Q3 2024 Trading Update
LONDON, UK / ACCESSWIRE / October 23, 2024 / Ecora Resources PLC (LSE:ECOR)(TSX:ECOR) issues the following trading update for the period 1 July to 30 September 2024.
Ecora is the leading royalty company focused on supporting the supply of industrial commodities essential to creating a sustainable future. The Group's portfolio combines volume growth in 2024 and 2025 from its currently producing royalty portfolio with an extensive pipeline of high-quality development projects that are expected to drive material medium term revenue growth.
Marc Bishop Lafleche, Chief Executive Officer of Ecora, commented:
"Following a solid performance in Q3, the Group reported US$5.2 million of portfolio contribution. Importantly, underground operations at Voisey's Bay are ramping up with total deliveries in H2 on schedule to at least double the number received in H1. The number of cobalt deliveries is anticipated to continue to increase throughout 2025 ahead of full steady state production being achieved during 2026. This will see Voisey's Bay become a cornerstone asset for the Group, offering leverage to a recovery in cobalt prices from current cyclical lows.
"There were several positive developments in our sector leading copper portfolio, including the updated Feasibility Study at Santo Domingo, which confirmed the project's robust economics and potential to operate within the lowest cost quartile of global copper mines."
Highlights:
15% increase in portfolio contribution for the nine months ended 30 September 2024 of US$56.8 million (2023: US$49.4 million)
US$5.0 million of core portfolio contribution (ex-Kestrel) for Q3 2024 (Q3 2023: US$4.8 million; Q2 2024: US$5.5 million)
In line with guidance, production at Kestrel was mainly outside of Ecora's private royalty area in Q3 2024, with mining expected to return to Ecora's royalty area in H1 2025
Total portfolio contribution of US$5.2 million in Q3 2024 including Kestrel (Q3 2023: US$5.8 million; Q2 2024: US$31.8 million)
Ramp up of underground mining activity at Voisey's Bay accelerated resulting in the Group receiving four cobalt deliveries (each delivery is 20 tonnes of which 70% is attributable to the Group) during the period at an average realised sales price of $11.4/lb
The average realised sales price for Q3 2024 reflects the weighting to standard grade product. Deliveries in Q4 2024 are expected to be primarily alloy grade product
Whitehaven Coal announced the approval of the Narrabri Stage 3 project in accordance with the Environment Protection and Biodiversity Conservation Act. Subject to no further appeals, the approval triggers Ecora's right to a total of US$5.0 million of staged contingent consideration[1]
The operator of the Four Mile mine notified the Group that no royalty income will be due in H2 2024 as there have been no sales of product from the Group's royalty area - the Group is currently discussing with the operator the circumstances and timeline for sales restarting
Net debt at 30 September 2024 of US$85.5 million (30 June 2024: US$86.0 million)
Portfolio updates:
In September, Ecora completed the acquisition of a 0.85% Gross Revenue Royalty over the Phalaborwa rare earths project located in South Africa, operated by Rainbow Rare Earths ("Rainbow"), for a cash consideration of US$8.5 million
In September, Rainbow announced a 15% increase in the Mineral Resource Estimate for Phalaborwa, taking the total resource tonnage to 35.0 Mt and increasing the project life by two years
Capstone Copper released an updated Feasibility Study for the Santo Domingo project re-affirming the quality of the project as a low-cost operation with expected C1 cash costs of $0.33 per payable pound of copper over its 19-year mine life
Largo Resources announced a 42% increase in production in Q3 2024 to 3,072 tonnes of V205, their highest quarterly production number in seven quarters - most of this is expected to be reported as sales subject to royalties in Q4 2024
In July, BHP announced that it will temporarily suspend the construction of the West Musgrave project in October 2024, with the decision to be reviewed by February 2027
Cyprium Metals closed a US$27.3 million offtake financing agreement with Glencore plc, with the proceeds in part funding early site works at the Nifty copper complex as well as Nifty mine restart feasibility studies. During the period, Cyprium also released an updated mine optimisation plan and is expected to release an updated Pre-Feasibility Study in Q4 2024
Alta Copper announced an infill drilling campaign commencing in H1 2025 targeting high-grade mineralisation zones at Cañariaco Norte, accompanied by an exploration program in the nearby and highly prospective Cañariaco Sur and Quebrada Verde extensions (all of which are within Ecora's royalty area). Alta Copper's largest shareholder Fortescue Ltd. (34%) continued to support the project's development via a C$2.5 million private placement during the period
