Franco-Nevada Corporation
Condensed Consolidated Statements of Financial Position |
(unaudited, in millions of U.S. dollars)
At June 30, | At December 31, | |||||||
2023 |
|
| 2022 |
| ||||
ASSETS | ||||||||
Cash and cash equivalents (Note 4) | $ | | $ | | ||||
Receivables |
| |
| | ||||
Gold bullion, prepaid expenses and other current assets (Note 6) |
| |
| | ||||
Current assets | $ | | $ | | ||||
Royalty, stream and working interests, net (Note 7) | $ | | $ | | ||||
Investments (Note 5) |
| |
| | ||||
Deferred income tax assets |
| |
| | ||||
Other assets (Note 8) |
| |
| | ||||
Total assets | $ | | $ | | ||||
LIABILITIES | ||||||||
Accounts payable and accrued liabilities | $ | | $ | | ||||
Current income tax liabilities |
| |
| | ||||
Current liabilities | $ | | $ | | ||||
Deferred income tax liabilities | $ | | $ | | ||||
Other liabilities | | | ||||||
Total liabilities | $ | | $ | | ||||
SHAREHOLDERS’ EQUITY | ||||||||
Share capital (Note 16) | $ | | $ | | ||||
Contributed surplus |
| |
| | ||||
Retained earnings |
| |
| | ||||
Accumulated other comprehensive loss |
| ( |
| ( | ||||
Total shareholders’ equity | $ | | $ | | ||||
Total liabilities and shareholders’ equity | $ | | $ | | ||||
Commitments and contingencies (Notes 20 and 21) | ||||||||
Subsequent events (Note 22) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Franco-Nevada Corporation
Condensed Consolidated Statements of Income and Comprehensive Income |
(unaudited, in millions of U.S. dollars and shares, except per share amounts)
For the three months ended | For the six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
| 2023 |
|
| 2022 |
| 2023 |
|
| 2022 | |||||||
Revenue (Note 10) | $ | | $ | | $ | | $ | | ||||||||
Costs of sales | ||||||||||||||||
Costs of sales (Note 11) | $ | | $ | |
| $ | | $ | | |||||||
Depletion and depreciation | |
| |
| |
| | |||||||||
Total costs of sales | $ | | $ | | $ | | $ | | ||||||||
Gross profit | $ | | $ | | $ | | $ | | ||||||||
Other operating expenses (income) | ||||||||||||||||
General and administrative expenses | $ | | $ | |
| $ | | $ | | |||||||
Share-based compensation expenses (Note 12) | | — | | | ||||||||||||
Gain on sale of royalty interest (Note 7) | — | — |
| ( | — | |||||||||||
Gain on sale of gold bullion | ( | ( |
| ( | ( | |||||||||||
Total other operating expenses | $ | | $ | |
| $ | | $ | | |||||||
Operating income | $ | | $ | |
| $ | | $ | | |||||||
Foreign exchange gain (loss) and other income (expenses) | $ | | $ | ( |
| $ | | $ | | |||||||
Income before finance items and income taxes | $ | | $ | |
| $ | | $ | | |||||||
Finance items (Note 14) | ||||||||||||||||
Finance income | $ | | $ | |
| $ | | $ | | |||||||
Finance expenses | ( |
| ( |
| ( |
| ( | |||||||||
Net income before income taxes | $ | | $ | |
| $ | | $ | | |||||||
Income tax expense (Note 15) | |
| |
| |
| | |||||||||
Net income | $ | | $ | | $ | | $ | | ||||||||
Other comprehensive income (loss), net of taxes | ||||||||||||||||
Items that may be reclassified subsequently to profit and loss: | ||||||||||||||||
Currency translation adjustment | $ | | $ | ( |
| $ | | $ | ( | |||||||
Items that will not be reclassified subsequently to profit and loss: | ||||||||||||||||
(Loss) gain on changes in the fair value of equity investments |
|
|
| |||||||||||||
at fair value through other comprehensive income ("FVTOCI"), | ||||||||||||||||
net of income tax (Note 5) | ( | ( | | ( | ||||||||||||
Other comprehensive income (loss), net of taxes | $ | | $ | ( |
| $ | | $ | ( | |||||||
Comprehensive income | $ | | $ | | $ | | $ | | ||||||||
Earnings per share (Note 17) | ||||||||||||||||
Basic | $ | | $ | | $ | | $ | | ||||||||
Diluted | $ | | $ | | $ | | $ | | ||||||||
Weighted average number of shares outstanding (Note 17) | ||||||||||||||||
Basic | | | | | ||||||||||||
Diluted | | | | | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2023 Second Quarter Financial Statements | 3 |
Franco-Nevada Corporation
Condensed Consolidated Statements of Cash Flows |
(unaudited, in millions of U.S. dollars)
For the six months ended | ||||||||
June 30, | ||||||||
| 2023 |
|
| 2022 |
| |||
Cash flows from operating activities | ||||||||
Net income | $ | | $ | | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depletion and depreciation |
| |
| | ||||
Share-based compensation expenses |
| |
| | ||||
Gain on sale of royalty interest |
| ( |
| — | ||||
Unrealized foreign exchange gain |
| ( |
| — | ||||
Deferred income tax expense | |
| | |||||
Other non-cash items |
| ( |
| ( | ||||
Acquisition of gold bullion | ( | ( | ||||||
Proceeds from sale of gold bullion |
| |
| | ||||
Changes in other assets |
| — |
| ( | ||||
Operating cash flows before changes in non-cash working capital | $ | | $ | | ||||
Changes in non-cash working capital: | ||||||||
Increase in receivables | $ | ( | $ | ( | ||||
(Increase) decrease in prepaid expenses and other |
| ( |
| | ||||
Increase in current liabilities |
| |
| | ||||
Net cash provided by operating activities | $ | | $ | | ||||
Cash flows used in investing activities | ||||||||
