Kolibri Global Energy Inc. press release

Ecora Resources PLC Announces FY Results & Updated Capital Allocation Framework

2024-03-27

TSX - Toronto Stock Exchange · United States · Corporate Finance

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

Full Year Results and Updated Capital Allocation Framework

LONDON, UK / ACCESSWIRE / March 27, 2024 /Ecora Resources PLC (LSE:ECOR)(TSX:ECOR) announces full year results for the year ended 31 December 2023. The Company will publish its audited 2023 Annual Report and Accounts later today, which will be available on the Group's website at www.ecora-resources.comand on SEDAR at www.SEDAR.com.

Ecora is the leading royalty company focused on supporting the supply of commodities essential to creating a sustainable future. The Group has a portfolio which combines near term volume growth in 2024 and 2025 from operations underlying its producing royalty portfolio with a pipeline of development projects that should drive material medium term revenue growth.

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

"Against a backdrop of shifting markets, we're pleased to have achieved a set of results in line with expectations, underlining the robustness of our business at every point of the commodity cycle.

"Looking ahead, we anticipate year-on-year volume growth across the producing portfolio in 2024 and 2025. We also expect our operating partners to provide further updates on the timeline to first production from our near term development royalties, which combined with our currently producing royalties, have the potential to generate a portfolio contribution annual run-rate in excess of $100 million.

"Following rigorous consideration by the Board, we are today announcing an updated capital allocation framework. The framework consists of four pillars: growth, post-acquisition balance sheet deleveraging, cash dividends, and share buybacks. By adopting this framework, we are prioritising accelerated diversification and scale, both crucial prerequisites for a royalty company to achieve a premium equity rating.

"The current market environment has presented us with the opportunity to buyback Ecora shares at a substantial discount to net asset value. Consistent with our updated capital allocation framework to consider share buybacks, we have today announced a $10 million share repurchase which will be accretive to our per share metrics.

"On behalf of the Ecora team and the Ecora Board of Directors, I would also like to take this opportunity to thank Patrick Meier, who will be stepping down as Chair at our upcoming AGM, for his dedication and unwavering commitment towards transforming Ecora into the leading future facing commodity royalty company. I am grateful for his support and guidance, and we wish Patrick all the very best for the future."

Financial Highlights:

| ● | Portfolio contribution of $63.6m (2022: $143.2m) due to lower commodity prices and reduced levels of production from the Group's private royalty area at Kestrel | | ● | Royalty and metal stream-related revenue of $61.9m (2022: $141.9m) | | ● | Profit before tax of $4.6m (2022: $135.4m) | | ● | Adjusted earnings of $30.5m (2022: $87.9m), and adjusted earnings per share of 11.82c (2022: 37.55c) | | ● | Net debt as at 31 December 2023 of $75m (31 Dec 22: $36m), reflecting $27.5m invested in new royalties and $37m of deferred payments to S32 during the year | | ● | Refinanced the Group's $150m debt facility, increasing the size of the incremental accordion to $75m (previously $50m) | | ● | Updated capital allocation framework which seeks to maintain balance sheet strength, provide an attractive dividend yield relative to the royalty sector and retain the flexibility to allocate capital for growth | | ● | Announcement today of a $10m share buyback at substantial discount to NAV, primarily funded by recycling capital from recent LIORC share sales | | ● | Final dividend proposed of 2.125c per share, bringing the total dividend for the year to 8.5c per share ($22m), as per guidance |

Portfolio Highlights:

| ● | Kestrel saleable volumes mined within the Group's royalty area of 1.6 Mt (2022: 4.1 Mt) | | ● | Voisey's Bay cobalt stream deliveries totalled 11 shipments in 2023 (2022: 19 deliveries) in line with guidance; underground mine construction at Voisey's Bay now 92% complete | | ● | Mantos Blancos total copper production of 49 Kt (2022: 49Kt) | | ● | Favourable Four Mile judgment. Uranium sales of 5.0 Mlbs (2022: 4.9 Mlbs) | | ● | West Musgrave copper nickel project construction started and now 21% complete | | ● | Acquired 0.25% NSR royalty over Vizcachitas copper project, further enhancing royalty sector leading copper exposure | | ● | Acquired incremental 0.35% GRR royalty over the Piauί nickel-cobalt project, with proceeds primarily funding detailed engineering studies that will further de-risk the project | | ● | NexGen Energy made a highly prospective uranium discovery in Athabasca uranium basin, Canada, which occurred in an area over which Ecora holds a 2.0% NSR royalty |

