Ecora Resources Share Discussion Threads

[laurence llewelyn binliner] 23/8/2024 16:24

#Giltedge, it is going to be a tough hold for a couple of years now as we build out the portfolio, and then wait for 1 of them to come on-stream, bottom drawer for me I think, still pays a dividend twice a year, and could get a bid on the weak share price .

VB is just about to come into its own and deliver, such a shame WM will not meet expected timelines, but it is still there for us down the road..

A dark horse could be Dugbe, which has been drilled and now with results pending, our 2% NSR could come through in a 2,500+ POG environment..

[giltedge1] 23/8/2024 13:22

Cannot see any new royalties coming on stream till 2030,s, majors under pressure with falling iron ore price minors (capstone) struggle to raise funds or banks charge 10%+, its a waiting game, invest elsewhere & come back when in 40,s imo.

[laurence llewelyn binliner] 20/8/2024 15:03

#The Deacon, agreed, we do not have anything substantial lined up for 2027 onward (so far), WM put paid to that unfortunately, Piaui is moving forward and could surprise but it is another USD70M tranche buy-in and the full scale plant I do not see coming on stream that soon nor SD..

04.09.2024 and we can see where we are/were at H1 on debt/cash and dividend..

[the deacon] 20/8/2024 13:13

Interesting article, thanks. He's more optimistic than I regarding the income gap. There's isn't any income 'turning on' in 2027. BHP have said they'd review WM by Feb 2027. We don't yet know what Capstones intentions are regarding Santo Domingo either. Presently we hope there's royalty revenue coming in from new projects by 2027, but absolutely nothing is certain.MBL can add some dates into his slide deck all he wants, but ultimately it's not up to Ecora.

[laurence llewelyn binliner] 19/8/2024 18:45

Sept 24th for the H1-2024 results and dividend announcement, 1st one off the new policy to distribute semi-annual cash dividends based on range of 25-35% of free cash flow, but 2.125 cents last time around..

[tommygriff] 19/8/2024 18:33

Thanks - when is the next one due to be paid. Dividendmax is showing any info on it

[laurence llewelyn binliner] 17/8/2024 15:08

#Reddirish, the portfolio delivered USD27.7M without Kestrel in 2023 with just 11 deliveries from VB (USD5.6M) with that ramping up to 12-16 for 2024 and up to 40 through 2025, I have USD40-45M for 2026 if Kestrel drops to zero, so not as low as your expectations, which covers off the OPEX and dividends and we should have zero debt by then too..

[reddirish] 17/8/2024 14:01

It will be a close run thing for sure. If VB does ramp up as expected to 40 deliveries in 2026, my estimate is that total annual income could fall to just $25-30m in 2027 in the absence of any coal royalties (with up to 60% coming from VB). That would provide sufficient cash for operating expenses and debt repayments, but nothing for dividends, until the other major hoped -for income streams come on board. So the decision to invest or not rests on how secure that interim position is believed to be. Any significant shortfall means a cash crunch, and we all know where that leads (it's happened, painfully, several times in my portfolio over the years). But if it sees its way through, it should rise to close to NPV i.e. doubling or more. That the board is still paying ANY dividends, let alone using precious cash for buy- backs and minor portfolio extensions, suggests they are confident it is all going to be fine. I've now invested at a significant level (7% of my total portfolio) so I very much hope they are right! Any other estimates of the potential range of post- Kestral income?

[the deacon] 17/8/2024 11:28

A TRR/ECOR tie up would have been ideal, with Thacker Pass coming online as Kestrel dwindles away. They've also Mimbula that's ramping up copper production too. The major shareholders could have waved MBL goodbye and we'd have been left with a very attractive, well diversified dual listed royalty and streamer - complete with a dynamic management team. Ah well....

[laurence llewelyn binliner] 17/8/2024 11:15

#1Knocker, fair points, it is an interesting period for the company coming up now, we cannot reduce debt and buy new royalties at the same time in 2024/2025..

FY-2024 we are set up for around USD60-65M income
FY-2025 about the same..

Enough to strengthen the balance sheet, wipe the 25 pence debt per share out and cover the dividends..

With Nickel projects being mothballed, will Piaui and our next USD70M tranche go ahead, and how soon will we need to buy-in again..?

SD - post DFS, a construction decision and the integration of Santo Domingo represents the next phase of our transformational growth as we become a leading long-life and low-cost producer of critical metals essential for the worlds de-carbonization efforts. We now intend to progress with the assessment of the optimal financing structure for the project, which may include bringing in a minority partner at the project level. In parallel we will also continue to advance the detailed engineering on the project..

I was happy to bottom drawer the position and let it ride for the dividends (my main reason to hold) but will give it some more thought now the return has been cut in half, catalysts for a reversal look limited given our debt position..

[laurence llewelyn binliner] 17/8/2024 09:57

It is a tight spot (so far) we could end up in 2026 with the Kestrel run off and the loss of WM near term which was lined up to plug some of the gap..

