Ecora Royalties PLC

Good afternoon, everybody. Thank you very much for joining the Ecora Resources Half Year 2025 Results Presentation.

I'm joined today by Marc Bishop Lafleche, our Chief Executive; Kevin Flynn, Chief Financial Officer. I'm Geoff Callow, the Head of Investor Relations.

Marc and Kevin will take you through a presentation detailing our half year results. And 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 Marc.

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 Mimbula stream, which we acquired in late Q1. As a post-period event, we entered into an agreement to sell the noncore development stage Dugbe Gold Royalty, and this accelerates the group's deleveraging following the Mimbula stream acquisition earlier in the year and provides Ecora 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 Dugbe Royalty sale, and this is certainly an example of value that doesn't appear to have been priced into the Ecora shares.

We believe there is substantial value beyond the core producing royalty asset base. And as part of the Dugbe 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, Marc. 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 H1 '25 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 will 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 $0.06 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 Voisey's Bay and the Mantos Blancos assets as key drivers of this increase. Looking at Voisey's 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 Marc 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 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 looks 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 3 consecutive months of record levels of production.

Again, we expect very good momentum to come here going forward, and Marc will touch on that again a little later. But this positive and record levels of outcome is coming when the copper price, which did experience some volatility earlier on in the year around tariff disruptions has now bounced back to about $10,000 a tonne, 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 Mimbula 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 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 Mimbula and that it lags a quarter.

So whilst the normal levels of sales volumes has resumed here, it is lagging 1 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 in 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 and 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 million and 2.3 million tonnes 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 Ecora, the next 2 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 a slight increase here year-on-year given the weakening of the U.S. 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 million reflect higher borrowings in the period -- higher average borrowings in the period following the Mimbula 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 Dugbe 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 million.

This tax cost is based on the portfolio contribution accrued in the first half of the year. And as we noted, Kestrel is 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 Mimbula 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 increased 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 30th of June approximates to about 126p 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 Dugbe 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 Dugbe to this number, and we've effectively refinanced about 56% of the cost of Mimbula through extracting value from our portfolio.

Leverage remained comfortable at the half year at 2.5x. Again, this is pre-Dugbe.

Post-Dugbe, that pro forma number would have been about 2.17. And that's comfortably within the 3.5x permitted under our borrowing facility.

The Dugbe sale, as Marc 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 have 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 Marc.

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 derisking 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 in 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 Voisey's 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 tonnes of attributable cobalt.

And by comparison, in the first 2 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 tonnes of cobalt.

Previously, that was 335 to 390 tonnes. And that's notwithstanding scheduled maintenance outages at the Voisey's Bay mine in Q3 and then at the Long Harbour refinery during the fourth quarter as disclosed by Vale.

So with the Voisey's Bay operations now within a line of sight on steady-state production capacity, I think the question is, well, what's next at Voisey's? And the first is the possibility to increase production.

So Vale has previously stated that there exists potential to increase mill throughput rates from 2.8 million tonnes currently to 3.0 million tonnes 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 bears 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 U.S. DoD 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 debottlenecking program that was announced and completed last year has really led to the sulphide throughput increase to meet or exceed nameplate capacity levels in the past quarters. And so also what's next at Mantos Blancos, and that's really the possibility of a Phase 2 expansion.

And this study and this expansion potentially contemplates using largely existing or underutilized equipment to do 2 things. Number one, potentially increase sulphide concentrator throughput capacity to such that we could expect to see annual production copper increased by approximately 10,000 tonnes.

Second, increased copper cathode production by releaching historical waste material. And Capstone is targeting incremental copper production of approximately 25,000 tonnes per year over 15 years.

So that's fairly material considering that Capstone's guidance for Mantos Blancos in 2025 is the midpoint is around 54,000 tonnes and the Phase 2 expansion is potentially targeting an increase of somewhere in the order of 35,000 tonnes 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 2 expansion continues to advance. The crusher installation is now complete and in commissioning.

The ongoing Phase 2 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 2 expansion progresses towards completion. A very short update on Kestrel, and it's simply that no change in guidance for the calendar year.

As many of you will already be aware, we've always expected Kestrel to be very heavily weighted 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. 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, NexGen began a 43,000 meter exploration drill program at Patterson Quarter East to further delineate the deposit.

And at midyear, 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 and competent basement rock and interestingly, actually, at shallower depth in the NexGen's nearby world-class Arrow deposit. So in short, Patterson Corridor 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 NexGen 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 Ecora's royalty entitlements over NexGen properties are actually much broader than solely Patterson Corridor East. They do not include Arrow, but they do mirror the mineral claims underlying the 10% carried interest that NexGen acquired from Rio Tinto in July 2025.

So in time, these royalty interests that Ecora has in Athabasca certainly have the potential to benefit from further exploration. 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 the independent supply chains has emerged as a key focal point for Western governments. However, it's only been in the last couple of 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 3 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 Rare Earths royalty, which we acquired last year with hindsight that is turning out to be a really opportune countercyclical 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 stake in Rainbow Rare Earths via TechMet and indirectly via developments more widely in terms of security of supply in the rare earths market and the 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 nonmarket 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.

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? Would you look at exposure and something like lithium?

And if you have one, is there any -- is there a targeted commodity mix that you have in mind?

Laura, thanks for the question. I think from a commodity perspective, our mandate to some degree is quite broad.

I would say, it encapsulate the critical mineral/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 subject to such as lithium, for example, such as -- subject to the entry point, the 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.

Just a couple from me, if possible. The first is kind of more of a clarification point.

On 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 H2 '24 production was sort of about 50-50 alloy and standard. What's the kind of outlook there for the quality split?

Will, thanks for that. Historically, if you run sort of 5 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 alloy-grade product -- standard-grade products in the future, it does appear as if there's an effort to shift to 100% alloy grade.

Okay. That's clear.

And then the second, maybe just a bit more on broader strategy and commodity-wise. So looking at your portfolio split, I'm really thinking about a couple of good or interesting nickel assets you have in the Piauí and West Musgrave against the backdrop of -- obviously, nickel had a challenging couple of years, and I think consensus sort of it's probably destined to kind of stay there for the foreseeable.

I guess the overall question is 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 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? Just be interested to get your sort of views on that.

Yes. So when you think about our nickel exposure, Will, 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 Piauí 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 as ore -- as costs are increased from mining of -- 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 Ecora would be open to considering anything on its merits at this point -- at this time in the nickel market, though, you think it might not be the best time to maximize value.

Yes. I appreciate your comments.

And yes, congrats on the strong first half.

Great. We've got a few questions from the webcast.

First question is, congratulations on the sale of Dugbe Gold Royalty. I would like to know what other noncore royalties in your opinion that will be worth millions that are currently not recognized by others.

Well, thanks for the question. I think you could make the point if you look at what's currently priced into the Ecora shares.

The entirety arguably of the development nonproducing portfolio is not reflected in the current Ecora share price. So you could -- I don't think you need to necessarily look to noncore 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, graphites?

Yes. 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 were -- 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 and evolving 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. Just today, we haven't found any to 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 SMIT Royalty, Electric Royalty, et cetera?

I think, generally speaking, we don't really comment on M&A publicly. I think as -- of course, we do consider any and all opportunities.

To date, we've seen strong value, for example, the Mimbula-producing copper stream and that's something we've pursued.

Great. Thank you.

There are no further questions on 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.

So 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 in our producing royalty portfolio, but key derisking events in relation to that next wave of growth, both in terms of brownfield expansions and greenfield installations thereafter.