Ecora Royalties PLC

Good afternoon, everybody. Thank you for joining us today. My name is Geoff Callow, the Head of Investor Relations. I'm joined on this Ecorra Resources full year 2024 results call by our Chief Executive, Mark Bishop-Le Fleche, and Kevin Flynn, our Chief Financial Officer. We'll take you through a short presentation. I'll draw your attention to the forward-looking statements on the second slide. And then at the end of the presentation, there'll be an opportunity to ask questions, both over the phone line and the operator will give instructions for this at the end, and also through the webcast. With that, I'll hand over to Mark.

Thanks, everyone, for joining us. And to those joining us from other parts of the world, good morning. Overall, 2024 was a very good year for the Quora in the context of what was a much broader, difficult market backdrop. We saw portfolio contribution grow year on year from our producing royalties, if you adjust 2024 for non-recurring items. And one year in from the introduction of our capital allocation framework, really prioritizing the diversifying our asset base and growing our sources of short and medium-term income. We feel the acquisition of the Palabora royalty and more recently the Mimbula copper stream represent tangible delivery on that front. From a portfolio perspective, we saw volume growth in 24 as expected from our key underlying producing royalties at Voizes. We saw the completion of the underground mine in the second half of the year and really strong cobalt volume growth thereafter. Mentos Blancos also performed very well. We saw a record level of royalty income in the fourth quarter, and Capstone has guided for further year-on-year copper production volume growth with the potential for that to grow in the future. Same at Kestrel, year-on-year volume growth expected to continue into 2025. I mentioned tough markets last year. Cobalt was certainly an example of a market that saw significant oversupply and at year-end was trading approximately 50-year lows in real terms. In that context, that drove an impairment to the Voices Bay Stream. Kevin will discuss that in more detail on the call. We'll also discuss some of the more recent developments that have occurred in the cobalt market since February that provide what we believe really positive tailwinds in the future on pricing. The last point to flag of note, recently we announced a copper stream over the producing Mambula mine. That increases our producing copper exposure. It's also a very low cost mine with a fantastic management team. And as we already mentioned, when we announced the transaction, we really feel is the perfect deal for Ecorra. Moving to the next page, we can see a snapshot of ECOR's royalty portfolio adjusted for the Mumbula acquisition. On top left of the page, base metals now represent 80% of our commodity exposure with 50% estimated copper exposure as a percentage of our NAV. From a jurisdiction perspective, 75% roughly of our portfolio to OECD jurisdictions, with the balance being in very well-established mining jurisdictions such as Brazil and Zambia. And as we've flagged many a times, the cost curve positioning of our portfolio at Acora continues to be heavily weighed to low-cost mines or projects. Operations that can operate throughout the commodity price cycle and generate strong cash flows are those that are expected to have robust economics and thus more likely to come into production in the future. And the composition of the portfolio equally continues to be well balanced in terms of the stage of development. The majority of the asset base is weighed to producing royalties and streams with the second largest exposure to advanced or permitted or shovel-ready development stage projects with just under 20% of long-return optionality. I spoke about copper representing approximately 50% of the business's estimated net asset value. And looking over at the next slide, over the last decade, we've slowly built what has become today the royalty sector's leading organic copper growth pipeline. which is just a fantastic achievement and a great platform to continue to build on. Attributable copper production last year was just under 2 million pounds, and that's expected to grow substantially over the next decade with the potential to hit 20 million pounds. The front end of that growth profile is driven by Mimbula and Mantos Blancos. And in the medium term, of course, Santo Domingo is a big one, and Capstone is progressing that project well. Bringing that all together, you can see our critical minerals royalty portfolio is expected to grow substantially in the short, medium, and long term, from $20 million revenue in 2024, ramping up to potentially over $100 million of income in 2030. And that's truly underpinned by our royalties that are currently in production today. We still expect a couple good years of production volumes at Kestrel, although that royalty is expected to decline in the future as production moves out of our royalty area. And then looking out again to 2030, almost 80% of our revenue is expected to be generated from base metals and of that, that's heavily weighed to copper. Accor's producing and development stage royalty portfolio offers very strong organic growth. And turning to look what's priced in, today it appears that there's an opportunity for investors to come in at a level that is below the estimated value of a producing asset portfolio and capture the substantial volume growth potential and revenue growth potential that exists over the medium term effectively for free. And now I hand it over, Kevin, to run through the financials.

