Good morning, ladies and gentlemen, and welcome to the Franco-Nevada Corporation Q2 2021 Results Conference Call. This call is being recorded today, August 12th, 2021. And at this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session.

[Operator Instructions] I would now like to turn the conference over to your host, Bonavia Tek. Please go ahead..

Thank you, Michelle. Good morning, everyone. Thank you for joining us today to discuss Franco-Nevada's Second Quarter 2021 results. Accompanying this call is a presentation available on our website at franco-nevada.com, where you will also find our full Financial results.

Paul Brink, President, and CEO of Franco-Nevada will provide some introductory remarks, followed by Sandip Rana, CFO of Franco-Nevada, who will provide a brief review of our results. This will be followed by a Q&A period. Our full Executive team is available to answer any questions.

We would like to remind participants that some of today's commentary may contain forward-looking information, and we refer you to a detailed cautionary note on Slide 2 of the presentation. I will now turn the call over to Paul Brink, President, and CEO of Franco-Nevada..

Haynesville, Condestable, and Vale Debentures. The timing of the Haynesville addition is looking fortuitous with strong natural gas prices. Condestable offers immediate precious metal cash flow and long-term upside. And the Vale interest set our base of low-risk, long-life cash flow and also increased our asset diversity.

With the additions to the portfolio remains more than 80% precious metals focused. Regarding 25% growth in the business over 5 years from our 2020 level, with both organic mine expansions and new mines as the growth drivers. Cobre Panama, Detour, Stillwater, and Tasiast are all being expanded over the period.

Kirkland Lake Gold graciously hosted our Board to visit the Detour Lake mine this week. We came away very impressed with their team, the optimizations, the drive in the output expansion, and the potential for the whole body to become far bigger over time.

As a first step, we expect you'll see a meaningful increase in the resource, based on the drilling that they are doing this year. In terms of new gold mines, Goldfields reports that Solaris Nortech Construction is on track, and we expect the development of Hardrock, Valentine Lake, and Stibnite Gold to follow.

With an impressive PFS recently published Skeena Resources, Eskay Creek is likely the next in the development timeline. Continued strong copper prices bode well for our pipeline of long-term copper development projects; Alpala, Tackatack, and [Indiscernable] amongst others.

Under the larger long-term options in our portfolio, our royalties on the Ring of Fire Chrome, and Eagle nickel deposits. The agreed acquisition by BHP of Noront Resources is a big step to making the development of those deposits a reality.

In summary, Franco-Nevada continues to deliver with record financial results, built-in growth, and tremendous long-term optionality. We are cash positive; once again, have no debt; have 1.4 billion in available capital; and are generating operating cash flow at a rate close to a billion dollars per year.

We're focused on precious metal acquisitions, and we see a good pipeline of opportunities. Sandip, over to you..

Thanks, Paul. Good morning, everyone. The financial results for Q2, 2021 continued to showcase the strength of Franco-Nevada's portfolio. Our royalty and stream assets, both mining and energy, continue to perform well, either in-line or ahead of expectations.

As Paul mentioned, the Company achieved many financial records for Second Quarter, with GEO sold, revenue, adjusted EBITDA, and adjusted net income all reaching new highs. As you turn to Slide 3 of the presentation, we have highlighted the golden gold equivalent ounces sold for the 3 and 6 months ended June 30th, 2021, and 2020.

Overall, GEO sold increased significantly over the prior year, as operations that were impacted by the COVID-19 pandemic in 2020, are now back to normal operations. For the Quarter, GEO sold over 166,856, which was 60% higher than the prior year. For the quarter, we had a strong performance from a number of key assets.

The main contributors were Cobre Panama, Guadalupe, Antapaccay, and Antamina; all of which produced ahead of expectations. Also, the Company recorded its first GEO s sold from the recent Vale Royalty purchase. The Company accrued $28 million in revenue or 15,493 GEOs sold. This represented 6 months of revenue from January 1st to June 30th, 2021.

The actual royalty premium payment will be declared on September 30th, at which time we will true up the amount we have accrued. As a result of recording 6 months of revenue for the Vale Royalty, our precious metals revenue was 75% for the quarter, we do expect to be back above 80% in the Third Quarter.