Acquisition of royalty, stream and working interests | $ | ( | $ | ( | ||||
Proceeds from sale of royalty interest | | — | ||||||
Proceeds from sale of investments |
| |
| | ||||
Acquisition of energy well equipment |
| ( |
| ( | ||||
Acquisition of investments |
| ( |
| ( | ||||
Proceeds from settlement of loan receivable from Noront Resources Ltd. | — | | ||||||
Net cash used in investing activities | $ | ( | $ | ( | ||||
Cash flows used in financing activities | ||||||||
Payment of dividends | $ | ( | $ | ( | ||||
Proceeds from exercise of stock options |
| |
| | ||||
Net cash used in financing activities | $ | ( | $ | ( | ||||
Effect of exchange rate changes on cash and cash equivalents | $ | | $ | ( | ||||
Net change in cash and cash equivalents | $ | | $ | | ||||
Cash and cash equivalents at beginning of period | $ | | $ | | ||||
Cash and cash equivalents at end of period | $ | | $ | | ||||
Supplemental cash flow information: | ||||||||
Income taxes paid | $ | | $ | | ||||
Dividend income received | $ | | $ | | ||||
Interest and standby fees paid | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2023 Second Quarter Financial Statements | 4 |
Franco-Nevada Corporation
Condensed Consolidated Statements of Changes in Shareholders’ Equity |
(unaudited, in millions of U.S. dollars)
|
|
| Accumulated |
|
| |||||||||||
other | ||||||||||||||||
Share capital | Contributed | comprehensive | Retained | |||||||||||||
(Note 16) | surplus | loss | earnings | Total equity | ||||||||||||
Balance at January 1, 2022 | $ | | $ | | $ | ( | $ | | $ | | ||||||
Net income |
| — |
| — |
| — |
| |
| | ||||||
Other comprehensive loss, net of taxes |
| — |
| — |
| ( |
| — |
| ( | ||||||
Total comprehensive income | $ | | ||||||||||||||
Exercise of stock options | $ | | $ | ( | $ | — | $ | — | $ | | ||||||
Share-based payments | — | | — | — | | |||||||||||
Transfer of gain on disposal of equity investments at FVTOCI | — |
| — |
| ( |
| | — | ||||||||
Dividend reinvestment plan |
| |
| — |
| — |
| — |
| | ||||||
Dividends declared |
| — |
| — |
| — |
| ( |
| ( | ||||||
Balance at June 30, 2022 | $ | | $ | | $ | ( | $ | | $ | | ||||||
Balance at January 1, 2023 | $ | | $ | | $ | ( | $ | | $ | | ||||||
Net income |
| — |
| — |
| — |
| |
| | ||||||
Other comprehensive income, net of taxes |
| — |
| — |
| |
| — |
| | ||||||
Total comprehensive income | $ | | ||||||||||||||
Exercise of stock options | $ | | $ | ( | $ | — | $ | — | $ | | ||||||
Share-based payments | — | | — | — | | |||||||||||
Transfer of gain on disposal of equity investments at FVTOCI |
| — |
| — |
| ( |
| |
| — | ||||||
Dividend reinvestment plan |
| |
| — |
| — |
| — |
| | ||||||
Dividends declared |
| — |
| — |
| — |
| ( |
| ( | ||||||
Balance at June 30, 2023 | $ | | $ | | $ | ( | $ | | $ | | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2023 Second Quarter Financial Statements | 5 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2023 and 2022
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 1 - Corporate Information
Franco-Nevada Corporation (“Franco-Nevada” or the “Company”) is incorporated under the Canada Business Corporations Act. The Company is a royalty and stream company focused on precious metals (gold, silver, and platinum group metals) and has a diversity of revenue sources. The Company owns a portfolio of royalty, stream and working interests, covering properties at various stages, from production to early exploration located in South America, Central America & Mexico, United States, Canada, Australia, Europe and Africa.
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 include the accounts of Franco-Nevada and its wholly-owned subsidiaries (its “subsidiaries”) (hereinafter together with Franco-Nevada, the “Company”). These 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, 2022 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, 2022. These condensed consolidated interim financial statements were authorized for issuance by the Board of Directors on August 8, 2023.
The financial statements 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 and six months ended June 30, 2023 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) Significant Judgments, Estimates and Assumptions
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. The areas of judgment and estimation are consistent with those reported in the annual consolidated financial statements for the year ended December 31, 2022.
(c) New and Amended Accounting Standards
International Tax Reform – Pillar Two Model Rules – Amendments to IAS 12, Income Taxes
On May 23, 2023, the IASB issued International Tax Reform – Pillar Two Model Rules – Amendments to IAS 12. The amendments introduce a mandatory temporary exception to the accounting for deferred taxes arising from the jurisdictional implementation of the Pillar Two model rules, and disclosure requirements for affected entities to help users of the financial statements better understand an entity’s exposure to Pillar Two income taxes arising from that legislation.
