EPS 2012 A 2013 E 2014 E FY - Swiss Resource Capital AG · Fiscal Year end Decemeber 31 NAV US$/sh P/NAV LT Gold: Price Deck: Spot Gold: EPS 2012 A 2013 E 2014 E Q1 0.31 A 0.28 A

Please see Disclosures and Disclaimers at the end of this report. A division of Dundee Securities Ltd.

Dundee Capital Markets is a registered trademark of Dundee Corporation, used under license.

Franco-Nevada Corp. (FNV-T: C$43.35) November 21, 2013

BUY, Medium Risk

Dundee target: C$50.00

Chris Lichtenheldt, CFA / (647) 253-1128 [email protected]

Scott Morrison / (416) 350-3392 [email protected]

Premium performance comes with a premium price

Gold-focused royalty and streaming company…

Franco-Nevada (“Franco”) is a gold-focused royalty and streaming company listed on the TSX and NYSE under "FNV", with a market capitalization of $6.1 billion. Franco has a portfolio of 369 royalty and streaming agreements, including both producing and non-producing mineral and oil & gas assets, and an industry-leading balance sheet with Q3 2013 working capital of $891MM and no debt.

We view Franco’s portfolio as high-quality, with revenue derived from assets carrying an average cash operating margin of 35% during Q3 2013, and with 94% of Franco’s revenue derived from assets with a cash operating margin of more than 20% (Dundee estimates). Furthermore, we forecast 2013 gold equivalent production of 228kozs could grow by +40% to 328kozs in 2017.

…with a long history of outperformance

Franco IPO'd in December 2007, but also traded publicly for more than 18 years before being acquired by Newmont Mining in early 2002. Both the old Franco and the new company have a track record of consistent outperformance. In 21 of 24 years it has been a publicly-listed company (1984-2001, 2008-2013), Franco has outperformed the gold producers; and in 18 of 24 years, it has outperformed the price of gold. With its insulated cost structure, superior operational diversity, higher margins, and free exploration upside, we expect Franco to continue outperforming the average gold producer over the long-term. Furthermore, with growing production and a dividend yield of 1.7%, we also expect Franco to continue outperforming the price of gold over the long-term.

Franco is expensive relative to producers, but has a superior business model

We estimate Franco trades at a 2014 P/CFPS multiple of 24.3x and a P/NAV multiple of 1.78x (based on spot $1,244/oz gold), reflecting premiums of 137% and 24%, respectively, versus our gold-producer coverage. Franco is not an "inexpensive" stock, but we believe the company has a superior business model and is a suitable investment for investors looking for high-quality exposure to gold prices.

Initiating with a Buy rating and C$50.00 price target

We derive our C$50.00 price target using a 50% weighting applied to our 24x P/CF valuation of C$47.55 and a 50% weighting to our 2.04x P/NAV valuation of C$53.06. Our multiples are based on Franco's historical premiums to the gold producing peers (detailed within). Offering exceptionally high-quality exposure to gold prices, we are initiating coverage of Franco-Nevada with a Buy rating.

FNV: Price/Volume Chart

Source: Factset

Company Description Franco-Nevada is a gold-focused royalty and streaming company. With its 369 royalties and streams, Franco-Nevada offers exceptional geographical and operational diversity and has a long track-record of outperforming gold prices and gold equities.

Recommendation New Last

Rating: BUY -

Target: C$50.00 -

Risk: Medium -

2013 EPS 0.95 -

2014 EPS 0.94 -

Company Data

Price (11/20/13): C$43.35

52-Week Range: C$33.05-58.67

Market Capitalization ($MM): US$6,092

Enterprise Value ($MM): US$5,302

Shares Outstanding - Basic (MM):

Shares Outstanding - Diluted (MM):

2013E Dividend Yield:

Avg Daily Volume (3 Mos) (000s):

Cash ($MM): US$790

Debt ($MM): US$0

Working Capital ($MM): US$891

Fiscal Year end Decemeber 31

NAV US$/sh P/NAV LT Gold:

Price Deck:

Spot Gold:

EPS 2012 A 2013 E 2014 E

Q1 0.31 A 0.28 A 0.22 E

Q2 0.24 A 0.22 A 0.23 E

Q3 0.31 A 0.24 A 0.24 E

Q4 0.32 A 0.23 E 0.24 E

FY 1.19 A 0.95 E 0.94 E

P/E 35.0x 43.7x 44.1x

CFPS 2012 A 2013 E 2014 E

FY 2.22 A 1.92 E 1.92 E

P/CF 18.6x 21.5x 21.6x

All Figures in US$ Unless Otherwise Noted

Source: Bloomberg, Company reports, DCM Estimates

Notes: EPS is adjusted, Avg Volume solely for TSX listing

23.24 1.78x $1244/oz

146.9

157.7

1.7%

811

24.89 1.67x $1325/oz

mailto:[email protected]

mailto:[email protected]

Franco-Nevada November 21, 2013

DUNDEE CAPITAL MARKETS Page | 2

Contents

Executive summary - Expensive, but worth it ...................................................................................................................................3

A history of outperformance ..............................................................................................................................................................8

Company description ......................................................................................................................................................................11

High-quality asset portfolio .............................................................................................................................................................14

Growing production profile and earnings ........................................................................................................................................15

Strong balance sheet ......................................................................................................................................................................17

Comparable valuation .....................................................................................................................................................................18

Valuation: Buy, C$50.00 Price target ..............................................................................................................................................23

Appendix 1 - Key assets .................................................................................................................................................................24

Appendix 2 - Management ..............................................................................................................................................................27

Appendix 3 - Risks ..........................................................................................................................................................................28

Appendix 4 - Asset summary table .................................................................................................................................................31

Appendix 5 - Royalties & Streams explained ..................................................................................................................................33

Note: All price data as of November 20, 2013. Wherever we refer to "spot" gold prices, a price of $1,244/oz was assumed unless otherwise noted.



EXECUTIVE SUMMARY - EXPENSIVE, BUT WORTH IT

Franco-Nevada is a gold focused royalty and streaming company listed on the TSX and NYSE under "FNV", with a market capitalization of $6.1 billion. Franco-Nevada ("Franco") currently has a portfolio of 369 royalty and streaming agreements, including both producing and non-producing mineral and oil and gas assets. The company also has a strong balance sheet with working capital of $891M and no debt as at September 30, 2013.

Growing production from a high-quality asset base

We forecast a gold equivalent production CAGR of 10% from 2013 to 2017, from 228kozs in 2013 to 328kozs by 2017 (lower left). The most significant contributors to this growth are Cobre Panama, and Detour Lake, which more than offset production declines at various other assets. To measure the quality of this production, we look at the cash operating margin of the assets which make up Franco's streaming and royalty agreements. We view Franco's portfolio as relatively high-quality, with 94% of revenue during Q3 2013 derived from assets with an operating margin of more than 20% (lower right).

Production profile (gold equivalent ounces) Q3/13 revenue curve by margin of underlying asset

Notes: See page 13 for detailed footnotes regarding our calculations for the chart on the above right. Source: Company reports, DCM Estimates

Below we outline our key operating and financial forecasts over the 2013-2017 timeframe. Despite our forecast decline in average gold prices in 2014 versus 2013, we forecast EPS and CFPS to be roughly flat as the company grows production. We expect growing production, earnings and cash flow after 2014.

Key operating and financial forecasts: forecast growth in production and earnings (Dundee price deck)

Source: Company reports, DCM Estimates

0

50

100

150

200

250

300

350

400

2013E 2014E 2015E 2016E 2017E

Go

ld E

qu

ivale

nt

Ou

nces (

ko

zs)

GEO Cobre Panama New Prosperity

10% CAGR, excluding New Prosperity

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

0% 20% 40% 60% 80% 100%

Esti

mate

d c

ash

op

era

tin

g m

arg

in

Cumulative revenue

Q3 2013 Q2 2013

US$MM, unless otherwise noted 2013 2014 2015 2016 2017

Revenue $400 $407 $438 $473 $522

Production (gold equivalent ounces - GEO, kozs) 228 232 246 280 328

Franco Guidance - GEO, kozs 215-235

Oil and Gas Revenue $75 $80 $79 $80 $80

Franco Guidance +$65

EBITDA $320 $334 $365 $391 $415

EBITDA Margin (%) 80% 82% 83% 83% 79%

Net Income (adjusted) $143 $142 $157 $164 $176

EPS (diluted, adjusted, US$ per share) $0.95 $0.94 $1.04 $1.09 $1.16

CFPS (diluted, pre-working capital, US$ per share) $1.92 $1.92 $2.10 $2.24 $2.40

NAV (US$ per share) $24.89

Gold-focused royalty/streaming company

94% of Q3 revenue came from assets with cash margins of +20%



Below we outline Dundee's commodity price forecasts. These forecasts drive our financial forecasts within our price target calculation outlined above. However, throughout this report we also present some forecasts based on "spot" gold prices. We note any instances in which spot gold prices have been applied.

Dundee commodity price forecasts

Source: DCM Estimates

As stated earlier, Franco has an extensive portfolio containing nearly 370 assets, therefore providing significant operational diversity. We note, however, the company's 6 largest assets account for 33% of our NAV.

Top 6 assets in portfolio (measured as % of total NAV)


Franco's history - consistent outperformance

Franco has a long track record of exceptional value creation (lower left, page 5). We also looked at this data including the "Old Franco" (full years traded 1984-2001) and then further segmented this track record into three categories: 1) years when gold prices were down, 2) years when gold prices were flat, and 3) years when gold prices were up. Franco has consistently outperformed both the price of gold and the gold equities.

2009A 2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E

Silver (US$/oz) $14.69 $20.23 $35.25 $31.13 $24.17 $22.88 $23.83 $23.00 $22.00

Gold (US$/oz) $972 $1,224 $1,570 $1,668 $1,423 $1,373 $1,430 $1,375 $1,325

Zinc (US$/lb) $0.75 $0.98 $0.99 $0.88 $0.86 $0.90 $1.00 $1.00 $0.90

Lead (US$/lb) $0.78 $0.98 $1.09 $0.93 $0.97 $1.00 $1.00 $1.00 $0.90

Copper (US$/lb) $2.34 $3.42 $4.00 $3.61 $3.24 $3.30 $3.50 $3.50 $2.75

WTI Oil (US$/bbl) $61.77 $79.52 $95.07 $94.14 $99.00 $95.00 $90.00 $90.00 $90.00

Weyburn 11%

Goldstrike 6%

MWS 5%

Stillwater 4%

Detour 4%

Palmarejo 3%

Rest (363 assets plus balance sheet)

67%

Franco has a record of significantly outperforming

Well diversified portfolio with some key assets



Franco-Nevada has consistently outperformed gold producers and the gold price

Notes: 1) "XAU Index" refers to the Philadelphia Gold and Silver Index; 2) "Gold up" is defined as >3%, "Gold flat" is defined as -3 to 3% and "Gold down" is defined as <-3%; 3) The performance chart on the right includes performance from the "Old Franco" which was a public company until acquired by Newmont in 2002; 4) 2013 performance is YTD only, all other years are full calendar years; 5) Within the performance chart on the right, the averages exclude the years 1984-1987 as Franco's performance exceeded 800%. Source: Bloomberg, DCM research.

Relative valuation - Premium, but not as high as it may seem

Franco has historically traded at a significant premium to the gold producers when looking at forward P/CF multiples (lower left). However, this premium is not as significant if we replace the forward estimates with actual results (lower right). In other words, Franco has a better track record of achieving the forecast cash flows than its gold producing peers, which helps to justify the premium.

Historical forward-looking P/CF multiples based on forecasts (L) and based on actual results (R) (2010 to present)

Notes: Charts based on Bloomberg data beginning in 2010. Chart above left based on forward twelve month Bloomberg estimates. Chart above right we replace the forecast cash flows with the actual resulting cash flows. Source: Bloomberg, DCM research

While not as significant as forward estimates make it appear, Franco still trades at a noticeable premium. We believe this premium is warranted as Franco has: 1) no direct capital cost inflation risk, 2) nominal operating cost inflation risk, 3) better operational diversity (operating risk spread across 45 producing mineral assets and 137 oil and gas assets), 4) higher margins and, 5) "free" exploration upside potential.

1

10

100

1000

Ind

exed

to

100 a

t IP

O

New Franco-Nevada XAU Index Gold

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Gold down(9 Years)

Gold flat(6 Years)

Gold up(9 Years)

Avera

ge

pri

ce p

erf

orm

an

ce

New and old Franco Gold XAU Index

6

8

10

12

14

16

18

20

FNV Sr. Golds

7.6x P/CF Premium

6

8

10

12

14

16

18

20

FNV Sr. Golds

5.1x P/CF premium

Premium warranted

Premium is not as high as it looks when actual results are used instead of forecasts



Franco also trades at a premium to its royalty peers Silver Wheaton (SLW-T, Buy, C$29PT) and Royal Gold (RGLD, not covered). We note the premium relative to SLW is 9 points when looking at P/CF, but only about 2 points when looking at EV/EBITDA as Silver Wheaton has net debt totaling $978MM, whereas Franco currently has a net cash position of $790MM. Franco also trades at a premium to our gold producers and silver producers under coverage. We also note Franco's P/CF premium is currently higher than the historical average, as the company underwent a re-rating in early 2012 and has since maintained a higher premium. Franco is not an "inexpensive" stock, but we believe the company has a superior business model, when compared to the producers, and is a suitable investment for investors looking for high-quality exposure to gold.

Comparable tables

Notes: 1) Figures for Royal Gold (not covered) based on Bloomberg consensus estimates; 2) "Gold Producers" and "Silver Producers" based on Dundee's gold and silver equities under coverage. Source: Bloomberg, DCM Estimates

Balance sheet - positioned for opportunistic acquisitions

At the end of Q3 2013, Franco had $790M in cash, $52M in short-term investments, $70M in long-term investments and no debt. With its cash, investments and undrawn credit facility of $500M, we forecast the company has roughly $1.3 billion of available capital (after giving consideration to post-Q3 acquisitions).

