Proactiveinvestors Australia Anglo Pacific Group PLC https://www.proactiveinvestors.com.au Proactiveinvestors Australia Anglo Pacific Group PLC RSS feed en Wed, 17 Jul 2019 06:57:04 +1000 http://blogs.law.harvard.edu/tech/rss Genera CMS action@proactiveinvestors.com (Proactiveinvestors) action@proactiveinvestors.com (Proactiveinvestors) <![CDATA[Media files - Anglo Pacific to make three more acquisitions before year-end as revenues surge ]]> https://www.proactiveinvestors.com.au/companies/stocktube/9960/anglo-pacific-to-make-three-more-acquisitions-before-year-end-as-revenues-surge-9960.html Thu, 26 Jul 2018 10:14:00 +1000 https://www.proactiveinvestors.com.au/companies/stocktube/9960/anglo-pacific-to-make-three-more-acquisitions-before-year-end-as-revenues-surge-9960.html <![CDATA[News - Anglo Pacific's revenues charged by vanadium price surge ]]> https://www.proactiveinvestors.com.au/companies/news/201628/anglo-pacific-s-revenues-charged-by-vanadium-price-surge-201628.html Higher coal and vanadium prices have lifted interim revenues at mining royalty specialist Anglo-Pacific PLC (LON:APF).

Royalty income will be in a range of £17.5mln to £18mln in the half year to June, a 10% increase year-on-year after a very strong second quarter.

WATCH: ANGLO PACIFIC ENCOURAGED AS NEW KESTREL OWNER REPORTEDLY SET TO EXPAND PRODUCTION

Kestrel, a coal mine in Australia, will again produce the bulk of this revenue.

Royalty income from the mine is 15% higher than a year ago in a range of £14mln - £14.5mln driven by higher coal prices and production.

Volumes at Kestrel more than doubled in the second quarter compared to the first and will continue at this level for the remainder of the year.

Anglo has also seen a sharp increase in the royalty from the Maracás Menchen vanadium mine in Brazil, which will contribute a record £2.0mln - £2.5mln or already more than the whole of 2017.

Julian Treger, Anglo Pacific’s chief executive, said he is now confident the full year will see ‘further organic growth in our income and cash generation’. 

Kestrel is set to change hands soon but Treger sees this as a bonus for Anglo.

The buyers, Adaro and EMR, recently announced that they intend to double output over the coming years.

“Given that virtually all mining is expected to be within our private royalty area over this period, there is the potential to see a corresponding doubling of our royalty income (depending on commodity prices), which would be a significant and material windfall for the company and its stakeholders.”

Anglo also has exposure to uranium through Berkeley Energia, where production is expected to start shortly, and recently acquired an interest in the Cañariaco copper project in Peru.

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Thu, 26 Jul 2018 09:02:00 +1000 https://www.proactiveinvestors.com.au/companies/news/201628/anglo-pacific-s-revenues-charged-by-vanadium-price-surge-201628.html
<![CDATA[Media files - Anglo Pacific encouraged as new Kestrel owner reportedly set to expand production ]]> https://www.proactiveinvestors.com.au/companies/stocktube/9801/anglo-pacific-encouraged-as-new-kestrel-owner-reportedly-set-to-expand-production-9801.html Mon, 09 Jul 2018 15:55:00 +1000 https://www.proactiveinvestors.com.au/companies/stocktube/9801/anglo-pacific-encouraged-as-new-kestrel-owner-reportedly-set-to-expand-production-9801.html <![CDATA[News - Anglo Pacific Group boosted by coal price as broker upgrades ]]> https://www.proactiveinvestors.com.au/companies/news/198700/anglo-pacific-group-boosted-by-coal-price-as-broker-upgrades-198700.html King coal appears to be back in the ascendancy and the rising price of the commodity was behind an upgrade for Anglo Pacific Group PLC (LON:APF), the mining royalty specialist.

Peel Hunt has bumped its valuation to 190p from 181p for shares in the business as it said it expected a ‘fade’ in the price of the black stuff to occur next year rather than this.

“Coal prices have been higher than expected over the past few months, due partly to logistics issues in a range of countries,” said analyst Peter Mallin-Jones in a note to clients.

“Demand has also been strong in Chinese steel output, and notably Chinese coal burn in power generation.

“This has driven an increase to our coal price estimates, lifting Anglo Pacific’s revenues and cash flows.”

Valuation underlines Anglo’s potential

So, why does this matter to Anglo? Well, it has exposure to the sector via royalty streams from the Kestrel and Narrabri mines in Australia, which were singled out by the Peel Hunt number cruncher.