The temporary exception from recognition and disclosure of information about deferred taxes and the requirement to disclose the application of the exception, apply immediately and retrospectively upon issue of the amendments. The disclosure of the current tax expense related to Pillar Two income taxes and the disclosures in relation to periods before the legislation is effective are required for annual reporting periods beginning on or after 1 January 2023, but are not required for any interim period ending on or before 31 December 2023.
The Company is assessing the impact of the amendments on its consolidated financial statements.
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2023 and 2022
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 3 - Acquisitions and Other Transactions
(a) | Acquisition of Royalty on Pascua-Lama Project – Chile |
Subsequent to quarter-end, Franco-Nevada, through a wholly-owned subsidiary, agreed to acquire a sliding-scale gold royalty and fixed-rate copper royalty from private individuals over property pertaining to the Chilean portion of Barrick Gold Corp.’s Pascua-Lama project for an aggregate purchase price of $
(b) | Acquisition of Royalty on Volcan Gold Project – Chile |
Subsequent to quarter-end, on July 6, 2023, Franco-Nevada, through a wholly-owned subsidiary, agreed to acquire a
(c) | Funding of the Tocantinzinho Stream – Brazil |
On June 30, 2023, the Company’s wholly-owned subsidiary, Franco-Nevada (Barbados) Corporation (“FNBC”), disbursed $
Additionally, through one of its wholly-owned subsidiaries, Franco-Nevada provided G Mining Ventures with a $
(d) | Acquisition of Additional Royalty Interest on Caserones – Chile |
During the six months ended June 30, 2023, Franco-Nevada, through a wholly-owned subsidiary, acquired an incremental effective NSR totaling
The transactions have been accounted for as an acquisition of a mineral royalty interest.
(e) | Acquisition Agreement for New Royalties with EMX Royalty Corporation |
On June 27, 2023, Franco-Nevada executed a binding term sheet with EMX Royalty Corporation (“EMX”) for a
(f) | Acquisition of Royalties on Exploration Properties – Nevada and Arizona, U.S. |
On June 15, 2023, Franco-Nevada, through a wholly-owned subsidiary, acquired a portfolio of
The transaction has been accounted for as an acquisition of mineral royalty interests.
(g) | Acquisition of Additional Royalty on Valentine Gold Project and Private Placement with Marathon Gold Corporation – Newfoundland, Canada |
On June 8, 2023, Franco-Nevada acquired an additional
Subsequent to quarter-end, on July 5, 2023, Franco-Nevada acquired
2023 Second Quarter Financial Statements | 7 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2023 and 2022
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
The additional
(h) | Acquisition of Royalty on Kerr-Addison Property and Share Subscription with Gold Candle Ltd. – Ontario, Canada |
On April 14, 2023, Franco-Nevada acquired a
Subsequent to quarter-end, on July 26, 2023, Franco-Nevada also completed the previously announced subscription for common shares of Gold Candle, a private company, and acquired
The acquisition of the
(i) | Acquisition of Gold Royalties – Australia |
On February 22, 2023, Franco-Nevada acquired a portfolio of
The transaction has been accounted for as an acquisition of a mineral royalty interest. The contingent payment will be capitalized as part of the cost of the royalty interest if and when the underlying obligating events have occurred.
(j) | Receipt of Valentine Gold Royalty Buy-back – Newfoundland, Canada |
On February 22, 2023, Marathon exercised its option to buy-back
The transaction has been accounted for as a disposal of royalty mineral interest as referenced in Note 7(b).
(k) | Acquisition of Mineral Rights with Continental Resources, Inc. – U.S. |
During the three and six months ended June 30, 2023, Franco-Nevada recorded contributions to the Royalty Acquisition Venture of $
The Royalty Acquisition Venture is accounted for as a joint operation in accordance with IFRS 11 Joint Arrangements.
Note 4 - Cash and Cash Equivalents
Cash and cash equivalents comprised the following:
At June 30, | At December 31, |
| |||||||
|
| 2023 |
|
| 2022 |
| |||
Cash deposits | $ | | $ | | |||||
Term deposits |
| |
| | |||||
$ | | $ | |
As at June 30, 2023 and December 31, 2022, cash and cash equivalents were primarily held in interest-bearing deposits.