Thanks, Mark. And turning to our financial KPIs. 2024 was a solid year from the group with volume guidance across the portfolio largely met. And when we adjust 2023 for the 104 mile catch-up payment, our contribution grew 9% on a like-for-like basis. The volume growth in the portfolio really accelerated towards the end of the year, noticeably at Voices Bay and Mantos, and this momentum should continue with volume growth expected across the portfolio in 2025. With a largely static cost base, our adjusted earnings were in line with the previous year at 11.4%. And we continue to generate good free cash flow in the period which was sufficient to meet our investment activity in the year. This is a key principle of our revised capital allocation framework that we put in place at the beginning of 2024. So in summary, 2024 certainly met our expectations and we're seeing good momentum across the portfolio to be optimistic for what lies ahead in 2025. Turning to the next slide, which looks at our portfolio contribution in a little more detail. So whilst overall income was in line with 2023, as I mentioned, 2023 did benefit from a one-off historical receipt at 4ml. And adjusting for this, our contribution increased 9% on a like-for-like basis. This was largely due to volume growth at Voices Bay and Kestrel in the year, offset somewhat by lower commodity prices. Looking at our base metals portfolio, this performed very well in the period, the noticeable highlight being a 36% increase in volumes from Voisey's Bay. This was offset, as Mark mentioned, by a softer cobalt pricing environment in the period. Our realized prices here were down about 18%. The inverse was the case at our Mantos royalty, where higher pricing for copper was offset slightly by a reduction in volumes. But the real highlight within our base metals portfolio is what's to come in 2025 and beyond. At the lower end of our guidance, Voisey should see a 60% increase in volumes in 2025, and Mantos ended 2024 by hitting record monthly production numbers. With higher spot copper and cobalt prices currently, along with the recent addition of the Mumbula copper stream, which is income producing, we're optimistic for good growth to come from our core base metals portfolio in the year ahead. Speciality metals saw a reduction at Marrakesh due to lower vanadium prices. Pricing here was about 30% down on realized prices in the year. And as I mentioned, four mile for 2023 included a one off back payment of royalties and 2024 was impacted by no sales in the second half of the year. We are now expecting as of 1st of January that sales will return to normal levels at four mile for the year ahead and beyond. Within our bulk and other category, EVBC continues to benefit from very high gold prices. This offset lower volumes in the period. But the outlook for the gold price looks set to remain healthy, certainly for the near term in 2025. Kestrel saw a 30% increase in volumes in the period, achieving the high end of our guidance at 2.1 million tonnes. We're guiding, I think, 5% to 10% increase in volumes in 2025 before the royalty begins to taper off as it moves outside of our private royalty area beyond that. Looking at pricing, Coke & Co futures are currently higher than the current spot price, which is very important for us considering most of our volumes from Kestrel in 2025 are expected to come through in Q2 and Q3. So overall, the key takeaway here, a very satisfactory year and certainly the potential for more to come in 2025. The next slide shows how the portfolio contribution drops down into adjusted earnings. Our operating costs remain static year on year. Finance costs increase slightly in the period, a function of higher average borrowings as we completed the SED32 financing and the Palabora royalty in mid-year. Our tax charge continues to reflect a higher effective tax rate associated with Kestrel. Our effective tax rate should begin to decrease in the coming years as the complexion of our portfolio changes away from Kestrel towards our base metals portfolio. Combined, all of this resulted in adjusted earnings of 28.8 million in the period, and that translates to 11.4 cent in the period. This metric also reflecting the lower weighted average share is an issue following the share buyback program undertaken in the first half of 2024. Our balance sheet is a mixture of assets held at fair value and amortized costs, and overall the royalty assets decreased by 12.5% in the period. This decrease reflects the natural depletion at Kestrel as it moves towards the end of its life, along with an impairment charge of Boise's Bay, which Mark mentioned. This impairment charge is due to a prolonged decrease in the cobalt price, primarily driven by significant additional supply in the cobalt market in the period. This has decreased the forward consensus prices, and this impacts the implied future income of the stream, resulting in the impairment. The impairment is reflected both at asset level, but also within our deferred tax line, and this number is included in the other long-term receivable category. But as the impairment is price driven, this can be reversed in the eventuality that pricing rebounds and the forward price starts to tick up again. But ironically, the impairment provision is happening at a time when the operation is producing at record levels and the ramp up well and truly established. The next chart shows our net debt movement in the period. Free cash flow was around $22 million, which was sufficient to finance the final SED32 payment and our Palabora rare earths investment. Share buyback in the period was financed by the part disposal of our residual stake in LIORC. The dividend in the period reflects the revised capital allocation policy, which we implemented at the beginning of 2024. And this now sees our dividend being paid based on a percentage of free cash flow. The final dividend that we propose is 1.1 cent per share, which is based on a 25% payout. And when this is added to the 1.7 cent paid for the first half would result in total dividends for the year of 2.81 cents. Following our Membula acquisition, we continue to prioritize deleveraging and balance sheet strength. And as such, we would anticipate being more towards the lower end of our payout ratio for the immediate future. We continue to receive disposal proceeds from the sale of our Narrabri royalty a number of years ago. And following the permitting of the Narrabri asset deposit, an additional $3 million was received in January 2025. As part of our Mimbula financing, we took the opportunity to accelerate all remaining obligations under the sale agreement. And this resulted in $6.2 million being received in February 2025, roughly at the same time as the Mimbula financing. Our closing net debt number of 82 million is now a little bit out of date following the 50 million Mimbula Stream acquisition. As a result, our average borrowings in 2025 are expected to be higher than 2024, albeit comfortably within our covenant limits. The next slide shows the modifications we have made to our borrowing facility associated with the Mambula acquisition. Once again, we're very pleased to see the ongoing support of our lending group through the acquisition, which saw each of them increase their commitments by $10 million, such that we now have a $180 million borrowing facility. And at today's pro forma net debt, around $50 million of this remains undrawn. We expect to see pretty meaningful repayments over the course of the year, subject to further investments, and our immediate priority post-acquisition remains on deleveraging. We've tweaked some of the terms of the facility, noticeably the reduction in our interest cover test to ensure that we retain significant headroom under the covenants over the expected term of the facility. That term itself having also been extended by 12 months to February 2028. As I said, really pleasing to see our lenders supporting our growth ambitions. And we always feel this is a true validation of our strategy and the quality assets that we're acquiring. And with that, I'll hand back to Mark.