Ecora Royalties PLC

Good afternoon, everybody. Thank you very much for joining the eCorra Resources half year 2025 results presentation. I'm joined today by Mark Bishop-Lafleche, our chief executive, Kevin Flynn, chief financial officer. I'm Geoff Callow, the head of investor relations. Mark and Kevin will take you through a presentation detailing our half year results. At the start of that, you'll find a disclaimer, which relates to forward-looking statements, which we won't dwell on, but please be aware of that. And finally, there'll be an opportunity for anybody at the end of the presentation to ask any questions you may have. With that, I'll hand over to Mark.

Thank you for joining us today. We are excited to present our first half 2025 results. During the period, we saw very strong volume and revenue growth in our critical minerals portfolio, in particular from base metals. A very strong continued ramp up at Voisey's Bay mine and is currently carrying forward into the third quarter. We saw record production and revenue from the Mantos Blancos copper royalty. And the period saw the first income from the Mambula stream, which we acquired in late Q1. As a post-period event, we entered into an agreement to sell the non-core development stage Dugby Gold Royalty, and this accelerates the group's deleveraging following the Mimbula Stream acquisition earlier in the year and provides Acora with greater flexibility to reallocate the capital in the future should an opportunity present itself. As I mentioned just now, it was very pleasing to see our producing critical minerals royalties increasingly demonstrate their underlying cash generation potential during the first half of 2025. Over the calendar year 25, we expect it to be the first year in ECORA's history when more than 50% of our revenue is generated in connection to critical minerals. And that's assuming current commodity prices, which represents a significant milestone in this company's evolution from 20% base metals in 2020 to an expected 85% in 2030 with copper at the core. So 2025 really does appear, in our view anyways, to represent a potential inflection point for ECORA, as this company transitions from historically being linked to a single commodity with a relatively short life to being much more diversified in terms of counterparties, commodities, and most importantly, perhaps, underpinned by royalties over mines that have production horizons that are measured in decades rather than years. I just mentioned the Dugbee royalty sale, and this is certainly an example of value that doesn't appear to have been priced into the eCore shares. We believe there is substantial value beyond the core producing royalty asset base. And as part of the Dugbee transaction, it's really great to demonstrate this and unlock value as part of that transaction. So with that, I'll hand it over to Kevin to run through the financials.

