TIDMECOR
RNS Number : 1749R
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/oz(1) .
-- 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.
(1) EVBC 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 +44 (0) 20 3435 7400
Geoff Callow - Head of Investor Relations
Website: www.e cora-resources. com
Camarco
Gordon Poole / Owen Roberts / Elfie Kent +44 (0) 20 3757 4997
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.
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