro (2% royalty) – Yamana Gold reports that the project is on track for mechanical completion by year-end with startup of production expected early next year.

· Cobre Panama (gold and silver stream) – During the quarter, Franco-Nevada contributed $50.2 million of its share of construction capital for the Cobre Panama project with a total of $512.4 million of its $1 billion commitment contributed as of the end of Q1/2017.  First Quantum reported that the project is over 50% complete as of the end of Q1/2017 and that the project remains scheduled for phased commissioning during 2018, with continued ramp-up over 2019.  Franco-Nevada expects to contribute between $200-$220 million to the project in 2017. 

· Precious Metals — Rest of World:  25,900 GEOs from Rest of World precious metals assets were sold during the quarter,  an increase of 31.8% year-over-year.  This reflected the first full quarter of deliveries from Karma, as well as the sale of ounces which had been received in Q4/2016.

· Subika (2% royalty) – Newmont formally announced plans to develop a new underground mine and expand plant capacity at its Ahafo operation in Ghana.  Together, the two projects are forecast to add incremental gold production between 200,000 to 300,000 ounces per year during the first five years of production.  The proposed underground mine is estimated to be mostly covered by Franco-Nevada’s 2% royalty.

· Tasiast (2% royalty) – Kinross reports the Tasiast Phase 1 expansion remains on schedule for full production in Q2/2018. Kinross expects to provide a feasibility for a possible Phase 2 expansion in Q3/2017. This is expected to add an additional 18,000 tonnes per day for a total combined throughput capacity of 30,000 tonnes per day.

· Karma (fixed gold deliveries and stream) – 5,000 GEOs were sold in the quarter of which 1,250 were received in Q4/2016.  

· Sabodala (fixed gold deliveries and stream)  –7,500 GEOs were sold in the quarter, of which 1,875 were received in Q4/2016. Teranga Gold won the PDAC award for Environmental & Social Responsibility for its work around the Sabodala mine. 

· Edikan (1.5% royalty) – Perseus Mining released an updated mine plan in February envisioning a 6.5 year mine life. 

· Agi Dagi (2% royalty) – Alamos Gold has tabled a positive feasibility report for the project projecting annual production of 177,600 ounces of gold over 5 years.  A positive PEA was also completed for the neighbouring Camyurt project on which Franco-Nevada also holds a royalty.

· Oil & Gas: Revenue from oil & gas assets increased to $10.9 million in Q1/2017 compared to $3.6 million in Q1/2016,  reflecting higher prices and lower capital expenses year-over-year on the Company’s Canadian assets, as well as the addition of the STACK portfolio of royalties in Q4/2016.  The contribution from the new U.S. royalty assets is expected to become more significant after 2017. 

Dividend Increase

Franco-Nevada is pleased to announce that its Board of Directors has declared a quarterly dividend of $0.23 per share. The dividend is a 4.5%  increase from the previous $0.22 per share quarterly dividend and marks the 10th consecutive annual dividend increase for Franco-Nevada shareholders. Canadian investors in Franco-Nevada’s IPO in December 2007 are now receiving an effective 8.3% yield on their cost base.  The dividend will be paid on June 29, 2017 to shareholders of record on June 15, 2017 (the “Record Date”).  The Canadian dollar equivalent is to be determined based on the daily average rate posted by the Bank of Canada on the Record Date.  Under Canadian tax legislation, Canadian resident individuals who receive “eligible dividends” are entitled to an enhanced gross-up and dividend tax credit on such dividends.

The Company has a Dividend Reinvestment Plan (“DRIP”).  Participation in the DRIP is optional.  The Company will issue additional common shares through treasury at a 3% discount to the Average Market Price, as defined in the DRIP.  However, the Company may, from time to time, in its discretion, change or eliminate the discount applicable to treasury acquisitions or direct that such common shares be purchased in market acquisitions at the prevailing market price, any of which would be publicly announced.  The

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DRIP and enrollment forms are available on the Company’s website at www.franco-nevada.com.  Registered shareholders may also enroll in the DRIP online through the plan agent’s self-service web portal at www.investorcentre.com/franco-nevada.  Beneficial shareholders should contact their financial intermediary to arrange enrollment.

This press release is not an offer to sell or a solicitation of an offer of securities. A registration statement relating to the DRIP has been filed with the U.S. Securities and Exchange Commission and may be obtained under the Company’s profile on the U.S. Securities and Exchange Commission’s website at www.sec.gov.

Shareholder Information 

The complete Condensed Consolidated Interim Financial Statements and Management’s Discussion and Analysis can be found today on Franco‑Nevada’s website at www.franco-nevada.com, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

Management will host a conference call tomorrow, Wednesday,  May 10, 2017 at 8:30 a.m. Eastern Time to review Franco‑Nevada’s Q1/2017 results. 

Interested investors are invited to participate as follows:

· Via Conference Call: Toll-Free: (888) 231-8191; International: (647) 427-7450

· Conference Call Replay until May 17th: Toll-Free (855) 859-2056; Toronto (416) 849-0833; Pass code 8958319

· Webcast: A live audio webcast will be accessible at www.franco-nevada.com

Corporate Summary

Franco-Nevada Corporation is the leading gold-focused royalty and stream company with the largest and most diversified portfolio of cash-flow producing assets.  Its business model provides investors with gold price and exploration optionality while limiting exposure to many of the risks of operating companies.  Franco-Nevada is debt free and uses its free cash flow to expand its portfolio and pay dividends.  It trades under the symbol FNV on both the Toronto and New York stock exchanges.  Franco-Nevada is the gold investment that works.

For more information, please go to our website at www.franco-nevada.com or contact:

Stefan Axell	Sandip Rana
Director, Corporate Affairs	Chief Financial Officer
(416) 306-6328	(416) 306-6303
info@franco-nevada.com

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Forward Looking Statements

This press release contains “forward looking information” and “forward looking statements” within the meaning of applicable Canadian securities laws and the United States Private Securities Litigation Reform Act of 1995, respectively, which may include, but are not limited to, statements with respect to future events or future performance, management’s expectations regarding Franco-Nevada’s growth, results of operations, estimated future revenues, carrying value of assets, future dividends and requirements for additional capital, mineral reserve and mineral resource estimates, production estimates, production costs and revenue, future demand for and prices of commodities, expected mining sequences, business prospects and opportunities. In addition, statements (including data in tables) relating to reserves and resources and gold equivalent ounces (“GEOs”) are forward looking statements, as they involve implied assessment, based on certain estimates and assumptions, and no assurance can be given that the estimates and assumptions are accurate and that such reserves and resources and GEOs will be realized. Such forward looking statements reflect management’s current beliefs and are based on information currently available to management. Often, but not always, forward looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budgets”, “scheduled”, “estimates”, “forecasts”, “predicts”, “projects”, “intends”, “targets”, “aims”, “anticipates” or “believes” or variations (including negative variations) of such words and phrases or may be identified by statements to the effect that certain actions “may”, “could”, “should”, “would”, “might” or “will” be taken, occur or be achieved. Forward looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Franco-Nevada to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. A number of factors could cause actual events or results to differ materially from any forward looking statement, including, without limitation: fluctuations in the prices of the primary commodities that drive royalty and stream revenue (gold, platinum group metals, copper, nickel, uranium, silver, iron-ore and oil and gas); fluctuations in the value of the Canadian and Australian dollar, Mexican peso, and any other currency in which revenue is generated, relative to the U.S. dollar; changes in national and local government legislation, including permitting and licensing regimes and taxation policies and the enforcement thereof; regulatory,  political or economic developments in any of the countries where properties in which Franco-Nevada holds a royalty, stream or other interest are located or through which they are held; risks related to the operators of the properties in which Franco-Nevada holds a royalty, stream or other interest, including changes in the ownership and control of such operators; influence of macroeconomic developments; business opportunities that become available to, or are pursued by Franco-Nevada; reduced access to debt and equity capital; litigation; title, permit or license disputes related to interests on any of the properties in which Franco-Nevada holds a royalty, stream or other interest; whether or not the Corporation is determined to have “passive foreign investment company” (“PFIC”) status as defined in Section 1297 of the United States Internal Revenue Code of 1986, as amended; potential changes in Canadian tax treatment of offshore streams; excessive cost escalation as well as development, permitting, infrastructure, operating or technical difficulties on any of the properties in which Franco-Nevada holds a royalty, stream or other interest; actual mineral content may differ from the reserves and resources contained in technical reports; rate and timing of production differences from resource estimates, other technical reports and mine plans; risks and hazards associated with the business of development and mining on any of the properties in which Franco-Nevada holds a royalty, stream or other interest, including, but not limited to unusual or unexpected geological and metallurgical conditions, slope failures or cave-ins, flooding and other natural disasters, terrorism, civil unrest or an outbreak of contagious disease; and the integration of acquired assets. 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 in which Franco-Nevada holds a royalty, stream or other interest 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 that underlie the asset portfolio; the Corporation’s ongoing income and assets relating to determination of its PFIC status; no material changes to existing tax treatment; no adverse development in respect of any significant property in which Franco-Nevada holds a royalty, stream or other interest; the accuracy of publicly disclosed expectations for the development of underlying properties that are not yet in production; integration of acquired assets; and the absence of any other factors that could cause actions, events or results to differ from those anticipated, estimated or intended. However, there can be no assurance that forward looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Investors are cautioned that forward looking statements are not guarantees of future performance. Franco-Nevada cannot assure investors that actual results will be consistent with these forward looking statements and investors should not place undue reliance on forward looking statements due to the inherent uncertainty therein. For additional information with respect to risks, uncertainties and assumptions, please refer to the “Risk Factors” section of Franco-Nevada’s most recent Annual Information Form filed with the Canadian securities regulatory authorities on www.sedar.com and Franco-Nevada’s most recent Annual Report filed on Form 40-F filed with the SEC on www.sec.gov. 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.

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NON-IFRS MEASURES:  Adjusted Net Income and Adjusted EBITDA are intended to provide additional information only and do not have any standardized meaning prescribed under 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 below or the Company’s current MD&A disclosure found on the Company’s website, on SEDAR and on EDGAR. Comparative information has been recalculated to conform to current presentation.

1 GEOs include our gold, silver, platinum, palladium and other mineral assets. GEOs are estimated on a gross basis for NSR royalties and, in the case of stream ounces, before the payment of the per ounce contractual price paid by the Company. For NPI royalties, GEOs are calculated taking into account the NPI economics. Platinum, palladium, silver and other minerals are converted to GEOs by dividing associated revenue, which includes settlement adjustments, by the relevant gold price. The gold price used in the computation of GEOs earned from a particular asset varies depending on the royalty or stream agreement, which may make reference to the market price realized by the operator, or the average for the month, quarter, or year in which the mineral was produced or sold. For Q1/2017, the average commodity prices were as follows: $1,219 gold (Q1/2016 - $1,181), $17.42 silver (Q1/2016 - $14.83), $981 platinum (Q1/2016 - $914) and $767 palladium (Q1/2016 - $524).

2 Adjusted EBITDA and Adjusted EBITDA per share are non-IFRS financial measures, which exclude the following from net income and EPS: income tax expense/recovery; finance expenses; finance income; depletion and depreciation; non-cash costs of sales; impairment charges related to royalty, stream and working interests and investments; gains/losses on sale of royalty interests; gains/losses on investments; and foreign exchange gains/losses and other income/expenses.

3 Adjusted Net Income and Adjusted Net Income per share are non-IFRS financial measures, which exclude the following from net income and earnings per share (“EPS”): foreign exchange gains/losses and other income/expenses; impairment charges related to royalty, stream and working interests and investments; gains/losses on sale of royalty interests;  gains/losses on investments; unusual non-recurring items; and the impact of income taxes on these items.

Reconciliations to IFRS measures

	For the three months ended
	March 31,
(expressed in millions, except per share amounts)	2017		2016
Net Income	$	45.6	$	30.0
Income tax expense		10.4		8.1
Finance expenses		0.8		1.3
Finance income		(0.9)		(1.1)
Depletion and depreciation		71.5		65.5
Non-cash costs of sales		1.8		1.8
Gain on investments		—		(1.5)
Foreign exchange (gains)/losses and other (income)/expenses		(0.7)		0.3
Adjusted EBITDA	$	128.5	$	104.4
Basic weighted average shares outstanding		178.5		166.7
Adjusted EBITDA per share	$	0.72	$	0.63

	For the three months ended
	March 31,
(expressed in millions, except per share amounts)	2017		2016
Net Income	$	45.6	$	30.0
Foreign exchange (gains)/losses and other (income)/expenses		(0.7)		0.2
Gain on investments		—		(1.5)
Tax effect of adjustments		(0.1)		(0.7)
Adjusted Net Income	$	44.8	$	28.0
Basic weighted average shares outstanding		178.5		166.7
Adjusted Net Income per share	$	0.25	$	0.17

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FRANCO-NEVADA CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(unaudited, in millions of U.S. dollars)

	At March 31,		At December 31,
	2017		2016
ASSETS
Cash and cash equivalents (Note 4)	$	283.0	$	253.0
Receivables		69.1		71.1
Prepaid expenses and other (Note 6)		36.0		37.1
Current assets		388.1		361.2
Royalty, stream and working interests, net (Note 3)		3,665.4		3,668.3
Investments (Note 5)		150.6		147.4
Deferred income tax assets		21.9		21.3
Other assets (Note 7)		21.8		23.4
Total assets	$	4,247.8	$	4,221.6
LIABILITIES
Accounts payable and accrued liabilities	$	16.8	$	21.0
Current income tax liabilities		15.1		16.6
Current liabilities		31.9		37.6
Deferred income tax liabilities		41.0		37.5
Total liabilities		72.9		75.1
SHAREHOLDERS’ EQUITY (Note 14)
Common shares		4,675.6		4,666.2
Contributed surplus		43.2		41.6
Deficit		(330.6)		(336.8)
Accumulated other comprehensive loss		(213.3)		(224.5)
Total shareholders’ equity		4,174.9		4,146.5
Total liabilities and shareholders’ equity	$	4,247.8	$	4,221.6
Subsequent events(Note 17)

The accompanying notes are an integral part of these condensed consolidated interim financial statements and can be found in our Q1/2017 Report available on our website

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FRANCO-NEVADA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 (unaudited, in millions of U.S. dollars, except per share amounts)

