Ecora Royalties Plc · LSE:ECOR
Ecora Royalties — H1 2020 Earnings Presentation
33 slides from Ecora Royalties's earnings presentation, Aug 27, 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 half year ended 30 June 2020
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 HALF YEAR ENDED 30 JUNE 2020
Slide 4: COVID-19 Update
4 COVID-19 UPDATE IMPACT ON ANGLO PACIFIC GROUP COMMODITY PRICE PERFORMANCE (REBASED) (1) • Anglo Pacific is closely monitoring and evaluating the situation. 160 At this time, the mines underlying the Company’s material royalty related revenue remain in production Iron Ore • Kestrel should benefit f
Slide 5: H1 2020 Highlights
5 H1 2020 HIGHLIGHTS FIGURES IN £’000 H1 2020 % MVT H1 2019 Kestrel 11,974 (47%) 22,692 Royalty related dividends (LIORC) 2,296 (33%) 3,420 Mantos Blancos 1,200 Maracás Menchen (304) 1,783 Narrabri 1,586 (30%) 2,273 McClean Lake / Denison - interest 888 (9%) 975 Four Mile 133 21% 110 Royalty related
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 HALF YEAR ENDED 30 JUNE 2020 £30 £20 £10 £0 2014 2015 2016 2017 2018 201
Slide 8: Royalty Portfolio Exposure Evolution
8 ROYALTY PORTFOLIO EXPOSURE EVOLUTION AS OF YEAR END 2013 (ADJUSTED) (1) (2) AS OF 30 JUNE 2020 (3) COMMODITY EXPOSURE COMMODITY EXPOSURE Coking coal (4) 76% Iron ore 30% Iron Ore 9% Coking coal (4) 21% Producing Gold (4) 7% Producing Base metals 17% Royalties: Royalties: Uranium 4% Thermal coal (4
Slide 9: Illustrative Royalty Portfolio Exposure
9 ILLUSTRATIVE ROYALTY PORTFOLIO EXPOSURE ILLUSTRATIVE PORTFOLIO INCLUDING INCOA AND PIAUÍ FUNDING RIGHTS (1) • INCOA FINANCING AGREEMENT COMMODITY EXPOSURE • High-quality, long-life ground calcium carbonate project in the Base metals (2) 30% Dominican Republic with a processing facility located in
Slide 10: Return of Capital and Trading Multiples
10 RETURN OF CAPITAL AND TRADING MULTIPLES DIVIDEND PER SHARE ROLLING EV/FY1 EBITDA & P/NAV (2) (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 9p 15.0x 1.20x 8p 7p ANGLO PACIFIC GROUP PLC RESULTS
Slide 11: Counterparty ESG Highlights
11 COUNTERPARTY ESG HIGHLIGHTS We believe that a strong focus on ESG is vital for the long-term success of our underlying assets and the maximisation of shareholder value. As a result, we are committed to integrating ESG considerations into our strategic decision-making and capital allocation HIGHLI
Slide 12: Financial Review
ANGLO PACIFIC GROUP PLC RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2020 12 FINANCIAL REVIEW
Slide 13: Financial Highlights
13 FINANCIAL HIGHLIGHTS EXPECTING A STRONGER PERFORMANCE IN H2 2020 AS ONE-OFF EVENTS WHICH OCCURRED IN H1 2020 ARE NOT EXPECTED TO RE-OCCUR AND THE OUTLOOK FOR COMMODITY PRICES LOOKS BETTER ADJ. EARNINGS/(LOSS) PER SHARE (1) DIVIDEND COVER (2) FREE CASH FLOW PER SHARE (3) (Pence per share) (Cover p
Slide 14: Income Summary
14 INCOME SUMMARY FIGURES IN £M H1 2020 H1 2019 FY 2019 FY 2018 Kestrel 12.0 22.7 37.0 32.6 Maracás Menchen (0.3) 1.8 2.8 5.9 Narrabri 1.6 2.3 4.0 3.5 Mantos Blancos 1.2 1.0 n/a Four Mile 0.1 0.1 0.3 0.1 Royalty income 14.6 26.9 45.1 42.1 LIORC dividends 2.1 3.4 8.0 1.9 Flowstream dividends 0.2 n/a
Slide 15: Summary Income Statement
15 SUMMARY INCOME STATEMENT FIGURES IN £M H1 2020 H1 2019 Royalty related income 17.8 31.3 Amortisation of royalties (2.7) (1.5) Operating expenses (3.4) (3.4) Operating profit (1) 11.7 26.4 Impairment of royalty intangible assets - - Revaluation royalty financial instruments 0.1 0.4 Revaluation of
Slide 16: Summary Balance Sheet
16 SUMMARY BALANCE SHEET FIGURES IN £M as at 30 Jun 2020 31 Dec 2019 30 Jun 2019 Coal royalties (Kestrel) 75.5 96.4 123.8 Royalty financial instruments 72.1 65.8 66.7 Royalty and exploration intangibles 105.0 102.2 69.8 Other long-term receivables 17.9 17.9 19.1 Total royalty assets 270.5 282.3 279.
