Ecora Royalties Plc · LSE:ECOR
Ecora Royalties — Anglo Pacific Group — H1 2011 Earnings Presentation
33 slides from Ecora Royalties's earnings presentation, Aug 11, 2011
Slide 1: Interim Results
Interim Results August 11, 2011
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer Certain statements in this presentation, other than statements of historical fact, are forward-looking By its nature, this information is subject to inherent risks and uncertainties that may be general or statements based on certain assumptions and reflect the Company
Slide 3: Introduction
1. Introduction Peter Boycott (Chairman)
Slide 4: Financial Results
2. Financial Results Matthew Tack (Finance Director)
Slide 5: H1 2011 Highlights
H1 2011 Highlights Record royalty income for the period • Royalty income of £16.4 million (H1 2010: £15.7 million) Strong cash position • Cash balance of £36.7 million as at June 30, 2011 • No borrowings or hedging Interim dividend of 4.25p • Increase in interim dividend of 7.6% (H1 2010: 3.95p) Roy
Slide 6: Income statement overview
Income statement overview Figures in £’000 H1 2011 H1 2010 Royalty income 16,361 15,679 Operating expenses (1,340) (1,459) Operating profit 15,003 14,562 Realised gains 7,464 17,372 Profit before tax 22,741 31,726 Profit after tax 16,413 24,731 Royalty cash flow per share 15.36p 14.95p Earnings per
Slide 7: Half on half performance
GBP million 10 15 20 25 30 35 0 5 H1 2005 H2 2005 H1 2006 H2 2006 Half on half performance H1 2007 H2 2007 H1 2008 H2 2008 H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 Profit after tax Royalty income 6
Slide 8: Balance sheet overview
Balance sheet overview Figures in £’000 H1 2011 H1 2010 Non-current assets 366,165 294,952 Cash and cash receivables 36,726 18,846 Trade and other receivables 7,257 11,724 Total assets 410,148 325,522 Total liabilities 78,241 60,185 Total shareholders’ equity 331,907 265,337 Debt NIL NIL 7
Slide 9: Strong cash balance
Strong cash balance • Cash balance supporting growth of 40 the Company 36.7 35 • Cash balance as at June 30, 2011 is £36.7 million 30 28.3 25 GBP million 20 18.8 15 10 5 0 30 Jun 2010 31 Dec 2010 30 Jun 2011 Cash and cash equivalents 8
Slide 10: Growth in Asset Value
Growth in Asset Value • Total assets at £410.1 million (FY 2010: £415.6 million) • Cash at period end of £36.7 million (FY 2010: £28.3 million) • Receivables at period end of £7.3 million (FY 2010: £8.8 million) • Total quoted and unquoted strategic interests valued at £100.1 million (FY 2010: £128.
Slide 11: Interim dividend
Interim dividend Growth in royalty income supporting dividend • Progressive dividend policy • Interim dividend of 4.25p, representing an increase of 7.6% (H1 2010: 3.95p) • Ex-dividend date of November 9, 2011 • Dividend to be paid on January 11, 2012 35 30 Dividend per share Royalty cash flow per s
Slide 12: Strategy and Outlook
3. Strategy and Outlook John Theobald (Chief Executive Officer)
Slide 13: Strategy
Strategy Actively expand and enhance the Anglo Pacific royalty portfolio • Acquisition of existing royalties to increase revenues in the near term • Identification of early stage opportunities with potential to provide long term royalty agreements Commodity diversification with: • High level of pric
Slide 14: The royalty model
The royalty model Benefits from owning royalties: • Low operational risk • No balance sheet liability • Revenue upside due to: – Commodity price increases – Expansion of mineral resources • A direct link to revenue, not profits, reducing investor exposure to cost fluctuations • Limited overhead requ
Slide 15: Our royalty portfolio
Our royalty portfolio • Five producing royalties in the Anglo Pacific portfolio • 12 development and exploration royalties – Including three royalty acquisitions completed during 2011 • Royalty acquisitions during 2011 – Araguaia nickel projects (in Brazil), operated by Horizonte Minerals – ‘Ring of
Slide 16: Geographic and commodities diversity in asset portfolio
Geographic and commodities diversity in asset portfolio
Slide 17: Operational highlights
Operational highlights • Acquisition of two new royalties and one royalty option agreement – 1% NSR royalty over the Black Label, Black Thor and Big Daddy chromite deposits, operated by Cliff Natural resources, for US$18 million – 1.0% GRR royalty over the Isua iron ore project in Greenland, operate
Slide 18: Timetable for growth
