Ecora Royalties Plc · LSE:ECOR
Ecora Royalties — Ecora Resources — Investor Presentation (February 2023)
33 slides from Ecora Royalties's investor presentation, February 2023
Slide 1: Ecora Resources PLC Company Overview
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 Company Overview February 2023
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: Ecora Resources overview
Ecora Resources overview Leading future-facing commodities royalty company Illustrative pro-forma revenue exposure to future-facing commodities (1) 100% World class royalty portfolio primarily in OECD jurisdictions 90% Strong growth profile Revenue exposure to future-facing commodities in 2026 Prove
Slide 4: Summary investment case
Summary investment case Compelling commodity & Derisked exposure Strong medium-term sustainability profile to the mining sector growth profile Robust balance sheet Well covered dividend Management team to fund accretive growth into the future with proven track record Investor Presentation February 2
Slide 5: Our vision Our strategy
Commodities central to a sustainable future Our vision Our strategy To be globally recognised as the royalty To acquire royalties and streams over low- company synonymous with commodities cost mining operations and projects with that support a sustainable future by strong management teams, located i
Slide 6: The energy transition will be metal intensive
The energy transition will be metal intensive Illustrative Metal Intensity (1) Clean energy is dependent on mineral extraction (1) (Kg/MW) (Kg/MW) 250 Copper Copper Nickel Natural gas Nickel Cobalt Zinc 200 Lithium Other minerals Other minerals Coal 150 Nuclear 100 Solar PV Onshore wind 50 Offshore
Slide 7: Leading future-facing commodity royalty company
Leading future-facing commodity royalty company Batteries & electric Power generation & grid Commodity exposure (1) vehicles infrastructure Copper, Nickel, Cobalt, Copper, Vanadium, Uranium 73% Base Metals Vanadium ~80% 2% Vanadium future- 4% Uranium facing 13% Coking Coal 8% Other Geographic exposu
Slide 8: Commodity selection
Commodity selection Mining operations & commodities that support a sustainable future Required to achieve the electrification Encompassing relative of energy consumption environmental benefits ✓ Copper ✓ Zinc ✓ Tin ✓ Producing high purity products ✓ Nickel ✓ Manganese ✓ Hydrogen ✓ Low levels of envi
Slide 9: 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 10: Supported by a strong growth pipeline
Supported by a strong growth pipeline Ring of Fire Salamanca Incoa Piauí West Cañariaco Musgrave Nifty Santo Pilbara Domingo Development Early Stage West Santo Asset / Piauí Incoa Nifty Salamanca Pilbara Cañariaco Ring of Fire Commodity (1) Musgrave Domingo Nickel & Cobalt Calcium Carbonate Copper U
Slide 11: Positioned for growth
Positioned for growth Path to annual revenue greater than US$100m primarily derived from future-facing commodities 1H 2022 average pricing (5) ~US$30 1H 2022 average - 50m pricing (5) 2022-2030E Kestrel research through cycle analyst annual ~US$15 Analyst consensus annual average - 20m long-term pri
Slide 12: Our investment criteria
Our investment criteria Ecora has demonstrated a disciplined approach to royalty acquisitions Low cost profile Well positioned on industry cost curves Geography Established mining jurisdictions Returns Achieves defined IRR targets appropriate for risk profile Commodity Commodities required for susta
Slide 13: Proven track record
Proven track record Acquisitions have delivered income growth and attractive returns Portfolio contribution Capital allocation track record (US$m) Cum. Income $100 Portfolio Pre-2014 (1) & Cons. NAV Acquisition Consensus Cumulative as % of Acq. Acquisitions 2014 Onwards (2) (3) Price (4) NAV Income
Slide 14: Capital allocation priorities
Capital allocation priorities Strong financial position with a focus on reducing debt, growth and shareholder returns Balance • Deployed ~$400m since Q1 2021 sheet strength • Net debt ~$35m at end Q4 2022 US$200 million RCF (1) Funding for • Strong banking relationships further • ~$180m of liquidity
Slide 15: Outlook
Outlook Recycling steel Insulated from Strong long-term making coal inflationary fundamentals for cashflows into pressures seen in commodity future-facing mining sector basket commodities Balance sheet Medium-term flexibility to growth pursue further acquisitions Investor Presentation February 2023
Slide 16: Appendix
Appendix
Slide 17: Company snapshot
Company snapshot • Largest LSE listed non-precious focused royalty and ✓ Experienced management team and streaming company independent Board ✓ Track record of royalty investing • Focused on commodities which support a Capabilities ✓ Capital markets and dedicated IR team sustainable future • Listed o
Slide 18: ESG considerations are imbedded in our investment process
ESG considerations are imbedded in our investment process Summary ESG due diligence framework Environmental Social Governance • Energy supply / use • Host country labour practices • Purpose, values, culture and capabilities • Energy management/emissions • Rights of indigenous peoples reduction plans