One asset which did underperform for the Quarter was Hemlo, we recorded the last GEO sold as the NPI amount was lower than expected. A combination of less mining on our royalty lands, along with higher operating costs, resulted in 70% fewer GEOs being recorded during the quarter compared to the prior year.

We did expect the NPI to decrease as the year progressed, but the Q2 payment is lower than expected. Slide 4 highlights our total revenue and adjusted EBITDA amounts for the 3 and 6 months ended June 30th, 2020, and 2021.

As you can see from the bar charts, revenue and adjusted EBITDA have increased significantly year-over-year to 347.1 million in revenue in the quarter is a record, as is the adjusted EBITDA of 290 million. A margin of 83.5% was achieved. Gold and silver revenue increased from 156.8 million in Q2 2020 to 239.9 million in Q2 2021, a 53% increase.

The increase was due to an increase in gold and silver ounces sold, combined with an increase in commodity prices. The Second Quarter also saw a strong contribution from the energy assets, as revenue increased from 14.6 million a year ago, to 47.3 million this Quarter.

The increase was due to the recovery in energy prices as in Q2, 2020, we saw a record low of WTI prices. We also benefited from the recent Haynesville acquisition, which contributed 7.2 million in revenue during the Quarter. As you turn to Slide 5, you'll see the key financial results for the Company.

As mentioned, the increase in revenue and adjusted EBITDA was due predominantly to the increase in GEO sold, and an increase in commodity prices, both precious metals, and energy. On the cost side, the cost of sales was higher at 47.3 million versus 28 million a year ago.

The increase was due to more stream ounces being delivered, 109,000 versus 64,000 in Q2, 2020. Depreciation was also higher quarter-over-quarter, due to the increase in GEOs sold, a large portion being from higher depletion stream assets, as well as the Company recorded the first depletion associated with the Vale Royalty.

Adjusted net income and adjusted net income per share increased significantly in the Second Quarter of 2021, adjusted net income was 182.6 million or $0.96 per share, increases of approximately 100% for both over the prior year. Franco-Nevada is both a royalty and a streaming Company.

Slide 6 breaks down the mix between streams and royalty revenue for the second quarter of 2021. The streams that Franco-Nevada has added have been very successful for the Company, adding significant top-line growth. They have become the largest component of our revenue, generating 199.5 million or 57% of revenue during the quarter.

However, it is royalties, whether Mining or Energy, which generate a higher margin and thus cash flow from operations. As you can see, the costs related to royalties are minimal, with a combined cost of 3.1 million related to the 147.6 million in revenue generated by royalties.

We believe our diversified business model of both stream and royalty assets will allow us to achieve -- continue to achieve peer-leading EBITDA margins. With respect to margins, the chart on Slide 7 illustrates how the margin for the Company increases as the gold price increases.

Our mining cost structure, which we reflect in our cash costs per ounce, includes our cost of sales fewer costs associated with the energy business, which are minimal. Cash cost per ounce usually ranges between $250 to $300 per GEO s sold.

In a rising gold price environment, we expect to benefit fully as the cost per ounce should not increase significantly. In fact, back in Q2 2019, the gold price averaged 1,310 per ounce, and our cash cost per ounce was $238. The average gold price is now 1,816 per ounce, having increased almost 40%, while the cash cost per ounce increased marginally.

Strong margins are one of the strengths of our diverse portfolio. The other cash component of the Company besides the cost of sales is our corporate administration costs, our Board and Management are very proud of our focus on cost management. We like to stress the strength of our business model and the scalability.

The chart on Slide 8 [Indiscernable] illustrates our focus on being as cost-efficient as possible in managing this business. Here we have highlighted our quarterly revenues and our quarterly general and administrative expenses since our IPO.

Since 2008, our revenues have grown from approximately 25 million to almost 350 million this quarter, while our G&A has remained fairly stable over this time period. Q2 2021, Corporate Administration including stock compensation expense was 3% of revenue.

