Ecora Royalties Plc · LSE:ECOR
Ecora Royalties — Anglo Pacific Group — FY2019 Earnings Presentation
33 slides from Ecora Royalties's earnings presentation, March 2020
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 2019
Slide 2: Important Disclaimer
2 IMPORTANT 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
Slide 3: Overview
3 OVERVIEW Our strategy is to become a leading natural resources company through investing in high quality projects in preferred jurisdictions with trusted counterparties, underpinned by strong ESG principles ANGLO PACIFIC GROUP PLC RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019
Slide 4: COVID-19 Update
4 COVID-19 UPDATE IMPACT ON ANGLO PACIFIC GROUP • Anglo Pacific is closely monitoring and evaluating the situation. At this time, the mines underlying the Company’s material royalty related revenue remain in production • Kestrel is not currently subject to any restrictions impeding production or sal
Slide 5: 2019 Full Year Highlights
5 2019 FULL YEAR HIGHLIGHTS FINANCIAL HIGHLIGHTS • Record £55.7m in royalty related revenue, an increase of 21% on the previous record of £46.1m earned in 2019 • Total portfolio contribution increased by 20% to £59.5m • 21% increase in operating profit to £44.8m (2018: £37.1m) • 13% increase in adju
Slide 6: Track Record
6 TRACK RECORD We have demonstrated our ability to successfully identify and acquire accretive royalty related assets over the past six years, increasing the size and diversification of our portfolio, deploying ~£192.5m into acquisitions and returning ~£77.5m to shareholders in dividends. ANGLO PACI
Slide 7: Acquisitions Have Increased Portfolio Income
7 ACQUISITIONS HAVE INCREASED PORTFOLIO INCOME PORTFOLIO CONTRIBUTION 2014-2019 (In GBP millions) Anglo Pacific portfolio pre-2014 (1) Acquisitions 2014 to present (2) (3) £70 £60 £50 £40 ANGLO PACIFIC GROUP PLC RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019 £30 £20 £10 £0 2014 2015 2016 2017 2018 2019
Slide 8: Royalty Portfolio Exposure Evolution
8 ROYALTY PORTFOLIO EXPOSURE EVOLUTION AS OF YEAR END 2013 (ADJUSTED) (1) (2) AS OF YEAR END 2019 (3) COMMODITY EXPOSURE COMMODITY EXPOSURE Coking coal (4) 76% Coking coal (4) 26% Iron Ore 9% Iron ore 26% Producing Gold (4) 7% Producing Base metals 16% royalties: royalties: Uranium 4% Thermal coal (
Slide 9: Acquisitions Have Diversified Royalty Portfolio and Reduced Coal Exposure
9 ACQUISITIONS HAVE DIVERSIFIED ANGLO PACIFIC’S ROYALTY PORTFOLIO AND SIGNIFICANTLY REDUCED COAL EXPOSURE KESTREL CONTRIBUTION TO ANGLO PACIFIC NAV BASED ON BROKER ESTIMATES (%) Kestrel (coking coal) Other 100% 80% 34.7% 48.6% 62.1% 66.8% 60% 40% 65.3% 51.4% 20% 37.9% 33.2% 0% Dec-14 Dec-16 Dec-18 D
Slide 10: Return of Capital and Trading Multiples
10 RETURN OF CAPITAL AND TRADING MULTIPLES DIVIDEND PER SHARE (1) ROLLING EV/FY1 EBITDA & P/NAV (3) (In GBp per share) (Broker consensus EBITDA and NAV estimates) Anglo Pacific EV / FY1 EBITDA (LHS) Anglo Pacific P / NAV (RHS) 25.0x 2.00x 20.0x 1.60x 15.0x 1.20x 9p 8p ANGLO PACIFIC GROUP PLC RESULTS
Slide 11: Financial Review
ANGLO PACIFIC GROUP PLC RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019 11 FINANCIAL REVIEW
