REG - Ecora Resources PLC - Half year results
04/09/2024 07:00
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RNS Number : 7901C Ecora Resources PLC 04 September 2024
4 September 2024
Ecora Resources PLC
("Ecora", the "Group" or the "Company")
Half year results
Ecora Resources PLC (LSE/TSX: ECOR) announces half year results for the six
months ended 30 June 2024 which are available on both the Group's website at
www.ecora-resources.com (http://www.ecora-resources.com) and on SEDAR at
www.sedar.com (http://www.sedar.com) .
Ecora is the leading royalty company focused on supporting the supply of
industrial commodities essential to creating a sustainable future. The Group
has a portfolio which 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:
"Our portfolio contribution in the first half of 2024 was up 15% year-on-year,
driven by a strong performance from Kestrel. H2 portfolio contribution is
expected to be principally weighted to the Group's other producing royalties
including production volume growth at the Voisey's Bay and Mantos Blancos
mines. Further production growth at Voisey's Bay is expected thereafter as
underground operations ramp-up up to steady state production levels.
"Capstone Copper's updated Feasibility Study on the Santo Domingo project
reiterated the project's robust economics and potential to operate within the
lowest cost quartile of global copper mines. BHP's decision to temporarily
suspend operations at its Australian Nickel division, in light of current
nickel market weakness, including the construction of West Musgrave, was
disappointing but we remain confident in the project's potential as a low-cost
producer of nickel and copper.
"We have seen a strong uptick in opportunities to further grow our portfolio,
which we continue to evaluate applying our stated investment criteria and a
capital allocation priority to maintain a strong balance sheet."
Financial highlights:
· Total portfolio contribution in H1 2024 of $51.3 million (H1 2023:
$44.5 million) with royalty and metal stream related revenue in H1 2024 of
$49.5 million (H1 2023: $42.7 million)
· Adjusted earnings per share in H1 2024 of 10.38c (H1 2023: 9.06c)
· Profit before tax in H1 2024 of $17.9 million (H1 2023: loss
$10.2 million)
· Net debt at 30 June 2024 of $86.0 million (31 December 2023:
$74.6 million), representing leverage of 1.43x
· The Group amended and extended its $150 million revolving credit
facility, securing more favourable terms and providing greater flexibility
· Half year dividend of 1.70 cents per share, equating to 33% of
free cash flow, and towards the upper end of our stated 25-35% payout range,
to be paid in January 2025
· Proceeds of CA$11.1million ($8.1 million) from sale of shares in
Labrador Iron Ore Royalty Corporation ("LIORC") implying a total return on
investment of ~110% (inclusive of dividends), with proceeds deployed into the
Group's share buyback program in Q2 2024
Portfolio highlights:
· Strong performance from Kestrel steelmaking coal royalty delivering
volumes from private royalty area in H1 at the top end of full year volume
guidance; no material volumes expected in H2 2024
· Four deliveries of cobalt were received in H1 under the Voisey's Bay
stream (each delivery is 20 tonnes of which 70% is attributable to the Group).
With the Voisey's Bay Mine Expansion Project construction phase nearing
completion, production volumes are expected to ramp-up with between 8 and 12
cobalt lot deliveries expected in the second half of 2024
· Year-on-year production volume growth expected in 2024 and through
2025 at operations underlying the Group's royalty portfolio
Post-period end events
· On 1 July the Group announced the acquisition of a 0.85% Gross
Revenue Royalty over the Phalaborwa rare earths project located in South
Africa, and operated by Rainbow Rare Earths Ltd ("Rainbow") for a cash
consideration of $8.5 million
· On 11 July, BHP announced that it will temporarily suspend the
construction of the West Musgrave nickel-copper project in October 2024, with
the decision to be reviewed by February 2027
· On 31 July, Capstone Copper Corp. ("Capstone") published an updated
Feasibility Study for the Santo Domingo project which reiterated its robust
economics as a low-cost operation with expected cash costs of $0.33 per
payable pound of copper over its 19 year mine-life
Portfolio contribution HY 2024 HY 2023 FY 2023
$m YoY $m $m
Core portfolio
Voisey's Bay (cobalt) 2.0 (35%) 3.1 5.6
Mantos Blancos (copper) 2.8 (15%) 3.3 6.1
Maracás Menchen (vanadium) 1.1 (35%) 1.7 3.1
Four Mile (uranium) 1.4 133% 0.6 6.8
Carlota (copper) 0.3 - 0.3 0.6
Royalty and stream income 7.6 (15%) 9.0 22.2
Dividends - LIORC & Flowstream 0.3 (70%) 1.0 2.0
Interest - McClean Lake 0.8 (11%) 0.9 1.8
Royalty and stream related revenue 8.7 (20%) 10.9 26.0
EVBC((1)) 0.5 (58%) 1.2 0.7
Principal repayment - McClean Lake 1.7 31% 1.3 2.3
Less:
Metal streams cost of sales (0.4) (43%) (0.7) (1.3)
Total portfolio contribution from core assets 10.5 (17%) 12.7 27.7
Near term run-off portfolio
Kestrel (steel making coal) 40.8 28% 31.8 35.9
Total near term run-off portfolio 40.8 28% 31.8 35.9
Total portfolio contribution 51.3 15% 44.5 63.6
((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 and
stream related revenue.
Analyst presentation
There will be an analyst presentation webcast at 9:00am (BST) today (4
September 2024) hosted by Marc Bishop Lafleche (CEO) and Kevin Flynn (CFO).
Please join the event 5-10 minutes prior to the scheduled start time. When
prompted, provide the confirmation code or event title.
Event Ecora Resources - Half Year Results
Time Zone Dublin, Edinburgh, Lisbon, London
Start Time/Date 9:00am/4 September 2024
Webcast Link https://brrmedia.news/ECOR_HY_24 (https://brrmedia.news/ECOR_HY_24)
For further information
Ecora Resources PLC +44 (0) 20 3435 7400
Geoff Callow - Head of Investor Relations
www.ecora-resources.com (http://www.ecora-resources.com)
FTI Consulting +44(0) 20 3727 1000
Sara Powell / Ben Brewerton / Nick Hennis ecoraresources@fticonsulting.com (mailto:ecoraresources@fticonsulting.com)
Notes to Editors:
Alternative Performance Measures
Throughout this announcement a number of financial measures are used to assess
the Group's performance. The measures are defined below and, with the
exception of operating profit/(loss), are non-IFRS measures because they
exclude amounts that are included in, or include amounts that are excluded
from, the most directly comparable measure calculated and presented in
accordance with IFRS, or are calculated using financial measures that are not
calculated in accordance with IFRS. The non-IFRS measures may not be
comparable to other similarly titled measures used by other companies and have
limitations as analytical tools and should not be considered in isolation or
as a substitute for analysis of the Group's operating results as reported
under IFRS. The Group does not regard these non-IFRS measures as a substitute
for, or superior to, the equivalent measures calculated and presented in
accordance with IFRS or those calculated using financial measures that are
calculated in accordance with IFRS.
Portfolio contribution
Portfolio contribution represents funds received or receivable from the
Group's underlying royalty and stream related assets, and is taken into
account by the Board when determining dividend levels. Portfolio contribution
is royalty and stream related revenue net of metal stream costs of sales, plus
royalties received or receivable from royalty financial instruments carried at
FVTPL and principal repayments received under the Denison financing agreement.
Refer to note 21 of the condensed consolidated financial statements for
portfolio contribution.
Operating profit
Operating profit represents the Group's underlying operating performance from
its royalty and stream interests. Operating profit is royalty and stream
related revenue, less metal streams cost of sales, amortisation and depletion
of royalties and streams and operating expenses. Operating profit excludes
impairments and revaluations, and reconciles to 'operating profit before
impairments and revaluations' on the income statement.
Adjusted earnings and adjusted earnings per share
Adjusted earnings represent the Group's underlying operating performance from
core activities. Adjusted earnings is the profit/loss attributable to equity
holders plus royalties received from financial instruments carried at fair
value through profit or loss, less all valuation movements and impairments
(which are non-cash adjustments that arise primarily due to changes in
commodity prices), amortisation and depletion charges, unrealised foreign
exchange gains and losses, and any associated deferred tax, together with any
profit or loss on non-core asset disposals as such disposals are not expected
to be ongoing. Adjusted earnings divided by the weighted average number of
shares in issue gives adjusted earnings per share. Refer to note 5 of the
condensed consolidated financial statements for adjusted earnings and adjusted
earnings per share.
Net debt
Net debt is calculated as borrowings less cash and cash equivalents. Refer to
note 14 of the condensed consolidated financial statements for details of the
Group's borrowings and net debt.
Free cash flow and free cash flow per share
The structure of a number of the Group's royalty financing arrangements, such
as the Denison transaction completed in February 2017, result in a significant
amount of cash flow being reported as principal repayments, which are not
included in the income statement. As the Group considers dividend cover by
reference to both adjusted earnings per share and the free cash flow generated
by its assets, management have determined that free cash flow per share is a
key performance indicator.
Free cash flow per share is calculated by dividing net cash generated from
operating activities, plus proceeds from the disposal of non-core assets and
any cash considered as the repayment of principal under commodity related
financial agreements, less finance costs, by the weighted average number of
shares in issue. Refer to note 19 to the condensed consolidated financial
statements for free cash flow per share.
BUSINESS REVIEW
Results
The Group delivered a strong financial performance in the first half of the
year reporting a total portfolio contribution of $51.3 million (H1 23: $44.5
million). This was driven by the performance of Kestrel where saleable
production from the Group's private royalty area during H1 was at the top end
of full year guidance for 2024. There is no material contribution expected
from Kestrel in H2 2024.
Cobalt prices have remained at cyclically low levels, with an H1 2024 average
price received for the sale of Voisey's Bay cobalt of $16.0/lb (H1 2023:
$16.5/lb). The majority of our cobalt deliveries are alloy grade and attract a
premium versus the standard grade price which averaged $13.2/lb in the period.
Historically, approximately 80% of the cobalt delivered under the Voisey's Bay
stream has been to alloy grade specification, which currently realises a
premium of approximately $4/lb to the FastMarkets Metal Bulletin standard
grade price.
On 27 March, the Group announced an updated capital allocation framework, and
in conjunction a $10 million share buyback programme. The capital allocation
framework seeks to maintain balance sheet strength, while continuing to
provide an attractive dividend yield relative to the royalty sector peers and
retain the flexibility to allocate capital for further growth. The capital
allocation framework also considers opportunistic share buybacks if the
Group's shares are trading at a sizable discount to estimated net asset value.
This is the first period in which the Group will declare its dividend under
the revised framework, with dividend distributions based on a percentage of
average free cash flow across the previous two half year periods. Across H2
2023 and H1 2024 the average free cash flow totalled $12.7 million. The
Board has determined that the H1 2024 dividend will be 1.70 cents per share
which equates to 33% of average free cash flow during the prior two half year
periods and is towards the upper end of the stated 25-35% payout range.
On 1 July the Group announced the acquisition of a 0.85% Gross Revenue Royalty
on the Phalaborwa Rare Earths Project in South Africa. The project is operated
by Rainbow and in connection with the royalty acquisition, the Group
subscribed for $1.5 million of ordinary shares in Rainbow on 28 June 2024.
In January, the Group announced that it had amended and extended its $150
million revolving credit facility agreement with its existing syndicate of
Scotiabank, CIBC and RBC. The agreement includes an uncommitted accordion
feature of up to $75 million to be used to fund royalty acquisitions which
would take the borrowing capacity up to $225 million. There are no fixed
amortisations or step downs associated with the facility and maturity has been
extended to January 2027 at the earliest.