Note 5 - Investments
Investments comprised the following:
At June 30, | At December 31, |
| |||||||
|
| 2023 |
|
| 2022 |
| |||
Equity investments | $ | | $ | | |||||
Warrants |
| |
| | |||||
$ | | $ | |
2023 Second Quarter Financial Statements | 8 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2023 and 2022
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
(a) | Equity investments |
Equity investments comprised the following:
At June 30, | At December 31, |
| |||||||
|
| 2023 |
|
| 2022 |
| |||
Labrador Iron Ore Royalty Corporation ("LIORC") | $ | | $ | | |||||
Other |
| |
| | |||||
$ | | $ | |
During the six months ended June 30, 2023, the Company disposed of equity investments with a cost of $
The change in the fair value of equity investments recognized in other comprehensive income for the periods ended June 30, 2023 and 2022 were as follows:
For the three months ended | For the six months ended |
| ||||||||||||||
June 30, | June 30, | |||||||||||||||
| 2023 |
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||
(Loss) gain on changes in the fair value of equity investments at FVTOCI | $ | ( | $ | ( | $ | | $ | ( | ||||||||
Income tax recovery (expense) in other comprehensive income |
| |
| |
| ( |
| | ||||||||
(Loss) gain on changes in the fair value of equity investments at FVTOCI, net of income tax | $ | ( | $ | ( |
| $ | | $ | ( |
Note 6 – Gold Bullion, Prepaid Expenses and Other Current Assets
Gold bullion, prepaid expenses and other current assets comprised the following:
At June 30, | At December 31, | ||||||||
|
| 2023 |
|
| 2022 |
| |||
Gold bullion | $ | | $ | | |||||
Prepaid expenses |
| |
| | |||||
Stream ounces inventory | | | |||||||
Debt issue costs |
| |
| | |||||
$ | | $ | |
2023 Second Quarter Financial Statements | 9 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2023 and 2022
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 7 - Royalty, Stream and Working Interests
(a) | Royalty, Stream and Working Interests |
Royalty, stream and working interests, net of accumulated depletion and impairment charges and reversals, comprised the following:
Impairment | ||||||||||||||
Accumulated | (charges) | |||||||||||||
As at June 30, 2023 |
| Cost |
| depletion(1) |
| reversals |
|
| Carrying value |
| ||||
Mining royalties | $ | | $ | ( | $ | — | $ | | ||||||
Streams | | ( | — | | ||||||||||
Energy | | ( | — | | ||||||||||
Advanced | | ( | — | | ||||||||||
Exploration | | ( | — | | ||||||||||
$ | | $ | ( | $ | — | $ | |
1. | Accumulated depletion includes previously recognized impairment charges and reversals. |
Impairments | ||||||||||||||
Accumulated | (charges) | |||||||||||||
As at December 31, 2022 |
| Cost |
| depletion(1) |
| reversals |
|
| Carrying value |
| ||||
Mining royalties | $ | | $ | ( | $ | — | $ | | ||||||
Streams | | ( | — |
| | |||||||||
Energy | | ( | — |
| | |||||||||
Advanced | | ( | — | | ||||||||||
Exploration | | ( | — | | ||||||||||
$ | | $ | ( | $ | — | $ | |
1. | Accumulated depletion includes previously recognized impairment charges and reversals. |
Changes in royalty, stream and working interests for the periods ended June 30, 2023 and December 31, 2022 were as follows:
Mining | |||||||||||||||||||
| royalties |
| Streams |
| Energy |
| Advanced |
| Exploration |
| Total |
| |||||||
Balance at January 1, 2022 | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Additions |
| | | | | |
| | |||||||||||
Depletion |
| ( |
| ( |
| ( |
| ( |
| — |
| ( | |||||||
Impact of foreign exchange |
| ( |
| — |
| ( |
| ( |
| ( |
| ( | |||||||
Balance at December 31, 2022 | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Balance at January 1, 2023 | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Additions | | | | | | | |||||||||||||
Disposals |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||||
Transfers |
| |
| — |
| — |
| ( |
| — |
| — | |||||||
Depletion |
| ( |
| ( |
| ( |
| ( |
| — |
| ( | |||||||
Impact of foreign exchange |
| |
| ( |
| |
| |
| |
| | |||||||
Balance at June 30, 2023 | $ | | $ | | $ | | $ | | $ | | $ | |
Of the total net book value as at June 30, 2023, $
(b) | Disposal of Royalty Interest |
On February 22, 2023, Marathon exercised its option to buy-back
2023 Second Quarter Financial Statements | 10 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2023 and 2022
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 8 - Other Assets
Other assets comprised the following:
At June 30, | At December 31, | ||||||||
|
| 2023 |
|
| 2022 |
| |||
Deposits related to Canada Revenue Agency ("CRA") audits | $ | | $ | | |||||
Energy well equipment, net | | | |||||||
Right-of-use assets, net |
| |
| | |||||
Debt issue costs | | | |||||||
Furniture and fixtures, net |
| — |
| | |||||
$ | | $ | |
Deposits related to CRA audits represent security paid in cash by the Company in connection with an audit by the CRA of its 2012-2017 taxation years, as referenced in Note 21.
