Franco-Nevada Corporation
Condensed Consolidated Statements of Financial Position |
(unaudited, in millions of U.S. dollars)
At June 30, | At December 31, | |||||||
2022 |
|
| 2021 |
| ||||
ASSETS | ||||||||
Cash and cash equivalents (Note 4) | $ | | $ | | ||||
Receivables |
| |
| | ||||
Loan receivable (Note 5) |
| — |
| | ||||
Prepaid expenses and other (Note 6) |
| |
| | ||||
Current assets | $ | | $ | | ||||
Royalty, stream and working interests, net (Note 7) | $ | | $ | | ||||
Investments (Note 5) |
| |
| | ||||
Deferred income tax assets |
| |
| | ||||
Other assets (Note 8) |
| |
| | ||||
Total assets | $ | | $ | | ||||
LIABILITIES | ||||||||
Accounts payable and accrued liabilities | $ | | $ | | ||||
Current income tax liabilities |
| |
| | ||||
Current liabilities | $ | | $ | | ||||
Deferred income tax liabilities | $ | | $ | | ||||
Other liabilities | | | ||||||
Total liabilities | $ | | $ | | ||||
SHAREHOLDERS’ EQUITY | ||||||||
Share capital (Note 16) | $ | | $ | | ||||
Contributed surplus |
| |
| | ||||
Retained earnings |
| |
| | ||||
Accumulated other comprehensive loss |
| ( |
| ( | ||||
Total shareholders’ equity | $ | | $ | | ||||
Total liabilities and shareholders’ equity | $ | | $ | | ||||
Commitments and contingencies (Notes 20 and 21) | ||||||||
Subsequent events (Notes 3 (a), 3 (d)) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Franco-Nevada Corporation
Condensed Consolidated Statements of Income and Comprehensive Income |
(unaudited, in millions of U.S. dollars and shares, except per share amounts)
For the three months ended | For the six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
| 2022 |
|
| 2021 |
| 2022 |
|
| 2021 | |||||||
Revenue (Note 10) | $ | | $ | | $ | | $ | | ||||||||
Costs of sales | ||||||||||||||||
Costs of sales (Note 11) | $ | | $ | |
| $ | | $ | | |||||||
Depletion and depreciation | |
| |
| |
| | |||||||||
Total costs of sales | $ | | $ | | $ | | $ | | ||||||||
Gross profit | $ | | $ | | $ | | $ | | ||||||||
Other operating expenses (income) | ||||||||||||||||
General and administrative expenses | $ | | $ | |
| $ | | $ | | |||||||
Share-based compensation expenses (Note 12) | — | | | | ||||||||||||
Impairment charges | — | |
| — | | |||||||||||
Gain on sale of gold bullion | ( | ( |
| ( | ( | |||||||||||
Total other operating expenses | $ | | $ | |
| $ | | $ | | |||||||
Operating income | $ | | $ | |
| $ | | $ | | |||||||
Foreign exchange (loss) gain and other income (expenses) | $ | ( | $ | ( |
| $ | | $ | ( | |||||||
Income before finance items and income taxes | $ | | $ | |
| $ | | $ | | |||||||
Finance items (Note 14) | ||||||||||||||||
Finance income | $ | | $ | |
| $ | | $ | | |||||||
Finance expenses | ( |
| ( |
| ( |
| ( | |||||||||
Net income before income taxes | $ | | $ | |
| $ | | $ | | |||||||
Income tax expense (Note 15) | |
| |
| |
| | |||||||||
Net income | $ | | $ | | $ | | $ | | ||||||||
Other comprehensive (loss) income, net of taxes | ||||||||||||||||
Items that may be reclassified subsequently to profit and loss: | ||||||||||||||||
Currency translation adjustment | $ | ( | $ | |
| $ | ( | $ | | |||||||
Items that will not be reclassified subsequently to profit and loss: | ||||||||||||||||
(Loss) gain on changes in the fair value of equity investments |
|
|
| |||||||||||||
at fair value through other comprehensive income ("FVTOCI"), | ||||||||||||||||
net of income tax (Note 5) | ( | | ( | | ||||||||||||
Other comprehensive (loss) income, net of taxes | $ | ( | $ | |
| $ | ( | $ | | |||||||
Comprehensive income | $ | | $ | | $ | | $ | | ||||||||
Earnings per share (Note 17) | ||||||||||||||||
Basic | $ | | $ | | $ | | $ | | ||||||||
Diluted | $ | | $ | | $ | | $ | | ||||||||
Weighted average number of shares outstanding (Note 17) | ||||||||||||||||
Basic | | | | | ||||||||||||
Diluted | | | | | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2022 Second Quarter Financial Statements | 3 |
Franco-Nevada Corporation
Condensed Consolidated Statements of Cash Flows |
(unaudited, in millions of U.S. dollars)
For the six months ended | ||||||||
June 30, | ||||||||
| 2022 |
|
| 2021 |
| |||
Cash flows from operating activities | ||||||||
Net income | $ | | $ | | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depletion and depreciation |
| |
| | ||||
Share-based compensation expenses |
| |
| | ||||
Impairment charges |
| — |
| | ||||
Unrealized foreign exchange loss |
| — |
| | ||||
Deferred income tax expense | |
| | |||||
Other non-cash items |
| ( |
| ( | ||||
Acquisition of gold bullion | ( | ( | ||||||
Proceeds from sale of gold bullion |
| |
| | ||||
Changes in other assets |
| ( |
| ( | ||||
Operating cash flows before changes in non-cash working capital | $ | | $ | | ||||
Changes in non-cash working capital: | ||||||||
Increase in receivables | $ | ( | $ | ( | ||||
Decrease (increase) in prepaid expenses and other |
| |
| ( | ||||
Increase (decrease) in current liabilities |
| |
| ( | ||||
Net cash provided by operating activities | $ | | $ | | ||||
Cash flows used in investing activities | ||||||||
Acquisition of royalty, stream and working interests | $ | ( | $ | ( | ||||
Acquisition of investments |
| ( |
| — | ||||
Acquisition of energy well equipment |
| ( |
| ( | ||||
Proceeds from repayment of loan receivable | | — | ||||||
Proceeds from sale of investments |
| |
| | ||||
Net cash used in investing activities | $ | ( | $ | ( | ||||
Cash flows used in financing activities | ||||||||