	For the three months ended
	March 31,
		2017		2016
Revenue(Note 10)		$	172.7	$	132.0
Cost of sales
Costs of sales (Note 11)			39.9		24.4
Depletion and depreciation			71.5		65.5
Total cost of sales			111.4		89.9
Gross profit			61.3		42.1
Other operating expenses (income)
Corporate administration			5.3		5.4
Business development			0.8		0.3
(Gain) on sale of gold bullion (Note 16)			—		(0.6)
Total other operating expenses			6.1		5.1
Operating income (Note 16)			55.2		37.0
Foreign exchange gain (loss) and other income (expenses) (Note 16)			0.7		(0.2)
Realized gain on investments			—		1.5
Income before finance items and income taxes			55.9		38.3
Finance items
Finance income			0.9		1.1
Finance expenses (Note 9)			(0.8)		(1.3)
Net income before income taxes			56.0		38.1
Income tax expense (Note 13)			10.4		8.1
Net income		$	45.6	$	30.0
Other comprehensive income (loss):
Items that may be reclassified subsequently to profit and loss:
Unrealized gain (loss) in the market value of available-for-sale investments, net of income tax expense of $0.2 (2016 - income tax expense of $0.2) (Note 5)			1.5		15.8
Realized change in market value of available-for-sale investments (Note 5)			—		(1.5)
Currency translation adjustment			9.7		49.5
Other comprehensive income			11.2		63.8
Total comprehensive income		$	56.8	$	93.8
Basic earnings per share(Note 15)		$	0.26	$	0.18
Diluted earnings per share(Note 15)		$	0.25	$	0.18

The accompanying notes are an integral part of these condensed consolidated interim financial statements and can be found in our Q1/2017 Report available on our website

8

FRANCO-NEVADA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (unaudited, in millions of U.S. dollars)

	For the three months ended
	March 31,
	2017		2016
Cash flows from operating activities
Net income	$	45.6	$	30.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depletion and depreciation		71.5		65.5
Non-cash costs of sales		1.8		1.8
Share-based payments		1.5		1.3
Unrealized foreign exchange (gain) loss		(0.4)		0.2
Gain on investments		—		(1.5)
Deferred income tax expense		2.6		2.6
Other non-cash items		(0.4)		(0.5)
Acquisition of gold bullion (Note 16)		(5.9)		(15.8)
Proceeds from sale of gold bullion (Note 16)		3.1		24.9
Operating cash flows before changes in non-cash working capital		119.4		108.5
Changes in non-cash working capital:
Decrease in receivables		2.0		15.2
Decrease in prepaid expenses and other		4.1		1.2
Decrease in current liabilities		(5.7)		(0.9)
Net cash provided by operating activities (Note 16)		119.8		124.0
Cash flows from investing activities
Acquisition of royalty, stream and working interests		(61.5)		(516.1)
Acquisition of oil & gas well equipment		(0.4)		(0.7)
Proceeds from sale of investments		—		10.6
Acquisition of investments		—		(0.7)
Net cash used in investing activities (Note 16)		(61.9)		(506.9)
Cash flows from financing activities
Net proceeds from issuance of common shares		—		883.5
Repayment of Credit Facility		—		(460.0)
Credit facility amendment costs		(1.0)		—
Payment of dividends		(30.1)		(28.3)
Proceeds from exercise of stock options and warrants		0.1		10.2
Net cash (used in) provided by financing activities		(31.0)		405.4
Effect of exchange rate changes on cash and cash equivalents		3.1		4.6
Net change in cash and cash equivalents		30.0		27.1
Cash and cash equivalents at beginning of period		253.0		149.2
Cash and cash equivalents at end of period	$	283.0	$	176.3
Supplemental cash flow information:
Cash paid for interest expense and loan standby fees	$	0.6	$	1.2
Income taxes paid	$	10.1	$	5.5

The accompanying notes are an integral part of these condensed consolidated interim financial statements and can be found in our Q1/2017 Report available on our website

9

EX-99.2

Exhibit 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS

This Management’s Discussion and Analysis (“MD&A”) of financial position and results of operations of Franco-Nevada Corporation (“Franco-Nevada”, the “Company”, “we” or “our”) has been prepared based upon information available to Franco-Nevada as at May 9, 2017 and should be read in conjunction with Franco-Nevada’s unaudited condensed consolidated interim financial statements and related notes as at and for the three months ended March 31, 2017 and 2016.  The unaudited condensed consolidated interim financial statements and MD&A are presented in U.S. dollars and have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements in accordance with IAS 34 Interim Financial Reporting.  

Readers are cautioned that the MD&A contains forward-looking statements and that actual events may vary from management’s expectations. Readers are encouraged to read the “Cautionary Statement on Forward-Looking Information” at the end of this MD&A and to consult Franco-Nevada’s audited consolidated financial statements for the years ended December 31, 2016 and 2015 and the corresponding notes to the financial statements which are available on our website at www.franco-nevada.com, on SEDAR at www.sedar.com and in our most recent Form 40-F filed with the Securities and Exchange Commission on EDGAR at www.sec.gov.

Additional information related to Franco-Nevada, including our Annual Information Form, is available on SEDAR at www.sedar.com, and our Form 40-F is available on EDGAR at www.sec.gov. These documents contain descriptions of certain of Franco-Nevada’s producing and advanced royalty and stream assets, as well as a description of risk factors affecting the Company.  For additional information, our website can be found at www.franco-nevada.com.

2 2017 First Quarter Management’s Discussion and Analysis FNV TSX NYSE

TABLE OF CONTENTS 

4	BUSINESS OVERVIEW AND STRATEGY
5	HIGHLIGHTS
6	GUIDANCE
7	MARKET OVERVIEW
8	SELECTED FINANCIAL INFORMATION
9	REVENUE BY ASSET
10	OVERVIEW OF FINANCIAL PERFORMANCE – Q1/2017 TO Q1/2016
26	SUMMARY OF QUARTERLY INFORMATION
26	BALANCE SHEET REVIEW
18	LIQUIDITY AND CAPITAL RESOURCES
21	CRITICAL ACCOUNTING ESTIMATES
21	OUTSTANDING SHARE DATA
22	INTERNAL CONTROL OVER FINANCIAL REPORTING AND DISCLOSURE CONTROLS AND PROCEDURES
23	NON-IFRS FINANCIAL MEASURES
26	CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

Abbreviations used in this report

The following abbreviations may be used throughout this MD&A:

Abbreviated Definitions
Periods under review
"Q1/2017"	The three-month period ended March 31, 2017
"Q4/2016"	The three-month period ended December 31, 2016
"Q3/2016"	The three-month period ended September 30, 2016
"Q2/2016"	The three-month period ended June 30, 2016
"Q1/2016"	The three-month period ended March 31, 2016
Places and currencies		Measurement
"U.S."	United States	"GEO"	Gold equivalent ounces
"$" or "USD"	United States dollars	"oz"	Ounce
"C$" or "CAD"	Canadian dollars	"oz Au"	Ounce of gold
		"oz Ag"	Ounce of silver
Interest types		"oz Pt"	Ounce of platinum
"NSR"	Net smelter return royalty	"oz Pd"	Ounce of palladium
"GR"	Gross royalty	"LBMA"	London Bullion Market Association
"ORR"	Overriding royalty	"bbl"	Barrel
"GORR"	Gross overriding royalty	"boe"	Barrels of oil equivalent
"FH"	Freehold or lessor royalty	"WTI"	West Texas Intermediate oil
"NPI"	Net profits interest
"NRI"	Net royalty interest
"WI"	Working interest

The Gold Investment that WORKS Franco-Nevada Corporation 3

BUSINESS OVERVIEW AND STRATEGY

Franco-Nevada is the leading gold-focused royalty and stream company by both gold revenue and number of gold assets. The Company has the largest and most diversified portfolio of royalties and streams by commodity, geography, revenue type and stage of project.  The portfolio is actively managed with the aim to maintain over 80% of revenue from precious metals (gold, silver & PGM). 

Franco-Nevada Asset Count at May 9, 2017
	Precious Metals	Other Minerals	Oil &Gas		TOTAL
Producing	41	5	61	(1)	107
Advanced	34	7	—		41
Exploration	135	37	19		191
TOTAL	210	49	80		339

(1) Includes acquisition of Midland Basin royalties expected to close by June 30, 2017.

The Company does not operate mines, develop projects or conduct exploration.  Franco-Nevada’s business model is focused on managing and growing its portfolio of royalties and streams. The advantages of this business model are:

· Exposure to precious metals price optionality;

· A perpetual discovery option over large areas of geologically prospective lands with no additional cost other than the initial investment;

· Limited exposure to many of the risks associated with operating companies; 

· A free cash-flow business with limited cash calls;

· A high-margin business that can generate cash through the entire commodity cycle;

· A scalable and diversified business in which a large number of assets can be managed with a small stable overhead; and

· A forward-looking business in which management focuses on growth opportunities rather than operational or development issues.

Franco-Nevada’s financial results in the short-term are primarily tied to the price of commodities and the amount of production from its portfolio of producing assets. Financial results have also been supplemented by acquisitions of new producing assets.  Over the longer-term, results are impacted by the availability of exploration and development capital applied by other companies to expand or extend Franco-Nevada’s producing assets or to advance Franco-Nevada’s advanced and exploration assets into production.

Franco-Nevada has a long-term investment outlook and recognizes the cyclical nature of the industry.  Franco-Nevada has historically operated by maintaining a strong balance sheet so that it can make investments during commodity cycle downturns.

Franco-Nevada’s shares are listed on the Toronto and New York stock exchanges under the symbol FNV.  An investment in Franco-Nevada’s shares is expected to provide investors with yield and exposure to gold price and exploration optionality while limiting exposure to many of the risks of operating companies. Since its Initial Public Offering (“IPO”) over nine years ago, Franco-Nevada has increased its dividend annually and its share price has outperformed the gold price and all relevant gold equity benchmarks.

Franco-Nevada’s revenue is generated from various forms of agreements, ranging from net smelter return royalties, streams, net profits interests, net royalty interests, working interests and other. For definitions of the various types of agreements, please refer to our most recent Annual Information Form filed on SEDAR at www.sedar.com or our Form 40-F filed on EDGAR at www.sec.gov.  

4 2017 First Quarter Management’s Discussion and Analysis FNV TSX NYSE

 

Highlights

Financial Update – Q1/2017

· 131,578 GEOs(1) recognized in revenue in Q1/2017, an increase of 23.4% from  106,621 GEOs in Q1/2016;

· $172.7 million in revenue, an increase of 30.8% from revenue of $132.0 million in Q1/2016;

· $128.5 million, or $0.72 per share, of Adjusted EBITDA(2), (3)in Q1/2017, an increase of 23.1% from $104.4 million or $0.63 per share, in Q1/2016;

· 74.4% in Margin(2), (3), compared to 79.1% in Q1/2016;

· $45.6 million, or $0.26 per share, in net income for Q1/2017,  an increase of 52.0% compared to $30.0 million, or $0.18 per share, in Q1/2016;

· $44.8 million, or $0.25 per share, in Adjusted Net Income(2), (3) in Q1/2017, an increase of 60.0% compared to $28.0 million, or $0.17 per share, in Q1/2016;  

· $119.8 million in net cash provided by operating activities(3) in Q1/2017, a decrease of 3.4% compared to $124.0 million in Q1/2016;  and

· $1.6 billion in available capital at March 31, 2017, comprising of $356.2 million of working capital, $117.3 million in marketable equity securities, and $1.1 billion available under the Company’s credit facilities. Of this, $99.0 million will be used to fund the remainder of the Company’s acquisition of oil & gas royalty interests in the Midland Basin which is expected to close by June 30, 2017. Further, subsequent to March 31, 2017, Franco-Nevada received proceeds of C$157.6 million from the exercise of 2,100,718 common share purchase warrants at an exercise price of C$75.00 per warrant. As of the date of this report, there remained 4,407,675 warrants outstanding.  

(1)GEOs include our gold, silver, platinum, palladium and other mineral assets, and do not include Oil & Gas assets. GEOs are estimated on a gross basis for NSR royalties and, in the case of stream ounces, before the payment of the per ounce contractual price paid by the Company. For NPI royalties, GEOs are calculated taking into account the NPI economics. Silver, platinum, palladium and other minerals are converted to GEOs by dividing associated revenue, which includes settlement adjustments, by the relevant gold price. The gold price used in the computation of GEOs earned from a particular asset varies depending on the royalty or stream agreement, which may make reference to the market price realized by the operator, or the average for the month, quarter, or year in which the mineral was produced or sold. For illustrative purposes, please refer to average commodity price tables on page 10 of this MD&A for indicative prices which may be used in the calculation of GEOs.    

(2)Adjusted Net Income, Adjusted EBITDA and Margin are non-IFRS financial measures with no standardized meaning under IFRS. For further information and a detailed reconciliation, please see the “Non-IFRS Financial Measures” section of this MD&A.

(3)In Q3/2016, the Company adopted a retrospective change in accounting policy with respect to its classification of proceeds from sales of gold bullion in its statement of cash flows and statement of income and comprehensive income. For further information, refer to Note 16 of the condensed consolidated financial statements for the three months ended March 31, 2017. The Company’s non-IFRS measures, as defined in the “Non-IFRS Financial Measures” section of this MD&A, were also adjusted accordingly to reflect gains/losses on sales of such gold bullion as an operating activity that is part of the Company’s underlying operating business. Comparative information has been adjusted to conform to current presentation.

The Gold Investment that WORKS Franco-Nevada Corporation 5

Corporate Development

Acquisition of U.S. Oil & Gas Royalties – Midland Basin

On March 13, 2017, Franco-Nevada, through a wholly-owned U.S. subsidiary, agreed to purchase a package of royalty rights in the Midland Basin of West Texas for a price of $110.0 million. The Midland Basin forms the eastern portion of the broader Permian Basin and represents one of the most active and profitable oil plays in North America.  The royalties consist of approximately 97% mineral title rights, along with some GORRs, which apply to approximately 908 acres (net after royalties) that, with pooling, provides exposure to an estimated gross acreage of 675,000 acres (a significant portion of the overall Midland Basin) at an estimated average royalty rate of 0.14%.  The royalties are subject to a diverse operator base, which is anchored by Pioneer Natural Resources.  Royalty revenue is expected to grow in future years as horizontal drilling activity in the area continues to ramp up. The transaction is expected to close in the second quarter of 2017.

Funding of Cobre Panama

The Company funded an additional $50.2 million towards the Cobre Panama precious metals stream in Q1/2017. As at March 31, 2017, the Company has funded a  cumulative total of  $512.4 million of its $1 billion maximum commitment. First Quantum Minerals Ltd. (“First Quantum”) expects total capital expenditures of $1,060 million in 2017. According to First Quantum, capital expenditure for the first quarter of 2017 was $243 million, and the project was just over 50% complete. 

Financing

On March 22, 2017, the Company extended the maturity of its existing $1 billion credit facility, from November 12, 2020 to March 22, 2022.

On  March 20, 2017, Franco-Nevada’s subsidiary, Franco-Nevada (Barbados) Corporation (“FNBC”), entered into an unsecured revolving credit facility (the “FNBC Credit Facility”). The FNBC Credit Facility provides for the availability over a one-year period of up to $100.0 million in borrowings. Refer to “Liquidity and Capital Resources” for details.  

Dividend Increase

Franco-Nevada is pleased to declare a quarterly dividend of $0.23 per share. The dividend is a 4.5% increase from the previous $0.22 per share quarterly dividend and marks the tenth consecutive annual dividend increase for Franco-Nevada shareholders.

