Ecora Royalties PLC (ECOR) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Ecora Resources investor presentation. I'm joined today by Chief Executive Officer, Marc Bishop Lafleche; and Chief Financial Officer, Kevin Flynn. [Operator Instructions] I'd now like to hand over to you, Marc, to begin the presentation.

Well, thank you, and good afternoon to all of those joining us from the U.K. So there are a few themes that will be recurring throughout the presentation, and as an introduction, we thought to highlight a few of them. The first really relates to the portfolio's potential in the course of this year and next year, to demonstrate substantial free cash flow generation from our critical minerals asset base. And you'll also hear us refer quite a lot to the general demand thematic for the commodity base of critical minerals. I think you'll see, over the course of the presentation, a reference to some really high-quality operators and some very low-cost mines, either that are already in production and generating strong free cash flow or at the development stage, and of course, our capital allocation framework and update on what we've accomplished in the past year. For those less familiar with the royalty model, Ecora is London-listed, and our business model is to acquire royalties or streams over high-quality minerals projects or operations. The royalty model is somewhat different to investing directly into a -- for an investor is somewhat different to investing directly into a mining company or a company that's developing a mineral property, given our business model is to take exposure at the top line. So in other words, we take exposure at the production level and at the commodity price level without direct exposure to the cost of extracting the commodities, the capital costs associated with ongoing capital expenditure as well as development capital to build new operations. Our business model is very scalable. And as a consequence, with a very constant fixed cost base, the royalty model also provides exposure to inflationary trends in a positive way, given our revenues grow along with inflation, and we generally see minimal cost inflation at our asset base -- at our central cost as I've said a portion of our central cost base. The royalty model also provides substantial exposure to life of mine extension potential beyond reserve-based mine lives as well as production increases and of course, commodity price outperformance over time. Today's portfolio consists of approximately 80% base metals, of which copper is at the core, representing approximately 50% of the research analysts' net asset estimates or net value -- net asset value estimates. The portfolio has been structured intentionally in a very defensive way with exposure to assets that are either producing at the low end of industry cost curves, so in other words, producing at relatively low cost compared to other mines producing the same commodity. And that permits the generation of strong free cash flow throughout the commodity price cycle as well as projects that are expected to be low-cost producers wants to come into operation. The impact, of course, is that operations or projects that have low costs generally are those that have the best expected economics and thus are most likely to be developed in time. The portfolio footprint today is to well-established mining jurisdictions, 85% OECD in Brazil, as well as other jurisdictions where there's a long track record of mining. And the portfolio today is quite heavily weighted towards assets that are generating cash flows and thus provides exposure to a relatively derisked -- relative to mining operations that are relatively derisked and don't necessarily entail development time lines. 2025 is a year that we're, quite frankly, very excited about because it's a year where we're really beginning to see the free cash flow growth from the critical minerals portfolio that we've assembled. Year-on-year, we're expecting to see sizable growth from our base metals assets, and that includes Voisey's Bay, Mantos Blancos, as well as our recent acquisition, Mimbula, and that's expected to drive free cash flow growth over the next few years. In the medium term, Ecora offers substantial revenue growth potential from a number of high-quality development stage royalties, many of these already fully permitted and approaching a final investment decision point. Within the longer term, zooming in on our copper exposure, Ecora has assembled a portfolio to deliver investors one of the leading copper growth pipelines within the wider royalty sector from historically 2 million pounds with the potential over the next decade to almost -- to increase almost tenfold. This slide shows you the attributable copper production to Ecora. So in other words, it's not the total production of each underlying mine, but it's a calculation adjusting for our royalty interest. And it's -- if you were to try to estimate Ecora's copper-related revenue, it will be a matter of taking the attributable production and multiplying it by the -- your assumed copper price. Where we sit today, the Ecora shares offer significant value. At today's level, that growth profile doesn't appear to be priced into the Ecora shares. And as you can see on this slide, there is a sizable upside value just from the producing asset base, which represents what we believe to be a really attractive entry point and has been further exemplified by recent director share purchases. So with that, I'll hand it over to Kevin, who will provide an update on our full year 2024 results.