Payment of dividends | $ | ( | $ | ( | ||||
Proceeds from draw of revolving credit facilities | — | | ||||||
Repayment of revolving credit facilities | — | ( | ||||||
Credit facility amendment costs |
| — | ( | |||||
Proceeds from exercise of stock options |
| |
| | ||||
Net cash used in financing activities | $ | ( | $ | ( | ||||
Effect of exchange rate changes on cash and cash equivalents | $ | ( | $ | | ||||
Net change in cash and cash equivalents | $ | | $ | ( | ||||
Cash and cash equivalents at beginning of period | $ | | $ | | ||||
Cash and cash equivalents at end of period | $ | | $ | | ||||
Supplemental cash flow information: | ||||||||
Dividend income received | $ | | $ | | ||||
Interest and standby fees paid | $ | | $ | | ||||
Income taxes paid | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2022 Second Quarter Financial Statements | 4 |
Franco-Nevada Corporation
Condensed Consolidated Statements of Changes in Shareholders’ Equity |
(unaudited, in millions of U.S. dollars)
|
|
| Accumulated |
|
| |||||||||||
other | Retained | |||||||||||||||
Share capital | Contributed | comprehensive | earnings | |||||||||||||
(Note 16) | surplus | loss | (deficit) | Total equity | ||||||||||||
Balance at January 1, 2022 | $ | | $ | | $ | ( | $ | | $ | | ||||||
Net income |
| — |
| — |
| — |
| |
| | ||||||
Other comprehensive loss |
| — |
| — |
| ( |
| — |
| ( | ||||||
Total comprehensive income | $ | | ||||||||||||||
Exercise of stock options | $ | | $ | ( | $ | — | $ | — | $ | | ||||||
Share-based payments | — | | — | — | | |||||||||||
Transfer of gain on disposal of equity investments at FVTOCI |
| — |
| — |
| ( |
| |
| — | ||||||
Dividend reinvestment plan |
| |
| — |
| — |
| — |
| | ||||||
Dividends declared |
| — |
| — |
| — |
| ( |
| ( | ||||||
Balance at June 30, 2022 | $ | | $ | | $ | ( | $ | | $ | | ||||||
Balance at January 1, 2021 | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Net income |
| — |
| — |
| — |
| |
| | ||||||
Other comprehensive income |
| — |
| — |
| |
| — |
| | ||||||
Total comprehensive income | $ | | ||||||||||||||
Exercise of stock options | $ | | $ | ( | $ | — | $ | — | $ | | ||||||
Share-based payments | — | | — | — | | |||||||||||
Transfer of gain on disposal of equity investments at FVTOCI | — |
| — |
| ( |
| | — | ||||||||
Dividend reinvestment plan |
| |
| — |
| — |
| — |
| | ||||||
Dividends declared |
| — |
| — |
| — |
| ( |
| ( | ||||||
Balance at June 30, 2021 | $ | | $ | | $ | ( | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2022 Second Quarter Financial Statements | 5 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2022 and 2021
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 1 - Corporate information
Franco-Nevada Corporation (“Franco-Nevada” or the “Company”) is incorporated under the Canada Business Corporations Act. The Company is a royalty and stream company focused on precious metals (gold, silver, and platinum group metals) and has a diversity of revenue sources. The Company owns a portfolio of royalty, stream and working interests, covering properties at various stages, from production to early exploration located in South America, Central America & Mexico, United States, Canada, Australia, Europe and Africa.
The Company’s shares are listed on the Toronto Stock Exchange and the New York Stock Exchange and the Company is domiciled in Canada. The Company’s head and registered office is located at 199 Bay Street, Suite 2000, Toronto, Ontario, Canada.
Note 2 - Significant accounting policies
(a) Basis of presentation
These unaudited condensed consolidated interim financial statements include the accounts of Franco-Nevada and its wholly-owned subsidiaries (its “subsidiaries”) (hereinafter together with Franco-Nevada, the “Company”). These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of condensed interim financial statements, including IAS 34 Interim Financial Reporting. These condensed consolidated interim financial statements should be read in conjunction with the Company’s annual consolidated financial statements for the year ended December 31, 2021 and were prepared using the same accounting policies, method of computation and presentation as were applied in the annual consolidated financial statements for the year ended December 31, 2021. These condensed consolidated interim financial statements were authorized for issuance by the Board of Directors on August 10, 2022.
The financial information included herein reflects all adjustments, consisting only of normal recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year. Seasonality is not considered to have a significant impact over the condensed consolidated interim financial statements. Taxes on income in the interim period have been accrued using the tax rates that would be applicable to expected total annual income.
(b) Significant judgments, estimates and assumptions
The preparation of consolidated financial statements in accordance with IFRS requires the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The areas of judgment and estimation are consistent with those reported in the annual consolidated financial statements for the year ended December 31, 2021.
(c) New and Amended Accounting Standards
Certain new accounting standards and interpretations have been published that are currently effective requirements or forthcoming requirements. These standards are not expected to have a material impact on the Company’s current or future reporting periods.