We expect the net cash levels to decrease over the coming years as Franco makes payments on Cobre Panama (assuming the deal structure is unchanged after First Quantum's review of the project). Furthermore, while we expect the company would need to dip into a net-debt position to fund its share of Taseko's New Prosperity project, we currently exclude New Prosperity from our forecasts due to permitting challenges that we believe could halt advancement for the foreseeable future.

With this strong balance sheet, we believe Franco will continue to add to its portfolio. Management's strategy is to invest at the bottom of the cycle in long-life assets with exploration upside. While the large deals, such as the $1 billion Cobre Panama stream, garner the most attention from the market, it is often the smaller, less scrutinized deals that ultimately drive the most value-creation over the long-term. For example, a $3MM investment in Goldstrike has resulted in more than $700M of royalties paid to-date; and a $2MM loan led to a 2% NSR royalty on Detour Lake, that we now value at $148MM. We expect Franco to continue to opportunistically deploy capital in smaller transactions ($0-75MM), which could continue to create value over the long-term.

Company Target

Price

Share Price P/NAV at

Deck(1)(2)(3)

P/NAV Spot (1)(3)(5)

EV/EBITDA

at deck

(CY)

(C$) (C$) 2013E 2014E 2013E 2014E 2014E 3 Month YTD 2 Year 5 Year

Franco-Nevada (FNV CN) Buy $50.00 $43.35 24.89 1.67x 1.78x 21.5x 21.6x 22.0x 24.3x 15.9x -11.3% -23.7% 3.5% 201.7%

Silver Wheaton (SLW CN) Buy $29.00 $21.85 16.82 1.24x 1.48x 13.5x 12.5x 13.9x 14.8x 13.9x -22.9% -39.1% -34.3% 542.6%

Royal Gold (RGLD US)* na N/R $46.24 na na na 16.2x 13.1x 16.2x 13.1x 8.3x -25.8% -43.2% -39.5% 55.8%

Gold Producers (avg) na na na na 1.02x 1.44x 8.8x 8.1x 9.1x 10.2x 6.8x -26.3% -49.9% -56.2% 112.8%

Silver Producers (avg) na na na na 1.18x 1.83x 8.6x 11.2x 9.1x 15.6x 10.1x -22.2% -37.0% -41.2% 334.4%

Notes: Royal Gold numbers are based on consensusSource: DCM Estimates, Bloomberg

(1) NAV is based on 5% discount rate

(2) Calculated at price deck gold forecasts: 2013=$1,423/oz, 2014=$1,373/oz, 2015=$1,430/oz, 2016=$1,375/oz long-term=$1,325/oz.

(3) P/NAV adjusted at spot FX rates.

(4) Ratios equal to or less than 0 or greater than 100 are not displayed

(5) Spot silver and gold prices, forward curve base metals, spot fx

Rating NAV at

Price

Deck(2) (3)

P/CF at Deck

(CY)(2)(4)

P/CF at Spot

(CY)(4)(5)

Share price performance in percentage

Cobre Panama payments of $1bln over next few years

Franco also trades at a premium to SLW and RGLD

We expect additional acquisitions



Cash flow and balance sheet movements based on spot gold (sensitivities dashed)

Note: We assume only 94% of production if gold were at $1,100/oz, in line with our margin analysis (see page 13), based on spot gold of $1,244, other than sensitivities. Source: DCM Estimates, company reports

Dividend - currently yielding 1.7%

Based on the company's quarterly dividend of US$0.18/share, we forecast FNV shares are currently yielding approximately 1.7%. Based on spot gold prices for the remainder of the year, we forecast the 2013 payout ratio (measured as cash dividends as a percentage of cash flow from operations) will be 38%, which we believe is sustainable.

Buy rating and C$50.00 Price Target

We derive our C$50.00 price target using a 50% weighting applied to our 24x P/CF valuation of $47.55 and a 50% weighting to our 2.04x P/NAV valuation of C$53.06. Offering exceptionally high-quality exposure to gold prices, we rate FNV Buy.

Our 24x P/CF multiple is based on Franco's 2-year average P/CF premium to the producers of 10.7 points, plus our current target multiple for the gold producers of 13.0x. To arrive at our blended P/NAV multiple of 2.04x, we apply a 3.0x P/NAV multiple to the gold assets and a 1.0x P/NAV multiple to all other assets. Our 3.0x multiple on the gold assets is based on Franco's 2-year P/CF multiple premium to the producers, in percentage terms, of roughly 130%. We apply this 130% premium to our current median target P/NAV multiple for gold producers of 1.3x. We believe Franco's historical P/CF premium is a good proxy for a target P/NAV premium as both metrics are ultimately based on cash flows.

Price Target Buildup: C$50.00 price target and Buy rating


End of executive summary

-600

-400

-200

0

200

400

600

800

1,000

1,200

Operating cash flow Investing cash flow Financing cash flow

Net cash Gold at $1,500 per oz flat Gold at $1,100 per oz flat

Multiple NPV FTM CFPS Target Weighting Total

P/NAV (Precious metals), 5% discount rate 3.00x C$13.52 C$40.57

P/NAV (oil/gas+base metals), 8% discount rate 1.00x C$6.16 C$6.16

Balance sheet items 1.00x C$6.33 C$6.33

Total 2.04x C$26.02 C$53.06 50% C$26.53

P/CF 24.0x C$1.98 C$47.55 50% C$23.77

C$ Price Target (rounded to nearest dollar) C$50.00

2013 payout ratio of 38%

Positive net cash under various gold price assumptions

Blended P/CF, P/NAV methodology



A HISTORY OF OUTPERFORMANCE

Can Franco-Nevada's outperformance continue?

Franco-Nevada has a long track record of exceptional value creation. In the charts below we illustrate Franco's performance relative to the Philadelphia Gold and Silver Index ("XAU") and to the price of gold. We show performance of both the "Old Franco" (prior to being acquired by Newmont in 2002) and the new Franco-Nevada Corporation which was spun out of Newmont in December 2007. The "Old Franco" included a number of the same executives as the new Franco, most notably Pierre Lassonde (now Chairman) and David Harquail (now CEO).

Both the Old and New Franco-Nevada consistently outperform gold producers and the gold price

Note: "Old Franco" indexed to 100 in 1990; from 1985 to 1990 Old Franco's share priced increased more than 1000%, so we had to re-index the chart in 1990 just so the other lines didn't appear perfectly flat. Source: Bloomberg

Given the impressiveness of this long-running record of outperformance, we further dissected this track record looking for circumstances under which Franco underperformed its peers, or the price of gold. We segmented each year of Franco's existence into one of three categories: 1) gold prices down (<-3%), 2) gold prices flat (-3% to +3%), and 3) gold prices up (>+3%). As it turns out, Franco consistently outperformed both the price of gold and gold equities, illustrating that Franco in fact offers better gold leverage in the long-term.

Franco has tended to outperform no matter the direction of gold (averages shown)

Notes: 1) "Gold up" is defined as >3%, "Gold flat" is defined as -3 to 3% and "Gold down" is defined as <-3%, years used are 1988-2001, and 2008-2013. 2) Averages exclude the years 1984-1987 as Franco's performance exceeded 800% over that period. Source: Bloomberg

1

10

100

1000

Franco-Nevada XAU Index Gold

Old Franco

1

10

100

1000

Ind

exed

to

100 a

t IP

O

New Franco-Nevada XAU Index Gold

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Gold down(9 Years)

Gold flat(6 Years)

Gold up(9 Years)

Avera

ge

pri

ce p

erf

orm

an

ce

New and old Franco Gold XAU Index

FNV tends to outperform no matter the direction of gold prices



We acknowledge that future performance will not necessarily mimic past performance, but instead is based on the fundamentals going forward (mine-lives, quality of deals, asset quality, exploration success, balance sheet strength etc.). Nevertheless, the charts in this section clearly demonstrate a strong business model with a proven track-record. Franco appears to have established a business model capable of consistently outperforming its producing peers over the long-term.

How does the market perceive Franco's deals following announcement?

As is the case with any company possessing a strong balance sheet (see page 17 for more detail on the balance sheet), there is always a risk the company elects to deploy its capital in investments that the market believes carry an insufficient return on capital, or unfavorable risk profile, or both. In order to gauge Franco's track-record for engaging in deals that satisfy the market (at least initially), we looked at Franco's share price performance in the 10 trading days following the announcement of several transactions over the past few years (note we focused on transactions for which there was a separate press release). Franco outperformed both the gold equities and the price of gold.

Relative performance 10 days following deal announcement

Source: Factset, Company reports

Management has acknowledged that Franco's deals can often appear 'fully-valued' as management is willing to pay a full price if they view promising exploration potential. To measure the long-term success of Franco's acquisition strategy, we again point to the company's long-term track-record of outperformance detailed previously.

How do we perceive Franco's deals?

In order to answer this question we calculated the IRR on two of Franco's recent deals under various commodity price assumptions.

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

Midas Gold(May 2013

$15M)

Lake Shore(Feb 2012

$35M)

Kirkland(Oct 2013

$50M)

Weyburn(Jan 2012

$55M)

Lumina(Sept 2011

$66M)

Weyburn(Nov 2012

$400M)

Gold Wheaton(Dec 2010

$830M)

Cobre Panama(Aug 2012$1,000M)

Franco Gold XAU Index

The market's reception to Franco's deals are mixed initially…

…but favourable over the long-term



Cobre Panama estimated IRR's Kirkland Lake estimated IRR's

Notes: 1) DCM commodity price forecasts are shown on page 4; 2) Spot prices include $1,244/oz gold; 3) Consensus prices taken from Bloomberg; 4) Spot prices the day of the announcement include $1,620/oz and $1,345/oz gold for Cobre Panama and Kirkland Lake, respectively. Source: DCM estimates, Bloomberg, Company reports.

Based on long-term consensus commodity prices at the time of the transaction, both deals appeared to offer an IRR 8% or higher. However, assuming today's spot gold prices, the Cobre Panama deal appears less attractive as we calculate an IRR of 4%. We believe the minimum expectation is that a deal appear accretive under reasonable commodity price assumptions at the time of the announcement (i.e. spot prices or long-term consensus prices at the time of the deal). However, for a resource company to create significant value for the long-term investor, deals ideally need to be entered into at (or near) the bottom of the cycle. With the benefit of hindsight, we know the Cobre Panama deal was not entered into at the bottom, but given the exceptionally long-life of the asset (+40 years) the ultimate return will be determined over coming decades.

5.0%

4.0%5.0%

8.0% 8.5%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

DCM Price Deck Current Spot Consensus LTprices

Spot prices dayof announcement

Consensus LTprices day of

announcement

10.7% 9.9% 10.5%10.7% 11.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

DCM Price Deck Current Spot Consensus LTprices

Spot prices dayof

announcement

Consensus LTprices day of

announcement

Cobre Panama deal looked better under gold prices at the time



COMPANY DESCRIPTION

Franco-Nevada is a gold focused royalty and streaming company listed on the TSX and NYSE under "FNV", with a market capitalization of $6.1 billion. Franco-Nevada ("Franco" hereafter) currently has a portfolio of 369 royalty and streaming agreements including both producing and non-producing mineral assets and producing oil & gas assets. As at the end of Q3 2013, the company had working capital of $891M and no debt. In addition to its gold and energy assets, Franco also holds interests in platinum group metals and other resources. Below we elaborate on Franco's business mix.

~78% of 2013 revenue from precious metals

On November 13, 2012, Franco purchased an additional 11.71% NRI in the Weyburn oil unit, operated by Cenovus. With this added oil exposure, we expect the company to generate roughly 19% of 2013E revenue from oil & gas. We expect the oil division's contribution to Franco's consolidated revenue to decrease over the next few years as gold revenue increases. We forecast oil & gas revenue, as a percentage of total revenue, to decline to roughly 15% by 2017 as Franco's gold stream with Cobre Panama ramps-up. Once fully ramped-up, we believe Cobre Panama could amount to roughly 20% of consolidated revenue.

2013E Revenue breakdown by type 2017E Revenue breakdown by type


Panama to grow from 0% to 30% of NAV

With respect to NAV breakdown, Franco offers an attractive political risk profile with nearly 75% of the company's NAV located in jurisdictions considered to be of lower political risk (Canada, U.S., Mexico, Australia). We note the NAV breakdown on the lower left includes our current carrying value of roughly zero for Cobre Panama. This is due to the fact Franco's $1 billion of outstanding payments completely offsets the value we carry for all future revenues from the asset (based on our long-term gold price of $1,325/oz and discount of 5%). As Franco makes its $1 billion in payments to First Quantum, our NPV for the Cobre Panama stream approaches $1 billion, at which point 30% of our NAV will be situated in Panama, as shown in the following chart on the lower right.

78%

3%

19%

Precious metals Base Metals Oil and Gas

80%

5%

15%

Precious metals Base Metals Oil and Gas

$6.1Bln gold-focused royalty company

~78% precious metal revenue, rest oil & gas and base metals



Current NAV breakdown Q1 2017 NAV breakdown - Cobre Panama grows to 30% of NAV


We note that Panama ranks in the lowest quartile of the Fraser Institute's "Policy Potential Index" (PPI), which serves to dilute the quality of Franco's portfolio. However, in 2017 we still forecast roughly 50% of Franco's NAV will come from USA, Canada, Mexico and Australia combined.

66% of assets have +10 year lives; majority of NAV from producing assets

Based on current reserves combined with our forecast for current resource conversion at the mines, we calculate an average mine life of roughly 21 years for Franco (weighted by NAV), with 66% of the company's assets carrying a mine life of more than 10 years. Based on the normal course of mine depletion, we forecast that by the end of 2016, a smaller number of Franco's assets will fall into the +20 year category, however this trend may be offset by continued exploration success.