Management believes we can continue to add to our portfolio and grow our business without adding significant overhead to the Company. Slide 9 highlights the diversification of the portfolio, which we consider one of the strengths and differentiators of Franco-Nevada. As shown, 86% of our Q2 2021 revenue was generated by mining assets.

The geographic revenue profile has revenue being sourced 92% from the Americas, with South America being the largest at 34%. With respect to asset diversification, Cobre Panama was our largest revenue generator at 19% of total revenue for the Quarter, followed by Candelaria at 10%. No other single asset generated more than 10% of revenue.

The last chart highlights our operator diversity. Our largest exposure to revenue being generated by anyone operator is again 19%, which is First Quantum, which operates Cobre Panama. On Slide 10 we have provided updated guidance for 2021.

As you will recall, we've previously raised our GEO sold guidance to 580,000 to 615,000, with the acquisition of the Vale Royalty. With a strong performance for the first 6 months of 2021, we are increasing the bottom end of that range to 590,000, so the new GEO sold guidance range is 590,000 to 615,000.

For the second half of 2021, we expect to continue to benefit from the ramp-up at Cobre Panama and strong production from Antamina. Also with continued strong iron ore prices, the Vale Royalty should perform well. However, we do expect lower revenue for the Hemlo NPI as the Operator mines less on our NPI lands.

As you saw, the Q2 2021 Hemlo revenue was significantly lower than prior periods. For Musselwhite, one of our other NPI s, we do not expect to record any revenue until 2022, as the calculation is still in a deficit position. And we do not forecast any revenue from Tasiast in the second half as it recovers from the mill fire that occurred during Q2.

For Gold Quarry and Goldstrike, we did record revenue in the first 6 months of 2021 that related to prior periods, that's revenue from both is forecast to be slightly lower in the second half of 2021. For the energy business, we're pleased to raise our revenue guidance significantly to 155 to 170 million, from the previous 115 million to 135 million.

This increase in guidance is due to a strong rebound in energy prices we've seen this year. We've assumed $60 a barrel WTI, and $2.75 MCF natural gas for the remainder of 2021. As of today, as seen on Slide 11, with respect to available capital on hand, the Company has liquidity of $1.4 billion.

We did fund the Vale Royalty acquisition of 538 million with a combination of cash on hand and 150 million draws on our credit facility during the second quarter. That drawdown has been fully repaid, and the Company is again debt-free. With that, I will turn it over to Michelle. Happy to take any questions..

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] One moment, please, for your first question. Your first question comes from Greg Barnes, TD Securities. Please go ahead..

Thank you. It's Greg Barnes. Sandip, just from the Vale accrual of 24 million, I think it was, well 28 million. That's a bit lower than I was expecting, a little closer to 40 million.

Are there some lags or pricing adjustments that go into this, and how should we model it going forward?.

Hi, Greg. It's Eaun here. Yes. I guess a couple of things. The first to keep in mind is, the payments are originating from the northern system, which has been attributed to seasonality in the first half. Historically, it's been somewhere around 45% of sales occur in the first half versus 55% in the second half, just looking at historical numbers.

This year, that's probably exacerbated a little bit by the fire at the northern system port. We've made a conservative estimate there in terms of what actually got sold in the first half. That's probably the most salient point there.

And then secondarily, there are some deductions for transportation, and so with the rising oil price we've made provision for that as well, and then finally, yes, given the volatility and run-up in prices, Vale uses a number of different pricing conventions, we've made a provision for that as well to account for the likely lag.

We will get the actual determination at the end of September, and from there, should be able to make any true-up that is necessary to the 28 million. Hopefully, that's helpful, if you have any specific questions, we can follow up directly on those..

Okay. No. That is helpful.

In terms of the pricing, you said there were some lags, how does that work?.

It's just the contracting for the sales of iron ore, I think they're contracted not just spot, but both with provisional pricing and historical or earlier pricing, determining sales. So prior periods pricing will apply to some of the sales that occurred in the first half, which will bring down the realized price..

Is there any rule of thumb we could use on that Euan?.

Void does provide some disclosure as to the various pricing systems that it's using. I don't have an exact number for you, but we can follow up on that..

