Ecora Royalties Plc · LSE:ECOR
Ecora Royalties — FY2021 Earnings Presentation
38 slides from Ecora Royalties's earnings presentation, Mar 30, 2022
Slide 1: Financing Investment in Natural Resources to Enable a Sustainable Future
Anglo Pacific Group PLC FINANCING INVESTMENT IN NATURAL RESOURCES TO ENABLE A SUSTAINABLE FUTURE Results for the year ended 31 December 2021
Slide 2: Disclaimer
2 DISCLAIMER This document has been prepared and issued by and is the sole responsibility of Anglo Pacific Group 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 concerning
Slide 3: FY2021 Highlights
3 FY2021 HIGHLIGHTS • Record annual portfolio contribution of $85.6m (2020: $47.5m) with 45% of this generated in Q4 Record portfolio contribution 1 • Results driven by strong performances at Kestrel and Voisey’s Bay – with the former producing driven by Kestrel & Voisey’s Bay $26m in Q4 2021 • 21st
Slide 4: Commodities underlying portfolio continue to perform strongly
4 COMMODITIES UNDERLYING PORTFOLIO CONTINUE TO PERFORM STRONGLY SHARE PRICE & COMMODITY BASKET PERFORMANCE (1) (2) YTD COMMODITY BASKET PRICE CHANGES (1) (2) (Rebased to 100) (%) Anglo Pacific weighted commodity basket Year to date 2022 Anglo Pacific share price 78% 4505 55% +293% 40% 43% 4004 36% 1
Slide 5: Commodity price exposure without inflationary cost pressures
5 WE PROVIDE COMMODITY PRICE EXPOSURE WITHOUT INFLATIONARY COST PRESSURES US CONSUMER PRICE INFLATION (1) THE ROYALTY MODEL US CPI over past 5 years (%) 10% Mining companies 7.9% 8% Attr. Production Attr. Production 6% Commodity Price Commodity Price ANGLO PACIFIC GROUP PLC RESULTS FOR THE YEAR ENDE
Slide 6: Financial Review
6 ANGLO PACIFIC GROUP PLC RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021 FINANCIAL REVIEW
Slide 7: Financial Highlights
7 FINANCIAL HIGHLIGHTS A RECORD YEAR OF PORTFOLIO CONTRIBUTION – Q4 21 FROM KESTREL ALONE WAS ~50% OF FY20 TOTAL PORTFOLIO CONTRIBUTION. PORTFOLIO CONTRIBUTION ADJ. EARNINGS PER SHARE (1) DIVIDEND COVER (2) (US$m) (US$c per share) (Times) 85.6 26.1 2.6x 76.0 25.2 24.1 2.4x 2.3x 2.3x 65.5 21.7 55.0 4
Slide 8: Portfolio Contribution and Key Developments
8 PORTFOLIO CONTRIBUTION AND KEY DEVELOPMENTS RECORD CONTRIBUTION IN FY21. FY22 SHOULD SEE SIMILAR VOLUMES AND PRICING CURRENTLY FAR IN ADVANCE OF FY21. ASSET CONTRIBUTION AND KEY DEVELOPMENTS (US$m) 31 Dec 2021 31 Dec 2020 % Portfolio developments • Average price up 60% Kestrel 48.1 23.3 106% • Wei
Slide 9: FY2021 Adjusted Earnings Build Up
9 FY2021 ADJUSTED EARNINGS BUILD UP ADJUSTED EARNINGS FOR 2021 (US$m) ($1.3) ($10.7) ($7.3) $0.1 ($14.1) $85.6 ANGLO PACIFIC GROUP PLC RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021 $52.3 $25.2c Portfolio McClean Lake Operating Finance costs Other Taxes Adjusted earnings Adjusted earnings contribution
Slide 10: Summary Balance Sheet
