Ecora Royalties PLC (ECOR) Earnings Call Transcript & Summary

Good morning, and thank you for joining us for Ecora's First Half 2024 Results Presentation. In the H1 period, we saw strong portfolio contribution of $52 million and that was driven primarily by high volume production within our Kestrel royalty area. During the period, we acquired a royalty over the advanced stage Phalaborwa rare earth project. It's a high-quality rare earth development project that's targeting first production in the latter half of this decade. We also saw the underground mine extension project at Voisey's Bay approach completion. A key milestone for ramp-up was achieved in the first half of the year. And the second key milestone is expected to be achieved in the second half. In light of a weak nickel pric environment, BHP has temporarily halted the construction of the West Musgrave project with a restart to be considered by February 2027. And this is, of course, disappointing. Although we do remain very confident in this asset's potential as a low-cost, long-life fully permitted nickel and copper project. Capstone Copper released a feasibility study or an updated feasibility study on Santo Domingo, which confirmed the project's robust economics as a low-cost producer of copper. We ended the period with net debt of approximately $86 million and a leverage ratio of 1.4x, which is well below our financial covenants. And with that, I'll hand it to Kevin, who will discuss financial performance in more detail.

Thanks, Marc. So turning to our KPI slide, and we'll go through these in a little more detail over the next few slides. But the key summary here is that the first half saw a very good performance from Kestrel coming in at the top end of our guidance, and this was the driver for the growth in portfolio contribution. Our revised capital allocation framework went live in the second quarter, and this resulted in a dividend of $0.17 for the half year. Under this policy, we also undertook a $10 million share buyback program, and this was financed through the disposal and recycling of our LIORC stake. The buyback is reflected in the per share metrics in this presentation. And finally, the balance sheet remains very healthy. Following the final payments to South32 in January, the group now has no further fixed commitments with leverage very low at 1.43x at the half year and a loan-to-value ratio of only 16%. Turning to our portfolio contribution. 2024 is set to be a year of 2 halves, with the first half heavily weighted to Kestrel volumes and the second half set to see a significant ramp-up in deliveries from Voisey's Bay. The core portfolio generated $10.5 million in the period, a 17% reduction on the comparative period, although H1 '23 included income from our full stake in LIORC, which we disposed of in the second quarter of this year. Although we only received 4 deliveries from Voisey's Bay, the real impact of the material handling unit and underground ramp-up should really start to come through in the second half. Our full year guidance remains at between 12% to 16%. So we expect to see at least a doubling of volume in the second half of the year with the ramp-up continuing further into 2025 and beyond. We saw lower volumes from our Mantos royalty in the second -- in the first half of the year, but we expect these volumes to accelerate in the second half as the impact of the debottlenecking project continues. And we would also be reasonably bullish on copper price environment going forward also. Maracas was down year-on-year, and this was mainly due to weaker vanadium prices in the period. The first half saw Cigar Lake returned to operating at 100% capacity, and this benefited the McClean Lake toll income in the period. And finally, at Four Mile, revenue here was buoyed by strong uranium pricing in the period compared to the comparative period last year. But Kestrel was the clear highlight in the period, generating $41 million of revenue on 2 million tonnes of sales, and this was at the top end of our guidance. We're expecting immaterial contribution in the second half from Kestrel as mining is not expected to return to our private royalty area, until the first quarter of next year. So overall then, a good performance from the portfolio. And outside of Kestrel, we should see volume growth at most of the assets in the second half of the year. Turning to the next slide, which shows our adjusted earnings. I won't dwell on this too much. It's very similar year-on-year in terms of its composition. Just to pick out one or two points. The tax charge in the period reflects the income received from Kestrel, and that's taxed at 30% in Australia. So with little income forecast from Kestrel in the second half of the year, there should be a corresponding reduction in tax to come. The increase in the finance costs reflects higher average borrowings in the period as the final payments to South32 were largely made in the second half of last year and January this year. This all results in adjusted earnings of $26.6 million. And after taking into account the share buyback program resulted in adjusted earnings per share for the first half of the year of $0.14. Turning to the balance sheet. When looking at the balance sheet, it's always important to remember that the group's $263 million of royalty intangible assets are carried at the lower of cost or realizable value. So in other words, in many instances, the fair value of these assets is higher and this value is not reflected on the balance sheet. Our net debt, which we'll come to on the next slide, increased by $11 million in the period to what should now be a peak of about $86 million. And at these levels, the balance sheet remains very healthy. The total royalty assets net of deferred tax, were $543 million. So this implies a loan to balance sheet asset ratio of only 16%. And this number would be lower still if all the assets were actually carried at fair value. Key takeaway from this slide, net assets of $468.2 million equates to approximately $1.88 per share and this is the equivalent of GBP 1.47, which is considerably higher than the current share price level. Turning to our next slide and borrowings. Net debt, as noticed on the previous slide increased modestly to $86 million in the period. Importantly, once the Phalaborwa conditions are met, the group will have no further fixed commitments or capital outlays ahead of it, which should see net debt reduced considerably over the next 12 to 18 months depending on investment activity. Even with net debt of $86 million, the business is very comfortable from a leverage perspective, with operational leverage of only 1.43x and loan to balance sheet assets of only 16%. The borrowing facility itself was refinanced in January, which provides for greater flexibility and a lower cost structure. The latter should reduce further as it's widely anticipated, the Fed will commence cutting interest rates in the second half of the year. But importantly, for us, there are no step downs or fixed amortization schedules associated with this facility, and this facility has a maturity date of January 2027. So no immediate refinancing pressure, and this date could be extended by a further 12 months anyway upon request. So overall, the group remains well capitalized with no capital commitments low levels of balance sheet and operational gearing from which to continue remaining active on the investment front. Now the final slide shows how the half year dividend is derived under the new formula from our capital allocation policy. And here, what we look to do is to average the two preceding 6-month periods. And this is really being done to attempt to reduce the significant impact of volatility from Kestrel on free cash flow. And this depends obviously as to whether or not Kestrel operates within our royalty area land or not. The effect of the averaging method should produce a smoother dividend in each half year period. For this half year, the dividend produced. The dividend was based on free cash flow of $12.7 million and at 33% payout ratio, which is towards the top of our stated policy. This produces a dividend per share of $0.017 for the half year. And with that, I'll hand back to Marc.

