Thank you for joining us here today for the presentation of our Ecora's Full Year 2022 Results. I'm joined by Ecora's Chief Financial Officer, Kevin Flynn. There will be an opportunity for analysts and investors to ask questions at the end of the call. Please follow the instructions as provided by the call operator. 2022 certainly delivered. We saw record portfolio contribution, record earnings per share, a record pace of deleveraging, and a record dividend cover. This was largely driven by non-repeatable cash flows from our Kestrel royalty, which we reallocated during the course of the year to the acquisition of a high-quality near-term portfolio of royalties from South32. We saw material progress in relation to our organic development stage royalties over the course of the year, with much more to come in 2023.
The fundamentals underpinning our portfolio today, particularly those tied to future-facing commodities, remain very strong. The commodity basket underpinning our royalty producing royalty portfolio today remains strong, albeit slightly lower than record levels seen over the course of 2022. The commodity prices underlying our portfolio performed very strongly in the course of 2022. You can see on this slide on the left, very strong performance in the first half of the year. Over the course of the second half, those commodity prices, which were at record, if not near record levels, were softened slightly, albeit these commodity prices, even into 2023, remain very high relative to where we were in prior years. Thus, the business is very well positioned three months into 2023 for continued strong performance. 2022 represented another year of delivery on our key strategic objectives.
Looking back, there have been three distinct phases that have framed our execution. The first strategic imperative represented the replacement of Kestrel income and the stabilization of our royalty portfolio's income profile, such that following the Kestrel run off, the business had a stable revenue line into the future. That, that phase was largely completed with the acquisition of the Voisey's Bay royalty into 2021. The next key strategic imperative was to change the complexion of the business from being a stable revenue profile to one of growth. That arguably was completed following the acquisition of a portfolio of royalties from South32. We now find ourselves in a third phase, with the strategic imperative being to add greater scale and add greater diversification, both in terms of commodity exposure, but also in terms of counterparties.
This slide really hones in on the previously mentioned second strategic objective, which we feel was achieved in 2022, to enhance the company's growth profile. One can see that from a base today of a slightly under $40 million, our portfolio of future-facing commodities in production, at construction stage, and in development in the medium term has a path in excess of $100 million of income per annum. The energy transition is expected to drive seismic changes in terms of the world's need for future-facing commodities. The scale of this challenge is hard to comprehend. To bring it to earth, we've included a few sort of practical examples on this slide.
In order to achieve the net zero scenario, which is what globally we're all shooting for, by 2040, it's estimated that the current stocks of internal combustion vehicles would need to be substituted for something like over 700 million passenger electric vehicles or slightly under 400,000 wind turbines, which is the equivalent of 1,300 of today's largest current offshore wind farm. From a battery capacity, something like 100x Tesla's current 135 GWh battery Gigafactory. This challenge is enormous. For Ecora, we see that as an opportunity, an opportunity to deploy capital, but also some very strong structural trends to which we've aligned our commodity exposure.
We can see that as we look at how our portfolio composition has evolved from 2021 to 2022, but certainly when one goes even further back to 2014, when our portfolio was almost 100% weighted towards coal. At year-end 2022, approximately 85% of our basket was weighed towards future-facing commodities, with the bulk of that being base metals in copper, nickel, and cobalt, but also including uranium and vanadium. What we've also achieved in 2022 is a repositioning of our portfolio such that it is a healthier mix of producing assets, but also development and near-term royalties. With that, I'll hand it over to Kevin to cover the financial highlights of the year.
Thanks, Mark. Turning to our performance indicators, which I'll discuss in more detail as I go through these slides. The record portfolio contribution was largely driven by our short-life Kestrel royalty, which is producing fantastic cash flow for the business in its final few years within our private royalty land. Our remaining longer-term core portfolio continues to grow also. There remains good upside potential, as Mark will discuss later on. Our adjusted earnings per share increased as a result of the record income in the year. As I'll discuss on slide 12, the shares issued as part of the South32 acquisition meant that adjusted earnings did not increase to the same extent as our revenue.
Finally, our dividend remains well covered, even with Kestrel stepping down in the year ahead, should still remain well covered in the run-up to the South32 portfolio coming online. Turning to slide 11. Here we have split our portfolio contribution into what is now the core portfolio of the business, the portfolio we've effectively been strategically repositioning to over the last eight years and reflecting the fact that Kestrel is now short-term, albeit a significant royalty as it begins its transition outside of our private royalty lands. The average royalty income received from Kestrel over the last years is around about $40 million, one of our first key strategic imperatives, as Mark outlined, has always been to build a portfolio to replace that revenue. It's pleasing to see that our core portfolio almost achieved this in FY 2022 at $36 million.
