Franco-Nevada Corp (FNV) 2021 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Franco-Nevada Corporation Q2 2021 Results Conference Call. This call is being recorded today, August 12, 2021. (Operator Instructions)

I would now like to turn the conference over to your host, Bonavie 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 our 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.

Thanks, Bonavie. Good morning, and thanks for joining our call. We're delighted to announce a record second quarter that builds on the momentum from our first quarter. Records for the quarter include GEOs sold, revenues, adjusted EBITDA and adjusted net income. We also continue to operate at near record margins. In Q2, we received our first payment under the newly acquired Vale iron ore debentures, the ongoing ramp-up with Cobre Panama and higher deliveries from our Guadalupe stream were the other main drivers for the increase in GEOs sold. For the second half of 2021, we expect our portfolio to continue its strong performance but expect lower deliveries and revenues from Tasiast as it recovers from the mill fire and Hemlo with less production on our royalty ground.

We're raising the lower end of our GEO guidance for the year based on the strong performance of our mining assets year-to-date. And with the recovery in oil and gas prices, energy revenues for the quarter were well again ahead of our guidance run rate. And as a result, we've made a meaningful increase to our energy revenue guidance for the year. A theme for this reporting season has been cost inflation, labor materials and energy. This is a stage in the cycle where our business model really distinguishes itself. Our revenue-based royalties and streams aren't impacted by cost inflation. We operate with small headcount and low G&A. Commodity price increases flow directly to our bottom line. In fact, we have leveraged inflation as energy and steel prices increase will benefit through our portfolio of energy and iron ore royalties.

Turning to our growth outlook. We expected 2021 to be a strong growth year, driven mostly by increasing contribution from Cobre Panama. We've added to that growth with 3 new acquisitions totaling $850 million this year; Haynesville, Condestable and the 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 add to our base of low-risk, long-life cash flow and also increase our asset diversity. With the additions, the portfolio remains more than 80% precious metal focused.

We're guiding to 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 tour visit to the Detour Lake mine this week. We came away very impressed with their team, the optimizations that are driving the output expansion and the potential for the ore body to become far bigger over time. As a first step, we expect you'll see a meaningful increase to the resource based on the drilling that they're doing this year.

In terms of new gold mines, Gold Fields reports that Salares Norte 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 time line. Continued strong copper prices bode well for our pipeline of long-term copper development projects, Alpala, Taca Taca and NuevaUnión amongst others. One of the larger long-term options in our portfolio are 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 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 $1 billion 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 continue to showcase the strength of Franco-Nevada's portfolio. Our royalty and stream assets, both mining and energy, continued to perform well, either in line or ahead of expectations. As Paul mentioned, the company achieved many financial records for second quarter with GEOs 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 gold and gold equivalent ounces sold for the 3 and 6 months ended June 30, 2021 and 2020. Overall GEOs sold increased significantly over prior year as operations that were impacted by the COVID-19 pandemic in 2020 are now back to normal operations. For the quarter, GEOs sold of 166,856 was 60% higher than prior year. For the quarter, we had strong performance from a number of key assets. Main contributors were Cobre Panama, Guadalupe, Antapaccay and Antamina, all of which produced ahead of expectations. Also, the company recorded its first GEO 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 1 to June 30, 2021. The actual royalty premium payment will be declared on September 30. 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 third quarter. One asset which did underperform for the quarter was Hemlo. We recorded less GEOs 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 7% less GEOs being recorded during the quarter compared to 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 30, 2020 and 2021. As you can see from the bar charts, revenue and adjusted EBITDA has increased significantly year-over-year. The $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. 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 of Q2 2020, we saw record low 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 GEOs sold and an increase in commodity prices, both precious metals and energy. On the cost side, 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, the company recorded the first depletion associated with the Vale Royalty. Adjusted net income and adjusted net income per share increased significantly in second quarter 2021. Adjusted net income was $182.6 million or $0.96 per share, increases of approximately 100% for both over prior year. Franco-Nevada is both a royalty and streaming company.