The Group ended the period 30 June 2024 with net debt of $86 million. This is
expected to reduce meaningfully in the next 18 months (absent acquisitions,
assuming current commodity prices and operator volume guidance) as the Group
has no firm funding commitments beyond the payment on completion of the $8.5
million for the Phalaborwa royalty. Leverage at the end of June was 1.43x,
well below the 3.5x permitted under the facility.
Adjusted earnings in the period increased to $26.6 million (H1 2023: $23.4
million) generating adjusted earnings per share of 10.38c (H1 2023: 9.06c).
Outlook
The second half of the year is expected to be weighted towards the Group's
portfolio ex-Kestrel, with Kestrel operations moving outside the Group's
royalty area before returning in H1 2025 at current mining rates. Based on H1
operating partner production levels, we continue to expect year-on-year
underlying production volume growth across our royalty portfolio in 2024 and
as well as 2025.
The Voisey's Bay underground mine expansion was 96% complete as of the end of
Q2 2024, with the mining of the underground Reid Brook and Eastern Deeps
deposits now ramping up such that the Group expects to receive eight to twelve
deliveries of cobalt in H2 2024 and between 20 and 28 deliveries of cobalt in
2025. At life of mine average production levels, expected to be reached by the
end of 2026, the Group will receive around 40 deliveries of cobalt per
annum.
At the start of H2 2024, mining activities at Kestrel have moved outside the
Group's private royalty area and are expected to stay outside for the
remainder of the year before returning in late Q1 2025. With Kestrel and
Voisey's Bay volumes for 2025 expected to be higher than in 2024, the Group is
well positioned to deliver a strong financial performance in 2025 (at constant
commodity prices).
We were pleased to see Capstone publish an updated Feasibility Study for the
Santo Domingo project which confirmed the robust economics of the project
which could contribute approximately $30 million per annum (on analyst
consensus volumes and pricing) to Ecora once it enters production. It was
disappointing to see BHP temporarily suspend the construction of the West
Musgrave nickel-copper project, but we are confident in the project's
potential as a low-cost producer of nickel and copper.
A final investment decision by Brazilian Nickel on the Piauí project is not
expected before 2025, which would trigger the right, but not obligation, to
invest a further $62.5 million in the project to part fund construction
capital costs.
We believe that the capital we have deployed in the past four years has given
us the assets that will become the cornerstone of our portfolio well into the
next decade and beyond. While our short-term focus is on high-quality
acquisitions that are producing, or close to production, and from which we
would have a clear path to de-leveraging, we will also look at earlier stage
opportunities that are high quality but smaller ticket sizes, in line with our
capital allocation framework which prioritises the maintenance of a strong
balance sheet.
PORTFOLIO REVIEW
Producing Royalties
Voisey's Bay (Cobalt)
Attributable deliveries under the Voisey's Bay cobalt stream totalled 56
tonnes (H1 2023: 84 tonnes) during the period (four 20 tonne deliveries of
which 70% is attributable to the Group), realising an average sales price of
approximately $16.00/lb (H1 2023: $16.54/lb).
Cobalt deliveries in Q2 were impacted by annual planned maintenance at the
Long Harbour refinery. Between 8 and 12 deliveries are expected during H2 with
one having been received, one at port and two due to be shipped imminently.
Kestrel (Steelmaking coal)
Production from Kestrel was within the Group's private royalty area for the
majority of H1 2024 with saleable production volumes of 2.0Mt at the top end
of FY 24 guidance (1.8-2.0 Mt). There are expected to be minimal volumes from
the Group's private royalty area in H2 2024, leaving FY 24 guidance at c. 2.0
Mt.
Operations are expected to move back inside the Group's private royalty area
during H1 2025 and overall volumes in the Group's royalty area in 2025 are
currently anticipated to be higher than the 2.0 Mt guided to in 2024.
Mantos Blancos (Copper)
Total copper production of 21.0kt (H1 2023: 25.8kt) was lower than the
operator guidance of 23- 28kt due to localised geotechnical issues impacting
the mine sequence in Q2 which resulted in lower grades and recoveries.
Capstone is anticipating higher throughput rates in H2 following the final
installation, commissioning and tie in of new tailings pumping infrastructure.
During June mill ore throughput averaged 17ktpd, a monthly record, and the
final tie in of the new infrastructure was completed in July with the ramp up
to 20ktpd expected during Q3.
Other
Largo Inc. focused on reducing operating costs and improving productivity at
the Maracas Menchen mine during H1 2024, to navigate a period of lower
vanadium prices which reduced to $6.59/lb compared to $9.97/lb in H1 2023.
V(2)O(5) production was impacted in Q1 by unplanned kiln maintenance resulting
in H1 2024 sales totalling 4,418 tonnes (H1 2023: 4,544 tonnes). Largo has
reiterated full year production guidance of 9,000 -11,000 tonnes.
Throughput at the McClean Lake Mill increased by 16% as output from the Cigar
Lake mine increased by 21% to 5.1Mlbs (H1 2023: 4.2Mlbs). Cameco's full year
2024 Cigar Lake production guidance remains 18Mlbs.
The Group sold down the majority of its equity holding in LIORC for proceeds
of CA$11.1 million ($8.1 million). Ecora now holds a total of 57,390 shares.
Advanced Development Stage Royalties
Santo Domingo (Copper)
Capstone published an updated feasibility study for the fully permitted Santo
Domingo project in Q3 2024. The updated Feasibility Study enhanced the mine's
economics with low capital intensity and first quartile costs. Capstone is now
focusing on optimising the financing structure of the project and in parallel
will advance the detailed engineering of the project. Ecora owns a 2% Net
Smelter Return ("NSR") royalty over part of the Santo Domingo project that
covers the highest copper grade portion of the mine plan. In the initial six
to seven years of production in the Group's royalty area, annual production is
expected to be 106ktpa of copper and 4.7 Mtpa of by products (including gold
and iron).
West Musgrave (Nickel-copper)
BHP announced in February 2024 that it was reviewing the plans for its Western
Australia nickel operations, which include the West Musgrave nickel-copper
project, at the same time it stated that on a standalone basis West Musgrave
could still generate reasonable returns. In July 2024, BHP announced that it
would be temporarily suspending the construction of the West Musgrave project
in October 2024 with the decision to be reviewed by February 2027.
Piauí (Nickel)
Brazilian Nickel has completed the detailed engineering studies that were
incorporating the learnings from the small-scale plant with a view to
optimising the flow sheet ahead of advancing financing discussions for the
construction of the project. A final investment decision is not expected
before 2025 which would trigger the Group's right, but not obligation, to
invest a further $62.5 million to part fund construction of the project. This
investment would increase the royalty rate from 1.60%, which at current
commodity prices would generate a material portfolio contribution, to 4.25%.
Nifty (Copper)
In May 2024, Cyprium Metals Limited announced the results of the Nifty Surface
Mine Scoping Study. The results of the study show an expected average annual
production of 36,000 tonnes of copper. Nifty is a brownfield development and
the Board of Cyprium has approved the advancement to a Pre-Feasibility Study.
The Group holds a 1.5% Realised Value Royalty over the Nifty project.
Early Stage Royalties
SW2 (Uranium)
In March 2024, NexGen Energy Ltd announced the discovery of a new intense
uranium zone on its SW2 property located around 3.5km east of its world class
Arrow Deposit in Saskatchewan, Canada. Ecora has a 2% Net Smelter Return
Royalty on parts of the SW2 Rook 1 property which contain the new discovery.
In August 2024 NexGen provided an update on the results of its drilling
programme which confirmed that the footprint of the new discovery is larger
than Arrow's at the same stage of metres drilled and shows all the signs of
being another world class discovery.
Canariaco (Copper)
In June 2024, Alta Copper Corp. filed a new Technical Report and Preliminary
Economic Assessment ("PEA") for the Canariaco Copper Project over which the
Group holds a 0.5% NSR royalty. The PEA outlines a project producing an
average of 158ktpa of copper in the first ten years and with a total mine life
of 28 years at an estimated upfront capital cost of $2.1 billion. Additional
drilling in a number of defined areas has the potential to delineate
additional mineral resources.
Amapá (Iron Ore)
In March 2024, Cadence Minerals announced results of an optimisation study for
the Amapá Iron Ore Project which delivered material capital savings to the
project. In July 2024, Cadence announced an updated PFS-level economic study
with an increased NPV for the project of $1.145 billion. Ecora owns a 1% GRR
over a majority of the project area.
FINANCE REVIEW
The first half of the year saw increased portfolio contribution owing largely
to the 2.0Mt in production from the Group's private royalty lands at Kestrel,
which was higher than expected and at the upper end of the Group's full year
guidance. As a result, the Group's portfolio contribution increased from
$44.5m in H1 2023 to $51.3m in H1 2024. Other notable highlights saw the Group
refinance its borrowing facility, which extends maturity to Q1 2027 at the
earliest, with no step downs or amortisation requirements. This facility
reinforces the balance sheet and provides capital for the Group to continue
making acquisitions.
The second half of the year will see an increase in deliveries from the
Group's Voisey's Bay cobalt stream following the successful installation of
the materials handling unit at the Reid Brook deposit. This is a key milestone
for the ramp up of the underground mine which is expected to result in 40
deliveries annually once the mine reaches steady state production, a
significant increase from the 12-16 deliveries being forecast in the current
year.
Absent further acquisitions, the second half of the year should see a
reduction in net debt from its peak of $86m at the end of June, with more
significant deleveraging envisaged in 2025. Although borrowings are running
higher than previous reporting periods, the leverage ratio remains very
comfortable at 1.43x which is well within the 3.5x limit in the borrowing
facility.
The Group's new capital allocation policy was announced at the end of March
and along with the payment of the 2023 final dividend, the Group executed a
$10m share buyback program. In addition, the Group entered into a $10m
financing package with Rainbow Rare Earths which resulted in a 0.85% royalty
for $8.5m along with a $1.5m equity subscription.
With modest and manageable levels of leverage and significant headroom on the
Group's borrowing facility the Group remains in a strong financial position
and is well capitalised to continue to execute its growth strategy.
Results
The Group's portfolio contribution increased by 15% to $51.3m for the six
months ended 30 June 2024 (H1 2023: $44.5m). The increase in portfolio
contribution combined with the $23.9m fair value loss on the revaluation of
the Kestrel royalty, which reflects resource depletion in the first half of
the year and slightly lower forward-looking pricing inputs, resulted in an H1
2024 profit after tax of $11.5m (H1 2023: loss of $7.5m), generating basic
earnings per share of 4.48c for the first half of 2024 (H1 2023: loss per
share 2.90c). Adjusting for the royalties from EVBC, valuation movements,
non-cash items and the tax effect of these adjustments, resulted in H1 2024
adjusted earnings of $26.6m (H1 2023: $23.4m) and adjusted earnings per share
of 10.38c (H1 2023: 9.06c).
The key driver for the increase in the Group's portfolio contribution during
H1 2024 was the expected increase in volumes from Kestrel as production
returned to the Group's private royalty lands, compared to H1 2023. Slightly
offsetting the higher volumes at Kestrel was the combined impact of slightly
weaker coal prices, which declined from $242/t in H1 2023 to $222/t in H1
2024, and the corresponding decrease in the average royalty rate from 20.45%
in H1 2023 to 19.09% in H1 2024, resulting in total royalties of $40.8m (H1
2023: $31.8m).
Production at Voisey's Bay in H1 2024 reflects the ongoing transition from the
open pit mine and ramp-up to full production of the underground mine. As a
result, cobalt deliveries reduced by 33% to four in H1 2024 (H1 2023: six).
In addition to the reduction in cobalt deliveries in the first half, the
cobalt price remained depressed with the Group realising an average sales
price of $16.03/lbs in H1 2024 (H1 2023: $16.54/lbs). The combination of
both lower volumes and lower cobalt prices resulted in the contribution from
the Group's Voisey's Bay stream, net of metal stream cost of sales, decreasing
to $1.6m (H1 2023: $2.4m).