2013 asset life estimate - producing End of 2016 asset life estimate - producing

Note: Weyburn has a life of 37+ years, which significantly increases the weighted average mine life of 21 years stated above. Source: Company reports, DCM Estimates

As is true with every mining company, Franco needs to establish a pipeline of exploration and development stage assets that will someday replace the revenue from existing assets. In order to address this need, Franco has royalty agreements on more than 27,000 square kilometers over properties that are either in exploration or advanced development. While it is difficult to predict if/when, and to what degree, these properties may ultimately generate returns for Franco, with more than 27,000 square kilometers of land contained in 154

38%

27%

5%

4%0%

2%

10%

15%Canada

USA

Mexico

Australia

Panama

Mauritania

Exploration

Other

27%

19%

1%2%

30%

2%8%

11% Canada

USA

Mexico

Australia

Panama

Mauritania

Exploration

Other

34%

22%

29%

15%

<10 yrs 10-15 yrs 15-20 yrs 20+ yrs

44%

37%

10%

10%

<10 yrs 10-15 yrs 15-20 yrs 20+ yrs

50% of NAV to come from politically stable jurisdictions

Project pipeline can offset production declines over the long-term



different exploration assets, the odds are favourable that some of these properties will ultimately move into production. During a recent presentation, David Harquail (CEO) stated he believed 1 in 20 early stage properties can ultimately become 'big wins'.

Land positioning by development stage - in km2 Current NAV broken down by stage of development

Note: Exploration and producing oil and gas land packages combined amount to a total land position of 6,241km2; for the sake of the above chart we assumed each oil and gas land claim is the same size. Source: Company reports

Measured in kilometers square, the majority of Franco's land package consists of non-producing assets; however the majority of our value is naturally attributed to producing assets. Moreover, the majority of the 21% attributable to development value is comprised of Cobre Panama, Rosemont and Agi Dagi - all of which are near-production assets (with Agi Dagi and Rosemont still needing permits).

As stated earlier, Franco has an extensive portfolio containing nearly 370 assets, therefore providing significant operational diversity. We note, however, the company's 6 largest assets account for 33% of our NAV.

Top 6 assets in portfolio (measured as % of total NAV)


11,380

2,943

19,672

2,879

3,362

Producing mineral Advanced mineral

Exploration mineral Producing Oil and gas

Exploration oil and gas

79%

21%

Operating Development

Weyburn 11%

Goldstrike 6%

MWS 5%

Stillwater 4%

Detour 4%

Palmarejo 3%

Rest (363 assets plus balance sheet)

67%

Well diversified portfolio with some key assets



HIGH-QUALITY ASSET PORTFOLIO

We look at the operating margin of Franco's counterparties

When it comes to judging asset-quality for producing companies, we would typically look at cash outlays at the various operating mines to determine the health and resiliency of the cash operating margin. In the case of Franco's asset portfolio, the margins Franco realizes are high (~80% EBITDA margins), but do not help us gauge the 'break-even' commodity price at which the underlying asset would no longer generate operating cash and, in turn, be at risk of closure.

Therefore, in order to assess the health of the underlying assets that ultimately drive Franco's cash flows, we have constructed a production curve which illustrates the cash operating margin of the underlying assets that make up Franco's royalty portfolio. Unfortunately, due to disclosure limitations at the various assets, we were unable to compile "all-in sustaining costs"; however, we believe cash operating costs are still useful as they represent the majority of the costs required to operate a mine over the short and medium term.

For example, when looking at the below chart, in the most recently reported quarter (Q3 2013), Franco's revenue was derived from assets with an average cash operating margin of 35%, and 94% of Franco’s revenue was derived from assets with a cash operating margin of more than 20%. In the quarter prior (Q2 2013), margins were slightly higher on average due to the drop in average gold prices from $1,420/oz in Q2 to $1,330/oz in Q3.

We believe this margin curve analysis can also be useful in determining the potential 'shut-down' point for various portions of Franco's revenue stream. For example, if we look at the line representing Q3 2013, we can approximate that if gold prices were to drop 20% (i.e. from the average price of $1,330/oz in Q3 to $1,064/oz) roughly 6% of Franco's revenue would be at risk as it would be coming from assets that are no longer generating operating cash.

Q3/13 revenue curve by margin of underlying asset

Notes: 1) To construct the curve we used the disclosed cash cost figure from the operator in all cases where such disclosure was available. If cash cost disclosure was not available, we used the disclosed EBITDA margin for the consolidated division in which that particular asset resides. For example, costs for the Sudbury assets are based on KGHM's international EBITDA (or adjusted EBITDA if EBITDA not available) 2) For Franco’s streams and/or royalties that are grouped into the “other” category, or in which cases data was unavailable (which together total 9% of Franco’s consolidated revenue in Q3 2013), we assumed the operating margins of those various royalties are distributed proportionately over the entire curve. 3) We note this is based on historical figures, and therefore does not forecast the operator's ability to lower costs in the event of a metal price downturn; 4) This curve also excludes "sustaining capital" which may or may not be necessary to sustain operations over a short period of time. Source: company reports, DCM estimates.

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Esti

mate

d c

ash

op

era

tin

g m

arg

in

Cumulative revenue

Q3 2013 Q2 2013

Franco has ~80% EBITDA margins… ...but it's more important to look at the margins of the assets themselves 94% of Franco's revenue comes from assets with +20% cash operating margins in Q3 2013

Average cash operating margin of 35%



Furthermore, based on our model for Cobre Panama, we believe this curve will improve slightly as this project moves into production over the coming years.

Q3/13 estimated margin curve if Cobre Panama were in production

Notes: See notes from the previous figure. Cost estimates for Cobre Panama are based on Dundee Capital Markets model and not necessarily based on company guidance. Source: DCM Estimates, Company reports

GROWING PRODUCTION PROFILE AND EARNINGS

10% production CAGR from 2013 to 2017

Between 2013 and 2017 we expect 10% compound annual growth in "gold-equivalent" production. The most significant contributor to this growth is Cobre Panama which more than offsets production declines at other assets. We note, however, the Cobre Panama project is undergoing a complete review, and therefore forecasts for this project could materially change in the future (we discuss this topic in greater detail in Appendix 1).

If Taseko Mine's New Prosperity project is ultimately permitted and goes into production by 2017, for example, we believe the production CAGR over this same timeframe could be 15%; however we do not include the project in our forecasts given ongoing permitting challenges.

Production profile (gold equivalent ounces) - mining assets

Source: DCM estimates

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Esti

mate

d c

ash

op

era

tin

g m

arg

in

Cummulative revenue

Q3 2013 With Cobre Panama

0

50

100

150

200

250

300

350

400

2013E 2014E 2015E 2016E 2017E

Go

ld E

qu

ivale

nt

Ou

nces (

ko

zs)

GEO Cobre Panama New Prosperity

10% CAGR, excluding New Prosperity

We don't expect the curve to change much when Cobre Panama begins

We exclude new prosperity from our production forecasts



Below we outline our key operating and financial forecasts over the 2013-2017 timeframe. Despite our decline in forecast average gold prices in 2014 versus 2013, we forecast EPS and CFPS will be roughly flat as the company grows production. We expect growing production, earnings and cash flow after 2014.

Key operating and financial forecasts (based on Dundee commodity price forecasts)


Historically more royalties than streams, but this is changing

In terms of gold-equivalent-ounces (GEOs), we forecast roughly 44% of Franco's 2014 production will come from streams and this could grow to roughly 52% by 2017 as Cobre Panama is a streaming agreement. Given streaming-agreements have an ongoing cost per ounce associated with them, we expect Franco's EBITDA margin to decline very slightly over the coming years - however both streams and royalties generally offer high margins when compared to producing assets and, most importantly, are generally not exposed to unexpected increases in costs.

Production breakdown by type


US$MM, unless otherwise noted 2013 2014 2015 2016 2017

Revenue $400 $407 $438 $473 $522

Production (gold equivalent ounces - GEO, kozs) 228 232 246 280 328

Franco Guidance - GEO, kozs 215-235

Oil and Gas Revenue $75 $80 $79 $80 $80

Franco Guidance +$65

EBITDA $320 $334 $365 $391 $415

EBITDA Margin (%) 80% 82% 83% 83% 79%

Net Income (adjusted) $143 $142 $157 $164 $176

EPS (diluted, adjusted, US$ per share) $0.95 $0.94 $1.04 $1.09 $1.16

CFPS (diluted, pre-working capital, US$ per share) $1.92 $1.92 $2.10 $2.24 $2.40

NAV (US$ per share) $24.89

0

50

100

150

200

250

300

350

2013E 2014E 2015E 2016E 2017E

Go

ld E

qu

ivale

nt

Ou

nces (

ko

zs)

Royalty ounces Stream ounces

Cobre Panama will increase the amount of gold from "streams"



STRONG BALANCE SHEET

$891M working cap and no "debt" - but $1bln owing to First Quantum

As of the end of Q3 2013, Franco had $790M in cash, $52M in short-term investments and another $70M in long-term investments. Franco's total working capital amounted to $891M and the company has a further $500M in undrawn credit and no debt on the balance sheet. Altogether, Franco currently has access to roughly $1.3 billion of available capital (including Q4 transactions up to November 21st). While we expect Franco's balance sheet to remain relatively strong, we expect the net cash levels to decrease over the coming years as the company makes its Cobre Panama payments.

Based on the current deal structure, Franco would be making its initial $100M payment on Cobre Panama either in late 2013 or early 2014 and we forecast the total agreed payments of $1 billion would be made by the end of Q2 2016. However, on its Q3 2013 results conference call, management indicated they would not be making payments until after First Quantum's full review of the project has been completed (expected by the end of 2013). Therefore we now model the first payment will occur in Q1 2014. If Taseko Mines receives its permit on the New Prosperity project, Franco would likely make payments totaling $350M over 2015/2016; however given permitting challenges we currently do not include these payments within our forecasts.

Based on the current spot gold price of $1,244/oz, we believe Franco's net cash position could decline from $790MM at the end of Q3 2013 to a low of $188MM in Q2 2016. We do not expect the company to dip into a net-debt position unless the New Prosperity project advances or if the company consumes its cash on transactions or if gold prices drop below $1,100 (or a combination of both). Given Franco's stated desire to remain low/no-debt, we believe the company is unlikely to do large deals at this point in time. Instead, we expect the company to continue engaging in smaller transactions such as the recent $50MM Kirkland Lake royalty acquisition.

Cash flow and balance sheet movements based on spot gold (sensitivities dashed)

Note: We assume only 94% of production if gold were at $1,100/oz, in line with our margin analysis (see page 14) Based on spot gold of $1,244, other than sensitivities. Source: DCM Estimates, company reports

Dividend - current yield of 1.7%

Based on the company's quarterly dividend of US$0.18/share, we forecast FNV shares are currently yielding around 1.7%. Based on spot gold prices for the remainder of the year, we forecast the 2013 payout ratio (measured as cash dividends as a % of cash flow from

-600

-400

-200

0

200

400

600

800

1,000

1,200

Operating cash flow Investing cash flow Financing cash flow

Net cash Gold at $1,500 per oz flat Gold at $1,100 per oz flat

$1.3billion of available capital

Available cash will decrease as payments on Cobre Panama are made

Cash balance could dip further with additional transactions

Strong balance sheet even under $1,100/oz gold



operations) will be 38%. This will represent a significant increase over the 2008-2012 period which ranged from 17-25%. However, even at spot gold prices going forward, we believe the payout ratio will remain below 45%. The payout rate continues to be affordable for Franco and management remains committed to the dividend.

COMPARABLE VALUATION

Franco trades at a significant premium…

Franco has historically traded at a significant premium to its gold producing peers. To illustrate this premium, we outline the average P/CF multiple point difference between Franco and its gold producing peers from the beginning of 2010 (this data is based on Bloomberg consensus forward-twelve-month cash flow per share forecasts.

Consensus FTM P/CF multiple premium (Franco minus average gold producer)

Note: Gold producers used in this analysis include: ABX, G, NEM, K, AEM, IMG, YRI, ELD, NEM and spreads are based on a simple average of these companies. Source: Bloomberg

As can be seen above, this premium gapped higher in early 2012 due to continued disappointments from the gold producers (capex blowouts, production misses etc.) followed by a decline in gold prices, under which Franco's business model is more resilient. The average premium since the start of 2012 has been roughly 10.7 points, which is what we apply within our price target methodology (detailed later in this report).

…but it's not as high as it looks

As noted above, Franco trades at a noticeable premium relative to the gold producers when looking at forward estimates. However, this apparent premium is not nearly as significant when looking at the actual results. In other words, Franco has a better track record for achieving the forecast cash flows than its gold producing peers.

In order to illustrate this difference between the perceived premium and the actual premium, we compared P/CF multiples based on forward looking estimates to P/CF multiples based on the actual results for that period. Specifically, using available Bloomberg data beginning in 2010, we first looked at the forward price to cash flow multiples (i.e. share price divided by forecast cash flows over the coming twelve months). This is a representation of the perceived P/CF multiples for Franco and for the gold producing peer group. When looking at this data, it appears Franco trades at a P/CF multiple of 18.7x vs. the gold producers at 11.1x, or a premium of 7.6 points.

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

FNV-Sr Gold (Spread) 2010-2012 Average Average since 2012

Average 10.7x pts

Average 6.2x pts

FNV underwent a re-rating in 2012

Historically, the P/CF premium appears to be 7.6 points…



P/CF multiples based on forecast cash flows; Franco appears to carry a 7.6 point premium

Notes: "Sr. Golds" includes ABX, G, NEM, K, AEM, IMG, YRI, ELD, NEM. Data differs slightly from above chart as this chart includes different time frames due to data availability. Source: Bloomberg, DCM Estimates

Next, we replace the forecast cash flows for each period of time with the actual cash flows for that period. Here we see that Franco was actually trading at a P/CF multiple of 19x vs. the gold producers of 13.9x, or a multiple point difference of only 5.1x. Again, this is because the gold producers, on average, delivered cash flow per share figures considerably below expectations.