Outlook:
Voisey's Bay underground production to continue to ramp-up towards steady state levels in 2026
8-12 deliveries expected in H2 2024 (H1 2024: 4), FY 2024 guidance of 12-16 deliveries remains unchanged
20-28 deliveries expected in 2025
Life of mine average of 40 deliveries per annum expected when fully ramped up
Mantos Blancos copper production expected to be higher in Q4 2024 following scheduled maintenance during Q3 2024
Business development activities primarily focused on growing the Group's near-term income producing royalty portfolio
Net debt expected to reduce meaningfully in the next 18 months at current commodity prices and operator production guidance, absent royalty acquisitions
Portfolio contribution | Q3 2024 | Q3 2023 |
| 9M 2024 | 9M 2023 |
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| US$m | US$m | Q/Q | US$m | US$m | Y/Y |
Core portfolio |
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Voisey's Bay (cobalt) | 1.4 | 0.5 |
| 3.4 | 3.5 |
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Mantos Blancos (copper) | 1.3 | 1.4 |
| 4.1 | 4.7 |
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Maracás Menchen (vanadium) | 0.4 | 0.7 |
| 1.5 | 2.4 |
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Four Mile (uranium) | - | 0.2 |
| 1.4 | 0.8 |
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Carlota (copper) | 0.1 | 0.2 |
| 0.5 | 0.4 |
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Royalty and stream income | 3.2 | 3.0 | 7% | 10.9 | 11.8 | (8%) |
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Dividends - LIORC & Flowstream | 0.1 | 0.8 |
| 0.3 | 1.8 |
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Interest - McClean Lake | 0.4 | 0.4 |
| 1.2 | 1.4 |
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Royalty and stream related revenue | 3.7 | 4.2 | (12%) | 12.4 | 15.0 | (17%) |
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EVBC (1) | 0.7 | 0.2 |
| 1.2 | 0.6 |
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Principal repayment - McClean Lake | 0.8 | 0.5 |
| 2.5 | 1.8 |
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Less: |
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Metal streams cost of sales | (0.2) | (0.1) |
| (0.6) | (0.8) |
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Total portfolio contribution from core assets | 5.0 | 4.8 | 4% | 15.5 | 16.6 | (7%) |
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Near term run-off portfolio |
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Kestrel (steel making coal) | 0.2 | 1.0 |
| 41.3 | 32.8 |
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Total near term run-off portfolio | 0.2 | 1.0 | (80%) | 41.3 | 32.8 | 26% |
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Total portfolio contribution | 5.2 | 5.8 | (10%) | 56.8 | 49.4 | 15% |
1Under IFRS 9, the royalties received from EVBC are reflected in the fair value movement of the underlying royalty rather than recorded as royalty income
For further information
Ecora Resources PLC | +44 (0) 20 3435 7400 |
Geoff Callow - Head of Investor Relations |
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Website: | www.ecora-resources.com |
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FTI Consulting | +44 (0) 20 3727 1000 |
About Ecora Resources
Ecora Resources is a leading royalty company focused on supporting the supply of commodities essential to creating a sustainable future.
Our vision is to be globally recognised as the royalty company of choice synonymous with commodities that support a sustainable future by continuing to grow and diversify our royalty portfolio in line with our strategy. We will achieve this through building a diversified portfolio of scale over high quality assets that drives low volatility earnings growth and shareholder returns.
The mining sector has an essential role to play in the energy transition, with commodities such as copper, nickel and cobalt - key materials for manufacturing batteries and electric vehicles. Copper also plays a critical role in our electricity grids. All these commodities are mined and there are not enough mines in operation today to supply the volume required to achieve the energy transition.
Our strategy is to acquire royalties and streams over low-cost operations and projects with strong management teams, in well-established mining jurisdictions. Our portfolio has been reweighted to provide material exposure to this commodity basket and we have successfully transitioned from a coal orientated royalty business in 2014 to one that by 2026 will be materially coal free and comprised of over 90% exposure to commodities that support a sustainable future. The fundamental demand outlook for these commodities over the next decade is very strong, which should significantly increase the value of our royalty portfolio.
Ecora's shares are listed on the London and Toronto Stock Exchanges (ECOR) and trade on the OTCQX Best Market (OTCQX:ECRAF).
