ECORA RESOURCES Energy, renewables and resources
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Introduction
Welcome to Spotlight, a bonus report which is distributed eight times a year alongside your digital copy of Shares.
It provides small caps with a platform to tell their stories in their own words.
This edition is dedicated to businesses powering the global economy, whether that be in mining, oil and gas, the renewables space, infrastructure or energy provision.
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What have been the bestperforming small-cap mining stocks in 2024?
Examining the resources minnows which have done best so far this year
In this article we discuss the best performing AIM-listed mining stocks so far this year. The data shows that small cap miners producing tin, tungsten, helium, and gold exploration companies have offered impressive returns to investors.
UP IN THE AIR
UK-based helium exploration and production company
Helium One Global (HE1:AIM) has seen shares gain an impressive 274%. These gains, albeit from a low base, are primarily due to the progress the company has made with its flagship project in Tanzania.
The company holds exploration licenses covering 4,512 square kilometres in the Rukwa Rift basin in Tanzania which may in the
future become a new helium province.
As an early-stage explorer in this field it is well-positioned to benefit from rising longterm helium demand and pricing.
Although Plymouth-based tungsten and tin miner Tungsten West (TUN) has seen share price gains of 120%, there have been a few wobbles this year including the abrupt departure of CEO Neil Gawthorpe in June.
In mid-August, the company appointed a new CEO Jeffery Court who has 30 years’ experience of the mineral resource sector.
DIGGING UP GAINS
Shares in lithium miner
Savanna Resources (SAV:AIM) jumped 15% on 20 June after it received a £16 million investment from AMG Critical Materials group – an Amsterdam-listed specialty metals group.
Over the past year shares have gained 92.9% as the company continues to grow and develop Europe’s first European lithium mine north of Portugal.
Gold, copper, silver, and precious metal company Anglo Asian mining (AAZ:AIM) has seen shares gain 50%.
On the 5 August, the company’s Azerbaijan subsidiary, Azerbaijan International Mining Company Limited (AIMC) was given the green light from the Azerbaijan government for the final phase of its tailings dam.
‘Confirmation was also received that the construction work will comply with all health and safety requirements,’ said the company.
Anglo Asian mining continues to prioritise the progression of its development portfolio, with the new Gilar mine expected to enter production in the fourth quarter of 2024.
OTHER SHINING LIGHTS
Other gainers this year are specialist metal supplier Uru Metals (URU) and an early-stage gold exploration company Oriole Resources (ORR:AIM). Uru Metals shares have gained 107% and Oriole Resources shares have gained 100%.
In January this year, Oriole Resources signed two agreements with BCM International in respect of the group’s Bibemi and Mbe projects.
On the 5 September, the company reported a pretax profit for the six months to 30 June of £1.15 million compared to a loss of £860,000 last year. Oriole has also been a beneficiary of a rising gold price.
Top performing mining small caps in 2024
Company Year-to-date performance
Ecora Resources, a company at the heart of the energy transition
With a portfolio focused on future facing commodities and the business model of providing funding to the mining sector, Ecora Resources (ECOR:LSE/TSX.
ECRAF:OTCQX) is truly a company at the heart of the energy transition.
With many of the world‘s royalty companies focused on the precious metals space, Ecora has long been concentrating on the mining sector‘s primary thematic, positioning itself as the world’s leading royalty company focused on the critical minerals essential to renewable and low carbon electricity generation, as well as electricity’s subsequent transmission, storage, and consumption.
By focusing on building a diversified portfolio of royalties over low-cost projects backed by strong operators such as Vale (VALE:NSE), Capstone Copper (CS:TSE), BHP (BHP) amongst others, Ecora has built a strong platform for further growth and diversification.
Looking ahead, volume growth in 2024 and 2025 is expected from the operations
underpinning Ecora’s royalty portfolio, and its portfolio of royalties over a pipeline of high-quality development projects provides strong revenue growth potential thereafter.
RECENT TURNAROUND
However, this outlook was not always so clear-cut. Back in 2014, the business was entirely dependent on a single royalty over a steel making coal mine, Kestrel, and mining activities were not expected within the royalty area after 2030.
Cognizant of that overdependence, as well as the
energy transition’s potential to drive critical mineral demand growth over multiple decades, the company embarked on a journey to rebuild its portfolio and provide investors with a royalty company fully aligned with this trend.
In the brief time since, Ecora’s portfolio has evolved such that 85% of its NAV (net asset value) now comes from future-facing commodities including copper, nickel, cobalt, uranium, and rare earths, amongst others. Most of these assets are in OECD (organisation for economic co-operation and development) jurisdictions, over operations that can, or are expected to, generate strong cash flows throughout the highs and lows of commodity price cycles and operated by recognized, high quality partners.
CURRENT OPPORTUNITY
For investors, Ecora’s royalty portfolio provides a relatively de-risked way to invest in the metals and mining space given royalties are a function of the revenue generated by a mine operation, and not impacted directly by operating costs, with few royalty companies purely focused on investing in commodities driving the energy transition.
In the medium term, the portfolio has the potential to generate more than $100 million annually, primarily underpinned by a sector leading portfolio of royalties
over copper operations and high-quality development projects.
In addition to its current dividend yield of approximately 5%, Ecora shares offer substantial value, with the share price today less than the value of the producing portfolio, meaning that its portfolio of royalties over high quality development projects are not currently priced in, and provide pure upside for investors.
WHAT NEXT?
The capital that Ecora’s management has deployed
FUN FACTS ABOUT COPPER
DID YOU KNOW?
• Ecora has the leading copper growth pipeline in the royalty sector.
• One tonne of copper brings functionality to 40 cars, powers 100,000 mobile phones, enables operations in 400 computers and provides electricity to 30 homes.
• Demand could nearly double by 2035 and there will be a 20% shortfall from the supply level required for the netzero emissions by 2050 target.
has yielded a portfolio of royalties generating cashflow, as well as high quality projects that once in production, will become the cornerstones of the business for many decades to come. It is a strong platform to continue to grow Ecora’s royalty portfolio, which would benefit further from continued diversification.
Capital market conditions for the mining sector have been challenging of late, highlighting the merits of the royalty partnership as a source of capital, with royalty financing now a mainstream source of funding. Coupling the mining sector’s need for capital, and expectations of strong critical mineral demand growth trends, Ecora’s near and midterm growth prospects appear attractive.
WATCH RECENT PRESENTATIONS
Ecora Resources (ECOR)
Marc Bishop Lafleche, CEO
Ecora’s strategy is to acquire royalties and streams over low-cost operations and projects with strong management teams, in well-established mining jurisdictions. Our portfolio has been reweighted to provide material exposure to this commodity basket and we have successfully transitioned from a coal orientated royalty business in 2014 to one that by 2026 will be materially coal free and comprised of over 90% exposure to commodities that support a sustainable future.
Empire Metals (EEE)
Shaun Bunn, Managing Director
Empire Metals (LON:EEE) is an exploration and resource development company focused on the Pitfield Project in Western Australia, a globally significant titanium project contained within a giant, sediment-hosted, hydrothermal mineral system.
Pathfinder Minerals Plc (PFP)
Paul Barrett, CEO
Pathfinder Minerals Plc (PFP) is a natural resources company is being admitted to AIM following the acquisition of Rome Resources Limited in a reverse takeover. Rome Resources holds tin assets in the DRCongo with encouraging initial drilling results, situated only 8km from the highest grade tin mine in the world.
Databank – Commodity price performance 2021-2024
Source: Refinitiv. *Data to 23 September.