Elsewhere, volumes at Mantos Blancos were impacted by localised geotechnical
issues resulted in a 15% reduction in royalties for H1 2024, despite the
stronger year on year copper price, with royalties totalling $2.8m (H1 2023:
$3.3m). At Maracas Menchen, the sustained weakness in the vanadium price
resulted in royalties reducing by 35% to $1.1m for H1 2024 (H1 2023: $1.7m),
despite volumes remaining flat year on year.
Whilst not included in portfolio contribution, the Group has continued to
benefit from the price linked contingent consideration in conjunction with the
Narrabri disposal. The Group is entitled to a $/t payment should the thermal
coal price exceed $90/t. The Group received $0.1m in price linked payments for
H1 2024, increasing total price linked payments to date to $2.3m. This is in
addition to the $14.8m fixed payments received since 31 December 2021, with a
further $2.0m to be received in January 2025 before final payments of $2.0m
and $2.8m are received in January 2026 and December 2026 respectively. In
addition to the price linked contingent consideration, the Group will be
entitled to a further $5m at the point when the Narrabri South Extension
receives permitting.
The table below outlines the key drivers of portfolio contribution increases
in the period.
HY1 2024 HY1 2023 Variance
$m % PC $m % PC % Notes
Kestrel 40.8 80% 31.8 72% 28% In line with the Group's guidance of Kestrel volumes being weighted towards H1
2024, volumes increased by 49% from 1.34Mt in H1 2023 to 2.0Mt in H1 2024 as
production returned to the Group's private royalty lands
Price achieved decreased by 8% resulting in the average royalty rate
decreasing from 20.45% in H1 2023 to 19.09% in H1 2024
Voisey's Bay 2.0 4% 3.1 7% (35%) 4 deliveries received during H1 2024, compared to 6 deliveries received during
H1 2023, reflecting the ongoing transition from the open pit to the
underground mine and associated ramp-up
The Group achieved an average sales price of $16.03/lbs in H1 2024 down from
$16.54/lbs H1 2023, reflecting the ongoing global oversupply and reduced
demand in China
Mantos Blancos 2.8 5% 3.3 7% (15%) Volumes decreased by 19% which reflects a planned mill shutdown in Q1 2024 and
a short-term localised geotechnical issue that impacted mine sequencing in Q2
2024
Price achieved increased by 4%
Maracás Menchen 1.1 2% 1.7 4% (35%) Price achieved decreased by 34% reflecting lower demand for vanadium from
China in H1 2024
H1 volumes remained flat year on year
Four Mile 1.4 3% 0.6 1% 133% Volumes decreased by 33% - 1.9Mlbs in H1 2024 vs 2.8Mlbs in H1 2023
Lower volumes were offset by the 53% increase in average price achieved -
$75/lbs in H1 2024 vs $49/lbs in H1 2023
Carlota 0.3 1% 0.3 1% - Other represents revenue generated by the Carlota royalty acquired in July
2022
Royalty and stream income 48.4 40.8 19%
Dividends - LIORC & Flowstream 0.3 1% 1.0 2% (70%) The Group monetised 94% of its holding in LIORC between Q4 2023 and Q2 2024
realising C$30m
H1 2024 dividends reflect the smaller holding despite the dividend per share
increasing from $1.15/shares in H1 2023 vs C$1.55/share in H1 2024
Interest - McClean Lake 0.8 2% 0.9 2% (11%)
Royalty and stream related revenue 49.5 42.7 16%
EVBC 0.5 1% 1.2 3% (58%)
Principal repayment - McClean Lake 1.7 3% 1.3 3% 31% Throughput at the McClean Lake Mill increased by 16% in H1 2024, reflecting
increased output from Cigar Lake
Less:
Metal steams cost of sales (0.4) (1%) (0.7) (2%) (43%) Reflects deliveries from Voisey's Bay decreasing to 4 in H1 2024 from 6 in H1
2023
Total portfolio contribution 51.3 44.5 15%
The Group's borrowings have increased from $82.4m at 31 December 2023 to
$99.0m at 30 June 2024, reflecting the final $9.2m paid during Q1 2024 in
deferred consideration relating to the South32 portfolio acquired in 2022 and
the final tax payments relating to the year ended 31 December 2023. The
increase in borrowings has resulted in a corresponding increase in finance
costs for the H1 2024. Absent any further acquisitions, borrowings are
expected to have peaked at 30 June 2024, as a result finance costs should
reduce over subsequent periods as the Group de-levers. In addition, there is
now a heightened expectation in the Federal Reserve reducing its headline
interest rate in the second half of the year which should also benefit the
Group's finance costs going forward.
The Group's combined current and deferred taxes resulted in an income tax
charge for H1 2024 of $6.4m, compared to an income tax credit of $2.7m in H1
2023. The increase in the combined tax charge in the period reflects the
increase in royalty related revenue and the tax effect of the gain on the
revaluation of royalty financial instruments, slightly offset by the tax
effect of the decrease in Kestrel valuation.
As a result, the Group generated a profit after tax for the period of $11.5m
(H1 2023: loss after tax of $7.5m). This produced basic earnings per share of
4.48c (H1 2023: basic loss 2.90c). Adjusting for the royalties from EVBC,
valuation movements, non-cash items and the tax effect of these adjustments,
adjusted earnings per share were 10.38c (H1 2023: 9.06c).
Dividends
Under the updated capital allocation policy, the dividend is now calculated
based on a payout ratio of the average free cash flow generated in the
immediate two preceding six-month periods. The averaging of the two periods is
designed to smooth out quarterly volatility from the Kestrel royalty as it
moves in and out of the Group's private royalty lands.
The H1 2024 free cash flow of $12.6m combined with the H2 2023 free cash flow
of $12.8m results in an average free cash flow over the two periods of $12.7m.
The Board has determined to pay an interim dividend of 1.70 cents per share
for the first six months of 2024. This equates to a payout ratio for the first
half of 33%, which is at the top end of the 25-35% ratio in the revised
policy. The H1 2024 dividend will be paid on 31 January 2025, to all
shareholders on the Register of Members on 3 January 2025.
Balance Sheet
Net assets decreased by ~$14m in the first six months of the year, mainly due
to the $17m decrease in the value of the Kestrel royalty (net of tax),
together with the completion of the $10m share buyback programme announced on
27 March 2024 and the distribution of ~$11m in dividends, slightly offset by
the Group's adjusted earnings for the period of ~$27m.
Total royalty and stream related assets, net of associated deferred tax, at 30
June 2024 were $567.2m of which 91% represent battery metals (31 December
2023: $608.7m; 87%). The Group's coal exposure, net of associated deferred
tax, is now 7% (31 December 2023: 9%).
Net assets of $468.2m at the end of June results in net assets per share of
$1.88 (£1.47) - a significant premium to the closing share price of £0.72 at
30 June 2024.
Cash flow and liquidity
As the royalties from Kestrel were weighted towards Q2 2024 and therefore not
received until after the period, following the final tax payments relating to
the year ended 31 December 2023 totalling $18.3m made in June, the Group's
cashflow from operating activities decreased to $13.2m for H1 2024 (H1 2023:
$18.3m). Adjusting for finance costs, the receipt of principal repayments
under the Denison loan and the receipt of deferred and contingent
consideration from the Narrabri disposal, results in free cashflow of $12.6m
for H1 2024 (H1 2023: $22.2m) as detailed in note 19 of the financial
statements.
During the period, the Group paid the final instalment of deferred
consideration to South32 totalling $9.2m in relation to the acquisition of the
South32 royalty portfolio in July 2022. Offsetting the deferred consideration
paid to South32, was the receipt of $2.0m in deferred consideration and $0.2m
in price linked contingent consideration arising from the 2021 disposal of the
Narrabri royalty, together with $8.1m in proceeds realised through the partial
disposal of the Group's holding in LIORC. Combined with the $1.7m in
principal repayments received under the Denison loan this resulted in total
cash from investing activities in H1 2024 of $2.9m (H1 2023: cash used in
investing activities $12.6m).
The Group undertook a $10m capital recycling program in Q2 24 by disposing of
the vast majority of its residual LIORC stake and using the proceeds to
execute the $10m share buyback program announced in March 2024. This saw the
Group disposing of an equity trading at around 1x p-nav multiple into the
Group's equity which was trading at a much lower multiple.
The Group refinanced its $150m facility in Q1 2024. Although the headline
commitment remained the same, the new facility comes at a slightly reduced
cost, more flexible in how it can be drawn and operated and with a $25m
additional accordion ticket which could take the total facility size to $225m.
Importantly, the Group has no refinancing obligations until January 2027 at
the earliest and there are no scheduled repayments required. With net debt
forecast to have peaked at the end of June 2024, at the date of this report
the Group has undrawn borrowings of $56.4m to continue financing new royalty
acquisitions.
Principal risks and uncertainties
Ecora Resources is exposed to a variety of risks and uncertainties which may
have a financial, operational or reputational impact on the Group. The
principal risks and uncertainties facing the Group in the second half of 2024
are the same as those disclosed in the 2023 Annual Report and Accounts, and
relate to the following:
• Catastrophic and natural catastrophe risks
• Investment approval
• Future demand for our product
• Commodity prices
• Operator dependence and concentration risk
• Geopolitical events
• Financing capability
• Stakeholder support
The Group is exposed to changes in the economic environment, including to tax
rates and regimes, as with any other business.