These assets, along with the growth we've put into the business in the last 24 months, should see a portfolio of non-Kestrel assets delivering annual income of over $100 million in the medium term. I'll run through these assets briefly. Voisey's Bay first. We received 19 deliveries during the year compared to 21 in the previous year. The increased cobalt prices were higher, particularly in H1, with average sales of $38 a pound before falling to around about $23 per pound in the second half. We expect around about 13-15 deliveries in financial year 2023, a year in which we always anticipated would be the lowest in terms of volume as the underground transition is expected to gather significant momentum from 2024 onwards.
Pricings continued to fall in the year-to-date, trading around about $17-$18 a pound, due mainly to supply restraints in H1 2022 easing and a slowing down in the Chinese economy over the last six months. Income from Mantos reached $6 million during the period as they continued to make progress with their debottlenecking project, which saw volumes increase by 8%, also in a stronger pricing environment. Looking ahead, we hope to see the trend for higher volumes continuing in FY 2023 as Capstone evaluate the potential to increase throughput from 7.3 million to 10 million tons per annum. Next to Maracas. Pricing here offset a small volume reduction. Pricing on average was about 15% higher in the period, indicating that the operator might be achieving higher margins for the portion of their sales going into the battery market.
Largo revised down its guidance during FY 2022, but are now guiding 10% higher sales volumes in 2023, and along with the completion of ilmenite plant should now allow for some near-term upside. The decrease in revenue from LIORC reflects the reduction in total dividend from $6 per share to $3.10 per share. Financial year 2021 was a very strong year for iron ore prices, and these softened noticeably in 2022, but still remain relatively high in the context of the last five years. Broker consensus for LIORC dividends for 2023 is around about $2.60 per share, which will be a 16% re-reduction on financial year 2022. McClean Lake is a relatively stable source of income, generating around about CAD 400,000-500,000 per month.
The good news story here is that Cameco has reversed its intention to operate the underlying Cigar Lake mine at 75%. Our normal revenue from this asset should remain unaffected in the year ahead. We saw higher volumes coming through from Four Mile in the period, along with higher pricing. As per previous results, we are deferring this cash on the balance sheet until the result of the appeal in the legal case in Australia, which we expect to come through later on in the year, which could see some cash released to the income statement from that point. Other royalties include EVBC, and here we are in dialogue with the operator as to how to assist them managing their liquidity over the course of the next 12 months, given that their cost base has at times exceeded the gold price.
We'll provide an update on this with the half-year numbers, but in the meantime, we're expecting a deferral of cash flow into 2024. Finally, and by no means least, Kestrel. Despite volumes within the private royalty land reducing by 20% to just over four million tons in the period, the pricing achieved more than doubled as stability really returned to the market in 2022, and the price no doubt benefited from the noticeable increase in the thermal coal market as the price of energy rebased. In times of increasing prices, the royalty also benefits significantly from the ratchet structure, which as a farewell gift from the departing royalty increased noticeably on the 1st of July.
By way of illustration, the weighted average royalty rate in the H1 of the year was 13.2%, and this increased to almost 23% in the H2, and it's around about these levels currently with the spot price at $350 a ton. Looking forward, we'd expect to receive around 50% of the FY 2022 volumes in 2023 from Kestrel, which although will still generate very healthy cash flow, will nonetheless result in an inevitable decrease in portfolio contribution for 2023. Turning to slide 12. The royalty business model should provide healthy margins, and in the current year, this is certainly the case. Our adjusted earnings in dollar terms increased by 68%, which is the same percentage as our portfolio contribution.
This is really in stark contrast to the underlying mining sector, which is grappling with inflation and the associated margin erosion. However, at Ecora, our cost base, in fact, remained largely in line with the previous years. As always, we'll continue to focus on cost discipline in the year ahead. As said previously, one of our key focuses is on per share metrics, especially in relation to how we deploy capital and finance acquisitions. During the year, we issued 43.6 million shares to South32 as part of the finance package to acquire their portfolio of battery metal royalties. This acquisition was a strategic decision taken to recycle nonrecurring Kestrel revenue into royalties which do not yet generate cash flow, but are expected to do so by the middle of the decade.