Okay. Great. Thank you, Kevin. On Slide 12, we can see a quick snapshot of our portfolio as of the half year. A couple of key points I'll add here. First of all, the portfolio continues to be weighted to established mining jurisdiction and leading operator partners. Base metals remain at the core of our portfolio, led by copper, and our exposure to low-cost assets, which are producing or in the future expected to produce at levels which can generate strong cash flows through commodity price cycles. The portfolio also continues to be principally weighted to producing assets. On Page 13, as Kevin just mentioned, we saw very strong performance at Kestrel in the first half. And we also know that Kestral operations are expected to be outside of our Ecora's royalty area in the second half of the year, such that based on the volumes produced to date, we've seen Kestrel produce at the upper end of our expectations and guidance for the full year 2024, which is a great result. We'll come back to Voisey's Bay on an upcoming slide. And looking now at Santo Domingo, Capstone released an updated feasibility study on the project, which confirmed two things that we were confident of seeing. First is robust project economics. And second is the potential for this project to be a very low-cost producer of copper. Capstone has estimated average copper production over a 17-year mine life at only $0.33 per pound, confirmed Santo Domingo amongst the lowest-cost copper projects globally. We'll come back to the Phalaborwa rare earth projects in a moment. And just the final point on this slide is in relation to LIORC. As Kevin mentioned, we monetized the majority of our holding. We realized an attractive total return on that investment, with the proceeds now being recycled to fund the share buyback program we completed earlier this year. In terms of a Kestrel update, the real key takeaway on this slide relates to the visibility that we have in relation to the Kestrel volumes over the next few years. And more specifically, the confidence the volumes, despite being out of our royalty area in the second half of this year, we'll return next year. And you can see this in the mine plan on the left-hand side of the slide, where we superimposed our royalty area with the longwall panels and also included a rough estimate of timing in terms of when the panels will be mined, and thus, when production will be in our royalty area. So turning now to Voisey's. There are three key points we'd like to highlight on this slide. The first relates to the underground ramp-up of ore production. And as you can see on the left-hand side of the page, we do feel as though we finally have a very good line of sight on that volume growth. [ Vale ] is forecasting a -- again, very steep production growth starting in '24, all the way through to '26 when full production levels are expected to be achieved. So the second point is, well, what does that mean in terms of volumes delivered to Ecora. Well, in the second half of this year, we expect a big step-up versus the first half. In the first half, we had 4 deliveries. In the second half, we expect 8 to 12, and actually, so far, so as of the end roughly of August, we've had one lot delivered. One is important, 2 are expected to ship imminently. And then for next year, we anticipate 20 to 28 deliveries before achieving steady-state delivery levels of around 40 per annum for the remainder of the mine plan and by the end of '26. And then the last point is on pricing. As some of you may recall, Voisey's Bay primarily produces a premium product. Around 80% of our deliveries to date have been Alloy grade. And in the market today, alloy grade is realizing a substantial price benefit relative to standard grade product currently around $4 per pound differential. We recently announced the acquisition of a royalty over the Phalaborwa project. And we have delighted to get this one across the line after having reviewed their aerospace now for at least 4 to 5 years and consistently seen this project screen at the top of the list on a number of metrics. First production is targeted for 2027. And we structured this transaction such that there are step-ups in the royalty rate should things slip into the future. The royalty closing is subject to an execution of certain security documents and such that we expect the deal to the CPs to closing to be met fairly soon. In our full year 2023 results, we touched on a new discovery that we made in a royalty area we have in a property owned by NextGen. And since then, we've been really encouraged by some of the progress that's been made, specifically some of the drill results that have come up. On a like-for-like basis, the resource footprint that's been discovered is actually larger than the nearby feasibility