Note 9 – Debt
Corporate Revolver
The Company has a $
2023 Second Quarter Financial Statements | 11 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2023 and 2022
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 10 - Revenue
Revenue classified by commodity, geography and type comprised the following:
For the three months ended | For the six months ended |
| ||||||||||||||
June 30, | June 30, | |||||||||||||||
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| |||||
Commodity | ||||||||||||||||
Gold(1) | $ | | $ | | $ | | $ | | ||||||||
Silver |
| | |
| | | ||||||||||
Platinum group metals(1) |
| | |
| | | ||||||||||
Iron ore(2) | | | | | ||||||||||||
Other mining assets | | | | | ||||||||||||
Mining | $ | | $ | | $ | | $ | | ||||||||
Oil | $ | | $ | | $ | | $ | | ||||||||
Gas | | | | | ||||||||||||
Natural gas liquids | | | | | ||||||||||||
Energy | $ | | $ | | $ | | $ | | ||||||||
$ | | $ | | $ | | $ | | |||||||||
Geography | ||||||||||||||||
South America | $ | | $ | | $ | | $ | | ||||||||
Central America & Mexico | | | | | ||||||||||||
United States |
| | |
| | | ||||||||||
Canada(1)(2) |
| | |
| | | ||||||||||
Rest of World |
| | |
| | | ||||||||||
$ | | $ | | $ | | $ | | |||||||||
Type | ||||||||||||||||
Revenue-based royalties | $ | | $ | | $ | | $ | | ||||||||
Streams(1) |
| |
| |
| |
| | ||||||||
Profit-based royalties |
| |
| |
| |
| | ||||||||
Other(2) |
| |
| |
| |
| | ||||||||
$ | | $ | | $ | | $ | |
1. | For Q2 2023, revenue includes a gain of $ |
2. | For Q2 2023, revenue includes dividend income of $ |
Note 11 - Costs of Sales
Costs of sales, excluding depletion and depreciation, comprised the following:
For the three months ended | For the six months ended |
| ||||||||||||||
June 30, | June 30, | |||||||||||||||
| 2023 |
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||
Costs of stream sales | $ | | $ | | $ | | $ | | ||||||||
Mineral production taxes |
| |
| |
| |
| | ||||||||
Mining costs of sales | $ | | $ | | $ | | $ | | ||||||||
Energy costs of sales |
| |
| |
| |
| | ||||||||
$ | | $ | | $ | | $ | |
2023 Second Quarter Financial Statements | 12 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2023 and 2022
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 12 - Share-Based Compensation Expenses
Share-based compensation expenses comprised the following:
For the three months ended | For the six months ended |
| |||||||||||||
June 30, | June 30, | ||||||||||||||
| 2023 |
| 2022 |
|
| 2023 |
|
| 2022 |
| |||||
Stock options and restricted share units | $ | | $ | | $ | | $ | | |||||||
Deferred share units |
| |
| ( |
| |
| | |||||||
$ | | $ | — | $ | | $ | |
Share-based compensation expenses include expenses related to equity-settled stock options, restricted share units (“RSUs”) and deferred share units (“DSUs”), as well as the mark-to-market gain or loss related to the DSUs.
Note 13 - 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 | For the six months ended |
| |||||||||||||
June 30, | June 30, | ||||||||||||||
| 2023 |
| 2022 |
|
| 2023 |
|
| 2022 |
| |||||
Short-term benefits(1) | $ | | $ | | $ | | $ | | |||||||
Share-based payments(2) |
| |
| |
| |
| | |||||||
$ | | $ | | $ | | $ | |
1. | Includes salary, benefits and short-term accrued incentives/other bonuses earned in the period. |
2. | Represents the expense of stock options and RSUs and mark-to-market charges on DSUs during the period. |
Note 14 - Finance Income and Expenses
Finance income and expenses for the periods ended June 30, 2023 and 2022 were as follows:
For the three months ended | For the six months ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
|
| 2023 |
|
| 2022 |
| 2023 |
|
| 2022 | |||||||
Finance income |
|
| |||||||||||||||
Interest | $ | | $ | | $ | | $ | | |||||||||
$ | | $ | | $ | | $ | | ||||||||||
Finance expenses |
|
| |||||||||||||||
Standby charges | $ | | $ | | $ | | $ | | |||||||||
Amortization of debt issue costs |
| |
| |
| |
| | |||||||||
$ | | $ | | $ | | $ | |
2023 Second Quarter Financial Statements | 13 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2023 and 2022
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 15 - Income Taxes
Income tax expense for the periods ended June 30, 2023 and 2022 was as follows:
For the three months ended | For the six months ended |
| |||||||||||||
June 30, | June 30, |
| |||||||||||||
| 2023 | 2022 |
|
| 2023 |
|
| 2022 |
| ||||||
Current income tax expense | $ | | $ | | $ | | $ | | |||||||
Deferred income tax expense | | | | | |||||||||||
Income tax expense | $ | | $ | | $ | | $ | |
Canada Revenue Agency Audit
The Company is undergoing an audit by the CRA of its 2012-2019 taxation years, as referenced in Note 21.
Global Minimum Tax
Canada, together with approximately 140 other countries comprising the OECD/G20 Inclusive Framework on BEPS (Base Erosion and Profit Shifting), agreed to in principle in 2021, certain base erosion tax initiatives, including the introduction of a 15% global minimum tax (“Pillar Two”) that applies to large multinational enterprise groups with global consolidated revenues over €750 million.
On March 28, 2023, the Government of Canada reaffirmed its intention to implement Pillar Two effective for fiscal years that begin on or after December 31, 2023. Subsequent to the quarter-end, on August 4, 2023, the government released for consultation draft legislation, which is intended to closely follow the detailed model rules, commentary, and administrative guidance agreed to by the Inclusive Framework. Management has been evaluating the Pillar Two proposals, and is reviewing the Canadian draft legislation and assessing the impact to the Company.
If the rules are enacted or substantively enacted, it could result in the Company’s profits being subject to additional taxation.