Thanks, Mark. My first slide, as always, summarizes our financial performance in the period. And I think just to deal with that at the outset, if we look at the comparative periods across these charts in 23 and 24, these illustrate the inverse of what we're currently seeing with the timing of Kestrel being within our private royalty area. So in 23 and 24, we saw the vast majority of our full year contribution being earned in the first half of the year. We're expecting that dynamic to reverse in 2025. So in effect, the green box for H125 is more comparable to the lighter blue columns within the previous years. And what we've done here is we've just put in a dotted line to show where the broker consensus numbers are looking at for the rest of the year across these KPIs, showing how we expect the portfolio to catch up as we go through the second half of the year. Now, that's not to say, of course, that this catch-up is solely driven by Kestrel. That would be to do a disservice to the fantastic progress and momentum we've seen from our base metals portfolio in the first half of this year, which was up 81% on the previous year. And there's some very good tailwinds, both volume-driven and pricing, to suggest that there's more to come in the second half of the year. Portfolio contribution in its usual way carries across into our adjusted earnings per share and our free cash flow graphs as always. Just one other thing to pick up on, the total dividend for the first half of the year announced was 0.6 cent per share and that's very much in line with our capital allocation policy paying out approximately 25% of our free cash flow. Turning to the next slide, which is our portfolio contribution in a little more detail. As I said, the headline number here and the reduction of 65% doesn't really tell the full story. If we go further up the page and look at our base metals portfolio, which, as I mentioned, increased by 81%, we certainly want to highlight the Voices Bay and the Mantos Blancos assets as key drivers of this increase. Looking at Voices Bay first, we're very pleased that the ramp up and the transition to the underground mine is now firmly established. And for the first period, really, this is coming through our income statement, reporting more than double revenue. And Mark will touch on the reasons why we're very confident with what we received in Q3 to date and the outlook for the rest of the year in a moment. The other side to this coin, of course, is the cobalt price. The DRC introduced an export ban on cobalt in the first quarter of this year, which has created a stability in the cobalt price around about the 18 to 20 dollar per pound level, which has remained pretty firm in the period. This export ban was extended and is due to end at the end of September. Many commentators think that further price stabilization mechanisms will be implemented by the DRC government at this stage. But it's worth remembering that before this export ban was put in place, the cobalt price was around about $13 a pound. So we've received some very positive uplift in terms of both volume and pricing from this asset, both of which look set to continue. Mantos was another stellar performer in the portfolio, up 35% in the period. This was mainly volume-driven, as the operator Capstone has announced three consecutive months of record levels of production. Again, we expect very good momentum to come here going forward, and Mark will touch on that again a little later. But this positive and record levels of outcome is coming when the copper price rises. which did experience some volatility earlier on in the year around tariff disruptions, has now bounced back to about $10,000 a ton, whereas post-tariff it traded down to about $8,000. So again, with price and volume tailwinds here, we expect a good finish to the year. The Mumbula copper acquisition, this one really doesn't tell the full story. Given the way the stream is structured, the revenue recognition point is based on the receipt of the copper and the sale of those units. We usually receive those units and sell them immediately in the week after the quarter end date. So the revenue recognition period is is the first week of the quarter. So actually, the 0.7 million received here relates to February and March of 2025. It doesn't include 1.4 million we've sold already in Q3, which was based on production in Q2. So again, we expect good momentum in the second half of the year here. Just picking out a couple of others as we go down. Four Mile, very similar to Mamboula in that it lags a quarter. So whilst the normal levels of sales volumes has resumed here, it is lagging one quarter. So we expect much higher levels of revenue to come through in the second half. And bear in mind the 1.4 million comparative number here on H1 last year. There was no revenue in the second half of last year. So we expect good momentum here too. It's worth noting again, further down the chart, that EVBC provides us with some gold exposure. And the delta here reflects the outperformance of the gold price over the first half of the year. And beyond that, in fact, gold is trading just under 3,500 an ounce. And we have some good torque to that through the EVBC gold royalty. And last but by no means least is Kestrel. And whilst this now represents a short-term asset for the group, it's still worth remembering that we expect total volumes here between 2.2 and 2.3 million tons this year. This is about a 10% increase on what we received last year. So whilst not core to the long-term equity story of Acora, the next two years from Kestrel is still very key to our deleveraging path. And I'll touch on this later on. Turning to our adjusted earnings, a couple of things just to highlight here. Our overheads in the period, we report these in USD, but the vast majority of our cost base is in pound sterling. So slight increase here year on year, given the weakening of the US dollar in the period. The 6.4 million here includes about 800,000 of share-based payments. So that is not a cash cost. Our finance costs of 4.9 reflect higher borrowings in the period, higher average borrowings in the period following the Membula acquisition. But they've also benefited from somewhat lower finance costs given the rate cuts that the Fed has imposed this year to date and with expectations that further cuts could be coming in the second half of the year. The potential, especially with Dugbee now as well, to see a reduction in our run rate on finance costs. And one thing which is also worth noting is the tax cost of 1.8. This tax cost is based on the portfolio contribution accrued in the first half of the year. And as we noted, Kestrel was not a significant component of that. And Kestrel, as I've said before, attaches a very high effective tax rate. So the effective tax rate implied here is a real indication of what is to come in terms of free cash flow conversion in life after Kestrel in a couple of years' time. Turning to the balance sheet, just to highlight a couple of things, the increase in royalty assets obviously includes the Membula acquisition, offset somewhat by the fair value revision to Kestrel in a lower coking coal price environment. Worth noting, as I often do, the 249.7 million royalty intangible assets This represents about 45% of our total royalty assets. Now, these assets under IFRS are carried at the lower of their fair value or amortized cost. And as such, any increase or inherent increase value in this portfolio, whether that is through reserve and resource upside revisions to commodity prices or indeed just the unwinding of the discount rate as these get closer to production, is never reflected on the balance sheet. And if we go further down the page, the 429.9 million net assets at 13th of June approximates to about 126 P per share. So based on the hidden value, if you like, of the intangible assets, there should be some upside to that number on a pro forma basis. My final slide is our net debt reconciliation and our liquidity. This chart is a little bit out of date given the recent announcement of the Dugbee disposal. But for this year, it includes the MIMBULA acquisition. And it's worth remembering as well, at the same time we did this, we took the opportunity to accelerate all the remaining deferred considerations associated with our Narrabri disposal, which along with the payments we had received in January 2025 associated with the contractual obligations brought in $11.5 million. adding the 16.5 million from Dugbee to this number, and we've effectively refinanced about 56% of the cost of Mambula through extracting value from our portfolio. Leverage remained comfortable at the half-year at 2.5x. Again, this pre-Dugbee. Post-Dugbee, that pro forma number would have been about 2.17. And that's comfortably within the 3.5 times permitted under our borrowing facility. The Dugbee sale, as Mark mentioned, should accelerate deleveraging in the second half of the year, along with the second half weighting of our portfolio cash contributions. And if we look across to the box on the bottom right-hand side of the page, we'll see, based on consensus pricing, where the debt numbers could end up at the end of this year and next year. So we remain well capitalized. On top of those numbers, we have $108 million facility. We've no obligations on this until maturity in early 2028. and plenty of capital left to recycle into future acquisitions. And I'll pass it back to Mark.