Details of any key risks and uncertainties specific to the period are covered
in the Business and Portfolio review sections. Details of relevant tax matters
are included in note 15 to the Condensed financial statements. The principal
risks and uncertainties facing the Group at the 2023 year end are set out in
detail on pages 63 to 67 of the strategic report in the 2023 Annual Report and
Accounts. The 2023 Annual Report and Accounts is available on the Group's
website www.ecora-resources.com
Six months ended
30 June 30 June
2024 2023
Notes $'000 $'000
Royalty and metal stream related revenue 2 49,458 42,735
Mineral streams cost of sales (368) (725)
Amortisation and depletion of royalties and streams 8, 10 (3,071) (4,665)
Operating expenses (5,764) (4,963)
Operating profit before revaluations 40,255 32,382
Revaluation of royalty financial instruments 9 8,465 3,011
Revaluation of coal royalties (Kestrel) 7 (23,858) (43,820)
Finance income 103 3
Finance costs 3 (4,916) (2,802)
Net foreign exchange (losses)/gains (839) 1,674
Other losses 4 (1,308) (664)
Profit/(loss) before tax 17,902 (10,216)
Current income tax charge (8,089) (10,705)
Deferred income tax credit 15 1,673 13,445
Profit/(loss) attributable to equity holders 11,486 (7,476)
Total and continuing earnings/(loss) per share
Basic earnings/(loss) per share 5 4.48c (2.90c)
Diluted earnings/(loss) per share 5 4.47c (2.90c)
Six months ended
30 June 30 June
2024 2023
Notes $'000 $'000
Profit/(Loss) attributable to equity holders 11,486 (7,476)
Items that will not be reclassified to profit or loss
Changes in the fair value of equity investments held at fair value through
other comprehensive income
Revaluation of royalty financial instruments (612) (1,792)
Revaluation of mining and exploration interests 11 166
Deferred tax relating to items that will not be reclassified to profit or loss 15 69 309
(532) (1,317)
Items that have been or may be subsequently reclassified to profit or loss
Net exchange loss on translation of foreign operations (4,685) (5,126)
(4,685) (5,126)
Other comprehensive loss for the period, net of tax (5,217) (6,443)
Total comprehensive profit/(loss) for the period 6,269 (13,919)
Audited
30 June 31 December
2024 2023
Notes $'000 $'000
Non-current assets
Property, plant and equipment 2,981 3,063
Coal royalties (Kestrel) 7 51,427 77,354
Metal streams 8 160,246 161,440
Royalty financial instruments 9 31,331 32,829
Royalty and exploration intangible assets 10 262,966 269,801
Mining and exploration interests 11 4,302 2,791
Deferred costs 12 1,897 341
Other receivables 13 27,592 33,708
Deferred tax 15 36,128 37,451
578,870 618,778
Current assets
Trade and other receivables 13 23,477 9,649
Cash and cash equivalents 12,980 7,850
36,457 17,499
Total assets 615,327 636,277
Non-current liabilities
Borrowings 14 98,962 82,400
Other payables 16 11,978 14,461
Deferred tax 15 24,237 28,126
135,177 124,987
Current liabilities
Income tax liabilities 5,523 15,927
Trade and other payables 16 6,470 13,344
11,993 29,271
Total liabilities 147,170 154,258
Net assets 468,157 482,019
Capital and reserves attributable to shareholders
Share capital 17 6,528 6,762
Share premium 17 169,212 169,212
Other reserves 96,721 103,293
Retained earnings 195,696 202,752
Total equity 468,157 482,019
Other reserves
Share Foreign
Investment based currency
Share Share Merger revaluation payment translation Special Treasury Retained Total
capital premium reserve reserve reserve reserve reserve shares earnings equity
Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 January 2023 6,761 169,212 94,847 6,321 687 3,952 833 102 220,889 503,604
Loss for the period - - - - - - - - (7,476) (7,476)
Other comprehensive income:
Changes in fair value of equity investments held at fair value through other
comprehensive income
Valuation movement taken to equity - - - (1,626) - - - - - (1,626)
Deferred tax - - - 309 - - - - - 309
Foreign currency translation - - - - - (5,126) - - - (5,126)
Total comprehensive loss - - - (1,317) - (5,126) - - (7,476) (13,919)
Transferred to retained earnings on disposal - - - (17) - - - - 17 -
Dividends - - - - - - - - (11,070) (11,070)
Utilisation of treasury shares to satisfy employee related share base payments 17, 22 1 - - - - - - (1) 76 76
Value of employee services - - - - 371 - - - - 371
Total transactions with owners of the Company 1 - - (17) 371 - - (1) (10,977) (10,623)
Balance at 30 June 2023 6,762 169,212 94,847 4,987 1,058 (1,174) 833 101 202,436 479,062
Other reserves
Share Foreign
Investment based currency
Share Share Merger revaluation payment translation Special Treasury Retained Total
capital premium reserve reserve reserve reserve reserve shares earnings equity
Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 July 2023 6,762 169,212 94,847 4,987 1,058 (1,174) 833 101 202,436 479,062
Profit for the period - - - - - - - - 8,323 8,323
Other comprehensive income:
Changes in fair value of equity investments held at fair value through other
comprehensive income
Valuation movement taken to equity - - - (571) - - - - - (571)
Deferred tax - - - 315 - - - - - 315
Foreign currency translation - - - - - 5,462 - - - 5,462
Total comprehensive profit - - - (256) - 5,462 - - 8,323 13,529
Transferred to retained earnings on disposal - - - (2,985) - - - - 2,985 -
Dividends - - - - - - - - (10,992) (10,992)
Value of employee services - - - - 420 - - - - 420
Total transactions with owners of the Company - - - (2,985) 420 - - - (8,007) (10,572)
Balance at 31 December 2023 6,762 169,212 94,847 1,746 1,478 4,288 833 101 202,752 482,019
Other reserves
Share Foreign
Investment based currency
Share Share Merger revaluation payment translation Special Treasury Retained Total
capital premium reserve reserve reserve reserve reserve shares earnings equity
Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 January 2024 6,762 169,212 94,847 1,746 1,478 4,288 833 101 202,752 482,019
Profit for the period - - - - - - - - 11,486 11,486
Other comprehensive income:
Changes in fair value of equity investments held at fair value through other
comprehensive income
Valuation movement taken to equity - - - (601) - - - - - (601)
Deferred tax 15 - - - 69 - - - - - 69
Foreign currency translation - - - - - (4,685) - - - (4,685)
Total comprehensive profit - - - (532) - (4685) - - 11,486 6,269
Transferred to retained earnings on disposal 9 - - - (1,416) - - - - 1,416 -
Dividends 6 - - - - - - - - (10,836) (10,836)
Share buy-back 17 (239) - - - - - - 239 (10,000) (10,000)
Utilisation of treasury shares to satisfy employee related share base payments 17, 22 5 - - - (878) - - (5) 878 -
Value of employee services - - - - 705 - - - - 705
Total transactions with owners of the Company (234) - - (1,416) (173) - - 234 (18,542) (20,131)
Balance at 30 June 2024 6,528 169,212 94,847 (202) 1,305 (397) 833 335 195,696 468,157
Six months ended
30 June 30 June
2024 2023
Notes $'000 $'000
Cash flows from operating activities
Profit/(Loss) before taxation 17,902 (10,216)
Adjustments for:
Finance income (103) (3)
Finance costs 3 4,916 2,802
Net foreign exchange loss/(gains) 839 (1,674)
Other losses 4 1,308 664
Revaluation of royalty financial instruments 9 (8,465) (3,011)
Royalties from royalty financial instruments 510 -
Revaluation of coal royalties (Kestrel) 7 23,858 43,820
Depreciation of property, plant and equipment 87 8
Amortisation and depletion of royalties and streams 8, 10 3,071 4,665
Amortisation of deferred acquisition costs 9 9
Share based payment expense 681 422
44,613 37,486
(Increase)/decrease in trade and other receivables (13,895) 1,381
Increase/(decrease) in trade and other payables 793 (830)
Cash generated from operations 31,511 38,037
Income taxes paid (18,295) (19,744)
Net cash generated from operating activities 13,216 18,293
Cash flows from investing activities
Proceeds on disposal of mining and exploration interests - 79
Investment in convertible loan - (109)
Purchase of property, plant and equipment (2) (54)
Purchase of royalty and exploration intangibles 10, 16 (9,167) (18,333)
Proceeds on disposal of royalty and exploration intangibles 13 2,201 4,682
Proceeds on disposal of royalty financial instruments 9 8,145 -
Repayments under commodity related financing agreements 13 1,714 1,312
Prepaid acquisition costs (60) (137)
Finance income received 103 3
Net cash from/(used in) investing activities 2,934 (12,557)
Cash flows from financing activities
Drawdown of revolving credit facility 14 16,600 41,100
Repayment of revolving credit facility 14 (400) (33,700)
Dividends paid 6 (10,836) (11,070)
Share buyback payments 17 (10,000) -
Finance costs paid (4,624) (2,164)
Net cash used in financing activities (9,260) (5,834)
Net increase/(decrease) in cash and cash equivalents 6,890 (98)
Cash and cash equivalents at beginning of period 7,850 5,850
Effect of foreign exchange rates (1,760) 542
Cash and cash equivalents at end of period 12,980 6,294
1. Basis of preparation
These condensed consolidated interim financial statements of Ecora Resources
PLC are for the six months ended 30 June 2024. They have been prepared in
accordance with United Kingdom adopted International Accounting Standard 34
'Interim Financial Reporting'. They do not include all of the information
required for full annual financial statements, and should be read in
conjunction with the consolidated financial statements of the Group for the
year ended 31 December 2023.
This condensed consolidated financial information does not comprise statutory
accounts within the meaning of Section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2023 were approved on 26
March 2024. Those accounts, which contained an unqualified audit report
under Section 495 of the Companies Act 2006 and which did not include a
reference to any matters to which the auditors drew attention by way of
emphasis and did not make any statements under Section 498 of the Companies
Act 2006, have been delivered to the Registrar of Companies in accordance with
Section 441 of the Companies Act 2006.
1.1 Going concern
The financial position of the Group and its cash flows are set out on pages 16
and 20. The Directors have considered the principal risks of the Group which
are set out on pages 63 to 67 of the 2023 Annual Report, and considered key
sensitivities which could impact on the level of available borrowings. As at
30 June 2024 the Group had cash and cash equivalents of $13m and borrowings
under its revolving credit facility of $99m leaving $51m undrawn as set out in
note 14.
Subsequent to the period end, the Group made a partial repayment of $10m and
borrowed a further $5m to partially fund the acquisition of the Phalaborwa
Rare Earths Project royalty detailed in note 23. As a result of these
transactions, total borrowings under the Group's revolving credit facility as
of the date of this report are $94m. Subject to continued covenant compliance,
the Group has access to a further $56m through its secured $150m revolving
credit facility as at the date of this report.
The Directors have considered the Group's cash flow forecasts for the period
to the end of 30 September 2025 under base case and downside scenarios,
including the demand for the commodities produced and the prices realised by
the underlying operations of the Group's royalty and stream portfolio, and the
ongoing operations themselves, including production levels. In all of the
scenarios modelled (including price and volume reductions of 10% and a 10%
adverse movement in foreign exchange), the Group continues to operate within
its banking covenant limits with no debt redemption or amortisation commitment
within the 12-month period from the date of approval of these interim
condensed consolidated financial statements.
The Board is satisfied that the Group's forecasts and projections, taking into
account reasonably possible changes in trading performance and other
uncertainties, together with the Group's cash position and access to the
revolving credit facility, show that the Group will be able to operate within
the levels of its current facilities for the period assessed. For this reason,
the Group continues to adopt the going concern basis in preparing its
condensed interim financial statements.
1.2 Alternative Performance Measurers
The condensed consolidated interim financial statements include certain
Alternative Performance Measures (APMs) which include adjusted earnings per
share, adjusted dividend cover, net debt, free cash flow per share and
portfolio contribution. The directors believe that disclosing alternative
performance measures provides benefit to the users of the financial statements
and aligns to the Group's internal monitoring of key performance indicators.
These APMs are defined on page 4 of this half yearly financial report and are
reconciled to GAAP measures in the notes 5, 6, 14, 19 and 21 respectively. The
APM definitions are consistent with those disclosed in the consolidated
financial statements of the Group for the year ended 31 December 2023 on the
inside front cover.
1.3 Changes in accounting policies
The accounting policies applied are materially consistent with those adopted
and disclosed in the Group financial statements for the year ended 31 December
2023.
The following accounting standards, amendments and clarifications were adopted
in the period with no significant impact:
- Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
- Amendments to IAS 1 Presentation of Financial Statements
- Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)
The Group has not early adopted any other amendment, standard or
interpretation that has been issued but is not yet effective. It is expected
that where applicable, these standards and amendments will be adopted on each
respective effective date.
1.4 Key sources of estimation uncertainty and critical accounting judgements
Key areas of critical accounting judgement and estimation uncertainty that
have the most significant effect on the Group's consolidated financial
statements remain as disclosed in note 4 of the consolidated financial
statements of the Group for the year ended 31 December 2023.
2 Royalty and metal stream related revenue
Six months ended
30 June 2024 30 June 2023
$'000 $'000
Royalty revenue 46,400 37,733
Stream revenue 1,978 3,063
Interest from royalty related financial assets 809 940
Dividends from royalty financial instruments 271 999
49,458 42,735
Interest from royalty related financial assets for the six months ended 30
June 2024 of $0.8m (30 June 2023: $0.9m) relates to interest earned on the
Group's 13-year amortising loan of C$40.8m with an interest rate of 10% per
annum, to Denison Mines Inc ("Denison"), which is classified as non-current
other receivables (note 13).
Dividends from royalty financial instruments for the six months ended 30 June
2024 of $0.3m (30 June 2023: $1.0m) relates to the dividends received from the
Group's investments in Labrador Iron Ore Company (2024: $0.2m; 2023: $0.9m) as
described in note 9, together with the dividends received from the Group's
investment in Flowstream Vintage (2024: $0.1m; 2023: $0.1m), an unquoted oil
and gas streaming company.