GUIDANCE

The following contains forward-looking statements. Reference should be made to the “Cautionary Statement on Forward-Looking Information” section at the end of this MD&A. For a description of material factors that could cause our actual results to differ materially from the forward-looking statements below, please see the Cautionary Statement and the “Risk Factors” section of our most recent Annual Information Form filed with the Canadian securities regulatory authorities on www.sedar.com and our most recent Form 40-F filed with the Securities and Exchange Commission on EDGAR at www.sec.gov. 2017 guidance is based on assumptions including the forecasted state of operations from our assets based on the public statements and other disclosures by the third-party owners and operators of the underlying properties (subject to our assessment thereof).

With a strong performance in Q1/2017, Franco-Nevada is on-track to meet its previously announced guidance. 

	Q1/2017 Actual	2017 Guidance	2016 Actual
Mineral assets - GEO production(1),(2)	131,578 GEOs	470,000 - 500,000 GEOs	464,383 GEOs
Oil & Gas assets - Revenue(3)	$10.9 million	$35.0 million - $45.0 million	$30.1 million

(1)Of the 470,000 to 500,000 GEOs, Franco-Nevada expects to receive 335,000 to 345,000 GEOs under its various stream agreements. For the three months ended March 31, 2017, the Company has earned 94,225 GEOs from its stream agreements.

(2)In forecasting GEOs for 2017, gold, silver, platinum and palladium metals have been converted to GEOs using commodity prices of $1,200/oz Au, $17.50/oz Ag, $950/oz Pt and $750/oz Pd. 

(3)In forecasting revenue from Oil & Gas assets for 2017, the WTI oil price is assumed to average $50 per barrel with a $3.50 per barrel price differential between the Edmonton Light and realized prices for Canadian oil.

We expect to fund approximately $200.0 million to $220.0 million towards the Cobre Panama precious metals stream in 2017. In Q1/2017, the Company funded $50.2 million, for a cumulative total of $512.4 million of its $1 billion maximum commitment.

In addition, the Company estimated depletion and depreciation expense to be $265.0 million to $295.0 million for 2017. For the three months ended March 31, 2017, depletion and depreciation expense totaled $71.5 million.

Franco-Nevada strives to generate 80% of revenue from precious metals over a long-term horizon which includes gold, silver and PGMs. In the short-term, we may diverge from the long-term target based on opportunities available. With 91.5% of revenue earned from precious metals in Q1/2017, the Company has the flexibility to consider diversification opportunities outside of the precious metals space and increase its exposure to other commodities. 

6 2017 First Quarter Management’s Discussion and Analysis FNV TSX NYSE

MARKET OVERVIEW

The prices of precious metals are the largest factors in determining profitability and cash-flow from operations for Franco-Nevada. Historically, the price of gold has been subject to volatile price movements and is affected by numerous macroeconomic and industry factors that are beyond the Company’s control. Major influences on the gold price include macroeconomic factors such as the level of interest rates, inflation expectations, currency exchange rate fluctuations including the relative strength of the U.S. dollar, and the supply of and demand for gold.

The gold price performed well in the first quarter of 2017, somewhat reversing most of the losses it had incurred in the last quarter of 2016. As was widely anticipated, in March 2017, the U.S. Federal Reserve increased its benchmark interest rate for a second time in three months. There continues to be significant uncertainty as several elections take place in Europe, including an unexpected election in the U.K., and the current U.S. administration continues to implement its various economic initiatives including potential tax cuts and renegotiations of trade agreements. 

Overall, the gold price ended Q1/2017 at $1,245/oz, approximately 8.6% higher than at the end of Q4/2016. During Q1/2017, gold prices traded between $1,151/oz and $1,284/oz with an average price of $1,219/oz. This represents an increase of 3.2% compared to the Q1/2016 average gold price of $1,181/oz, while remaining relatively consistent with the average price of  $1,218/oz for Q4/2016. 

The price of silver ended Q1/2017 at $18.06/oz, 11.2% higher than at the end of Q4/2016. Silver prices averaged $17.42/oz in Q1/2017, compared to $14.83/oz in Q1/2016, an increase of 17.5%. As for platinum and palladium, the price per ounce at the end of Q1/2017 was $940/oz and $798/oz, respectively, increases of 4.7% and 19.1%, respectively, when compared to prices at the end of Q4/2016. Average prices for the quarter were $981/oz and $767/oz, for platinum and palladium respectively, compared to $914/oz and $524/oz, for Q1/2016, increases of 7.3% and 46.4% year-over-year, respectively. 

Commodity price volatility also impacts the number of GEOs contributed by non-gold mineral assets when converting silver, platinum, palladium and other minerals to GEOs. Silver, platinum, palladium and other minerals are converted to GEOs by dividing associated revenue, which includes settlement adjustments, by the relevant gold price. The gold price used in the computation of GEOs earned from a particular asset varies depending on the royalty or stream agreement, which may make reference to the market price realized by the operator, or the average for the month, quarter, or year in which the mineral was produced or sold.  

Despite the volatile commodity prices, the Company continued to deliver strong results and significant increases in GEOs compared to Q1/2016, reflecting the performance of our mineral assets.  One of the strengths of the Franco-Nevada business model is that our business is not impacted when producer costs increase as long as the producer continues to operate. Royalty and stream payments/deliveries are based on production levels of the underlying operations with no adjustments for the operator’s operating costs, with the exception of NPI and NRI royalties, which are based on the profit of the underlying mining operation. Profit-based royalties accounted for approximately 5.2% of total revenues in Q1/2017.

The Gold Investment that WORKS Franco-Nevada Corporation 7

SELECTED FINANCIAL INFORMATION

	For the three months ended
(in millions, except Average Gold Price,	March 31,
GEOs, Margin and per share amounts)	2017			2016
Statistical Measures
Average Gold Price	$	1,219		$	1,181
GEOs sold(1)		131,578			106,621
Statement of Income and Other Comprehensive Income
Revenue	$	172.7		$	132.0
Depletion and depreciation		71.5			65.5
Cost of sales		39.9			24.4
Operating income(2)		55.2			37.0
Net income		45.6			30.0
Basic earnings per share	$	0.26		$	0.18
Diluted earnings per share	$	0.25		$	0.18
Dividends declared per share	$	0.22		$	0.21
Dividends declared (including DRIP)	$	39.4		$	38.5
Weighted average shares outstanding		178.5			166.8
Non-IFRS Measures
Adjusted EBITDA(2),(3)	$	128.5		$	104.4
Adjusted EBITDA(2),(3) per share	$	0.72		$	0.63
Margin(2),(3)		74.4	%		79.1	%
Adjusted Net Income(2),(3)	$	44.8		$	28.0
Adjusted Net Income(2),(3) per share	$	0.25		$	0.17
Statement of Cash Flows
Net cash provided by operating activities(2)	$	119.8		$	124.0
Net cash used in investing activities(2)	$	(61.9)		$	(506.9)
Net cash (used in) provided by financing activities	$	(31.0)		$	405.4

	As at		As at
	March 31,		December 31,
	2017		2016
Statement of Financial Position
Cash and cash equivalents	$	283.0	$	253.0
Total assets		4,247.8		4,221.6
Deferred income tax liabilities		41.0		37.5
Total shareholders’ equity		4,174.9		4,146.5
Working capital		356.2		323.6

(1) Refer to Note 1 at the bottom of page 5 of this MD&A for the methodology for calculating GEOs, and, for illustrative purposes, to the average commodity price table on page 10 of this MD&A for indicative prices which may be used in the calculations of GEOs.

(2) In  Q3/2016, the Company adopted a retrospective change in accounting policy with respect to its classification of proceeds from sales of gold bullion in its statement of cash flows and statement of income and comprehensive income. For further information, refer to Note 16 of the condensed consolidated financial statements for the three months ended March 31, 2017. The Company’s non-IFRS measures, as defined in the “Non-IFRS Financial Measures” section of this MD&A, were also adjusted accordingly to reflect gains/losses on sales of such gold bullion as an operating activity that is part of the Company’s underlying business. Comparative information has been adjusted to conform to current presentation.

(3) Adjusted EBITDA, Margin and Adjusted Net Income are non-IFRS financial measures with no standardized meaning under IFRS. For further information and a detailed reconciliation, please see the “Non-IFRS Financial Measures” section of this MD&A.  

8 2017 First Quarter Management’s Discussion and Analysis FNV TSX NYSE

REVENUE BY ASSET

Our portfolio is well-diversified with GEOs and revenue being earned from 46 mineral assets and 60 oil & gas interests in various jurisdictions (not including the acquisition of Midland Basin royalties, which is expected to close by June 30, 2017). The following table details revenue earned from our various royalty, stream and working interests for the three months ended March 31, 2017 and 2016:

		For the three months ended
(expressed in millions)		March 31,
Property	Interest	2017		2016
PRECIOUS METALS
United States
Goldstrike	NSR 2-4%, NPI 2.4-6%	$	3.6	$	5.8
Stillwater	NSR 5%		5.7		3.2
Gold Quarry	NSR 7.29%		2.3		2.9
Marigold	NSR 1.75-5%, GR 0.5-4%		2.7		1.6
Fire Creek/Midas	Fixed to 2018 / NSR 2.5%		2.4		2.4
Bald Mountain	NSR/GR 0.875-5%		1.1		0.3
South Arturo	GR  4-9%		5.3		0.1
Other			0.6		0.5
Canada
Sudbury	Stream 50%		6.5	$	5.8
Detour Lake	NSR 2%		3.2		3.0
Golden Highway	NSR 2-15%		2.1		2.2
Musselwhite	NPI 5%		0.9		1.0
Hemlo	NSR 3%, NPI 50%		1.0		1.8
Kirkland Lake(1)	NSR 1.5-5.5%, NPI 20%		1.1		1.2
Timmins West	NSR 2.25%		0.9		0.8
Canadian Malartic	GR 1.5%		0.4		0.2
Other			—		—
Latin America
Antapaccay	Stream (indexed)	$	18.5	$	11.2
Antamina	Stream 22.5%		16.3		21.0
Candelaria	Stream 68%		27.6		22.0
Guadalupe-Palmarejo(2)	Stream 50%		23.7		14.8
Other			0.6		0.8
Rest of World
MWS	Stream 25%	$	8.6	$	7.1
Sabodala	Stream 6%, Fixed to 2019		9.1		6.7
Subika	NSR 2%		2.0		1.0
Tasiast	NSR 2%		1.7		1.5
Karma	Stream 4.875%, Fixed to 75koz		6.0		1.5
Duketon	NSR 2%		1.5		1.7
Edikan	NSR 1.5%		0.9		0.9
Other			1.7		3.0
		$	158.0	$	126.0
Other Minerals		$	3.8	$	2.4
Oil & Gas
Weyburn	NRI 11.71%, ORR 0.44%, WI 2.56%	$	8.3	$	2.3
Midale	ORR 1.14%, WI 1.59%		0.4		0.3
Edson	ORR 15%		0.6		0.3
STACK	Effective Royalty Rate 1.61%		0.6		—
Other			1.0		0.7
		$	10.9	$	3.6
Revenue		$	172.7	$	132.0

(1) In October 2016, the overlying NSR on the Kirkland Lake Gold properties was reduced from 2.5% to 1.5% pursuant to Kirkland Lake’s buy-back of 1% of the NSR.

(2) In July 2016, Coeur met its obligation to deliver 400,000 ounces under the Palmarejo agreement. Deliveries under the new Guadalupe agreement commenced in Q3/2016.

The Gold Investment that WORKS Franco-Nevada Corporation 9

Overview of Financial Performance – Q1/2017 to Q1/2016 

The prices of precious metals, oil and gas and the actual production from mineral and oil & gas assets are the largest factors in determining profitability and cash flow from operations for Franco-Nevada. The following table summarizes average commodity prices and average exchange rates during the periods presented.

								QOQ		YOY
Quarterly average prices and rates		Q1/2017		Q4/2016		Q1/2016		(Q1/17-Q4/16)		(Q1/17-Q1/16)
Gold(1)	($/oz)	$	1,219	$	1,218	$	1,181	0.1	%	3.2	%
Silver(2)	($/oz)		17.42		17.18		14.83	1.4	%	17.5	%
Platinum(3)	($/oz)		981		944		914	3.9	%	7.3	%
Palladium(3)	($/oz)		767		684		524	12.1	%	46.4	%
Edmonton Light	(C$/bbl)		64.82		60.70		41.17	6.8	%	57.4	%
Quality Differential	(C$/bbl)		(7.59)		(5.83)		(8.86)	30.2	%	(14.3)	%
Realized oil price	(C$/bbl)		57.23		54.87		32.31	4.3	%	77.1	%
CAD/USD exchange rate(4)			0.7555		0.7496		0.7282	0.8	%	3.7	%

(1) Based on LBMA Gold Price PM Fix.

(2) Based on LBMA Silver Price.

(3) Based on London PM Fix.

(4) Based on Bank of Canada noon rates.

Revenue and Gold Equivalent Ounces

Revenue for Q1/2017 was $172.7 million compared with $132.0 million for Q1/2016, an increase of 30.8%.  The increase year‑over-year is due to the increase of GEOs sold of 131,578 GEOs in Q1/2017,  an increase of 23.4%  from 106,621  GEOs sold in Q1/2016, coupled with higher average precious metals prices. Of this $172.7 million in revenue, precious metals revenue comprised 91.5%, compared to 95.4% in Q1/2016, while revenue from the Americas was 81.0%, compared to 81.5% in Q1/2016. The proportion of revenue earned from precious metals assets decreased year-over-year as a result of higher oil & gas revenues which benefitted from higher prices, higher production levels, and lower capital expenditures, as well as the addition of the STACK portfolio of royalties in Q4/2016.

10 2017 First Quarter Management’s Discussion and Analysis FNV TSX NYSE

The following table outlines GEOs and revenue attributable to Franco-Nevada for the three months ended March 31, 2017 and 2016 by commodity, geographical location and type of interest: 

	Gold Equivalent Ounces(1)			Revenue (in millions)
For the three months ended March 31,	2017	2016	Variance	2017		2016		Variance
Commodity
Precious Metals
Gold	100,540	76,753	23,787	$	122.9	$	91.5	$	31.4
Silver	19,746	22,627	(2,881)		24.4		26.8		(2.4)
PGM	8,224	5,196	3,028		10.7		7.6		3.1
Precious Metals - Total	128,510	104,576	23,934		158.0		125.9		32.1
Other Minerals	3,068	2,045	1,023		3.8		2.5		1.3
Oil & Gas	-	-	-		10.9		3.6		7.3
	131,578	106,621	24,957	$	172.7	$	132.0	$	40.7
Geography
United States	19,634	14,275	5,359	$	24.0	$	16.9	$	7.1
Canada	14,601	13,284	1,317		29.2		20.9		8.3
Latin America	70,429	58,510	11,919		86.7		69.8		16.9
Rest of World	26,914	20,552	6,362		32.8		24.4		8.4
	131,578	106,621	24,957	$	172.7	$	132.0	$	40.7
Type
Revenue-based	25,914	23,145	2,769	$	34.1	$	28.7	$	5.4
Streams	94,225	75,294	18,931		116.3		91.4		24.9
Profit-based	2,809	4,666	(1,857)		8.9		6.3		2.6
Other	8,630	3,516	5,114		13.4		5.6		7.8
	131,578	106,621	24,957	$	172.7	$	132.0	$	40.7

(1) Refer to Note 1 at the bottom of page 5 of this MD&A for the methodology for calculating GEOs, and, for illustrative purposes, to the average commodity price table on page 10 of this MD&A for indicative prices which may be used in the calculations of GEOs.

