Good morning, everyone, and thank you for joining us today to discuss Ecora Resources' results for the first half of 2023. Our portfolio delivered in line with expectations during the period, with the real story being that we have now firmly entered the beginning of a long-expected, multi-year transition in the commodities and royalty assets underlying our revenue mix. During this period, we will see a runoff in the Kestrel steelmaking coal royalty, and in parallel, an increase in the percentage of income from our basket of future-facing commodity royalties, eventually reaching close to 100%.
We are pleased with the continued progress towards first production across our near-term development stage royalty book, with BHP, for example, reporting that the construction of the West Musgrave project, over which Ecora has a 2% NSR royalty, remains on track for first production as early as the second half of 2025. The transition from open pit to underground mining operations at Voisey's Bay continues and appears on track for a substantial ramp-up in underground volume in 2024 and onwards. The volumes previously expected to be mined from Ecora's royalty area in the second half of this year now seem almost certainly likely to slip into 2024. However, those volumes are not lost and we anticipate will run through and contribute to our royalty performance in 2024.
Shortly after the period end, we announced the acquisition of a royalty over the Vizcachitas Copper Project, which is one of the world's largest undeveloped copper projects globally, and our fifth copper royalty, which complements our development pipeline, which is poised to deliver continued growth until the middle of the next decade. With that, I'll hand the call over to you, Kevin.
Thanks, Marc. Turning to the first slide, showing our KPIs for the first half of the year. The trend in our KPIs now reflects the well signposted commencement of the Kestrel transition, as Marc said, where mining is expected to now largely be outside of our private royalty boundary. This is going to continue in the coming years with quarter-on-quarter revenue now likely to be quite volatile. The transition is also taking place at the same time as we await the ramping up of the Voisey's Bay underground operation, which should come through in financial year 2024 and before the commencement of first production at West Musgrave a year later. D espite the anticipated short-term decline, the portfolio remains on track to organically deliver revenue in excess of $100 million from future-facing commodities in the medium term.
Adjusted earnings reflects the non-occurrence of the windfall revenues from Kestrel in the first half of 2022, and we were pleased to see the margin remain relatively flat, despite reflecting the share price, share issuance as associated with the South32 transaction and operating in a higher cost and interest rate environment. Dividend cover remains healthy at over two times, although we expect this to tighten in the second half as we expect minimal volumes to come through from Kestrel until Q1 2024. Turning to the next slide. As usual, I'll run through the portfolio quite quickly. Overall, our contribution, as expected, was about 53% lower than the previous year. Our core portfolio was 46% lower. This was largely driven by lower volumes and cobalt prices associated with Voisey's Bay.
We received 6 deliveries in the period from Voisey's Bay, down from 12 the previous year, and these deliveries also came at a time when prices were lower, the average cobalt price being on average 55% lower in the period. Strong pricing in the first half of 2022 reflected a period of supply disruption from key markets, which has now largely reversed, but we were pleased to see pricing post half year starting to move up again to around $18 a pound at alloy grade. The ramp-up profile at the operation continues apace, and we'd now expect to see gradual increases in volumes over the next 18 months up to nameplate capacity. Elsewhere in the portfolio, we're pleased with the contribution from Mantos, which is now beginning to bear the fruit of the debottlenecking investment made over the last year or so.
Volumes were up 14% in the period, although realized at lower copper prices as the copper market continues to suffer from broader macro uncertainty around the health of the Chinese economy. But there remains good upside potential here, with a possible phase 2 expansion project being evaluated. Maracás came in below the previous year as the operation missed production guidance, given adverse weather in the early part of the year a nd similarly to Mantos, this coincided with a period of lower pricing, although at close to $10 a pound, this is still well above our investment thesis. We were also pleased to note the completion of the ilmenite plant in the period, paving the way for further upside here. Elsewhere in the portfolio, iron ore income reflected lower iron ore pricing environment, limiting dividend payments.
Four Mile saw lower volumes in the period, but the uranium price has been a particular highlight. We're also awaiting the results of the appeal regarding the ongoing dispute here, which hopefully should give us some greater clarity by the end of the year. F inally, to Kestrel. The majority of volumes have now been received from this royalty, and the transition outside of the group's royalty boundary began in the second half of last year. Volumes were down 55% in the period, although based on lower overall mining volumes as they continued to deal with inferior geology towards the extremities of the 400 series panels.
The larger variance here was pricing, which came down from an average of $450 a ton, with a peak of over $600 in the first half of 2022, to an average of $290 in the first half of this year, and currently at $270. We're expecting minimal volumes to come through in H2, with the next significant volumes likely to come through to us in the Q1 of 2024. Turning to the next slide. To reiterate what I said previously, our per share results here reflects the non-recurrence of windfall Kestrel revenue and the issuance of shares to South32 in the second half of last year.