3 Finance costs
Six months ended
30 June 2024 30 June 2023
$'000 $'000
Professional fees (760) (687)
Revolving credit facility fees and interest (4,156) (2,115)
(4,916) (2,802)
Professional fees represent legal and arrangement fees relating to the Group's
revolving credit facility. These fees are initially capitalised as deferred
financing costs (note 12) and amortised over the term of the facility.
4 Other losses
Six months ended
30 June 2024 30 June 2023
$'000 $'000
Provision for royalty revenue receivable - (1,170)
Other (losses)/gains (1,308) 506
(1,308) (664)
At 30 June 2023 management assessed the recoverability of the Q1 and Q2 2023
royalties owing from the operator of EVBC to be inherently uncertain and fully
provided for the $1.2m receivable in light of the sustained margin pressures
and operational constraints at the mine at the time. In the second half of
2023 the Group reached an agreement with the operator and recovered the
royalties owing in full which resulted in the provisions being reversed.
Included in other losses is a loss on revaluation of the contingent
consideration receivable related to West Musgrave (note 13) of $1.1m (2023:
gain of $0.5m).
5 Earnings/(loss) per share
The disclosures in this note include certain Alternative Performance Measures
(APMs). For more information on the APMs used by the Group, including the
definitions, please refer to page 4.
Earnings/(loss) per ordinary share is calculated on the Group's profit after
tax of $11.5m for the six months ended 30 June 2024 (30 June 2023: loss of
$7.5m) and the weighted average number of shares in issue during the period of
256,291,853 (2023: 257,888,523).
Six months ended
30 June 2024 30 June 2023
$'000 $'000
Net profit/(loss) attributable to shareholders
Earnings/(loss) - basic 11,486 (7,476)
Earnings/(loss) - diluted 11,486 (7,476)
Six months ended
30 June 2024 30 June 2023
Weighted average number of shares in issue
Basic number of shares outstanding 256,291,853 257,888,523
Dilutive effect of Employee Share Option Scheme 527,226 -
Diluted number of shares outstanding 256,819,079 257,888,523
Earnings/(loss) per share - basic 4.48c (2.90c)
Earnings/(loss) per share - diluted 4.47c (2.90c)
Adjusted earnings per share
Adjusted earnings represent the Group's underlying operating performance from
core activities. Adjusted earnings is the profit/loss attributable to equity
holders plus the royalty receipts from the EVBC royalty, less all valuation
movements and impairments (which are non-cash adjustments that arise primarily
due to changes in commodity prices), amortisation and depletion charges,
unrealised foreign exchange gains and losses, and any associated deferred tax,
together with any profit or loss on non-core asset disposals as such disposals
are not expected to be ongoing.
Diluted
Earnings earnings
Earnings per share per share
$'000 c c
Net profit attributable to shareholders
Profit - basic and diluted for the six months ended 30 June 2024 11,486 4.48c 4.47c
Adjustment for:
Amortisation and depletion of royalties and streams 3,071
Receipts from royalty financial instruments 510
Revaluation of royalty financial instruments (8,465)
Revaluation of coal royalties (Kestrel) 23,858
Revaluation of contingent consideration 1,308
Unrealised foreign exchange (gains)/losses 839
Tax effect of the adjustments above (5,991)
Adjusted earnings - basic and diluted for the six months ended 30 June 2024 26,616 10.38c 10.36c
(Loss)/ Diluted
(Loss)/ earnings (loss)/
earnings
earnings per share per share
$'000 c c
Net profit attributable to shareholders
Loss - basic and diluted for the six months ended 30 June 2023 (7,476) (2.90c) (2.90c)
Adjustment for:
Amortisation and depletion of royalties and streams 4,665
Receipts from royalty financial instruments 1,170
Revaluation of royalty financial instruments (3,011)
Revaluation of coal royalties (Kestrel) 43,820
Revaluation of contingent consideration (506)
Unrealised foreign exchange (gains)/losses (1,674)
Tax effect of the adjustments above (13,631)
Adjusted earnings - basic and diluted for the six months ended 30 June 2023 23,357 9.06c 9.05c
In calculating the adjusted earnings per share, the weighted average number of
shares in issue takes into account the dilutive effect of the Group's employee
share option schemes in those periods where the Group has adjusted earnings.
In periods where the Group has an adjusted loss, the employee share option
schemes are considered anti-dilutive as including them in the diluted number
of shares outstanding would decrease the loss per share, as such they are
excluded.
The weighted average number of shares in issue for the purpose of calculated
basic and diluted adjusted earnings per share are as follows:
Six months ended
30 June 2024 30 June 2023
Weighted average number of shares in issue
Basic number of shares outstanding 256,291,853 257,888,523
Dilutive effect of Employee Share Option Scheme 527,226 199,179
Diluted number of shares outstanding 256,819,079 258,087,702
6 Dividends
The disclosures in this note include certain Alternative Performance Measures
(APMs). For more information on the APMs used by the Group, including the
definitions, please refer to page 4.
On 14 February 2024, an interim dividend of 2.125c per share was paid to
shareholders ($5.4m) in respect of the year ended 31 December 2023.
The Board recommended and the Company's shareholders approved a final dividend
in respect of the year ended 31 December 2023 of 2.125c at the Annual General
Meeting on 2 May 2024. The final dividend totalling $5.4m was paid on 5 June
2024.
Under the updated capital allocation policy, the dividend is now calculated
based on a payout ratio of the average free cash flow generated in the
immediate two preceding six-month periods. The averaging of the two periods is
designed to smooth out quarterly volatility from the Kestrel royalty as it
moves in and out of the Group's private royalty lands.
The H1 2024 free cash flow of $12.6m (note 19) combined with the H2 2023 free
cash flow of $12.8m results in an average free cash flow over the two periods
of $12.7m. The Board has determined to pay an interim dividend of 1.70 cents
per share for the first six months of 2024. This equates to a payout ratio for
the first half of 33%, which is at the top end of the 25-35% ratio in the
revised policy. The H1 2024 dividend will be paid on 31 January 2025, to all
shareholders on the Register of Members on 3 January 2025.
7 Coal royalties (Kestrel)
$'000
At 1 January 2023 106,669
Foreign currency translation (2,101)
Loss on revaluation of coal royalties (43,820)
At 30 June 2023 60,748
Foreign currency translation 1,306
Gain on revaluation of coal royalties 15,300
At 31 December 2023 77,354
Foreign currency translation (2,069)
Loss on revaluation of coal royalties (23,858)
At 30 June 2024 51,427
The carrying value of the Group's coal royalty of $51.4m (A$77.3m) is based on
a valuation completed during June 2024 by an independent coal industry
advisor, amended for management's assessment of the nominal discount rate and
future commodity price assumptions. The independent coal industry advisor's
assumptions relating to volumes and foreign exchange rates were not changed.
The valuation is based on a net present value of the future pre-tax cash flows
from Kestrel discounted at a nominal rate of 10.5% (30 June 2023: 10.5%; 31
December 2023: 10.5%). The key assumptions in the valuation other than
discount rate relate to price and foreign exchange rates.
Price assumptions
The independent coal industry advisor's price assumptions were based on the
June 2024 Consensus Economics forecast of U$257/t for the second half of 2024.
Given the volatility in the commodity prices management have assumed an
average price for the second half of 2024 of U$234/t based on the Australian
Premium Coking Coal FOB Financial Future price, before reverting to consensus
pricing collated by RBC which decreases to an average nominal price U$223/t
between 2025 and 2028, and a long-term flat nominal price of U$199/t.
Foreign exchange rate assumptions
The independent coal industry advisor's AUD:USD exchange rate assumptions used
in the 30 June 2024 valuation assume a strengthening in the Australia dollar
from a short-term rate of 0.67 to a long term rate of 0.73 against the US
dollar.
The net royalty income from this investment is taxed in Australia at a rate of
30%. The revaluation of the underlying Australian dollar asset is recognised
in the Income Statement with the retranslation to the Group's USD presentation
currency recognised in the foreign currency translation reserve.
Were the coal royalty to be carried at cost the carrying value would be $0.3m
(2023: $0.3m).
8 Metal streams
30 June 2024 31 December 2023
$'000 $'000
Cost 175,585 175,585
Contingent consideration 2,978 2,978
Gross carrying amount 178,563 178,563
Depletion and impairment (18,317) (17,123)
Carrying amount 160,246 161,440
The metal stream and contingent consideration are being depleted on a
units-of-production basis over the total expected deliveries to be received of
16.7Mlbs (30 June 2023: 16.9Mlbs; 31 December 2023: 15.5Mlbs). During the
period to 30 June 2024, the Group received 0.12Mlbs of cobalt resulting in a
depletion charge of $1.2m (30 June 2023: 0.26Mlbs resulting in a depletion
charge of $2.6m; six months to 31 December 2023: 0.22Mlbs resulting in a
depletion charge of $2.4m).
The contingent consideration in relation to the acquisition is determined by
reference to minimum production thresholds and cobalt prices, and has been
classified as a financial liability that is carried at fair value based on the
discounted expected cash outflows. The fair value of the contingent
consideration is remeasured at each reporting date, such that the gross
carrying amount is equal to the sum of amounts paid to date and expected
future payments and depreciated on a units-of-production basis over the total
expected deliveries to be received from the metal stream.
As at 30 June 2024 the fair value of the contingent consideration for future
periods has been determined to be nil as the minimum production and price
thresholds are not expected to be achieved in the period to 30 June 2025 (31
December 2023: nil).
9 Royalty financial instruments
The details of the Group's royalty financial instruments, which are held at
fair value are summarised below:
Royalty 30 June 2024 31 December 2023
Carrying value Carrying value
Commodity rate Escalation Classification $'000 $'000
EVBC Gold, silver, copper 0.50% ( ) Up to 3% gold >$2,500/oz FVTPL - -
Dugbe 1 Gold 2.00% 2.5% >$1,800/oz and production <50,000oz/qrt FVTPL 5,414 1,402
McClean Lake Uranium - 22.5% of tolling milling receipt on production >215Mlbs FVTPL 4,914 2,865
Piauí Nickel-cobalt 1.60% - FVTPL 19,785 18,329
Labrador Iron Ore Iron ore 7.00% - FVOCI 1,218 10,233
31,331 32,829
The Group's royalty instruments are represented by four royalty agreements,
EVBC, Dugbe 1, McClean Lake and Piauí which entitle the Group to either the
repayment of principal and a net smelter return ("NSR") royalty for the life
of the mine or a gross revenue royalty ("GRR") where the project commences
commercial production or the repayment of principal where it does not. All
four royalty agreements are classified as fair value through profit or loss
('FVTPL').
The Group's entitlements to cash by way of the repayment of the principal and
the NSR royalty or the GRR have been classified as fair value through profit
or loss in accordance with IFRS 9 and are carried at fair value in accordance
with the Group's classification of royalty arrangements criteria adopted in
the last annual financial statements for the year to 31 December 2023.
The Group's fifth royalty financial instrument is its equity investment in
Labrador Iron Ore Company ('LIORC'), which entitles the Group to a share of
the 7% GRR LIORC receives from the Iron Ore Company of Canada ('IOC') mine and
distributes to its shareholders via dividends. As LIORC is a single asset
company, holding the GRR over the IOC mine, which is owned and operated by Rio
Tinto. The Group has classified its equity investment in LIORC as a royalty
financial instrument and made an irrevocable election to designate it as
FVTOCI.
The Group sold 367,200 shares in LIORC in the first half of 2024 generating
C$11.1m ($8.1m) in proceeds and retained 57,390 shares. The Group's partial
sale of its holding in LIORC in 2024 resulted in a capital gain of C$2.2m
($1.6m) which was transferred directly to retained earnings, net of C$0.3m
($0.2m) in income tax arising from the gain.
