Ecora Royalties Plc · LSE:ECOR
Ecora Royalties — FY2022 Earnings Presentation
39 slides from Ecora Royalties's earnings presentation, Mar 29, 2023
Slide 1: Ecora Resources PLC 2022 Full year results presentation
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 2022 Full year results presentation March 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: Delivering record performance
Delivering record performance Strong financial Portfolio well positioned performance for growth from future facing • Record portfolio contribution of commodities $143m (2021: $86m) • Acquisition of a high-quality royalty • Record AEPS of 37.55c portfolio of near-term copper nickel (2021: 25.18c) roy
Slide 4: Commodity prices underlying portfolio have remained robust
Commodity prices underlying portfolio have remained robust Ecora commodity basket performance(1) Commodity price changes from January 2021(1) Rebased to 100 400% 400 164% 350 350% 300 300% 99% 94% 250 250% 66% 200 200% +99 150 150% 28% 15% 6% 100 100% 65% Iron Cobalt Copper Nickel Uranium Vanadium S
Slide 5: Delivering against strategic objectives
Delivering against strategic objectives 2014 2022 Onwards OBJECTIVE 1 ✓ Voisey’s Bay Replace the income from Kestrel coal royalty with income from future facing commodities acquisition completed Maracás McClean LIORC Mantos Voisey’s strategic Menchen Lake Iron ore Blancos Bay objective Vanadium Uran
Slide 6: Growing future facing commodities portfolio
Growing future facing commodities portfolio Revenue growth from future facing commodities(1) 120 Development(2) Future facing commodities (producing) Other commodities • Santo Domingo – targeted start 100 Future facing commodities (construction) up 2026-2028 Future facing commodities (development) •
Slide 7: Understanding the scale of the energy transition
Understanding the scale of the energy transition Transition technologies will require vast amounts of metals Requirements by 2040 for net-zero emissions scenario 727 million 374,000 13TWh Annual battery Passenger EVS(1) Wind turbines(3) capacity(1) Corresponds to: Equivalent of: Equivalent of: 1 EV
Slide 8: Portfolio aligned to strong commodity demand trends
Portfolio aligned to strong commodity demand trends Year end 2021 Year end 2022 Commodity Exposure (1) Commodity Exposure (1) Base metals - 63% Base metals- 78% Uranium - 6% Uranium - 4% ~75% Vanadium - 4% ~85% Vanadium - 2% future facing future facing commodities Coking coal - 13% commodities Cokin
Slide 9: Financials
Financials
Slide 10: Record financial performance
Record financial performance Portfolio contribution Adjusted earnings per share(1) Dividend cover(2) (US$m) (USc) 37.6 4.4x 143.2 26.1 25.2 24.1 2.6x 85.6 2.3x 2.3x 75.9 65.9 15.7 47.5 1.4x 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 • Driven by resilient commodity pri
Slide 11: Portfolio contribution
Portfolio contribution ($m) 31 Dec 2022 31 Dec 2021 % Core portfolio Voisey’s Bay (cobalt) 14.6 12.5 17% Mantos Blancos (copper) 6.0 5.7 5% Maracás Menchen (vanadium) 3.6 3.3 9% LIORC (high purity iron ore pellets) 2.9 5.6 (48%) McClean Lake (uranium) 5.0 3.7 35% Four Mile (uranium) 1.0 0.3 233% Oth
Slide 12: Adjusted earnings
Adjusted earnings Change in Earnings (US$m) 143.2 (2.9) (10.8) (6.4) (0.4) (34.8) 87.9 37.6c Portfolio McClean Lake Operating expenses Finance costs Other Taxes Adjusted earnings Adjusted earnings per contribution principal repayment share 2021 (US$m) 85.6 (1.3) (10.7) (7.3) 0.1 (14.1) 52.3 25.2 • A
Slide 13: Summary balance sheet
Summary balance sheet ($m) 31 Dec 2022 31 Dec 2021 Metal streams (inc deferred tax) 197.6 203.0 Coal royalties (Kestrel) 106.7 84.5 Royalty financial instruments 43.9 53.8 Royalty and exploration intangibles 252.6 69.5 Other long-term receivables 37.4 39.1 Total royalty assets 638.2 449.9 Cash and c
Slide 14: Net debt reduced by $54m