However, as income does not accrue on day one, there is inevitable dilution to the adjusted earnings number in the short term, which is going to be more than compensated for by stellar accretion when the royalties commence generating cash flow. Slide 13 summarizes our balance sheet. I won't spend too much time on this, as we'll be dealing with the liquidity and debt profile of the business on the next slide. Here we can see the Kestrel royalty was valued at $106 million at the end of the period, whereas most of the group's other assets are included at amortized cost, so do not necessarily reflect their true market value. Included within other liabilities this year is the large tax payable on the Kestrel income, which is due to be paid in June next year. Turning to slide 14.
Here we can see how the strong income generated in the period enabled us to pay down debt much faster than expected, resulting in net debt reducing from $90 million to $36 million at the end of the year. Having invested almost $400 million over the last two years. The group was almost debt-free at the time of entering into the South32 transaction. We expect net debt to increase as we go through financial year 2023, as we pay the tax on the Kestrel royalty income, along with the remaining stage payments to South32. We are very pleased to modify our existing borrowing facility during the year. We negotiated the removal of the scheduled $25 million step down, which preserved the overall headline at $150 million.
At the same time, we negotiated the provision of a $50 million accordion feature, which would bring the facility up to $200 million for suitable future investments. Finally, we extended the term of the facility by a further 12 months to the first quarter of 2025. In terms of firepower, we remain well capitalized. Even once our debt peaks during the fourth quarter of 2023, we should still have liquidity inclusive of LIORC and Treasury shares in excess of $100 million with a further $50 million accordion on top. That's a good segue into the next slide 15 on capital allocation. We've been very careful in terms of capital allocation over the past 24 months in selectively increasing our gearing levels to transact on $400 million of acquisitions.
The conviction we had in terms of Kestrel cash flows proved well-founded, and we were able to use these cash flows to delever in the run-up to the South32 transaction, a transaction which was structured to provide balance sheet strength through six quarterly stage payments. As I mentioned previously, we're well capitalized in order to continue our growth strategy, but the transactions we're looking to undertake need to have the ability to contribute towards our per share key performance indicators in order to provide for shareholder returns. Our dividend of 7p remains constant, although we are rebasing this to $0.085 per share on the average FX rate over the past 12 months.
This works out to be around $0.02125 per quarter. At this stage, our main financial outgoing will be determined in the same currency as our income is earned. We continue to enjoy strong support from our lending institutions, which are amongst the largest Canadian blue-chip banks and who should be isolated from the current volatility in the banking sector. As such, the business is well-placed and capable of acting quickly and opportunistically as deal flow arises. With that, I'll hand back to Mark.
Thank you, Kevin. Looking back at 2022, key developments in the portfolio, which Kevin has touched on to a degree, so keeping it brief. We saw record met coal prices driving a record portfolio contribution at Kestrel. The implementation of a new royalty rate at Voisey's Bay. The transition from the open pit operation to the underground mining is now fully underway with an expected wrap-up coming in the years to come. At Mantos Copper, we saw the completion of the debottlenecking project. First, we saw a final investment decision taken at West Musgrave, with construction now underway. At Piauí, we saw the completion of a starter plant which saw first production towards the middle of last year. At Santo Domingo, the completion of a Manto Verde Santo Domingo district integration plan, which identified material cost savings.
Looking ahead to 2023 in the next 12 months, we anticipate the busiest year in terms of our organic portfolio growth that I've seen in my 10 years at Ecora. First, the continued transition from the underground operations at Voisey's Bay to full ramp-up, starting in 2024 and onwards. At Mantos Blancos, a phase two of an expansion study expected in the second half of the year. At Santo Domingo, an updated feasibility study, also in the second half of the year. At Piauí, the project finance construction process continues. We're also seeing first production at the starter plant. At Maracas, the commissioning of an ilmenite plant. At Nifty, continued progress is expected in relation to the restart project financing. Last but certainly not least, the ongoing construction activities at West Musgrave. Turning how to look at the cobalt market.
We've seen in the past 12 months, prices move from sort of mid-cycle levels to peak levels and back down to levels which are approaching the cyclical lows. There are a number of factors that have been driving this change. First of all, we've seen new supply entering the market as a byproduct from Indonesian nickel mines. We've also seen softer demand from portable consumer electronics, following a boom post during the COVID period. Looking ahead, the medium to long-term outlook remains very positive for cobalt, simply as even if one assumes a level of new battery chemistries, which ultimately is a positive thing towards achieving our global net zero objectives. In absolute levels, demand for cobalt remains robust, and the trends are very supportive in the medium to longer term.