GEOs and revenue from precious metals were earned from the following geographical locations:

	Gold Equivalent Ounces(1)			Revenue (in millions)
For the three months ended March 31,	2017	2016	Variance	2017		2016		Variance
Geography for Precious Metals
Precious Metals
United States	19,529	14,165	5,364	$	23.7	$	16.8	$	6.9
Canada	12,652	12,252	400		16.1		16.0		0.1
Latin America	70,429	58,510	11,919		86.7		69.8		16.9
Rest of World	25,900	19,649	6,251		31.5		23.3		8.2
Precious Metals - Total	128,510	104,576	23,934	$	158.0	$	125.9	$	32.1
Other Minerals	3,068	2,045	1,023		3.8		2.5		1.3
Oil & Gas	-	-	-		10.9		3.6		7.3
	131,578	106,621	24,957	$	172.7	$	132.0	$	40.7

(1) Refer to Note 1 at the bottom of page 5 of this MD&A for the methodology for calculating GEOs, and, for illustrative purposes, to the average commodity price table on page 10 of this MD&A for indicative prices which may be used in the calculations of GEOs.

The Gold Investment that WORKS Franco-Nevada Corporation 11

Precious Metals

Revenue from precious metals assets was $158.0 million in Q1/2017 compared to $125.9 million in Q1/2016, reflecting 128,510 GEOs from precious metals assets, an increase of 22.9% from 104,576 GEOs in Q1/2016. The largest component of these increases was contributed by our Latin American assets which realized an increase of 20.4% in GEOs, and 24.2% in revenue compared to the prior year.

GEOs and revenue increases for the quarter are attributable to the following assets:

· Guadalupe  - The Guadalupe stream, which became effective in Q3/2016, delivered 19,300 GEOs in Q1/2017, compared to 12,501 GEOs under the Palmarejo agreement in Q1/2016, due to higher production year-over-year and a reduction of inventory that had built up from the prior quarter.

· Antapaccay - The Company sold 15,019 GEOs from its Antapaccay agreement in Q1/2017,  compared to 8,918 GEOs in Q1/2016, a year-over-year increase of 68.4% due to only two months of deliveries taking place in Q1/2016, upon closing of the stream acquisition in late February 2016. 

· South Arturo - The South Arturo mine generated payments of 4,392 GEOs, compared to 83 GEOs in Q1/2016. The South Arturo mine poured its first gold pour in August 2016.

· Karma - The Company sold 5,000 GEOs in Q1/2017 in relation to its Karma stream, of which 1,250 were received in Q4/2016. This compares to 1,250 GEOs received and sold in Q1/2016.  Deliveries from Karma are fixed in the initial years of the stream at a rate of 1,250 ounces per month.

· Candelaria - The Company sold 22,483 GEOs from its Candelaria stream, compared to 18,626 in Q1/2016. The increase in GEOs sold is partly due to the sale of 2,032 GEOs which had been delivered in Q4/2016.

· Stillwater - Stillwater generated payments of 4,646 GEOs, compared to 2,642 GEOs in Q1/2016, as a result of higher platinum and palladium production in the quarter.

The above significant increases in GEOs were partially offset by decreases in GEO deliveries compared to Q1/2016 from the following assets:

· Antamina – Sales from the Antamina stream decreased by 4,651 GEOs year-over-year,  as 2016 was an exceptionally strong year of silver production for Antamina.

· Goldstrike – Payments from both the NSR and NPI royalties were lower in Q1/2017 compared to Q1/2016, resulting in 1,845 fewer GEOs.

During Q1/2017, 1,385,922 ounces of silver were sold from our Candelaria, Antapaccay, Antamina and Cerro San Pedro interests which were converted to 19,746 GEOs.

Other Minerals

Other Minerals generated 3,068 GEOs and $3.8 million in revenue, compared to 2,045 GEOs and $2.5 million in revenue in Q1/2016.  

12 2017 First Quarter Management’s Discussion and Analysis FNV TSX NYSE

Oil & Gas

Oil & Gas assets generated revenue of $10.9 million for the quarter (94% oil and  6% gas), a three-fold increase compared to $3.6 million for the Q1/2016 (93% oil and 7% gas).  Production for the quarter was 5.5% higher than in Q1/2016; coupled with higher oil prices and lower capital costs from the operators. 

Revenue from the Weyburn Unit for the quarter increased to $8.3 million (Q1/2016 - $2.3 million) with $5.5 million earned from the NRI (Q1/2016 - $0.8 million), $2.3 million earned from the working interest (Q1/2016 - $1.2 million) and $0.5 million earned from the overriding royalties (Q1/2016 - $0.3 million). Revenue from the Weyburn NRI was higher due to the higher average realized prices, coupled with lower costs and higher production levels.  Although operating expenses were 10% higher than in Q1/2016, capital expenses were 45% lower in Q1/2017 compared to Q1/2016. The actual realized price from the NRI was 70% higher in Q1/2017, at C$57.82/boe compared to C$33.97/boe for Q1/2016.

Oil & Gas revenue also included $0.6 million from the STACK acquisition which took place in Q4/2016.

Operating Costs and Expenses

The following table provides a list of operating costs and expenses incurred in the periods presented:

	For the three months ended March 31,
(expressed in millions)	2017		2016		Variance
Costs of sales	$	39.9	$	24.4	$	15.5
Depletion and depreciation		71.5		65.5		6.0
Corporate administration		5.3		5.4		(0.1)
Business development		0.8		0.3		0.5
(Gain) loss on sale of gold bullion		—		(0.6)		0.6
	$	117.5	$	95.0	$	22.5

Costs of Sales

The following table provides a breakdown of cost of sales incurred in the periods presented:

	For the three months ended March 31,
(expressed in millions)	2017		2016		Variance
Cost of stream sales	$	36.4	$	21.7	$	14.7
Cost of prepaid ounces		1.8		1.8		—
Mineral production taxes		0.6		0.3		0.3
Oil & Gas operating costs		1.1		0.6		0.5
	$	39.9	$	24.4	$	15.5

The variance of $15.5 million is in-line with the increase in stream ounces sold of 94,225 GEOs in Q1/2017 compared to 75,294 GEOs in Q1/2016.  Cost of stream sales in Q1/2017 also reflects the higher per ounce cost under the Guadalupe agreement of $800 per ounce of gold received, compared to the inflation-adjusted cost of $400 per ounce of gold under the prior Palmarejo agreement. The ongoing stream costs per ounce are either a fixed amount per ounce delivered (typically adjusted for inflation each year) or an amount based as a percentage of spot price of gold or silver.  

The Gold Investment that WORKS Franco-Nevada Corporation 13

Depletion and Depreciation

Depletion and depreciation totaled $71.5 million for the quarter compared to $65.5 million in Q1/2016. The majority of the increase of $6.0 million is due to higher royalty payments and stream deliveries from Antapaccay, South Arturo, Karma and Candelaria, partly offset by lower deliveries from Antamina. Depletion expense also benefitted from a lower depletion rate on the Guadalupe stream, which became effective in Q3/2016, compared to the depletion rate on the Palmarejo agreement.  

Corporate Administration

The following table provides a breakdown of corporate administration expenses incurred for the periods presented:

	For the three months ended March 31,
(expressed in millions)	2017		2016		Variance
Salaries and benefits	$	1.1	$	1.1	$	—
Professional fees		0.3		0.5		(0.2)
Office costs		0.2		0.4		(0.2)
Board of Directors cost		0.7		1.1		(0.4)
Share-based compensation		1.6		1.3		0.3
Other		1.4		1.0		0.4
	$	5.3	$	5.4	$	(0.1)

Corporate administration expenses, representing 3.1% of revenue for Q1/2017,  remained relatively consistent with expenses incurred in Q1/2016.  Board of Directors fees’ vary according to the mark-to-market of the value of deferred share units that are granted to the directors of the Company. Although the Company’s share price increased both during Q1/2017 and Q1/2016, the increase was more significant in Q1/2016, resulting in a  higher mark-to-market of the deferred share unit liability in Q1/2016 compared to Q1/2017.  

Business Development Expenses

Business development expenses totaled $0.8 million compared to a $0.3 million in Q1/2016. Timing and amount of these costs typically vary depending upon the level of business development related activity, and the timing of completing transactions. Business development expenses related to completed transactions are capitalized to the relevant mineral interest asset following the closing of transactions.

14 2017 First Quarter Management’s Discussion and Analysis FNV TSX NYSE

Gain or Loss on Sale of Gold Bullion

The Company did not recognize a gain or loss on the sale of gold bullion in Q1/2017, compared to a gain of $0.6 million in Q1/2016. Gold bullion is physical ounces of gold which the Company receives as settlement from certain of its royalty interests, and is presented as other current assets on the statement of financial position.

Foreign Exchange and Other Income/Expenses

The following table provides a list of foreign exchange and other income/expenses incurred for the periods presented:

	For the three months ended March 31,
(expressed in millions)	2017		2016		Variance
Foreign exchange gain (loss)	$	0.5	$	(0.2)	$	0.7
Other income		0.2		—		0.2
	$	0.7	$	(0.2)	$	0.9

Foreign exchange losses and other income/expenses were comprised of a  foreign exchange gain of $0.5 million, compared to a  loss of $0.2 million in Q1/2016, reflecting a strengthening of the U.S. dollar relative to the Canadian dollar. Under IFRS, all foreign exchange gains or losses related to monetary assets and liabilities held in a currency other than the functional currency are recorded in net income as opposed to other comprehensive income. The parent company’s functional currency is the Canadian dollar, while the functional currency of certain of the Company’s subsidiaries is the U.S. dollar.

Other income also includes dividend income on certain of the Company’s equity investments.

Finance Income and Finance Expenses 

The following table provides a breakdown of finance income and expenses incurred for the periods presented:

	For the three months ended March 31,
(expressed in millions)	2017		2016		Variance
Finance Income
Interest	$	0.9	$	0.9	$	—
Finance Fees		—		0.2		(0.2)
	$	0.9	$	1.1	$	(0.2)
Finance Expenses
Standby Charges	$	0.6	$	0.4	$	0.2
Interest		—		0.8		(0.8)
Amortization		0.2		0.1		0.1
	$	0.8	$	1.3	$	(0.5)

Finance income was $0.9 million (Q1/2016 - $1.1 million) for the quarter while finance expenses were $0.8 million (Q1/2016 - $1.3 million). Finance income is earned on our cash equivalents and/or short-term investments. Finance income also includes interest income in the amount of $0.5 million accrued on the Noront Resources Ltd. loan during Q1/2017. Finance expenses consist of the costs of standby charges, which represent the costs of maintaining our credit facilities; and amortization of the costs incurred with respect to the initial set-up or subsequent amendments of the facilities. In Q1/2017, the Company incurred no interest expense as it had not drawn on its credit facilities.  

Income Taxes

Income tax expense for the quarter totaled $10.4 million (Q1/2016 –$8.1 million), comprised of a current income tax expense of $7.8million (Q1/2016 - $5.5 million) and a deferred income tax expense of  $2.6 million (Q1/2016 –$2.6 million). The increase in income tax expense year-over-year reflects higher revenues earned during the quarter compared to Q1/2016.

Net Income

Net income for Q1/2017 was $45.6 million, or $0.26 per share, compared to $30.0 million, or $0.18 per share, for the same period in 2016. Adjusted Net Income was $44.8 million, or $0.25 per share, compared to $28.0 million, or $0.17 per share, earned in Q1/2016. The increase in net income and Adjusted Net Income was driven primarily by higher revenue due to a  strong performance from the Company’s portfolio,  namely with respect to the Antapaccay,  Guadalupe, South Arturo, Candelaria, and Stillwater assets.  

The Gold Investment that WORKS Franco-Nevada Corporation 15

SUMMARY OF QUARTERLY INFORMATION

Selected quarterly financial and statistical information for the most recent eight quarters(1) is set out below:

(in millions, except Margin, GEOs,	Q1			Q4			Q3			Q2			Q1			Q4			Q3			Q2
and per share amounts)	2017			2016			2016			2016			2016			2015			2015			2015
Revenue	$	172.7		$	155.3		$	172.0		$	150.9		$	132.0		$	121.3		$	103.7		$	109.4
Costs and expenses(2), (3)		117.5			154.9			104.5			100.5			95.0			157.6			77.6			78.6
Operating income (loss)(3)		55.2			0.4			67.5			50.4			37.0			(36.3)			26.1			30.8
Other income (expenses)(3)		0.8			8.5			(0.2)			3.2			1.1			—			(2.4)			2.1
Income tax expense (recovery)		10.4			13.4			12.9			11.3			8.1			(4.9)			8.5			11.3
Net income (loss)		45.6			(4.5)			54.4			42.3			30.0			(31.4)			15.2			21.6
Basic earnings (loss) per share	$	0.26		$	(0.03)		$	0.31		$	0.24		$	0.18		$	(0.20)		$	0.10		$	0.14
Diluted earnings (loss) per share	$	0.25		$	(0.03)		$	0.30		$	0.24		$	0.18		$	(0.20)		$	0.10		$	0.14
Net cash provided by operating activities(3)	$	119.8		$	121.9		$	121.6		$	103.5		$	124.0		$	84.9		$	73.0		$	72.8
Net cash used in investing activities(3)		(61.9)			(113.3)			(41.5)			(28.1)			(506.9)			(987.7)			(44.6)			(38.5)
Net cash provided by (used in) financing activities		(31.0)			(30.5)			(29.4)			(23.8)			405.4			445.2			(23.2)			(24.3)
Average Gold Price(4)	$	1,219		$	1,218		$	1,335		$	1,259		$	1,181		$	1,104		$	1,124		$	1,193
GEOs sold(5)		131,578			121,910			123,065			112,787			106,621			106,312			85,637			83,040
Adjusted EBITDA(3),(6)	$	128.5		$	122.2		$	142.2		$	120.3		$	104.4		$	94.2		$	77.5		$	82.1
Adjusted EBITDA(3),(6) per share	$	0.72		$	0.69		$	0.80		$	0.68		$	0.63		$	0.60		$	0.49		$	0.52
Margin(3),(6)		74.4	%		78.7	%		82.7	%		79.7	%		79.1	%		77.7	%		74.7	%		75.1	%
Adjusted Net Income(3),(6)	$	44.8		$	42.9		$	53.5		$	40.0		$	28.0		$	23.7		$	19.4		$	22.9
Adjusted Net Income(3),(6) per share	$	0.25		$	0.24		$	0.30		$	0.22		$	0.17		$	0.15		$	0.12		$	0.15

(1) Sum of the quarters may not add up to yearly total due to rounding.