Net debt reduced by $54m Change in net debt (US$m) 12 4 10 63 90 (54) (154) 19 36 (5) (1) (1) 1 Jan 2022 Acquisitions Finance cost, FX Operating costs Taxes Portfolio (1) Narrabri disposal Cash from share Non-core sales Dividend 31 Dec 2022 Change to net 2021 (US$m) & other contribution issue debt p
Slide 15: Capital allocation priorities
Capital allocation priorities Strong financial position with a focus on reducing debt, growth and shareholder returns Other Balance Funding for Quarterly shareholder sheet strength further acquisitions dividends returns • Deployed • Strong banking • Final dividend of 1.75p per • Dependent on busines
Slide 16: Portfolio update
Portfolio update
Slide 17: Key developments in 2022
Key developments in 2022 Kestrel (steel making coal) West Musgrave (copper nickel) • Record coal prices drove $107m contribution • FID taken in September • Queensland government added new higher royalty • Construction commenced in November bands • OZ Minerals agreed to takeover by BHP • Saleable pro
Slide 18: Upcoming portfolio catalysts
Upcoming portfolio catalysts Pipeline of catalysts across producing and development stage projects Voisey’s Bay Transition to underground mine Expected ramp up in 2024 West Musgrave Maracás Menchen Construction ongoing Mantos Blancos Ilmenite plant Production targeted 2025 Phase II expansion commiss
Slide 19: Cobalt market update
Cobalt market update Cobalt price performance(1) ($/lb) • Prices have weakened in early 2023 $40 high $39.75/lb following a strong performance in 2022 $35 • New supply from Indonesia changing Acquisition of Voisey’s Bay market balance stream $30 Ecora average • Reduced demand from portable realised
Slide 20: Commodity selection
Commodity selection Required to achieve the electrification Mining operations & of energy consumption commodities that support a sustainable future ✓ Copper ✓ Zinc ✓ Tin ✓ Nickel ✓ Manganese ✓ Hydrogen ✓ Lithium ✓ Graphite ✓ Rare Earths ✓ Cobalt ✓ Vanadium Current Commodity Exposure Encompassing rel
Slide 21: Improved sustainability disclosure
Improved sustainability disclosure Long-term value can only be achieved through sustainable and responsible investment UN Global Compact & SDGS • Prepared first COP report under UNGC which will be submitted in Q2 2023 • Started to align business with UN SDGs SBTi aligned objective setting • Setting
Slide 22: Outlook
Outlook Revenue mix Committed to further transitioning to future growth facing commodities Commodity price basket Continue to enhance primarily remains strong sustainability reporting Organic growth catalysts Disciplined approach throughout the year to royalty acquisitions 2022 Full year results Mar
Slide 23: Appendix
Appendix
Slide 24: Our vision, our strategy
Commodities central to a sustainable future Our vision Our strategy To be globally recognised as the To acquire royalties and streams royalty company synonymous over low-cost mining operations with commodities that support a sustainable and projects with strong management future by continuing to gro
Slide 25: Ecora offers exceptional value relative to peers and in absolute terms
Ecora offers exceptional value both relative to peers and in absolute terms Market Cap(1) P/NAV(1) EV/2023E EBITDA(1) 2023E EBITDA (1) Avg. Discount Rate (2) (US$M) (x) (x) (US$M) (%) LTM LTM Avg. Max ECORA Ecora $375 0.6x 0.8x 1.1x 5.7x $74 7.5% Deterra $1,560 1.0x 1.0x 1.1x 10.2x $152 5.2% LIORC $
Slide 26: Diversified portfolio of producing royalties
Diversified portfolio of producing royalties Market cap of listed producing royalty counterparties ~ $200bn Voisey’s Bay IOC McClean Lake Mill EVBC Carlota Maracás Menchen Kestrel Mantos Blancos Four Mile Producing Voisey’s Mantos Maracás McClean Asset / IOC Kestrel EVBC Four Mile Carlota Commodity
Slide 27: Supported by a strong growth pipeline
Supported by a strong growth pipeline Ring of Fire Salamanca Incoa Piauí West Cañariaco Musgrave Nifty Santo Pilbara Domingo Development Early Stage West Santo Asset / Piauí Incoa Nifty Salamanca Pilbara Cañariaco Ring of Fire Commodity (1) Musgrave Domingo Nickel & Cobalt Calcium Carbonate Copper U