Excellent. Thanks, Marc, and hello, everyone. Looking at our financial highlights briefly. 2024, I could summarize as a very solid year for Ecora. Adjusting for the impact of a one-off receipt from Four Mile in 2023, we're really pleased to report an increase in portfolio contribution by about 9% to $63.2 million. Adjusted earnings of $0.1143, again, we'll come on to these in a minute. And then Marc touched on, we updated our capital allocation framework at the beginning of last year, and we really started to see the benefit of this coming through into the portfolio in 2024. Our net debt at the end of the year was $82 million. That's a little out of date, given the Mimbula acquisition that we acquired post results. Again, I'll touch on that in another slide. And looking at Voisey's Bay, we did impair the asset at the end of the year. This was purely price-driven impairment, reflecting the downward revisions to the long-term cobalt price. And ironically, since February of this year, with the DRC imposing export bans on cobalt, the price has really rallied. It's up about 60-or-so percent. So price-driven impairment charge not reflective at all of underlying operational performance or where we expect the volume ramp-up to come this year and beyond. We've deployed close to $20 million during the year on acquisitions and our dividend at the end of the year, based on the revised capital allocation framework when combined with the interim dividend was about $0.0281 per share, approximating to about 32% of our free cash flow. Plenty of portfolio highlights in the period. I'll touch on these as we get into the portfolio contribution slide shortly. Looking towards our KPIs. As I mentioned, very pleased with our portfolio contribution up 9% year-on-year. A lot of this increase was primarily driven to volume outperformance at Kestrel, Mantos, and Voisey's Bay in the period. A lot of this volume ramp-up was well-telegraphed and flagged in advance, but it was very pleasing to see it come through nonetheless. One of the benefits of the royalty model is a relatively flat cost base and structure. So portfolio contribution really does drop through to adjusted earnings, and we are pleased to see adjusted earnings remaining in line with the previous year in the period. Our free cash flow conversion for the year remained reasonably in line with the previous year as well. And one of the benefits we anticipate seeing over the coming years is that as our critical minerals portfolio begins to increase in terms of its composition of our contribution, our effective tax rate is expected to decline as Kestrel attracts a reasonably high effective tax rate. So the quality of earnings going forward and our free cash flow conversion on those earnings is expected to increase significantly. Just to look at our portfolio contribution in a little more detail. We've split out the portfolio in 3 segments, the first of which is base metals. And as Marc said, that's very heavily weighted towards copper. But in the short term, the real catalyst to come here is volume increase from Mantos and Voisey's Bay. And it's very pleasing to see a lot of that coming through at the latter half of 2024. Mantos reporting record monthly production volumes. Voisey's Bay, the successful completion of the infrastructure being put in place in the underground transition being completed. And that really started to drive volumes towards the end of the year. And this momentum has certainly continued into 2025. For Voisey's, we expect to see a minimum of 60% increase on volumes in 2025 compared to what was already a noticeable increase in 2024. Looking at our specialty metals and uranium. McClean Lake very much in line as usual. Maracás did suffer from a weaker vanadium price environment but operations there remains profitable. And looking at Four Mile, which is our uranium exposure, this really is not apples and