Ecora Royalties Plc · LSE:ECOR
Ecora Royalties — H1 2024 Earnings Presentation
31 slides from Ecora Royalties's earnings presentation, Sep 3, 2024
Slide 1: Ecora Resources PLC Half Year Results Presentation
Providing capital to the Providing capital to the mining sector required mining sector to supply to supply the commodities the commodities central central to a sustainable future to a sustainable future Ecora Resources PLC Half Year Results Presentation September 2024
Slide 2: Important disclaimer
Important disclaimer • This document has been prepared and issued by and is the sole responsibility of Ecora Resources PLC (the “Company”) and its subsidiaries (the “Group”) for selected recipients. It comprises the written materials for a presentation to investors and/or industry professionals conc
Slide 3: H1 2024 summary
H1 2024 summary Strong financial Portfolio update performance • Strong Kestrel performance • Portfolio contribution of $51.3m (H1 2023: $44.5m) • Acquisition of a 0.85% GRR over the Phalaborwa rare earths project • AEPS of 10.38c (H1 2023: 9.06c) • Voisey’s Bay underground mine ramping-up to full pr
Slide 4: Financial Review
Financial Review
Slide 5: Financial performance
Financial performance Portfolio contribution Adjusted earnings per share(1) Free cash flow(2) (US$m) (USc) (US$m) 143.2 37.55 137.2 50.4 9.47 55.4 25.18 85.6 63.6 15.72 52.8 47.5 62.6 19.1 19.68 28.08 11.82 92.8 8.29 81.8 35.0 23.4 2.76 25.4 41.3 51.3 12.8 44.5 9.06 10.38 15.6 24.1 23 7.4 5.5 22.2 9
Slide 6: Portfolio contribution increased 15%
Portfolio contribution increased 15% ($m) H1 2024 H1 2023 % Core portfolio Voisey’s Bay (cobalt)(1) 1.6 2.4 (33%) Mantos Blancos (copper) 2.8 3.3 (15%) Maracás Menchen (vanadium) 1.1 1.7 (35%) LIORC (high purity iron ore pellets) 0.3 1.0 n/a McClean Lake (uranium) 2.5 2.2 14% Four Mile (uranium) 1.4
Slide 7: Adjusted earnings
Adjusted earnings Change in Earnings (US$m) 51.3 (1.7) (5.8) (4.9) (12.3) 26.6 10.4c Portfolio McClean Lake principal Operating expenses Finance costs Taxes Adjusted earnings Adjusted earnings per contribution repayment share HY 23 (US$m) 44.5 (1.3) (5.0) (2.8) (10.9) 23.4 9.1 • Increase in finance
Slide 8: Summary balance sheet
Summary balance sheet ($m) 30 June 2024 31 Dec 2023 30 June 2023 Metal streams (inc deferred tax) 193.9 195.0 195.7 Coal royalties (Kestrel) 51.4 77.4 60.7 Royalty financial instruments 31.3 32.8 44.0 Royalty and exploration intangibles 263.0 269.8 248.1 Other long-term receivables 27.6 33.7 33.3 To
Slide 9: Balance sheet remains robust
Balance sheet remains robust Change in net debt (US$m) 10 18 (38) 4 7 9 (10) 11 11 86 75 01-Jan-24 Acquisitions Finance cost, FX & Operating costs Taxes Share buy back Portfolio Disposals Dividend 30-Jun-24 Change to net debt other contribution position HY 2023 (US$m) 36 18 2 6 20 - (46) (5) 11 43 7
Slide 10: H1 2024 dividend of ¢1.7 per share
H1 2024 dividend of ¢1.7 per share 2023 2024 H1 H2 H1 H2 Interim Payout range Dividend $12.8m $12.6m (25 – 35%) distribution dividend Average FCF ¢1.7 per 33% $12.7m share Half Year Results - September 2024 10
Slide 11: Portfolio update
Portfolio update
Slide 12: Diversified portfolio of low-cost assets backed by strong operators
Diversified portfolio of low-cost assets backed by strong operators Geographic exposure (1) Cost curve positioning of our key assets (3) South America 43% 1st Quartile 39% 96% North America 30% 84% 2nd Quartile 45% 1st & 2nd OECD(2) Australia 23% 3rd Quartile 15% quartile Other 4% 4th Quartile 1% Co
Slide 13: Portfolio developments
Portfolio developments Kestrel (steelmaking coal) West Musgrave (nickel copper) • Saleable volumes from Group’s private royalty area • Construction > 21% complete totaled 2.0Mt (H1 2023: 1.4 Mt) • Temporarily suspending operations from October • Kestrel operations returning to Ecora royalty area 202
Slide 14: Kestrel update
Kestrel update LEGEND • H1 2024 portfolio contribution of $40.8 million Royalty Area • Saleable production volumes in H1 of 2Mt at top end of FY 24 guidance (1.8-2.0 Mt) • Minimal production volumes expected from Group’s private royalty area in H2 24 • FY 25 forecast production volumes within Ecora
Slide 15: Voisey's Bay – material ramp up starting in H2
Voisey’s Bay – material ramp up starting in H2 Voisey’s Bay ore production ramp-up profile(1) (million tonnes per year) ✓ Reid Brook activities are largely complete Open pit ~3.0 Underground (VBME) 2.8 ✓ Eastern Deeps activities expected to be completed in H2 2024 2.3 Cobalt shipment guidance (100%
Slide 16: Phalaborwa project: adds rare earths to commodity basket
Phalaborwa project: adds rare earths to commodity basket Rainbow Rare Earths (Rainbow) US$1.5 million Equity subscription – Listed on the London Stock Exchange (LSE: RBW) with a GBp11.3652 per share, priced at 20-day VWAP market capitalization of ~US$80m – Majority owner (85%) of Phalaborwa rare ear
Slide 17: NexGen's uranium discovery continues to expand
NexGen’s uranium discovery continues to expand Ecora’s royalty area at NexGen’s SW2 project(1) NexGen has announced a material expansion in the mineralised zone at Patterson Corridor East (PCE)(2) • Off-scale (>61,000 cps) high-grade uranium mineralization has been intersected in four drillholes • G
Slide 18: Capital allocation
Capital allocation Priorities Philosophy Outcomes Acquire high quality royalties to further Acquired a 0.85% GRR over the Phalaborwa Growth diversify and grow the portfolio rare earths project for $8.5 million Focus on post-transaction balance sheet Expect peak net debt (ex-acquisitions) was Delever
Slide 19: Growth strategy update
Growth strategy update Our strategic priorities Illustrative commodities universe ✓ Copper ✓ Manganese • Infill around cornerstone royalties ✓ Zinc ✓ Uranium • Focus on acquiring producing or near-term income royalties ✓ Tin ✓ Vanadium • Smaller investments in high quality, earlier stage projects ✓
Slide 20: Near term catalysts
Near term catalysts 2024 2025 2026 Voisey’s Bay Underground ramp up Financing Detailed Engineering Santo Domingo Construction partnership / Sanctioning West Musgrave Construction temporarily suspended – to be reviewed by Feb 2027 Mantos Blancos Sanctioning / potential Phase II FS expansion Piauí Con
Slide 21: What is priced into the shares today?
