Ecora Royalties Plc · LSE:ECOR
Ecora Royalties — Anglo Pacific Group — Merger or Acquisition (February 2021)
28 slides from Ecora Royalties's merger presentation, Feb 24, 2021
Slide 1: Transformational Acquisition of Voisey's Bay Cobalt Stream
Anglo Pacific Group PLC TRANSFORMATIONAL ACQUISITION OF VOISEY’S BAY COBALT STREAM 24 February 2021
Slide 2: Disclaimer
1 DISCLAIMER NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION THIS PRE
Slide 3: Transformational Acquisition of Voisey's Bay Cobalt Stream for US$205M
2 TRANSFORMATIONAL ACQUISITION OF VOISEY’S BAY COBALT STREAM FOR US$205M A New Cornerstone Asset Repositions the Portfolio • An established world class, low cost operation • Rebalances towards 21st century commodities • One of the largest non-DRC sources of cobalt • Addresses Kestrel medium term roy
Slide 4: Transaction Summary
3 TRANSACTION SUMMARY VOISEY’S BAY • An operating nickel-cobalt-copper mine, located in Canada, a well- established mining jurisdiction • Operated by Vale Canada Ltd, a subsidiary of Vale S.A., one of the worlds largest mining companies • Projected mine life to 2034, based on current reserves, with
Slide 5: Transaction Funding and Financial Impact
4 TRANSACTION FUNDING AND FINANCIAL IMPACT TRANSACTION FUNDING FINANCIAL IMPACT In US$ million) Equity placing (19.99% Share Capital) $60(3) • Proforma net debt is expected to be c.US$120m at close with leverage of ~3x and rapid deleveraging to ~2x expected to occur by mid 2022 LIORC proceeds $85(4)
Slide 6: An Accretive Transaction for Shareholders
5 AN ACCRETIVE TRANSACTION FOR SHAREHOLDERS Transforms World class Proactive Delivers on Attractive commodity mine and redeployment ESG cobalt exposure counterparty of capital objectives dynamics ANGLO PACIFIC GROUP PLC
Slide 7: Electric Vehicles Expected to Underpin Cobalt Demand Growth
6 ELECTRIC VEHICLES EXPECTED TO UNDERPIN COBALT DEMAND GROWTH OVERVIEW (8) FORECAST EV SALES & MARKET SHARE (9) (LHS: EV sales in millions, RHS: Total car sales) • Cobalt has a variety of end-uses including: batteries, superalloys, EV Sales EV market share catalysts and carbides • Automotive batteri
Slide 8: Supply May Struggle to Meet Demand Growth Resulting in Market Deficits
7 SUPPLY MAY STRUGGLE TO MEET DEMAND GROWTH RESULTING IN MARKET DEFICITS OVERVIEW (8) FORECAST COBALT SUPPLY AND DEMAND (8) (In Mt) • Limited supply growth with production mostly in the form of by-products Operational supply Highly probably additional tonnes Probable additional tonnes Possible addit
Slide 9: Voisey's Bay: A Tier Mine Located in Canada and Operated by Vale
8 VOISEY’S BAY: A TIER 1 MINE LOCATED IN CANADA AND OPERATED BY VALE 16-YEAR PRODUCTION TRACK RECORD CANADA • Nickel mine with copper and cobalt by-products Voisey’s Bay Mine • Produces premium alloy grade cobalt metal products • Current open pit operations expected to deplete in 2022 Newfoundland &
Slide 10: Voisey's Bay is a World Class, Low-Cost Mine with Leading ESG Credentials