The resulting dividends from the Group's investment in LIORC have been
classified as royalty related revenue (refer to note 2) as a result of LIORC's
primary source of income being the 7% GRR described above.
At the reporting date, the fair value of the Group's investment in LIORC has
been determined by reference to the quoted bid price of the instrument.
The Group's remaining royalty financial instruments are valued based on the
net present value of pre-tax cash flows discounted at a pre-tax nominal rate
between 10.50% and 16.50% at reporting date.
For those royalty financial instruments not in production, the outcome of this
net present value calculation is then risk weighted to reflect management's
current assessment of the overall likelihood and timing of each project coming
into production and royalty income arising. This assessment is impacted by
news flow relating to the underlying operation in the period, in conjunction
with management's assessment of the economic viability of the project based on
commodity price projections.
The table below outlines the discount rate and risk weighting applied in the
valuation of the Group's royalty financial instruments:
30 June 2024 31 December 2023
Classification Discount Rate Risk Weighting Discount Rate Risk Weighting
EVBC Fair Value through Profit or Loss 11.50% 0% 12.00% 0%
Dugbe 1 Fair Value through Profit or Loss 16.50% 25.00% 35.00% 32.50%
McLean Lake Fair Value through Profit or Loss 10.50% 60% 10.00% 60%
Piaui Fair Value through Profit or Loss 13.00% 42.5% - 100%(1) 17.50% 55%-100%(1)
(1) A risk weighting of 42.5% (2023:55%) is applied to the probability of
Piaui's expanded 24Ktpa plant reaching commercial production, as compared to
the risk weighting of 100% (2023: 100%) applied to the 1Ktpa plant which has
already achieved production.
10 Royalty and exploration intangible assets
30 June 2024 31 December 2023
$'000 $'000
Royalty interests 325,030 332,570
Contingent consideration 8,655 11,115
Exploration and evaluation costs 919 919
Gross carrying amount 334,604 344,604
Amortisation and impairment (71,638) (74,803)
Carrying amount 262,966 269,801
Impairments of royalty intangible assets
All intangible assets are assessed for indicators of impairment at each
reporting date. Where an impairment indicator has been identified, the
recoverable amount of the asset has been estimated at 30 June 2024 with no
impairment charges recognised (31 December 2023: no impairment charges
recognised). The Group's intangible assets will be assessed for indicators
of impairment again at 31 December 2024.
Impairment sensitivity
The Group considers the announcement by BHP on 11 July 2024 to suspend the
construction of West Musgrave project from October 2024 with the decision to
be reviewed by February 2027, as an indicator of impairment as at 30 June
2024. Having reviewed the recoverable amount of the West Musgrave royalty at
30 June 2024 and concluded that no impairment charge should be recognised, the
Group has reviewed the sensitivity of its assessment concluding the following:
· A 10% decrease in the underlying commodity prices would result in an
impairment charge of $6.6m being recognised.
· A 1% increase in the discount rate applied to the expected future
cash flows from the West Musgrave royalties, would result in an impairment
charge of $6.6m being recognised.
Contingent consideration
On 19 July 2022, the Group acquired the West Musgrave, Santa Domingo, Nifty
and Carlota royalties from South32 Royalty Investments Pty Ltd ("South32") for
a fixed consideration of $185m with further contingent consideration of up to
$15m. The deferred consideration has been paid in full, with the last payment
made in January 2024 of $9.2m.
Contingent consideration is payable subject to future nickel prices and
minimum production levels at West Musgrave post commencement of production and
has been classified as a financial liability that is carried at fair value
based on the discounted expected future cash outflows. After initial
recognition the contingent consideration is measured at fair value at the end
of each reporting period, with any fair value gains or losses recognised in
the royalty intangible assets balance. As at 30 June 2024, the fair value of
the contingent consideration payable is $8.7m based on a pre-tax nominal
discount rate of 11.0% (31 December 2023: fair value of $11.1m on a pre-tax
nominal discount rate of 10.5%).
Amortisation of royalty intangible assets
The amortisation charge for the period, of $1.9m (30 June 2023: $2.1m) relates
to the Group's producing royalties, Mantos Blancos, Maracás Menchen, Carlota
and Four Mile. Amortisation of the remaining interests will commence once
they begin commercial production.
11 Mining and exploration interests
Total mining and exploration interests are represented by:
30 June 2024 31 December 2023
$'000 $'000
Quoted investments 1,806 296
Unquoted investments 2,496 2,495
4,302 2,791
Number of investments 8 7
On 28 June 2024, the Group subscribed for 10,442,427 new ordinary shares at a
price of 11.3652 pence per share in Rainbow Rare Earths Ltd for $1.5m, which
was paid after the period end. Rainbow Rare Earths Ltd is listed on the London
Stock Exchange. The share subscription was executed in connection with the
royalty acquisition over the Phalaborwa Rare Earths Project which was
completed after the reporting period (refer to note 23).
12 Deferred costs
30 June 2024 31 December 2023
$'000 $'000
Deferred acquisition costs 400 341
Deferred financing costs 1,497 -
1,897 341
Deferred financing costs
As at 30 June 2024 deferred financing costs of $1.5m represent the unamortised
costs associated with the Group's $150m revolving credit facility which was
amended and extended in January 2024 (note 14). These deferred financing costs
are amortised over the three-year term of the facility.
13 Trade and other receivables
30 June 2024 31 December 2023
$'000 $'000
Non-current
Denison financing agreement 14,836 17,135
Deferred consideration 4,310 6,311
Contingent consideration 8,326 10,149
Other receivables 120 113
27,592 33,708
30 June 2024 31 December 2023
$'000 $'000
Current
Income tax receivable 173 276
Prepayments 420 383
Royalty receivables 18,759 5,042
Deferred consideration 2,000 2,000
Contingent consideration 1,160 1,122
Other receivables 965 826
23,477 9,649
Denison financing agreement
For the period ended 30 June 2024, the Group earned $0.8m in interest revenue
and received total toll milling receipts of $1.7m, resulting in a principal
repayment of $2.5m (30 June 2023: $0.9m in interest revenue and total toll
milling receipts of $1.3m, resulting in a principal repayment of $2.3m).
Deferred consideration
The Group disposed of its 1% gross revenue royalty over the Narrabri mine to
the operator, Whitehaven Coal Limited, for fixed consideration of $21.6m of
which $4.4m was received on completion with the balance payable in annual
instalments until 31 December 2026 and further contingent consideration also
payable over the period to 31 December 2026. $2m of fixed consideration was
received in the six months ended 30 June 2024.
Contingent consideration
Contingent consideration receivable comprises of contingent consideration in
relation to the West Musgrave acquisition as well as the Narrabri disposal (as
described above).
As described in note 10, under the West Musgrave Royalty the Group is entitled
to a A$10m payment on commercial production being achieved at West Musgrave,
which is distinct from and separate to the net smelter return royalty and is
accounted for as a financial asset and measured at fair value through profit
or loss. As at 30 June 2024, the fair value of the contingent consideration
receivable is $5.7m (31 December 2023: $6.8m).
The contingent consideration receivable from the disposal of Narrabri consists
of $5.0m, receivable in instalments, upon the approval of the Narrabri South
extension project by state and federal authorities in Australia, prior to 31
December 2026. In addition, the Group is entitled to receive bi-annual
contingent payments linked to future realised coal prices during the period
from closing to 31 December 2026. Subject to realised prices exceeding $90/t
the Group will be entitled to $0.05/t, increasing to $0.25/t if realised
prices exceed $150/t. Both elements of the contingent consideration in
relation to the sale of the Narrabri royalty have been classified as a
financial asset that is carried at fair value based on discounted expected
cash flows. $0.2m of contingent consideration was received in the six months
ended 30 June 2024.
As at 30 June 2024, the Group assessed the probability of the Narrabri South
Extension being approved at 50% (2023: 50%) and applied this to the discounted
future cash flows with an 11% (2023: 11%) pre-tax nominal discount rate
resulting in a fair value of $2.3m (2023: $2.1m) for this element of the
contingent consideration. The price and sales volume linked contingent
consideration was also valued by applying an 11% (2023: 11%) pre-tax nominal
discount rate to the expected future cash flows, resulting in a fair value of
$1.5m (2023: $2.1m) for this element of the contingent consideration.
Royalty receivables
Royalty receivables comprise amounts relating to royalties receivable from
Kestrel, Mantos Blancos, Maracás Menchen, EVBC and Carlota for the last
quarter in each period, together with dividends declared but not yet received
from LIORC. These amounts were received in full after the period end.
14 Borrowings
30 June 2024 31 December 2023
$'000 $'000
Secured borrowing at amortised cost
Revolving credit facility 98,962 82,400
98,962 82,400
The disclosures in this note include certain Alternative Performance Measures
(APMs). For more information on the APMs used by the Group, including the
definitions, please refer to page 4.
In January 2024 the Group entered into an amendment and extension of its $150m
revolving credit facility agreement largely on the same terms as the previous
facility and subject to SOFR plus a ratchet between 2.25% and 4.00%, depending
on leverage levels. The amended and extended facility also includes an
uncommitted accordion feature of up $75m to be used to fund royalty
acquisitions which, if implemented, would take the potential borrowing
capacity up to $225m. The Group's facility is secured by way of a floating
charge over the Group's assets and is subject to a number of financial
covenants, all of which have been met during the period ended 30 June 2024.
The facility has a maturity date of January 2027 and subject to lender
consent, can be extended twice by up to 12 months on each occasion.
The Directors consider that the carrying amount of the Group's borrowings
approximates their fair value.
The Group's net debt position after offsetting interest bearing liabilities
against cash and cash equivalents is as follows:
30 June 2024 31 December 2023
$'000 $'000
Revolving credit facility (98,962) (82,400)
Cash and cash equivalents 12,980 7,850
Net debt (85,982) (74,550)
15 Deferred tax
The following is the analysis of the deferred tax balances (after offset) for
financial reporting purposes:
30 June 2024 31 December 2023
$'000 $'000
Deferred tax liabilities (24,237) (28,126)
Deferred tax assets 36,128 37,451
11,891 9,325
The following are the major deferred tax liabilities/(assets) recognised by
the Group and the movements thereon during the period:
Revaluation Revaluation Accrual of
of coal of royalty royalty Other Tax
royalty instruments receivable revaluations losses Total
$'000 $'000 $'000 $'000 $'000 $'000
At 1 January 2023 32,001 567 3,061 1,406 (32,810) 4,225
Charge/(credit) to profit or loss (13,146) 544 (281) 152 (97) (12,828)
Credit to other comprehensive income - (253) - - - (253)
Exchange differences (630) 21 (79) (42) - (730)
Effect of change in tax rate: - - - - -
- income statement - - - - (617) (617)
At 30 June 2023 18,225 879 2,701 1,516 (33,524) (10,203)
Charge/(credit) to profit or loss 4,590 (1,465) (1,842) (352) (105) 826
Credit to other comprehensive income - (371) - - - (371)
Exchange differences 391 (26) 23 36 (1) 423
At 31 December 2023 23,206 (983) 882 1,200 (33,630) (9,325)
Charge/(credit) to profit or loss (7,157) 1,765 4,138 (451) 32 (1,673)
Credit to other comprehensive income - (69) - - - (69)
Partial disposal of LIORC recognised in equity - (211) - - - (211)
Exchange differences (621) 38 17 (33) (14) (613)
At 30 June 204 15,428 540 5,037 716 (33,612) (11,891)
Uncertain tax positions
The Group operates across many tax jurisdictions. Application of tax law can
be complex and requires judgement to assess risk and estimate outcomes,
particularly in relation to the Group's cross-border operations and
transactions. The evaluation of tax risks considers both amended assessments
received and potential sources of challenge from tax authorities. In some
cases, it may not be possible to determine a range of possible outcomes or a
reliable estimate of the potential exposure.