10 SUMMARY BALANCE SHEET FIGURES IN $M 31 Dec 2021 31 Dec 2020 Metal streams (inc deferred tax) 203.0 - Coal royalties (Kestrel) 84.5 76.3 Royalty financial instruments 53.8 99.9 Royalty and exploration intangibles 69.5 130.5 Other long-term receivables 39.1 23.2 Total royalty assets 449.9 329.9 Min
Slide 11: Financial Resources
11 FINANCIAL RESOURCES THE GROUP IS WELL IN ADVANCE OF ITS DELEVERAGING TARGETS FOLLOWING RECORD PORTFOLIO CONTRIBUTION IN 2021. 2021 CHANGE IN NET DEBT (In US$m) 8 10 12 (74) (63) 208 (62) (7) ANGLO PACIFIC GROUP PLC RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021 25 56 90 33 1 Jan 2021 Acquisitions Fi
Slide 12: Capital Allocation Principles
12 CAPITAL ALLOCATION PRINCIPLES STRONG FINANCIAL POSITION WITH A FOCUS ON DE-LEVERAGING, GROWTH & SHAREHOLDER RETURNS. US$150 MILLION RCF BALANCE SHEET • Material de-leveraging over the last year post the STRENGTH Voisey’s Bay transaction Lending syndicate: • Continuing the diversification of our p
Slide 13: Strategy and Portfolio
ANGLO PACIFIC GROUP PLC RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021 13 COMPANY UPDATE
Slide 14: Anglo Pacific's commodity exposure has been transformed
14 ANGLO PACIFIC’S COMMODITY EXPOSURE HAS BEEN TRANSFORMED YEAR END 2013 (1) YEAR END 2021 (2) COMMODITY EXPOSURE COMMODITY EXPOSURE Coking coal (3) 76% Base Metals 58% Iron Ore 9% Vanadium 10% 4% ~75% Uranium 6% 21st century Uranium 4% 21st century commodities Other 11% commodities Iron Ore 8% Coki
Slide 15: Expected Catalysts in the Portfolio
15 EXPECTED CATALYSTS IN THE PORTFOLIO ORGANIC GROWTH OPPORTUNITIES EXPECTED TO ADD TO PORTFOLIO REVENUE AND DURATION. VOISEY’S BAY – Ramp up to full underground production rate by 2025 MANTOS BLANCOS – Phase 2 mill expansion from 7.3 Mtpa to 10 Mtpa PFS expected Q3 2022 KESTREL – New longwall panel
Slide 16: Cobalt Market Update
16 COBALT MARKET UPDATE MARKET UPDATE (1) FORECAST LITHIUM ION BATTERY CATHODE SPLIT (1) (2) (% market share) Cobalt bearing • Cobalt prices have risen 69% since July 2021 to present Non-cobalt bearing • Strong EV sales growth witnessed throughout the year • Logistics constraints driving reduced glo
Slide 17: Maracás Menchen
17 MARACÁS MENCHEN HIGHLIGHTS & LOM PLAN UPDATE (1) FIRST QUARTILE INDUSTRY COST PROFILE (Production cost US$/lb V2O5) • Updated NI 43-101 technical report filed in Dec-2021 following extensive $10 drilling and engineering work: • Life of mine extended to 2041, up from 2031 previously $8 Maracás Men
Slide 18: ESG considerations central to investment process
18 ESG CONSIDERATIONS ARE CENTRAL TO ANGLO PACIFIC’S INVESTMENT PROCESS SUMMARY ESG DUE DILIGENCE FRAMEWORK Environmental Social Governance • Energy supply / use • Host country labour practices • Purpose, values, culture and capabilities • Energy management / emission • Rights of indigenous peoples
Slide 19: Sustainability Progress - A Year of Substantial Transition