P/CF multiples based on actual cash flows; Franco actually carries a 5.1 point premium

Notes: "Sr. Golds" includes ABX, G, NEM, K, AEM, IMG, YRI, ELD, NEM. Source: Bloomberg, Company reports

Next we summarize the implied premium when looking at forward estimates versus the premium when looking at actual results.

6

8

10

12

14

16

18

20

FNV Sr. Golds

7.6x P/CF Premium

6

8

10

12

14

16

18

20

FNV Sr. Golds

5.1x P/CF premium

… but this premium is only 5.1 points when looking at actual results…



Implied vs. actual FNV valuation premium

Source: Bloomberg, company reports, DCM Estimates

We believe this 5.1 historical multiple point premium for Franco is warranted for the following reasons: 1) no direct capital cost inflation risk, 2) nominal operating cost inflation risk, 3) better operational diversity (operating risk spread across 45 producing mineral assets and 137 oil and gas assets), 4) higher margins and, 5) "free" exploration upside potential (i.e. Franco does not contribute to exploration expenditures, but does benefit from discoveries). We believe this premium is warranted as gold producers, on average, have a relatively poor track record for achieving planned targets, as demonstrated by the above charts.

Franco trades at a premium on most other metrics as well

Due to its strong track record and diversified asset portfolio, Franco trades at a premium to its producing peers (both gold and silver), and Franco also trades at a noticeable premium to Silver Wheaton (SLW, Buy C$29.00PT) and Royal Gold (RGLD, not covered), which are similar to Franco as both are precious metal royalty/streaming companies.

2014E P/CF (based on Dundee price deck) 2014E EV/EBITDA (based on Dundee price deck)

Note: Consensus estimates used for RGLD as the stock is not covered by Dundee Capital Markets. Source: DCM Estimate, Bloomberg

We note the premium relative to SLW is more than 9 points when looking at P/CF, but only about 2 points when looking at EV/EBIDTA. This is mainly due to the fact Silver Wheaton has net debt totaling $978MM, whereas Franco currently has a net cash position of $790MM.

7.6x

5.1x

0

1

2

3

4

5

6

7

8

Implied multiple premium Actual multiple premium

21.6x

13.1x 12.5x11.2x

8.1x

0x

5x

10x

15x

20x

25x

FNV RGLD SLW Silverproducers

Goldproducers

15.9x13.9x

10.1x

8.3x

6.8x

0x

5x

10x

15x

20x

FNV SLW Silverproducers

RGLD Goldproducers

… so Franco has a better track record for achieving results vs. the gold producers

Franco also trades at a premium to the other royalties



P/NAV (based on Dundee price deck) 2014E P/E (based on Dundee price deck)

Note: P/NAV not available for RGLD, P/E for RGLD based on Bloomberg estimates as the stock is not covered by Dundee Capital Markets. Source: DCM Estimates, Bloomberg

When looking at P/NAV, we note Franco trades at a 0.43 multiple point premium to SLW. Both companies have similar business models and both have excellent track records of outperforming the underlying commodity and outperforming their respective producing peers. It is important to recognize, however, that Franco has not always traded at such a significant premium, and in fact traded at a discount to Silver Wheaton prior to 2012.

Franco's FTM P/CF premium over SLW (FNV P/CF minus SLW P/CF)

Note: current spread differs slightly from above chart as this chart is based on Bloomberg data and the above chart is based on DCM estimates. Source: Company reports, Bloomberg, DCM Estimates

We believe this recent valuation gap between Franco and Silver Wheaton exists for three main reasons (in order of significance): 1) the investment community is concerned about Silver Wheaton's ongoing tax audit; 2) Franco has a stronger balance sheet with its net cash position of $790MM versus Silver Wheaton's net debt position of $978MM; and 3) silver's additional volatility relative to gold has deterred some investors.

While we will not go into full details regarding Silver Wheaton's ongoing tax audit within this report, we will summarize the situation by saying we believe the worst-case outcome would be full taxation for Silver Wheaton (albeit we believe this is a low-probability event). However, we note any legislative changes calling for full taxation of SLW would likely impact

1.67x

1.24x1.18x

1.02x

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

FNV SLW Silverproducers

Gold producers

39.8x

23.2x21.4x

17.7x14.4x

0x

5x

10x

15x

20x

25x

30x

35x

40x

45x

FNV RGLD Silverproducers

SLW Goldproducers

-12.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

FNV SLW Spread Average 2010-March 21, 2012 Average since March 22, 2012

Average 6.2 pts

Average -0.5 ptsSLW tax audit becomes known

FNV's premium compared to SLW has expanded over the past couple years…

…we believe this is mainly due to SLW's ongoing tax audit



Franco as well - although to a much lesser degree given Franco has fewer tax-sheltered streaming deals.

Given Franco's premium relative to Silver Wheaton has expanded due to taxation, we believe it is prudent to assess the valuation of both of these companies under a scenario of full taxation. Below we show our forecast "current" and "full-tax" P/NAVs for Franco and Silver Wheaton.

Franco-Nevada premium over Silver Wheaton drops if we assume "full taxation" for both

Note: Based on Dundee price deck, shown on page 15. Source: DCM Estimates, Bloomberg

Our methodology for calculating these "full-tax" scenarios include applying a 26% tax rate to all assets that are currently structured to pay an ongoing tax rate of less than 3% (i.e. tax-sheltered assets). Based on this structure, we expect the impact to Franco's NAV would effectively be zero; we believe this for two reasons: 1) 226 of Franco's 232 mineral agreements are set up as royalties (not "streams"), which are already taxed, and 2) based on the spot gold price of $1,244/oz, the $1 billion of payments on Cobre effectively shelters Franco from tax until year 2029 anyway.

Comparable tables

Notes: Estimates for Royal Gold (not covered) are based on Bloomberg estimates. Source: Bloomberg, DCM Estimates

1.67 1.67

1.24

1.60

0.0x

0.5x

1.0x

1.5x

2.0x

Current Full-tax

P/N

AV

FNV SLW

4% premium

35% premium

Company Target

Price

Share Price P/NAV at

Deck(1)(2)(3)

P/NAV Spot (1)(3)(5)

EV/EBITDA

at deck

(CY)

(C$) (C$) 2013E 2014E 2013E 2014E 2014E 3 Month YTD 2 Year 5 Year

Franco-Nevada (FNV CN) Buy $50.00 $43.35 24.89 1.67x 1.78x 21.5x 21.6x 22.0x 24.3x 15.9x -11.3% -23.7% 3.5% 201.7%

Silver Wheaton (SLW CN) Buy $29.00 $21.85 16.82 1.24x 1.48x 13.5x 12.5x 13.9x 14.8x 13.9x -22.9% -39.1% -34.3% 542.6%

Royal Gold (RGLD US)* na N/R $46.24 na na na 16.2x 13.1x 16.2x 13.1x 8.3x -25.8% -43.2% -39.5% 55.8%

Gold Producers (avg) na na na na 1.02x 1.44x 8.8x 8.1x 9.1x 10.2x 6.8x -26.3% -49.9% -56.2% 112.8%

Silver Producers (avg) na na na na 1.18x 1.83x 8.6x 11.2x 9.1x 15.6x 10.1x -22.2% -37.0% -41.2% 334.4%

Notes: Royal Gold numbers are based on consensusSource: DCM Estimates, Bloomberg

(1) NAV is based on 5% discount rate

(2) Calculated at price deck gold forecasts: 2013=$1,423/oz, 2014=$1,373/oz, 2015=$1,430/oz, 2016=$1,375/oz long-term=$1,325/oz.

(3) P/NAV adjusted at spot FX rates.

(4) Ratios equal to or less than 0 or greater than 100 are not displayed

(5) Spot silver and gold prices, forward curve base metals, spot fx

Rating NAV at

Price

Deck(2) (3)

P/CF at Deck

(CY)(2)(4)

P/CF at Spot

(CY)(4)(5)

Share price performance in percentage

We believe FNV has less tax risk than SLW

Franco has less taxable stream- revenue



VALUATION: BUY, C$50.00 PRICE TARGET

We derive our C$50.00 price target using a 50% weighting applied to our 24x P/CF valuation of C$47.55 and a 50% weighting to our 2.04x P/NAV valuation of C$53.06.

Our 24x P/CF multiple is based on Franco's 2-year average P/CF premium to the producers of 10.7 points, plus our current target multiple for the gold producers of 13.0x. To arrive at our blended P/NAV multiple of 2.04x, we apply a 3.0x P/NAV multiple to the gold assets and a 1.0x P/NAV multiple to all other assets. Our 3.0x multiple on the gold assets is based on Franco's 2-year P/CF multiple premium to the producers, in percentage terms, of roughly 130%. We apply this 130% premium to our current median target P/NAV multiple for gold producers of 1.3x. We believe Franco's historical P/CF premium is a good proxy for a target P/NAV premium as both metrics are ultimately based on cash flows.

Price Target Buildup


Offering exceptionally high-quality exposure to gold prices, we rate Franco-Nevada a Buy.

Multiple NPV FTM CFPS Target Weighting Total

P/NAV (Precious metals), 5% discount rate 3.00x C$13.52 C$40.57

P/NAV (oil/gas+base metals), 8% discount rate 1.00x C$6.16 C$6.16

Balance sheet items 1.00x C$6.33 C$6.33

Total 2.04x C$26.02 C$53.06 50% C$26.53

P/CF 24.0x C$1.98 C$47.55 50% C$23.77

C$ Price Target (rounded to nearest dollar) C$50.00

Blended P/CF, P/NAV methodology



APPENDIX 1 - KEY ASSETS

Cobre Panama – A long life, low cost, expandable asset; but awaiting clarity on plans

Cobre Panama is an open-pit copper project located in Pamana, owned by First Quantum, and is currently in development with initial production expected in 2016. With a current reserve-life of 40 years, Cobre Panama offers substantial leverage to long-term copper prices (for FM shareholders) and gold prices (for FNV shareholders). Based on Dundee forecasts, we believe Cobre Panama will fall in the 1st quartile of the copper cash cost curve once in production, making Cobre Panama an attractive asset.

Franco-Nevada announced a $1 billion streaming deal in August 2012 on Cobre Panama (owned by Inmet at the time). We forecast the deal entitles Franco to an average of 86.1k ounces of gold equivalent over the first 11 years of the project.

Cobre Panama Stream levels

Source: Company reports, Dundee estimates

Unlike most streaming deals, which are based on a percentage of the gold or silver produced at the mine, the precious metal streams in this deal are tied proportionately to production of the primary metal - copper in this case - for the first 31 years of production. This structure provides protection against any disappointments in gold/silver production from the mine, and serves to better align Franco's interests with the natural production incentives the operator has. Other clauses written into the deal that protect Franco shareholders include: 1) Franco's stream is secured by a pledge of First Quantum's interest in MPSA, the project operator, and 2) Franco is entitled to top-up payments if the mill capacity expansion to 240,000 tpd is delayed beyond year 10 (initial capacity is 160,000 tpd).

Potential for changes to the deal's structure?

Following First Quantum's acquisition of Inmet, which closed in April 2013, the Cobre Panama agreement is now between Franco and First Quantum. Based on comments made by Philip Pascall (First Quantum's Chairman), we believe First Quantum would rather not have this deal with Franco. Within a letter addressed to Inmet shareholders dated January 9th 2013, Philip stated "…the streaming transaction announced on August 20, 2012, forward sells the precious metals stream from Cobre Panama, resulting in an unfortunate loss of opportunity and an increase in the cost of copper production."

With its acquisition of Cobre Panama, First Quantum has undertaken a full review of the project in order to maximize its economics. The conclusion of this review is expected before the end of 2013. First Quantum's update on Cobre Panama will be a key issue to watch as it could have implications to Franco's stream. Given First Quantum's statements regarding its distaste for the streaming agreement, we believe it is possible the companies could potentially renegotiate some of the terms of the deal.

Deliver period 1 Delivery period 2 Delivery period 3

~years 1-11 ~years 12-31 ~Beyond original mine plan

Gold

Au Delivered 0 to 808kozs 808kozs to 1,716kozs Greater than 1,716kozs

Delivery terms 120 oz per 1MM lbs Cu 81 oz per 1MM lbs Cu 63.4% of Au in Con.

Silver

Ag delivered 0 to 9,842kozs 9,842 to 29,731kozs Greater than 29,731kozs

Delivery terms 1,376 oz per 1MM lbs Cu 1,776 oz per 1MM lbs Cu 62.1% of Ag in Con.

GoldEq (60:1 ratio)

AuEq delivered 0 to 972kozs 972 to 2,212kozs Greater than 2,212kozs

Delivery terms 143 oz per 1MM lbs Cu 111 oz per 1MM lbs Cu ~63% of AuEq in Con.

Average AuEq delivered (Dundee forecast) 86.1kozs 65kozs

Copper project owned by First Quantum

Average attributable AuEq production of 86kozs over first 10 years

Franco has protection built in to the deal

Frist Quantum views the deal as "unfortunate"

We believe its possible deal terms could be revisited



Franco has not yet made payment on the transaction. Based on the current terms, Franco is set to begin making payments after First Quantum has spent $1 billion on the project. Thereafter, Franco will contribute $1.00 of every $4.00 spent on Cobre Panama until Franco has contributed $1 billion. We expect Franco's payments to begin in early 2014, unless the terms are altered.

New Prosperity - not included in our forecasts, but could add $1.50/share to our NAV

Taseko’s New Prosperity project, located in British Columbia, Canada, is a permitting-stage asset on which Franco holds a streaming agreement. The agreement would see Franco purchase 22% of gold produced for $400/oz. With estimated annual gross production of ~300kozs over the first 5 years, Franco's share would be ~66kozs. The capital payments required by FNV would be $350MM and are only owed if the project is permitted. However, we note permitting of this project is challenged.