Okay, well, thank you, Kevin. And as we both mentioned, it is a very exciting time for eCora, both in terms of the ongoing revenue growth from our producing critical minerals royalties, but also in terms of the de-risking events spanning the next wave of cash flow growth. And while we won't dwell on this slide, as many of the key points are covered later in the presentation, I think we'll just briefly mention one thing, and that relates to developments at the West Musgrave project. First, while BHP has reiterated that it intends to review the decision to temporarily suspend its Western Australian nickel unit by February 2027, and that's along with the development of the West Musgrave project. In July of this year, BHP announced that it would consider divesting the Australian nickel assets. And of course, this potentially opens the door to a change in the West Musgrave project ownership. Ultimately, West Musgrave is a low cost, fully permitted, long life copper nickel asset located in Australia that's partially built and actually only a couple of years from coming into production. And suffice to say that the list of similar projects globally is very short. So it's, of course, very early days, but certainly something to keep an eye on. You've heard already from both Kevin and I, the key takeaway at Voices, in short, is that the long-awaited production ramp-up is now firmly established, and we're on track to see full production levels next year. In the first half, we received 140 tons of attributable cobalt, and by comparison, in the first two months of Q3, we've already received that exact same amount. So based on the H1 performance and the second half outlook, We have upgraded the low end of our full year 2025 attributable cobalt guidance range to 365 to 390 tons of cobalt. Previously, that was 335 to 390. And that's notwithstanding scheduled maintenance outages at the Voices Bay Mine in Q3 and then at the Long Harbor Refinery during the fourth quarter as disclosed by Valley. So with the Voises Bay operations now within a line of sight on steady state production capacity, I think the question is, well, what's next at Voises? And the first is the possibility to increase production. So Valley has previously stated that there exists potential to increase mill throughput rates from 2.8 million tons currently to 3.0 million tons per annum, potentially more, we'll see. And second, this is in the form of the possibility of the life of mine extension potential. I think this is an area that we've discussed a lot in the past, but from what we're seeing, it seems almost certain that the LOM will be incrementally extended to some degree. And if we look beyond that, the scenario of doubling of the mine life actually appears both very possible and still with a potential gap to what we would see as the very best possible blue sky scenario. I think we've touched on the cobalt market to some degree, and I won't dwell on the developments from the DRC government, but I think one other point to add, and it continues the theme of government action in relation to critical minerals frameworks. The USDOD has recently launched an alloy grade cobalt tender of up to $500 million. And this is something we'll come back to later in the presentation. The Mantos Blancos Royalty performed very strongly during the period. And this is something really driven off of strong operational performance by the Capstone team. The de-bottlenecking program that was announced and completed last year has really led to the sulfide throughput increase to meet or exceed main plate capacity levels in the past quarters. And so also what's next at Mantos Blancos? And that's really the possibility of a phase two expansion. And this study and this expansion potentially contemplates using largely existing or underutilized equipment to do two things. Number one, potentially increase sulfide concentrator throughput capacity such that we could expect to see annual production copper increased by approximately 10,000 tons. Second, increase copper cathode production by re-leaching historical waste material. And Capstone is targeting incremental copper production of approximately 25,000 tons per year over 15 years. So that's fairly material considering that Capstone's guidance from Antos Blancos in 2025 is the midpoint is around 54,000 tons and the phase two expansion is potentially targeting an increase of somewhere in the order of 35,000 tons per year. That study is expected in 2026. And again, something we've said before, but to repeat the point, appears to be the type of low capital, high return on investment project that mining execs favor. As you'll all be aware, we completed the acquisition of the producing Mimbula copper stream during the first half of the year. The phase two expansion continues to advance. The crusher installation is now complete and in commissioning. The ongoing phase two expansion continues. And there's also exploration drilling ongoing at the site. Kevin touched