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2022 and 2021
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 3 - Acquisitions and other transactions
(a) | Financing Package with G Mining Ventures on the Tocantinzinho Gold Project – Brazil |
Subsequent to Q2 2022, on July 18, 2022, the Company’s wholly-owned subsidiary, Franco-Nevada (Barbados) Corporation (“FNBC”), acquired a gold stream with reference to production from the Tocantinzinho project, owned by G Mining Ventures Corp. (“G Mining Ventures”) and located in Pará State, Brazil (the “Stream”). FNBC will provide a deposit of $
Stream deliveries to FNBC are based on gold production from the Tocantinzinho property, according to the following schedule: (i)
The Term Loan is a $
Franco-Nevada also subscribed for
(b) | Acquisition of Caserones Royalty – Chile |
On April 14, 2022, the Company agreed to acquire, through a wholly-owned subsidiary, an effective
The Company also completed a private placement with EMX Royalty Corporation (“EMX”), acquiring
Franco-Nevada’s investments in SLM California and EMX are accounted for as equity investments and designated at fair value through other comprehensive income in accordance with IFRS 9 Financial Instruments.
2022 Second Quarter Financial Statements | 7 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2022 and 2021
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
(c) | Acquisition of Additional Castle Mountain Royalty – California, U.S. |
On May 2, 2022, the Company, through a wholly-owned subsidiary, acquired an existing
(d) | Acquisition of Royalties – Chile |
Subsequent to Q2 2022, on July 25, 2022, the Company acquired, through a wholly-owned subsidiary, a portfolio of
(e) | Acquisition of Mineral Rights with Continental Resources, Inc. – U.S. |
The Company, through a wholly-owned subsidiary, has a strategic relationship with Continental Resources, Inc (“Continental”) to acquire, through a jointly-owned entity (the “Royalty Acquisition Venture”), royalty rights within Continental’s areas of operation.
Franco-Nevada recorded contributions to the Royalty Acquisition Venture of $
The Royalty Acquisition Venture is accounted for as a joint operation in accordance with IFRS 11 Joint Arrangements.
Note 4 - Cash and cash equivalents
Cash and cash equivalents comprised the following:
At June 30, | At December 31, |
| |||||||
|
| 2022 |
|
| 2021 |
| |||
Cash deposits | $ | | $ | | |||||
Term deposits |
| |
| | |||||
$ | | $ | |
As at June 30, 2022 and December 31, 2021, cash and cash equivalents were primarily held in interest-bearing deposits.
Note 5 - Investments and loan receivable
Investments and loan receivable comprised the following:
At June 30, | At December 31, |
| |||||||
|
| 2022 |
|
| 2021 |
| |||
Loan receivable | $ | — | $ | | |||||
$ | — | $ | | ||||||
Equity investments | $ | | $ | | |||||
Warrants |
| |
| | |||||
$ | | $ | |
2022 Second Quarter Financial Statements | 8 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2022 and 2021
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
(a) | Equity investments |
Equity investments comprised the following:
At June 30, | At December 31, |
| |||||||
|
| 2022 |
|
| 2021 |
| |||
Labrador Iron Ore Royalty Corporation ("LIORC") | $ | | $ | | |||||
SLM California | | — | |||||||
Other |
| |
| | |||||
$ | | $ | |
During the six months ended June 30, 2022, the Company disposed of equity investments with a cost of $
The change in the fair value of equity investments recognized in other comprehensive income for the periods ended June 30, 2022 and 2021 were as follows:
For the three months ended | For the six months ended |
| |||||||||||||
June 30, | June 30, | ||||||||||||||
| 2022 |
| 2021 |
|
| 2022 |
|
| 2021 |
| |||||
(Loss) gain on changes in the fair value of equity investments at FVTOCI | $ | ( | $ | | $ | ( | $ | | |||||||
Income tax recovery (expense) in other comprehensive income |
| |
| ( |
| |
| ( | |||||||
(Loss) gain on changes in the fair value of equity investments at FVTOCI, net of income tax | $ | ( | $ | |
| $ | ( | $ | |
(b) | Loan receivable |
The loan receivable was extended to Noront Resources Ltd. (“Noront”) as part of the Company’s acquisition of royalty rights in the Ring of Fire mining district of Ontario, Canada, in April 2015. On May 4, 2022, following the acquisition of Noront by Wyloo Metals Pty Ltd., the Company received $
Note 6 - Prepaid expenses and other current assets
Prepaid expenses and other current assets comprised the following:
At June 30, | At December 31, | ||||||||
|
| 2022 |
|
| 2021 |
| |||
Gold bullion | $ | | $ | | |||||
Prepaid expenses |
| |
| | |||||
Stream ounces inventory | | | |||||||
Debt issue costs |
| |
| | |||||
$ | | $ | |
2022 Second Quarter Financial Statements | 9 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2022 and 2021
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 7 - Royalty, stream and working interests
(a) | Royalties, streams and working interests |
Royalty, stream and working interests, net of accumulated depletion and impairment charges and reversals, comprised the following:
Impairment | ||||||||||||||
Accumulated | (charges) | |||||||||||||
As at June 30, 2022 |
| Cost |
| depletion(1) |
| reversals |
|
| Carrying value |
| ||||
Mining royalties | $ | | $ | ( | $ | — | $ | | ||||||
Streams | | ( | — | | ||||||||||
Energy | | ( | — | | ||||||||||
Advanced | | ( | — | | ||||||||||
Exploration | | ( | — | | ||||||||||
$ | | $ | ( | $ | — | $ | |
1. | Accumulated depletion includes previously recognized impairment charges and reversals. |