Note 16 - Shareholders’ Equity
(a) | Share Capital |
The Company’s authorized capital stock includes an unlimited number of common shares (
Changes in share capital for the periods ended June 30, 2023 and December 31, 2022 were as follows:
Number | |||||||
|
| of shares |
|
| Amount |
| |
Balance at January 1, 2022 |
| | $ | | |||
Exercise of stock options | | | |||||
Vesting of restricted share units | | | |||||
Dividend reinvestment plan | | | |||||
Balance at December 31, 2022 | | $ | | ||||
Balance at January 1, 2023 | | $ | | ||||
Exercise of stock options | | | |||||
Dividend reinvestment plan | | | |||||
Balance at June 30, 2023 | | $ | |
2023 Second Quarter Financial Statements | 14 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2023 and 2022
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
(b) | Dividends |
For the three months ended June 30, 2023, the Company declared dividends of $
For the three months ended | For the six months ended |
| |||||||||||||
June 30, | June 30, |
| |||||||||||||
| 2023 |
| 2022 |
|
| 2023 |
|
| 2022 |
| |||||
Cash dividends | $ | | $ | | $ | | $ | | |||||||
DRIP dividends |
| |
| |
| |
| | |||||||
$ | | $ | | $ | | $ | |
Note 17 - Earnings per Share ("EPS")
For the three months ended June 30, |
| ||||||||||||||||||||
2023 | 2022 |
| |||||||||||||||||||
|
| Shares |
| Per Share |
|
| Shares |
| Per Share |
| |||||||||||
Net income | (in millions) | Amount |
| Net income | (in millions) | Amount |
| ||||||||||||||
Basic earnings per share | $ | |
| | $ | | $ | |
| | $ | | |||||||||
Effect of dilutive securities |
| — |
| |
| — |
| — |
| |
| ( | |||||||||
Diluted earnings per share | $ | |
| | $ | | $ | |
| | $ | |
For the six months ended June 30, |
| ||||||||||||||||||||
2023 | 2022 |
| |||||||||||||||||||
|
| Shares |
| Per Share |
|
| Shares |
| Per Share |
| |||||||||||
Net income | (in millions) | Amount |
| Net income | (in millions) | Amount |
| ||||||||||||||
Basic earnings per share | $ | |
| | $ | | $ | |
| | $ | | |||||||||
Effect of dilutive securities |
| — |
| |
| ( |
| — |
| |
| ( | |||||||||
Diluted earnings per share | $ | |
| | $ | | $ | |
| | $ | |
For the three months ended June 30, 2023,
2023 Second Quarter Financial Statements | 15 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2023 and 2022
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 18 - Segment Reporting
The chief operating decision-maker organizes and manages the business under
The Company’s reportable segments for purposes of assessing performance are presented as follows:
For the three months ended June 30, | ||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||
Mining | Energy | Total | Mining | Energy | Total | |||||||||||||||
Revenue | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Expenses | ||||||||||||||||||||
Costs of sales | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Depletion and depreciation | | | | | | | ||||||||||||||
Segment gross profit | $ | | $ | | $ | | $ | | $ | | $ | |
For the six months ended June 30, | ||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||
| Mining |
| Energy |
| Total |
| Mining |
| Energy |
| Total |
| ||||||||
Revenue | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Expenses | ||||||||||||||||||||
Costs of sales | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Depletion and depreciation | | | | | | | ||||||||||||||
Segment gross profit | $ | | $ | | $ | | $ | | $ | | $ | |
A reconciliation of total segment gross profit to consolidated net income before income taxes is presented below:
For the three months ended | For the six months ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||
Total segment gross profit | $ | | $ | | $ | $ | |||||||||||
Other operating expenses (income) | |||||||||||||||||
General and administrative expenses | $ | | $ | | $ | | $ | | |||||||||
Share-based compensation expense | | — | | | |||||||||||||
Gain on sale of royalty interest | — | — | ( | — | |||||||||||||
Gain on sale of gold bullion | ( | ( | ( | ( | |||||||||||||
Depreciation | | | | | |||||||||||||
Foreign exchange gain (loss) and other income (expenses) | ( | | ( | ( | |||||||||||||
Income before finance items and income taxes | $ | | $ | | $ | | $ | | |||||||||
Finance items | |||||||||||||||||
Finance income | $ | | $ | | $ | | $ | | |||||||||
Finance expenses | ( | ( | ( | ( | |||||||||||||
Net income before income taxes | $ | | $ | | $ | | $ | |
2023 Second Quarter Financial Statements | 16 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2023 and 2022
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 19 - 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 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
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 June 30, 2023 | (Level 1) | (Level 2) | (Level 3) | fair value |
| |||||||||
Receivables from provisional concentrate sales | $ | — | $ | | $ | — | $ | | ||||||
Equity investments |
| |
| — |
| |
| | ||||||
Warrants |
| — |
| |
| — |
| | ||||||
$ | | $ | | $ | | $ | |
| Quoted prices in |
| Significant other |
| Significant |
|
|
| ||||||
active markets for | observable | unobservable |
| |||||||||||
| identical assets | inputs | inputs | Aggregate |
| |||||||||
As at December 31, 2022 | (Level 1) | (Level 2) | (Level 3) | fair value |
| |||||||||
Receivables from provisional concentrate sales | $ | — | $ | | $ | — | $ | | ||||||
Equity investments |
| |
| — |
| |
| | ||||||
Warrants |
| — |
| |
| — |
| | ||||||
$ | | $ | | $ | | $ | |
2023 Second Quarter Financial Statements | 17 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2023 and 2022
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
The valuation techniques that are used to measure fair value are as follows:
(a) | Receivables from provisional concentrate sales |
The fair values of receivables arising from gold and platinum group metal concentrate 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.
(b) | Investments |
The fair values of publicly-traded 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 Company holds
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.