stage, Arrow deposit. And so this is one that we'll continue to watch very carefully and await further updates from NextGen. In our 4-year results, we also announced an updated capital allocation framework with four key priorities: the force being growth and during that period, as we mentioned already, we acquired Phalaborwa royalty. Second, deleveraging and maintaining generally balance sheet strength. As Kevin already mentioned, we have no further fixed commitments, and any growth that we'll pursue will be very much in the context of maintaining a strong balance sheet. We mentioned the cap dividend. Kevin talked about the H1 dividend at $0.17 per share. And one of the benefits of our updated capital allocation framework is that with the change in dividend policy, all else being equal, we've been able to deploy the differential in cash dividends to growth. And in this year, we saw that differential funding the $8.5 million Phalaborwa Royalty acquisition. And then last, buybacks. As we mentioned, the Board would opportunistically consider a buyback program in the event the Ecora's share price materially traded below estimates of net asset value. And in the period, we completed a $10 million buyback. Now on to our growth strategy. This year has been a great year for reviewing opportunities. We've actually seen a big pickup in the number of files across our desks, and we're reviewing them with a couple of key priorities in mind. So the first is, to infill and diversify the portfolio around some of the larger cornerstone royalties we've acquired in the past couple of years. Number two, our primary focus continues to be to identify royalties that are in production or that are close to production that meet our investment criteria. We'll also consider opportunistically smaller royalties over really world-class projects. But ideally, we'll have completed a larger producing royalty acquisition before we do another longer-dated development stage royalty. And all of these and again, I can't stress enough all of our opportunities are considered in the context of a strategic priority to maintain a strong balance sheet. No change in our commodity focus. And encouragingly, we've seen a relatively good level of copper opportunities actually this year, which we're very keen to maintain at the core of our portfolio. So looking ahead at the next couple of years, we've already spoken about Voisey's. We've spoken about Santo Domingo. We've spoken about West Musgrave and we've spoken about Mantos Blancos as well as Phalaborwa. So I'll just focus here on Piauí and Nifacility. At Piauí, the company continues to progress financing discussions with a number of very high-quality interested parties. But unfortunately, the backdrop and the current -- the backdrop of the current nickel price environment is challenging and it appears as though the conclusion of that financing process will be delayed. That's no longer expected for 2024, expected 2025 or later. Cyprium recently completed an Aussie dollar AUD 40 million financing with Glencore. Those proceeds in addition to a targeted further raise of AUD 20 million or should be sufficient to fund the restart of cathode production and in parallel, and this is really more interesting to recore in the longer term, the company is continuing to progress a study on the restart of copper concentrate production, which has historically been targeting annual production of around 36,000 tonnes of contained copper in concentrate per annum. Looking at the core share price versus what's priced in. We've refreshed this slide. This is 1 that we show regularly in terms of where we're trading versus the net asset value of the business and the shares continue to appear to offer substantial value. The share price is actually today less than the value of the producing portfolio, and actually, the high-quality development portfolio is priced in today is pure upside. So to conclude, in summary, the key points we've mentioned today, we had a very strong H1. We anticipate that to be followed by volume growth in calendar year '24 and '25. We currently are in a good position with respect to our balance sheet. Our leverage ratio of 1.4x is well below financial covenants. Our copper growth portfolio -- it's continued -- expected to continue to see further derisking events over the course of this year and next. It's a very attractive entry point for Ecora shares, currently trading around 0.4x of NAV. Strong counterparty list developing a pipeline of near-term revenue growth, as well as the producing portfolio. And last, we're seeing good level of opportunities, which we'll always evaluate in the context of ultimately maintaining a strong balance sheet. So with that, thanks for joining us today, and we're happy to take any questions you may have.