(2) Includes impairment charges on royalty, stream and working interests.

(3) In Q3/2016, the Company adopted a retrospective change in accounting policy with respect to its classification of proceeds from sales of gold bullion in its statement of cash flows and statement of income and comprehensive income. For further information, refer to Note 16 of the condensed consolidated financial statements for the three months ended March 31, 2017.  The Company’s non‑IFRS measures, as defined in the “Non-IFRS Financial Measures” section of this MD&A, were also adjusted accordingly to reflect gains/losses on sales of such gold bullion as an operating activity that is part of the Company’s underlying operating business. Comparative information presented above has been adjusted to conform to current presentation.

(4) Based on LBMA Gold Price PM Fix.

(5) GEOs include our gold, silver, platinum, palladium and other mineral assets, and do not include Oil & Gas assets. GEOs are estimated on a gross basis for NSR royalties and, in the case of stream ounces, before the payment of the per ounce contractual price paid by the Company. For NPI royalties, GEOs are calculated taking into account the NPI economics. Silver, platinum, palladium and other minerals are converted to GEOs by dividing associated revenue, which includes settlement adjustments, by the relevant gold price. The gold price used in the computation of GEOs earned from a particular asset varies depending on the royalty or stream agreement, which may make reference to the market price realized by the operator, or the average for the month, quarter, or year in which the mineral was produced or sold. For illustrative purposes, please refer to average commodity price tables on page 10 of this MD&A for indicative prices which may be used in the calculation of GEOs.

(6) Adjusted EBITDA, Margin and Adjusted Net Income are non-IFRS measures with no standardized meaning under IFRS. For further information and a detailed reconciliation, please refer to the “Non-IFRS Financial Measures” section of this MD&A.

16 2017 First Quarter Management’s Discussion and Analysis FNV TSX NYSE

BALANCE sheet review

Summary Balance Sheet and Key Financial Metrics
(expressed in millions, except debt to equity ratio)	At March 31, 2017		At December 31, 2016
Cash and cash equivalents	$	283.0	$	253.0
Current assets		388.1		361.2
Non-current assets		3,859.7		3,860.4
Total assets	$	4,247.8	$	4,221.6
Current liabilities		31.9		37.6
Non-current liabilities		41.0		37.5
Total liabilities	$	72.9	$	75.1
Total shareholders’ equity	$	4,174.9	$	4,146.5
Debt	$	—	$	—
Total common shares outstanding		178.6		156.9
Key Financial Ratios
Working Capital	$	356.2	$	323.6
Debt to equity		—		—

Assets

Total assets were $4,247.8 million at March 31, 2017 compared to $4,221.6 million at December 31, 2016. Our asset base is primarily comprised of non-current assets such as our royalty, stream and working interests, and current assets of cash and cash equivalents. This reflects our business strategy of growing a diversified portfolio and ensuring cash is available for future acquisitions and dividends. The increase of $26.9 million in current assets as at March 31, 2017 compared to December 31, 2016 is due to net cash generated by operating activities, partly offset by the Company’s contribution of $50.2 million towards the Cobre Panama project, as well as the deposit of $11.0 million into an escrow account for the Midland Basin portfolio of royalties which the Company agreed to acquire in Q1/2017.  The increase in non-current assets from these capital expenditures  was partly offset by the depletion of royalty, stream and working interests.

Liabilities

Total liabilities at March 31, 2017 were $72.9 million including current and deferred income tax liabilities, a decrease of $2.2 million compared to December 31, 2016, reflecting a  decrease in trade payables and current income tax liabilities.

As at March 31, 2017,  neither the corporate entity nor FNBC had drawn on their respective credit facility.  

Shareholders’ Equity

Shareholders’ equity increased by $28.4 million as at March 31, 2017 compared to December 31, 2016, reflecting net income of $45.6 million for the three months ended March 31, 2017, partly offset by declared dividends of $39.4 million, of which $9.3 million were settled through the issuance of common shares pursuant to the Company’s DRIP.

The Gold Investment that WORKS Franco-Nevada Corporation 17

Liquidity and Capital Resources

Cash flow generated for the three months ended March 31, 2017 and 2016 was as follows:

	For the three months ended
	March 31,
(expressed in millions)	2017		2016
Cash provided by operating activities(1)	$	119.8	$	124.0
Cash used in investing activities(1)		(61.9)		(506.9)
Cash provided by (used in) financing activities		(31.0)		405.4
Effect of exchange rate changes on cash and cash equivalents		3.1		4.6
Change in cash and cash equivalents	$	30.0	$	27.1

(1) In Q3/2016, the Company adopted a retrospective change in accounting policy with respect to its classification of proceeds from sales of gold bullion in its statement of cash flows. Comparative information, including information presented in the “Quarterly Financial Information” section of this MD&A, has been adjusted to conform to current presentation. For further information, refer to Note 16 of the condensed consolidated financial statements for the three months ended March 31, 2017.

Operating Cash Flow

Cash generated by operating activities was $119.8 million and $124.0 million for Q1/2017 and Q1/2016, respectively. Although the Company benefitted from higher gross profits due to the increase in GEOs earned in the quarter, this cash inflow was more than offset by changes in non-cash working capital.  

In Q3/2016, the Company adopted a retrospective change in accounting policy with respect to its classification of proceeds from sales of gold bullion in its statement of cash flows. Pursuant to certain of its royalty agreements, the Company receives gold bullion as settlement for amounts which it is due. In prior periods, management had classified proceeds from the sale of such gold bullion as an investing activity based on its intention with respect to the holding period of the gold bullion. As the magnitude and frequency of trading increased over time, management determined the acquisition and subsequent sale of the gold bullion to be an operating activity. As a result, the Company has reclassified the cash proceeds from the sale of such gold bullion, and any related gain or loss arising during the holding period, to be a component of operating income and operating cash flows. Comparative information, including information presented in the “Quarterly Financial Information” section of this MD&A, has been adjusted to conform to current presentation. For further information, refer to Note 16 of the condensed consolidated financial statements for the three months ended March 31,  2017.

Investing Activities

Cash used in investing activities was  $61.9 million for Q1/2017 compared to $506.9 million in Q1/2016.  Investing activities in Q1/2017 included the funding of the Cobre Panama stream of $50.2 million, as well as the initial deposit of $11.0 million into an escrow account for the purchase of the Midland Basin portfolio of royalties the Company agreed to acquire in Q1/2017. At March 31,  2017, the Company has funded a cumulative total of  $512.4 million of its total $1.0 billion maximum commitment to the construction of Cobre Panama. 

Financing Activities

Net cash used in financing activities was $31.0 million for Q1/2017 reflecting payments of cash dividends in the quarter. This compares to net cash provided by financing activities of  $405.4 million for Q1/2016, which included the proceeds from the share issuance in February 2016, partly offset by the repayment of amounts the Company had drawn on its credit facility of $460.0 million.

18 2017 First Quarter Management’s Discussion and Analysis FNV TSX NYSE

Capital Resources

As at March 31, 2017, our cash and cash equivalents totaled $283.0 million (December 31, 2016 - $253.0 million).  In addition, we held investments at March 31, 2017 with a combined value of $150.6 million (December 31, 2016 - $147.4 million), of which $117.3 million was held in publicly-traded equity instruments (December 31, 2016 - $114.6 million).

Further, an amount of $1.0 billion, or its Canadian dollar equivalent, is available under our unsecured credit facility (the “Credit Facility”).  Advances under the Credit Facility bear interest depending upon the currency of the advance and the Company’s leverage ratio.  At March 31, 2017, U.S. and Canadian dollar advances would bear interest at a rate of 4.20% and 2.90%, respectively, with a maturity of March 22, 2022. Funds can also be drawn using LIBOR 30-day rates plus 1.20% per annum.

In addition, on March 20, 2017, the Company’s subsidiary, Franco-Nevada (Barbados) Corporation, entered into an unsecured revolving credit facility (the “FNBC Credit Facility”). The FNBC Credit Facility provides for the availability over a one-year period of up to $100.0 million in borrowings. The FNBC Credit Facility has a maturity date of March 20, 2018. The Company has the option of requesting, during a period of time before each anniversary date, up to two additional one-year extensions of the maturity.

Advances under the FNBC Credit Facility can be drawn as base rate advances with interest payable monthly at the CIBC base rate, plus 0.35% per annum. At March 31, 2017, advances would bear interest at a rate of 4.35%. Funds can also be drawn as LIBOR loans for periods of 1, 2, 3 or 6 months with interest payable at a rate of LIBOR plus 1.35% per annum. The FNBC Credit Facility is subject to a standby fee of 0.27% per annum.

As at May 9, 2017, the full amount of $1.1 billion is available as neither the corporate entity nor FNBC had drawn on their respective credit facility.

Subsequent to March 31, 2017, 2,100,718 common share purchase warrants with an exercise price of C$75.00 per warrant and an expiry date of June 16, 2017 were exercised, resulting in proceeds of C$157.6 million to the Company. As at May 8, 2017, there remained 4,407,675 warrants outstanding. Should the entirety of these warrants be exercised prior to their expiry, the Company would receive proceeds of C$330.6 million. The Company’s share price on the Toronto Stock Exchange closed at C$87.12 on March 31, 2017, and at C$91.82 on May 8, 2017.

Management’s objectives when managing capital are to:

(a) ensure the preservation and availability of capital not being used for long-term investments by investing in low risk investments with high liquidity; and

(b) ensure that adequate levels of capital are maintained to meet the Company’s operating requirements and other current liabilities.

As at March 31, 2017, the majority of funds were held in cash deposits with several financial institutions. Franco-Nevada invests its excess funds in term deposits. Certain investments with terms to maturity upon acquisition of three months, or 92 days or less,  were classified as term deposits.

Our performance is impacted by foreign currency fluctuations of the Canadian dollar and Australian dollar relative to the U.S. dollar. The largest exposure is with respect to the Canadian/U.S. dollar exchange rate as we hold a significant amount of our assets in Canada and report our results in U.S. dollars.  The effect of volatility in these currencies against the U.S. dollar impacts our corporate administration, business development expenses and depletion on mineral and oil & gas interests incurred in our Canadian and Australian entities due to their respective functional currencies. During Q1/2017, the Canadian dollar traded in a range of $0.7405 to $0.7690, closing the quarter at $0.7506, and the Australian dollar traded between $0.7207 and $0.7723, closing the quarter at $0.7645.  

Our near-term cash requirements include funding of the acquisition of the U.S. oil & gas royalties in the Midland Basin, commitments under the Cobre Panama stream agreement, corporate administration costs, certain costs of operations, payment of dividends and income taxes directly related to the recognition of royalty and stream revenues.  As a royalty/stream company, there are limited requirements for capital expenditures other than for the acquisition of additional royalties/streams and working interests’ capital commitments.  Such acquisitions are entirely discretionary and will be consummated through the use of cash, as available, or through the issuance of common shares or other equity or debt securities or use of our credit facility. We believe that our current cash resources, our available credit facility and future cash flows will be sufficient to cover the cost of our commitments under the various stream agreements, administrative expenses, costs of operations and dividend payments for the foreseeable future.

The Gold Investment that WORKS Franco-Nevada Corporation 19

Purchase Commitments

The following table summarizes Franco-Nevada’s commitments to pay for gold, silver and PGM pursuant to the associated precious metals agreements:

	Attributable Payable
	Production to be Purchased						Per Ounce Cash Payment (1),(2)
															Term of		Date of
Interest	Gold		Silver		PGM		Gold			Silver			PGM		Agreement(3)		Contract
Antamina	0	%	22.5	% (4)	0	%		n/a			5	% (5)		n/a	40 years		7-Oct-15
Antapaccay	—	% (6)	—	% (7)	0	%		20	% (8)		20	% (9)		n/a	40 years		10-Feb-16
Candelaria	68	% (10)	68	% (10)	0	%	$	400		$	4.00			n/a	40 years		6-Oct-14
Cobre Panama	—	% (11)	—	% (12)	0	%	$	406		$	6.09			n/a	45 years		2-Nov-15
Karma	4.875	% (13)	0	%	0	%		20	% (14)		n/a			n/a	40 years		11-Aug-14
Guadalupe	50	%	0	%	0	%	$	800			n/a			n/a	40 years		2-Oct-14
Sabodala	6	% (15)	0	%	0	%		20	% (16)		n/a			n/a	40 years		12-Dec-13
MWS	25	%	0	%	0	%	$	400			n/a			n/a	40 years	(17)	2-Mar-12
Cooke 4	7	%	0	%	0	%	$	400			n/a			n/a	40 years		5-Nov-09
Sudbury(18)	50	%	0	%	50	%	$	400			n/a		$	400	40 years		15-Jul-08

(1) Subject to an annual inflationary adjustment except for Antamina, Antapaccay, Karma, Guadalupe, and Sabodala.

(2) Should the prevailing market price for gold be lower than this amount, the per ounce cash payment will be reduced to the prevailing market price.

(3) Subject to successive extensions.

(4) Subject to a fixed payability of 90%. Percentage decreases to 15% after 86 million ounces of silver has been delivered under the agreement.

(5) Purchase price is 5% of the average silver price at the time of delivery.

(6) Gold deliveries are referenced to copper in concentrate shipped with 300 ounces of gold delivered for each 1,000 tonnes of copper in concentrate shipped, until 630,000 ounces of gold has been delivered. Thereafter, percentage is 30% of gold shipped.

(7) Silver deliveries are referenced to copper in concentrate shipped with 4,700 ounces of silver delivered for each 1,000 tonnes of copper in concentrate shipped, until 10.0 million ounces of silver has been delivered. Thereafter, percentage is 30% of silver shipped.

(8) Purchase price is 20% of the spot price of gold until 750,000 ounces of gold have been delivered, thereafter the purchase price is 30% of the spot price of gold.

(9) Purchase price is 20% of the spot price of silver until 12.8 million ounces of silver have been delivered, thereafter the purchase price is 30% of the spot price of silver.

(10) Percentage decreases to 40% after 720,000 ounces of gold and 12.0 million ounces of silver have been delivered under the agreement.

(11) Gold deliveries are indexed to copper in concentrate produced from the project. 120 ounces of gold per every 1 million pounds of copper produced until 808,000 ounces of gold delivered. Thereafter 81 ounces of gold per 1 million pounds of copper produced to 1,716,188 ounces of gold delivered, thereafter 63.4% of the gold in concentrate.

(12) Silver deliveries are indexed to copper in concentrate produced from the project. 1,376 ounces of silver per every 1 million pounds of copper produced until 9,842,000 ounces of silver delivered. Thereafter 1,776 ounces of silver per 1 million pounds of copper produced to 29,731,000 ounces of silver delivered, thereafter 62.1% of the silver.

(13) Gold deliveries are fixed at 15,000 ounces per annum until February 28, 2021. Thereafter, percentage is 4.875%.

(14) Purchase price is 20% of the average gold price at the time of delivery.

(15) Gold deliveries are fixed at 1,875 ounces per month until December 31, 2019. Thereafter, percentage is 6% of gold produced.