Cautionary statement on forward-looking statements and related information
Certain statements in this announcement, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect the Group's expectations and views of future events. Forward-looking statements (which include the phrase 'forward-looking information' within the meaning of Canadian securities legislation) are provided for the purposes of assisting readers in understanding the Group's financial position and results of operations as at and for the periods ended on certain dates, and of presenting information about management's current expectations and plans relating to the future. Readers are cautioned that such forward-looking statements may not be appropriate other than for purposes outlined in this announcement. These statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, cash flow, requirement for and terms of additional financing, performance, prospects, opportunities, priorities, targets, goals, objectives, strategies, growth and outlook of the Group including the outlook for the markets and economies in which the Group operates, costs and timing of acquiring new royalties and making new investments, mineral reserve and resources estimates, estimates of future production, production costs and revenue, future demand for and prices of precious and base metals and other commodities, for the current fiscal year and subsequent periods.
Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as 'expects', 'anticipates', 'plans', 'believes', 'estimates', 'seeks', 'intends', 'targets', 'projects', 'forecasts', or negative versions thereof and other similar expressions, or future or conditional verbs such as 'may', 'will', 'should', 'would' and 'could'. Forward-looking statements are based upon certain material factors that were applied in drawing a conclusion or making a forecast or projection, including assumptions and analyses made by the Group in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances. The material factors and assumptions upon which such forward-looking statements are based include: the stability of the global economy; the stability of local governments and legislative background; the relative stability of interest rates; the equity and debt markets continuing to provide access to capital; the continuing of ongoing operations of the properties underlying the Group's portfolio of royalties, streams and investments by the owners or operators of such properties in a manner consistent with past practice; no material adverse impact on the underlying operations of the Group's portfolio of royalties, streams and investments from a global pandemic; the accuracy of public statements and disclosures (including feasibility studies, estimates of reserve, resource, production, grades, mine life and cash cost) made by the owners or operators of such underlying properties; the accuracy of the information provided to the Group by the owners and operators of such underlying properties; no material adverse change in the price of the commodities produced from the properties underlying the Group's portfolio of royalties, streams and investments; no material adverse change in foreign exchange exposure; no adverse development in respect of any significant property in which the Group holds a royalty or other interest, including but not limited to unusual or unexpected geological formations and natural disasters; successful completion of new development projects; planned expansions or additional projects being within the timelines anticipated and at anticipated production levels; and maintenance of mining title.
Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions, which could cause actual results to differ materially from those anticipated, estimated or intended in the forward-looking statements. Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser. No statement in this communication is intended to be, nor should it be construed as, a profit forecast or a profit estimate.
By its nature, this information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate; that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved.
A variety of material factors, many of which are beyond the Group's control, affect the operations, performance and results of the Group, its businesses and investments, and could cause actual results to differ materially from those suggested by any forward-looking information. Such risks and uncertainties include, but are not limited to current global financial conditions, royalty, stream and investment portfolio and associated risk, adverse development risk, financial viability and operational effectiveness of owners and operators of the relevant properties underlying the Group's portfolio of royalties, streams and investments; royalties, streams and investments subject to other rights, and contractual terms not being honoured, together with those risks identified in the 'Principal Risks and Uncertainties' section of our most recent Annual Report, which is available on our website. If any such risks actually occur, they could materially adversely affect the Group's business, financial condition or results of operations. Readers are cautioned that the list of factors noted in the section herein entitled 'Risk' is not exhaustive of the factors that may affect the Group's forward-looking statements. Readers are also cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements.
The Group's management relies upon this forward-looking information in its estimates, projections, plans and analysis. Although the forward-looking statements contained in this announcement are based upon what the Group believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. The forward-looking statements made in this announcement relate only to events or information as of the date on which the statements are made and, except as specifically required by applicable laws, listing rules and other regulations, the Group undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
This announcement also contains forward-looking information contained and derived from publicly available information regarding properties and mining operations owned by third parties. This announcement contains information and statements relating to the Kestrel mine that are based on certain estimates and forecasts that have been provided to the Group by Kestrel Coal Pty Ltd ("KCPL"), the accuracy of which KCPL does not warrant and on which readers may not rely.
[1]pursuant to the Group's divestment of its Narrabri royalty to Whitehaven, as announced by the Group on 14 October 2021
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SOURCE: Ecora Resources PLC
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