on this, but we do expect to see growing copper volumes of stream copper in the second half of the year as we benefit from a full reporting period. And of course, in H2 and beyond as the phase two expansion progresses towards completion. a very short update on Kestrel. And it's simply that no change in guidance for a calendar year. As many of you will already be aware, we've always expected Kestrel to be very heavily weighed to H2. We've already seen the mining operations return to our royalty area in late Q2. So we are very confident on these volumes coming through in the second half of the year. I'm turning now to Patterson Corridor East. This is an asset in our portfolio that sometimes appears to sort of get lost in the wash, despite our best efforts to really showcase and bring attention to this royalty. In the first half of the year, NextGen began a 43,000 meter expiration dual program at Patterson Corridor East to further delineate the deposit. And at mid-year, just over half of that program has been completed. I think the only way to describe some of the results of the program thus far are just geologically exceptional. Mineralization has been confirmed at 600-meter strike, 600-meter vertical extent, open in all directions, and in a hosted incompetent basement rock. And interestingly, actually, at shallower depth than the next-gen's nearby world-class aero-deposit. So in short, Patterson Quarter East does continue to show what we see as potential to be a generational uranium discovery. And we, of course, eagerly await the release of a maiden resource, which NextGen is targeting sometime next year. And we think that should go a long way to helping daylight the value of this royalty. I think a second point to note while we're on this topic is that ICORA's royalty entitlements over next-gen properties are actually much broader than solely Patterson Quarter East. They do not include Aero, but they do mirror the mineral claims underlying the 10% carried interests that next-gen acquired from Rio Tinto in July 2025. So in time, these royalty interests that ICORA has in Athabasca certainly have the potential to benefit from further expiration. And last, before we finish, turning now to a wider critical minerals market perspective. In recent years, it's clear to anyone connected to the minerals sector that the establishment of independent supply chains has emerged as a key focal point for Western governments. However, it's only been in the last couple months, actually, where we've seen a very strong acceleration of action, and that's been from the U.S. government in particular. I think the first trend relates to stockpiling, and the alloy-grade cobalt tender that's just been launched by the U.S. Department of Defense is a great example of this type of market development. The tender represents actually somewhere around 100% of the total 2024 alloy grade production by the three qualifying producers, being Vale, Glencore, and Sumitomo. And of course, it's unclear at this time what volumes will ultimately transact, but there's a real possibility as we look to the future of a much tighter supply-demand balance, specifically around these really high-spec alloy grade products. and other commodities where governments might look to stockpile minerals. I think second is the emergence of a trend of public-private partnerships. And our rainbow rarest royalty, which we acquired last year, with hindsight, that is turning out to be a really opportune counter-cyclical entry point, is very well positioned to benefit directly and indirectly. And you can see a read-across, obviously, through the existing indirect U.S. government ownership state in rainbow rare earths via TechMIT, and indirectly via developments more widely in terms of security of supply in the rare earths market. And there's a direct read-across, of course, to the U.S. Department of Defense agreement with MP Materials to enter into a 10-year offtake agreement for NDPR production. at price levels that are well in excess of spot levels. And that ultimately provides some level of insulation to MP materials anyways, to non-market forces into the future. So in terms of what this all means for ECORA, well, first we think that our commodity exposure is very favorably aligned to what is actually quite a simple question. And that question is whether one believes that the world is likely to continue to see strong electricity demand growth. We have high quality portfolio of royalties over low cost assets and development stage assets with strong operators. And the revenue profile is underpinned by a very strong critical minerals growth. I think H1 certainly acts as a tangible demonstration of the portfolio's underlying cash generation potential with more to come in the future with volume growth in H2 and beyond, which seems to particularly highlight what we see as a very attractive current entry point for investors. So thank you for joining the presentation and we'll now take questions.