apples. As I mentioned, we had a payments received in the second half of 2023 of $5.4 million relating to backdated royalties. And in fact, we received no royalties in the second half of 2024, as the operation didn't sell what it was producing. So from this year or from the first of January onwards, we understand that sales levels have returned to normal, and we expect that to come through in 2025. Our bulks and other is largely dominated by Kestrel. Again, we were pleased to see volume growth at Kestrel, albeit coming through at slightly lower coking coal prices in the period. But the good news here, whilst Kestrel is reasonably short life for us now, we expect to see 5% to 10% volume growth in 2025. And whilst the coking coal price is a little bit soft at the moment, most of our volumes are expected in Q2 and Q3 of this year, which should allow some time for restocking levels to hopefully impact positive pricing for the coking coal market. So as I said, overall, 9% increase on a like-for-like basis, which we are very pleased with. Looking at our net debt, I'll touch on the Mimbula financing in a moment. But as I said earlier, the 2024 is very much the start period of the implementation of a new capital allocation framework, whereby our dividend payments reduced in the period, and this facilitated the financing of our Phalaborwa Rare Earths acquisition that we announced midyear. Total acquisitions were $19 million in the period, so we remain quite active as we went through the year. And the share buyback that we initiated in the period was financed based on the part monetization of our residual LIORC stake. We continue to see deferred consideration come through from our Narrabri disposal that we entered into a number of years ago. And as part of our Mimbula financing, we agreed with the operator to accelerate the remainder of those payments, which we received in February of this year. The closing net debt of $82 million, as I said, is a little out of date. We acquired the Mimbula copper stream in February this year for $50 million, and that left us with pro forma net debt of around about $126 million at the time. As part of that acquisition, we were very pleased to once again work with our existing lenders who happen to be a trio of some of the sector-leading lenders to the royalty and streaming universe. Each of them increased their commitments by $10 million. So we increased our revolving facility by $30 million to $180 million in the period. Approximately $50 million of this remains undrawn. And if we look to the bottom right of this table, this is based on analyst consensus numbers for our free cash flow generation in the period. But this could see us being down to between $95 million to $110 million by the end of this year, with that same level of free cash flow being generated available for deleveraging in 2026 as well. So overall, we're very comfortable to have stepped into the Mimbula financing in this way, very similar to what we actually did with the Voisey's Bay financing in 2021, which allowed for a reasonably quick level of deleveraging as well. As part of the facility, we were very pleased to extend the term of the facility by 12 months. So there's no refinancing or amortization pressures until January 2028, when we expect to see our net debt levels considerably lower. And we were pleased as well just to make some tweaks to the facility in terms of how we look at our covenant calculations with interest cover being reduced to 3x, and the lenders agreed as well to a smoothening profile of Kestrel to take into account the seasonality depending on whether Kestrel operates within or outside our private royalty area. So very pleased to continue to have the full support of our lending syndicate. We feel that, that's a real validation of our strategy but also the quality of the assets that we're acquiring. And Marc, maybe a portfolio review.