Tax matters with uncertain outcomes arise in the normal course of business and
occur due to changes in tax law, changes in interpretation of tax law,
periodic challenges and disagreement with tax authorities. Tax obligations
assessed as having probable future economic outflows capable of reliable
measurement are provided for. As at 30 June 2024 the Group recognised a
provision for uncertain tax positions of $4.0m (30 June 2023: $3.8m; 31
December 2023: $4.0m).
The Group does not currently have any material unresolved tax matters or
disputes with tax authorities. Recent changes to and the interpretation of
tax legislation in certain jurisdictions where the Group has established
structures may however, be a potential source of challenge from tax
authorities. Due to the complexity of changes in international tax
legislation, the Group has taken local advice and has recognised provisions
where necessary. None of these provisions are material in relation to the
Group's assets or liabilities.
16 Trade and other payables
30 June 2024 31 December 2023
$'000 $'000
Non-current
Contingent consideration 8,656 11,115
Lease liability 2,918 2,918
Other taxation and social security payables 404 428
11,978 14,461
30 June 2024 31 December 2023
$'000 $'000
Current
Other taxation and social security payables 307 151
Trade payables 464 414
Accruals and other payables 5,259 3,172
Lease liability 440 440
Deferred consideration - 9,167
6,470 13,344
As at 31 December 2023, current deferred consideration payable and non-current
contingent consideration payable is in relation to the acquisition of West
Musgrave as detailed in note 10. The final instalment of the deferred
consideration payable was paid in January 2024.
17 Share capital, share premium and merger reserve
Number of Share capital Share premium Merger reserve Total
shares $'000 $'000 $'000 $'000
Group and Company
Ordinary shares of 2p each at 1 January 2023 257,856,157 6,761 169,212 94,847 270,820
Utilisation of shares held in treasury on exercise 47,244 1 - - 1
of employee options (a)
Ordinary shares of 2p at 30 June and 31 December 2023 257,903,401 6,762 169,212 94,847 270,821
Share buy-back (b) (9,491,317) (239) - - (239)
Utilisation of shares held in treasury on exercise of employee options (c)
185,809 5 - - 5
Ordinary shares of 2p at 30 June 2024 248,597,893 6,528 169,212 94,847 270,587
(a) On 26 February 2023, the Company utilised 47,244
ordinary shares of 2p each from treasury, to settle awards to employees under
the Deferred Share Bonus Plan that had vested.
(b) The Company acquired in aggregate 9,491,317 ordinary
shares of 2p each between 27 March 2024 and 30 May 2024 for a total
consideration of U$10m under a share buy-back programme. The ordinary shares
repurchased under the programme are held in treasury.
(c) On 25 June 2024, the Company utilised 185,809 ordinary
shares of 2p each from treasury, to settle awards to employees under the
Long-term Incentive Plan that had vested.
As at 30 June 2024, the Group held 13,134,660 shares in treasury (31 December
2023: 3,829,152).
18 Segment information
The Group's chief operating decision maker is considered to be the Executive
Committee. The Executive Committee evaluates the financial performance of the
Group based on a portfolio view of its individual royalty arrangements.
Royalty income and its associated impact on operating profit is the key focus
of the Executive Committee. The income from royalties is presented based on
the jurisdiction in which the income is deemed to be sourced as follows:
Australia: Kestrel, Crinum, Four Mile, Pilbara, West Musgrave,
Nifty
Americas: Voisey's Bay, McClean Lake, Mantos Blancos, Maracás
Menchen, LIORC, Ring of Fire, Piauí, Canariaco, Ground Hog, Flowstream,
Amapá, Carlota, Santo Domingo and Vizcachitas
Europe: EVBC, Salamanca
Other: Dugbe I, Corporate and also includes the Group's
mining and exploration interests (excluding Flowstream)
The following is an analysis of the Group's results by reportable segment. The
key segment result presented to the Executive Committee for making strategic
decisions and allocation of resources is operating profit as analysed below.
The segment information provided to the Executive Committee for the reportable
segments for the six months ended 30 June 2024 is as follows (noting that
total segment operating profit corresponds to operating profit before
revaluations which is reconciled to profit/loss before tax on the face of the
consolidated income statement):
Australia Americas Europe All other
Royalties Royalties Royalties segments Total
$'000 $'000 $'000 $'000 $'000
Royalty and stream related revenue 42,133 7,325 - - 49,458
Amortisation and depreciation of royalties and streams (40) (3,031) - - (3,071)
Mineral streams cost of sales - (368) - - (368)
Operating expenses (1,911) (67) - (3,786) (5,764)
Total segment operating profit/(loss) 40,182 3,859 - (3,786) 40,255
Total segment assets 184,932 406,996 243 23,156 615,327
Total assets include:
Additions to non-current assets (other than financial instruments and deferred - - - 2 2
tax assets)
Total segment liabilities 51,424 86,679 - 9,067 147,170
The segment information provided to the Executive Committee for the reportable
segments for the six months ended 30 June 2023 is as follows:
Australia Americas Europe All other
Royalties Royalties Royalties segments Total
$'000 $'000 $'000 $'000 $'000
Royalty and stream related revenue 32,427 10,308 - - 42,735
Amortisation and depreciation of royalties and streams (47) (4,618) - - (4,665)
Mineral streams cost of sales - (725) - - (725)
Operating expenses (2,060) (59) - (2,844) (4,963)
Total segment operating profit/(loss) 30,320 4,906 - (2,844) 32,382
Total segment assets 193,619 413,021 - 12,433 619,073
Total assets include:
Additions to non-current assets (other than financial instruments and deferred - - - 54 54
tax assets)
Total segment liabilities 78,804 54,185 - 7,022 140,011
The segment information for the twelve months ended 31 December 2023 is as
follows:
Australia Americas Europe All other
Royalties Royalties Royalties segments Total
$'000 $'000 $'000 $'000 $'000
Royalty and metal stream related revenue 42,698 19,202 - - 61,900
Amortisation and depletion of royalties and streams (81) (7,386) - - (7,467)
Metal streams cost of sales - (1,338) - - (1,338)
Operating expenses (4,134) (374) - (6,381) (10,889)
Total segment operating profit/(loss) 38,483 10,104 - (6,381) 42,206
Total segment assets 207,288 417,327 112 11,550 636,277
Total assets include:
Additions to non-current assets (other than financial instruments and deferred - 20,407 - 112 20,519
tax assets)
Total segment liabilities 61,246 78,803 - 14,209 154,258
The amounts provided to the Executive Committee with respect to total segment
assets are measured in a manner consistent with that of the financial
statements. These assets are allocated based on the operations of the segment
and the physical location of the asset.
The amounts provided to the Executive Committee with respect to total segment
liabilities are measured in a manner consistent with that of the financial
statements. These liabilities are allocated based on the operations of the
segment.
The royalty related income in Australia for the six months ended 30 June 2024
of $42.1m (2023: $32.4m) is substantially derived from the Kestrel royalty,
which generated $40.8m for the six months ended 30 June 2024 (2023: $31.8m).
The royalty and stream related income derived from the Kestrel royalty
represent greater than 10% of the Group's revenue for the six months ended 30
June 2024 and 30 June 2023.
The royalty related income in the Americas for the six months ended 30 June
2024 of $7.3m (2023: $10.3m) is substantially derived from the Voisey's Bay
metal stream sales of $2.0m (2023: $3.1m), Mantos Blancos royalties of $2.8m
(2023: $3.3m) and dividends received from the Group's investment in LIORC of
$0.2m (2022: $0.9m).
The royalty and metal stream-related revenue for the six months ended 30 June
2024 from Voisey's Bay of $2.0m (2023: $3.1m), together with $1.1m from
Maracás Menchen (2023: $1.7m), $2.8m from Mantos Blancos (2023: $3.3m), $1.4m
from Four Mile (2023: $0.6m) and $0.4m from Carlota (2023: $0.3m), represents
revenue recognised from contracts with customers as defined by IFRS 15.
19 Free cash flow
The disclosures in this note include certain Alternative Performance Measures
(APMs). For more information on the APMs used by the Group, including the
definitions, please refer to page 4.
The structure of a number of the Group's royalty financing arrangement, such
as the Denison transaction completed in February 2017, result in a significant
amount of cash flow being reported as principal repayments, which are not
included in the income statement. As the Group considers the dividend payout
by reference to the free cash flow generated by its assets, management have
determined that free cash flow per share is a key performance indicator.
Free cash flow per share is calculated by dividing net cash generated from
operating activities, proceeds from the disposal of non-core assets and
repayments under commodity related financing agreements, less finance costs
paid, by the weighted average number of shares in issue. The free cash flow
per share for the period ended 30 June 2023 has been restated to include the
proceeds on disposal of Narrabri as a non-core asset. This change is in line
with the Group's updated Capital Allocation Framework as disclosed on page 17
of the 2023 Annual Report.
6 months ended Free cash flow
30 June 2024 per share
$'000 c
Net cash generated from operating activities
Net cash generated from operating activities for the period ended 30 June 2024 13,215
Adjustment for:
Proceeds from disposal of non-core assets 2,201
Finance income received 103
Finance costs paid (4,624)
Repayments under commodity related financing agreements 1,714
Free cash flow for the period ended 12,609 4.92c
6 months ended Free cash flow
30 June 2023 per share
$'000 c
(restated)
Net cash generated from operating activities
Net cash generated from operating activities for the period ended 30 June 2023 18,293
Adjustment for:
Proceeds from disposal of non-core assets 4,761
Finance income received 3
Finance costs paid (2,164)
Repayments under commodity related financing agreements 1,312
Free cash flow for the period ended 22,205 8.61c
The weighted average number of shares in issue for the purpose of calculating
the free cash flow per share is as follows:
30 June 2024 30 June 2023
Weighted average number of shares in issue 256,291,853 257,888,523
20 Financial risk management
The Group's principal treasury objective is to provide sufficient liquidity to
meet operational cash flow and dividend requirements and to allow the Group to
take advantage of new growth opportunities whilst maximising shareholder
value. The Group's activities expose it to a variety of financial risks
including liquidity risk, credit risk, foreign exchange risk and price risk.
The Group operates controlled treasury policies which are monitored by
management to ensure that the needs of the Group are met while minimising
potential adverse effects of unpredictability of financial markets on the
Group's financial performance.
Financial instruments
The Group held the following investments in financial instruments (this
includes investment properties):
30 June 2024 31 December 2023
$'000 $'000
Investment property (held at fair value)
Coal royalties (Kestrel) 51,427 77,354
Fair value through other comprehensive income
Royalty financial instruments 1,218 10,233
Mining and exploration interests 4,302 2,791
Fair value through profit or loss
Royalty financial instruments 30,113 22,596
Contingent consideration - receivable 9,366 11,070
Financial assets at amortised cost
Trade and other receivables 40,990 31,427
Contingent consideration - receivable 120 201
Cash at bank and on hand 12,980 7,850
Financial liabilities at amortised cost
Trade and other payables 464 414
Borrowings 98,962 82,400
Deferred consideration - 9,167
Lease liability 3,358 3,358
Financial liabilities at fair value through profit or loss
Contingent consideration - payable 8,656 11,115
Cash and cash equivalents comprise cash and short-term deposits held by the
Group treasury function. The carrying amount of these assets approximates
their fair value.
The Directors consider that the carrying amount of trade and other
receivables, trade and other payables and deferred consideration approximates
their fair value.
Liquidity and funding risk
The objective of the Group in managing funding risk is to ensure that it can
meet its financial obligations as and when they fall due. As at 30 June
2024, the Group had borrowings of $99.0m (31 December 2023: $82.4m) and cash
and cash equivalents of $13.0m (31 December 2023: $7.9m).
