What you need to know:
- Ecora is a leading royalty company focusing on critical minerals
(predominantly copper). The Company has shifted its exposure from
coal to base metals, and the market has not fully recognized this. - ECOR has a diversified mix of assets across project stages and
commodities, while focusing on safe jurisdictions. - We expect ECOR to see stellar growth over the next five years due to
copper’s fundamentals and its development royalties advancing. - Ecora trades at 0.8x NAV, a steep discount to peers at 1.9x NAV.
Ecora Royalties PLC (ECOR:TSX,LSE, ECRAF:OTCQX) is a leading critical minerals
focused royalties firm, offering investors exposure to a basket of metals which are
growing in importance to society. ECOR uses a royalty model, providing a
diversified approach with producing and developing assets in top jurisdictions. We
expect the Company to experience major growth over the next five years as it
transitions away from its past focus on coal. We are initiating coverage on
Ecora Royalties with a BUY rating and target price of C$4.00/share.
Investment Thesis Summary
Transition to Critical Metals. ECOR was historically focused on generating income
from coal royalties before re-allocating capital over the last ten years towards base
metals. Now, base metals represent 81% of NAV (including copper at 50%), playing
into mega-trends including electrification, power generation, and renewable energy.
The market continues to value ECOR based on its past exposure to coal, which will
be phased out over the coming years.
Diversified Mix of Projects. The Company has a largely diversified portfolio of
projects across the mine lifecycle. 49% of NAV is from producing assets (generating
steady cashflow) while 43% is from advanced stage development assets (providing
growth opportunities). The remaining 8% comes from exploration projects.
High Growth Through 2030 with Zero Capital Required. Ecora has a projected
75% income growth over the next five years, with its critical minerals portfolio
growing 300%. This requires zero additional capital and growth can surpass these
levels if metal prices rise. We are modelling 30% growth in 2026, and a slight
decline in 2027 based on decreasing coal production (while the base metals
portfolio continues to grow), but overall growth will resume shortly thereafter.
Tier-One Operating Partners. Ecora’s partnership network spans most of the top
mining firms and its portfolio is focused on operations in strong jurisdictions. 77%
of NAV comes from OECD countries, and 44% of NAV comes from assets in the 1st
quartile of the cost curve.
Management & Ownership. Management brings decades of senior leadership
experience across mining and capital markets, combining sector expertise with a
track record of value creation. Together, they represent the ideal group to navigate
ECOR through its next phase of growth and deliver sustained returns.
Valuation. Ecora trades at 0.8x NAV and 17.0x/18.3x 2026E/2027E EBITDA
compared to its peers at 1.9x and 35.0x/24.9x, respectively. We attribute the
discount to the continued cashflow from coal assets, which will be overtaken by
base metals over the coming years, resulting in a re-rating.
Catalysts
- Voisey’s Bay Ramp Up – Ongoing
- Mimbula Brownfield Expansion – Ongoing