Thanks, Kevin. So this is quite a busy slide and we won't go through all the nitty-gritty detail. But effectively, if one is so inclined on this slide, what you can see is a summary of what's been accomplished in our portfolio, what's expected to occur within the next 2 years, and what's expected to derisk our first production within the medium term. I think as we mentioned a few times in this presentation, some of the key points to touch on this slide relate to the volume growth that's expected from our base metals royalty portfolio. That includes the ramp-up of the underground expansion at Voisey's Bay. That also includes producing at nameplate production levels has been achieved at Mantos Blancos. But just focusing on 2 points while we're here. There are 2 relatively low CapEx intensity initiatives to potentially substantially increase production at Mantos Blancos, so we thought we'd take the opportunity just to run through those today. The first relates to a Phase 2 expansion and that would entail the utilization of quite a lot of existing infrastructure and processing capacity on site. That could potentially result for relatively modest CapEx as estimated and stated by Capstone Copper. That could result in increased production capacity of approximately 10,000 tonnes, and a feasibility study on that is expected in the second half of this year. And another initiative certainly worth tracking relates to the possibility to retreat historic of mined material at the Mantos Blancos mine that could be done with existing SX/EW capacity, so again, expected by Capstone to be relatively low capital intensity and that could result in a production of 25,000 tonnes of copper. Putting those 2 together is quite significant in the context of this operation last year, producing just under 50,000 tonnes per year. So that's something that we, and along with the market, likely to be watching very closely. We have a detailed slide following up here on Voisey's. So on the left, a summary of the ramp-up profile and there are 2 things happening at Voisey's Bay at the moment. First, there's just more material coming out of the ground and being treated. But number two, we have a cobalt stream at this mine. And the percentage grades of cobalt in the material being treated are increasing as a result of the underground material having a higher average grade than the above-ground material. So that's really expected to drive substantial volume growth in this year and next year. As Kevin mentioned, the guidance at Voisey's Bay for this year is 60% to 90% growth year-on-year, with approximately 35% to 45% of this year's volumes expected in H1 and the balance in the second half of the year. One thing that we've seen that's been quite a big change is the cobalt market, that relates to some of the action that the DRC has taken. As Kevin mentioned, towards the end of last year, cobalt prices were really approaching 50-year lows. And the DRC, which is where operations produced approximately 75% to 85% of total world's supply, decided to implement a cobalt ban or an export ban and that was announced in February. You can see on the bottom right half of the page, fairly substantial price impact as a result. And the DRC is currently considering or have stated that they're considering the implementation of some form of export quota system, which based on public disclosure would be designed to achieve a more balanced supply-demand picture. We saw a fairly substantial volume ramp-ups from 1 producer in the DRC. And on a cyclical level, being at sort of the lows of last year, it's worth noting that Ecora receives, on average, 75% to 85% of the product as alloy-grade cobalts, which historically has priced at a premium to the standard grade product. And you can see in the chart, the spread between the 2 and the last, I guess, roughly last 12 months. And the levels that we're at today of just under $20 per pound in the wider context of cobalt are still relatively low. Historically, you can see the low for alloy-grade being around $14. Historically, the high has been around just over $40. And since we bought the cobalt stream to date, we've realized an average cobalt price of approximately $23 per pound. So I guess the point I'm trying to make here is that even at $20 per pound, that's still a relatively low level on a cyclical basis. One of the things that we're really announced -- excited to announce this year is the Mimbula copper stream acquisition. One year ago, we announced an updated capital allocation framework. And the idea and the thinking behind the decision was very much influenced by a need to further diversify Ecora's sources of income but also medium-term growth. And the last 12 months roughly since then, we're really pleased with the tangible delivery of first, the Phalaborwa Rare Earths royalty and then more recently, the $50 million producing copper stream at Mimbula. There's a lot to like at the Mimbula mine. It's already in production. It's expected to achieve full capacity sometime in 2026. There's a brownfield expansion to grow production from 14,000 tonnes per annum to approximately 56,000 tonnes per annum. And the deal was structured in such a way that it accelerated cash flow, and as producing royalty would contribute meaningfully to our free cash flow and our ability to delever, having drawn, as Kevin mentioned, $50 million to fund the acquisition. The Mimbula is owned by Moxico Resources, which is a private company and it is led by a fantastic management team. Alan Davies as the CEO, and everyone -- the others and the team have a lot of experience. And blue-chip miners have taken this project from what was concept into production and are one of the fastest-growing mining companies in the world today. So all in all, a great acquisition, we think, the perfect next deal to Ecora to really drive earnings growth in the here and the now and also contribute to the front end of our growth profile. So in short, I think we sit here today with a lot of confidence for the outlook for Ecora. As I mentioned, what we're seeing is we're at the beginning in 2025 of what should be our critical minerals royalty portfolio beginning to drive substantial free cash flow. And that really starts, as I mentioned, with the Mimbula, Voisey's, and Mantos Blancos over the course of this year. But that growth is expected to continue for the next 5 years, where growth at its core is base metals-focused with copper really at the center. And thus far in the year anyways, we really appear to be seeing some pretty strong copper as well as cobalt price tailwinds. We're expecting to see that volume growth first for those [ EV ] assets but also at Kestrel, which is indeed approaching the end of its life but still has a few more years of good cash flows left in it. We continue to have balance sheet flexibility with immediately a focus on deleveraging but with capacity to pursue further growth. And it's an attractive entry point for investors, with the assets trading today -- with the price trading today at a level, which appears to be less than the value of the producing asset base. So with that, we'll turn it over to any questions that you may have.