(16) Purchase price is 20% of prevailing market price at the time of delivery.

(17) Agreement is capped at 312,500 ounces of gold.

(18) The Company is committed to purchase 50% of the precious metals contained in ore from the properties. Cash payment is based on gold equivalent ounces.

Cobre Panama Stream Agreement

The Company has funding commitments under the Cobre Panama stream agreement as described in the Guidance section above.  At March 31, 2017, the Company has funded a cumulative total of  $512.4 million of its $1.0 billion maximum commitment, leaving a remainder of $487.6 million to be funded.

20 2017 First Quarter Management’s Discussion and Analysis FNV TSX NYSE

CriticalAccountingEstimates

The preparation of consolidated financial statements in accordance with IFRS requires the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management’s best knowledge of the relevant facts and circumstances, having regard to previous experience. However, actual outcomes may differ from the amounts included in the consolidated financial statements.

Our significant accounting policies and estimates are disclosed in notes 2 and 3 of our most recent annual consolidated financial statements.

New and amended standards adopted by the Company

The following standard was effective and implemented as of January 1, 2017.

IAS 12 Income Taxes

IAS 12 Income taxes provides guidance on the recognition of deferred tax assets. In January 2016, the IASB issued amendments to clarify the requirements for recognizing deferred tax assets on unrealized losses. The amendments clarify the accounting for deferred tax where an asset is measured at fair value and that fair value is below the asset’s tax base. They also clarify certain other aspects of accounting for deferred tax assets. The amendments are effective for annual periods beginning on or after January 1, 2017. The Company has adopted the amendments to IAS 12 in its financial statements for the annual period beginning on January 1, 2017. The adoption of the amendments did not have a material impact on the consolidated financial statements.

New Accounting Standards Issued But Not Yet Effective

IFRS 9 Financial Instruments

On July 24, 2014, the IASB published the final version IFRS 9 Financial Instruments which brings together the classification, measurement, impairment and hedge accounting phases of the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes a loss impairment model, amends the classification and measurement model for financial assets by adding a new fair value through comprehensive income category for certain debt instruments and provides additional guidance on how to apply the business model and contractual cash flow characteristics test. This final version of IFRS 9 supersedes all previous versions of IFRS 9 and is effective for periods beginning on or after January 1, 2018. The Company is currently assessing the impact of IFRS 9 on the consolidated financial statements. The Company expects to report more detailed information, including estimated quantitative financial impacts, if material, in its consolidated financial statements as the effective date approaches.

IFRS 15 Revenue from Contracts with Customers

In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers. The new standard provides a comprehensive framework for recognition, measurement and disclosure of revenue from contracts with customers, excluding contracts within the scope of the standards on leases, insurance contracts and financial instruments. IFRS 15 becomes effective for annual periods beginning on or after January 1, 2018 and is to be applied retrospectively with early adoption permitted. The Company is in the process of assessing the impact of IFRS 15 on the consolidated financial statements. The Company expects to report more detailed information, including estimated quantitative financial impacts, if material, in its consolidated financial statements as the effective date approaches.

Outstanding Share Data

Franco-Nevada is authorized to issue an unlimited number of common and preferred shares.  A detailed description of the rights, privileges, restrictions and conditions attached to each class of authorized shares is included in our Annual Information Form for the year ended December 31, 2016, a copy of which can be found on SEDAR at www.sedar.com and in our 40-F, a copy of which can be found on EDGAR at www.sec.gov.

The Gold Investment that WORKS Franco-Nevada Corporation 21

As of May 8, 2017,  the number of common shares outstanding or issuable pursuant to other outstanding securities is as follows:

Common Shares	Number
Outstanding	180,726,678
Issuable upon exercise of Franco-Nevada warrants(1)	4,407,675
Issuable upon exercise of Franco-Nevada options(2)	1,304,328
Issuable upon exercise of special warrant(3)	2,000,000
Issuable upon vesting of Franco-Nevada RSUs	138,614
Diluted common shares	188,577,295

(1) The warrants have an exercise price of C$75.00 per share and an expiry date of June 16, 2017.

(2) There were 1,304,328 stock options under our share compensation plan outstanding to directors, officers, employees and others with exercise prices ranging from C$15.20 to C$75.45 per share.

(3) In connection with the transaction with Taseko Mines Limited, one special warrant was granted to Taseko which will be exchangeable into 2,000,000 purchase share warrants once Taseko’s New Prosperity project gets fully permitted and financed. Each purchase share warrant will entitle Taseko to purchase one Franco-Nevada common share at a price of C$75.00 per share before June 16, 2017. New Prosperity’s most recent permit application was denied in 2014.

Franco-Nevada has not issued any preferred shares.

INTERNAL CONTROL OVER FINANCIAL REPORTING AND DISCLOSURE CONTROLS AND PROCEDURES

Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining Franco-Nevada’s internal control over financial reporting and other financial disclosure and our disclosure controls and procedures.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.  Franco-Nevada’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Franco-Nevada; (ii) are designed to provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that receipts and expenditures of Franco-Nevada are being made only in accordance with authorizations of management and directors of Franco-Nevada; and (iii) are designed to provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Franco-Nevada’s assets that could have a material effect on Franco-Nevada’s financial statements. Internal control over other financial disclosure is a process designed to ensure that other financial information included in this MD&A, fairly represents in all material respects the financial condition, results of operations and cash flows of Franco-Nevada for the periods presented in this MD&A.

Franco-Nevada’s disclosure controls and procedures are designed to provide reasonable assurance that material information relating to Franco-Nevada, including its consolidated subsidiaries, is made known to management by others within those entities, particularly during the period in which this report is prepared and that information required to be disclosed by Franco-Nevada in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation.

22 2017 First Quarter Management’s Discussion and Analysis FNV TSX NYSE

Due to its inherent limitations, internal control over financial reporting and other financial disclosure may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may change.

For the three months ended March 31, 2017, there has been no change in Franco-Nevada’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, Franco-Nevada’s internal control over financial reporting.  

NON-IFRS FINANCIAL MEASURES

Adjusted EBITDA and Adjusted EBITDA per share

Adjusted EBITDA and Adjusted EBITDA per share are non-IFRS financial measures, which exclude the following from net income and earnings per share (“EPS”):

· Income tax expense/recovery;

· Finance expenses;

· Finance income;

· Depletion and depreciation;

· Non-cash costs of sales;

· Impairment charges related to royalty, stream and working interests;

· Impairment of investments;

· Gains/losses on sale of royalty, stream and working interests;

· Gains/losses on investments;

· Foreign exchange gains/losses and other income/expenses; and

· Unusual non-recurring items.

Management uses Adjusted EBITDA and Adjusted EBITDA per share to evaluate the underlying operating performance of the Company as a whole for the reporting periods presented, to assist with the planning and forecasting of future operating results, and to supplement information in its financial statements. The Company also uses Margin, which is defined as Adjusted EBITDA divided by revenue, in its annual incentive compensation process to evaluate management’s performance in increasing revenue and containing costs. Management believes that in addition to measures prepared in accordance with IFRS such as Net Income and Earnings per Share, our investors and analysts use Adjusted EBITDA and Adjusted EBITDA per share to evaluate the results of the underlying business of the Company, particularly since the excluded items are typically not included in our guidance, with the exception of depletion and depreciation expense. While the adjustments to net income and EPS in these measures include items that are both recurring and non-recurring, management believes that Adjusted EBITDA and Adjusted EBITDA per share are useful measures of the Company’s performance because they adjust for items which may not relate to or have a disproportionate effect on the period in which they are recognized, impact the comparability of our core operating results from period to period, are not always reflective of the underlying operating performance of our business and/or are not necessarily indicative of future operating results. Adjusted EBITDA and Adjusted EBITDA per share are only intended to provide additional information to investors and analysts, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. They do not have any standardized meaning under IFRS, and may not be comparable to similar measures presented by other issuers.

The Gold Investment that WORKS Franco-Nevada Corporation 23

Reconciliation of Net Income to Adjusted EBITDA:

	For the three months ended
	March 31,
(expressed in millions, except per share amounts)	2017		2016
Net Income	$	45.6	$	30.0
Income tax expense		10.4		8.1
Finance expenses		0.8		1.3
Finance income		(0.9)		(1.1)
Depletion and depreciation		71.5		65.5
Non-cash costs of sales		1.8		1.8
(Gain) on investments		—		(1.5)
Foreign exchange (gains)/losses and other (income)/expenses		(0.7)		0.3
Adjusted EBITDA	$	128.5	$	104.4
Basic weighted average shares outstanding		178.5		166.8
Basic EPS	$	0.26	$	0.18
Income tax expense		0.06		0.05
Finance expenses		—		0.01
Finance income		(0.01)		(0.01)
Depletion and depreciation		0.40		0.39
Non-cash costs of sales		0.01		0.02
(Gain) on investments		—		(0.01)
Foreign exchange (gains)/losses and other (income)/expenses		—		—
Adjusted EBITDA per share	$	0.72	$	0.63

Margin

Margin is a non-IFRS financial measure which is defined by the Company as Adjusted EBITDA divided by revenue. The Company uses Margin in its annual incentive compensation process to evaluate management’s performance in increasing revenue and containing costs. Margin is intended to provide additional information, does not have any standardized definition under IFRS and should not be considered in isolation or as a substitute for a measure of performance in accordance with IFRS.

Reconciliation of Net Income to Margin: 

	For the three months ended
	March 31,
(expressed in millions, except Margin)	2017			2016
Net Income	$	45.6			30.0
Income tax expense		10.4			8.1
Finance expenses		0.8			1.3
Finance income		(0.9)			(1.1)
Depletion and depreciation		71.5			65.5
Non-cash costs of sales		1.8			1.8
(Gain) on investments		—			(1.5)
Foreign exchange (gains)/losses and other (income)/expenses		(0.7)			0.3
Adjusted EBITDA	$	128.5		$	104.4
Revenue		172.7			132.0
Margin		74.4	%		79.1	%

24 2017 First Quarter Management’s Discussion and Analysis FNV TSX NYSE

Adjusted Net Income and Adjusted Net Income per share

Adjusted Net Income and Adjusted Net Income per share are non-IFRS financial measures, which exclude the following from net income and EPS:

· Foreign exchange gains/losses and other income/expenses;

· Impairment charges related to royalty, stream and working interests;

· Impairment of investments; 

· Gains/losses on sale of royalty, stream and working interests;

· Gains/losses on investments;

· Unusual non-recurring items; and

· Impact of income taxes on these items.

Management uses Adjusted Net Income and Adjusted Net Income per share to evaluate the underlying operating performance of the Company as a whole for the reporting periods presented, to assist with the planning and forecasting of future operating results, and to supplement information in its financial statements. Management believes that in addition to measures prepared in accordance with IFRS such as Net Income and Earnings per Share, our investors and analysts use Adjusted Net Income and Adjusted Net Income per share to evaluate the results of the underlying business of the Company, particularly since the excluded items are typically not included in our guidance. While the adjustments to net income and EPS in these measures include items that are both recurring and non-recurring, management believes that Adjusted Net Income and Adjusted Net Income per share are useful measures of the Company’s performance because they adjust for items which may not relate to or have a disproportionate effect on the period in which they are recognized, impact the comparability of our core operating results from period to period, are not always reflective of the underlying operating performance of our business and/or are not necessarily indicative of future operating results. Adjusted Net Income and Adjusted Net Income per share are intended to provide additional information to investors and analysts and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. They do not have any standardized meaning under IFRS, and may not be comparable to similar measures presented by other issuers.

Reconciliation of Net Income to Adjusted Net Income: 

	For the three months ended
	March 31,
(expressed in millions, except per share amounts)	2017		2016
Net Income	$	45.6	$	30.0
Foreign exchange (gains)/losses and other (income)/expenses		(0.7)		0.2
(Gain) on investments		—		(1.5)
Tax effect of adjustments		(0.1)		(0.7)
Adjusted Net Income	$	44.8	$	28.0
Basic weighted average shares outstanding		178.5		166.8
Basic EPS	$	0.26	$	0.18
Foreign exchange (gains)/losses and other (income)/expenses		(0.01)		—
Gain on investments		—		(0.01)
Tax effect of adjustments		—		—
Adjusted Net Income per share	$	0.25	$	0.17

The Gold Investment that WORKS Franco-Nevada Corporation 25

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This MD&A contains “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian securities laws and the United States Private Securities Litigation Reform Act of 1995, respectively, which may include, but are not limited to, statements with respect to future events or future performance, management’s expectations regarding Franco-Nevada’s growth, results of operations, estimated future revenues, carrying value of assets, future dividends and requirements for additional capital, mineral reserve and mineral resource estimates, production estimates, production costs and revenue, future demand for and prices of commodities, expected mining sequences, business prospects and opportunities. In addition, statements (including data in tables) relating to reserves and resources and gold equivalent ounces are forward-looking statements, as they involve implied assessment, based on certain estimates and assumptions, and no assurance can be given that the estimates and assumptions are accurate and that such reserves and resources and GEOs will be realized. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budgets”, “scheduled”, “estimates”, “forecasts”, “predicts”, “projects”, “intends”, “targets”, “aims”, “anticipates” or “believes” or variations (including negative variations) of such words and phrases or may be identified by statements to the effect that certain actions “may”, “could”, “should”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Franco-Nevada to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. A number of factors could cause actual events or results to differ materially from any forward-looking statements, including, without limitation: fluctuations in the prices of the primary commodities that drive royalty and stream revenue (gold, platinum group metals, copper, nickel, uranium, silver, iron-ore and oil & gas); fluctuations in the value of the Canadian, Australian dollar and Mexican Peso and any other currency in which revenue is generated, relative to the U.S. dollar; changes in national and local government legislation, including permitting and licensing regimes and taxation policies and the enforcement thereof; regulatory, political or economic developments in any of the countries where properties in which Franco-Nevada holds a royalty, stream or other interest are located or through which they are held; risks related to the operators of the properties in which Franco-Nevada holds a royalty, stream or other interest, including changes in the ownership and control of such operators; influence of macroeconomic developments; business opportunities that become available to, or are pursued by Franco-Nevada; reduced access to debt and equity capital; litigation; title, permit or license disputes related to interests on any of the properties in which Franco-Nevada holds a royalty, stream or other interest; whether or not the Company is determined to have “passive foreign investment company” (“PFIC”) status as defined in Section 1297 of the United States Internal Revenue Code of 1986, as amended; potential changes in Canadian tax treatment of offshore streams; excessive cost escalation as well as development, permitting, infrastructure, operating or technical difficulties on any of the properties in which Franco-Nevada holds a royalty, stream or other interest; actual mineral content may differ from the reserves and resources contained in technical reports; rate and timing of production differences from resource estimates, other technical reports and mine plans; risks and hazards associated with the business of development and mining on any of the properties in which Franco-Nevada holds a royalty, stream or other interest, including, but not limited to unusual or unexpected geological and metallurgical conditions, slope failures or cave-ins, flooding and other natural disasters, terrorism, civil unrest or an outbreak of contagious disease; and the integration of acquired assets. The forward-looking statements contained in this MD&A are based upon assumptions management believes to be reasonable, including, without limitation: the ongoing operation of the properties in which Franco-Nevada holds a royalty, stream or other interest 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 that underlie the asset portfolio; the Company’s ongoing income and assets relating to determination of its PFIC status; no material changes to existing tax treatment; no adverse development in respect of any significant property in which Franco-Nevada holds a royalty, stream or other interest; the accuracy of publicly disclosed expectations for the development of underlying properties that are not yet in production; integration of acquired assets; and the absence of any other factors that could cause actions, events or results to differ from those anticipated, estimated or intended. However, there can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Investors are cautioned that forward-looking statements are not guarantees of future performance. Franco-Nevada cannot assure investors that actual results will be consistent with these forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements due to the inherent uncertainty therein. For additional information with respect to risks, uncertainties and assumptions, please refer to Franco-Nevada’s most recent Annual Information Form filed with the Canadian securities regulatory authorities on www.sedar.com and Franco-Nevada’s most recent Annual Report filed on Form 40-F filed with the SEC on www.sec.gov. The forward-looking statements herein are made as of the date of this MD&A 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.

