Hello everyone, I'm the CFO of Ecora Resources. My name is Kevin Flynn, and having attended some of these presentations, I think Ecora offers you a slightly different way of gaining your exposure to commodities, natural resources, and mining in particular. At its simplest, Ecora is a royalty and streaming business, so we provide your exposure effectively at the top line, so you don't take operating risk, you don't take margin compression risk. Our strategy is, or our journey has been, to take a legacy coking coal royalty and recycle that cash flow, specifically targeting commodities that will pave the way for the energy transition. So effectively, we're building a royalty and streaming business centered around providing exposure to the energy transition through commodities like copper, nickel, cobalt, vanadium, etc., and that differentiates us from our main peer set in North America. The model is primarily based around precious metals.
Our strategy in our business is to invest in the wider universe other than precious metals.
So for those of you who may be unfamiliar with what a royalty is, a royalty at its very simplest is when Ecora provides an upfront sum of capital, and in return for that, we will receive a percentage of top line revenue once it's in production.
There's a number of benefits to the model and that source of financing for operating businesses. First, it's a very non-intrusive form of finance. There's no covenants. Basically, we get paid when the operator is cash flow generative. Secondly, and what we're seeing at the moment in particular, and the way we've been reasonably successful, is that a royalty can attach to a byproduct as opposed to the principal product being operated. So we see that with our Voisey's Bay cobalt mine.
Voisey's Bay primarily is a nickel mine, but it has a cobalt byproduct, which we have streamed and effectively monetized. So it leaves the primary commodity unencumbered for the operator, and that primary commodity is probably the commodity which is driving most of the equity value for that business. And thirdly, the benefit is that for multi-asset operators, the royalty will only attach to one asset, thereby leaving the other assets unencumbered, whereas to issue equity is to effectively give away the upside over all assets and not just one. But speaking to an investor base, there are certain benefits as well of the royalty and streaming model. We think for investors, vis-à-vis investing directly in operations, firstly, it provides exposure to a basket of commodities, but at the top line revenue. So there's no margin compression issues.
You're not exposed to CapEx overruns, etc., both of which are and have been widely experienced in the mining sector of late. Secondly, of course, being an investment business, it's naturally a portfolio-driven business model. So there's a natural level of diversification within royalty and streaming businesses, whether that's by way of diversity of commodity, jurisdiction, management teams, etc. So you're not solely reliant on one operation, one commodity, or one management team. The royalty model as well is an inflation hedge as it operates on the top line. That's been very important over the last couple of years as we've seen inflation running through the wider sector. And as well with a royalty, once you've made your initial investment, any resource expansion that may come by comes for free effectively. You don't have to pay for that.
That's why at Ecora, we tend to generally focus on reserve life, and then we get the resource upside as free, and that's basically our blue sky. For the generalist investor, what we found is the story resonates really well because you don't need to fully understand the profile associated with the underlying operation because we operate on the top line level. We specifically focus on operations in the first or second quartile of the cost curve, which should ensure that the operation, even when trading at cyclical low levels, remains profitable and cash flow generative for us. Whereas if you invest at asset level, you really need to understand the key drivers of what can ultimately result in margin compression. The final key benefit is it's a very scalable business model.
To give you an example, Ecora has invested around about $425 million acquiring assets over the last three years, and we've done so using the same team and largely the same operating cost as we've gone through that. Just to have a quick look at what Ecora actually has currently, we've got a portfolio of assets, 50% of which are in production and 50% or 44% in fact are development with only 6% early stage. I'll come back to that just a little bit later. As I've mentioned, cost curve position is incredibly important for us. 84% of our asset base is either first or second quartile of the cost curve, which provides a very good buffer for cyclicality within certain niche commodities.