The fair values of the Company’s remaining financial assets and liabilities, which include cash and cash equivalents, receivables, accounts payable and accrued liabilities approximate their carrying values due to their short-term nature and historically negligible credit losses.
The Company has not offset financial assets with financial liabilities.
2023 Second Quarter Financial Statements | 18 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2023 and 2022
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 20 - Commitments
(a)Commodity purchase commitments
The following table summarizes the Company’s commitments pursuant to the associated precious metals agreements as at June 30, 2023:
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 |
| — | % | | % (4) | — | % | n/a | | % (5) | n/a |
| 7-Oct-15 | |||||||
Antapaccay |
| — | % (6) | — | % (7) | — | % |
| | % (8) | | % (9) | n/a |
| 10-Feb-16 | |||||
Candelaria |
| | % (10) | | % (10) | — | % | $ | | $ | | n/a |
| 6-Oct-14 | ||||||
Cobre Panama Fixed Payment Stream |
| — | % (11) | — | % (12) | — | % | $ | | (13) | $ | | (14) | n/a |
| 19-Jan-18 | ||||
Cobre Panama Floating Payment Stream | — | % (15) | — | % (16) | — | % | | % (17) | | % (18) | n/a |
| 19-Jan-18 | |||||||
Condestable | — | % (19) | — | % (20) | — | % | | % (21) | | % (22) | n/a |
| 8-Mar-21 | |||||||
Guadalupe-Palmarejo |
| | % | — | % | — | % | $ | | n/a | n/a |
| 2-Oct-14 | |||||||
Karma |
| | % | — | % | — | % |
| | % (23) | n/a | n/a |
| 11-Aug-14 | ||||||
Sabodala |
| — | % (24) | — | % | — | % |
| | % (25) | n/a | n/a |
| 25-Sep-20 | ||||||
MWS |
| | % | — | % | — | % | $ | | n/a | n/a |
| (26) | 2-Mar-12 | ||||||
Sudbury(27) |
| | % | — | % | | % | $ | | n/a | $ | |
| 15-Jul-08 | ||||||
Tocantinzinho |
| | % (28) | — | % | — | % | | % (29) | n/a | n/a |
| 18-Jul-22 | |||||||
Cooke 4 |
| | % | — | % | — | % | $ | | n/a | n/a |
| 5-Nov-09 |
1 | Subject to an annual inflationary adjustment except for Antamina, Antapaccay, Karma, Guadalupe-Palmarejo, 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 |
5 | Purchase price is |
6 | Gold deliveries are referenced to copper in concentrate shipped with |
7 | Silver deliveries are referenced to copper in concentrate shipped with |
8 | Purchase price is |
9 | Purchase price is |
10 | Percentage decreases to |
11 | Gold deliveries are indexed to copper in concentrate produced from the project. |
12 | Silver deliveries are indexed to copper in concentrate produced from the project. |
13 | After |
14 | After |
15 | Gold deliveries are indexed to copper in concentrate produced from the project. |
16 | Silver deliveries are indexed to copper in concentrate produced from the project. |
17 | After |
18 | After |
19 | Gold deliveries are fixed at |
20 | Silver deliveries are fixed at |
21 | Purchase price is |
22 | Purchase price is |
23 | Purchase price is |
24 | Based on amended agreement with an effective date of September 1, 2020, gold deliveries are fixed at |
25 | Purchase price is |
26 | Agreement is capped at |
2023 Second Quarter Financial Statements | 19 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2023 and 2022
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
27 | The Company is committed to purchase |
28 | Percentage decreases to |
29 | Purchase price is |
(b)Capital commitments
As at June 30, 2023, the Company has the following capital commitments: (i) $
The Company also has commitments for contingent payments in relation to various royalty agreements, as follows: (i) $
Note 21 - Contingencies
Canada Revenue Agency Audit
The CRA is conducting an audit for Franco-Nevada for the 2012-2019 taxation years.
Settlement of Domestic and FAPI Reassessments
In prior years, certain wholly-owned Canadian subsidiaries of the Company received Notices of Reassessment for the 2014 through 2017 taxation years (the “Domestic Reassessments”) in which the CRA increased income by adjusting the timing of the deduction of the upfront payments which were made in connection with precious metal stream agreements. This resulted in the Company being subject to an incremental payment of Federal and provincial income taxes for these years of $
In addition, in a prior year, the Company received Notices of Reassessment for the 2012 and 2013 taxation years (the “FAPI Reassessments”) in relation to its Barbadian subsidiary. The FAPI Reassessments asserted that a majority of the income relating to precious metal streams earned by the Barbadian subsidiary, in those years, should have been included in the income of its Canadian parent company and subject to tax in Canada as Foreign Accrual Property Income (“FAPI”). The CRA noted that its position may not extend beyond the 2013 taxation year. The FAPI Reassessments resulted in additional Federal and provincial income taxes of $
On April 28, 2023, the Company reached a settlement with the CRA in respect of the Domestic and FAPI Reassessments, which provide for these reassessments to be vacated entirely on a without-cost basis. Under the settlement, the CRA accepts the manner in which the Company deducts upfront payments made in connection with precious metal stream agreements for Canadian tax purposes. This would result in no FAPI in 2012 and 2013 as computed under Canadian tax law. While the settlement of the Domestic Reassessment only addresses the taxation years that were reassessed (2014-2017), the Company’s expectation is that the manner in which it deducts upfront payments made in connection with precious metal stream agreements for Canadian tax purposes will now be accepted by the CRA for the subsequent years.