Slide 17: Financial Resources
17 FINANCIAL RESOURCES H1 2020 CHANGE IN CASH BALANCE (In GBP millions) £0.4 £0.0 £0.1 (£3.0) (£0.9) (£10.1) £21.9 £6.6 (£5.7) (£1.2) ANGLO PACIFIC GROUP PLC RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2020 (£10.4) £7.6 £5.4 1 January Royalty Share Interest FX & other Overheads Finance Taxes Deferred RC
Slide 18: Royalty Portfolio Update
ANGLO PACIFIC GROUP PLC RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2020 18 ROYALTY PORTFOLIO UPDATE
Slide 19: Geographic and Commodity Exposure
19 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 20: Royalty Portfolio Update: Kestrel
20 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 21: Royalty Portfolio Update: LIORC and Mantos Blancos
21 ROYALTY PORTFOLIO UPDATE : LIORC AND MANTOS BLANCOS LIORC OVERVIEW (1) MANTOS BLANCOS OVERVIEW (3) • Anglo Pacific deployed an additional £5.7 million in Q1 2020 in LIORC share purchases, • In August 2019, Anglo Pacific acquired a 1.525% net smelter return royalty over all increasing total stake
Slide 22: Royalty Portfolio Update: Maracás Menchen and Narrabri
22 ROYALTY PORTFOLIO UPDATE : MARACÁS MENCHEN AND NARRABRI MARACÁS MENCHEN OVERVIEW (1) NARRABRI OVERVIEW (3) (4) • H1 2020 production and sales of 5,393 and 4,188 tonnes of V 2O5 respectively • FY2020 (ending 30 June 2020) ROM coal production of 6.1 Mt within guidance of 6.0-6.5 Mt, 5% below FY2019
Slide 23: Royalty Portfolio Update: Other Producing & Development
23 ROYALTY PORTFOLIO UPDATE : OTHER PRODUCING & DEVELOPMENT DENISON / MCCLEAN LAKE MILL: PRODUCING (1) EL VALLE AND CARLÉS MINES (EVBC): PRODUCING (2) • Cigar Lake produced 4.2 Mlbs of U3O8 in H1 2020, 58% below H1 2019 production • Operations re-started in April 2020 following a two-week shut-down
Slide 24: Positive Portfolio Developments
24 POSITIVE PORTFOLIO DEVELOPMENTS INCOA CALCIUM CARBONATE PROJECT • High-quality, long-life ground calcium carbonate production. Tranche 1 financing completed in May 2020, paving the way for the Group’s US$20m investment subject to conditions related to the project’s construction and operation CAÑA
Slide 25: Outlook
25 OUTLOOK • Stronger results expected in H2 2020 across much of the portfolio: o Kestrel should benefit from the recent improvement in coking coal prices and COVID-19 related port restriction impacting the Indian market being relaxed o LIORC expected to benefit from iron ore prices currently tradin
Slide 26: Q&A Session
ANGLO PACIFIC GROUP PLC RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2020 26 Q&A SESSION Chaired by Julian Treger
Slide 27: More to Come… Thank You
27 MORE TO COME… SOLID PLATFORM FOR EXISTING INVESTORS ANGLO PACIFIC GROUP PLC RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2020 & WELL POSITIONED FOR GROWTH …THANK YOU
Slide 28: Appendix
ANGLO PACIFIC GROUP PLC RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2020 28 APPENDIX
Slide 29: Proven Capital Allocation History
29 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 26.1 11.7 262% NARRABRI (THERMAL COAL) MARCH 2015 41.7
Slide 30: Sources of Near-Term Growth from Producing Assets
30 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 31: Disciplined Approach to Royalty/Stream Acquisitions
31 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 32: Financing Investment in Natural Resources to Enable a Sustainable Future
32 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 33: Endnotes
33 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