[Operator Instructions] First up, we have Marina Calero from RBC Capital Markets.

I just have a quick question on your growth projects. You mentioned the importance of the balance sheet and the challenging conditions for nickel. If you decide not to exercise the option for Piauí, is there a way you could monetize that option? And the second question, if you could give us an update on Ecora and the expected continuing contribution there.

Marina. On your question with Piauí look at this stage, we haven't made any actual decision as to what we may or may not look to do given the investment decision is not expected to come for some time. I think what we can say in terms of capital allocation principles, is that while we are looking to grow the company, that certainly would not be at the expense of balance sheet strength. And so any decision will be made in that context. In terms of the ability to monetize a portion of Piauí, invest portion of the royalty, all these types of things would have to be explored and considered at the time. Currently, we're not advancing any discussions in that area. With relation to your question on Ecora, the long stop date for that asset is in early 2025. At this stage, the company is not tracking towards achieving the CPs for funding, thus that there is currently not an expectation that they would be met -- of course, we could agree to extend the long soft deal in the future, and that hasn't been done as of today.

Yes, just to add to that, Marina, those two projects, in particular, Piauí and [indiscernible], they are just two great options that we have in our portfolio, and that we can consider at the time.

Now moving on to our next question from Richard Hatch from Berenberg.

Just a few questions. Just the first one is, I mean, we're seeing one of your peers that get taken out at a fairly deep discount to NAV, but still at a premium to where they were previously trading, if I look at the business and look at the medium-term cash flows, it looks like a pretty attractive sort of dividend stream. So do you sit there in the acquire do you sit there and worry that at this current valuation, there's some potential risk of an opportunistic bid for the company?

Well, I think as we highlighted in the presentation, the shares appear to be trading at a deep, deep, deep value, differential to the intrinsic value of the shares, market conditions, and there's always an element of cyclicality in the resource sector. So that presumably, partially explains these levels. We feel as though we've assembled a world-class royalty portfolio in two jurisdictions, very low cost and cost curve either in production or expected to be in production with great counterparties. So I can't really comment on what another group may or may not wish to do. But what we can say is we continue to believe that this business is -- this business has a great future, a lot of growth and a balance and exposure to the right commodities in particular copper.

Okay. That's helpful. And then Kevin, can I just ask on the balance sheet? I mean that seems to be one that investors continue to focus on worry around the medium-term kind of revenue profile as Kestral sort of drops away. And I completely understand you've got growth coming in from Voisey's and some of the other sort of royalties and the strategy you have. But say, for example, we take a 10% or a bit a 20% reduction in commodity prices. How sensitive or strong is the balance sheet versus weakness in commodity prices from today? Just wonder if you might be able to just give a bit of color on that because I think that's quite an important point that people are focusing on.

Yes, sure. Thanks for the question. I think you'll have seen in our note today, we run those scenarios, Richard, in our going concern analysis and clearly, at the half year, in our long-form announcements, we've published a clear report on that basis in terms of covenant, stress, et cetera. So yes, the balance sheet can certainly weather a downturn in terms of commodity prices. I think when you look for the next 6 months, our sensitivity to coking coal has gone away as we're not expecting volumes to come through. So we're not sensitive to very short-term coking coal price movements. And we'd like to think that we're cyclically at the bottom of the cobalt pricing curve. So it would seem quite penal to put 20% discount to cobalt prices as the ramp-up from Voisey's Bay coming through. So I think as Marc mentioned to Marina, we are -- we are here focusing on the balance sheet. The investment decisions that come across our desk will bear in mind what our leverage numbers and projections are going to be. And Yes. And we run the downside case in conjunction with our covenant compliance requirements. The other thing is we've now step downs or amortization schedules under the facility. So the earliest refi pressure is not until January 2027. So yes, net debt peaked. It's on a path to coming down depending on investment decisions, and we're quite comfortable with the level of gearing in the business and we see a meaningful pathway in the next 12 to 18 months to bring those numbers even there.