Permitting at New Prosperity remains a significant risk for this project as the permit was already denied once in 2010 over environmental concerns. This led to a redesign of the mine which was submitted to the government for review. Most recently, on October 31st 2013, the government panel reviewing the project again declared that New Prosperity will result in significant adverse environmental impacts. On November 5th, Taseko responded with a press release stating the panel had relied upon the wrong design and Taskeo intended to challenge aspects of the panel's findings. The panel's opinion has been submitted to the Federal Minister of the Environment, who has a maximum of 120 days to decide if it will allow the project to proceed. We do not currently ascribe any value to this project within our valuation; however if the permit is granted we believe this could increase our operating NAV by roughly 8.3%, or $1.50/share.

Weyburn - a 50 year operating history with decades to go

Weyburn is a Cenovus operated light/medium oil producing asset located in Saskatchewan. Weyburn is a long-life asset, commencing production in 1963 with current reserves out to 2050 (Dundee forecast). Following several transactions, Franco-Nevada now holds a 0.44% ORR, a 2.26% WI, and an 11.7% net royalty interest (NRI - similar to NPI) on the asset. The 11.7% net royalty interest was added in November 2012 at a cost of C$400MM. Weyburn is now the largest contributor to Franco's Oil & Gas Division.

Weyburn is the most important oil & gas asset

Source: company investor day presentation

We exclude New Prosperity from our forecasts…

…so it could add $1.50/shr to our NAV is permit is granted

FNV's most important oil & gas asset



Over its production history, Weyburn has undergone numerous expansions. Most recently a CO2 Enhanced Oil Recovery (EOR) project was undertaken in the year 2000. The project injected C02 at high pressure, which acts as a solvent to wash oil from between pore spaces in the rock, thereby increasing production. The injection also reduces viscosity so the oil flows more easily and also causes the oil to swell and expand out of spaces.

Weyburn - historical production

Source: Company presentation

The production profile of this asset is expected to peak in 2022, however we believe the asset could undergo another CO2 injection to offset natural production declines. Any such injection could result in a capital call to Franco which we have not yet built into our model given the timing and levels of required capital are uncertain. Therefore, we currently model a production decline after the year 2022 with current reserves depleted in 2050.

Numerous expansions have extended Weyburn's life

Could see another expansion before 2022



APPENDIX 2 - MANAGEMENT

David Harquail, President & CEO - Mr. Harquail has been the President and CEO of Franco-Nevada since its IPO in 2007. Previously Mr. Harquail held senior positions within Newmont and Newmont Capital, including Executive Vice President of Business Development and Exploration, and has worked within the Franco-Nevada group of companies since 1987. He has a degree in geological engineering from The University of Toronto, and an MBA from McGill.

Pierre Lassonde, Chairman - Mr. Lassonde was the president of Newmont Mining from 2002-2006, and previously was the co-founder and co-CEO of the original Franco-Nevada. He served as the Chairman of the World Gold Council, and currently serves as a director. He holds a degree in Electrical Engineering from Ecole Polytechnique and an MBA from The University of Utah, and honorary PhDs from both University of Utah and The University of Toronto.

Sandip Rana, CFO - Mr. Rana joined Franco-Nevada in 2010, prior to this he worked with the Four Seasons Hotel as a Vice-President, Corporate Finance. Additionally, he held treasurer and Controller roles at the original Franco-Nevada through the 1990s and up to 2002. He is a Chartered Accountant, and holds a Bachelor of Business Administration degree from the Schulich School of Business.

Geoff Waterman, COO - Mr. Waterman has a long history of working within Franco-Nevada, Old Franco, and Newmont. His time includes his current role as COO, previously he was VP, Oil and Gas at Newmont Capital, and was VP Oil and Gas at the Old Franco, and was Controller of Old Franco ('92-'99). Prior to this, he was an Auditor from 1988-1992 with Coopers and Lybrand. Mr. Waterman holds a Bachelor's degree in economics from Trent University.

Paul Brink, SVP Business Development - Mr. Brink joined Franco-Nevada in 2006, and has played a significant role in the mergers and acquisitions subsequently entered into by the company. He previously held the role of Director of Corporate Development at Newmont, and additionally was VP, Investment Banking at BMO Nesbitt Burns Inc. He holds a Bachelor's degree in Mechanical Engineering from the University of Witwatersrand and a Master's degree in Management Studies from Oxford.



APPENDIX 3 - RISKS

Mine closures under lower metal prices

While Franco enjoys industry-leading profit margins, the same is not always true for the underlying assets from which Franco derives its revenue. Furthermore, the health of the underlying assets is not apparent by assessing Franco's financials; we must look at the margins of the underlying mines. With the 22% drop in gold prices during 2013, the margins on many of the underlying assets have dropped materially, driving heightened concerns around potential mine closures.

To assess this risk we have constructed a production curve illustrating the cash operating margin of the underlying assets that make up Franco's royalty portfolio. For example, when looking at the below chart, in the most recently reported quarter (Q3 2013), 94% of Franco's reported revenue was derived from assets that had an operating margin of more than 20%.

We believe this margin curve analysis can also be useful in determining the potential 'shut-down' point for various portions of Franco's revenue stream. For example, if we look at the line representing Q3 2013, we can approximate that if gold prices were to drop 20% (i.e. from the average price of $1,330/oz in Q3 to $1,064/oz) roughly 6% of Franco's revenue would be at risk as it would be coming from assets that are no longer generating operating cash. [Notes: due to disclosure limitations, the below chart excludes sustaining capex which could result in a higher break-even gold price. Conversely, this chart is based on historical figures, and therefore does not forecast the operator's ability to lower costs in the event of a further metal-price downturn].

Q3/13 Estimated margin chart for royalties

Notes: 1) to construct the curve, we use the disclosed cash cost figure from the operator in all cases where the disclosure was available. If cash cost disclosure was not available, we used the disclosed EBITDA margin for the consolidated division in which that particular asset resides. For example, costs for the Sudbury assets are based on KGHM's international EBITDA (or adjusted EBITDA if EBITDA not available); 2) For Franco’s streams and/or royalties that are grouped into the “other” category or assets which report on a semi-annual basis (which total 9% of Franco’s consolidated revenue in Q3/Q2 2013), we assumed the operating margins of those various royalties are distributed proportionately over the entire curve; 3) We note this is based on historical figures, and therefore does not forecast the operator's ability to lower costs in the event of a metal-price downturn. Source: company reports, DCM estimates.

7% of our NAV is made up of projects that are not yet permitted

These projects include: Courageous Lake, Goldfields, Agi Dagi, Perama Hill, BruceJack, Golden Meadows, Gurupi, Relincho, Rosemont, and Taca Taca. It is difficult to predict the timing and the outcome of these permitting processes, therefore there is some risk to our

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Esti

mate

d c

ash

op

era

tin

g m

arg

in

Cumulative revenue

Q3 2013 Q2 2013

Margins at underlying assets have dropped

We believe FNV's portfolio is very resilient, but if prices drop materially, so could production and revenue



NAV if these projects fail to obtain permits. The most significant permitting risk is associated with New Prosperity, which we do not include in our NAV at this time.

Uncertainty around Cobre Panama's timeline

Following First Quantum's acquisition of Inmet in March of 2013, First Quantum indicated it would be revisiting development plans for the project sometime before year end 2013. While Franco's capital commitments are fixed at $1 billion, the company could be negatively impacted by any delays in the timing of production.

Other risks as per Franco's disclosure

The below paragraphs are excerpts from Franco's 2012 Annual Information Form. For full detail on these risks please see Franco's 2012 Annual Information Form starting on page 89.

Changes in the market price of the commodities that underlie the royalty, stream working and other interests will affect the profitability of Franco-Nevada and revenue generated therefrom.

The operations of the properties in which Franco-Nevada holds an interest is generally determined by third party property owners and operators, and Franco-Nevada has limited decision making power as to how these properties are operated, and the operators' failure to perform could affect the revenues generated by Franco-Nevada.

Franco-Nevada will have limited access to data and disclosure regarding the operation of properties, which will affect its ability to assess the royalty's/stream's performance.

Franco-Nevada depends on its operators for the calculation of royalty/stream payments. It may not be able to detect errors and payment calculations may call retroactive adjustments.

Several royalties/streams are significant to Franco-Nevada and any adverse development related to these properties will affect the revenue derived from the royalty/stream.

Franco-Nevada is dependent on the payment of royalties/streams by the owners and operators of the relevant properties and any delay in or failure of such royalty/stream payment will affect the revenues generated by the asset portfolio.

Certain royalty/stream interests and working interests are subject to rights in favour of others or third parties that could adversely affect the revenues generated from the asset portfolio.

The asset portfolio includes a number of royalty interests based on net profits, and the revenue derived from such royalty interests is dependent upon factors beyond the control of Franco-Nevada that may have an adverse effect on the overall revenues generated by the asset portfolio.

Franco-Nevada may enter into acquisitions or other material royalty or streaming transactions at any time.

Franco-Nevada may experience difficulty attracting and retaining qualified management and technical personnel to efficiently operate its business.

Increased competition for the royalty/stream interests and resource investments could adversely affect Franco-Nevada's ability to acquire additional royalties, streams and other investments in mineral and oil and natural gas properties.

Royalty/stream and other interests may not be honoured by operators of a project.

There may be unknown defects in the asset portfolio.

Current global financial conditions continue to be challenging.

Cobre Panama timeline/forecasts could change



Franco-Nevada's revenue, earnings, the value of its treasury and the value it records for its assets are subject to variations in foreign exchange rates, which may adversely affect the revenue generated by the asset portfolio or cause adjustments to the recorded value of assets.

The ability to pay dividends will be dependent on the financial condition of Franco-Nevada.

Certain of Franco-Nevada's directors and officers serve in similar positions with other public companies, which could put them in a conflict position from time to time.

Franco-Nevada can provide no assurance that it will be able to obtain adequate financing in the future or that the terms of such financing will be favourable and Franco-Nevada may have to raise additional capital through the issuance of additional equity, which could result in dilution to Franco-Nevada's shareholders.

If Franco-Nevada expands its business beyond the acquisition of royalty/stream interests, Franco-Nevada may face new challenges and risks which could affect its profitability, results of operations and financial condition.

Potential litigation affecting the properties in which Franco-Nevada holds its royalty/stream interests could have an adverse effect on Franco-Nevada.



APPENDIX 4 - ASSET SUMMARY TABLE

Asset Name

Operating

company

Agreement

type

% of Franco

Op NAV Asset description

Country/metal/mine-

type/process/production Terms

Agi Dagi Alamos Gold Royalty 0.8% Located in Turkey, Agi Dagi is planned to be an open pit,

heap leach operation which includes the higher grade

Camyurt satellite deposit. The operation is expected to

produce 176 koz/a over a estimated 9 year mine life.

Environmental permit approval is expected in 2014.

Turkey

Gold

Open pit

Heap leach

176kozs/yr avg

2% NSR

Bald Mountain Barrick Royalty 1.3% Located in Nevada, Bald Mountain is currently operating, as

a heap leach operation. We expect current steady state

production of around 163kozs per year, with a strip ratio of

3.0:1x and a reserve grade of 0.017oz/t

Nevada

Gold

Open -pit

Heap leach

163kozs/yr

0.875-5% NSR/GR, depending on which

area of the deposit is being mined

Cerro San Pedro New Gold Royalty 0.3% Located in Cerro San Pedro Mexico, CSP is an open pit,

heap leach operation, which is expected to produce an

average of 143kozs of gold over the next 3 years with a

strip ratio of 1.3:1. Production is expected to be complete in

2017.

Mexico

Gold

Open-pit

Heap leach

143kozs/yr

1.95% GR

Cobre Panama First Quantum Stream -0.4% The Cobre Panama Project is an open pit, conventional

floatation operation, located in Panama. Construction is

currently underway, and most recent plans anticipate 260kt

of copper per year at a cash cost of $0.94/lbs copper over

LOM with a strip ratio of 0.58:1.

Panama

Cu/Au/Ag/Mo

Open-pit

Flotation

60Mtpa tonnage

266ktpa copper

~Years 1-11: 120/1,376 oz Gold/silver per

1MM lbs Cu. ~Years 12-31: 81/1,776 oz

Gold/silver per 1MM lbs Cu. ~Years >31:

63.4% of gold and 62.1% of silver. Ongoing

payments of $400/oz gold and $6.00/oz

silver

Cooke 4 Gold One

International

Stream 1.7% Cooke 4 is adjacent to Gold One International's Cooke 1-3

underground operations and Randfontein Surface

operation, located in Westonaria, South Africa. Gold One

purchased the property from First Uranium, and currently

plans to mill Cooke 1-3 ore through the Cooke 4 mill

(200/100tpm gold/uranium ore capacity).

South Africa

Gold/Uranium

Underground

Dual gold & uranium process

74kozs/yr avg

7% of gold produced for ongoing payments

of $400/oz (subject to inflation adjustment)

Detour Lake Detour Gold Royalty 5.2% Detour Lake is an open pit, carbon in pulp operation,

currently in ramp-up, located ~185km Northeast of

Cochrane. Detour Lake is expected to produce 657koz/yr

over a 21.5 year mine life, at a total cash cost of $749/oz,

with a strip of 3.7:1.

Ontario

Gold

Open pit

Gravity/CIL

657koz/yr

2% NSR

Edikan Perseus Mining Royalty 1.4% Edikan, located in Ghana is an open-pit gold mining

operation which is expected to produce on average 216koz

over an 11 year mine life. Costs are estimated to be

~900/oz over the LOM.

Ghana

Gold

Open pit

CIL

216koz/yr avg

1.5-3% NSR

Golden Highway St. Andrews

Goldfield

Royalty 2.3% Golden Highway is the string of open-pit and underground

mines including Holt, Holloway, and Hislop. Production from

the Golden Highway is expected to be 95-105koz in 2013,

with all-in cash costs of US$1,210.