The revised target price, meanwhile, was based on the average of the updated net asset value (187p) and the dividend yield valuation of Anglo (194p).

The shares, down a penny, were changing hands for 153.5p, or around 24% below the Peel Hunt target.

Gold and uranium too

Anglo isn’t just fuelled by coal. It receives royalties from a gold project in Spain, a vanadium operation in Brazil, as well as receiving uranium income from the US and Australia.

There’s also a royalty on the Berkeley Energia (LON:BKY) uranium mine in Spain, due to come on stream next year.

That’s already a good spread in terms of commodity and jurisdiction, but chief executive Julian Treger said recently he is keen to broaden the company’s exposure to industrial metals.

“We want to grow in copper, nickel and zinc,” he says. “But it will be specific to opportunity.”

As to the more fashionable commodities like lithium and cobalt, it seems likely that Anglo will leave those alone for the moment. Treger reckons cobalt is a bit “overblown” and is not convinced of the long-term dynamics for lithium either.

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Tue, 12 Jun 2018 12:05:00 +1000 https://www.proactiveinvestors.com.au/companies/news/198700/anglo-pacific-group-boosted-by-coal-price-as-broker-upgrades-198700.html
<![CDATA[News - Anglo Pacific Group to acquire a net smelter return royalty in Peruvian copper project ]]> https://www.proactiveinvestors.com.au/companies/news/198556/anglo-pacific-group-to-acquire-a-net-smelter-return-royalty-in-peruvian-copper-project-198556.html Anglo Pacific Group plc (LON:APF, TSX:APY) is to acquire an existing 0.5% net smelter return royalty over the Cañariaco copper project from Entrée Resources.

The Cañariaco project in Peru is wholly-owned by Candente Copper (TSE:DNT).

READ: Anglo Pacific continues to generate lots of cash from its mining royalty portfolio​

Anglo Pacific will provide Entrée with US$1mln in Anglo Pacific shares in return for the royalty.

The acquisition is in line with the company's strategy to invest smaller amounts in development stage opportunities that have the potential for higher returns along with significant growth potential.

"The Cañariaco Royalty reflects the company's increased focus on commodities which we believe will be vital in the delivery of new technology and innovation. This copper royalty supplements our Maracás Menchen vanadium royalty and our recently announced Piauí nickel-cobalt royalty, providing the company with considerable exposure, and upside, to base materials which have a huge part to play in the energy storage and electric vehicle revolution,” said Julian Treger, the chief executive officer of Anglo Pacific Group.

"It is predicted that in the coming years declining copper grades at existing operations and the lack of recent investment into copper production capacity will lead to a supply deficit based on industrial demand sources alone. The incremental copper demand, driven by electric vehicle sales growth forecasts, creates conditions for an even tighter supply environment,” Treger said.

"We believe new copper supply will be required, and with a NI 43-101 compliant measured and indicated resources of over 7.5 billion pounds of contained copper, the Cañariaco project ranks as one of the largest independently owned, undeveloped copper projects. The project's additional exploration upside, low-cost potential and location in an established mining jurisdiction indicates a positive prospect for development during the next decade,” he continued.

"Longer-term, the Cañariaco project has the potential to provide economic benefits in the form of direct, full time, life of mine employment for approximately 600 people, as well as 2,000 people during construction, and in addition the potential to create indirect life of mine indirect employment for an additional 2,400 people over a 20 year mine-life," Treger suggested.

Shares in Anglo Pacific were up 2% at 153p towards the end of trading.

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Fri, 08 Jun 2018 15:37:00 +1000 https://www.proactiveinvestors.com.au/companies/news/198556/anglo-pacific-group-to-acquire-a-net-smelter-return-royalty-in-peruvian-copper-project-198556.html
<![CDATA[Media files - Anglo Pacific acquires royalty on Cañariaco Copper Project in Peru ]]> https://www.proactiveinvestors.com.au/companies/stocktube/9526/anglo-pacific-acquires-royalty-on-caariaco-copper-project-in-peru-9526.html Fri, 08 Jun 2018 15:27:00 +1000 https://www.proactiveinvestors.com.au/companies/stocktube/9526/anglo-pacific-acquires-royalty-on-caariaco-copper-project-in-peru-9526.html <![CDATA[Media files - Higher commodity prices sees Anglo Pacific get off to a solid start in 2018 ]]> https://www.proactiveinvestors.com.au/companies/stocktube/9293/higher-commodity-prices-sees-anglo-pacific-get-off-to-a-solid-start-in-2018-9293.html Tue, 15 May 2018 09:54:00 +1000 https://www.proactiveinvestors.com.au/companies/stocktube/9293/higher-commodity-prices-sees-anglo-pacific-get-off-to-a-solid-start-in-2018-9293.html <![CDATA[News - Anglo Pacific continues to generate lots of cash from its mining royalty portfolio ]]> https://www.proactiveinvestors.com.au/companies/news/196989/anglo-pacific-continues-to-generate-lots-of-cash-from-its-mining-royalty-portfolio-196989.html Higher commodity prices helped royalty company Anglo Pacific Group plc (LON:APF) get off to a solid start in 2018.