19 SUSTAINABILITY PROGRESS - A YEAR OF SUBSTANTIAL TRANSITION HIGHLIGHTS ILLUSTRATIVE 2026 COMMODITY EXPOSURE (1) • Transformed commodity profile via Voisey’s Bay cobalt stream, and a continued focus on commodities that support a more sustainable world • Our exit from thermal coal. Narrabri sale com
Slide 20: Focus on commodities that support a more sustainable world
20 FOCUS ON COMMODITIES THAT SUPPORT A MORE SUSTAINABLE WORLD 21ST CENTURY COMMODITIES ENCOMPASS ENVIRONMENTAL BENEFITS, MANY OF WHICH CRUCIAL TO A TRANSITIONING WORLD. 21st Century Commodities Required to achieve the electrification of Encompassing relative environmental energy consumption benefits
Slide 21: Highlights and Outlook
21 HIGHLIGHTS AND OUTLOOK HIGHLIGHTS • Record portfolio contribution of US$86 million • Transformational Voisey’s Bay cobalt stream acquisition • Strong performances at Kestrel and Voisey’s Bay – with the former producing $26m in Q4 2021 • Exit from thermal coal • 21st century commodities represent
Slide 22: Q&A Session
ANGLO PACIFIC GROUP PLC RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021 22 Q&A SESSION Chaired by Marc Bishop Lafleche
Slide 23: Appendix A: Financials
ANGLO PACIFIC GROUP PLC RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021 23 APPENDIX A FINANCIALS
Slide 24: Record year supported by high commodity prices and Voisey's Bay
24 RECORD YEAR SUPPORTED BY HIGH COMMODITY PRICES AND VOISEY’S BAY ACQUISITION FIGURES IN $M 2021 2020 2019 2018 2017 Kestrel 48.1 23.3 47.3 43.5 37.0 Voisey’s Bay 16.5 n/a n/a n/a n/a Narrabri 3.4 3.9 5.1 4.6 6.4 Mantos Blancos 5.7 3.7 1.3 n/a n/a Maracás Menchen 3.3 0.7 3.5 7.6 2.6 Four Mile 0.3 0
Slide 25: Summary Income Statement
25 SUMMARY INCOME STATEMENT FIGURES IN $M 31 Dec 2021 31 Dec 2020 Royalty and stream related income (net of cost of sales) 81.2 43.7 Amortisation of royalties (14.8) (7.1) Operating expenses (10.7) (8.2) Operating profit (1) 55.7 28.4 Impairment of royalty intangible assets (5.2) (4.3) Revaluation r
Slide 26: Appendix B: Track Record
ANGLO PACIFIC GROUP PLC RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021 26 APPENDIX B TRACK RECORD
Slide 27: APG has proven its ability to drive value accretive growth
27 APG HAS PROVEN ITS ABILITY TO DRIVE VALUE ACCRETIVE GROWTH STRONG TRACK RECORD OF GROWING PORTFOLIO INCOME THROUGH ACQUISITIONS AND DELIVERING ATTRACTIVE RETURNS ON CAPITAL. PORTFOLIO CONTRIBUTION CAPITAL ALLOCATION (US$m) (US$m, unless otherwise stated) APG Portfolio Pre-2014 (1) Acquisitions 20
Slide 28: Return of Capital and Trading Multiples
28 RETURN OF CAPITAL AND TRADING MULTIPLES DIVIDEND PER SHARE ROLLING EV/FY1 EBITDA & P/NAV (2) (GBp per share) (Broker consensus EBITDA and NAV estimates) Anglo Pacific EV / FY1 EBITDA (LHS) 9 9 Anglo Pacific P / NAV (RHS) 8 10x 2.0x 7 8x 1.5x 6x 1.0x ANGLO PACIFIC GROUP PLC RESULTS FOR THE YEAR EN
Slide 29: Portfolio Sustainability Highlights