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one and the telephone keypad. We'll pause for a brief moment. Thank you. We'll now take our first question from Laura Cheung of RBC. Please go ahead.

Hey, good afternoon. Thanks for the call. Just one question from me. I mean, your portfolio is obviously shifting towards base metals, but how are you thinking about the composition mix in the long term? And would you look to add exposure in something like lithium? And if you have one, is there a targeted commodity mix that you have in mind? Thanks.

Hi, Laura. Thanks for the question. I think from a commodity perspective, our mandate to some degree is quite broad. I would say it encapsulates the critical mineral slash electrification trend. That being said, we've sought to concentrate our portfolio in base metals with a cornerstone of copper. We certainly would consider other commodities such as lithium, for example, such as subject to the entry point returns profile, cost curve positioning, all the same key investment criteria that would apply on a relative basis throughout the commodity complex. So while we don't have a particularly predefined target commodity mix, we do consider moving laterally as and when commodities present cyclical opportunities, but there is certainly a focus on retaining base metals and in particular copper at the core of our commodity exposure.

Cool, thanks. Thank you. And we'll now take our next question from Will Dolby of Brandenburg. Please go ahead.

Yeah, hi, guys. Hi, Mark, Kevin, Jeff. Thank you very much for the call. Just a couple from me, if possible. The first is kind of more of a clarification point. Just looking at slide 14 on Voisey's Bay and the production there, and you sort of highlight the difference in price between alloy grade and standard grade, and then I see a portion of H224 production was sort of about 50-50 alloy and standard. What's the kind of outlook there for the quality split?

Hi, Will. Thanks for that. Historically, if you run sort of five years, what you'd see is probably 80% alloy, 20% standard grade. Although of recent years, this year in particular, as you can see in H1, there has been a focus to produce and target 100% alloy grade. So while it's certainly possible that we might see some standard grade products in the future, it does appear as if there's an effort to shift to 100% alloy grade.