The Company had posted security in cash for
2023 Second Quarter Financial Statements | 20 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2023 and 2022
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Transfer Pricing Reassessments
The Company has received reassessments from the CRA made on the basis of the transfer pricing provisions in the Income Tax Act (Canada) (the “Act”). The following table provides a summary of the CRA audit and reassessment matters further detailed below:
CRA Position | Taxation Years Reassessed | Potential Exposure for Tax, Interest and Penalties (in millions) | |
Transfer Pricing (Mexico) | Transfer pricing provisions in the Act apply such that a majority of the income earned by the Company’s Mexican subsidiary should be included in the income of the Company and subject to tax in Canada. | 2013, 2014, 2015, 2016 | For 2013-2016: Tax: $ Transfer pricing penalties: $ Interest and other penalties: $ The amounts set forth above do not include any potential relief under the Canada-Mexico tax treaty. The Company’s Mexican subsidiary ceased operations after 2016 and no reassessments for this issue are expected for subsequent years. |
Transfer Pricing (Barbados) | Transfer pricing provisions in the Act apply such that a majority of the income relating to certain precious metal streams earned by the Company’s Barbadian subsidiary should be included in the income of the Company and subject to tax in Canada. | 2014, 2015, 2016, 2017 | For 2014-2017: Tax: $ Transfer pricing penalties: $ Interest and other penalties: $ If the CRA were to reassess the 2018-2022 taxation years on the same basis: Tax: $ Transfer pricing penalties: $ Interest and other penalties: $ |
(a) | Mexico (2013-2016) |
In December 2018 and December 2019, the Company received Notices of Reassessment from the CRA for the 2013 taxation year (the “2013 Reassessment”) and for the 2014 and 2015 taxation years (the “2014 and 2015 Reassessments”, collectively with the 2013 Reassessment, the “2013-2015 Reassessments”) in relation to its Mexican subsidiary. The reassessments were made on the basis of the transfer pricing provisions in the Act and assert that a majority of the income earned by the Mexican subsidiary should have been included in the income of the Company and subject to tax in Canada. The 2013-2015 Reassessments result in additional Federal and provincial income taxes of $
In December 2020, the CRA issued revised 2013-2015 Reassessments to include transfer pricing penalties of $
In December 2021, the Company received a Notice of Reassessment for the 2016 taxation year (the “2016 Reassessment”) on the same basis as the 2013-2015 Reassessments, resulting in additional Federal and provincial income taxes of $
The 2016 Reassessment did not include transfer pricing penalties which are currently under review. If the CRA were to apply transfer pricing penalties, the Company estimates that the amount would be approximately $
2023 Second Quarter Financial Statements | 21 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2023 and 2022
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
has posted security in the form of cash for
For taxation years 2013 through 2016, the Company’s Mexican subsidiary paid a total of $
(b) | Barbados (2014-2017) |
The 2014 and 2015 Reassessments also reassess the Company in relation to its Barbadian subsidiary. The reassessments were made on the basis of the transfer pricing provisions in the Act and assert that a majority of the income relating to certain precious metal streams earned by the Barbadian subsidiary should have been included in the income of the Company and subject to tax in Canada, resulting in additional Federal and provincial income taxes of $
As noted above, in December 2020, the CRA issued revised 2014 and 2015 Reassessments to include transfer pricing penalties of $
In December 2021, the Company received the 2016 Reassessment as well as a Notice of Reassessment for the 2017 taxation year (the “2017 Reassessment”, collectively with the 2016 Reassessment, the “2016 and 2017 Reassessments”) that reassess the Company in relation to its Barbadian subsidiary on the same basis as the 2014 and 2015 Reassessments, resulting in additional Federal and provincial income taxes of $
If the CRA were to reassess the Company for taxation years 2018 through 2022 on the same basis and continue to apply transfer pricing penalties, the Company estimates that it would be subject to additional Canadian tax for these years of approximately $
Management believes that the Company and its subsidiaries have filed all tax returns and paid all applicable taxes in compliance with Canadian and applicable foreign tax laws and, as a result, no liabilities have been recorded in the financial statements of the Company for the Transfer Pricing Reassessments, or for any potential tax exposure that may arise in respect of these matters. The Company does not believe that the Transfer Pricing Reassessments are supported by Canadian tax law and jurisprudence and intends to vigorously defend its tax filing positions.
The CRA audit is ongoing and there can be no assurance that the CRA will not further challenge the manner in which the Company or any of its subsidiaries has filed its tax returns and reported its income. In the event that the CRA successfully challenges the manner in which the Company or a subsidiary has filed its tax returns and reported its income, this could potentially result in additional income taxes, penalties and interest, which could have a material adverse effect on the Company.
2023 Second Quarter Financial Statements | 22 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2023 and 2022
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 22 – Subsequent Events
Acquisitions and Other Transactions
Subsequent to quarter-end, the Company completed the following transactions:
● | Agreement to acquire a sliding-scale gold royalty and fixed-rate copper royalty on the Pascua-Lama project for $ |
● | Acquisition of a |
● | Share subscription with Marathon of $ |
● | Share subscription with Gold Candle of $ |
Please refer to the respective notes for further details.
2023 Second Quarter Financial Statements | 23 |