Timmins Ontario

Gold

Open-pit/underground

CIL

95-105kozs 2013

0.25-15% NSR, depending on which area of

the deposit is being mined, and depending

on the gold price

Gold Quarry Newmont Royalty 3.7% Gold Quarry is an open-pit operation located in Nevada

operating since 1985. Franco believes that its royalty is

expected to provide ~11,250ozs of gold per year.

Nevada

Gold

Open-pit

7.29% NSR

Goldstrike Barrick Gold Royalty 8.1% Located in Nevada, Goldstrike is a large open pit and

underground operation which we expect to produce an

average of 847kozs per year, at an average cash cost of

$540/oz over a remaining 12 year mine life.

Nevada

Gold

Open-pit, underground

CIL

~847koz/yr avg

2-4% NSR, 2.4-6% NPI, royalty levels

depend on area being mined

Hemlo Barrick Gold Royalty 1.0% Hemlo is a combined open pit and underground operation

located east of Thunderbay. Production is expected to

average ~210kozs over an estimated 4 year mine life.

Ontario

Gold


CIP

~210koz/yr avg

3% NSR, 5% NPI on portions

Mesquite New Gold Royalty 0.6% Mesquite is an open-pit heap leach operation located in

Imperial County, California. We currently expect average

production of 125koz over a 16 year mine life. Total cash

costs are expected to average $872/oz over LOM, with a

strip ratio of 2.7:1.

California

Gold

Open-pit

Heap Leach

~125koz/yr

0.5-2% NSR

Mt. Keith BHP Royalty 0.6% In operation since 1993, Mt. Keith, located in Western

Australia is an open pit, nickel sulphide operation. The mine

life of the operation is estimated at 13 years, and produces

roughly 35-40kt of nickel in concentrate. Mine production

was scaled back in early 2012, with stockpiled ore being

processed.

Australia

Nickel

Open-pit

Flotation

35-40t Ni in con. Avg

0.25% NPI, 0.375% GR

Musselwhite Goldcorp Royalty 0.7% Musselwhite is an underground carbon in pulp operation

located in Opapamiskan Lake, Ontario. We expect

production to average 260kozs of gold with an average

cash cost of ~770/oz over LOM.

Ontario

Gold

Underground

CIP

~260koz/yr avg

5% NPI



Note: This list does not include all of Franco's assets; it includes only assets which have separately disclosed revenue (i.e. are currently material to Franco's earnings) or assets with no current revenue, but may someday (i.e. material growth projects). Source: DCM Estimates, Company reports

Asset Name

Operating

company

Agreement

type

% of Franco

Op NAV Asset description

Country/metal/mine-

type/process/production Terms

MWS AngloGold Stream 5.9% Originally purchased from First Uranium, the MWS stream

covers 25% of gold production from the tailings recovery

project. After AngloGold Ashanti purchased the operation,

the agreement was amended to include AngloGold's tailings

processed through the plant, but now gold received by FNV

is maximized at 312.5kozs.

South Africa

Gold

Tailings

maximum of 312.5koz total

25% stream of all gold production, capped

at 312.5kozs

New Prosperity Taseko Stream 0.0% New Prosperity is a planned copper gold mine currently in

permitting stage. Production is expected to average

~230oz/yr over a 30+ year mine life. We do not expect to

see a final permitting decision until H1 2014.

British Columbia

Cu/Au

Open-pit

Flotation

70ktpd

230koz/yr avg

22% of gold production from New

Prosperity, with ongoing payments of

$400/oz gold (subject to 1% inflation

adjustment). Upfront payment of $350MM is

required by Franco.

Palmarejo Coeur Mining Stream 4.6% Located near Temoris Mexico, Palmarejo is a combined

open-pit and underground operation. Currently we expect

production to continue through 2023, with average gold

production of 89kozs/year.

Mexico

Silver/Gold


CIL

89kozs/yr avg

50% of gold production from Palmarejo,

with ongoing payments of $400/oz gold

(subject to 1% inflation adjustment).

Perama Hill Eldorado Gold Royalty 0.5% Located in Thrace Greece, Perama Hill is planned to be an

open-pit gold mine, producing an average of 110koz gold

per year. A low strip ratio of 0.29:1 over an estimated 8 year

mine life is expected. PH is expected to receive its EIS perit

approval by year end.

Greece

Gold/Silver

Open-pit

CIL

110koz/yr avg

2% NSR

Phoenix Rubicon Royalty 0.7% Located in Red Lake, Ontario, the Phoenix project is

expected to be an underground mine, with production

starting in 2014 and it is expected to produce 165kozs of

gold per year at an average cash cost of ~600/oz (as per

PEA). Average M&I grade is 8.52g/t gold.

Red Lake

Gold

Underground

Gravity seperation and CIL

165kozs/yr

2% NSR

Robinson KGHM

International

Royalty 0.2% Located near Ely, Nevada, Robinson is a Cu, Au, and Mo

mine which we expect to produce ~125Mlbs/yr of copper

per year. We do not expect KGHM to exceed 130Mlbs/yr

copper, or 60kozs of gold production, which limits the

royalty income to a 0.225% NSR on base metals.

Nevada

Cu/Au

Open-pit

Flotation

NSR of 0.225% on all base metals. NSR of

10% of all gold over 60koz produced per

year. A price participation royalty is paid

when there is production greater than

130Mlbs/year.

Rosemont Augusta

Resources

Royalty 3.4% Located in Arizona, the Rosemont project is currently in

permitting stages, and is expected to produce 243Mlbs of

copper per year, at a 1.9:1 strip ratio, over its 21 year mine

life. The company expects cash costs to average $1.02/lb

copper over the LOM. Still in permitting

Arizona

Cu/Au/Ag/Mo

Open-pit

Flotation

243mlbs/yr

1.5% NSR

Stillwater complex Stillwater Mining Royalty 5.5% Stillwater is a PGM operation which operates two mines, in

Montana, Stillwater and East Boulder. Production in

2013/2014 is expected to be 500kozs of PGM, increasing to

600kozs longer term.

Montana

PGM

Underground

Flotation

500kozs in 13/14

5% NSR

Subika Newmont Royalty 3.7% Located in Ghana, this royalty covers most of the Subika

open-pit at the Ahafo mine. Additionally, Newmont is

developing an underground mine at the Subika pit which is

expected to be covered by the royalty.

Ghana

Gold

Open pit and underground

Mill

2% NSR

Sudbury precious

metals

KGHM

International

Stream 5.8% The Sudbury basin stream covers all of the gold and PGM

production from KGHM's 3 operations. 1 of the assets

(Podolsky) has been put on care and maintenance, while

the McCreedy mine is currently mining nickel rich ore rather

than copper/precious metal rich ore. Levack is currently

accessing Glencore Xstrata's Craig infrastructure which

should provide more flexibility going forward.

Ontario

Ni/Cu/Co/PGM

Underground

Flotation

Ongoing payments of $400/oz gold

equivalent (subject to 1% annual inflation).

Tasiast Kinross Royalty 1.8% Located in Mauritania, Tasiast is expected to produce an

average of ~300koz/yr over the remaining LOM. This

assumes the mill is not substantially expanded. We expect

~$900/oz cash costs over the LOM, and we anticipate

production through 2033.

Mauritania

Gold

Open pit

Dump leach/mill

300kozs/yr - no expansion

2% NSR



APPENDIX 5 - ROYALTIES & STREAMS EXPLAINED

Franco-Nevada's portfolio of agreements can be broken down into three main categories: Royalties, Streams and Working Interests. In this section we explain each of these agreements. This section is based on an explanation provided in Franco-Nevada's "2013 Asset Handbook".

Royalties

Royalty agreements reflect an economic interest in the ongoing production of a particular property. These economic interests can be tied directly to the revenue generated at the asset, or can alternatively be tied to other levels of profitability.

Firstly, Revenue-based Royalties are tied to the value of the production or net proceeds received by the operator with defined deductions as specified by the royalty contract. Some forms of revenue-based royalties in the mining and oil & gas industries include: “NSR” (Net Smelter Return Royalty); “ORR” (Overriding Royalty); “GR” (Gross Royalty); and, “FH” Freehold or Lessor Royalty.

Secondly, Profit-based Interest Royalties are based on the operating profit as defined in the royalty contract. Often, royalty payments only begin after the operator has recovered its capital costs. The net profits interest royalty (“NPI”) is the most common form of these royalties. Similar to an NPI, a net royalty interest (“NRI”) is paid net of operating and capital costs.

Royalties often result in a more direct interest in the asset, which could result in the interest being more secure than streams in the event the operator were to file for bankruptcy.

Streams

Streams are metal purchase agreements that provide, in exchange for an upfront payment, the right to purchase all or a portion of one or more metals produced from a mine at a preset price, typically well below the prevailing spot price at the time of the deal. Streams are well suited to co-product production providing incentive to the operator to produce the gold. Streams are not considered to be royalties because of the ongoing cash payment required to purchase the physical metal; however streams share the key characteristic of eliminating exposure to unforeseen cost-inflation. Streams are also often considered to be a "passive" investment that may result in the ability to be sheltered from taxes.

Working Interests

Working Interest (“WI”) holders have an ownership position in the property and operation and hence are liable for cash calls on their share of capital, operating and environmental costs usually in proportion to their ownership percentage. Working interests are not considered to be royalties because of their ongoing funding requirements although, for profitable and low-capex operations, they can be economically similar in their calculations to NPIs.

An example of the financial impact of each different structure is provided in the table below. This example makes the following assumptions: 1) a gold price of $1,600/oz; 2) the stream interest cost per ounce of gold is set at $400/oz; 3) "all-in" operating and sustaining capital cost of $895/oz for the developed NPI/WI (1).



Economic impact of Royalty vs. Stream vs. NPI/WI

(1) For applicable costs for a developed NPI or WI, Barrick Gold Corporation's ("Barrick") 2012 all-in sustaining cash cost measure was assumed, as Barrick represents the largest gold company by production and reserves, as well as the operator at five of Franco-Nevada's assets. Excluded from the all-in sustaining measure are general and administrative costs as Franco-Nevada also has such costs which have not been reflected in the applicable cost for NSRs or streams.

(2) For applicable costs for an undeveloped NPI or WI, Franco-Nevada has adopted similar assumptions to those listed above. To reflect the cost of developing a new mine, Franco-Nevada has, for illustrative purposes, assumed Barrick's depreciation per ounce for 2012 of $236 per ounce.

Source: company reports, 2013 Franco-Nevada asset handbook

In conclusion, comparison shows the most leverage to the gold price is provided by an undeveloped NPI/WI followed by the Developed NPI/WI, then the stream, and lastly the NSR. However, with no ongoing costs to Franco-Nevada, the NSR theoretically provides more down-side protection to the price of gold; although the downside is ultimately determined by the profitability of the underlying asset, which we discuss earlier in this report.

NSR Stream

Developed NPI/WI

(1)

Undeveloped

NPI/WI (2)

Realized Price ($/oz) A $1,600 $1,600 $1,600 $1,600

Applicable Costs ($/oz) B $0 $400 $895 $1,131

Margin for Calculation ($/oz) C = A - B $1,600 $1,200 $705 $469

NSR, Stream or NPI % D 4% 4% 4% 4%

Revenue to FNV ($/oz) E = C x D $64 $48 $28 $19

NSR Equivalent F = E / $64 100% 75% 44% 29%

Alternatively

Ounces required to equal a 1% NSR 1.00 oz 1.33 oz 2.27 oz 3.41 oz



Franco Nevada: Forecasts at Dundee Price DeckRating BUY Basic Shares (MM) 147.1 Dundee Capital Markets

Risk Medium Diluted Shares (ITM / FD) (MM) 150.9 Chris Lichtenheldt

Target Price $50.00 Basic Mkt Cap (US$MM) $6,092 647-253-1128

Share Price $43.35 Enterprise Value (US$MM) $5,302 [email protected]

OPERATING STATISTICS BALANCE SHEET

2012A 2013E 2014E 2015E 2016E US$MM, Year-end Dec. 2012A 2013E 2014E 2015E 2016E

GEO production (kozs) 230 228 232 246 280 Assets

Cash*2 632 765 456 276 415

Precious metals revenue 381 314 315 340 364 Other Current Assets 247.5 147.9 147.9 147.9 147.9

Palmarejo 96 79 71 70 44 Current Assets 879 913 604 423 563

Sudbury 59 38 35 36 36 Non-current Assets 2,365 2,307 2,685 2,953 2,910

MWS 33 34 27 29 28 Total Assets 3,244 3,220 3,289 3,376 3,473

Stillwater 17 19 19 20 20 Liabilities

Gold Quarry 19 21 15 16 15 Current Liabilities 57 46 46 46 46

Golden Highway 14 12 10 11 13 Long Term Debt - - - - -

Marigold 11 9 7 8 7 Other non-current Liabilities 38 50 69 90 114

Detour - 6 13 15 15 Total Liabilities 95 96 115 137 161

Tasiast 6 7 6 8 8 Total Shareholder Equity 3,149 3,124 3,174 3,239 3,312

Musselwhite 6 2 4 - 5

INCOME STATEMENT

US$MM, Year-end Dec. 2012A 2013E 2014E 2015E 2016E

Oil and gas revenue (US$ MM) 41 75 80 79 80 Total Revenue 427 400 407 438 473

Weyburn 25 58 62 61 62 % Precious metals 89% 78% 77% 78% 77%

Other 16 17 18 17 18 % Base metals 1% 3% 3% 4% 6%

% Oil and Gas 10% 19% 20% 18% 17%

Operating Costs 59 56 53 52 60

G&A 15 11 13 14 15

Asset information Business Development 3 3 3 3 3

Minelife breakdown NAV by asset stage Other 86 10 3 4 4

EBITDA 265 320 334 365 391

Depreciation 127 125 125 135 146

EBIT 138 195 209 230 244

Net Interest Expense 1 1 - - -

Unusual/Other Items

EBT 155 181 203 227 242

Taxes 52 53 61 69 78

Other - - - - -

Net Income (Reported) 102.6 127.7 142.1 157.5 164.4

Net Income (Adjusted) 171.0 143.2 142.1 157.5 164.4

NET ASSET VALUE (US$) Target Build Up EPS (Reported) ($/sh) 0.72$ 0.87$ 0.96$ 1.07$ 1.11$