Impairments | ||||||||||||||
Accumulated | (charges) | |||||||||||||
As at December 31, 2021 |
| Cost |
| depletion(1) |
| reversals |
|
| Carrying value |
| ||||
Mining royalties | $ | | $ | ( | $ | — | $ | | ||||||
Streams | | ( | — |
| | |||||||||
Energy | | ( | |
| | |||||||||
Advanced | | ( | ( | | ||||||||||
Exploration | | ( | — | | ||||||||||
$ | | $ | ( | $ | | $ | |
1. | Accumulated depletion includes previously recognized impairment charges and reversals. |
Changes in royalty, stream and working interests for the periods ended June 30, 2022 and December 31, 2021 were as follows:
Mining | |||||||||||||||||||
| royalties |
| Streams |
| Energy |
| Advanced |
| Exploration |
| Total |
| |||||||
Balance at January 1, 2021 | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Additions |
| | | | | — |
| | |||||||||||
Transfers |
| |
| — |
| — |
| — |
| ( |
| — | |||||||
Impairment (charges) and reversals |
| — | — |
| |
| ( |
| — |
| | ||||||||
Depletion |
| ( |
| ( |
| ( |
| ( |
| — |
| ( | |||||||
Impact of foreign exchange |
| ( |
| — |
| |
| |
| ( |
| ( | |||||||
Balance at December 31, 2021 | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Additions | $ | | $ | — | $ | | $ | — | $ | | $ | | |||||||
Depletion |
| ( |
| ( |
| ( |
| ( |
| — |
| ( | |||||||
Impact of foreign exchange |
| ( |
| — |
| ( |
| ( |
| ( |
| ( | |||||||
Balance at June 30, 2022 | $ | | $ | | $ | | $ | | $ | | $ | |
Of the total net book value as at June 30, 2022, $
2022 Second Quarter Financial Statements | 10 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2022 and 2021
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 8 - Other assets
Other assets comprised the following:
At June 30, | At December 31, | ||||||||
|
| 2022 |
|
| 2021 |
| |||
Deposits related to Canada Revenue Agency ("CRA") audits | $ | | $ | | |||||
Energy well equipment, net | | | |||||||
Right-of-use assets, net |
| |
| | |||||
Debt issue costs | | | |||||||
Furniture and fixtures, net |
| |
| | |||||
$ | | $ | |
Deposits related to CRA audits represent security paid in cash by the Company in connection with an audit by the CRA of its 2012-2017 taxation years, as referenced in Note 21.
Note 9 - Debt
Changes in obligations related to the Company’s credit facilities were as follows:
Corporate | |||
| revolver | ||
Size of facility | $ | | |
Balance at January 1, 2021 | $ | — | |
Drawdowns | | ||
Repayment | ( | ||
Balance at December 31, 2021 | $ | — | |
Drawdowns | $ | — | |
Repayment | — | ||
Balance at June 30, 2022 | $ | — |
(a) | Corporate Revolver |
The Company has a $
The Company has
(b) | FNBC Revolver |
The Company’s subsidiary, FNBC, had a $
2022 Second Quarter Financial Statements | 11 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2022 and 2021
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 10 - Revenue
Revenue classified by commodity, geography and type comprised the following:
For the three months ended | For the six months ended |
| ||||||||||||||
June 30, | June 30, | |||||||||||||||
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| |||||
Commodity | ||||||||||||||||
Gold(1) | $ | | $ | | $ | | $ | | ||||||||
Silver |
| | |
| | | ||||||||||
Platinum group metals(1) |
| | |
| | | ||||||||||
Iron ore(2) | | | | | ||||||||||||
Other mining assets(3) | | | | | ||||||||||||
Mining | $ | | $ | | $ | | $ | | ||||||||
Oil | $ | | $ | | $ | | $ | | ||||||||
Gas | | | | | ||||||||||||
Natural gas liquids | | | | | ||||||||||||
Energy | $ | | $ | | $ | | $ | | ||||||||
$ | | $ | | $ | | $ | | |||||||||
Geography | ||||||||||||||||
South America(3) | $ | | $ | | $ | | $ | | ||||||||
Central America & Mexico | | | | | ||||||||||||
United States |
| | |
| | | ||||||||||
Canada(1)(2) |
| | |
| | | ||||||||||
Rest of World |
| | |
| | | ||||||||||
$ | | $ | | $ | | $ | | |||||||||
Type | ||||||||||||||||
Revenue-based royalties | $ | | $ | | $ | | $ | | ||||||||
Streams(1) |
| |
| |
| |
| | ||||||||
Profit-based royalties |
| |
| |
| |
| | ||||||||
Other(2)(3) |
| |
| |
| |
| | ||||||||
$ | | $ | | $ | | $ | |
1. | For Q2 2022, revenue includes a loss of $ |
2. | For Q2 2022 and H1 2022, revenue includes dividend income of $ |
3. | For Q2 2022 and H1 2022, revenue includes dividend income of $ |
Note 11 - Costs of sales
Costs of sales, excluding depletion and depreciation, comprised the following:
For the three months ended | For the six months ended |
| ||||||||||||||
June 30, | June 30, | |||||||||||||||
| 2022 |
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||||
Costs of stream sales | $ | | $ | | $ | | $ | | ||||||||
Mineral production taxes |
| |
| |
| |
| | ||||||||
Mining costs of sales | $ | | $ | | $ | | $ | | ||||||||
Energy costs of sales |
| |
| |
| |
| | ||||||||
$ | | $ | | $ | | $ | |
2022 Second Quarter Financial Statements | 12 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2022 and 2021
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 12 - Share-based compensation expense
Share-based compensation expenses comprised the following:
For the three months ended | For the six months ended |
| |||||||||||||
June 30, | June 30, | ||||||||||||||
| 2022 |
| 2021 |
|
| 2022 |
|
| 2021 |
| |||||
Stock options and restricted share units | $ | | $ | | $ | | $ | | |||||||
Deferred share units |
| ( |
| |
| |
| | |||||||
$ | — | $ | | $ | | $ | |
Share-based compensation expenses include the amortization expense of equity-settled stock options and restricted share units (“RSUs”), as well as the gain or loss on the mark-to-market of the value of the deferred share units granted to the directors of the Company.