Okay. That's great. That's it from me. Thank you..

Your next question comes from Josh Wolfson of RBC. Please go ahead..

Thank you. Just another question on the guidance for the Energy division.

Just wanted to confirm, it does not include any potential top-up payments; is that correct?.

Thanks, Josh, it's Jason here. What exactly are you referring to when you mention top-up payments? Maybe you could just clarify the question..

The catch-up payments you historically have reported that I think historically have not been included in your guidance. I'm not sure what the terminology is you guys historically have used as a guide..

I think probably what you're referring to is prior period adjustments, which sometimes impact our financials.

For the forecast that we've provided, what we've done is we've taken the actual revenue on our financial statements for the first half of the year, which does include some prior period adjustments, but the back half of the year, that forecast is based just on the production of the expect to receive for the next 6 months and the commodity prices that we've provided.

So there aren't any sort of one-time catch-up payments in the rest of the forecast..

Okay.

And is it fair to say that the prior period adjustments tend to increase in a rising price environment?.

Somewhat, yes. If we have accrued a lower revenue than we actually receive due to higher commodity prices, you can see some prior period adjustments. Oftentimes though, those prior period adjustments are related to new wells that come online that we haven't budgeted for.

We have very little visibility into future wells that are drilled on our lands because there are many operators drilling those wells. When they come on unexpectedly, what happens is we get a -- an adjustment that we have to make retroactively. Those are hard to know when they're going to come through.

That is the major driver behind those prior period adjustments. Although you're right; in a rising commodity price environment, if we've accrued a lower revenue, you can see an adjustment or a true-up..

Okay. Thank you. And on the gold side of the business. For guidance on Hemlo, the prior guidance earlier this year was that we were expected to see this transition, I think more so in the second half of the year.

Ignoring the impact of the margin component for the NPI, should we assume that the portion of the line that [Indiscernible] is on now is going to reflect what the second quarter type of volumes would be attributable to Franco would be going forward?.

Yeah, Josh, and that's our best estimate. We're looking at the Second Quarter, it was lower than we expected and sooner, but then the lower amount. So going forward, I think it's safe to say that's what we're expecting.

As we know with the NPI, it can change quarter by quarter depending on how costs go and where they mine, but they publicly stated that they're trying to find other areas to mine at Hemlo, so I think to be conservative, that's what I would estimate..

Okay. Thanks. And then maybe a final question, if the team and maybe members are able to comment on this, going back to the Detour Lake visits.

I'm curious to know any thoughts on what the potential opportunity would be to volumes to Franco with the new mine plan they're coming in and new resource if there's anything that can be commented on?.

Josh, I think I just reiterate some of the stuff that Kirkland Lake has been saying, as you know they had put out a new mine plan.

A couple of things there, the next step is with the drilling this year, they expect to put out a new resource on the back of that, but also doing work, once they know what that new resource looks like on how they can improve on that expanded mine plan.

And a few years out there is a dip in the production, one of the main aims is how do they fill in that dip in the production and it sounds like they have some good ideas on how they can do that..

Great. Those are all my questions. Thank you very much..

Your next question comes from Brian MacArthur of Raymond James. Please go ahead..

Thanks. Good morning. Sorry, my question goes back to the valley true-up as well. Are we trueing up all 6 months going forward? I mean, I get it. There's legs of 3 to 6 month -- 3 to 4, 5 months in contracts.

But as we have a rise in price here, have we in a way -- you book, you know what Q1 is, and we're just trueing up Q2 volumes, or is it a total true-up over the 6 months? And then my second part of the question then is on that part, if the iron ore price rolls over, have we provisionally priced up that potentially the peak at 6 months will actually have lower prices going forward because we'll have the original contract stuff which is moving forward but then we'll have provisional pricing stuff on the Q2 end quarters going down? Can you give any guidance? Because like Greg said, I am surprised that was only 28 million this quarter..

Yes. Brian, yes, as Eaun highlighted, we were a little conservative on that. In terms of the true-up, they're going to declare what that dividend premium payment is on September 30th. That'll be the royalty rate times the revenue that they achieved for that 6-month period. And depending upon what that is, we will then adjust accordingly.