Okay. So comfortable with the balance sheet and strength at this point in time? Is that a fair point to say?

Yes.

Yes. Okay. Cool. And then just -- I don't know if you'd be able to give us a bit more of a steer of where you expect that net debt to go to just on consensus pricing or whatever it may be, just assuming you do not do any more sort of investment decisions, have you got a rough kind of handle on what you think is fair? Or do you think sort of market can kind of move there?

Yes. I mean, dependent on broker consensus numbers, et cetera, volumes, Richard. I mean that net debt number of 86 now could well be around the 50, 55 level by the end of next year. So as the ramp-up from voices comes through, and that's a number that's likely to decrease further into 2026. Leverage numbers would be very managing.

Okay. Helpful. And then the last one is just on the cobalt market. I mean it's a more opaque market than some of the other commodities. I just wonder you sort of mentioned that you sort of think that we're at the bottom. I just wonder whether you might just be able to sort of flesh out a couple of comments on your view on the cobalt market here, where we are over the next couple of years? Is it stabilization? And then and then increase? Or what's the sort of thought process around it, please?

Yes. I think the two dimensions to that question. On the demand side, you've seen continued strong demand growth. I mean cobalt is a small market and demand has been absolutely healthy. Part of the challenge and part of the pressure on the cobalt price has come from supply additions, which in any small market, not too dissimilar to what we see in the lithium space. Supply responses can be chunky and the aligning demand growth and the supply with supply additions is maybe not as so as one might like. We've seen some big capacity additions, in particular from [indiscernible] in the past 6 to 12 months [indiscernible] in the DRC, and based on some of the commentary from [indiscernible] in the past weeks, they've suggested that the step up in supplies sort of at its peak now from the. So that suggests, looking elsewhere in the market that the supply additions have run their course and from here, you feel like we have at least a line side as to the beginning of the next cobalt cycle. I suppose the question is, how could [indiscernible] cobalt demand grow to clear out existing inventories out of thought. We maybe not even the course of this year, over '25, '26. We certainly see that market move back based on forecast anyways, back at just it.

And with that, I'd like to hand over for questions via the webcast.

Thank you. We've had a number of questions from the webcast. Our first question is portfolio contribution from core assets fell by 70% year-on-year. Should investors be concerned by this? How do you see this number moving in the next few years?

As Kevin touched on this, when he spoke and he referred to this year being a tale of two halves. I think should deliver a lot more confidence in the growth from the core asset portfolio. In particular, we also touched on Voisey's Bay stuff up in H2, but in the next couple of years. So within the core portfolio, between starting immediately in H2, but of course, in the medium term and beyond, there's a lot of growth to come, eventually putting the portfolio on the path in the medium term to headline revenue in excess of $100 million. The headline figure, of course, is subject to one of our near-term development assets come on date. That being said, there's a very good level of core portfolio contribution expected from those assets that are already in production next custom.

Good net asset per share valuation be explained in some detail. How much relates to discounted cash flow from expected full value?

Yes. So thank you for that question. If I could refer you to two data points in the presentation. The first is on Page 21 of the deck, this is entirely based on discounted cash flow analysis, and it reflects a consensus of research analysts. The second data point would be the implied balance sheet net asset value, and that is really as mix, as Kevin mentioned, when he spoke to us now, it's a mix of some of our assets being held at historical purchase cost and then advertise over to reserve life once in production and some of our assets being revalued as of the balance sheet date. Kestrel is the biggest in terms of the revaluation, and that's carried based on a 6-month revaluations. In other words, at year-end and a half year.

It seems the route of BHP's problem is with the nickel West asset, not West Musgrave. So you can see the asset being sold and completed by another party before 2027.

One of the things we always look for when we buy royalties are royalties of our mines at a really low cost. And the reason we do that is, because those assets can generate strong cash flows through the commodity price cycle. And that's one of the reasons that we remain confident to West Musgrave's potential. This asset is located in the lower half of the production cost curve globally. And even at today's very depressed nickel prices, would be cash flow or expected to be cash flow positive. It also helps that, that asset is heavily weighed towards copper. And obviously, the copper market today is just relative to -- has traded back this week in the past week, but still remains very strong on a historical basis. As to whether or not BHP would look to sell an asset, it's hard for us to comment as BHP has not made any specific disclosure in relation to that.

It feels like you've been saying that you continue to see good opportunities for growth, but never actually pull the trigger by the small investment in Phalaborwa, the dividend cut was to fund these opportunities. But what is the point if you never take them?