Note 13 - Related party disclosures
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company. Key management personnel include the Board of Directors and the executive management team.
Compensation for key management personnel of the Company was as follows:
For the three months ended | For the six months ended |
| |||||||||||||
June 30, | June 30, | ||||||||||||||
| 2022 |
| 2021 |
|
| 2022 |
|
| 2021 |
| |||||
Short-term benefits(1) | $ | | $ | | $ | | $ | | |||||||
Share-based payments(2) |
| |
| |
| |
| | |||||||
$ | | $ | | $ | | $ | |
1. | Includes salary, benefits and short-term accrued incentives/other bonuses earned in the period. |
2. | Represents the expense of stock options and restricted share units and mark-to-market charges on deferred share units during the period. |
Note 14 - Finance income and expenses
Finance income and expenses for the periods ended June 30, 2022 and 2021 were as follows:
For the three months ended | For the six months ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
|
| 2022 |
|
| 2021 |
| 2022 |
|
| 2021 | |||||||
Finance income |
|
| |||||||||||||||
Interest | $ | | $ | | $ | | $ | | |||||||||
$ | | $ | | $ | | $ | | ||||||||||
Finance expenses |
|
| |||||||||||||||
Standby charges | $ | | $ | | $ | | $ | | |||||||||
Amortization of debt issue costs |
| |
| |
| |
| | |||||||||
Interest | — |
| |
| — | | |||||||||||
Accretion of lease liabilities |
| — |
| |
| — |
| | |||||||||
$ | | $ | | $ | | $ | |
2022 Second Quarter Financial Statements | 13 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2022 and 2021
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 15 - Income taxes
Income tax expense for the periods ended June 30, 2022 and 2021 was as follows:
For the three months ended | For the six months ended |
| |||||||||||||
June 30, | June 30, |
| |||||||||||||
| 2022 | 2021 |
|
| 2022 |
|
| 2021 |
| ||||||
Current income tax expense | $ | | $ | | $ | | $ | | |||||||
Deferred income tax expense |
| | | | | ||||||||||
Income tax expense | $ | | $ | | $ | | $ | |
The Company is undergoing an audit by the CRA of its 2012-2017 taxation years, as referenced in Note 21.
Note 16 - Shareholders' equity
(a) | Share capital |
The Company’s authorized capital stock includes an unlimited number of common shares (
Changes in share capital in for the periods ended June 30, 2022 and December 31, 2021 were as follows:
Number | |||||||
|
| of shares |
|
| Amount |
| |
Balance at January 1, 2021 |
| | $ | | |||
Exercise of stock options | | | |||||
Vesting of restricted share units | | | |||||
Dividend reinvestment plan | | | |||||
Balance at December 31, 2021 | | $ | | ||||
Exercise of stock options | | $ | | ||||
Dividend reinvestment plan | | | |||||
Balance at June 30, 2022 | | $ | |
(b) | Dividends |
In Q2 2022 and H1 2022, the Company declared dividends of $
Dividends paid in cash and through the Company’s Dividend Reinvestment Plan (“DRIP”) were as follows:
For the three months ended | For the six months ended |
| |||||||||||||
June 30, | June 30, |
| |||||||||||||
| 2022 |
| 2021 |
|
| 2022 |
|
| 2021 |
| |||||
Cash dividends | $ | | $ | | $ | | $ | | |||||||
DRIP dividends |
| |
| |
| |
| | |||||||
$ | | $ | | $ | | $ | |
2022 Second Quarter Financial Statements | 14 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2022 and 2021
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 17 - Earnings per share ("EPS")
For the three months ended June 30, |
| ||||||||||||||||||||
2022 | 2021 |
| |||||||||||||||||||
|
| Shares |
| Per Share |
|
| Shares |
| Per Share |
| |||||||||||
Net income | (in millions) | Amount |
| Net income | (in millions) | Amount |
| ||||||||||||||
Basic earnings per share | $ | |
| | $ | | $ | |
| | $ | | |||||||||
Effect of dilutive securities |
| — |
| |
| ( |
| — |
| |
| — | |||||||||
Diluted earnings per share | $ | |
| | $ | | $ | |
| | $ | |
For the six months ended June 30, |
| ||||||||||||||||||||
2022 | 2021 |
| |||||||||||||||||||
|
| Shares |
| Per Share |
|
| Shares |
| Per Share |
| |||||||||||
Net income | (in millions) | Amount |
| Net income | (in millions) | Amount |
| ||||||||||||||
Basic earnings per share | $ | |
| | $ | | $ | |
| | $ | | |||||||||
Effect of dilutive securities |
| — |
| |
| ( |
| — |
| |
| ( | |||||||||
Diluted earnings per share | $ | |
| | $ | | $ | |
| | $ | |
For the three and six months ended June 30, 2022, there were
Note 18 - Segment reporting
The chief operating decision-maker organizes and manages the business under
The Company’s reportable segments for purposes of assessing performance are presented as follows:
For the three months ended June 30, | ||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||
Mining | Energy | Total | Mining | Energy | Total | |||||||||||||||
Revenue | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Expenses | ||||||||||||||||||||
Costs of sales | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Depletion and depreciation | | | | | | | ||||||||||||||
Segment gross profit | $ | | $ | | $ | | $ | | $ | | $ | |
For the six months ended June 30, | ||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||
| Mining |
| Energy |
| Total |
| Mining |
| Energy |
| Total |
| ||||||||
Revenue | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Expenses | ||||||||||||||||||||
Costs of sales | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Depletion and depreciation | | | | | | | ||||||||||||||
Segment gross profit | $ | | $ | | $ | | $ | | $ | | $ | |
2022 Second Quarter Financial Statements | 15 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2022 and 2021
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
A reconciliation of total segment gross profit to consolidated net income before income taxes is presented below:
For the three months ended | For the six months ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||
Total segment gross profit | $ | | $ | | $ | $ | |||||||||||
Other operating (income)/expenses | |||||||||||||||||
General and administrative expenses | $ | | $ | | $ | | $ | | |||||||||
Share-based compensation expense | - | | | | |||||||||||||
Impairment and charges | - | | - | | |||||||||||||
Gain on sale of gold bullion | ( | ( | ( | ( | |||||||||||||
Depreciation | | | | | |||||||||||||
Foreign exchange loss (gain) and other expenses (income) | | | ( | | |||||||||||||
Income before finance items and income taxes | $ | | $ | | $ | | $ | | |||||||||
Finance items | |||||||||||||||||
Finance income | $ | | $ | | $ | | $ | | |||||||||
Finance expenses | ( | ( | ( | ( | |||||||||||||
Net income before income taxes | $ | | $ | | $ | | $ | |
Note 19 - Fair value measurements
Fair value is a market-based measurement, not an entity-specific measurement. For some assets and liabilities, observable market transactions or market information might be available. For other assets and liabilities, observable market transactions and market information might not be available. However, the objective of a fair value measurement in both cases is the same - to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions (i.e. an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).