Royalty income from the Kestrel coal mine and other projects totalled £7.9mln in the opening three months of the year, in line with the £8.2mln generated in the same period of 2017, which was a record year for the group.

Strong cash generation

The slight drop-off in income was down to production shortfalls at Rio Tinto PLC’s (LON:RIO) Kestrel mine and Whitehaven’s Narrabri project, although volumes at those two mines are expected to pick up over the year.

The lower volumes were partially offset by the continued recovery of commodity prices; in particular vanadium, which has more than doubled over the past year.

Higher prices look set to be a key feature moving forward as well, with the second quarter consensus for coking coal now 50% higher than what was predicted this time last year.

During the quarter, Anglo generated free cash flow of £13.3mln (Q1 2017: £13.4mln) leaving it with £18.7mln in the bank come the end of March (Dec 31: £8.1mln).

WATCH: Higher commodity prices sees Anglo Pacific get off to a solid start in 2018

“We continue to generate significant cash from our portfolio, have immediate access to circa US$65mln and are currently in the process of upsizing our bank facility,” said chief executive Julian Treger.

“The focus for the year is firmly on growth and we continue to work very hard on exploring, evaluating and appraising new opportunities.”

He added: “The announced sale of Kestrel during the quarter was around 50% higher than what the market had anticipated in 2017, suggesting a potential upside to our royalty. This should benefit Anglo Pacific as the beneficiary of the vast majority of royalty payments over the next 8-10 years.”

Anglo shares were down 0.9% to 161p shortly after the opening bell in London.

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Tue, 15 May 2018 08:16:00 +1000 https://www.proactiveinvestors.com.au/companies/news/196989/anglo-pacific-continues-to-generate-lots-of-cash-from-its-mining-royalty-portfolio-196989.html
<![CDATA[Media files - Anglo Pacific CEO says Kestrel royalty brings increased confidence in growth from organic sources ]]> https://www.proactiveinvestors.com.au/companies/stocktube/9254/anglo-pacific-ceo-says-kestrel-royalty-brings-increased-confidence-in-growth-from-organic-sources-9254.html Wed, 09 May 2018 16:10:00 +1000 https://www.proactiveinvestors.com.au/companies/stocktube/9254/anglo-pacific-ceo-says-kestrel-royalty-brings-increased-confidence-in-growth-from-organic-sources-9254.html <![CDATA[News - Anglo Pacific’s bumper royalty revenue means it’s now trading on a cash flow multiple of just seven times ]]> https://www.proactiveinvestors.com.au/companies/news/194369/anglo-pacifics-bumper-royalty-revenue-means-its-now-trading-on-a-cash-flow-multiple-of-just-seven-times-194369.html Anglo Pacific Group plc (LON:APF) turned in a bumper set of full year results at the end of March, as the recovery in the mining sector began to hit its stride and the company’s judicious acquisition strategy starts to pay off in a serious way.

Royalty income from the Kestrel coal mine and other projects hit a record level of £37.4mln, an increase of 90% over the £19.7mln received last year.

In part, of course, that increase is a straightforward consequence of the greater number of active royalties that are now in the portfolio, and a greater measure of the company’s performance can be seen in the almost tripling of the free cash flow per share from 7.93p to 23.2p.

Accordingly, Anglo Pacific’s shares are trading on a cash flow multiple of around 6.5 or seven times, which is low for a royalty company and a result partly because in London there’s a paucity of peers to which the company can be compared.

And, with a 72% increase in adjusted earnings booked at 16.82p, up from the 9.76p delivered in the previous year, the dividend is now covered by almost 2.5 times.

All of which provides a very solid foundation for Anglo Pacific to build upon in the coming months and years.

Chief executive Julian Treger is confident the company will be able to up the number of deals it can do in a given calendar year, now that the mining market looks to have recovered its poise to some extent after long years of bearish sentiment, but even if there is more optimism around in mining, capital is still extremely scarce. And that’s where the real opportunity for Anglo Pacific comes in.

The company ended the year with cash on hand of £8.1mln, a figure that’s set to grow quarter-on-quarter as the royalty income continues to roll in. There’s also U$15mln available through what Treger describes as “non-core” equity holdings, and an unused credit facility of US$40mln.

