Q4 2023 Highlights

  • FY23 portfolio contribution of $63.6m (2022: $143.2m), with the YoY decline primarily a result of lower production within the Group’s private royalty area at Kestrel as well as a normalisation of commodity prices in 2023 from near record levels the previous year.

  • Q4 portfolio contribution was $14.4m (including $5.4m of accrued income released to the income statement following the favourable Four Mile judgment announced on 4 December 2023). On a recurring basis, Q4 portfolio contribution was $9.1m, up 57% on Q3 2023 ($5.8m).

  • The Voisey’s Bay stream produced four deliveries in Q4 (Q3 2023: one delivery) taking the number of deliveries for 2023 to 11 (2022: 19 deliveries), in line with guidance and reflecting the ramp up profile of the underground transition.

  • During Q4 2023, the Group invested $7.5m into the Piauí nickel-cobalt project, increasing its royalty from 0.35% to 1.60%.

    • The proceeds will primarily be used to finance detailed engineering studies and flow sheet optimisation that will further de-risk the project prior to the start of construction.

    • The Group has the right to acquire a further 2.68% royalty over the Piauí project for a consideration of $62.5m. These funds would form part of the construction financing package.

  • During Q4, the Group sold ~60% of its residual stake in Labrador Iron Ore Royalty Corporation (LIORC) realising C$18.9m, a total pre-tax return on investment of c. 110% and a gain on disposal of C$4.1m. The proceeds were used to pay down debt and remain available to fund growth opportunities, including the recent investment into Piauí.  

  • Net debt at the end of the period, following these investment activities, was $75m (2022: $36m).


Portfolio Outlook

  • Production at Kestrel moved back into the Group’s private royalty area at the end of 2023. Saleable volumes produced within the Group’s private royalty area are forecast to be 15-25% higher in 2024 than those achieved in 2023 (c 1.6 Mt) and are expected to be weighted towards Q1, with approximately 75% of the full year volumes in Q1, and approximately 15% in Q4.  Steelmaking coal prices have started the year at elevated levels compared to the previous year.

  • Voisey’s Bay stream is expected to produce between 12-16 deliveries of cobalt in 2024. Between 5-6 deliveries are scheduled for H1 2024, as deliveries will be heavily weighted towards the second half of the year when production from the underground mining operations is expected to ramp up. More detailed guidance for H2 will be provided in the Q2 2024 trading update. 

  • Mantos Blancos production volumes are forecast to increase in 2024 due to higher mill throughput with the increase being second half weighted.

  • Capstone Copper is expecting to release a Feasibility Study for the Santo Domino project by mid-2024, with a potential project sanctioning decision not anticipated prior to mid-2025.

  • BHP continues construction of the West Musgrave nickel-copper project in Australia with first production targeted as early as end-2025.

  • Production volumes at the Group’s other royalty assets for 2024 are expected to be broadly in line with 2023 levels.


Post Period Events 

  • In January 2024, the Group made the final $9.2m deferred consideration payment to South32 in relation to the royalty portfolio acquired in 2022.

  • Completion of a refinancing of the Group’s corporate debt facilities has increased the borrowing potential to $225m on broadly similar terms to the previous facility.​​​​​

“In-line with our expectations, portfolio contribution rebounded from third quarter levels as operations at Kestrel moved back within the Group’s private royalty area and a higher weighting of quarterly cobalt deliveries from Voisey’s Bay.

“This momentum has continued into 2024. Kestrel production within the Group’s private royalty area is expected to increase 15-25% compared to 2023. The Voisey’s Bay underground ramp-up is expected to accelerate in H2, and other volumes across the portfolio expected to be ahead or in-line with last year. Current commodity price levels would imply year-on-year portfolio contribution growth in the year ahead.     

“In the fourth quarter, we acquired an incremental royalty interest over the Piauí project for $7.5m. Brazilian Nickel will primarily use these funds to de-risk the project by undertaking final engineering studies prior to project construction. This was financed by recycling  a portion of our LIORC holding in the quarter, which realised a c. 110% total pre-tax return on the investment.

“The mining sector continues to see underinvestment and a challenging market backdrop. We anticipate these conditions will persist over next 2-3 years, during which royalty financing should be a highly attractive source of capital. The extension of our revolving credit facility puts us in a strong position to continue to grow and diversify our portfolio, which currently offers the leading copper growth profile in the royalty sector.”

Marc Bishop Lafleche, Chief Executive Officer

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2023 Half Year Results

“Our performance in the first half of the year has been in line with expectations for a lower portfolio contribution following a record outcome in 2022. Ecora has now entered the first of a multiyear transition in the commodities underlying the composition of our revenue mix, which will see a run-off in the Kestrel steel making coal royalty, and income growth from our portfolio of royalties exposed to future facing commodities which has the potential to generate over US$100m of annual portfolio contribution in the medium term.

Marc Bishop Lafleche

Chief Executive Officer