The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value.
● | Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. |
● | Level 2 inputs are quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices observable for the asset or liability (for example, interest rate and yield curves observable at commonly quoted intervals, forward pricing curves used to value currency and commodity contracts and volatility measurements used to value option contracts), or inputs that are derived principally from or corroborated by observable market data or other means. |
● | Level 3 inputs are unobservable (supported by little or no market activity). |
The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs.
There were
2022 Second Quarter Financial Statements | 16 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2022 and 2021
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Assets and Liabilities Measured at Fair Value on a Recurring Basis:
| Quoted prices in |
| Significant other |
| Significant |
|
|
| ||||||
active markets for | observable | unobservable |
| |||||||||||
identical assets | inputs | inputs | Aggregate |
| ||||||||||
As at June 30, 2022 | (Level 1) | (Level 2) | (Level 3) | fair value |
| |||||||||
Receivables from provisional concentrate sales | $ | — | $ | | $ | — | $ | | ||||||
Equity investments |
| |
| — |
| |
| | ||||||
Warrants |
| — |
| |
| — |
| | ||||||
$ | | $ | | $ | | $ | |
| Quoted prices in |
| Significant other |
| Significant |
|
|
| ||||||
active markets for | observable | unobservable |
| |||||||||||
| identical assets | inputs | inputs | Aggregate |
| |||||||||
As at December 31, 2021 | (Level 1) | (Level 2) | (Level 3) | fair value |
| |||||||||
Receivables from provisional concentrate sales | $ | — | $ | | $ | — | $ | | ||||||
Equity investments |
| |
| — |
| |
| | ||||||
Warrants |
| — |
| |
| — |
| | ||||||
$ | | $ | | $ | | $ | |
The fair values of the Company’s remaining financial assets and liabilities, which include cash and cash equivalents, receivables, loan receivables, accounts payable and accrued liabilities, and debt approximate their carrying values due to their short-term nature, historically negligible credit losses, fair value of collateral, or floating interest rate.
The Company has not offset financial assets with financial liabilities.
The valuation techniques that are used to measure fair value are as follows:
(a) | Receivables |
The fair values of receivables arising from gold and platinum group metal concentrate sales contracts that contain provisional pricing mechanisms are determined using the appropriate quoted forward prices from the exchange that is the principal active market for the particular metal. As such, these receivables are classified within Level 2 of the fair value hierarchy.
(b) | Investments |
The fair values of publicly-traded investments are determined based on a market approach reflecting the closing prices of each particular security at the statement of financial position date. The closing prices are quoted market prices obtained from the exchange that is the principal active market for the particular security, and therefore are classified within Level 1 of the fair value hierarchy.
The Company holds
The fair values of warrants are estimated using the Black-Scholes pricing model which requires the use of inputs that are observable in the market. As such, these investments are classified within Level 2 of the fair value hierarchy.
