Ecora Resources PLC (LSE:ECOR, TSX:ECOR, OTCQX:ECRAF) has struck a deal to sell its royalty interest in the Dugbe gold project in Liberia for up to $20 million, as it continues to streamline its portfolio and focus on higher-priority assets.
The sale involves a wholly-owned subsidiary of Ecora that holds a 2% net smelter return (NSR) royalty over the development project.
The buyer is a unit of Elemental Altus Royalties, a company that specialises in acquiring royalty and streaming interests in mining projects.
Under the terms of the deal, Ecora will receive $16.5 million in cash upfront, with up to $3.5 million more payable if the project advances.
The additional payments are tied to key development milestones, $700,000 on the start of construction and a further $2.8 million when commercial production begins.
If the mine ends up being developed on a smaller scale than originally planned, Ecora will still receive the full contingent payment once cumulative gold production reaches 150,000 ounces.
Ecora acquired the Dugbe royalty back in 2012. As of the end of last year, the asset had a carrying value of $5.9 million, meaning the upfront cash component alone represents a significant uplift.
Marc Bishop Lafleche, Ecora’s chief executive, said: “The transaction unlocks value from a development stage asset in a non-core commodity and will enable us to accelerate the group's deleveraging, as well as providing further flexibility to acquire cash generative royalties within our targeted commodity basket in time.”
He added that the deal demonstrates the “substantial value within Ecora's wider royalty portfolio outside the core producing assets.”
What is a net smelter return royalty?
A Net Smelter Return royalty, or NSR, entitles the holder to a percentage of revenue from the sale of mined minerals, after processing and refining costs have been deducted.
In this case, Ecora had the right to receive 2% of Dugbe’s net revenue once production began.
Background on Dugbe
The Dugbe project, located in south-eastern Liberia, is at an advanced stage but is not yet in production.
A feasibility study completed in 2022 outlined a plan to produce over 200,000 ounces of gold per year, though this remains subject to financing and permitting.
Elemental Altus has been steadily building a portfolio of royalty interests across Africa and elsewhere, and the acquisition of Dugbe fits its strategy of backing early-stage projects with long-term potential.
Looking ahead
For Ecora, the sale continues a broader reshaping of its royalty portfolio. The group focuses on commodities it believes are critical to the energy transition, including copper, nickel and lithium, and has been recycling capital out of legacy gold assets.
The proceeds are expected to go towards paying down debt and funding acquisitions more in line with the group’s current priorities.