26 2017 First Quarter Management’s Discussion and Analysis FNV TSX NYSE

EX-99.3

Exhibit 99.3

FRANCO-NEVADA CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(unaudited, in millions of U.S. dollars)

	At March 31,		At December 31,
	2017		2016
ASSETS
Cash and cash equivalents (Note 4)	$	283.0	$	253.0
Receivables		69.1		71.1
Prepaid expenses and other (Note 6)		36.0		37.1
Current assets		388.1		361.2
Royalty, stream and working interests, net (Note 3)		3,665.4		3,668.3
Investments (Note 5)		150.6		147.4
Deferred income tax assets		21.9		21.3
Other assets (Note 7)		21.8		23.4
Total assets	$	4,247.8	$	4,221.6
LIABILITIES
Accounts payable and accrued liabilities	$	16.8	$	21.0
Current income tax liabilities		15.1		16.6
Current liabilities		31.9		37.6
Deferred income tax liabilities		41.0		37.5
Total liabilities		72.9		75.1
SHAREHOLDERS’ EQUITY (Note 14)
Common shares		4,675.6		4,666.2
Contributed surplus		43.2		41.6
Deficit		(330.6)		(336.8)
Accumulated other comprehensive loss		(213.3)		(224.5)
Total shareholders’ equity		4,174.9		4,146.5
Total liabilities and shareholders’ equity	$	4,247.8	$	4,221.6
Subsequent events(Note 17)

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 2017 First Quarter Financial Statements FNV TSX NYSE

FRANCO-NEVADA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(unaudited, in millions of U.S. dollars, except per share amounts)

	For the three months ended
	March 31,
		2017		2016
Revenue(Note 10)		$	172.7	$	132.0
Cost of sales
Costs of sales (Note 11)			39.9		24.4
Depletion and depreciation			71.5		65.5
Total cost of sales			111.4		89.9
Gross profit			61.3		42.1
Other operating expenses (income)
Corporate administration			5.3		5.4
Business development			0.8		0.3
(Gain) on sale of gold bullion (Note 16)			—		(0.6)
Total other operating expenses			6.1		5.1
Operating income (Note 16)			55.2		37.0
Foreign exchange gain (loss) and other income (expenses) (Note 16)			0.7		(0.2)
Realized gain on investments			—		1.5
Income before finance items and income taxes			55.9		38.3
Finance items
Finance income			0.9		1.1
Finance expenses (Note 9)			(0.8)		(1.3)
Net income before income taxes			56.0		38.1
Income tax expense (Note 13)			10.4		8.1
Net income		$	45.6	$	30.0
Other comprehensive income (loss):
Items that may be reclassified subsequently to profit and loss:
Unrealized gain (loss) in the market value of available-for-sale investments, net of income tax expense of $0.2 (2016 - income tax expense of $0.2) (Note 5)			1.5		15.8
Realized change in market value of available-for-sale investments (Note 5)			—		(1.5)
Currency translation adjustment			9.7		49.5
Other comprehensive income			11.2		63.8
Total comprehensive income		$	56.8	$	93.8
Basic earnings per share(Note 15)		$	0.26	$	0.18
Diluted earnings per share(Note 15)		$	0.25	$	0.18

The accompanying notes are an integral part of these condensed consolidated financial statements.

The Gold Investment that WORKS Franco-Nevada Corporation 3

FRANCO-NEVADA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions of U.S. dollars)

	For the three months ended
	March 31,
	2017		2016
Cash flows from operating activities
Net income	$	45.6	$	30.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depletion and depreciation		71.5		65.5
Non-cash costs of sales		1.8		1.8
Share-based payments		1.5		1.3
Unrealized foreign exchange (gain) loss		(0.4)		0.2
Gain on investments		—		(1.5)
Deferred income tax expense		2.6		2.6
Other non-cash items		(0.4)		(0.5)
Acquisition of gold bullion (Note 16)		(5.9)		(15.8)
Proceeds from sale of gold bullion (Note 16)		3.1		24.9
Operating cash flows before changes in non-cash working capital		119.4		108.5
Changes in non-cash working capital:
Decrease in receivables		2.0		15.2
Decrease in prepaid expenses and other		4.1		1.2
Decrease in current liabilities		(5.7)		(0.9)
Net cash provided by operating activities (Note 16)		119.8		124.0
Cash flows from investing activities
Acquisition of royalty, stream and working interests		(61.5)		(516.1)
Acquisition of oil & gas well equipment		(0.4)		(0.7)
Proceeds from sale of investments		—		10.6
Acquisition of investments		—		(0.7)
Net cash used in investing activities (Note 16)		(61.9)		(506.9)
Cash flows from financing activities
Net proceeds from issuance of common shares		—		883.5
Repayment of Credit Facility		—		(460.0)
Credit facility amendment costs		(1.0)		—
Payment of dividends		(30.1)		(28.3)
Proceeds from exercise of stock options and warrants		0.1		10.2
Net cash (used in) provided by financing activities		(31.0)		405.4
Effect of exchange rate changes on cash and cash equivalents		3.1		4.6
Net change in cash and cash equivalents		30.0		27.1
Cash and cash equivalents at beginning of period		253.0		149.2
Cash and cash equivalents at end of period	$	283.0	$	176.3
Supplemental cash flow information:
Cash paid for interest expense and loan standby fees	$	0.6	$	1.2
Income taxes paid	$	10.1	$	5.5

The accompanying notes are an integral part of these condensed consolidated financial statements.

4 2017 First Quarter Financial Statements FNV TSX NYSE

FRANCO-NEVADA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(unaudited, in millions of U.S. dollars)

					Accumulated
					other
	Share capital		Contributed		comprehensive
	(Note 14)		Surplus		income (loss)		Deficit		Total Equity
Balance at January 1, 2017	$	4,666.2	$	41.6	$	(224.5)	$	(336.8)	$	4,146.5
Net income		—		—		—		45.6		45.6
Other comprehensive income		—		—		11.2		—		11.2
Total comprehensive income		—		—		—		—		56.8
Exercise of warrants		0.1		—		—		—		0.1
Share-based payments		—		1.6		—		—		1.6
Dividend reinvestment plan		9.3		—		—		—		9.3
Dividends declared		—		—		—		(39.4)		(39.4)
Balance at March 31, 2017	$	4,675.6	$	43.2	$	(213.3)	$	(330.6)	$	4,174.9
Balance at January 1, 2016	$	3,709.0	$	44.3	$	(288.1)	$	(302.2)	$	3,163.0
Net income		—		—		—		30.0		30.0
Other comprehensive loss		—		—		63.8		—		63.8
Total comprehensive loss		—		—		—		—		93.8
Equity offering		894.0		—		—		—		894.0
Exercise of stock options		13.5		(3.3)		—		—		10.2
Share-based payments		—		1.5		—		—		1.5
Dividend reinvestment plan		10.2		—		—		—		10.2
Dividends declared		—		—		—		(38.5)		(38.5)
Balance at March 31, 2016	$	4,626.7	$	42.5	$	(224.3)	$	(310.7)	$	4,134.2

The accompanying notes are an integral part of these condensed consolidated financial statements.

The Gold Investment that WORKS Franco-Nevada Corporation 5

FRANCO-NEVADA CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

(unaudited, expressed in millions of U.S. dollars except share and per share amounts)

Note 1 – Corporate information

Franco-Nevada Corporation (“Franco-Nevada” or the “Company”) is incorporated under the Canada Business Corporations Act. The Company is a gold-focused royalty and stream company with additional interests in silver, platinum group metals, oil & gas and other resource assets. The majority of revenues are generated from a diversified portfolio of properties in the United States, Canada, Mexico, Peru, Chile, Australia and Africa. At March 31, 2017,  the portfolio includes approximately 338 assets (not including the Midland Basin portfolio of royalties, as discussed in Note 3(a)) covering properties at various stages from production to early stage exploration.

The Company’s shares are listed on the Toronto Stock Exchange and the New York Stock Exchange and the Company is domiciled in Canada. The Company’s head and registered office is located at 199 Bay Street, Suite 2000, Toronto, Ontario, Canada.

Note 2 – Significant accounting policies

(a)Basis of presentation

These unaudited condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of condensed interim financial statements, including IAS 34 Interim Financial Reporting. These condensed consolidated interim financial statements should be read in conjunction with the Company’s annual consolidated financial statements for the year ended December 31, 2016 and were prepared using the same accounting policies, method of computation and presentation as were applied in the annual consolidated financial statements for the year ended December 31, 2016.  These consolidated financial statements were authorized for issuance by the Board of Directors on May 9, 2017.

The financial information included herein reflects all adjustments, consisting only of normal recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the full year. Seasonality is not considered to have a significant impact over the condensed consolidated interim financial statements. Taxes on income in the interim period have been accrued using the tax rates that would be applicable to expected total annual income.

(b)New and amended standards adopted by the Company

The following standard was effective and implemented as of January 1, 2017.

IAS 12 Income Taxes

IAS 12 Income taxes provides guidance on the recognition of deferred tax assets. In January 2016 the IASB issued amendments to clarify the requirements for recognizing deferred tax assets on unrealized losses. The amendments clarify the accounting for deferred tax where an asset is measured at fair value and that fair value is below the asset’s tax base. They also clarify certain other aspects of accounting for deferred tax assets. The amendments are effective for annual periods beginning on or after January 1, 2017. The Company has adopted the amendments to IAS 12 in its financial statements for the annual period beginning on January 1, 2017. The adoption of the amendments did not have a material impact on the consolidated financial statements.

(c)New accounting standards issued but not yet effective  

IFRS 9 Financial Instruments

On July 24, 2014, the IASB published the final version IFRS 9 Financial Instruments which brings together the classification, measurement, impairment and hedge accounting phases of the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes a loss impairment model, amends the classification and measurement model for financial assets by adding a new fair value through comprehensive income category for certain debt instruments and provides additional guidance on how to apply the business model and contractual cash flow characteristics test. This final version of IFRS 9 supersedes all previous versions of IFRS 9 and is effective for periods beginning on or after January 1, 2018. The Company is currently assessing the impact of IFRS 9 on the consolidated financial statements. The Company expects to report more detailed information, including estimated quantitative financial impacts, if material, in its consolidated financial statements as the effective date approaches.

6 2017 First Quarter Financial Statements FNV TSX NYSE

IFRS 15 Revenue from Contracts with Customers

In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers. The new standard provides a comprehensive framework for recognition, measurement and disclosure of revenue from contracts with customers, excluding contracts within the scope of the standards on leases, insurance contracts and financial instruments. IFRS 15 becomes effective for annual periods beginning on or after January 1, 2018 and is to be applied retrospectively with early adoption permitted. The Company is in the process of assessing the impact of IFRS 15 on the consolidated financial statements.  The Company expects to report more detailed information, including estimated quantitative financial impacts, if material, in its consolidated financial statements as the effective date approaches.

Note 3 – Acquisitions and other transactions

(a)U.S. Oil & Gas Royalties Acquisition – Midland Basin

On March 13, 2017, the Company agreed to purchase a portfolio of royalties in the Midland Basin of West Texas, for a price of $110.0 million. The Midland Basin forms the eastern half of the broader Permian Basin. The royalties include mineral title which provide a perpetual interest in royalty lands. The transaction is expected to close in the second quarter of 2017.

At March 31, 2017, the Company has advanced $11.0 million to an escrow account, which will be applied against the purchase price upon closing. The deposit is included in royalty, streams and working interests on the statement of financial position as at March 31, 2017.

The acquisition will be accounted for as an asset acquisition upon closing.

(b)Cobre Panama Update

The Company has a precious metals stream agreement for First Quantum Minerals Ltd.’s (“First Quantum”) Cobre Panama project (“Cobre Panama”). The project, which is located in Panama, is in the construction phase. Under the terms of the agreement, Franco-Nevada will provide a deposit of up to $1.0 billion against future deliveries of gold and silver from Cobre Panama. The deposit is funded on a pro-rata basis of 1:3 with First Quantum’s 80% share of the capital costs in excess of $1.0 billion.

In the three months ended March 31, 2017, the Company funded $50.2 million towards the stream, for a cumulative total of $512.4 million of its $1.0 billion commitment. Capitalized costs for the Cobre Panama project of $517.9 million are included in royalty, stream and working interests on the statement of financial position as at March 31, 2017.

Note 4 – Cash and cash equivalents

As at March 31, 2017, cash and cash equivalents were primarily held in interest-bearing deposits.

	At March 31,		At December 31,
	2017		2016
Cash deposits	$	220.4	$	182.4
Term deposits		62.6		70.6
	$	283.0	$	253.0

Note 5 – Investments

Investments comprise the following:

	At March 31,		At December 31,
	2017		2016
Non-current investments
Equity investments	$	121.1	$	118.4
Warrants		0.9		0.9
Loan Receivable		28.6		28.1
Total Investments	$	150.6	$	147.4

Non-current investments

These investments comprise: (i) equity interests in various public and non-public entities which the Company acquired through the open market or through transactions; (ii) warrants in various publicly-listed companies; and (iii) a loan receivable extended to Noront Resources Ltd. as part of the Company’s acquisition of royalty rights in the Ring of Fire mining district of Ontario, Canada, in April 2015. 

The Gold Investment that WORKS Franco-Nevada Corporation 7

Equity investments have been designated as available-for-sale and, as a result, have been recorded at fair value. One equity investment of a non-public entity, having a carrying value of $3.8 million (December 31, 2016 - $3.8 million), has been designated as an equity investment held at cost as no reliable estimate of fair value can be determined because there is no publicly available information with which to estimate future cash flows, associated operating costs or capital expenditures and no alternative active market. Management does not intend to dispose of the investment and expects to recover the carrying value through the payment of dividends.

The loan receivable has been designated as loans and receivables under IFRS and is carried at amortized cost using the effective interest rate method.