Slide 19: Exposure to assets and commodity products which provide relative environmental benefits
Exposure to assets and commodity products which provide relative environmental benefits Total nickel industry carbon emissions (1) (tonne CO2 equivalent per tonne of saleable nickel, 2022) Environmental benefit of iron ore pellets (tonne CO2E per tonne steel) (2) 300 Up to ~40% reduction in steel pr
Slide 20: Q4 2022 portfolio contribution
Q4 2022 portfolio contribution Figures in US$m Q4 2022 QoQ Q3 2022 2022 YoY 2021 Kestrel 9.8 (65%) 28.0 107.2 123% 48.1 Voisey’s Bay 3.3 106% 1.9 18.8 14% 16.5 Mantos Blancos 1.6 23% 1.3 6.0 5% 5.7 Maracás Menchen 0.8 (11%) 0.9 3.6 9% 3.3 Four Mile 0.2 100% 0.1 1.0 233% 0.3 Carlotta 0.2 n/a n/a 0.2
Slide 21: Financial snapshot
Financial snapshot Royalty related revenue Adjusted earnings per share Dividend cover ($m) ($¢) (x) 85.3 26.1 25.2 2.6 24.1 2.4 71.2 2.3 2.3 21.7 61.5 48.8 15.7 43.7 1.4 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 FCF per share Royalty assets acquired Liquidity positio
Slide 22: Upcoming catalysts in the portfolio
Upcoming catalysts in the portfolio Voisey’s Bay – Ramp up to steady state underground production rate by 2025 Mantos Blancos – Phase 2 mill expansion from 7.3Mtpa to 10Mtpa PFS expected Q4 2022 Kestrel – Updated Queensland royalty regime LIORC – Growing demand for high grade iron ore pellets given
Slide 23: Acquisition of royalty portfolio from South32
Acquisition of royalty portfolio from South32 West Musgrave Santo Domingo Nifty Carlota Highlights (Australia) (Chile) (Australia) (USA) • West Musgrave and Santo Domingo: – High-quality, long-life, near-term Operator production assets – Increased copper, nickel and cobalt exposure Nickel & Copper &
Slide 24: West Musgrave is a high quality nickel & copper project in Western Australia
West Musgrave is a high quality nickel & copper project in Western Australia West Musgrave royalty overview (1) • Large-scale nickel sulphide & copper development project Location • Established counterparty in OZ Minerals with proven track record of operating and developing mines Port Hedland • Comp
Slide 25: Santo Domingo is a fully permitted copper project in Chile
Santo Domingo is a fully permitted copper project in Chile Santo Domingo royalty overview (1) • 100% owned by Capstone Copper, a leading copper producer operating in the Location Americas – Formed following the merger between Capstone Mining & Mantos Copper, PERU BOLIVIA completed in early 2022 – Me
Slide 26: Kestrel mine overview
Kestrel mine overview Kestrel overview (1) (2) • The Kestrel mine is operated by a private joint venture between EMR Capital LEGEND 300 (42%), PT Adaro Energy (38%) and Mitsui (20%) MINE Layout Private Royalty Series Mining Tenement Boundary Panels • 2022 guided saleable coal production of ~7.0 Mt P
Slide 27: Updated Queensland royalty rate
Updated Queensland royalty rate Queensland royalty rate (1) Illustrative royalty uplift (per tonne basis) (2) Previous royalty regime Coal Price Previous royalty Revised royalty rate Royalty regime effective from 1 July 2022 (A$ per tonne) rate (from 1 July 2022) $54 <$100 7% 7% $44 >$100 and up to
Slide 28: Ecora offers exceptional value both relative to peers and in absolute terms
Ecora offers exceptional value both relative to peers and in absolute terms Market cap(1) P/NAV(1) EV/2023E EBITDA(1) 2023E EBITDA (1) Av. discount rate (2) (US$m) (x) (x) (US$m) (%) LTM LTM Avg. Max ECORA Ecora $430 0.7x 0.8x 1.1x 6.6x $72 7.3% Deterra $1,383 1.0x 1.0x 1.1x 9.9x $137 5.2% LIORC $1,
Slide 29: Overview of a royalty transaction
Overview of a royalty transaction A royalty is an agreement which provides, in exchange for an upfront Illustrative transaction structure payment made to the mining company, the right to receive a proportion of the revenue from a mining operation once in production without the capex or opex risk Eco
Slide 30: Overview of a stream transaction
Overview of a stream transaction Step 1 Illustrative transaction structure • Miner sells right to future metal production to streamer Metal production • The sale is typically for a percentage of production (Settled physically or in cash) Step 2 • Consideration received by miner includes: Mining Stre
Slide 31: Advantages of royalty and stream financing
Advantages of royalty and stream financing Advantages for Ecora Advantages for project operator Investment Advantages vs. • No maturity date when principal must be proposition debt financing repaid or refinanced • Limited exposure to cost base with cash • No interest expense with royalty payments fl
Slide 32: Investor information
Investor information Top Shareholders (as at 1 January 2023) (1) Analyst coverage Bank of America South32 16.9% Cameron Needham (London) Berenberg Schroder Investment Management 8.0% Richard Hatch (London) Peel Hunt Aberforth Partners 7.9% Tim Huff (London) RBC Canaccord Genuity Wealth Management 4.
Slide 33: 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
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