Franco-Nevada Provides Update on CRA Review As previously disclosed, the CRA is conducting an audit of Franco-Nevada Corporation’s 2012-2015 taxation years. Franco-Nevada has now received a proposal letter from the Canada Revenue Agency in relation to royalty income earned by Franco -Nevada’s
NEWS RELEASE
Toronto, December 5, 2018
Franco-Nevada Provides Update on CRA Review
As previously disclosed, the CRA is conducting an audit of Franco-Nevada Corporation’s 2012-2015 taxation years. Franco-Nevada
has now received a proposal letter from the Canada Revenue Agency in relation to royalty income earned by Franco -Nevada’s
Mexican subsidiary during the 2013 taxation year. The audit is ongoing and there can be no assurance that CRA will not raise further
challenges with respect to Franco-Nevada or its Mexican or other foreign subsidiaries.
For the 2013 taxation year, Franco-Nevada’s Mexican subsidiary paid Mxn154.3 million Pesos (US$12.1 million) in cash taxes, at
a 30% tax rate, to the Mexican tax authorities on income earned in Mexico. The CRA is proposing to tax a majority of such inc ome
as though it were earned in Canada. Assuming the CRA is successful in its challenge, Franco -Nevada estimates on a preliminary
basis that it would be subject to federal and provincial tax of approximately Cdn$12.8 million (US$9.7 million) plus any appl icable
penalties and interest but before any relief under the Canada-Mexico tax treaty.
The tax treaty between Canada and Mexico is intended to avoid double taxation. Management strongly believes that the
Company has paid all applicable taxes in compliance with Canadian and Mexican tax laws. Franco-Nevada intends to vigorously
defend its position and seek relief under the tax treaty.
For more information, please go to our website at www.franco-nevada.com or contact:
Sandip Rana Paul Brink
Chief Financial Officer President & Chief Operating Officer
(416) 306-6303 (416) 306-6305
Forward Looking Statements
This press release contains “forward looking information” and “forward looking statements” within the meaning of applicable Canadian securities laws
and the United States Private Securities Litigation Reform Act of 1995, respectively, which may include, but are not limited to, statements with respect
to future events or future performance, management’s expectations regarding Franco-Nevada’s growth, results of operations, estimated future
revenues, carrying value of assets, future dividends and requirements for additional capital, mineral reserve and mineral resource estimates, production
estimates, production costs and revenue, future demand for and prices of commodities, expected mining sequences, business prospects and
opportunities, audits being conducted by the CRA and available remedies, and the remedies relating to and consequences of the ruling of the Supreme
Court of Panama in relation to the Cobre Panama project. Such forward looking statements reflect management’s current beliefs and are based on
information currently available to management. Often, but not always, forward looking statements can be identified by the use of words such as “plans”,
“expects”, “is expected”, “budgets”, “scheduled”, “estimates”, “forecasts”, “predicts”, “projects”, “intends”, “targets”, “aims”, “anticipates” or “believes”
or variations (including negative variations) of such words and phrases or may be identified by statements to the effect that certain actions “may”,
“could”, “should”, “would”, “might” or “will” be taken, occur or be achieved. Forward looking statements involve known and unknown risks, uncertainties
and other factors, which may cause the actual results, performance or achievements of Franco-Nevada to be materially different from any future results,
performance or achievements expressed or implied by the forward looking statements. A number of factors could cause actual events or results to differ
materially from any forward looking statement, including, without limitation: fluctuations in the prices of the primary commodities that drive royalty and
stream revenue (gold, platinum group metals, copper, nickel, uranium, silver, iron-ore and oil and gas); fluctuations in the value of the Canadian and
Australian dollar, Mexican Peso and any other currency in which revenue is generated, relative to the U.S. dollar; changes in national and local
government legislation, including permitting and licensing regimes and taxation policies and the enforcement thereof; regulatory, political or economic
developments in any of the countries where properties in which Franco-Nevada holds a royalty, stream or other interest are located or through which
they are held; risks related to the operators of the properties in which Franco-Nevada holds a royalty, stream or other interest, including changes in the
ownership and control of such operators; influence of macroeconomic developments; business opportunities that become available to, or are pursued
by Franco-Nevada; reduced access to debt and equity capital; litigation; title, permit or license disputes related to interests on any of the properties in
which Franco-Nevada holds a royalty, stream or other interest; whether or not Franco-Nevada is determined to have “passive foreign investment
company” (“PFIC”) status as defined in Section 1297 of the United States Internal Revenue Code of 1986, as amended; potential changes in Canadian
tax treatment of offshore streams; excessive cost escalation as well as development, permitting, infrastructure, operating or technical difficulties on any
of the properties in which Franco-Nevada holds a royalty, stream or other interest; actual mineral content may differ from the reserves and resources
contained in technical reports; rate and timing of production differences from resource estimates, other technical reports and mine plans; risks and
hazards associated with the business of development and mining on any of the properties in which Franco-Nevada holds a royalty, stream or other
interest, including, but not limited to unusual or unexpected geological and metallurgical conditions, slope failures or cave-ins, flooding and other
natural disasters, terrorism, civil unrest or an outbreak of contagious disease; and the integration of acquired assets. The forward looking statements
contained in this press release are based upon assumptions management believes to be reasonable, including, without limitation: the ongoing
operation of the properties in which Franco-Nevada holds a royalty, stream or other interest by the owners or operators of such properties in a manner
consistent with past practice; the accuracy of public statements and disclosures made by the owners or operators of such underlying properties; no
material adverse change in the market price of the commodities that underlie the asset portfolio; Franco-Nevada’s ongoing income and assets relating
to determination of its PFIC status; no material changes to existing tax treatment; the expected application of tax laws and regulations by taxation
authorities; the expected assessment and outcome of any audit by any taxation authority; no adverse development in respect of any significant property
in which Franco-Nevada holds a royalty, stream or other interest; the accuracy of publicly disclosed expectations for the development of underlying
properties that are not yet in production; integration of acquired assets; and the absence of any other factors that could cause actions, events or results
to differ from those anticipated, estimated or intended. However, there can be no assurance that forward looking statements will prove to be accurate,
as actual results and future events could differ materially from those anticipated in such statements. Investors are cautioned that forward looking
statements are not guarantees of future performance. Franco-Nevada cannot assure investors that actual results will be consistent with these forward
looking statements and investors should not place undue reliance on forward looking statements due to the inherent uncertainty therein. For additional
information with respect to risks, uncertainties and assumptions, please refer to the “Risk Factors” section of Franco-Nevada’s most recent Annual
Information Form filed with the Canadian securities regulatory authorities on www.sedar.com and Franco-Nevada’s most recent Annual Report filed on
Form 40-F filed with the SEC on www.sec.gov. The forward looking statements herein are made as of the date of this press release only and Franco-
Nevada does not assume any obligation to update or revise them to reflect new information, estimates or opinions, future events or results or otherwise,
except as required by applicable law.