As for the iron ore price rolling over, at the end of the day, we'll look at what their volumes are for Q3, and make our best estimate on what we think their average price sales will be, and book that amount. I think the reality here is there are going to be adjustments every quarter.

It's not exactly an NPI, but just because of the way the calculation works with all the various components that are used to calculate the amount, having true-ups every quarter, whether positive or negative, I think it's going to be the norm..

And even though you only get paid every six months, you'll true it up every quarter going forward? Is that right or will you just do it every 6 months when you actually know you what actually got?.

No, we'll do it every quarter..

Perfect. Thank you very much. And my second question, I notice you changed the Sudbury screen payment, so it's 60% as opposed to 800 above a certain price, I think it was 1333.

Just to be clear though, if the gold price were to go back down below 1333, does it go back to a hard floor of $800 or is that 60% a function all the way down as well?.

Yes. So if the gold price is between 800 to 1,333 we're paying $800 an ounce, if it's above 1,333 we pay 60% of the average spot price, up to a maximum of 1,200, and if the gold price is below 800, we just pay what the gold price is..

Great. Thank you very much, Sandip, that's very clear..

Your next question comes from Cosmos Chiu with CIBC. Please go ahead..

Good morning, Paul, Sandip, and team, and thanks for taking my questions here. Maybe my first question is back to the energy guidance for revenue. Good to see that you've increased it, but I also noticed that you only increased the WTI assumption by a little bit, $55 up to $60 a barrel.

So to confirm, I guess the increase in your revenue guidance is based on more than just a commodity price increase, I would imagine there is some increase in drilling activity that's been factored in as well?.

Hi Cosmos, it's Jason here..

Hi Jason..

The bulk of that increase really is commodity price related, as you mention, we did the forecast at $60 WTI and 275 for gas, we're currently sitting above that for both commodities. In terms of production, what we're assuming for the back-end of the year is reasonably flat production across most of the assets.

We do in the longer-term forecast that we provided earlier in the year, we do assume that there will be an increase in drilling over time, over the course of the next several years, but for the balance of 2021, we're assuming sustained rates at reasonably current levels, which would deliver basically a flat or reasonably flat volume production profile..

Great. I guess my follow-up question on that Jason is, as you mentioned, the assumption right now is $60 a barrel, we're sitting higher than that now.

Could you remind us then, what's the sensitivity in terms of your revenue, to potentially higher commodity prices compared to what you've assumed?.

Yes Cosmos, I don't have the numbers in front of me. I believe that we provided that earlier on in the year, I think of a memory that if we have a 10% increase across both oil and gas, that would result in somewhere around a 13% increase in energy revenue..

Great. And Jason, I think you and I have talked about this in the past as well. In terms of drilling activity, in terms of CapEx budgets for the energy companies, it gets updated, I guess, maybe once a year.

From what you're seeing right now, are you expecting CapEx or drilling activity, as you mentioned, to increase? Are you seeing that -- some of those green shoots coming out?.

So far -- I guess, if you rewind back to early 2020 when prices collapsed, at that point in time, we actually took an impairment on some of our U.S. assets. For the valuation around that impairment testing, what we did is we assumed a rebound in drilling activity from what was, at the time, at a very, very low level.

That rebound, we assumed would take place over 4 years, 5 years. And we assumed it would rebound to around 70% to 80% of the 2019 levels. What we've seen so far is that drilling rates have been rebounding along the trajectory that we'd assumed at the time. So far, we haven't had to make any significant adjustments to our forecast.

What we're -- the jury is still out on go-forward drilling rates. U.S. oil companies and Shell companies, in particular, have been very disciplined in their capital budgets, and they are signaling to shareholders that the focus is going to be on dividends and returns to shareholders.

We'll see over the next couple of years what amount of capital it gets put towards filling programs, and that will ultimately will have to update, I guess our activity rate assumptions based on how it plays out over the next couple of years..

Of course. And maybe one last question on the energy patch here. With the increase in energy prices, oil prices, are you seeing opportunities in the oil patch running dry? No pun intended..