Net debt at 30.06.2024 USD86M is expected to reduce meaningfully in the next 18 months (absent acquisitions, assuming current commodity prices, operator volume/guidance)

Acquisitions with near term production will be expensive to buy but we have until 26/27 to get some lined up, but given the above expectation on debt reduction it looks like we might not be targeting anything big like another VB/S32 purchase..

Recent acquisitions from Rainbow target 2027 and Vizcachitas 2029, Incoa could come in from 2025 but small beer compared to the cash cow Kestrel, SD DFS/FID unknown..

VB will be adding USD20M a year from 2025 so a strong start for us there, I will hold and watch but with a 2.5% PF position it can just ride and see how it plays out over time, still pays 3.5 pence a year to observe developments..

[1knocker] 17/8/2024 09:25

Thanks, deacon.

Not a very bright outlook.

Realistically, as I see it ECOR can't do much to get out of the short to medium term hole it has dug itself into (asset sales to fund a pivot would be at a cracking loss, it has no cash on hand for significant further purchases, and any equity raise would be at a heavy discount to an already depressed SP), so when the Kestrel money stops it will very likely fall to a low ball takeover bid from a stronger player with a better balanced asset portfolio which can afford to wait for the ECOR assets to become productive.

Ecor share buybacks will only serve further to reduce its capital available to make purchases to fill the short to medium term revenue gap, making it even more vulnerable to a low ball takeover, and at a lower price.

[the deacon] 16/8/2024 20:59

That's the risk, yes. West Musgrave and Santo Domingo are the two that prompted ECOR to execute the S32 transaction - in the belief that at least WM would be in production by the time Kestrel came to an end. Piaui has the potential to contribute meaningfully but, as is the case with WM - the nickel market/outlook isn't conducive to a new mine build. Remember, BHP initially sold WM to Oz Minerals, and now have it back following the Oz takeover. It's safe to say BHP aren't overly enamored with the economics at WM, so it's difficult to say when that situation changes. Santo Domingo has always been a high cost option for Capstone. The chunky upfront capex is likely a turn off vs the option of M&A. I'm sure WM and Santo Domingo get into production, but I very much doubt either make it before Kestrel ends. Then there's Voiseys Bay. VB is predominantly a nickel mine, with ECOR enjoying a stream on the cobalt byproduct. Ramp up is expected to improve things, but won't bridge the kestrel void on its own for ECOR.Difficult to know what's going on at Piaui given there's no public disclosure requirements there. I suspect there'll be no rush to commercial production though - with similar outlook issues to WM. In a market where there's a rush to bring on new meaningful (scale) production asap, then these assets get built and ECOR makes a heck of a lot of money. But we're not in that market, and unfortunately the cash cow is running out fast. Recently there's been a flurry of royalties purchased on producing copper assets by some of the bigger royalty co's. That's the sort of place ECOR's cash should have gone given the time constraint. I'm sure WM, Santo Domingo and Piaui all make it into production, but I'm also equally sure it won't be in time to fill that oncoming Kestrel void.

[1knocker] 16/8/2024 18:56

Stay with us damp seaweed. Your post poses the most perceptive question I have seen here in a long while.

I wish I knew the answer. I hope someone else does and will enlighten us.

[damp seaweed] 16/8/2024 12:28

I haven’t darkened the door of Ecora for quite some time. As I recall the Kestral royalty is due to terminate in 2026. Looking at the most recent update, it seems that Kestral contributed >80% of the income.
The new royalties seem both meagre,and quite some way off. And in the case of Rainbow, rather risky.
So does the Ecora just fall off a cliff in 2 years, or have I missed something?

[quepassa] 16/8/2024 09:01

only llb could give it such a spin that reduced shareholder dividends are a good thing....


if you asked 1,000 shareholders if they thought reduced dividends were a good thing - I don't think a single one would say yes.


as mentioned before, llb would try and convince you that his three-legged donkey was favourite to win the Grand National.

[quepassa] 16/8/2024 08:58

do you mean MBL or LLB

?

??

???

nudge-nudge wink-wink

[the deacon] 16/8/2024 08:18

They've fallen in line with the more generous dividend paying royalty companies. What ECOR need to show now is a dynamic team that's ahead of the curve in terms of capital allocation. The previous yield here was the main reason for holding. Now they're really competing with peers such as Altius, and over recent years Altius has shown themselves to be very astute allocators. There's a handful of reasons why ECOR doesn't enjoy the sort of multiple that Altius does. It's up to MBL to step up and change that now.

[laurence llewelyn binliner] 16/8/2024 08:10

1Knocker, shrink-flation, full size Mars bars are now what the fun size ones were.. :o)

BUT, retaining earnings does increase the rate at which we can reduce debt and add new royalties so it does serve a very worthwhile purpose..

[1knocker] 16/8/2024 07:50

Yes it does pay a dividend, but has applied the supermarket pricing model: no change in the packet price, but half the number of items in the annual dividend packet.

Will the customers notice that amounts to a 50% dividend cut?

[laurence llewelyn binliner] 16/8/2024 07:28

#tommygriff, yes, but bi-annual now down from quarterly with the payout reduced 50% to reduce debt while we get through the transition period to stronger future income..

[tommygriff] 15/8/2024 11:14

Do Ecora still pay a dividend? Or has that been cut?