9 VOISEY’S BAY IS A WORLD CLASS, LOW-COST MINE WITH LEADING ESG CREDENTIALS RANKED BY CASH COSTS (16) (17) RANKED BY CO2 INTENSITY (16) (18) (19) (Total cash costs in US$/lb, on co-product basis) (In tonnes of CO2 eq. per tonne of saleable nickel) $8.0 270 225 $6.0 Voisey’s Bay 180 $4.0 135 90 $2.0
Slide 11: Repositioning Anglo Pacific Towards 21st Century Commodities
10 REPOSITIONING ANGLO PACIFIC TOWARDS 21ST CENTURY COMMODITIES COMMODITY EXPOSURE BY PORTFOLIO VALUE GEOGRAPHIC EXPOSURE BY PORTFOLIO VALUE As of 31-Dec-20 (Unaudited) (12) As of 31-Dec-20 (Unaudited) (12) Iron Ore 31% Canada 39% Coking coal 17% Australia 37% ~22% Base Metals 16% ~93% South America
Slide 12: Growing Revenues from Battery Metals
11 GROWING REVENUES FROM BATTERY METALS COMMODITY EXPOSURE BY PORTFOLIO CONTRIBUTION CALENDAR YEAR 2020 PRO FORMA INCL. VOISEY’S BAY PRO FORMA INCL. PIAUI & INCOA <10% ~41% ~51% BATTERY BATTERY BATTERY METALS METALS METALS ~41%(2) battery ~51%(2) battery related metals related metals As of 31-Dec-20
Slide 13: Proactive Capital Reallocation Following Strong Outperformance of Iron Ore
12 PROACTIVE CAPITAL REALLOCATION FOLLOWING STRONG OUTPERFORMANCE OF IRON ORE IRON ORE VS COBALT PRICE PERFORMANCE ONE MONTH AVERAGE VS RBC LT PRICES (Rebased to 100 as of 1 January 2018) (20) (21) Iron Ore (22) 1 Month Average vs. (US$ per tonne) (20) (23) RBC LT Forecast: (22) 2.3x 62% Iron Ore CF
Slide 14: The New Anglo Pacific Group
13 THE NEW ANGLO PACIFIC GROUP A New Cornerstone Asset Repositions the Portfolio • An established world class, low cost operation • Rebalances towards 21st century commodities • One of the largest non-DRC sources of cobalt • Addresses Kestrel medium term royalty run-off Improved Environmental Footpr
Slide 15: Q & A
ANGLO PACIFIC GROUP PLC 14 Q &A
Slide 16: Appendix
ANGLO PACIFIC GROUP PLC 15 APPENDIX
Slide 17: Principal Royalty and Streaming Related Assets Over Five Continents
16 17 PRINCIPAL ROYALTY AND STREAMING RELATED ASSETS OVER FIVE CONTINENTS PRODUCING ROYALTY COMMODITY OPERATOR LOCATION ROYALTY RATE / STREAM VOLUME 1 IRON ORE VOISEY’S BAY 2 COBALT VALE CANADA 22.82% CO STREAM COMPANY OF CANADA KESTREL 3 COKING & EMR CAPITAL / AUSTRALIA 7 – 15% GRR MCCLEAN LAKE THE
Slide 18: Voisey's Bay Overview
17 VOISEY’S BAY OVERVIEW MINE OVERVIEW KEY OPERATING PARAMETERS(3) • Located in Labrador, Canada with first production in 2005 Start-up Year Year 2005 • 100% owned and operated by Vale Mine Life (from 2020) Years 14 • Produces nickel and copper concentrates containing cobalt by-products • Nickel con
Slide 19: A World Class Stream: Voisey's Bay Streaming Agreement
18 A WORLD CLASS STREAM: VOISEY’S BAY STREAMING AGREEMENT OVERVIEW OF KEY STREAM TERMS Counterparty • Vale (MCap: US$92 billion (1)) • Voisey’s Bay Mine (Open Pit and Underground) Stream Area • Includes 2km area of interest around Voisey’s Bay • 22.82% of all Voisey’s Bay cobalt production after Tra
Slide 20: Voisey's Bay Mine Extension Project
19 VOISEY’S BAY MINE EXTENSION PROJECT VOISEY’S BAY UNDERGROUND MINE EXTENSION HISTORICAL AND FORECAST COBALT PRODUCTION (1) PROJECT (1) (In thousand tonnes) • Transition to underground mining expected to start in 2021 APG attributable entitlement: 22.82% (3) • 54% complete with US$725m of US$1.7bn