What is priced into the shares today? Analyst consensus NAV/share(1) (p/share) £0.11 (£0.28) £0.83 Value not currently £1.11 reflected in £0.90 market value Current share price: 60p Current Ecora share £0.60 price of 60p £0.13 per share Kestrel Producing Near Term Other Growth Net debt Total NAVPS A
Slide 22: Outlook
Outlook Focus on diversifying and scaling royalty portfolio to achieve premium royalty company valuation. VOLUME GROWTH STRONG BALANCE SHEET Production volume growth expected in 2024 and 2025 1.4x leverage and no firm capital commitments COPPER GROWTH PORTFOLIO ATTRACTIVE ENTRY POINT Sector leading
Slide 23: Appendix
Appendix
Slide 24: Green shoots to pricing for our key growth commodities
Green shoots to pricing for our key growth commodities Copper(1) Cobalt(2) Nickel(1) $5.0 $18 $10 $17 Average YTD $9 Average YTD $4.5 Average YTD $16.1/lb $7.8/lb $4.1/lb $16 $8 $4.0 $15 $7 $3.5 $14 $6 Aug-23 Oct-23 Dec-23 Feb-24 Apr-24 Jun-24 Aug-24 Aug-23 Oct-23 Dec-23 Feb-24 Apr-24 Jun-24 Aug-24
Slide 25: Ecora offers exceptional value relative to peers and in absolute terms
Ecora offers exceptional value both relative to peers and in absolute terms Market Cap(1) P/NAV(1) EV/2024E EBITDA(1) 2024E EBITDA(1) 2025E FCF Yield(1) (US$M) (x) (x) (US$M) (%) LTM LTM Avg. Max ECORA Ecora $197 0.4x 0.5x 0.6x 5.3x $54 13.7% LIORC $1,439 0.9x 0.9x 1.0x 6.3x $221 8.0% Deterra $1,317
Slide 26: Year on year volume growth
Year on year volume growth Steady state annual Commodity 2023A 2024 guidance H1 2024 production Producing Kestrel Steelmaking 1.6 mt 2.0 mt 2.0 mt - (Ecora royalty area) coal Voisey’s Bay Cobalt 11d 12-16d 4d c. 40d(1) (Deliveries on 100% basis, 70% attr to Ecora) Mantos Blancos(2) Copper 49.5 kt 49
Slide 27: Value opportunity has two drivers
Value opportunity has two drivers Organic growth potential(1) Rerating potential(2) (In US$ millions) (In US$ millions) EBITDA growth Multiple expansion Multiple expansion potential when Ecora cashflows are Illustrative EV at US$100m EBITDA & flat trading multiple derived primarily from base metals
Slide 28: Diversified portfolio of producing royalties
Diversified portfolio of producing royalties Market cap of listed producing royalty counterparties ~ $200bn Voisey’s Bay IOC McClean Lake Mill EVBC Carlota Maracás Menchen Kestrel Mantos Blancos Four Mile Producing Voisey’s Mantos Maracás McClean Asset / IOC Kestrel EVBC Four Mile Carlota commodity(
Slide 29: Supported by a strong growth pipeline
Supported by a strong growth pipeline Ring of Fire SW2 Salamanca Incoa Piauí West Cañariaco Musgrave Nifty Santo Domingo Phalaborwa Pilbara Vizcachitas Development Early Stage West Santo Piauí Phalaborwa Incoa Nifty Asset / Musgrave Domingo Calcium Vizcachitas Salamanca SW2 Pilbara Cañariaco Ring of
Slide 30: Investor information
Investor information Top Shareholders (as at 30 June 2024) (1) Analyst coverage Berenberg South32 16.9% Richard Hatch (London) Canaccord Genuity Aberforth Partners 7.8% Alex Bedwany (London) Peel Hunt Schroder Investment Management 6.2% Pete Mallin-Jones (London) RBC Hargreaves Lansdown 4.1% Marina
Slide 31: Endnotes
Endnotes Third party information As a royalty and streaming Company, the Group often has limited, if any, access to non-public scientific and technical information in respect of the properties underlying its portfolio of royalties, or such information is subject to confidentiality provisions. As suc