As the acquisition of the South32 portfolios is not currently income producing, the impact of this and the associated financing costs has reduced our EPS in the short- term, while we await first production from BHP's West Musgrave. The reduction in finance costs in the period reflects the release of deferred borrowing costs in the first half of 2022, and it's also pleasing to see no increases in our cost base, despite persistently high inflation. Turning to the next slide. The balance sheet is a snapshot of our position as of thirteenth of June. The short-term nature of our Kestrel royalty now means that Kestrel only accounts for about 6% of our overall royalty assets. Other payables reflect the remaining deferred payments to South32, along with accrued tax payments in lieu of first half earnings. My final slide shows our liquidity.
Net debt increased gradually in the period as we continued to make deferred payments to South32. The other notable outgoing in the period was in relation to the tax payment on the record 2022 Kestrel revenue. While not included in the earnings, we continued to receive deferred revenue associated with our Narrabri disposal, which total $4 million in the period. Our contingent price link consideration continued to accrue, with a further $1.3 million received in the period. This takes total price link consideration to date to around about $2 million, based on much higher thermal coal prices than envisaged at the time of the disposal, and total cash now received, including the fixed consideration, to around $15 million.
There remains a further $9 million in fixed payments to come over the next three years, and along with high potential for price link payments, there is potential for a further $5 million should the southern permit be granted. We expect our borrowings to continue to increase as we go through the second half, with $20 million already drawn to fund our latest copper acquisition. Net debt should peak at around $100 million in the near term, leaving plenty of headroom on our $200 million facility for further acquisitions. We also retain our LIORC stake, currently valued at about $24 million, which could be recycled into acquisitions or indeed used to delever. As such, the group remains well capitalized to continue our growth profile. W ith that, I'll hand back to Mark.
Thank you, Kevin. As I mentioned earlier, shortly after the period end, we announced the acquisition of the Vizcachitas royalty, and this royalty across the board ticks the boxes for us. It's a long lifeline, it's low cost, very large scale, in a well-established mining jurisdiction, and of course, the asset yields potential for production upside as well as mine and life extension. As I mentioned just now, across the board, an asset that really ticks the boxes. The next slide details the Vizcachitas royalty structure in more detail. We think this is a great outcome for both the mining company, Los Andes, but also Ecora Resources. The transaction has been structured in such a way that in the event production is achieved in line with the targeted timeline, our royalty entitlement will be 0.25% NSR.
However, should things unfortunately slip beyond that date, the royalty is structured such that there are potential step-ups to the NSR royalty rate, or alternatively, in lieu of the step-ups to the royalty rate, Los Andes could elect to make cash payments to Ecora, potentially resulting in a royalty rate to Ecora of 0.55% NSR or cash payments of up to $40 million. On the next slide, you can really see what the Vizcachitas copper royalty does to complement our copper pipeline. We see this as being the leading copper development pipeline across the royalty sector, and as I mentioned, yields has the potential to deliver continued growth until the middle of the next decade.
From an asset perspective, copper is very much at the core of our portfolio, and in not too much time, hopefully from an income perspective, copper as a percentage of revenue contribution will catch up. C oming back to our developments across the portfolio, a t Kestrel, we don't expect very many volumes to be mined within our royalty lands during the second half of the year, although these volumes we see it as delayed, not lost. This does illustrate, however, a level of choppiness that we expect to occur within the Kestrel royalty, certainly signposted as the royalty winds down. At Voisey's Bay, the transition from open pit to underground is in the final stretch, and we anticipate a wrap-up in cobalt deliveries under our stream 2024 onwards. BHP completed the acquisition of OZ Minerals the first half of the year.
Construction, as a reminder, had already begun prior to that acquisition. F irst, the construction kicked off in November 2022, with BHP reaffirming OZ Minerals' first production date, which from our perspective, is excellent news. Earlier this week, Cameco announced a circa 12% reduction in 2023 production guidance at Cigar Lake to approximately 16 million pounds from 18 previously, and this is a function of lower mining productivity in a new zone of the ore body. On the next slide, we expect a number of milestones as well as news events relating to our development portfolio over the next 6 to 18 months. BHP has confirmed the continued development of the West Musgrave project following the acquisition of OZ Minerals. However, we'll monitor the construction process very carefully.
The transition to underground mining at Voisey's Bay, something that we continue to monitor, and we hopefully will see a ramp-up in production volumes towards the end of this year to substantiate the underground, expansion really expected to kick in in 2024 onwards. Turning to Capstone Copper. Capstone Copper appear on track to release an updated Santo Domingo feasibility study in the second half of this year, and that should very much inform the production start date, which currently is anticipated somewhere between 2026 and 2028. At Mantos Blancos, a feasibility study previously expected in the second half of this year has slipped slightly to first half 2024. This brownfield low CapEx expansion is something that we certainly would hope to kick in in the medium term.