Thank you very much for the presentation, Marc and Kevin. [Operator Instructions] So first question. You've been vocal about diversification. Can you give us some insight into how the company is exploring opportunities in other critical minerals? Do you have any specific regions in mind? And how soon could we see potential deals in these areas?

So there are probably 3 dimensions of diversification. The first is commodity. And from a commodity perspective, we've really sought to tap into a group of commodities that are driven ultimately by some very substantial trade trends with really strong and long-term fundamental outlooks. That includes just general urbanization, things like copper and other commodities that are driven as folks live in a more modern world, investment in power grids. We've also tapped into, through our portfolio of trends, like the energy transition, which are very metals intensive. This includes other trends like digital infrastructure. These critical minerals are, in the modern world, is almost inconceivable without this basket. And the list of potential commodities that fit into the critical minerals theme is very broad. It's almost easier to focus on the ones we don't look at. And really, those are precious metals as well as other commodities that are potentially such hydrocarbons that tend to have, on a relative basis in the horizon of a royalty investment, relatively declining long-term demand outlooks. From a counterparty perspective, really what we're looking for are experience in high-quality operators because at the end, Ecora itself is a small-cap company, but the folks operating the mines and the projects to which Ecora has exposure in aggregate have a total market caps in excess of $200 billion. So some great names in the mining sector and that's something we'll continue to target. And from a jurisdiction focus, we're always looking and really maintaining exposure to really well-established mining jurisdictions, which is crucial to operating a project successfully in the short, medium, and long term. In terms of the next deals, we've been very busy. Our focus at the moment continues to be acquiring royalties that will contribute towards growing income in the short term. And we think that, that's certainly something that, as we demonstrate that free cash flow growth, will be rewarded by the market. In particular, we take that because historically, our Kestrel royalty is one which has had a fairly short mine life. And therefore, it appears that the market is applying a relatively low cash flow multiple to the Kestrel royalty, which potentially is a function of it being short-dated. So as we see cash flow ramping up from our critical minerals portfolio, which have mine lives -- reserve-based mine lives for decades would be in addition to that potential for mine life expansion, we think that the market will reward us.

Thank you for that. Next question, has Ecora ever considered acquiring royalties over a platinum group metal project? Or do they not fit in with the group's strategy?

We have absolutely looked at PGMs in prior years. To date, we haven't transacted. There's no sort of key reason for that. I mean, when we look at our transactions, some of the things we work on, we sort of stay in front of for years and the stars just don't align. One other reason could simply be that precious metals do sort of tend -- PGMs or platinum-grade metals could lend themselves to being viewed as precious metals and therefore, some of the precious metals royalty companies target them. But there's no PGMs in theory do sit within our target commodity mix.

For our projects focusing on uranium, why is that?

Well, when you look at sort of some of the themes I mentioned earlier, ultimately, uranium is a commodity that has direct exposure to power demand. And I think when you look at modern society of the world we live in today and you sort of fast forward even 10 years, things like digital -- continued digitalization of our society, and 1 step further, even robotics, which maybe not even as far away as many of us think, uranium certainly offers a great source of baseload power. And in that context, we've assembled a portfolio of royalties in the uranium side from the producing, near-term development stage, but also the longer dated and a bit longer-dated one. And our royalty over NexGen's Patterson Corridor East is perhaps one of the most prospective uranium deposits in the world today, which is, to be clear, at drilling stage. So it's very early stage, but I'd encourage folks to have a look at the NexGen disclosures in relation to the potential -- well, first, in relation to the drill results themselves but also some of the NexGen disclosure in relation to the potential of what this new deposit could or identify mineralogy could offer in the future.

Thank you for that, Marc. Next question, are there any potential delays or risk investors should be aware of for the Phalaborwa project?

Yes. Well, one of the things that we really like about the Phalaborwa royalty ultimately is that this isn't a mine in the conventional sense. The Phalaborwa project contemplates retreating what are called phosphogypsum stack material that's been left over from the production of phosphates. And that material is in sort of long stacks neatly organized, which don't entail mining. They don't entail moving waste material. They don't entail blasting really expensive things. And as a consequence, relatively speaking, that affords much lower capital intensity, very low operating costs. And that project really does appear to be amongst the fastest projects to market in the world today. The project -- DFS is expected later this year. That should provide more information on the exact timing, although Rainbow Rare Earths continues to target 2027 as the production date. And 1 thing to consider as well in today's modern world of the geopolitical tension and competition we see, particularly around critical minerals, is the indirect investment of the U.S. government via the DFC via TechMet as a shareholder, but also as a potential asset-level contributor of financing to build this project. So it's certainly 1 to watch and it's 1 that we're really excited about, in particular, the price outlook, given most of the world's supply today comes from China. And we've seen already some pretty elevated moves in other minerals where there's potential for supply of these minerals to be, for lack of a better word, weaponized in front of geopolitical disputes or leverage.

Thank you. Next question, the Mimbula copper stream ramp-up, could you provide more detail on the expected ramp-up trajectory at Mimbula? What specific milestones should investors monitor to track progress towards the 56 kilotonnes per annum copper production targeted by mid-2026? And how confident is the management team in the operations execution timeline?