No Cosmos, there's plenty of opportunities in the oil and gas base, both in oil and in gas. The pace of opportunities has slowed down after prices collapsed in early 2020, but there are a good amount of opportunities that are available and actionable at this point.

Given the number of investments that we've done recently into energy and iron ore, our focus though is on precious metals, and so despite the fact that there are opportunities available, we will be very selective about pursuing those oil and gas opportunities..

And on that front, with the recent pressure on gold and precious metals prices, are you seeing better opportunities in terms of potential acquisitions in precious metals? Maybe that's a question for Eaun or Paul?.

Sure. Hi, Cosmos. On the gold side, I would say yes. We're seeing a pretty healthy pipeline of primary gold projects moving towards the development phase. And so in that medium-sized deal bracket, there are more opportunities of that type, I would say overall versus past quarters..

Great. And then maybe one last question on the financial front. In terms of your dividend, as I work it out right now and I'm sure you know better than I do, the share price of Franco-Nevada has done really well year-to-date, and so now you're sitting at about a dividend yield of 0.78%.

I thought in the past, you had always had an unwritten target to have at least a 1% dividend yield.

Paul could you maybe comment on that, is that something that you still target right now?.

Cosmos, thanks for the question. The most fundamental thing as we've always said, when our Board looks at dividends is number one, they want to make sure that Franco, that they never have to reduce the dividend, so that payout is going to be conservative.

Second is they're tremendously proud of the record they have of increasing the dividend every year and still making it sustainable. So Any discussion, those are the 2 main points. We do look at that yield as well, it factors into that decision.

Typically, it's been at the start of each year that the Board will consider the dividend level for the year, and those are all the factors that will go into it when they think about the dividends at the start of next year.

But in the current environment, -- with the strong cash flow that the Company is generating, I think there's lots of room to move on the dividend..

Of course. And then Paul since I have you here, maybe I'll ask you another question. And certainly, as you brought it up, I'm excited as well, BHP potentially going to the Ring of Fire. I'm not as close to it, I think the royalty ranges from 1% to 3%.

And so could you remind us, I think overall most of it is 2%, but certain parts are 3%, could you just remind us the percentages and the different areas? And Paul, I always like to ask you this question, is this one royalty that will make the next Franco CEO look good, or is it one that will make you look good?.

I don't know the answer to that question, Cosmos, I hope it's going to make both of us look good..

All right. that's good..

And in terms of the various deposits update, as you know, there are a number of chrome deposits. And the -- Between them, then -- we're at 3% on some and at 2% on others. I'd need to put out the asset handbook to give you the names of which are which, but we do give the detail in there. And then also a 2% royalty on the -- sorry.

A 1% royalty on the Eagle mixed deposit, which I think is the first deposit that they're talking about..

Great. Thanks again, Paul, Sandip, Eaun, and Jason. And those are all the questions I have. Thank you..

Your next question comes from Mike Jalonen, Bank of America. Please go ahead..

Morning, Paul, Sandip, Eaun and whoever else is in the Franco room. Cosmos stole some of my thunder, I was going to ask about the Ring of Fire, or maybe I'll try to ask it in a different way.

What would -- maybe the next year or two, Paul, what would be the plans for BHP, if you talk to them, what are they planning to do? And I'll layer this with, I just saw some news, Trudeau is going to call a snap election for September 20th, it's forward under some writers, and a formal announcement will come Sunday, do you think Ring of Fire will be something that will be discussed in the election? And -- so thanks..

The -- Mike, I don't have a view directly from BHP yet. I suspect in the shorter term, no change from the current plans. As you're probably well aware, the first step is getting the road built up there.

And Norand (ph) has already been working with the First Nations on the permitting of that road, and the work has been getting the First Nations to be the proponents to do the environmental assessments so that road can get permitted. That work is in progress.

I think once those permits are in place, I think that's the time then that you'll see more political activity around the funding of that road, Mike. I don't know, but my guess is probably a bit premature for this election..

Okay. I guess Franco needs a bulldozer to help that road along. And -- all right. Well, thank you. And good luck..

Your next question comes from Tyler Langton, JPMorgan. Please go ahead..