Slide 21: Overview of a Stream
20 OVERVIEW OF A STREAM PRIMARY STREAM TRANSACTION OVERVIEW ILLUSTRATIVE TRANSACTION STRUCTURE Step 1 • Miner sells right to future metal production to streamer • The sale is typically for a percentage of production Metal production (Settled physically or in cash) Step 2 • Consideration received by
Slide 22: Cobalt Commodity Outlook is Attractive
21 COBALT COMMODITY OUTLOOK IS ATTRACTIVE COMMODITY OVERVIEW (1) COBALT MARKET DYNAMICS ARE DRIVEN BY… • Cobalt has a variety of end-uses including: batteries, superalloys, catalysts and INCREASING DEMAND (1) carbides. Due to its functional properties, Cobalt is vital in the electrification trend •
Slide 23: Electric Vehicle Growth Expected to Underpin Future Demand
22 ELECTRIC VEHICLE GROWTH EXPECTED TO UNDERPIN FUTURE DEMAND COBALT IS A KEY COMPONENT IN ELECTRIC VEHICLE KEY DRIVERS OF THE EV MARKET (2) BATTERIES (1) • Electric Vehicle (“EV”) battery demand is expected to increase at ~17% per • Average energy density of EV batteries is increasing year between
Slide 24: Economic Incentive to Reduce Cobalt Intensity in Li-ion Batteries Has Decreased
23 ECONOMIC INCENTIVE TO REDUCE COBALT INTENSITY IN LI-ION BATTERIES HAS DECREASED INPUT COSTS (1) (2) USAGE INTENSITY (1) ($/kwh) (kg/kwh) NMC (333) NMC (622) NMC (811) 19.0 Battery Lithium Cobalt Nickel Chemistry 15.0 12.6 NMC (333) 0.15 0.43 0.42 10.1 8.9 8.0 7.7 7.2 NMC (622) 0.14 0.23 0.69 4.4
Slide 25: Existing Piaui Nickel-Cobalt Royalty Optionality Positions APG for Further Growth
24 EXISTING PIAUI NICKEL-COBALT ROYALTY OPTIONALITY POSITIONS APG FOR FURTHER GROWTH AND INCREASED BASE METALS EXPOSURE ILLUSTRATIVE PORTFOLIO INCLUDING PIAUI, INCOA AND ACQUISITION OF VOISEY’S BAY STREAM Piaui Tranche Royalty COMMODITY EXPOSURE Illustrative (1) (2) (3) 4) • Brazilian Nickel is deve
Slide 26: Peer Benchmarking – Trading Metrics
25 PEER BENCHMARKING – TRADING METRICS EV / 2021E EBITDA P / 2021E CF P / 2021E NAV 2021E Div. Yield (Ratio) (Ratio) (Ratio) (%) APG 6.8x APG 8.7x APG 0.83x APG 6.9% (1) (1) (1) (1) Non- Non- Non- Non- Precious 13.2x Precious 15.6x Precious 1.22x Precious 5.0% Peers Peers Peers Peers (2) (2) (2) (2)
Slide 27: APG Has Proven Its Ability to Drive Value Accretive Growth
26 APG HAS PROVEN ITS ABILITY TO DRIVE VALUE ACCRETIVE GROWTH PORTFOLIO CONTRIBUTION CAPITAL ALLOCATION (In GBP million) APG Portfolio Pre-2014 (1) Acquisitions 2014 Onwards (2) (3) Cum. Income £60 Acquisition Consensus Cumulative & Cons. NAV Consideration NAV Income (4) as % of Acq. (M) (M) (M) Pri
Slide 28: End Notes
27 END NOTES 1. Bloomberg as of 12 February 2021. 2. 22.82% of cobalt production until 7.6kt of finished cobalt is delivered, 11.41% thereafter; represents 70% share of the original stream agreement between Vale and Cobalt27. Fixed Cobalt payability of 93.3%. Ongoing payment of 18% of cobalt referen
Anglo Pacific Group — Merger or Acquisition (February 2021) on 6ix