What we're ultimately trying to build, as I mentioned earlier, is a vehicle providing exposure to the energy transition, but we want that exposure to be mainly composed of base metals and within that, copper at the core. And we believe we've got a sector-leading copper portfolio within the royalty and streaming universe, and we're very bullish copper as well as investors. And our geographic exposure, we've built our portfolio without having to necessarily compromise the quality of the jurisdictions in which the assets are largely operated. So we're 96% OECD. Within that, we've got Australia, Canada, Chile, and Brazil mainly. So still very good jurisdictions, and that's key for a royalty investor as we've very little means to influence operating decisions.
Our only assets are our contracts, and it's very important for us that those contracts are in jurisdictions with good mining law and that categorize mining as a key economic activity.
So what we've been doing recently, we've been building a portfolio that's very much positioned now towards growth. Within the core Ecora profile, we've got about $40-$60 million, depending on commodity prices, of reasonably stable income for the next few years. And then beyond that, we've got some real key growth assets which will come in on top of that to drive our income growth. Specifically, once our coking coal royalty declines in the next two years, our portfolio outside of that asset, so the key portfolio now fully aligned to energy transition, has got capability of producing annual revenue for us of $100 million plus by the end of this decade.
We'll look at one or two of those assets in the next slide or two. The short-term catalyst for Ecora's stock is very much centered around our Voisey's Bay cobalt stream. This now is in full ramp-up mode. We acquired this asset in 2021 as it was going from its open pit to underground transition. This is a stream whereby we receive physical cobalt deliveries. In the first half of this year, just to give you a flavor for the ramp-up we're looking at, we had four deliveries of cobalt. Next year, for instance, we expect that to be between 20-28 deliveries. Then by the end of 2026, we should be seeing a run rate of 40 deliveries. We're going from four deliveries in the first half of the year to a steady state fully ramped-up position of about 40 units.
That in its own right should generate, again, depending on commodity prices, but cobalt is obviously at a cyclical low point, about $20-$25 million of revenue for us going forward. We believe that's going to be a key catalyst for our share price as that profile starts to come through in the second half of this year and next year as well.
So the good news for you and the bad news for me as a shareholder is our share price is currently at very distressed levels at GBP 0.67. It fundamentally undervalues what our brokers consider to be our net asset value. If you buy the stock today, you effectively pay less than the value of our income-producing assets, which by their very nature are de-risked themselves. The key growth assets that we have in the portfolio, you effectively get for free.
And we believe that's a very compelling buying opportunity today. And in fact, that's the reason my Chief Exec and I have been buying stock ourselves of late. We fully believe in the value of the growth that's coming through from this business.
So what are our priorities?
So in the short term, what we're going to try to do is to infill some income through acquiring income-producing assets. Again, very much down the fairway in terms of the commodities that we're looking to provide investors exposure to: copper, cobalt, nickel, zinc, and tin if we can get it. And we believe if we can infill revenue while we have a gap for some of our larger development assets to come through in 2028, we think that could be a good catalyst for the stock as well.
We will consider some smaller investments into some longer dated assets like we have been doing very selectively and successfully in the past, but we want to maintain base metals at the core of our portfolio. So if you look on the right-hand side of the chart, the green boxes are what we offer investors exposure to today. The ones with the tick without a box are the ones that we consider very much part of our core strategy, which we haven't obtained exposure to just yet. So in conclusion, we've got a very exciting portfolio today. 50% of the value of our business is in income-producing assets. There's natural diversification through that, but the good news for us is we're expecting volume growth across pretty much all of our assets in 2025, very much underpinned by the Voisey's Bay ramp-up profile.
Copper is very much at the forefront of our portfolio and our offering. Again, as I said, we believe we've got the best copper profile of any royalty and streaming business globally. We're bullish copper. We want more. And we see the good news is we see opportunities to continue to add to that. We've got a world-class operator base. I mean, these names will be very familiar to a lot of you. And some of those have been operating and generating income for us very consistently. We've got a strong balance sheet. We don't need to raise equity in the short term to fund our growth, depending on ticket sizes. We operate at reasonably low levels of leverage, and we've no further capital commitments into our business. So anything we do from now on is very much within our control.