NAV /Share NAV Valuation (C$) EPS (Adjusted) ($/sh) 1.19$ 0.95$ 0.94$ 1.04$ 1.08$

Minesite Assets Per share Multiple Value Average shares (MM) 143.1 146.9 147.2 147.5 147.7

Precious metals $13.52 3.00x $40.57

Goldstrike $231 $1.53 Other ops $6.16 1.00x $6.16

Palmarejo $130 $0.86 Balance sheet $6.36 1.0x $6.36 CASH FLOW STATEMENT

Detour $148 $0.98 Total $53.09 US$MM, Year-end Dec. 2012A 2013E 2014E 2015E 2016E

Cobre Panama -$12 -$0.08 Cashflow Valuation (C$) Net Income (Reported) 102.6 127.7 142.1 157.5 164.4

Sudbury $80 $0.53 Per share Multiple Value Depreciation 126.7 125.2 125.4 135.4 146.3

Other mineral assets $1,824 $12.11 FTM CFPS $1.98 24.0x $47.55 Other 91.7 37.4 22.5 25.3 28.1

Oil and gas $440 $2.90 Target Weightings Operating Cash Flow 321.0 290.4 290.0 318.2 338.7

Minesite assets $2,841 $18.83 P/NAV Weighting 50% $26.55 Operating Cash Flow ($/sh) 2.22 1.92 1.92 2.10 2.24

Balance Sheet and other $918 $6.09 P/Cashflow Weighting 50% $23.77 Working Capital Changes (14.7) (11.0) - - -

Total $3,759 $24.89 Target Price ($C/share, rounded) $50.00 Cash from Operations 306.3 279.4 290.0 318.2 338.7

2013E Revenue by Metal NAV by Geography Capital Expenditure (509.1) (139.1) (503.3) (403.2) (103.3)

Net Investments (150.2) 94.4 - - -

Investing Cash Flow (659.3) (44.7) (503.3) (403.2) (103.3)

Common Share Dividends (77.9) (102.0) (95.4) (95.6) (95.7)

Debt Additions - - - - -

Equity Financing 257.9 7.8 - - -

Other Net Financing (77.9) (103.5) (95.4) (95.6) (95.7)

Financing Cash Flow 180.0 (95.7) (95.4) (95.6) (95.7)

Foreign Exchange 10.6 (5.7) - - -

Change In Cash (162.4) 133.2 (308.7) (180.6) 139.7

Cash Balance 632 765 456 276 415

Free Cash Flow (280.7) 38.2 (308.7) (180.6) 139.7

Adj. Free Cash Flow *1 (202.8) 140.2 (213.3) (85.1) 235.4

VALUATION DATA

CONSOLIDATED GOLD PRODUCTION PROFILE 2012A 2013E 2014E 2015E 2016E

P/E 35.0x 43.7x 44.1x 39.8x 38.2x

P/CF 18.6x 21.5x 21.6x 19.7x 18.6x

P/NAV 1.67x

EV/EBITDA 20.0x 16.6x 15.9x 14.5x 13.6x

Adj. FCF Yield *1 (3%) 2% (4%) (1%) 4%

Dividend Yield 0% 0% 0% 0%

INPUT PRICES

2012A 2013E 2014E 2015E 2016E

Key Commodities

Gold (US$/oz) 1,668 1,423 1,373 1,430 1,375

Silver (US$/oz) 31.13 24.17 22.88 23.83 23.00

Oil (US$/bbl) 94.14 99.00 95.00 90.00 90.00

Key Currencies

CAD/USD 1.00 0.97 0.95 0.93 0.93

USD/MXP 13.15 12.73 13.00 13.00 13.50

(1) Adj FCF = Operating Cash Flow - Capex

(2) Negative cash implies financing need

Source: Company reports, Bloomberg, Dundee Capital Markets estimates

78%

3%

19%Preciousmetals

basemetals

oil andgas

38%

27%

5%

4%

0%

2%

10%

15%

Canada

USA

Mexico

Australia

Panama

Mauritania

Exploration

Other

-

10

20

30

40

50

60

70

80

90

-

50

100

150

200

250

300

2012A 2013E 2014E 2015E 2016E

MM

$

Go

ld E

qu

ivale

nt

ou

nces (

ko

zs)

Gold Equivalent Ounces (LHS) Oil and Gas Revenue (RHS)

34%

22%

29%

15%

<10 yrs 10-15 yrs 15-20 yrs 20+ yrs

79%

21%




Franco Nevada: Forecasts at Spot GoldRating BUY Basic Shares (MM) 147.1 Dundee Capital Markets

Risk Medium Diluted Shares (ITM / FD) (MM) 150.9 Chris Lichtenheldt

Target Price $50.00 Basic Mkt Cap (US$MM) $6,092 647-253-1128

Share Price $43.35 Enterprise Value (US$MM) $5,302 [email protected]

OPERATING STATISTICS BALANCE SHEET

2012A 2013E 2014E 2015E 2016E US$MM, Year-end Dec. 2012A 2013E 2014E 2015E 2016E

GEO production (kozs) 230 227 229 244 277 Assets

Cash*2 632 759 419 197 304

Precious metals revenue 381 309 281 293 326 Other Current Assets 247.5 147.9 147.9 147.9 147.9

Palmarejo 96 78 64 60 40 Current Assets 879 907 567 345 452

Sudbury 59 38 34 35 34 Non-current Assets 2,365 2,309 2,697 2,979 2,948

MWS 33 34 25 25 25 Total Assets 3,244 3,216 3,264 3,324 3,399

Stillwater 17 19 19 20 20 Liabilities

Gold Quarry 19 21 14 14 14 Current Liabilities 57 46 46 46 46

Golden Highway 14 12 8 8 10 Long Term Debt - - - - -

Marigold 11 9 7 7 7 Other non-current Liabilities 38 49 67 87 110

Detour - 6 12 13 14 Total Liabilities 95 96 113 133 156

Tasiast 6 7 6 7 7 Total Shareholder Equity 3,149 3,120 3,151 3,191 3,243

Musselwhite 6 2 3 - 3

INCOME STATEMENT

US$MM, Year-end Dec. 2012A 2013E 2014E 2015E 2016E

Oil and gas revenue (US$ MM) 41 73 78 82 83 Total Revenue 427 394 372 394 436

Weyburn 25 56 61 64 65 % Precious metals 89% 79% 76% 74% 75%

Other 16 17 17 18 18 % Base metals 1% 3% 3% 5% 6%

% Oil and Gas 10% 19% 21% 21% 19%

Operating Costs 59 56 54 54 61

G&A 15 11 12 13 14

Asset information Business Development 3 3 3 3 3

Minelife breakdown NAV by asset stage Other 86 10 3 3 4

EBITDA 265 314 300 321 354

Depreciation 127 123 115 122 135

EBIT 138 191 185 199 219

Net Interest Expense 1 1 - - -

Unusual/Other Items

EBT 155 176 180 197 217

Taxes 52 52 57 64 73

Other - - - - -

Net Income (Reported) 102.6 124.3 122.7 132.6 144.5

Net Income (Adjusted) 171.0 139.8 122.7 132.6 144.5

NET ASSET VALUE (US$) Target Build Up EPS (Reported) ($/sh) 0.72$ 0.85$ 0.83$ 0.90$ 0.98$

NAV /Share NAV Valuation (C$) EPS (Adjusted) ($/sh) 1.19$ 0.93$ 0.81$ 0.88$ 0.95$

Minesite Assets Per share Multiple Value Average shares (MM) 143.1 146.9 147.2 147.5 147.7

Precious metals $11.68 3.00x $35.04

Goldstrike $207 $1.37 Other ops $6.27 1.00x $6.27

Palmarejo $113 $0.75 Balance sheet $6.37 1.0x $6.37 CASH FLOW STATEMENT

Detour $138 $0.91 Total $47.68 US$MM, Year-end Dec. 2012A 2013E 2014E 2015E 2016E

Cobre Panama -$111 -$0.73 Cashflow Valuation (C$) Net Income (Reported) 102.6 124.3 122.7 132.6 144.5

Sudbury $69 $0.46 Per share Multiple Value Depreciation 126.7 123.3 114.6 121.7 135.0

Other mineral assets $1,719 $11.42 FTM CFPS $1.78 24.0x $42.84 Other 91.7 37.1 20.9 23.2 26.3

Oil and gas $455 $3.00 Target Weightings Operating Cash Flow 321.0 284.6 258.2 277.5 305.8

Minesite assets $2,591 $17.17 P/NAV Weighting 50% $23.84 Operating Cash Flow ($/sh) 2.22 1.89 1.71 1.83 2.02

Balance Sheet and other $920 $6.10 P/Cashflow Weighting 50% $21.42 Working Capital Changes (14.7) (11.0) - - -

Total $3,510 $23.24 Target Price ($C/share, rounded) $45.00 Cash from Operations 306.3 273.6 258.2 277.5 305.8

2013E Revenue by Metal NAV by Geography Capital Expenditure (509.1) (139.1) (503.2) (403.4) (103.4)

Net Investments (150.2) 94.4 - - -

Investing Cash Flow (659.3) (44.7) (503.2) (403.4) (103.4)

Common Share Dividends (77.9) (102.0) (95.4) (95.6) (95.7)

Debt Additions - - - - -

Equity Financing 257.9 7.8 - - -

Other Net Financing (77.9) (103.5) (95.4) (95.6) (95.7)

Financing Cash Flow 180.0 (95.7) (95.4) (95.6) (95.7)

Foreign Exchange 10.6 (5.7) - - -

Change In Cash (162.4) 127.5 (340.4) (221.5) 106.6

Cash Balance 632 759 419 197 304

Free Cash Flow (280.7) 32.5 (340.4) (221.5) 106.6

Adj. Free Cash Flow *1 (202.8) 134.6 (245.0) (125.9) 202.3

VALUATION DATA

CONSOLIDATED GOLD PRODUCTION PROFILE 2012A 2013E 2014E 2015E 2016E

P/E 35.0x 44.8x 51.0x 47.3x 43.5x

P/CF 18.6x 22.0x 24.3x 22.6x 20.6x

P/NAV 1.78x

EV/EBITDA 20.0x 16.9x 17.7x 16.5x 15.0x

Adj. FCF Yield *1 (3%) 2% (4%) (2%) 3%

Dividend Yield 0% 0% 0% 0%

INPUT PRICES

2012A 2013E 2014E 2015E 2016E

Key Commodities

Gold (US$/oz) 1,668 1,407 1,244 1,244 1,244

Silver (US$/oz) 31.13 23.68 19.86 19.86 19.86

Oil (US$/bbl) 94.14 96.90 93.33 93.33 93.33

Key Currencies

CAD/USD 1.00 0.97 0.95 0.93 0.93

USD/MXP 13.15 12.73 13.00 13.00 13.50

(1) Adj FCF = Operating Cash Flow - Capex

(2) Negative cash implies financing need

Source: Company reports, Bloomberg, Dundee Capital Markets estimates

79%

3%

19%Preciousmetals

basemetals

oil andgas

39%

28%

5%

4%

-4%

2%

11%

16%

Canada

USA

Mexico

Australia

Panama

Mauritania

Exploration

Other

-

10

20

30

40

50

60

70

80

90

-

50

100

150

200

250

300

2012A 2013E 2014E 2015E 2016E

MM

$

Go

ld E

qu

ivale

nt

ou

nces (

ko

zs)

Gold Equivalent Ounces (LHS) Oil and Gas Revenue (RHS)

34%

22%

29%

15%

<10 yrs 10-15 yrs 15-20 yrs 20+ yrs

81%

19%




Disclosures & Disclaimers

This research report (as defined in IIROC Rule 3400) is issued and approved for distribution in Canada by Dundee Securities

Ltd. (“Dundee Capital Markets”), an investment dealer operating its business through its two divisions, Dundee Capital

Markets and Dundee Goodman Private Wealth. Dundee Capital Markets is a member of the Canadian Investor Protection

Fund, the Investment Industry Regulatory Organization of Canada and an investment fund manager registered with the

securities commissions across Canada. Dundee Capital Markets is a subsidiary of Dundee Corporation.

Research Analyst Certification: Each Research Analyst involved in the preparation of this research report hereby certifies that: (1) the views and recommendations expressed herein accurately reflect his/her personal views about any and all of the securities or issuers that are the subject matter of this research report; and (2) his/her compensation is not and will not be directly related to the specific recommendations or views expressed by the Research Analyst in this research report. The Research Analyst involved in the preparation of this research report does not have authority whatsoever (actual, implied or apparent) to act on behalf of any issuer mentioned in this research report. U.S. Residents: Dundee Securities Inc. is a U.S. registered broker-dealer, a member of FINRA and an affiliate of Dundee Capital Markets. Dundee Securities Inc. accepts responsibility for the contents of this research report, subject to the terms and limitations as set out above. U.S. residents seeking to effect a transaction in any security discussed herein should contact Dundee Securities Inc. directly. Research reports published by Dundee Capital Markets are intended for distribution in the United States only to Major Institutional Investors (as such term is defined in SEC 15a-6 and Section 15 of the Securities Exchange Act of 1934, as amended) and are not intended for the use of any person or entity. UK Residents: Dundee Securities Europe LLP, an affiliate of Dundee Capital Markets, is authorized and regulated by the

United Kingdom’s Financial Conduct Authority (No 586295) for the purposes of security broking & asset management.

Research prepared by UK-based analysts is under the supervision of and is issued by its affiliate, Dundee Capital Markets.