Slide 6 breaks down the mix between streams and royalty revenue for 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 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 cost per ounce, includes our cost of sales less cost associated with the energy business, which are minimal. Cash cost per ounce usually ranges between $250 to $300 per GEO 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 is 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 clearly 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. This 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 any one operator is again 19%, which is First Quantum, who operates Cobre Panama.

On Slide 10, we have provided updated guidance for 2021. As you will recall, we had previously raised our GEOs sold guidance to 580,000 to 615,000 with the acquisition of the Vale Royalty. With the strong performance for the first 6 months of 2021, we are increasing the bottom end of that range to 590,000. So the new GEOs 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 land. As you saw, the Q2 2021 Hemlo revenue was significantly lower than prior periods.

For Musselwhite, one of our other NPIs, 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. Thus, 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 million 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 draw 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.

(Operator Instructions) Your first question comes from Greg Barnes, TD Securities.

It's Greg Barnes. Sandip, just on the Vale accrual of $24 million, I think it was -- or $28 million. That's a bit lower than I was expecting, closer to $40 million. Are there some lags or pricing adjustments that go into this? And how should we model it going forward?

Greg, it's Eaun here. Yes, I guess a couple of things. First to keep in mind is payments are originating from the Northern system, which has a fair bit of 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. So we've made a conservative estimate there in terms of what actually got sold in the first half. So 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 a 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 made a provision for that as well to account for the likely lag. We'll get the actual determination at the end of September. And from there, we 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. And in terms of the pricing, you said there was 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, Eaun?

Vale 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.

Your next question comes from Josh Wolfson of RBC.

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 mentioned top-up payments? Maybe you can 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 sort of talked about that.

Yes. I guess, I think probably what you're referring to is sort of 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 that we expect to receive for the next 6 months and the commodity prices that we've provided. So there aren't any sort of onetime catch-up payments in the rest of the forecast.

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

Somewhat. Yes, if we've accrued a lower revenue than we actually received 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. So when they come on unexpectedly, what happens is we get an adjustment that we have to make retroactively. So those are hard to know when they're going to come through. But 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 true-up.

Okay. And on the gold side of the business for guidance on Hemlo, I guess 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, I guess, the impact of the margin component for the NPI, should we assume that the portion of the line that, I guess, Barrick is on now is going to reflect what the second quarter type of volumes would be attributable to Franco would be going forward?

Yes, Josh, that's our best estimate. We're looking at second quarter, it was lower than we expected and sooner with 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. And then maybe final question, if the team or 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 there coming in and new resource? If there's anything that can be kind of commented on.

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

Your next question comes from Brian MacArthur of Raymond James.

My question goes back to the Vale true-up as well. So are we truing up all 6 months going forward? I mean, I get it. There's lags of 3 to 6 -- 3 to 4, 5 months in contracts. But as we have a rise in price here, have we been, a sort of way, booked? You know what Q1 is and we're just truing 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 the asset potentially to peak at 6 months, we'll 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'm surprised that it was only $28 million this quarter.

Yes. So 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 30. That will 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's going to be adjustments every quarter. That's not exactly 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, is going to be the norm.

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

No, we'll do it every quarter.

Perfect. And my second question, just -- I noticed you changed the Sudbury stream payment. So it's 60% as opposed to $800 above a certain price, I think it was $1,333. Just to be clear though, if the gold price were to go back down below $1,333, 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.

Your next question comes from Cosmos Chiu, CIBC.

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 the commodity price increase. I would imagine there's some increase in drilling activity that's been factored in as well?

Cosmos, it's Jason here. The bulk of that increase really is commodity price related. As you mentioned, we did the forecast at $60 WTI and $2.75 for gas. We're currently sitting above that for both commodities. But 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 our 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, 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, off-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 a very, very low level. That rebound, we assumed would take place over 4 or 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 sort of trajectory that we had assumed at the time. So, 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 shale 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. So we'll see over the next couple of years, what amount of capital gets put towards drilling programs, and that will ultimately -- we'll 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 space, both in oil and in gas. The pace of opportunities 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 amount of investment 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'll 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 maybe Paul.