Slide 12: Financial Highlights
12 FINANCIAL HIGHLIGHTS RECORD YEAR FROM OUR PORTFOLIO, RESULTING IN A 13% INCREASE IN ADJUSTED EARNINGS PER SHARE AND AN 18% INCREASE IN FREE CASHFLOW PER SHARE ADJ. EARNINGS/(LOSS) PER SHARE (1) DIVIDEND COVER (2) FREE CASH FLOW PER SHARE (3) (Pence per share) (Cover per share) (Pence per share) 2
Slide 13: Income Summary
13 INCOME SUMMARY FIGURES IN £M 2019 2018 2017 2016 Kestrel 37.0 32.6 28.8 13.1 Maracás Menchen 2.8 5.9 2.0 0.8 Narrabri 4.0 3.5 4.9 4.2 Mantos Blancos 1.0 n/a n/a n/a Four Mile 0.3 0.1 -- -- EVBC (1) n/a n/a 1.7 1.2 Royalty income 45.1 42.1 37.4 19.7 LIORC dividends 8.0 1.9 n/a n/a Flowstream divid
Slide 14: Summary Income Statement
14 SUMMARY INCOME STATEMENT FIGURES IN £M 31 Dec 2019 31 Dec 2018 Royalty related income 55.7 46.1 Amortisation of royalties (3.8) (3.0) Operating expenses (7.1) (6.0) Operating profit (1) 44.8 37.1 Impairment of royalty intangible assets (1.4) (2.2) Revaluation royalty financial instruments 2.5 (0.
Slide 15: Summary Balance Sheet
15 SUMMARY BALANCE SHEET FIGURES IN £M 31 Dec 2019 31 Dec 2018 Coal royalties (Kestrel) 96.4 109.8 Royalty financial instruments 65.8 46.2 Royalty and exploration intangibles 102.2 71.2 Other long-term receivables 17.9 19.3 Total royalty assets 282.3 246.5 Mining and exploration interests 3.6 2.8 Ca
Slide 16: Financial Resources
16 FINANCIAL RESOURCES REFINANCING PROVIDES ~US$75M OF LIQUIDITY 2019 CHANGE IN CASH BALANCE (In GBP millions) £0.3 - (£5.3) (£1.1) (£7.9) £0.5 £62.1 (£62.6) ANGLO PACIFIC GROUP PLC RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019 (£14.4) £30.7 £5.2 £7.6 £0 1 January Royalty Non-core Royalty Admin Financ
Slide 17: Royalty Portfolio Update
ANGLO PACIFIC GROUP PLC RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019 17 ROYALTY PORTFOLIO UPDATE
Slide 18: Geographic and Commodity Exposure
18 GEOGRAPHIC AND COMMODITY EXPOSURE 16 PRINCIPAL ROYALTY AND STREAMING RELATED ASSETS OVER FIVE CONTINENTS PRODUCING ROYALTY COMMODITY OPERATOR LOCATION ROYALTY RATE / IRON ORE STREAM VOLUME 1 COMPANY OF CANADA KESTREL 2 COKING & EMR CAPITAL / AUSTRALIA 7 – 15% GRR MCCLEAN LAKE THERMAL COAL PT ADAR
Slide 19: Royalty Portfolio Update: Kestrel
19 ROYALTY PORTFOLIO UPDATE : KESTREL KESTREL OVERVIEW (1) (2) ILLUSTRATIVE ANGLO PACIFIC ROYALTY AREA (1) • Rio Tinto’s 80% Kestrel stake acquired from Rio Tinto by EMR Capital (EMR) LEGEND (52%) and PT Adaro Energy (Adaro) (48%) for a US$2.25 billion consideration MINE Layout 300 Private Royalty S
Slide 20: Royalty Portfolio Update: LIORC and Mantos Blancos
20 ROYALTY PORTFOLIO UPDATE : LIORC AND MANTOS BLANCOS LIORC OVERVIEW (1) MANTOS BLANCOS OVERVIEW (3) • Anglo Pacific deployed an additional £20.3 million in 2019 and £5.7 million in Q1 2020 in • In August 2019, Anglo Pacific acquired a 1.525% net smelter return royalty over all LIORC share purchase
Slide 21: Royalty Portfolio Update: Maracás Menchen and Narrabri
21 ROYALTY PORTFOLIO UPDATE : MARACÁS MENCHEN AND NARRABRI MARACÁS MENCHEN OVERVIEW (1) NARRABRI OVERVIEW (3) (4) • Record FY 2019 production of 10,577 tonnes of V2O5 with record monthly production of • Whitehaven Coal achieved a strong level of ROM coal production in FY2019 (ending 1,162 tonnes ach