Okay, thanks, Mark. That's clear. And then the second, maybe just a bit more on broader strategy and commodity-wise, so looking at your portfolio split and really thinking about a couple of good or interesting nickel assets you have in there, Piau'i and West Musgrave, against the backdrop of... We've seen nickels had a challenge in a couple of years, and I think consensus is that it's probably destined to stay there for the foreseeable future. I guess the overall question is, you know, how are you seeing nickel and those assets sitting in your portfolio? Do you feel like you kind of have a more patient approach to ride through the cycle and let those come back? Or, you know, do you think there's maybe threats that these kind of projects are maybe going to struggle to get built and you have to start thinking about potentially trying to monetize them and reallocate capital elsewhere? It would be interesting to get your views on that. Thank you.

Yeah, so when you think about our nickel exposure well, I think part of the thought process would relate to cost curve positioning and number two, a more geopolitical security of supply question. So in terms of cost curve positioning, our nickel exposures are well in the lower half of the first cost curve, the lower half of the cost curve. And as a result, both West Musgrave and PEOE I have the potential to produce at today's price and still generate robust free cash flows. I think second, the world increasingly is shifting towards sizable and dominant market share in nickel from Indonesia, which in time is likely to revert as ore grades deplete or as costs are increased from mining ore bodies further away from processing sites. I think like any commodity, nickel historically has demonstrated cyclicality, but those assets are amongst the best undeveloped nickel deposits globally outside arguably of potentially Sudbury. More generally, would we consider monetizing them? I think it's a more general question on our portfolio. I think Accor would be open to considering anything on its merits at this point. At this time in the nickel market, though, you'd think it might not be the best time to maximize value.

Yeah, I appreciate your comments. And yeah, congrats on the strong first half. Thanks a lot, guys. Cheers.

Thank you. There are no further questions in queue. Once again, if you would like to ask a question, please press star 1 on your telephone keypad. Thank you. There are no further questions in queue. Handing it over for webcast questions.

Great, thanks. We've got a few questions from the webcast. First question is, congratulations on the sale of Dugby Gold Royalty. I would like to know what other non-core royalties, in your opinion, that will be worth millions but are currently not recognised by others?

Well, thanks for the question. I think you could make the point if you looked at what's currently priced into the core shares, the entirety arguably of the development non-producing portfolio is not reflected in the current core share price. So I don't think you need to necessarily look to non-core assets to see substantial value in this portfolio.

Great. Thank you. Next question is, What is the pipeline of potential royalty deals, especially in other metals that we don't have right now, lithium, manganese, zinc, tin, graphite?

Yeah, so I think within our targeted commodity remit, you've definitely included in that question a few of the commodities that we review and consider. As I mentioned in response to an earlier question, The key commodity that we'd really like to retain at the core of the portfolio is copper. We have absolutely reviewed a number of opportunities laterally, more specifically in terms of battery chemistries or elsewhere, in terms of energy production or energy consumption. To date, we haven't seen any opportunities that fully met our investment criteria in the other commodity suite. But it's also a question of cyclical entry points. And I think as you move forward in time, there's a sort of changing involving relative landscape towards what commodity might offer a more opportune entry point and vice versa. So by no means are we saying that we wouldn't consider any of those commodities. We absolutely do. It's just today we haven't found any transact on and with copper available, we chose to focus on that commodity.

Thank you. Next question is the royalty sector has heated up lately. Will we consider to buy other smaller peers such as Submit Royalty, Electric Royalty, etc.? ?

I think generally speaking, we don't really comment on M&A publicly. I think, of course, we do consider any and all opportunities. To date, we've seen strong value, for example, the Mimbilla producing Copper Stream, and that's something we've pursued.

Great, thank you. There are no further questions in the webcast, so I'll hand over to you for any closing remarks.

Well, thank you very much for joining us. We're very excited about these results. We do feel they represent a strong point of inflection for this portfolio and its evolution into the future. And we're very excited for the second half of the year, both in terms of further growth and our producing royalty portfolio, but key de-risking events in relation to that next wave of growth, both in terms of brownfield expansions and greenfield installations thereafter.