Yes. So for 2025 guidance from Mimbula is in the order of 15,000 to 20,000 tonnes and that compares to 14,000 tonnes last year. The execution of the project and the scheme of mining projects is on the relatively simpler side. For example, this is an open-pit operation. The expansion to Phase 2 contemplates adding more heaps to heap leach to fresh ore and also contemplates adding an ETL circuit and the expansion of an existing SX/EW circuit. So that's relatively far simpler than the complexity associated with, for example, the construction of an underground mining operation. And more information on the project and its ramp-up will be provided in regular business trading updates in the future.

Wonderful. Can you tell us more about how you evaluate the projects that you get involved in? And what influence do you have when you are involved?

Yes. Well, as a royalty investor, generally speaking, what we're looking for is, first and foremost, is high-quality ore bodies. And I touched on it earlier, but high-quality ore bodies ultimately provide a defensive aspect to royalty and stream investing. The highest-quality ore bodies typically have the lowest cost. The lowest-cost ore bodies typically offer the best project economics. And the best project economics typically are those that either stay in production over their expected lives or attract capital even in through-cycle and price environments. Beyond that, of course, we target strong operating operators, well-capitalized folks, folks who have experience in the sector and proven track records. And from a commodity price perspective, generally speaking, we try to achieve entry points that may not necessarily be at the absolute low in the commodity, but achieve entry points to commodities that offer really strong longer-term price appreciation potential such that we can outperform our expected investment case at the time.

Super. And how are ESG factors being integrated into your recent acquisitions?

Yes. ESG is an interesting 1 because a lot of what the world today considers as ESG, we would argue are simply prudent areas of diligence when acquiring a royalty or stream. I'll give you an example. So let's just imagine tailings dams. A tailings dam over the life of a mining operation is absolutely fundamental to the operation being able to produce the expected volumes of metal in the future. And so we've always really diligence things like tailings and environmental aspects, labor relations, local communities because they're really core, as I mentioned, to ultimately, when you buy a royalty, seeing those royalties come out, seeing those royalties being paid in the future. There's a real blurry line between what mining and royalty companies have always done when they consider the risk of a project and what today the world considers to be ESG. In any event, I think ultimately, when we buy royalties and streams, what we're looking for are projects that are resilient and mines that are resilient. And if the project is unlikely or is potentially threatened as a result of a cost pressure or its development is potentially impeded as a result of significant community opposition, both of those are really all part and parcel of the diligence that we consider when we make an investment.

Thank you. Voisey's Bay cobalt stream and recovery potential. With cobalt prices starting to recover and the DRC introducing export quotas, how is management currently assessing the medium-term earnings potential of Voisey's Bay stream? Is there a realistic path to reversing the recent impairment in 2024, if market conditions continue to strengthen?

Yes. Well, I think we can give some context around the price assumptions. Obviously, at year-end cobalt prices were approaching 50-year lows in real terms. And the long-term price assumed at the time of the year-end was approximately $17.60 per pound in real terms. That was the price used in assessing the value of the stream on a long-term basis in real terms. This price today is around $20 per pound for alloy-grade metal according to Fastmarkets, which is what we receive with reference to our stream, which historically has tended to trend a bit of a premium to the LME price. And is there a prospect for -- over the remaining life of the stream to achieve higher than that cobalt level? Absolutely, in theory on a cyclical basis, as I mentioned earlier, we've seen cobalt through-cycle range from lows at the end of last year to highs in the $40 per pound level. And at Voisey's, the valuation, of course, contemplates only the reserve-based mine life as defined now, having sort of seen the exploration potential that really exists at Voisey's Bay. There's, on a probability basis, really strong potential for that mine life to be extended far beyond the existing base mine life. And what's even more interesting is that if you remember earlier in the presentation, I mentioned that the cobalt grades improved as operations moved from the open pit to the underground. The drilling to date appears to show higher cobalt grades as operations move downwards, which would be really the potential for that life of mine expansion in the future.

Next question is, what specific challenges are you expected -- are expected during the ramp-up phase at Voisey's Bay? And how do you mitigate the risks?

