Physical: Acute and Chronic Physical Risks Drought and Water Scarcity: Constraints on water availability affecting operational capacity Potential Financial Impact for: Description Our Operating Partners Our Company Mitigating Actions Consecutive dry days are elevated at baseline and are projected to increase across most regions under both low - and high - emissions scenarios. Regions with notably high baseline exposure and increasing trends include Chile, West Africa, the western United States, Brazil, Peru and South Africa, indicating persistent drought conditions throughout the year rather than isolated seasonal events. In parallel, high water - stress index regions include Mexico, the United States, western Canada, South Africa, Australia, Chile and parts of West Africa, reflecting both physical water scarcity and competing demands on available water resources. In addition, eastern Canada is projected to experience a significant increase in water stress under both emissions scenarios, driven primarily by population growth and human - driven water demand rather than meteorological drought. This represents a potential emerging hotspot for operational risk, characterized by less predictable water - availability constraints despite historically wetter baseline conditions. Water scarcity and increasing demand pressures may constrain water availability for certain mining operations, potentially limiting operational capacity and affecting the timing of mineral extraction and GEO deliveries at individual sites. These impacts are typically concentrated at the operating - partner level and are influenced by site - specific water sourcing, permitting frameworks and infrastructure. While water - supply constraints may periodically affect production capacity, operating partners commonly mitigate impacts through proactive water - management planning, securing alternative water supplies, recycling and efficiency measures, and permit - backed access arrangements. Consistent with its non - operating model, Franco - Nevada’s exposure to water - related physical risk is therefore expected to manifest primarily through timing effects rather than permanent loss of value, supported by robust pre - investment due diligence, jurisdictional screening and ongoing asset - level monitoring. Operational throughput constraints Water scarcity may limit the availability of water required for mineral processing, cooling systems or dust - control activities, resulting in reduced throughput or temporary curtailment of operations during periods of sustained drought or elevated demand. Higher operating and capital costs Operators may incur higher operating costs and incremental capital requirements associated with securing alternative water supplies, maintaining or renewing water - use permits, and implementing water - efficiency, recycling or storage upgrades, which may increase unit costs and affect operating margins. Water - access and permitting risk In certain jurisdictions, operators may face water - access constraints where shared or third - party water - supply permits prove inaccurate, contested or insufficiently validated during project due diligence, potentially limiting available supply and constraining operational flexibility. Allocation risk during periods of scarcity Where governments prioritize municipal, agricultural or other essential users during periods of water scarcity, mining operations may be subject to reduced water allocations, further limiting processing capacity and production rates. Higher - cost supply alternatives In regions experiencing chronic water stress or limited freshwater availability, operators may be required to explore higher - cost water - supply options, such as desalination or long - distance water transport, which may involve elevated capital investment and ongoing operating costs. Reduced or delayed GEO deliveries Where water scarcity constrains operating - partner output, Franco - Nevada may experience reduced or delayed GEO deliveries under its royalty and stream interests, primarily reflecting timing effects rather than permanent loss of production. Revenue timing and near - term growth impacts Production curtailments or operating constraints arising from water - availability limitations may result in deferred revenue recognition and some downside to near - term growth expectations, particularly where development or expansion plans are rescheduled in response to water - supply uncertainty. Asset - level economic sensitivity and impairment risk In regions where chronic water scarcity materially weakens long - term project economics, including through sustained increases in operating costs or capital requirements, there is a risk that long - life assumptions may be revised, potentially increasing impairment risk for affected assets over time. Portfolio - level exposure and concentration effects While Franco - Nevada’s diversified, non - operating portfolio limits exposure to any single asset or jurisdiction, repeated water - related constraints affecting multiple assets within a region could influence portfolio - level GEO attribution and the timing of expected cash flows. Limited direct cost exposure, with indirect value impacts Consistent with Franco - Nevada’s royalty and streaming model, the company does not bear direct operating or capital costs associated with water - supply constraints. However, indirect impacts may arise through changes in production profiles, delivery timing, asset valuations and long - term growth assumptions for affected projects. Pre - investment water - risk screening and capital allocation discipline Franco - Nevada’s ability to influence water - related outcomes is greatest at the pre - investment stage, where water availability, water - stress conditions, hydrological trends and permitting frameworks are assessed as part of due diligence. These considerations inform capital allocation decisions, asset selection and jurisdictional exposure, particularly for assets located in water - stressed or drought - prone regions. Ongoing monitoring and targeted engagement post - investment Following investment, Franco - Nevada monitors water - related developments at operating assets through regular engagement with operating partners and the exercise of contractual information rights. Where appropriate, the company may engage with operators on water - management practices, drought preparedness and longer - term water - supply strategies intended to enhance operational resilience. Management oversight and Board escalation Water - related physical risks are evaluated by management and technical teams as part of ongoing portfolio oversight. Matters involving heightened uncertainty or potential longer - term impacts on asset performance or economics are escalated to the Board, as well as the board of directors of any subsidiary that is party to a transaction, and relevant Committees for review, reflecting the importance of water availability to long - term portfolio resilience. Franco-Nevada Corporation 62