Dundee Securities Europe LLP is responsible for compliance with applicable rules and regulations of the FCA, including Chapter

12 of the FCA’s Conduct of Business Sourcebook (the “FCA Rules”) in respect of any research recommendations (as defined in

the FCA Rules) in reports prepared by UK-based analysts. Dundee Capital Markets and Dundee Securities Europe LLP have

implemented written procedures designed to identify and manage potential conflicts of interest that arise in connection with

the preparation and distribution of their research. Dundee Capital Markets is responsible (i) for ensuring that the research

publications are compliant with IIROC Rule 3400 Research Restrictions and Disclosure Requirements. And (ii) including all

required conflict of interest disclosures.

General:

This research report is provided, for informational purposes only, to institutional investor and retail clients of Dundee Capital

Markets in Canada. This research report is not an offer to sell or the solicitation of an offer to buy any of the securities

discussed herein.

The information contained in this research report is prepared from publicly available information, internally developed data

and other sources believed to be reliable, but has not been independently verified by Dundee Capital Markets and Dundee

Capital Markets makes no representations or warranties with respect to the accuracy, correctness or completeness of such

information and they should not be relied upon as such. All estimates, opinions and recommendations expressed herein

constitute judgments as of the date of this research report and are subject to change without notice. Dundee Capital Markets

does not accept any obligation to update, modify or amend this research report or to otherwise notify a recipient of this

research report in the event that any estimates, opinions and recommendations contained herein change or subsequently

becomes inaccurate or if this research report is subsequently withdrawn.

Past performance is not a guarantee of future results, and no representation or warranty, express or implied, is made

regarding future performance of any security mentioned in this research report. The price of the securities mentioned in this

research report and the income they produce may fluctuate and/or be adversely affected by market factors or exchange rates,

and investors may realize losses on investments in such securities, including the loss of investment principal. Furthermore, the

securities discussed in this research report may not be liquid investments, may have a high level of volatility or may be subject

to additional and special risks associated with securities and investments in emerging markets and/or foreign countries that

may give rise to substantial risk and are not suitable for all investors. Dundee Capital Markets accepts no liability whatsoever

for any loss arising from any use or reliance on this research report or the information contained herein.



The securities discussed in this research report may not be suitable for all types of investors and such reports do not take into

account particular investment needs, objectives and financial circumstances of a particular investor. An investor should not

rely solely on investment recommendations contained in this research report, if any, as a substitution for the exercise of their

own independent judgment in making an investment decision and, prior to acting on any of contained in this research report,

investors are advised to contact his or her investment adviser to discuss their particular circumstances.

Non-client recipients of this research report should consult with an independent financial advisor prior to making any

investment decision based on this research report or for any necessary explanation of its contents. Dundee Capital Markets

will not treat non-client recipients of this research report as its clients by virtue of such persons receiving this research report.

Nothing in this research report constitutes legal, accounting or tax advice. Investors should consult with his or her own

independent legal or tax adviser in this regard.

Dundee Capital Markets Research is distributed by email, website or hard copy. Dissemination of initial research reports and any subsequent research reports is made simultaneously to a pre-determined list of Dundee Capital Markets' Institutional Sales and Trading representative clients and Dundee Goodman Private Wealth retail private client offices. The policy of Dundee Capital Markets with respect to Research reports is available on the Internet at www.dundeecapitalmarkets.com. Dundee Capital Markets has written procedures designed to identify and manage potential conflicts of interest that arise in connection with its research and other businesses. The compensation of each Research Analyst/Associate involved in the preparation of this research report is based competitively upon several criteria, including performance assessment criteria based on quality of research. The Research Analyst compensation pool includes revenues from several sources, including sales, trading and investment banking. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. Dundee Capital Markets generally restricts any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers. Certain discretionary client portfolios are managed by portfolio managers and/or dealing representatives in its private client

advisory division, Dundee Goodman Private Wealth. The aforementioned portfolio managers and/or dealing representatives

are segregated from Research and they may trade in securities referenced in this research report both as principal and on

behalf of clients (including managed accounts and investment funds). Furthermore, Dundee Capital Markets may have had,

and may in the future have, long or short positions in the securities discussed in this research report and, from time to time,

may have executed or may execute transactions on behalf of the issuer of such securities or its clients.

Should this research report provide web addresses of, or contain hyperlinks to, third party web sites, Dundee has not

reviewed the contents of such links and takes no responsibility whatsoever for the contents of such web sites. Web addresses

and/or hyperlinks are provided solely for the recipient's convenience and information, and the content of third party web sites

is not in any way incorporated into this research report. Recipients who choose to access such web addresses or use such

hyperlinks do so at their own risk.

Unless publications are specifically marked as research publications of Dundee Capital Markets, the views expressed therein

(including recommendations) are those of the author and, if applicable, any named issuer or Investment dealer alone and they

have not been approved by nor are they necessarily those of Dundee Capital Markets. Dundee Capital Markets. expressly

disclaims any and all liability for the content of any publication that is not expressly marked as a research publication of

Dundee Capital Markets.

Forward-looking statements are based on current expectations, estimates, forecasts and projections based on beliefs and

assumptions made by the author. These statements involve risks and uncertainties and are not guarantees of future

performance or results and no assurance can be given that these estimates and expectations will prove to have been correct,

and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking

statements.

© Dundee Securities Ltd. Any reproduction or distribution in whole or in part of this research report without permission is prohibited. Informal Comment: Informal Comments are analysts’ informal comments that are posted on the Dundee website. They generally pertain to news flow and do not contain any change in analysts' opinion, estimates, rating or target price. Any rating(s) and target price(s) in an Informal Comment are from prior formal published research reports. A link is provided in any Informal Comment to all company specific disclosures and analyst specific disclosures for companies under coverage, and general disclosures and disclaimers.



Mineral Exploration Watchlist: Dundee Capital Markets has not initiated formal continuing coverage of Mineral Exploration Watchlist companies. The companies will have recommendations and risk ratings as per our regular rating system, see Explanation of Recommendations and Risk Ratings for details. Risk ratings will be either Speculative or Venture. Speculative Risk rated companies are those companies that have published National Instrument 43-101 or JORC compliant resources or reliable historic resources and/or economic evaluations (scoping, pre-feasibility or feasibility studies) for material project(s) that could reasonably form the basis of a discounted cash flow analysis. Venture Risk rated companies are those companies that are generally at an earlier stage of exploration and/or development, where no material resource estimate, historic or compliant, exists. No price targets will be set for Mineral Exploration Watchlist companies as there are limited financial metrics upon which to base a reasonable valuation. Valuation methodologies and models will not be provided for Mineral Exploration Watchlist companies. Dundee clients should consult their investment advisor as to the appropriateness of an investment in the securities mentioned. Oil & Gas Exploration Watchlist: Dundee Capital Markets has not initiated formal continuing coverage of Oil & Gas Exploration Watchlist companies. The companies will have recommendations and risk ratings as per our regular rating system, see Explanation of Recommendations and Risk Ratings for details. Risk ratings will be either Speculative or Venture. Speculative Risk rated companies are those companies that have published National Instrument 51-101 or SPE compliant resources or reliable historic resources and/or economic evaluations for material project(s) that could reasonably form the basis of a discounted cash flow analysis. Venture Risk rated companies are those companies that are generally at an earlier stage of exploration and/or development, where no material resource estimate exists, or there is significant uncertainty with respect to firm drilling timing and prospects. No price targets will be set for Oil & Gas Exploration Watchlist companies as there are limited financial metrics, or resource information available, upon which to base a reasonable valuation. Dundee clients should consult their investment advisor as to the appropriateness of an investment in the securities mentioned. Presentations do not include disclosures that are specific to analysts and specific to companies under coverage. Please refer to formal published research reports for company specific disclosures and analyst specific disclosures for companies under coverage. Please refer to formal published research reports for valuation methodologies used in determining target prices for companies under coverage. Idea of Interest: Dundee Capital Markets has not initiated formal continuing coverage of Idea of Interest companies. Dundee

Capital Markets from time to time publishes reports on Idea of Interest securities for which it does not and may not choose to

provide formal continuous research coverage. All opinions and estimates contained in an Idea of Interest report are subject to

change without notice and are provided in good faith but without the legal responsibility that would accompany formal

continuous research coverage. The companies may have recommendations and risk ratings as per our regular rating system

and may have target prices, see Explanation of Recommendations and Risk Ratings for details. Any recommendations, ratings,

target prices and/or comments expire 30 days from the published date, and once expired should no longer be relied upon as

no assurance can be given as to the accuracy or relevance going forward. Dundee does not accept any obligation to update,

modify or amend any Idea of Interest report or to otherwise notify a recipient of an Idea of Interest report in the event that

any estimates, opinions and recommendations contained in such report change or subsequently become inaccurate. Dundee

clients should consult their investment advisor as to the appropriateness of an investment in the securities mentioned.

IIROC Rule 3400 Disclosures and/or FCA COBS 12.4.10 Disclosures: A link is provided in all research reports delivered by electronic means to disclosures required under IIROC Rule 3400. Disclosures required under IIROC Rule 3400 for sector research reports covering six or more issuers can be found on the Dundee Capital Markets website at www.dundeecapitalmarkets.com in the Research Section. Other Services means the participation of Dundee in any institutional non-brokered private placement exceeding $5 million. Where Dundee Capital Markets and its affiliates collectively beneficially own 1% or more (or for the purpose of FCA disclosure 5% or more) of any class of the issuer’s equity securities, our calculations will exclude managed positions that are controlled, but not beneficially owned by Dundee Capital Markets. A Research Analyst/Associate involved in the preparation of this research report has visited certain material operations of the following issuer(s): Franco-Nevada Corp. Chris Lichtenheldt viewed Franco-Nevada's Detour Lake and Palmarejo assets. Scott Morrison viewed Franco-Nevada's Detour Lake asset. The Research Analyst/Associate and/or Dundee Capital Markets has been partially reimbursed for expenses or partial expenses were paid for by the following issuer(s) for travel to material operations of the issuer(s): Franco-Nevada Corp. Explanation of Recommendations and Risk Ratings

Dundee target: represents the price target as required under IIROC Rule 3400. Valuation methodologies used in determining the price

target(s) for the issuer(s) mentioned in this research report are contained in current and/or prior research. Dundee target N/A: a price

target and/or NAV is not available if the analyst deems there are limited financial metrics upon which to base a reasonable valuation.



Recommendations: BUY: Total returns expected to be materially better than the overall market with higher return

expectations needed for more risky securities. NEUTRAL: Total returns expected to be in line with the overall market. SELL:

Total returns expected to be materially lower than the overall market. TENDER: The analyst recommends tendering shares to

a formal tender offer. UNDER REVIEW: The analyst will place the rating and/or target price Under Review when there is a

significant material event with further information pending; and/or when the analyst determines it is necessary to await

adequate information that could potentially lead to a re-evaluation of the rating, target price or forecast; and/or when

coverage of a particular security is transferred from one analyst to another to give the new analyst time to reconfirm the

rating, target price or forecast.

Risk Ratings: risk assessment is defined as Medium, High, Speculative or Venture. Medium: securities with reasonable liquidity

and volatility similar to the market. High: securities with poor liquidity or high volatility. Speculative: where the company's

business and/or financial risk is high and is difficult to value. Venture: an early stage company where the business and/or

financial risk is high, and there are limited financial metrics upon which to base a reasonable valuation.

Investors should not deem the risk ratings to be a comprehensive account of all of the risks of a security. Investors are directed to read Dundee Capital Markets Research reports that contain a discussion of risks which is not meant to be a comprehensive account of all the risks. Investors are directed to read issuer filings which contain a discussion of risk factors specific to the company’s business. Medium and High Risk Ratings Methodology: Medium and High risk ratings are derived using a predetermined methodology based on liquidity and volatility. Analysts will have the discretion to raise but not lower the risk rating if it is deemed a higher risk rating is warranted. Risk in relation to forecasted price volatility is only one method of assessing the risk of a security and actual risk ratings could differ. Securities with poor liquidity or high volatility are considered to be High risk. Liquidity and volatility are measured using the following methodology: a) Price Test: All securities with a price <= $3.00 per share are considered high risk for the purpose of this test. b) Liquidity Test: This is a two-tiered calculation that looks at the market capitalization and trading volumes of a company. Smaller capitalization stocks (<$300MM) are assumed to have less liquidity, and are, therefore, more subject to price volatility. In order to avoid discriminating against smaller cap equities that have higher trading volumes, the risk rating will consider 12 month average trading volumes and if a company has traded >70% of its total shares outstanding it will be considered a liquid stock for the purpose of this test. c) Volatility Test: In this two step process, a stock’s volatility and beta are compared against the diversified equity benchmark. Canadian equities are compared against the TSX while U.S. equities are compared against the S&P 500. Generally, if the volatility of a stock is 20% greater than its benchmark and the beta of the stock is higher than its sector beta, then the security will be considered a high risk security. Otherwise, the security will be deemed to be a medium risk security. Periodically, the equity risk ratings will be compared to downside risk metrics such as Value at Risk and Semi-Variance and appropriate adjustments may be made. All models used for assessing risk incorporate some element of subjectivity. SECURITY ABBREVIATIONS: NVS (non-voting shares); RVS (restricted voting shares); RS (restricted shares); SVS (subordinate voting shares).



Dundee Capital Markets Equity Research Ratings

As at September 30, 2013

Source: Dundee Capital Markets

68%

28%

4%

34%

25%

0%0%

11%

22%

33%

44%

55%

66%

77%

Buy Neutral Sell

% of companies covered by Dundee Capital Marketsin each rating category

% of companies within each rating category for whichDundee Capital Markets has provided investmentbanking services for a fee in the past 12 months.

Documents

EPS 2012 A 2013 E 2014 E FY - Swiss Resource Capital AG · Fiscal Year end Decemeber 31 NAV US$/sh P/NAV LT Gold: Price Deck: Spot Gold: EPS 2012 A 2013 E 2014 E Q1 0.31 A 0.28 A