Well, the part of the answer to that question is within the question itself, we updated our capital allocation framework with our full year results in March. And I would say Phalaborwa is actually the first example of allocating capital towards some of these small investments that historically would have been allocated to dividends. In the future, we'll continue to look to make opportunistic smaller investments over really high-quality assets. Although as we mentioned in our call, ideally, the next transactions would be in relation to something that has a clear line of sight to income or in production.

Our next question is, are there actionable and attractive opportunities for royalties or streams on cash flowing assets in the short term?

We've seen a big uptake in opportunities in the last 6 to 12 months. In terms of the timing, that's always a difficult question to answer. Because some of the opportunities that we're involved with low within malts, others potentially take years. And that's often because as a royalty investor, we may not be the only piece of financing within the capital structure of a mine's wider finance say. So we can be constrained at times by how quickly other financing initiatives move -- in other instances, our financing is a function of the state of equity or debt capital markets as well. So while we are absolutely encouraged by the opportunities that we see today, relative to what we've seen actually in 2023, commenting on timing is unfortunately challenging and not always within our control.

There are multiple parts to the next question, so I'll just split them up. Will you consider to buy small royalty companies or prospect generators?

I mean I think when we look at our growth strategy, ultimately, it's a question of buying high-quality royalties. Historically, we found that buying royalties directly from creating new royalties or buying existing royalties has been more about accretive way to grow. It's not to say we wouldn't consider M&A. But to date, that hasn't been the -- what we -- the best way we seek to grow the business. In terms of the second question, Rosie, will you go on to that now?

Absolutely. The debt level seems to be low due to Kestrel coal royalty However, the royalty will come off our private land in 2026. In other words, if we don't deleverage or we don't have more cash flow, the debt-to-earnings ratio will go up significantly up to 2026. How do we address this issue?

Yes. Marc, maybe I'll take that one. Yes, we've got 2 years of reasonably good income left from Kestrel. As I touched on earlier, that should now see meaningful deleveraging pathway come through. And obviously, we will assess the level of gearing in the context of our investment opportunities. But absent that, there's by the end of 2026. On the business as a normal case, the debt levels will be much, much lower, and therefore, the leverage ratios would also be.

Yes. Another question maybe on from that. The diagram on your deck, Page 14 shows the Kestrel royalty area, which is interesting. Do you know and can you share the approximate royalty area in square meters for the portions mined in full year '24 and those planned for full year '25 and '26.

It's challenging to comment on the specific areas, given we don't have access to the underlying mine plan. We can certainly, however, estimate the material within our royalty area and that really forms the basis of our guidance to the market. And based on that map and based on the current advance rates, we have derived a good -- strong level of confidence in terms of the mining area, the mining returning to our area next year. And also more generally, subject to making historical levels of yield in the material, higher volumes next year.

The next question on Piauí, appears to be a 99 million tonne resource at 0.84% nickel. Based on the current $8 per barrel and a 2.65% differential in royalty. I calculate that 2.65% to be worth $48.6 million at current prices for life of mine, so materially below the $62.5 million investment. So at today's nickel price is probably not uninvestable.

I think there's two parts to this question. The first is in terms of determining the value of that investment, it's really a function of what the production profile is. And assuming the stated production profile -- and again, discount rate, 1 would expect, at least on our numbers that figure to be higher. So if you'd like to circle back to our IR team on that calculation, and we're happy to talk you through the specifics. The project itself is very low cost. In terms of whether or not it's uninvestable, I mean I think on our maths and on the latest buying plan, that an asset would deliver a really attractive return. But frankly, as we mentioned many times in this call, the decision to invest is by no means one that we've taken. That's a decision that the Piauí is a right. It's not an obligation. And that decision will be very much considered as we've mentioned a couple of times on this call, within the context of maintaining a very strong balance sheet. And if we -- when you look at the transactions we've done in the past, and we've taken on leverage, it's always been in the context of having a very clear line of sight on fairly rapid subsequent deleveraging. That, that's not something that far beyond Piauí, it's a philosophy that we would apply in the context of ink dry down and RCF to fund any form of growth.

And I think, Marc, if I could just add to that. It's worth remembering that often it's lost in translation. We already have a royalty on this project. So that royalty stays.

Fantastic. There are no further questions via the webcast. So I'll just hand back to you, Marc, for any additional or closing remarks.

It was a strong set of H1, and thank you very much for joining us today.