The unrealized gains on available-for-sale investments recognized in other comprehensive income for the three months ended March 31, 2017 and 2016 were as follows: 

	For the three months ended
	March 31,
		2017		2016
Mark-to-market gain on equity investments		$	1.7	$	16.0
Deferred tax expense in other comprehensive income			(0.2)		(0.2)
Unrealized gain on available-for-sale securities, net of tax			1.5		15.8
Reclassification for realized change in market value recognized in net income, net of tax			—		(1.5)
		$	1.5	$	14.3

Note 6 – Prepaid expenses and other

Prepaid expenses and other current assets comprise the following:

		At March 31,		At December 31,
		2017		2016
Gold bullion	$	12.1	$	9.3
Inventory		0.6		2.7
Prepaid gold		7.1		7.0
Prepaid expenses		15.5		17.5
Debt issue costs		0.7		0.6
	$	36.0	$	37.1

Note 7 – Other assets

Other assets comprise the following:

	At March 31,			At December 31,
	2017			2016
Prepaid gold	$	5.3	$	7.1
Oil & gas well equipment, net		13.6		14.0
Furniture and fixtures, net		0.6		0.7
Debt issue costs		2.3		1.6
	$	21.8	$	23.4

Note 8 - Fair value measurements

Fair value is a market-based measurement, not an entity-specific measurement. For some assets and liabilities, observable market transactions or market information might be available. For other assets and liabilities, observable market transactions and market information might not be available. However, the objective of a fair value measurement in both cases is the same — to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions (i.e. an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).

The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value.

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices observable for the asset or liability (for example, interest rate and yield curves observable at commonly quoted intervals, forward pricing curves used to value currency and commodity contracts and

8 2017 First Quarter Financial Statements FNV TSX NYSE

volatility measurements used to value option contracts), or inputs that are derived principally from or corroborated by observable market data or other means.

Level 3 inputs are unobservable (supported by little or no market activity).

The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs.

There were no transfers between the levels of the fair value hierarchy during the three months ended March 31, 2017. 

Assets and Liabilities Measured at Fair Value on a Recurring Basis:

	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs		Aggregate
As at March 31, 2017	(Level 1)		(Level 2)		(Level 3)		Fair Value
Cash and cash equivalents	$	283.0	$	—	$	—	$	283.0
Receivables from provisional gold equivalent sales		—		6.8		—		6.8
Available-for-sale equity investments		117.3		—		—		117.3
Warrants		—		0.9		—		0.9
	$	400.3	$	7.7	$	—	$	408.0

	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs		Aggregate
As at December 31, 2016	(Level 1)		(Level 2)		(Level 3)		Fair Value
Cash and cash equivalents	$	253.0	$	—	$	—	$	253.0
Receivables from provisional gold equivalent sales		—		9.8		—		9.8
Available-for-sale equity investments		114.6		—		—		114.6
Warrants		—		0.9		—		0.9
	$	367.6	$	10.7	$	—	$	378.3

Assets Measured at Fair Value on a Non-Recurring Basis:

	Quoted Prices in				Significant
	Active Markets for		Significant Other		Unobservable
	Identical Assets		Observable Inputs		Inputs		Aggregate
As at December 31, 2016	(Level 1)		(Level 2)		(Level 3)		Fair Value
Royalty, stream and working interests	$	—	$	—	$	2.1	$	2.1
	$	—	$	—	$	2.1	$	2.1

Fair Values of Financial Assets and Liabilities

The fair values of the Company’s remaining financial assets and liabilities, which include receivables, loan receivables, accounts payable and accrued liabilities, approximate their carrying values due to their short-term nature and historically negligible credit losses and/or fair value of collateral. 

The Company has not offset financial assets with financial liabilities.

The valuation techniques that are used to measure fair value are as follows:

(a)Cash and cash equivalents

The fair values of cash and cash equivalents, including interest bearing deposits, are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. 

(b)Receivables

The fair values of receivables arising from gold and platinum group metal sales contracts that contain provisional pricing mechanisms are determined using the appropriate quoted forward prices from the exchange that is the principal active market for the particular metal. As such, these receivables are classified within Level 2 of the fair value hierarchy.

(c)Investments

The fair values of publicly-traded investments, including available-for-sale equity investments, are determined based on a market approach reflecting the closing prices of each particular security at the statement of financial position date. The closing prices are quoted market prices obtained from the exchange that is the principal active market for the particular security, and therefore are classified within Level 1 of the fair value hierarchy.

The Gold Investment that WORKS Franco-Nevada Corporation 9

The fair values of warrants are estimated using the Black-Scholes pricing model which requires the use of inputs that are observable in the market. As such, these investments are classified within Level 2 of the fair value hierarchy.

(d)Royalty, stream, and working interests

The fair values of royalty, stream, and working interests are determined primarily using a market approach using unobservable discounted future cash-flows. As a result, the fair values are classified within Level 3 of the fair value hierarchy.

Note 9 – Revolving term credit facilities

(a)Credit Facility - $1.0 billion 

The Company has a five year $1.0 billion unsecured revolving term credit facility (the “Credit Facility”). On March 22, 2017, the Company amended its Credit Facility by extending the term from November 12, 2020 to March 22, 2022.

Advances under the Credit Facility can be drawn as follows:

U.S. dollars

Base rate advances with interest payable monthly at the Canadian Imperial Bank of Commerce (“CIBC”) base rate, plus between 0.20% and 1.20% per annum depending upon the Company’s leverage ratio; or

LIBOR loans for periods of 1, 2, 3 or 6 months with interest payable at a rate of LIBOR, plus between 1.20% and 2.20% per annum, depending on the Company’s leverage ratio.

Canadian dollars

Prime rate advances with interest payable monthly at the CIBC prime rate, plus between 0.20% and 1.20% per annum, depending on the Company’s leverage ratio; or

Bankers’ acceptances for a period of 30 to 180 days with a stamping fee calculated on the face amount between 1.20% and 2.20%, depending on the Company’s leverage ratio.

All loans are readily convertible into loans of other types, described above, on customary terms and upon provision of appropriate notice. Borrowings under the Credit Facility are guaranteed by certain of the Company’s subsidiaries and are unsecured.

The Credit Facility is subject to a standby fee of 0.24% to 0.44% per annum, depending on the Company’s leverage ratio, even if no amounts are outstanding under the Credit Facility.

As at March 31,  2017, there was no balance (December 31, 2016 – $nil)  outstanding under the Credit Facility. 

As at March 31, 2017,  a balance of $3.0 million related to debt issue costs is remaining to be amortized over the remaining term of the Credit Facility (December 31, 2016 – $2.2 million). The unamortized debt issue costs associated with the Credit Facility are included in prepaid expenses and other current assets, and other non-current assets. For the three months ended March 31, 2017,  the Company recognized debt issuance cost amortization expense of $0.1 million (Q1/2016 - $0.1 million), and $0.4 million  (Q1/2016 – $0.4 million) of standby and administrative fees in the consolidated statement of income and comprehensive income.

(b)FNBC Credit Facility - $100.0 million 

On March 20, 2017, the Company’s subsidiary, Franco-Nevada (Barbados) Corporation, entered into an unsecured revolving term credit facility (the “FNBC Credit Facility”). The FNBC Credit Facility provides for the availability over a one-year period of up to $100.0 million in borrowings. The FNBC Credit Facility has a maturity date of March 20, 2018. The Company has the option of requesting, during a period of time before each anniversary date, up to two additional one-year extensions of the maturity. These requests are subject to approval from the lenders.

Advances under the FNBC Credit Facility can be drawn as follows:

· Base rate advances with interest payable monthly at the CIBC base rate, plus 0.35% per annum; or

· LIBOR loans for periods of 1, 2, 3 or 6 months with interest payable at a rate of LIBOR plus 1.35% per annum.

All loans are readily convertible into loans of other types on customary terms and upon provision of appropriate notice.

The FNBC Credit Facility is subject to a standby fee of 0.27% per annum, even if no amounts are outstanding.

As at March 31, 2017, there was no balance outstanding under the FNBC Credit Facility. 

As at March 31, 2017, $0.1 million related to debt issue costs were capitalized and will be amortised over the remaining term of the FNBC Credit Facility.

10 2017 First Quarter Financial Statements FNV TSX NYSE

Note 10 – Revenue

Revenue is comprised of the following:

	For the three months ended
	March 31,
	2017		2016
Mineral royalties	$	43.1	$	34.6
Mineral streams		116.3		91.4
Sale of prepaid gold		2.4		2.4
Oil & gas interests		10.9		3.6
	$	172.7	$	132.0

Note 11 – Costs of sales

Costs of sales are comprised of the following:

	For the three months ended
	March 31,
	2017		2016
Per ounce stream purchase cost	$	36.4	$	21.7
Cost of prepaid ounces		1.8		1.8
Oil & gas operating costs		1.1		0.6
Mineral production taxes		0.6		0.3
	$	39.9	$	24.4

Note 12 – Related party disclosures

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company. Key management personnel include the Board of Directors and the executive management team. Compensation for key management personnel of the Company was as follows:

	For the three months ended
	March 31,
	2017		2016
Short-term benefits(1)	$	0.8	$	0.7
Share-based payments(2)		1.8		1.7
	$	2.6	$	2.4

(1)Includes salary, benefits and short-term accrued incentives/other bonuses earned in the period.

(2)Represents the expense of stock options, restricted share units earned and mark-to-market charges on deferred share units during the year.

Note 13 - Income taxes

Income tax expense for the three months ended March 31, 2017 and 2016 was as follows:

	For the three months ended
	March 31,
	2017		2016
Current income tax expense		7.8		5.5
Deferred income tax expense		2.6		2.6
	$	10.4	$	8.1

The Gold Investment that WORKS Franco-Nevada Corporation 11

Note 14 - Shareholders’ equity

(a)Common shares

The Company’s authorized capital stock includes an unlimited number of common shares (issued  - 178,625,960 common shares as at March 31, 2017) having no par value and preferred shares issuable in series (issued -  nil).

During the three months ended March 31, 2017,  no common shares (Q1/2016 – 312,025)  were issued for the exercise of stock options, for proceeds of $nil (Q1/2016 - $10.2 million), and 1,887 common shares (Q1/2016 – 17) were issued upon the exercise of warrants, for proceeds of $0.1 million (Q1/2016 - $nil). In addition, 141,934 common shares (Q1/2016 – 166,075) were issued pursuant to the terms of the Company’s Dividend Reinvestment Plan (“DRIP”) for the three months ended March 31, 2017.  

(b)Dividends

The Company declared dividends in the amount of $39.4 million (Q1/2016 - $38.5 million), or $0.22 per share (Q1/2016 - $0.21 per share), in the three months ended March 31, 2017. The Company paid cash dividends in the amount $30.1 million (Q1/2016 - $28.3 million) and issued common shares pursuant to its DRIP valued at $9.3 million (Q1/2016 - $10.2 million), in the three months ended March 31, 2017.  

(c)Stock-based payments

During the three months ended March 31, 2017,  an expense of $1.5 million (Q1/2016 - $1.3 million) related to stock options and restricted share units has been included in the consolidated statement of income and other comprehensive income and $0.1 million was capitalized to royalty, stream and working interests (Q1/2016 - $nil).

Note 15 – Earnings per share (“EPS”)

For the three months ended March 31, 2017
	Earnings		Shares	Per Share
	(Numerator)		(Denominator)	Amount
Basic EPS	$	45.6	178.5	$	0.26
Effect of dilutive securities		—	1.3		(0.01)
Diluted EPS	$	45.6	179.8	$	0.25

For the three months ended March 31, 2016
	Earnings		Shares	Per Share
	(Numerator)		(Denominator)	Amount
Basic EPS	$	30.0	166.8	$	0.18
Effect of dilutive securities		—	0.6		—
Diluted EPS	$	30.0	167.4	$	0.18

For the three months ended March 31, 2017, 263,568 stock options (Q1/2016 – nil) were excluded from the computation of diluted EPS due to being anti-dilutive.  Restricted share units totaling 84,094 (Q1/2016 – 61,856) were excluded from the computation of diluted EPS for the three months ended March 31, 2017 due to the performance criteria for the vesting of the RSUs not being measurable as at March 31, 2017.

12 2017 First Quarter Financial Statements FNV TSX NYSE

Note 16 – Changes to comparative presentation

The condensed consolidated interim statement of cash flows and statement of income and comprehensive income for the three months ended March 31, 2016 reflect the retrospective application of a voluntary change in accounting policy adopted in 2016, as detailed in the Company’s accounting policies described in the annual consolidated financial statements for the year ended December 31, 2016. The change classifies proceeds from the sale of gold bullion as an operating activity, rather than an investing activity, on the condensed consolidated statement of cash flow. For consistency, any gains or losses that arise on the sale of gold bullion are also classified within operating income in the condensed consolidated statement of income and comprehensive income.

(a)Impact on statement of income and comprehensive income

The following table outlines the effects of this accounting policy change on the condensed consolidated statement of income and comprehensive income:

	For the three months ended March 31, 2016
	Previously			Current
Financial statement line item	Reported		Reclassification	Presentation
Operating income	$	36.4	0.6	$	37.0
Foreign exchange gain (loss) and other income (expense)(1)		0.4	(0.6)		(0.2)

(1) Excludes gain on sale of investments of $1.5 million, presented separately.

(b)Impact on statement of cash flows

The following table outlines the effects of this accounting policy change on the condensed consolidated statement of cash flows:

		For the three months ended March 31, 2016
	Previously			Current
Financial statement line item	Reported		Reclassification	Presentation
Net cash provided by operating activities	$	99.1	24.9	$	124.0
Net cash used in investing activities		(482.0)	(24.9)		(506.9)

Note 17 – Subsequent events

Exercise of share purchase warrants

Subsequent to March 31, 2017, 2,100,718 warrants to purchase common shares of the Company at an exercise price of C$75.00 were exercised, resulting in cash proceeds of C$157.6 million to the Company. As of the date of this report, there remained 4,407,675 warrants outstanding. The warrants have an exercise price of C$75.00 per warrant and expire on June 16, 2017.

The Gold Investment that WORKS Franco-Nevada Corporation 13

EX-99.4

Exhibit 99.4

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, David Harquail, President and Chief Executive Officer of Franco-Nevada Corporation, certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Franco-Nevada Corporation (the “issuer”) for the interim period ended March 31, 2017.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings:

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that:

(i)  material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1  Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control — Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

5.2 N/A

5.3 N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2017 and ended on March 31, 2017 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 9, 2017

(signed) David Harquail

David Harquail, Chief Executive Officer

Franco-Nevada Corporation

EX-99.5

Exhibit 99.5

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Sandip Rana, Chief Financial Officer of Franco-Nevada Corporation, certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Franco-Nevada Corporation (the “issuer”) for the interim period ended March 31, 2017.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings:

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that:

(i)  material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1  Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control — Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

5.2 N/A

5.3 N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2017 and ended on March 31, 2017 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 9, 2017

(signed) Sandip Rana

Sandip Rana, Chief Financial Officer

Franco-Nevada Corporation