2022 Second Quarter Financial Statements | 17 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2022 and 2021
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
Note 20 - Commitments
(a)Commodity purchase commitments
The following table summarizes the Company’s commitments pursuant to the associated precious metals agreements as at June 30, 2022:
Attributable payable |
| |||||||||||||||||||
production to be purchased | Per ounce cash payment (1),(2) | Term of | Date of |
| ||||||||||||||||
Interest |
| Gold |
| Silver |
| PGM |
| Gold |
| Silver |
| PGM |
| agreement(3) |
| contract |
| |||
Antamina |
| | % | | % (4) | | % | n/a | | % (5) | n/a |
| 7-Oct-15 | |||||||
Antapaccay |
| — | % (6) | — | % (7) | | % |
| | % (8) | | % (9) | n/a |
| 10-Feb-16 | |||||
Candelaria |
| | % (10) | | % (10) | | % | $ | | $ | | n/a |
| 6-Oct-14 | ||||||
Cobre Panama Fixed Payment Stream |
| — | % (11) | — | % (12) | | % | $ | | (13) | $ | | (14) | n/a |
| 19-Jan-18 | ||||
Cobre Panama Floating Payment Stream | — | % (15) | — | % (16) | | % | | % (17) | | % (18) | n/a |
| 19-Jan-18 | |||||||
Condestable | — | % (19) | — | % (20) | | % | | % (21) | | % (22) | n/a |
| 8-Mar-21 | |||||||
Karma |
| | % (23) | | % | | % |
| | % (24) | n/a | n/a |
| 11-Aug-14 | ||||||
Guadalupe-Palmarejo |
| | % | | % | | % | $ | | n/a | n/a |
| 2-Oct-14 | |||||||
Sabodala |
| — | % (25) | | % | | % |
| | % (26) | n/a | n/a |
| 25-Sep-20 | ||||||
MWS |
| | % | | % | | % | $ | | n/a | n/a |
| (27) | 2-Mar-12 | ||||||
Cooke 4 |
| | % | | % | | % | $ | | n/a | n/a |
| 5-Nov-09 | |||||||
Sudbury(28) |
| | % | | % | | % | $ | | n/a | $ | |
| 15-Jul-08 |
1 | Subject to an annual inflationary adjustment except for Antamina, Antapaccay, Karma, Guadalupe-Palmarejo, and Sabodala. |
2 | Should the prevailing market price for gold be lower than this amount, the per ounce cash payment will be reduced to the prevailing market price. |
3 | Subject to successive extensions. |
4 | Subject to a fixed payability of |
5 | Purchase price is |
6 | Gold deliveries are referenced to copper in concentrate shipped with |
7 | Silver deliveries are referenced to copper in concentrate shipped with |
8 | Purchase price is |
9 | Purchase price is |
10 | Percentage decreases to |
11 | Gold deliveries are indexed to copper in concentrate produced from the project. |
12 | Silver deliveries are indexed to copper in concentrate produced from the project. |
13 | After |
14 | After |
15 | Gold deliveries are indexed to copper in concentrate produced from the project. |
16 | Silver deliveries are indexed to copper in concentrate produced from the project. |
17 | After |
18 | After |
19 | Gold deliveries are fixed at |
20 | Silver deliveries are fixed at |
21 | Purchase price is |
22 | Purchase price is |
23 | Gold deliveries were fixed until February 28, 2021. Percentage is now |
24 | Purchase price is |
25 | Based on amended agreement with an effective date of September 1, 2020, gold deliveries are fixed at |
2022 Second Quarter Financial Statements | 18 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2022 and 2021
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
26 | Purchase price is |
27 | Agreement is capped at |
28 | The Company is committed to purchase |
(b)Capital commitments
The Company is committed to funding its share of the acquisition of mineral rights acquired through the Royalty Acquisition Venture with Continental as described in Note 3 (e).
The Company also has commitments of $
Subsequent to Q2 2022, as of July 18, 2022, the Company is committed to funding its acquisition of the Stream and its obligations under the Term Loan in relation to the Tocantinzinho project as described in Note 3 (a).
Note 21 - Contingencies
Canada Revenue Agency Audit
The CRA is conducting an audit of Franco-Nevada for the 2012-2017 taxation years.
During the quarter, the Company received a Notice of Reassessment for the 2017 taxation year in relation to the Canadian Domestic Tax matters, as further detailed below in Note 21 (a). The Company has filed a formal Notice of Objection against the reassessment and has posted security in the form of cash for
Management believes that the Company and its subsidiaries have filed all tax returns and paid all applicable taxes in compliance with Canadian and applicable foreign tax laws and, as a result, no liabilities have been recorded in the financial statements of the Company for the Reassessments (as defined below), or for any potential tax exposure that may arise in respect of these matters. The Company does not believe that the Reassessments are supported by Canadian tax law and jurisprudence and intends to vigorously defend its tax filing positions.
2022 Second Quarter Financial Statements | 19 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2022 and 2021
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
The following table provides a summary of the various CRA audit and reassessment matters further detailed below:
CRA Position | Taxation Years Reassessed | Potential Exposure for Tax, Interest and Penalties (in millions) | |
Canadian Domestic Tax Matters | Upfront payment made in connection with precious metal stream agreements should be deducted for income tax purposes in a similar manner to how such amount is expensed for financial statement purposes. | 2014, 2015, 2016, 2017 | For 2014-2017: Tax: $ Interest and other penalties: $ If CRA were to reassess the 2018-2021 taxation years on the same basis: Tax: $ Interest and other penalties: $ |
Transfer Pricing (Mexico) | Transfer pricing provisions in the Act (as defined below) apply such that a majority of the income earned by the Company’s Mexican subsidiary should be included in the income of the Company and subject to tax in Canada. | 2013, 2014, 2015, 2016 | For 2013-2016: Tax: $ Transfer pricing penalties: $ Interest and other penalties: $ The amounts set forth above do not include any potential relief under the Canada-Mexico tax treaty. The Company’s Mexican subsidiary ceased operations after 2016 and no reassessments for this issue are expected for subsequent years. |
Transfer Pricing (Barbados) | Transfer pricing provisions in the Act (as defined below) apply such that a majority of the income relating to certain precious metal streams earned by the Company’s Barbadian subsidiary should be included in the income of the Company and subject to tax in Canada. | 2014, 2015, 2016, 2017 | For 2014-2017: Tax: $ Transfer pricing penalties: $ Interest and other penalties: $ If CRA were to reassess the 2018-2021 taxation years on the same basis: Tax: $ Transfer pricing penalties: $ Interest and other penalties: $ |