Hey, good morning. Thanks for taking my question. Just to start on the GEO guidance for the year, the 590,000 to 615,000. And I know you talked about being on the higher end of that range. Through the first half, you're anywhere around 316,000.

I guess you mentioned Hemlo, but are there any other assets to look at it in terms of what's causing a slightly weaker second half, especially iron ore with a lag that should probably be better in the second half?.

Yes. Two in particular; one was Gold Quarry where we accrued or we booked about 4,500 GEOs in the first quarter that were related to 2020, so we won't have that in the second half of the year.

And then Goldstrike, we booked a number of about 7 million in revenue related to prior periods in the first half of the year as well which we won't have in the second half of the year. Those are 2 mines that were -- where we had prior period adjustments that we had booked in 2021 relating to 2020.

And then Tasiast, we don't expect any GEOs or revenue booked for Tasiast as they recover from the fire at -- in Mauritania there with Kinross. Those are the adjustments that we've reflected in the guidance for the next 6 months..

Okay. No, that's helpful. And then just with energy, I think the 2025 guidance for energy was 150 million to 170 million, so you're kind of -- they're already this year even and potentially higher this year with the current commodity prices.

When we think about 2025 if current prices hold, could that number be higher? Any color on how to think about the 2025 number versus this year's guide..

In all likelihood, if you did, you'd run higher prices, that range will likely be higher. We put out our 5-year guidance when we do our annual guidance in March, so at that time we'll be putting out 5-year guidance for 2026..

Got it. Right, that's it for me. Thanks so much..

Your next question comes from Tanya Jakusconek, Scotiabank. Please go ahead..

Great. Good morning, everyone, and thank you very much for taking my questions. Just wanted to follow up -- and thank you, Sandip, for some of the clarity on the guidance for the second half of the year. Can I just get a bit more guidance on Gold Quarry? You mentioned that there was a little bit of a top-up of 4,000 ounces in, I think Q1.

Are we expecting any contribution from Gold Quarry in the second half of the year?.

Yes. It will be about 1,000 ounces, Tanya, our projection for the full year is just over 5,000 ounces. It's based on a minimum, it's just a calculation, in previous years we were booking 11,250 GEOs per year. It's dropped to half of that this year, and then next year we're expecting 1,350 going forward..

That 1350, that's what we had, I just seemed to have -- okay, that makes sense, thank you very much for that.

And then maybe just coming back to -- I know we talked a bit about the M&A and transactions that are out there, and project financing on I think it said medium-size deal bracket, maybe can we just define the medium-sized deal bracket, is it's still within that 200 to 500 million range that we're talking about?.

Hi, Tanya. It's Eaun here. I would say, yeah, 100 to 300 is more what I would define as mid-sized transactions at this stage. That's more the kind of deal size that we're looking at in the pipeline at the moment, although there certainly are opportunities on either side of that..

And maybe Sandip, just if I could come back to you.

And I know we've talked about this, but I just want to come back to, if you can share your views on the global minimum tax proposal that's out there? Whether and when you're expecting it, and how this would impact you?.

I'm sure -- as you know, it's gaining momentum. I think there are 130 of the 139 OECD countries that have signed on to it, so it's a question of when it does get implemented. How it's going to work, I think it's still too early to determine.

There's a lot of work that has to be done with treaties, and in terms of the calculation, so we're watching it closely. I think the one thing for Franco is that we do have a diversified corporate structure.

So that global minimum tax would impact our international stream business, which is through Barbados, but it's not the majority of our business, we've got royalties within Canada, U.S., Australia, where we pay taxes above the amount that they're talking about for the global minimum tax.

So it's just something that we will watch, and adjust for when the time comes..

Thank you..

[ Operator Instructions]. There are no further questions. I will turn the conference back over to Bonavie Tek. Please go ahead..

Thank you, Michelle. We expect to release our Q3 2021 results after market close on November 3rd, with a conference call held the following morning. Thank you for your interest in Franco-Nevada..

Ladies and gentlemen, that concludes your conference for today. We thank you for participating and ask that you please disconnect your lines..