As I mentioned on the previous slide, we believe this is a very attractive entry point to the stock, trading at very low levels, currently 0.4 times NAV, which is very much an outlier in the royalty and streaming universe. We are today the cheapest royalty and streaming stock that you can acquire. And we're seeing a very strong uptick in opportunities to continue the growth journey. Part of the reason for that is by virtue of the fact our equity is trading at low and depressed levels. The same is true for small and mid-cap operators as well, for whom to raise equity would be incredibly dilutive. The royalty product, obviously much less dilutive form of capital raising. And we expect to see some good opportunities in the coming months to continue the growth profile. So with that, thank you so much for your interest.
I think this is the last presentation, and so really appreciate everyone hanging around.
Well, thank you. An interesting vehicle. Can I just ask then, are you an investment fund on steroids? Is that the way to look at it?
I don't think so. I think an investment fund on steroids would be a bit more haphazard in terms of how they invest. We've been very disciplined in how we invest. We look for quality jurisdictions, quality operators, low position on cost curve, right entry points as well. One of the things about royalty companies who focus on one particular commodity is that they have to invest in that through cycle and ride the cyclicality with the pricing environment. We've seen lithium run very hot. We stepped away from that, and we acquired copper at long-term prices of low $3 per pound. So we can move nimbly around that.
So no, we don't feel like we're an investment fund on steroids. Discipline is very important for us because ultimately these are very long-life assets, and the value needs to crystallize through those coming into production in accordance with our investment frame.
But you are now an investment fund with a heavy discount towards the underlying value.
We are. That's principally a function of a lot of distress in the U.K. markets. We are London-listed. London has now seen 40 consecutive months of outflows from the income funds. And unfortunately, we have historically been held in income funds. So we've suffered with their redemptions, I guess. But our loss is your gain. It's a great time to acquire a fantastic portfolio, blue chip operators, amazing income profile, and a great growth story.
But that's also quite important to underline.
The share price development is not a function of the investments and the underlying value. The share price performance is more a function of outflow in the funds, which means that the fund manager has to do something because he has to provide money next day, regardless.
eah, that's correct. We don't take offense or worry that the share price is an accurate value of our business. It's not. We're very confident in the profile, as I say, my CEO and I have been putting our money where our mouth is and buying ourselves. We believe in the growth potential of this business. I think we are the incumbent in terms of providing investors access to the energy transition through this model, and I think we've got to capitalize on our first mover advantage to continue that growth journey.
As I said, we don't have to raise capital in the short term depending on what deal flow presents. So the share price doesn't impact us on a day-to-day basis.
Head office in London, which is U.K., assets all over the globe, although you emphasize the importance of the jurisdictions. Can you find synergies and/or how do you keep track of your assets?
I mean, we've got an amazing team. I've been with the business 12 years. My CEO has been 10. We've got others that have been there a similar time as well. One of the key things for us is that most of our deal flow has come through bilateral processes, which means they have been relationship-driven. Some of those are rarer. It's exposure that we acquired recently. We've been very close to that company for a number of years.
It does take time for that familiarity and trust to result in a deal. But we've got a good network of people around us. We're well-known in the sector. We've got a leading syndicate of Canadian lenders to us as well. So we're plugged in. We've got a good analyst base. And what's important for us, our competitive landscape has moved in our favor recently as well. The royalty model in the precious metal sector is very, very competitive, much less so in the non-precious space. And again, it's incumbent upon us to keep building on that momentum.
So if one is sure of the underlying assets going up, but a little bit lazy to invest, Ecora would be the place to turn to because you will do the work with your team on a global basis, but with prudence.
Very much so.
I think our track record is pretty good. We're quite humble about that, but we haven't made any mistakes. I think the model resonates very well to the retail investor and the family offices because we do that work. You don't have to fundamentally understand the key margin levers within each mine that we operate in because we operate at the top line. And I think that's a huge USP for the business model. And it's just a different way of getting your exposure, but at a very, very attractive entry point.
Excellent, Kevin. Thank you so much.
Thank you so much. Really appreciate it.
We have a warm-up call. Thank you.