Q3 2023 Trading Update

Ecora Resources PLC

25 October 2023

 

25 October 2023

Ecora Resources PLC

("Ecora", the "Group" or the "Company")

Q3 2023 Trading Update

Ecora Resources PLC (LSE/TSX: ECOR) issues the following trading update for the period 1 July to 30 September 2023.

Highlights:

·      Portfolio contribution of $5.8 million (Q2 2023: $14.7 million) as Kestrel operations were mainly outside the Group's private royalty area and there was maintenance at Voisey's Bay.

·      Commodity prices underpinning Ecora's royalty portfolio were broadly flat throughout the period with copper averaging $3.80/lb and alloy grade cobalt averaging $17.84/lb.

·      The majority of Q3 saleable production at Kestrel was, as expected, outside the Group's royalty land with c. 60,000 tonnes from within the Group's royalty area. Production is expected to move back inside the Group's royalty area towards the end of Q4 driving a material increase in volume in H1 2024.

·      A maintenance period at the Long Harbour refinery restricted deliveries under the Voisey's Bay cobalt stream to 14 tonnes during the period (one 20 tonne delivery of which 70% is attributable to the Group), realising an average sales price of approximately $15/lb. Three deliveries are scheduled for Q4 which would result in 10-11 deliveries for FY 2023, in line with guidance, before an anticipated ramp up in 2024.

·      Capstone Copper announced on 2 August that it expects Mantos Blancos to deliver higher throughput rates in the second half of 2023 and to be fully ramped up to capacity of ~20,000 tonnes per day at year end.

·      Ecora and Orovalle reached an agreement relating to the royalty over the EVBC mine whereby Orovalle has agreed to pay the outstanding royalty amounts for Q3 2022 and Q4 2022 totalling $1.5m in full, before applying a new ratchet structure linked to the gold price from 1 January 2023,  that will see the applicable royalty increase from a minimum 0.5% where the gold price is <$1,800/oz up to 3.0% where the gold price is <$2,500/oz¹.

·      In August the Group completed the acquisition of a 0.25% NSR royalty over the Vizcachitas copper project in Chile, one of the largest undeveloped copper projects in the world, giving the Group a copper growth pipeline extending well into the next decade.

·      The Group expects a number of key growth milestones to be achieved in its near-term development portfolio including progress on construction of West Musgrave, construction financing options for the Piauí nickel project and feasibility studies in relation to the Santo Domingo project.

·      Net debt of $68 million as at 30 September 2023, excluding a $9.2 million payment to South32 in early October. The final $9.2 million deferred consideration instalment to South32 will be paid in January 2024.

                        ¹EVBC was previously a 2.5% NSR royalty which increased to 3.0% when the gold price exceeded $1,100 per ounce

Portfolio contribution	Q3 2023		Q2 2023	9M 2023
	$m	QoQ	$m	$m
Core portfolio
Voisey's Bay (cobalt)	0.5	(66%)	1.5	3.5
Mantos Blancos (copper)	1.4	(7%)	1.5	4.7
Maracás Menchen (vanadium)	0.7	(13%)	0.8	2.4
Four Mile (uranium)	0.2	-	0.2	0.8
Other (copper)	0.2	100%	0.1	0.4
Royalty and stream income	3.0	(27%)	4.1	11.8
Dividends - LIORC & Flowstream	0.8	33%	0.6	1.8
Interest - McClean Lake	0.4	(20%)	0.5	1.4
Royalty and stream related revenue	4.2	(19%)	5.2	15.0
EVBC(1) (2)	0.2	-	0.2	0.6
Principal repayment - McClean Lake	0.5	(17%)	0.6	1.8
Less:
Metal streams cost of sales	(0.1)	(75%)	(0.4)	(0.8)
Total portfolio contribution from core assets	4.8	(14%)	5.6	16.6
Near term run-off portfolio
Kestrel (steel making coal)	1.0	(89%)	9.1	32.8
Total near term run-off portfolio	1.0	(89%)	9.1	32.8
Total portfolio contribution	5.8	(61%)	14.7	49.4

(1)    Under IFRS 9, the royalties received from EVBC are reflected in the fair value movement of the underlying royalty rather than recorded as royalty income.

(2)    The previous estimate of $1.2 million for HY 2023 has been reduced to reflect the revised royalty rate resulting in total royalties for HY 2023 of $0.4 million

Marc Bishop Lafleche, Chief Executive Officer of the Company, commented:

"The third quarter was very much in line with our expectations and reflective of the transition phase of the portfolio. We can expect to see income volatility as mining at Kestrel moves in and out of the private royalty area, and our latest information would suggest the next material volumes are due to come in Q1 24. Steelmaking coal has been one of the stand out commodity performers in FY 23 and should prices remain elevated this would boost earnings in FY 24. We hope to see some positive news flow from our other portfolio assets during the remainder of the year.

"The Group remains strongly focussed on growth, both organically and through new royalty acquisitions and we were delighted to add a royalty over the Vizcachitas project to our leading copper royalty growth portfolio which complements the growth we expect in the coming years from both nickel and cobalt."

For further information

Ecora Resources PLC	[phone]
Geoff Callow - Head of Investor Relations
Website:	www.ecora-resources.com
Camarco Gordon Poole / Owen Roberts / Elfie Kent	[phone]

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.

 

END