Slide 22: Royalty Portfolio Update: Other Producing & Development
22 ROYALTY PORTFOLIO UPDATE : OTHER PRODUCING & DEVELOPMENT DENISON / MCCLEAN LAKE MILL: PRODUCING (1) EL VALLE AND CARLÉS MINES (EVBC): PRODUCING (2) • Cigar Lake produced 18 Mlbs of U3O8 in 2019, equivalent to 2018 production • Several productivity initiatives in progress including revaluation of
Slide 23: Sources of Near-Term Growth from Producing Assets
23 SOURCES OF NEAR-TERM GROWTH FROM PRODUCING ASSETS ASSET PRODUCTION UPSIDE MINE LIFE EXTENSION KESTREL Purchase of Kestrel by EMR and Adaro completed on 1 Defined royalty area provides limited mine life extension upside COKING COAL August 2018. Operator has already achieved significant volume incr
Slide 24: Disciplined Approach to Royalty/Stream Acquisitions
24 ANGLO PACIFIC’S DISCIPLINED APPROACH TO ROYALTY/STREAM ACQUISITIONS WE DILIGENTLY EVALUATE EACH PROJECT, ENSURING ITS VIABILITY FOR PRODUCTION AND POTENTIAL EXPLORATION UPSIDE. WE SELECT THE BEST OPERATIONS, DILIGENTLY GROWING REVENUE STREAMS. THIS STABLE CASHFLOW ALLOWS US TO BUY MORE ROYALTIES
Slide 25: Financing Investment in Natural Resources to Enable a Sustainable Future
25 FINANCING INVESTMENT IN NATURAL RESOURCES TO ENABLE A SUSTAINABLE FUTURE WE LOOK TO FUND BETTER QUALITY, CLEANER UNDERLYING COMMODITIES WHICH ARE GOOD FOR THE WORLD. OUR APPROACH INVESTING RESPONSIBLY • We believe that a strong focus on • We systematically integrate ESG factors into our investmen
Slide 26: Highlights and Outlook
26 HIGHLIGHTS AND OUTLOOK HIGHLIGHTS • Demonstrated ability to grow and diversify the portfolio • Milestone copper royalty acquired in August 2019 at an attractive cyclical entry point • ~US$125m in acquisitions since August 2018, financed from the balance sheet • Significant progress made on ESG •
Slide 27: Q&A Session
ANGLO PACIFIC GROUP PLC RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019 27 Q&A SESSION Chaired by Julian Treger
Slide 28: More to Come... Thank You
28 MORE TO COME… SOLID PLATFORM FOR EXISTING INVESTORS ANGLO PACIFIC GROUP PLC RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019 & WELL POSITIONED FOR GROWTH … THANK YOU
Slide 29: Appendix
ANGLO PACIFIC GROUP PLC RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019 29 APPENDIX
Slide 30: Proven Capital Allocation History
30 PROVEN CAPITAL ALLOCATION HISTORY ACQUISITION BROKER TOTAL INCOME & ASSET TRANSACTION CONSIDERATION CONSENSUS NAV CUMULATIVE CONSENSUS NAV AS % DATE (£M) (£M)(1) INCOME (£M)(2) OF ACQUISITION PRICE MARACÁS MENCHEN (VANADIUM) JUNE 2014 14.4 29.0 12.0 285% NARRABRI (THERMAL COAL) MARCH 2015 41.7 50
Slide 31: Advantages of Royalty and Stream Financing
31 ADVANTAGES OF ROYALTY AND STREAM FINANCING ADVANTAGES FOR ANGLO PACIFIC ADVANTAGES FOR PROJECT OPERATOR INVESTMENT • Limited exposure to cost base with cash ADVANTAGES • No maturity date when principal must be PROPOSITION flows linked to production levels or VS. DEBT repaid or refinanced revenues
Slide 32: Endnotes
32 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
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