Yes. So I mean, ultimately, part of the challenge, as we understand it through the ramp-up of Voisey's Bay, it was in part of a function of supply chain issues just around COVID. So that issue in and of itself of COVID, hopefully, a global pandemic of that nature is a one-off and that circumstances is not one will factor into our future thinking. But I think if you -- the real big takeaway from that experience has been the need to further diversify Ecora. Because ultimately, having a concentration and volume growth in a single asset just leads to revenue volatility. And if we, as Ecora, as we continue to diversify our sources of earnings from commodity, jurisdiction, operator, both in terms of those in production but those in terms of greenfield projects coming into production, that should really see reduced volatility. And just to give you an example, the cobalt prices are up or down, copper which is not perfectly correlated, moving up or down amongst the other commodities we have in our portfolio. So if you think about how we can best insulate the business against volatility, we feel that it's really a function of being more diversified. And the consequence of diversification is scale. But we don't think necessarily scale is the objective in and of itself. It's really the consequence of the goal of being more diversified. And ultimately, in that logic, having a number of projects in production is great, but having 2x or twice that many is always preferable. And having a number of projects at construction stage expected to drive revenue growth is great, but having twice or 3x or 4x is always better and similarly in the longer end of our portfolio. I mean, there's some really attractive and really strong development projects in the longer end of our pipeline, our organic growth pipeline. But again, we can never really be diversified. I think it's a never-ending objective in that sense to always just drive down revenue volatility and to diversify sources of future growth. And if you look across the royalty sector, I think most would agree that the companies in the sector that have the best equity ratings really are those to be -- tend to be the ones that are most diversified and thus most resilient.

I think, Marc, just to add to that specifically in relation to Voisey's, I think the ramp-up that we expect to come through there, and that gives me a degree of comfort going into 2025 is the fact that, that's based on capital that's now being invested, infrastructure that is now being installed. And now it's just a function of rates of extraction of ore. So with the ramp-up that we are guiding towards, it's not dependent on further capital necessarily going in. And that same position is true of our Mantos guidance as well.

Thank you, Kevin. Now you talk about a diverse portfolio but with 50% in copper, are you overinvested here?

Yes. Well, that's a really interesting one because when we think about this, ultimately, copper is a commodity that is number one, the -- from the base metals complex anyways, certainly the largest market. And if you look at copper price volatility historically from the peaks and the troughs, generally speaking, you can see far less amplitude between the high and the low compared to other commodities, particularly those that have much smaller markets. There are a number of lithium, for example, is a commodity that has really strong demand growth over the longer term but is still a relatively smaller market size growing quickly but still at a relatively smaller size in aggregate volumes. And you can kind of see the impact of that in sort of the volatility from the high and the low as you see substantial demand growth and sort of choppy supply responses, which are very difficult to time perfectly with that demand growth. So copper as a market, as I mentioned, is very diversified in terms of its supplier base, a big market, and also is a commodity that is sort of -- cannot really be removed from the modern world that we live in. It's in everything. We turn on the lights. We need power for our grids. So copper is a commodity. In that context, that is also expected to see really strong demand growth. Energy transition, of course, but frankly, just as a result of some of the great investment that's really required that we've seen at the beginning of some substantial grid investment packages, which are expected to continue into the future.

Thanks, Marc. Can you remind us on the company's dividend policy and plans in the future as this is a key element for some shareholders?

Yes. When we updated our capital allocation framework last year towards prioritizing growth and diversification, we did consider very carefully the dividend. We were absolutely conscious of the fact the dividend is really important to a big chunk of our shareholder base. The dividend as it stands today is with reference to the free cash flow generation in the business set semiannually as the -- within a range of 25% to 35% of the average 2 half year periods of free cash flow. And in that sense, our strategy to grow the dividend is to grow free cash flow while maintaining the constant percentage of free cash flow. So in other words, not to grow the dividend by increasing the percentage of free cash flow, but to grow free cash flows in such a way that the dividend growth is far more sustainable and resilient for the long term.

And the next question we have is what impact will Trump's tariffs have on Ecora?