Last, but certainly not least, we continue to be very impressed by the Brazilian Nickel management team, who hosted us earlier this year at Piauí for a site visit. The full-scale project financing discussions continue, and we hope that more updates will be available in relation to the timeline and the financing for that full-scale build-out later this year. So with that, I'll pass it back to the operator, and we're happy to answer any questions. Thank you.
Ladies and gentlemen, if you would like to ask a question or make a contribution on today's call, please press star one now on your telephone keypad. To withdraw your question, please press star two. The first question comes from the line of William Dalby, calling from Berenberg. Please go ahead.
Hi, good morning to the Ecora team. Thanks for your time today. Just a couple of questions from me. First off, could you talk through your options on the RCF covenants? So what levers do you have to maintain your good standing on the debt covenants? And you know, does the current leverage impact your ability to do deals in the next 12 months?
Hi. Yes, Kevin here. I'll take that one. O ur leverage ratios were quite low at the half year, leaving us plenty of headroom. We obviously expect our net debt profile to ramp up with the further payments to South32 over the second half of the year. But on our projections, we still remain very reasonably covered on our covenants. W e still see good availability on the facility. I think going out longer term, our debt capacity remains high and we remain very active as you have seen with our latest Vizcachitas royalty acquisition. E lsewhere, what can we do about our debt? We still have $24 million at LIORC.
We could recycle that into a new acquisition, or indeed, we could delever if we felt the need to. At present, we don't, but always good to have that flexibility.
Okay. Thanks for that. J ust a second. On tax for the half, you registered a GBP 11 million expense and a GBP 13 million credit. I just wondered, maybe you could give some color around the tax accounting for the half and maybe ballpark numbers we can expect in H2.
Yes, sure. I mean, the current tax is kind of just the average kind of effective tax rate predominantly based on Kestrel's revenue. The deferred tax credit, as you refer to, is an accounting adjustment based on the kind of opposite effect of the Kestrel loss. T hat gets backed out of our adjusted earnings calculation. For the second half of the year, we'd expect the effective tax rate to run as normal.
Okay, brilliant. Thanks a lot.
The next question comes from the line of Alex Bedwany, calling from Canaccord Genuity. Please go ahead.
Good day, guys. Thanks for taking the time and everything seems relatively straightforward. I had just one simple question: How much more in potential payments do you expect to receive from the Narrabri disposal?
Hi, it's Kevin here again. I think i n terms of our contractual fixed payments, we've got just under $9 million to come over the next three years. We also have some price-linked contingent consideration, which is currently in money. That pays us when prices are over $105 a ton for thermal coal. A gain, plenty of headroom on those numbers at the moment. That's $1 per ton amount based on the production at Narrabri. W e've been obviously receiving those as the thermal coal prices remained high. And the final piece, which is contingent upon the granting of the southern expansion, which would see us receive five annual installments of $1 million.
Okay, great. Thank you for that.
Sure.
There are no further questions on the telephone line, I will hand it back to your host to take questions from the webcast.
Thank you. Just a reminder, if you would like to ask a question over the webcast, please click on the Questions button in the toolbar at the bottom of your screen. We'll just pause for one second, allow time for questions. We have our first question from Tyler Broda at RBC. Growth really accelerates from 2026 with West Musgrave and fully ramped Voisey's. What do you think the potential for the business to add more near-term cash flow through a new transaction? Are you seeing value in potential deals at the moment?
Hi, Tyler. Thanks for your question. It's Marc here. As always, our pipeline and our investable universe seems to really span producing royalties, near term and earlier stage. We continue to see opportunities across the board, as I mentioned just now, but the most interesting value really seems to be near production, and that in part is a function of just challenging capital market conditions. W e've all seen really difficult issuance environment for mining companies, and therefore the royalty and streaming product for a lot of these groups is really value accretive option to keep funding projects.
W hile, of course, we do see some producing opportunities, at least in the very short term, it seems like the most value and the opportunities that we find most interesting and compelling tend to be slight construction stage or slightly earlier.
Thank you. We have our next question. Hi, is there possibly an update on Incoa startup?
The Incoa project is continuing on its commissioning program. I think the timeline to first production, unfortunately, was impacted, as a result of the COVID environment, which fundamentally just slowed construction and slowed commissioning. The company is working towards achieving a full-scale production towards the middle of 2024, and more information will be provided at year-end.
Thank you. There are no more questions on the webcast, so I'd like to hand back to Marc for any additional closing remarks.
Well, thank you very much for joining us today. We are pleased to report what are, as I mentioned, results in line with our expectations, but also some very exciting news on our development portfolio.