FAPI (Barbados) | The FAPI provisions in the Act (as defined below) apply such that a majority of the income relating to precious metal streams earned by the Company’s Barbadian subsidiary, in 2012 and 2013, should be included in the income of the Company and subject to tax in Canada. | 2012, 2013 | For 2012-2013: Tax: $ Interest and other penalties: $ Based on CRA’s proposal letter, no reassessments for this issue for years after 2013 are expected. |
(a) | Canadian Domestic Tax Matters (2014-2017) |
In October 2019, certain wholly-owned Canadian subsidiaries of the Company received Notices of Reassessment for the 2014 and 2015 taxation years (the “2014 and 2015 Domestic Reassessments”) in which the CRA increased income by adjusting the timing of the deduction of the upfront payments which were made in connection with precious metal stream agreements. The CRA’s position is that the upfront payment should be deducted for income tax purposes in a similar manner to how such upfront payment is expensed for financial statement purposes. Consequently, the CRA’s position results in a slower deduction of the upfront payment and an acceleration of the payment of Canadian taxes. This results in the Company being subject to an incremental payment of Federal and provincial income taxes for these years of $
2022 Second Quarter Financial Statements | 20 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2022 and 2021
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
filed formal Notices of Objection with the CRA against the 2014 and 2015 Domestic Reassessments, posted security in cash for
On September 14, 2021, the Company received a Notice of Reassessment for the 2016 taxation year (the “2016 Domestic Reassessment”) on the same basis as the 2014 and 2015 Domestic Reassessments, resulting in an incremental payment of Federal and provincial income taxes of $
On April 1, 2022, the Company received a Notice of Reassessment for the 2017 taxation year (the “2017 Domestic Reassessment” and, collectively with the 2016 Domestic Reassessment and the 2014 and 2015 Domestic Reassessments, the “Domestic Reassessments”) on the same basis as the 2014 and 2015 Domestic Reassessments, resulting in an incremental payment of Federal and provincial income taxes of $
If the CRA were to reassess the particular Canadian subsidiaries for taxation years 2018 through 2021 on the same basis, the Company estimates that it would be subject to an incremental payment of Canadian tax (after applying available non-capital losses and other deductions) of approximately $
(b) | Mexico (2013-2016) |
In December 2018 and December 2019, the Company received Notices of Reassessment from the CRA for the 2013 taxation year (the “2013 Reassessment”) and for the 2014 and 2015 taxation years (the “2014 and 2015 Reassessments”, collectively with the 2013 Reassessment, the “2013-2015 Reassessments”) in relation to its Mexican subsidiary. The reassessments were made on the basis of the transfer pricing provisions in the Income Tax Act (Canada) (the “Act”) and asserts that a majority of the income earned by the Mexican subsidiary should have been included in the income of the Company and subject to tax in Canada. The 2013-2015 Reassessments result in additional Federal and provincial income taxes of $
In December 2020, the CRA issued revised 2013-2015 Reassessments to include transfer pricing penalties of $
On December 21, 2021, the Company received a Notice of Reassessment for the 2016 taxation year (the “2016 Reassessment”) on the same basis as the 2013-2015 Reassessments, resulting in additional Federal and provincial income taxes of $
The 2016 Reassessment did not include transfer pricing penalties which are currently under review. If the CRA were to apply transfer pricing penalties, the Company estimates that the amount would be approximately $
For taxation years 2013 through 2016, the Company’s Mexican subsidiary paid a total of $
2022 Second Quarter Financial Statements | 21 |
Franco-Nevada Corporation
Notes to the Condensed Consolidated Financial Statements |
For the three and six months ended June 30, 2022 and 2021
(unaudited, expressed in millions of U.S. dollars, except per share amounts, unless otherwise noted)
(c) | Barbados (2014-2017) |
The 2014 and 2015 Reassessments also reassess the Company in relation to its Barbadian subsidiary. The reassessments were made on the basis of the transfer pricing provisions in the Act and assert that a majority of the income relating to certain precious metal streams earned by the Barbadian subsidiary should have been included in the income of the Company and subject to tax in Canada, resulting in additional Federal and provincial income taxes of $
As noted above, in December 2020, the CRA issued revised 2014 and 2015 Reassessments to include transfer pricing penalties of $
On December 21, 2021, the Company received the 2016 Reassessment as well as a Notice of Reassessment for the 2017 taxation year (the “2017 Reassessment”, collectively with the 2016 Reassessment, the “2016 and 2017 Reassessments”) that reassess the Company in relation to its Barbadian subsidiary on the same basis as the 2014 and 2015 Reassessments, resulting in additional Federal and provincial income taxes of $
If the CRA were to reassess the Company for taxation years 2018 through 2021 on the same basis and continue to apply transfer pricing penalties, the Company estimates that it would be subject to additional Canadian tax for these years of approximately $
(d) | Barbados (2012-2013) |
In August 2020, the Company received Notices of Reassessment for the 2012 and 2013 taxation years (the “FAPI Reassessments” and, collectively with the Domestic Reassessments, the 2013 Reassessment, the 2014 and 2015 Reassessments, and the 2016 and 2017 Reassessments, the “Reassessments”) in relation to its Barbadian subsidiary. The FAPI Reassessments assert that a majority of the income relating to precious metal streams earned by the Barbadian subsidiary, in those years, should have been included in the income of its Canadian parent company and subject to tax in Canada as Foreign Accrual Property Income (“FAPI”). The CRA has noted that its position may not extend beyond the 2013 taxation year. The FAPI Reassessments result in additional Federal and provincial income taxes of $
The CRA audit is ongoing and there can be no assurance that the CRA will not further challenge the manner in which the Company or any of its subsidiaries has filed its tax returns and reported its income. In the event that the CRA successfully challenges the manner in which the Company or a subsidiary has filed its tax returns and reported its income, this could potentially result in additional income taxes, penalties and interest, which could have a material adverse effect on the Company.
2022 Second Quarter Financial Statements | 22 |