Timetable for growth Existing pipeline Araquaia • Nickel Jogjakarta Jogjakarta El Valle Kestrel expansion • Initial iron ore • Mine commissioning • Coking and Thermal coal • 2Mtpa Fe conc. Isua concentrate sales • Iron ore in June • Impact (full year): in H2 • Impact (full year): • Impact (full year
Slide 19: Outlook and focus for remainder of 2011
Outlook and focus for remainder of 2011 • Continued strong demand for commodities underpinning prices • Spot coking coal prices above US$310 per tonne during the financial period and set to remain strong • Steady flow of new royalty opportunities –targeting three to four new royalties annually • Cur
Slide 20: Appendices
Appendices 19
Slide 21: Royalty portfolio
Royalty portfolio
Slide 22: Producing Royalty – Kestrel (Coal)
Producing Royalty – Kestrel (Coal) Kestrel Mine (i) Royalty 7% up to A$100/ton, 10% above A$100/ton of gross sales value of coal exported from private ground (royalty rate set by the Queensland Government). Anglo Pacific has an effective 50% ownership of this royalty. Status Producing (since 1992) O
Slide 23: Producing Royalty – Amapá (Iron Ore)
Producing Royalty – Amapá (Iron Ore) Amapá Project Overview The Amapá Iron Ore Project consists of a mine, process plant, railway line and port facility. Anglo American purchased its 70% holding from MMX Mineraçãoe Metalicos SA in 2007, with >$700m spent on the project Royalty 1.0% gross iron ore ro
Slide 24: Producing Royalty – El Valle and Engenho
Producing Royalty – El Valle and Engenho El Valle - Gold & Copper - Spain Operator Orvana Minerals (Acquired Kinbauri Gold – Oct 09) Royalty 2.5% NSR (increases to 3% above US$1,100/oz gold price) – acquisition cost C$7.5m Status Production commenced July 2011. Production target 105Koz Au, 4Kt Cu, 1
Slide 25: Acquisition of new development royalties – Steel manufacture
Acquisition of new development royalties – Steel manufacture ‘Ring of Fire’ – Chromite - Canada Operator Cliffs Natural Resources Royalty 1% NSR – acquisition cost US$18m NEW PHOTO Production Startup / Target Concentrate production expected in 2015 from Black Thor deposit Mine Life Not available. Ex
Slide 26: Development Royalties – Steel manufacture
Development Royalties – Steel manufacture Railway – Iron Ore - Australia Operator BHP Billiton Royalty 1.5% GRR – acquisition cost A$23.0m Production Startup / The Railway deposit is adjacent to BHP’s Area C operation and is expected Target to form part of its expansion in the Pilbara Mine Life 10+
Slide 27: Development Royalties – Steel manufacture
Development Royalties – Steel manufacture Bulqiza – Chromite - Albania Operator Empire Mining Corporation (Anglo Pacific Group – 17.8% stake) Royalty 3% NSR – acquisition cost C$3.1m Production Startup / Not available Target Mine Life Not available Resources Not available Araguaia – Nickel - Brazil
Slide 28: Development Royalties – Energy sector
Development Royalties – Energy sector Four Mile - Uranium - Australia Operator Quasar Resources / Alliance Resources JV Royalty 1% NSR – acquisition cost A$6.0m Production Startup / Startup delayed pending resolution of litigation Target Mine Life 15 years Resources (xi) I - 32Mlb U3O8 Inf – 38Mlb U
Slide 29: Development Royalties – Precious
Development Royalties – Precious Malartic Midway - Gold - Canada Operator Northern Star Mining (undergoing corporate restructuring) Royalty 2.5% NSR (increases to 2.75% above US$1,250/oz gold price) – acquisition cost C$8.0m Production Startup / Awaiting restructuring proposals Target Mine Life Mine
Slide 30: Targeting Royalty from Controlling Investments
Targeting Royalty from Controlling Investments Trefi Project Map Anglo Pacific Strategy • Long term objective to take the Canadian projects to scoping study level and then bring in joint venture partners and retain a carried interest and royalty entitlement • Total investment to date: £2m Trefi Coal
Slide 31: Management
Management
Slide 32: Experienced Management Team
Experienced Management Team Peter Boycott Brian Wides Chairman Director of International Business Development Appointed to the board in May 1997 and Chairman in June 1997. He has a MA in Joined the board in June 1997 and was appointed Finance Director in September Mechanical Sciences from the Univer
Slide 33: Endnotes
Endnotes All mineral resources disclosed in this presentation have been calculated in accordance with the standards of the Canadian Institute of Mining, Metallurgy Scientific and technical information in this presentation relating to Panorama Coal and Petroleum and NI 43-101, or the AusIMM JORC equi