To date, the group has realized a weighted average cobalt price of slightly under $30 per pound since the acquisition of the Voisey's Bay cobalt stream, which is well in excess of our investment case, and we're very pleased with how this asset has been performing. Turning now to commodity selection. Most of you will not be surprised that as we think about growing our royalty portfolio from a commodity selection perspective, it's really more of the same. First, by that, we mean we continue to focus on commodities that are required to achieve the electrification of energy consumption, including cobalt, copper, nickel, lithium, manganese, tin, and so on. Secondly, we continue to look for mining operations that produce commodities in a relatively cleaner or greener way. 2022 represented a step change in our sustainability disclosures.
We've introduced a new framework which is centered around our role as a responsible business, but also as responsible investors. We've aligned our disclosures with the UN Global Compact, Sustainable Development Goals. From a carbon perspective, we've set emission targets and objectives which leverage best-in-class guidance from the Science Based Targets initiative for small and medium-sized enterprises. Over the course of the year, we saw the benefits of our disclosures, where we saw a material improvement in our Sustainalytics ESG risk score from previously a severe risk classification to a low-risk classification, which is an incredible achievement and a step change in terms of the risk assessment and risk profile of this company. Looking ahead to 2023, our commodity basket remains very strong relative to prior years. We anticipate a number of organic growth catalysts throughout the year.
We continue to seek further growth in a disciplined and methodical way, focusing on per-share metrics, per-share EPS growth, and per-share net asset value growth. We'll continue to seek to improve our revenue mix, really targeting those commodities that we allocate in the basket of future facing. As always, really seek to continue to enhance our sustainability reporting and disclosures such that holistically our business is understood to be at the forefront of the mining sector's integral role to achieving the energy transition. Thank you very much for joining us today, and we'll be happy to take any questions you may have.
Thank you. If you would like to ask a question over the telephone, please signal by pressing star one on your telephone keypad. Once again, that is star one for questions over the telephone. We take our first question from Richard Hatch from Berenberg. Please go ahead.
Thanks. Yeah, morning, Mark and team, and thanks for the really good set of numbers. Just a bit of a technical question from me just on the financials. Kevin, just on this payables increase that you've posted on the current liabilities, I guess that is partially South32, but also there's some tax in there as well. Could you by any chance just quantify what the tax number is that we need to plug into our models and when that gets paid? That'd be very helpful. Thanks.
Thanks, Richard. Well, we've a couple of tax payables, but the big one is about $16 million , Richard, which is basically the tax on the record Kestrel results. That's payable in June of this year. You're right. I mean, the current liabilities increase there is reflecting that and South32 stage payments.
Okay, thanks. Mark, just on the cobalt price. I mean, I saw Jervois has suspended the Idaho operations overnight, given sort of softer cobalt prices and also some CapEx issues and cost inflation issues. I mean, what's your viewpoint on the sort of the evolution of cobalt prices? You know, do we have a softer period for the next sort of 18 months or so just while we work through some of this extra supply before it squeezes up? Do you think, you know, sort of higher cost operations coming out of the market give the opportunity to support the price like we saw with Glencore when they reduced operations in Zambia? Thanks.
Good morning, Richard. Thanks for the question. Probably helpful to break it down into short-term, medium, long-term. In the short-term, what we've seen is cobalt prices trade up from, you know, lows of around $15 per pound and currently on the metal side anyways, in the range of $17-$18. That's for an alloy grade product and say 16%-17% of grade according to Fastmarkets. By the end of the year, you know, probably be trading, at least if you look at sort of market forecasts, somewhere in the range of where we are today and $20 per pound. There are a bunch of factors, though, that could really move this.
The first is there's a dispute between CMOC and the DRC government, which has seen some pretty sizable volumes in the DRC accumulate as inventory. The market is really pricing that those volumes come to market very quickly in the short term. That depending on how that dynamic plays out, you know, could be a positive catalyst or could see prices go sort of sideways or slightly upwards based on where they are today.
The other thing that you're seeing actually is that the supply chains in China, particularly on the battery-grade cobalt, or the battery precursor material cobalt, has been accumulated. In part, you've seen some disruption in terms of volume supply chains as a result of COVID you know, a lot of those restrictions in China are coming to an end now. As those built-up inventories sort of de-stock to normalized level, that should be a positive on the global price. The last piece is the metal market. The metal market has been very strong. The metal market continues to be somewhat inelastic in terms of demand, and relatively speaking, has performed much better than sort of battery-grade hydroxide.