However, Treger hopes to raise that facility to US$90mln before too long. All told, with a strong financial base and significant war chest, Anglo Pacific looks well set up to secure further royalties from companies looking for constructive ways to raise capital without diluting their own shareholders.

“The backdrop is very favourable,” says Treger.

“There continues to be a shortage of capital in the mining sector, and there’s a lot of demand.”

It’s helpful - to Anglo Pacific at least – that this time round the mining cycle isn’t co-ordinated.

“Some commodities are more fully valued than others,” says Treger.

Accordingly, Anglo Pacific will continue to take a selective approach.

Currently it holds cash generating royalties over coal projects in Australia, a gold project in Spain, a vanadium project in Brazil, as well as uranium royalties in the US and Australia. There’s also a royalty on the Berkeley Energia (LON:BKY) uranium mine in Spain, due to come on stream next year.

That’s already a good spread in terms of commodity and jurisdiction, but Treger is keen to broaden the company’s exposure to industrial metals.

“We want to grow in copper, nickel and zinc,” he says. “But it will be specific to opportunity.”

As to the more fashionable commodities like lithium and cobalt, it seems likely that Anglo Pacific will leave those alone for the moment. Treger reckons cobalt is a bit “overblown” and is not convinced of the long-term dynamics for lithium either.

But that aside, the company is open to opportunities and comfortable with the way it sits in the current market.

“I think that subject to hiccups we’re now in a market which has co-ordinated global growth, and that should be beneficial to industrial minerals,” says Treger.

“Having said that the rise of indexisation will lead to a paucity of capital for mining ventures, and money from the generalist funds is going into the larger capitalised companies. The small companies and even specialised funds are continuing to see outflows.”

And that sort of environment is one in which Anglo Pacific should thrive.

“There’s a lot of demand for financing and not much supply,” adds Treger. “So we hope to up the number of transactions we complete this year.”

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Fri, 06 Apr 2018 09:01:00 +1000 https://www.proactiveinvestors.com.au/companies/news/194369/anglo-pacifics-bumper-royalty-revenue-means-its-now-trading-on-a-cash-flow-multiple-of-just-seven-times-194369.html
<![CDATA[News - Anglo Pacific on look out for more deals as royalty income soars ]]> https://www.proactiveinvestors.com.au/companies/news/193948/anglo-pacific-on-look-out-for-more-deals-as-royalty-income-soars-193948.html A huge increase in the contribution from its Kestrel coal royalty in Australia helped Anglo Pacific Holdings PLC (LON:APF) to record revenues.

Total royalty income in 2017 rose by 90% to £37.4mln, but it was Kestrel, which is being mined by Rio Tinto, that stood out.

WATCH: Anglo Pacific enjoys record 2017 with royalty income of £37.4 mln

Higher coal prices and more mining on Anglo’s royalty area saw Kestrel’s income rise 115% to £28.8mln.

Maracás Menchen, a vanadium royalty in Brazil, also chipped in strongly with its income jumping 150% to £2mln as prices soared and production increased.

Julian Treger, chief executive, said: "2017 was a record year for Anglo Pacific with royalty income of £37.4mln, and total income of £42.4mln when the cash flows from our Denison transaction are included.

Adjusted earnings rose by 82% to £30mln and shareholders get a 7p dividend for the year, a 17% increase.

Treger added that the group intends to maintain the momentum by acquiring new royalties as Anglo has access to over US$50m of liquidity from its balance sheet and a favourable commodity pricing outlook.

“Our pipeline is in very good shape and we move forward into 2018 with optimism." 

Shares were unchanged at 152.5p.

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Wed, 28 Mar 2018 08:47:00 +1100 https://www.proactiveinvestors.com.au/companies/news/193948/anglo-pacific-on-look-out-for-more-deals-as-royalty-income-soars-193948.html
<![CDATA[Media files - Anglo Pacific enjoys record 2017 with royalty income of £37.4 mln ]]> https://www.proactiveinvestors.com.au/companies/stocktube/8961/anglo-pacific-enjoys-record-2017-with-royalty-income-of-374-mln-8961.html Wed, 28 Mar 2018 08:32:00 +1100 https://www.proactiveinvestors.com.au/companies/stocktube/8961/anglo-pacific-enjoys-record-2017-with-royalty-income-of-374-mln-8961.html <![CDATA[Media files - Anglo Pacific enjoys record year with strengthening coal and vanadium prices ]]> https://www.proactiveinvestors.com.au/companies/stocktube/8712/anglo-pacific-enjoys-record-year-with-strengthening-coal-and-vanadium-prices-8712.html Wed, 07 Feb 2018 08:20:00 +1100 https://www.proactiveinvestors.com.au/companies/stocktube/8712/anglo-pacific-enjoys-record-year-with-strengthening-coal-and-vanadium-prices-8712.html <![CDATA[News - Record year for Anglo Pacific as coal prices recover ]]> https://www.proactiveinvestors.com.au/companies/news/191277/record-year-for-anglo-pacific-as-coal-prices-recover-191277.html Anglo Pacific Group plc (LON:APF), the royalty specialist, enjoyed a record year in 2017 as higher coal and vanadium prices combined with increased production on its land.