Slide 28: Renewable power generation dependent on future facing commodities
Renewable power generation dependent on increased supply of future facing commodities Clean energy is dependent on mineral Commodities produced in a relatively extraction(1) more sustainable way Annual metals demand from power grid under BNEF’s Economic Transition Scenario and Net Zero Scenario Copp
Slide 29: Battery storage provides an example
Battery storage provides an example Tesla’s 140GWh Gigafactory consumes huge Value of market for commodities involved in quantities of raw materials(1) energy transition will grow significantly(3) Annual value in energy transition ($ billion in 2022 real dollars) GRAPHITE ANODE 2050 Net Zero 140-170
Slide 30: Kestrel – a record year
Kestrel – a record year LEGEND • Record portfolio contribution of $107m MINE Layout 300 Series Private Royalty Panels Mining Tenement Boundary • Queensland government added new royalty rates at Public Areas higher coal prices Gordon Resources – Tenure Compilation QLD CADASTRE DCDB Royalty Areas2 • S
Slide 31: Updated Queensland royalty rate
Updated Queensland royalty rate Queensland royalty rate (1) Illustrative royalty uplift (per tonne basis) (2) Previous royalty regime Coal Price Previous royalty Revised royalty rate Royalty regime effective from 1 July 2022 (A$ per tonne) rate (from 1 July 2022) $54 <$100 7% 7% $44 >$100 and up to
Slide 32: Copper royalties
Copper royalties Mantos Blancos Santo Domingo Stage Producing Stage Development - fully permitted Location Chile Location Chile Operator Capstone Copper Operator Capstone Copper Royalty rate 1.525% NSR Royalty rate 2.0% NSR FY2022 $6.0m portfolio contribution FY2022 n/a Overview: Overview: Ecora acq
Slide 33: Copper royalties
Copper royalties Nifty Carlota Stage Restart Stage Producing Location Australia Location USA Operator Cyprium Metals Operator KGHM Polska Miedz Royalty rate 2.0% NSR (payable upon production threshold) Royalty rate 5.0% NSR FY2022 n/a FY2022 $0.2m portfolio contribution Overview: Ecora received $0.2
Slide 34: Nickel royalties
Nickel royalties West Musgrave Piauí Stage Construction Stage Development – pilot plant operating Location Australia Location Brazil Operator OZ Minerals Operator Brazilian Nickel Royalty rate 2.0% NSR Royalty rate 1.25% GRR (option to increase to 4.25% GRR) Overview: Overview: West Musgrave is a ni
Slide 35: Uranium royalties
Uranium royalties Denison / McClean Lake mill Four Mile Stage Producing Stage Producing Location Canada Location Australia Operator Orano Operator Quasar Resources Royalty rate 22.5% of toll milling revenue Royalty rate 1.0% NSR FY2022 $5m toll milling receipts FY2022 $1m portfolio contribution Over
Slide 36: Other key producing royalties
Other key producing royalties Maracás Menchen - Vanadium LIORC – Iron Ore Stage Producing Stage Producing Location Brazil Location Canada Operator Largo Resources Operator Rio Tinto Royalty rate 2.0% NSR Royalty rate 7.0% GRR (indirect) FY2022 $3.6m portfolio contribution FY2022 $2.9m portfolio cont
Slide 37: Other development royalties
Other development royalties Incoa – Calcium Carbonate Ring of Fire - Chromite Stage Development Stage Development Location Dominican Republic & USA Location Canada Operator Incoa Performance Minerals Operator Wyloo Metals Royalty rate ~1.23% GRR Royalty rate 1.0% NSR Overview: Ecora has a 1.0% life
Slide 38: Investor information
Investor information Top Shareholders (as at 1 January 2023) (1) Analyst coverage Bank of America South32 16.9% Cameron Needham (London) Berenberg Aberforth Partners 7.9% Richard Hatch (London) Peel Hunt Schroder Investment Management 7.6% Tim Huff (London) RBC Canaccord Genuity Wealth Management 5.
Slide 39: 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