29 PORTFOLIO SUSTAINABILITY HIGHLIGHTS ESG RISK FRAMEWORK & SUSTAINABILITY A CORE PILLAR OF INVESTMENT STRATEGY. HIGHLIGHTS AT THE ASSET LEVEL KEY ASSETS WELL POSITIONED ON EMISSIONS CURVE (1) (Ranked by CO2 intensity - in tonnes of CO2 eq. per tonne of saleable nickel) ASSET ESG HIGHLIGHTS 200 150
Slide 30: Appendix C: Royalty Portfolio Update
ANGLO PACIFIC GROUP PLC RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021 30 APPENDIX C ROYALTY PORTFOLIO UPDATE
Slide 31: High quality asset base with 21st century commodity exposure
31 HIGH QUALITY ASSET BASE WITH 21ST CENTURY COMMODITY EXPOSURE PRODUCING ROYALTY / STREAM COMMODITY OPERATOR LOCATION ROYALTY RATE / STREAM VOLUME 1 IRON ORE VOISEY’S BAY 2 COBALT VALE CANADA 22.82% CO STREAM COMPANY OF CANADA MCCLEAN LAKE MANTOS COPPER CAPSTONE COPPER CHILE 1.525% NSR BLANCOS MILL
Slide 32: Royalty Portfolio Update: Voisey's Bay
32 ROYALTY PORTFOLIO UPDATE VOISEY’S BAY. VOISEY’S BAY OVERVIEW (1) BATTERY CHEMISTRY MARKET SHARE (3) 22.82% attributable production cobalt stream (100% market share basis) • Anglo Pacific acquired a 70% net interest in an existing metal stream on cobalt LCO NCA NCM LMNO LFP LMO production from the
Slide 33: New Longwall Panel at Kestrel
33 NEW LONGWALL PANEL AT KESTREL KESTREL OVERVIEW (1) (2) ILLUSTRATIVE ANGLO PACIFIC ROYALTY AREA (1) LEGEND • The Kestrel Mine is operated by a private joint venture between EMR Capital (42%), PT MINE Layout 300 Adaro Energy (38%) and Mitsui (20%) Private Royalty Series Mining Tenement Boundary Pan
Slide 34: Royalty Portfolio Update: LIORC & Mantos Blancos
34 ROYALTY PORTFOLIO UPDATE LIORC & MANTOS BLANCOS. LIORC (1) MANTOS BLANCOS (3) Indirect interest in 7.0% GR royalty 1.525% NSR royalty • Anglo Pacific monetised ~77% of its position in LIORC in 4Q20 and 1Q21 to partially • Anglo Pacific acquired a 1.525% net smelter return royalty over all copper
Slide 35: Royalty Portfolio Update: Maracás Menchen & Narrabri
35 ROYALTY PORTFOLIO UPDATE MARACÁS MENCHEN & NARRABRI. MARACÁS MENCHEN OVERVIEW (1) NARRABRI OVERVIEW (2) 2.0% NSR royalty Divested 1.0% GR royalty • 2021 production and sales were 10.3kt, suffering impacts from bad weather and • ROM coal production of 3.1Mt in CY2021 (2020: 6.4 Mt), decline caused
Slide 36: Royalty Portfolio Update: Other Producing & Development
36 ROYALTY PORTFOLIO UPDATE OTHER PRODUCING & DEVELOPMENT. DENISON / MCCLEAN LAKE MILL: PRODUCING (1) EL VALLE AND CARLÉS MINES (EVBC): PRODUCING (2) Tolling revenue 2.5-3.0% NSR royalty • Operations at Cigar Lake and the McClean Lake Mill resumed in April 2021 following a • Lower production volumes
Slide 37: Royalty Portfolio Update: Other Development
37 ROYALTY PORTFOLIO UPDATE OTHER DEVELOPMENT. SALAMANCA URANIUM PROJECT (1) CAÑARIACO COPPER PROJECT (2) 1.0% NSR royalty 0.5% NSR royalty • Berkeley Energia’s focus continues to be on progressing the approvals required to • One of the largest development stage copper projects in the world commence
Slide 38: Endnotes
38 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