Sure. Cosmos, on the gold side, I would say, yes, we're seeing a pretty healthy pipeline of primary gold projects kind of moving towards the development phase. And so in that kind of 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 a sort of unwritten target to have at least a 1% dividend yield. Paul, maybe could you maybe comment on that? Is that something that you still sort of target right now?

The -- Cosmos, thanks for the question. The most fundamental things, as we've always said, when our Board looks at dividends is, number one, they want to make sure that Franco, they never have to reduce the dividend. So that payout is always going to be conservative. Second is they're tremendously proud of the record they have of increasing the dividend every year and so 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, the -- 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. 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. And in terms of the various deposits out there, as you know, there are a number of chrome deposits. And the -- between them, we're at 3% on some and a 2% on others. I need to put out the asset handbook to give you the names of which of which, but we do give the detail in there. And then also a 2% royalty on the -- sorry, a 1% royalty on the Eagle nickel deposit, which I think is the first deposit that we'll be [looking at].

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

Cosmos stole some of my thunder, I was going to ask about the Ring of Fire. But maybe I'll kind of ask it in a different way. What would -- maybe the next year or 2, Paul, what would be the plans for BHP? Have you talked 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 20. It's for under -- this is from Reuters, and a formal announcement to come Sunday. Do you think Ring of Fire will be something that will be discussed in the election?

Mike, I don't have a view directly from BHP yet. I suspect in the shorter term, no change from the current plans. The -- as you're probably well aware, the first step is getting the road built up there. And Noront has already been working with the First Nations on the permitting of that road, and the work has been given the -- the First Nations will be the proponents to do the environmental assessment so that the road can get permitted. So 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 it's probably a bit premature for this election.

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

Your next question comes from Tyler Langton, JPMorgan.

I guess just to start on the guidance, the GEO guidance for the year, the 590,000 to 615,000, and I know you talked about sort of being on the higher end of that range. I guess, through the first half, you're, I think, around 316,000. I guess you kind of mentioned Hemlo, but are there any other just sort of assets to look at in terms of what is causing a slightly sort of weaker second half, especially, I guess, iron ore with the lag should probably be sort of better in the second half?

Yes. So 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, 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. So those are 2 mines that were -- where we had prior period adjustments that were 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 that -- in Mauritania there with Kinross. So those are sort of the adjustments that we've reflected in the guidance for the next 6 months.

Okay. That's helpful. And then just with energy, I think the 2025 guidance for energy was sort of $150 million to $170 million. So you're kind of there already this year, kind of with even, I guess, potentially higher this year with sort of current commodity prices. When we think about 2025, I mean, if current prices hold, could that number be higher? Just any color on how to think about sort of that '25 -- 2025 number versus this year's guide.

Yes. In all likelihood, if you did 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.

Your next question comes from Tanya Jakusconek, Scotiabank.

I just wanted to follow up, and thank you, Sandip, for some of the clarity on the guidance for 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. So 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 a calculation in previous years. We were booking 11,250 GEOs per year. It's dropped and then -- to half of that this year and then next year, we're expecting 1,350 going forward.

That 1,350, that's what we had. I just seem to have -- okay. So that makes sense. And then maybe just coming back to -- I know we talked a bit about the M&A and transactions that are out there and the project financing, I think you said medium-sized deal bracket. Maybe can we just define the medium-sized deal bracket? Is it still within that $200 million to $500 million range that we're talking about?

Tanya, it's Eaun here. I would say yes, $100 million to $300 million is more what I would find as midsized 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?

Sure. As you know, it's gaining momentum. I think there's 130 of the 139 OECD countries 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, United States, 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.

(Operator Instructions) There are no further questions. So 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 3 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.