Ecora Royalties (ECOR) H1 2024 earnings summary

Executive summary

• Portfolio contribution rose 15% year-over-year to $52 million in H1 2024, driven by strong Kestrel royalty performance; no material Kestrel volumes expected in H2 2024.

• Adjusted EPS increased to 10.38c (H1 2023: 9.06c); adjusted earnings for H1 were $26.6 million.

• Net debt increased to $86 million, with leverage at 1.4x; $10 million share buyback completed in Q2 2024.

• Dividend for H1 set at 1.70c per share, reflecting a 33% payout ratio, at the upper end of the 25-35% range.

• Portfolio expanded with acquisition of a 0.85% GRR over the Phalaborwa Rare Earths Project, targeting first production in 2027.

Financial highlights

• Portfolio contribution: $51.3m (H1 2023: $44.5m), up 15% year-over-year, with Kestrel contributing $40.8m.

• Adjusted earnings were $26.6m; adjusted EPS was 10.38c; free cash flow was $12.6m.

• Net debt: $86m at 30 June 2024, leverage ratio at 1.4x.

• Dividend payout at 33% of free cash flow; $10m share buyback funded by LIORC stake disposal.

• Net assets at 30 June 2024 were $468.2m, or $1.88 per share.

Outlook and guidance

• H2 2024 expected to see significant volume growth from Voisey's Bay and Mantos, with Kestrel contribution minimal until Q1 2025.

• Voisey's Bay underground expansion 96% complete; 8-12 cobalt deliveries expected in H2 2024, ramping to 20-28 in 2025.

• Net debt projected to fall to $50-55 million by end of 2025, assuming no major investments.

• Capstone's Santo Domingo project could contribute ~$30m per annum once in production; West Musgrave construction suspended until at least Feb 2027.

• Focus remains on high-quality, near-production acquisitions and maintaining a strong balance sheet.