Okay. Helpful. Thanks, Mark. Just Sorry, my last one is, just on BD. I mean, obviously you got the balance sheet's gonna see a little bit more leverage coming on over the next sort of six, 12 months. You know, for good reasons, you made good money out of Kestrel. You've got to pay South32 for the portfolio of assets which are really, really good into the medium term. What if you were to look at the business development opportunities that you're seeing at the moment and then compare it to, say, this time last year, what are you, how are you kinda seeing the market in terms of opportunities that you can act on?
Are you seeing good ones that are just sort of coming away from you on price? Or is this sort of softness in some commodity prices at the moment? You know, for example, you know, nickel prices are a little bit lighter. You got copper sort of holding the line at the moment, but, you know, you're seeing some commodity prices drift a little bit at the moment. Are you seeing any opportunities that present themselves in a period of sort of volatile prices?
Well, Richard, I think, you know, the short way of put it is we've always been really disciplined in terms of how we deploy capital. We're really methodical in terms of putting together a business that is resilient in terms of being a exposure to low cost operation with strong counterparties. Yes, it's true, we've seen some commodities trade down. We've also seen some commodities perform really strongly. That's pretty much par for the course, you know, given our broad commodity selection criteria.
In the last 12 months, one thing we have seen is a lot of folks are really moving forward to bring projects up the development curve, whether that be getting them up to the final investment decision or into construction. A good chunk of the opportunity set today anyways, is characterized by something near-term production. There continues to be opportunity across the spectrum, whether it be in production, medium-term, short-term, long-term. In terms of pricing, producing royalties typically tend to be the most, tend to attract the lowest discount rates and the most interest. We continue to see opportunities across the set.
Cool. Thanks, Mark. Much appreciated.
Thank you. We currently have no further telephone questions, so I'd like to hand the call back over for questions from the webcast.
Thank you. First question from the webcast is from Euan at Liberum. In relation to Ecora expecting to have circa $100 million of facility headroom at peak debt, does this include the accordion?
Hi, Geoff. I'll take that. The $100 million at peak debt is in relation to both the undrawn facility and potential liquidity with our LIORC stake. No, it doesn't include the 50 accordion.
A question from Tyler at RBC. We're potentially on the cusp of a dramatic increase in global mining projects, but also have the potential new sources of capital from auto and battery makers. How do you see the competitiveness of the royalty model evolving in the coming years? How do you see the higher interest rate environments impacting the business?
Thanks for the question, Tyler. Generally what we'd say is that, you know, new capital coming to the sector is a very good thing. First of all, because it's complementary to our product offering, which has never we never intended, and we would never purport that Ecora is the one-stop shop for full financing to get a mine into production. Generally speaking, we always partner with groups, whether it be conceptually partnering with equity capital providers or debt capital providers. Seeking a new class of investors is helpful, and it's a good thing for the sector. More generally, in terms of the opportunity set, again, you know, all this does is it broadens the investable universe. You know, new capital to new projects, if we're not the full solution, basically means that we can.
New opportunities arise, and therefore the investable universe is multiplies and grows in scale. All in all, we continue to be very positive, especially as we see this new capital being longer-dated capital, and very focused on, you know, long-term supply, which by definition means projects that are built with an intent to, you know, operate, but also to, you know, that are built conservatively, and generally speaking, in line with what you really want as a, in terms of exposure to a mining project or a construction stage opportunity.
Thanks. A question from Andy Wilson at the West Yorkshire Pension Fund. Is the current banking crisis providing us with more opportunities, and do you see this continuing after it's sorted?
It's probably a question of relative cost of capital. You know, while we don't, to date anyways, we haven't seen the challenges in the global financials markets directly impacting any specific mining operators. What we have seen is an impact on equity market valuations. In that context, royalty products, which are typically accretive or relatively more accretive than an equity issuance, by definition are increasingly so. Therefore, the imperative for any CFO who's looking at its funding options and funding mix, the royalty product is increasingly attractive.
Thank you. There are no further questions from the webcast at this point in time.
Okay. Well, thank you very much all for joining us for 2022. As we mentioned, 2023 is certainly shaping up to be a very busy year. We look forward to updating you on the developments as and when they come through.