Outlook:

| ● | Well positioned to fund royalty acquisitions, including $75m RCF acquisition accordion | | ● | Broad pipeline of opportunities being evaluated in context of increased demand for capital from the natural resources sector | | ● | Year-on-year production volume growth at operations underlying production royalty portfolio expected in 2024 and 2025 | | ● | Kestrel saleable volumes from Ecora royalty area in 2024 expected to be 15-25% ahead of the 2023 volumes. Majority of 2024 Kestrel royalty receipts expected in H1 | | ● | Capstone Copper expected to release an updated Santo Domingo Feasibility Study during H1 2024. Capstone Copper targeting a final investment decision in H2 2025 | | ● | West Musgrave standalone project economics remain robust, BHP expected to provide updated guidance over the course of 2024 | | ● | Brazilian Nickel to further progress detailed engineering studies, operational readiness preparations, and construction financing workstreams in the upcoming year |

Updated Capital Allocation Framework:

The Board has reviewed the Company's approach to capital allocation and has approved an updated framework which aims to maintain balance sheet strength, provide an attractive dividend yield relative to the wider royalty sector, and retain the flexibility to allocate capital to enhance the Company's royalty portfolio via accretive acquisitions. The approach will also align dividend payout to free cash flow which is expected to grow as near term development royalties come into production.

Ecora's updated capital allocation framework has four pillars:

| ● | Acquire high-quality royalties to further diversify and grow the portfolio | | ● | Focus on post transaction balance sheet deleveraging | | ● | Distribute semi-annual cash dividends based on a range of 25-35% of free cash flow1 | | ● | Consider share buybacks in the context of market price and net asset value |

Based on research analyst consensus commodity price forecasts and operator production volume guidance from Ecora's operating partners, the mid-point of the new dividend payout ratio would see total FY 2024 dividend of approximately 4.0c per share.

1Free cash flow is calculated as net cash generated from operating activities, plus proceeds from the disposal of non-core assets and repayments received under commodity related financing arrangements, less finance costs and lease payments.

Analyst and Investor presentation

There will be an analyst and investor presentation webcast at 9am (GMT) on 27 March 2024. The presentation will be hosted by Marc Bishop Lafleche (CEO) and Kevin Flynn (CFO).

Please join the event 5-10 minutes prior to the scheduled start time.

| Event Title | Ecora Resources - 2023 Results Presentation | | Time Zone | Dublin, Edinburgh, Lisbon, London | | Start Time/Date | 9am (GMT) | | Duration

Webcast Link

Dial-in (UK-Wide) | 60 minutes

https://brrmedia.news/ECOR_FY23

+44 (0) 33 0551 0200 |

For further information

| Ecora Resources PLC | +44 (0) 20 3435 7400 | | Marc Bishop Lafleche Chief Executive Officer | | | Kevin Flynn Chief Financial Officer | | | Geoff Callow Head of Investor Relations | | | | | | Website : | www.ecora-resources.com | | | | | FTI Consulting

Sara Powell / Ben Brewerton / Nick Hennis | +44(0) 20 3727 1000

ecoraresources@fticonsulting.com |

Notes to Editors:

The financial information set out in this Results Announcement does not constitute the Company's annual report and accounts for the years ended 31 December 2022 or 2023 but is derived from those accounts. The auditors have reported on those accounts; their reports were unqualified and did not draw attention to any matters by way of emphasis without qualifying their report.

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 reflects the underlying performance of the Group's assets both in terms of those already in production and the timing of the Group's development royalties coming into production.. 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.

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 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.

Dividend cover

Dividend cover is calculated as the number of times adjusted earnings per share exceeds the dividend per share.

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, less finance costs, by the weighted average number of shares in issue.

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.

Technical and Third-Party Information

As a royalty and streaming company, the Group often has limited, if any, access to non-public scientific and technical information in respect of the properties underlying its portfolio of royalties, or such information is subject to confidentiality provisions. As such, in preparing this announcement, the Group has largely relied upon the public disclosures of the owners and operators of the properties underlying its portfolio of royalties investments, as available at the date of this announcement. Accordingly, no representation or warranty, express or implied, is made and no reliance should be placed, on the fairness, accuracy, correctness, completeness or reliability of that data, and such data involves risks and uncertainties and is subject to change based on various factors.