I'm not sure. So the challenge really when we think about the tariff situation today is that some of the announced tariffs have in the past few months, even been repealed or amended or changed fairly quickly. So it's difficult to take a precise view on the package today, noting that the package could change very quickly into the future. But there's probably 2 sort of key takeaways really. The first is that there is the macroeconomic risk factor as a result of tariffs that may or may not be implemented into the future and what that may mean for global economic growth. And the second, of course, is with regards to some of the trends we see in the world today, which are for supply chains to develop a lot of geopolitical lines. And that in and of itself reduces these barriers to free markets and to supply/demand in the commodity markets, meaning perfectly creates what could become price inflation. And therefore, as a royalty company, we're fairly well positioned defensively to some of that price inflation that may occur, and in fact, actually benefit from it by virtue of the royalty model.

And I think on a micro basis, Marc, Ecora doesn't have any investments or exposure directly in the U.S. tariffs depending on how things work out as well as tax rates, et cetera, within country, just may become a greater focus of diligence in the event that we do identify opportunities within the U.S.

And while it wasn't the question exactly, we've had it a few times of note. So to the degree if it's an interest to any of the viewers, our copper exposure is with reference to the LME benchmark price.

Thank you, both. Could you elaborate a bit on the Nifty royalty? Specifically at what production threshold triggers the royalty payment? And based on their planned production levels, how quickly would you expect the royalty to begin once the mine is in operation?

Yes. Well, I think there, it's a function of the production rates. And to take the second part of the question first, which is how quickly do you expect the royalty to come in, that's really a function of the production rates. And that we expect to see further delineation as further technical work is done. To hand unless you have it to hand. We don't have the exact production threshold number. But if you figure, but if you reach out to Ecora via our IR contact address, we can certainly share additional information.

Thank you. Next question is NAV discount and market disconnect. Ecora currently trades at a 45% discount to consensus NAV. What are your thoughts on this persistent disconnect between intrinsic value and market valuation? Do you have a defined strategy to close the gap, such as enhanced Investor Relations, increasing index eligibility or expanding the buyback program?

So of course, it goes without saying that we have a very -- a big focus at the moment is the Investor Relations program. And as Ecora offers substantial value to a great set of commodities with some great counterparties. Indexation, we saw the benefits of indexations last December when Ecora was admitted to the All Shares index here in the U.K. I think our immediate focus in terms of closing the gap on NAV really has been in the context of driving free cash flow growth because ultimately, Ecora historically, revenues have been very concentrated in the Kestrel royalty. And the Kestrel royalty, as we sit here today, is approaching the end of its life. So in that context, when such a large amount of our revenue is tied to a commodity or to an asset rather that is approaching the end of its life, it appears that the market is applying fairly low trading multiples to that source of cash flow. And so by focusing on for example, the Mimbula -- the recent Mimbula acquisition, by focusing and acquiring further royalties that really drive the front end of our growth profile, certainly here and the now or have a clear path to first income, it does if we do anticipate or we would expect that the market would apply higher valuation multiples to those cash flows on the basis that they're expected to recur for decades into the future with potential to expand thereafter.

Thank you. Are the USD 10 million of shares Ecora repurchased in 2024 still held in treasury? If so, what is your plan with them and will you cancel them?

They are held in treasury, that's correct. At the moment, there are no immediate plans with those shares. They're excluded from the denominator when calculating per share metrics. And therefore, the decision point on whether they would be canceled does not impact any way dividend per share calculation or earnings per share calculation.

Thank you. What key milestones should investors look for in the next 12 months on Phalaborwa?

So the first is the completion of the DFS, and that's expected later this year. And thereafter, the company would launched its financing process in advance of a final investment decision.

Great. [Operator Instructions] And how well invested are the management team?

I think you'll find that the directors and Kevin and I have, over the past years, continued to acquire shares. I think we absolutely see a sizable amount of value in the Ecora shares at these levels and have made share purchases as recently as last week.

Wonderful. Thank you. I know there's no further questions at the present time. So Marc, maybe if I could hand back to yourself for any closing remarks.

Well, look, I really appreciate your time today. I think as I mentioned over the course of this call, 2025 is a year that really has a potential to be an inflection point as we see this expected volume growth come through. And we demonstrate the free cash flow potential and growth from the critical minerals royalty portfolio that will carry Ecora into the future. So thanks a lot for joining us.

Wonderful, thank you today for everyone who joined us, and that concludes the Ecora Resources investor presentation. Please take a moment to complete a short survey following the event, and I hope you've enjoyed the event today. Thank you.