Subsequent to the period end, the Group made a partial repayment of $10m and
borrowed a further $5m to partially fund the acquisition of the Phalaborwa
Rare Earths Project royalty detailed in note 23. As a result of these
transactions, total borrowings under the Group's revolving credit facility as
of the date of this report are $94.0m. Subject to continued covenant
compliance, the Group has access to a further $56.0m through its secured $150m
revolving credit facility as at the date of this report. Further details on
the Group's revolving credit facility are included in note 14.
Credit risk
The Group's principal financial assets are bank balances, royalty financial
instruments (excluding the investment in LIORC), non-current other receivables
and trade and other receivables. These represent the Group's maximum exposure
to credit risk in relation to financial assets and total $94.2m at 30 June
2024 (31 December 2023: $73.8m).
Foreign exchange risk
The Group's transactional foreign exchange exposure arises from income,
expenditure and purchase and sale of assets denominated in foreign
currencies. With royalty income from Kestrel accounting for over 80% of the
Group's income (30 June 2023: over 75%), the Group's primary foreign exchange
exposure is to the Australian dollar, in which these royalties are
denominated. In addition to the Group's exposure to the Australian dollar,
it is also exposed to the Canadian dollar through the royalty related revenue
from LIORC and McClean Lake which is denominated in Canadian dollars and
accounted for 2% of the Group's income (30 June 2023: 4.2%).
The Group's hedging policy allows foreign exchange forward contracts to be
entered into with a maximum exposure of 70% of forecast Australian and
Canadian dollar denominated royalty revenue expected to be received during a
period not exceeding 12 months from contract date to settlement. There are
no outstanding forward contracts at 30 June 2024 and 31 December 2023.
Price risk
The royalty and metal stream portfolio exposes the Group to other price risks
through fluctuations in commodity prices, particularly the prices of coking
coal, cobalt, vanadium, copper, iron ore, gold and uranium. The Directors
obtain independent commodity price forecasts, the generation of which takes
into account fluctuations in prices, which are utilised in the valuation of
royalties - refer to note 7 and 9.
In addition to the commodity price risk, the Group is exposed to share price
risk in respect of its mining and exploration interests which include listed
and unlisted equity securities, together with its investment in LIORC which is
classified as a royalty financial instrument (note 9). No specific hedging
activities are undertaken in relation to these interests and the voting rights
arising from these equity instruments are utilised in the Group's favour.
Fair value hierarchy
The following table presents financial assets and liabilities measured at fair
value in the statement of financial position in accordance with the fair value
hierarchy. This hierarchy groups financial assets and liabilities into three
levels based on the significance of inputs used in measuring the fair value of
the financial assets and liabilities. The fair value hierarchy has the
following levels:
· Level 1: quoted prices (unadjusted) in active markets for
identical assets and liabilities;
· Level 2: inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
· Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The level within which the financial asset or liability is classified is
determined based on the lowest level of significant input to the fair value
measurement. The following tables present the Group's assets and liabilities
that are measured at fair value at 30 June 2024:
Level 1 Level 2 Level 3 Total
Group Notes $'000 $'000 $'000 $'000
Assets
Coal royalties (Kestrel) 7 - - 51,427 51,427
Royalty financial instruments 9 1,218 - 30,113 31,331
Mining and exploration interests - quoted 11 1,806 - - 1,806
Mining and exploration interests - unquoted 11 - 2,496 - 2,496
Contingent consideration - receivable 13 - - 9,366 9,366
Liabilities
Contingent consideration - payable 16 - - (8,656) (8,656)
Net fair value 3,024 2,496 82,250 87,770
The following tables present the Group's assets and liabilities that are
measured at fair value at 31 December 2023:
Level 1 Level 2 Level 3 Total
Group Notes $'000 $'000 $'000 $'000
Assets
Coal royalties (Kestrel) 7 - - 77,354 77,354
Royalty financial instruments 9 10,233 - 22,596 32,829
Mining and exploration interests - quoted 11 296 - - 296
Mining and exploration interests - unquoted 11 - 2,495 - 2,495
Contingent consideration - receivable 13 - - 11,070 11,070
Liabilities
Contingent consideration - payable 16 - - (11,115) (11,115)
Net fair value 10,529 2,495 99,905 112,929
There have been no significant transfers between Levels 1 and 2 in the
reporting period.
Fair value measurements in Level 3
The methods and valuation techniques used for the purposes of measuring fair
value of coal royalties, royalty financial instruments and contingent
consideration receivable and payable remain as disclosed in note 34 of the
consolidated financial statements of the Group for the year ended 31 December
2023. A description of the valuation process for Coal Royalties is provided in
note 7 which describes the assumptions that the valuations are most sensitive
to. Note 9 describes the sensitive assumptions affecting the valuation of
Royalty financial instruments, alongside commodity price forecasts.
The Group's financial assets and liabilities classified in Level 3 uses
valuation techniques based on significant inputs that are not based on
observable market data.
The following table presents the changes in Level 3 instruments for the six
months ended 30 June 2024.
Royalty financial instruments Coal royalties (Kestrel) Contingent consideration - receivable Contingent consideration - acquisitions Total
$'000 $'000 $'000 $'000 $'000
At 1 January 2024 22,596 77,354 11,070 (11,115) 99,905
Revaluation gains or losses recognised in:
Income statement 8,465 (23,858) (1,308) - (16,701)
Royalty intangible and metal stream - - - 2,193 2,193
Royalties due or received from royalty financial instruments (510) - - - (510)
Reclassified to current receivables/payables - - (120) - (120)
Foreign currency translation (438) (2,069) (276) 266 (2,517)
At 30 June 2024 30,113 51,427 9,366 (8,656) 82,250
The following table presents the changes in Level 3 instruments for the year
ended 31 December 2023.
Royalty financial instruments Coal royalties (Kestrel) Contingent consideration - receivable Contingent consideration - acquisitions Total
$'000 $'000 $'000 $'000 $'000
At 1 January 2023 18,290 106,669 12,650 (10,058) 127,551
Contingent consideration received - - (1,351) - (1,351)
Revaluation gains or losses recognised in:
Income statement (3,088) (28,520) (666) - (32,274)
Royalty intangible and metal stream - - - (1,037) (1,037)
Royalties due or received from royalty financial instruments (718) - - - (718)
Additions 7,774 - - - 7,774
Foreign currency translation 338 (795) 437 (20) (40)
At 31 December 2023 22,596 77,354 11,070 (11,115) 99,905
There have been no transfers into or out of Level 3 in any of the reporting
periods.
The Group measures its entitlement to the royalty income and any optionality
embedded within the royalty instruments using discounted cash flow models.
In determining the discount rate to be applied, management considers the
country and sovereign risk associated with the projects, together with the
time horizon to the commencement of production and the success or failure of
projects of a similar nature.
21 Portfolio contribution
The disclosures in this note include certain Alternative Performance Measures
(APMs). For more information on the APMs used by the Group, including the
definitions, please refer to page 4.
Portfolio contribution represents the funds received or receivable from the
Group's underlying royalty and stream related assets. A number of the
Group's royalty financing arrangements result in a significant amount of cash
flow being reported as principal repayments, which are not included in the
income statement. In addition, royalty receipts from those royalty financial
instruments classified as FVTPL such as EVBC, are reflected in the fair value
movement of the underlying royalty rather than recorded as royalty and stream
related revenue. The Group considers total portfolio contribution as a means
of assessing the overall performance of the Group's underlying royalty and
metal stream related assets.
Portfolio contribution is royalty and stream related revenue (note 2), less
metal stream cost of sales, plus royalties received or receivable from royalty
financial instruments carried at FVTPL and principal repayment received under
the Denison financing agreement (note 13) as follows:
Six months ended
30 June 2024 30 June 2023
$'000 $'000
Royalty and stream related revenue (note 2) 49,458 42,735
Royalties due or received from royalty financial instruments 510 1,170
Repayments under commodity related financing agreements (note 13) 1,714 1,312
Mineral streams cost of sales (368) (725)
51,314 44,492
Metal streams costs of sales represent the cost of cobalt purchases under the
Voisey's Bay stream agreement, marketing costs and insurance. The cost of
cobalt purchases is 18% of an industry cobalt reference price until the
original upfront amount paid for the stream, by its original holder, of $300m
is reduced to nil (through accumulating credit from 82% of the cobalt
reference price), increasing to 22% thereafter.
22 Share-based payments
On 26 February 2023, the Company utilised 47,244 ordinary shares of 2p each
from treasury, to settle awards to employees under the Deferred Share Bonus
Plan that had vested.
On 25 June 2024, the Company utilised 185,809 ordinary shares of 2p each from
treasury, to settle awards to employees under the Long-term Incentive Plan
that had vested.
23 Events occurring after period end
On 28 June 2024, the Group entered into an agreement to acquire a 0.85% Gross
Revenue Royalty over the Phalaborwa Rare Earths Project located in South
Africa for a total cash consideration of $8.5m. The royalty rate steps up by
0.1% to 0.95% if commercial production does not occur prior to 1 October 2027.
If commercial production does not occur prior to 1 July 2028, then the royalty
rate steps up by a further 0.15% to 1.10%.
Payment of the $8.5m royalty consideration was conditional upon:
· receipt of exchange control authorisation from the South African
Reserve Bank Financial Surveillance Department (customary for transactions of
this nature), expected within 6 to 8 weeks of submitting the application; and
· execution and delivery of certain security documents to Ecora.
Exchange control authorisation from the South African Reserve Bank Financial
Surveillance Department was received on 25 July 2024. As at the date of this
report the execution and delivery of the required security documents has not
yet occurred and therefore, ownership of the royalty had not passed to the
Group at 30 June 2024 and is not included in the balance sheet.
24 Availability of financial statements
This statement will be sent to shareholders and will be available at the
Group's registered office at Kent House, 3(rd) Floor North, 14-17 Market
Place, London W1W 8AJ.
Responsibility statement
The Directors are responsible for preparing the Interim Results for the six
months ended 30 June 2024 in accordance with applicable law, regulations and
accounting standards. In preparing the condensed interim Financial Statements,
the Directors are responsible for ensuring that they give a true and fair view
of the state of affairs of the Group at the end of the period and the profit
or loss of the Group for that period, as required by DTR 4.2.4R.
The Directors confirm that the condensed interim Financial Statements have
been prepared in accordance with United Kingdom adopted IAS 34 'Interim
Financial Reporting' and that the Interim Results includes a fair review of
the information required by DTR 4.2.7R and DTR 4.2.8R, namely:
· an indication of important events that have occurred during the
first six months and their impact on the condensed interim Financial
Statements, and a description of principal risks and uncertainties for the
remaining six months of the financial year; and
· Material related party transactions for the first six months of
the year and any material changes in the related party transactions described
in the last annual report.
The Directors are listed in the Group's 2023 Annual Report and Accounts. A
list of the current Directors is maintained on the Ecora Resources website:
www.ecora-resources.com. The maintenance and integrity of this website is the
responsibility of the Directors.
On behalf of the Board
M. Bishop Lafleche
Chief Executive Officer
3 September 2024
INDEPENDENT REVIEW REPORT TO ECORA RESOURCES PLC
Conclusion
We have been engaged by the Company to review the condensed set of financial
statements in the half yearly financial report for the six months ended 30
June 2024 which comprises the Condensed Consolidated Income Statement,
Condensed Consolidated Statement of Comprehensive Income, Condensed
Consolidated Balance Sheet, Condensed Consolidated Statement of Changes in
Equity, Condensed Consolidated Statement of Cash Flows and the related notes 1
to 24. We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed set of
financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half yearly
financial report for the six months ended 30 June 2024 is not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" (ISRE) issued by the Financial
Reporting Council. A review of interim financial information consists of
making inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half yearly financial report, the directors are responsible
for assessing the Group's ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
Company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
relating to going concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for conclusion paragraph of
this report.
Use of our report
This report is made solely to the Company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
3 September 2024
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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