Ecora has 10 producing royalties, the most important of which are the Voisey's Bay cobalt stream in Canada and the Mantos Blancos copper royalty in Chile along with the legacy Kestrel royalty. However, in the interim, they do provide trading updates, the most recent of which was published in January 2023 (see chart below). Source: Ecora Resources February 2023 Investor Presentation Company FinancialsĮcora reports their financials on semiannual basis, which means that their most recent financial report covers the first half of 2022. Furthermore, it retains ~ $180 million of liquidity for future growth. At the end of 2022 Ecora had a net debt of $35 million. Notably, due to extraordinarily high revenues from its Kestrel royalty recently, it was able to achieve this using very little debt. These large transactions ensure that Ecora is scheduled to generate about $100 million in annual revenues (see chart below) in the medium term, which exceeds its historical revenues from its largest legacy coal royalty (Kestrel). Notable royalties include a 2.0% net smelter return ("NSR") royalty on the West Musgrave nickel and copper project in Australia owned by OZ Minerals (which BHP is in the process of acquiring), and a 2.0% NSR royalty on the Santo Domingo copper and cobalt project in Chile owned by Capstone Copper. In July 2022, it acquired a portfolio of royalties over advanced development stage copper and nickel projects from South32.In February 2021, it acquired a stream on 22.82% of all cobalt production from Voisey's Bay, a world class base metals mine in Canada operated by Vale.It accomplished this commodities transformation by using the revenues generated from its coal royalties to complete two major base metals acquisitions: Furthermore, very few royalty companies are currently active in this area, which should price this company's stock at a premium, once the market realizes its transformation from coal to green metals. I think the decision to transform the commodity composition of the company is a good one, as there is going to be substantial demand for copper, nickel and cobalt in the green transition. They even recently changed their name from Anglo Pacific Mining to reflect their new green profile. This transformation in the commodity mix in the Ecora royalty portfolio came about as a result of a strategic decision by management to focus on future-facing metals. Instead, Ecora will primarily be a base metals royalty company with a large exposure to copper, nickel and cobalt. Yet in a few years' time, Ecora will have virtually no coal royalty exposure, as it has sold its Narrabri royalty, and the Kestrel operator will have mined out the areas subject to Ecora's royalty by 2026. It's two main legacy assets were the Kestrel coking coal royalty and the Narrabri thermal coal royalty, both of which are located in Australia. Company OverviewĮcora is non-precious metals royalty company, which historically has primarily been known as a coal royalty company. Therefore, I think the stock should trade at a least $3.50 per share and rate it as a strong buy. Generally, royalty companies tend to trade at 10 times their annual revenues at a minimum, especially when focusing on long life green metals assets. It has low debt and operating costs, and at a $1.75 price per share, Ecora has a market cap of around $450 million, which is less than 5 times medium term (3-5 years) annual revenues of around $100 million. Click here to find out more »Įcora Resources ( OTCQX:ECRAF) primarily has long life royalties on copper, nickel and cobalt mines, metals which are essential to the green transition. Active contributors also get free access to SA Premium. It's easy to become a Seeking Alpha contributor and earn money for your best investment ideas. Editor's note: Seeking Alpha is proud to welcome Jerome Davis as a new contributor.
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