Royalty income rose 90% to £37mln-£37.75mln with a further £4.7mln/£5mln to come from uranium operation Denison/McClean.

Julian Treger, the chief executive, said the average price realised at Australian coking coal royalty Kestrel was some 40% higher than a year earlier.

READ: Anglo Pacific could become the go-to royalty vehicle for the 21st century

Added to increased production there from its land, the weighted average royalty rate increased from 8.5% to 10.5%.

Thermal coal producer Narribri, also in Australia, saw royalty revenue rise by 15% despite lower volumes.

Treger also highlighted vanadium producer Maracás Menchen, which produced a record year of royalty income.

WATCH: Anglo Pacific enjoys record year with strengthening coal and vanadium prices

“The outlook for the year ahead, assuming consistent volumes, remains positive, with 90%+ of production at Kestrel expected to come from within our lands, and with commodity prices remaining resilient," he said.

“Prices for both coking and thermal coal are being buoyed by Chinese environmental restrictions on low-quality coal.

“It has long been our view that, over time, high quality lower polluting coal would start to become more desirable. It appears that this is now happening.”

The higher royalty receipts meant there was a net cash position of £8.1mln, debts of £1mln, at the year-end while the final dividend rises by two-thirds to 2.5p to make 7p for the year overall.

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Wed, 07 Feb 2018 07:38:00 +1100 https://www.proactiveinvestors.com.au/companies/news/191277/record-year-for-anglo-pacific-as-coal-prices-recover-191277.html
<![CDATA[News - Anglo Pacific could become the go-to royalty vehicle for the 21st century ]]> https://www.proactiveinvestors.com.au/companies/news/190752/anglo-pacific-could-become-the-go-to-royalty-vehicle-for-the-21st-century-190752.html Anglo Pacific Group PLC (LON:APF) hit a three-year high in January, which may surprise those who thought coal was dead as an investment.

Not that the mining royalties specialist is totally reliant on coal for its income, but it does form a large part of its cash flow, and the share price rise has gone hand-in-hand with strong coal prices.

WATCH: Anglo Pacific enjoys record year with strengthening coal and vanadium prices

An investment in coal may not be as sexy as one in lithium or cobalt, but to Julian Treger, Anglo Pacific’s chief executive, it makes a lot of sense.

Mining, he argues, is a perfect way for investors to mix the old with the new: As enthusiasm for the latest fad ebbs and flows there’s always one element of certainty, that the materials for whatever it is that’s being made will have to be mined.

Hence, there’s been a boom in the lithium mining sector in response to hype about electric car batteries, with cobalt slipstreaming along behind. Copper has enjoyed some benefit from this narrative too, as the thinking is that more wiring will be needed in electric vehicles than in petrol-powered ones.

In the case of coal, there’s power generation.

How much power is being used to mine the cryptocurrencies that are sweeping through world markets at the moment? That’s hard to quantify, but it has been notable that a US investor in Atlantic Power Corp (NYSE:AT) has been urging the company to use surplus electricity to mine cryptos, while in China, the authorities are said to have curbed power supply to known cryptocurrency miners.

The 21st-century technological revolution is steam-powered

In the US, much of the power generated for use in Tesla’s electric vehicles actually comes from steam-powered coal stations, an irony not lost on Treger. “These cars are powered by steam, as they were 120 years ago,” he muses.

Perhaps even more significantly for the longer-term, an immense amount of power is used to cool the world’s computers and to keep them cool, and in many countries, particularly outside of Europe, that means coal.

“It’s pretty unfortunate for UK investors that there’s a perception that coal is done for,” says Treger. “But demand continues to grow in absolute terms, although its share is falling.”

That dynamic, though subtle in itself, has had a fairly unsubtle read-through: coal price has been rising. Indeed, in the past 12 months, coal price has outperformed the expectations of many analysts by at least 100%.

The other side of the same coin, though, is, of course, pollution, but paradoxically perhaps, here there is help for coal producers too. That’s because, in China, a key bellwether for the world’s attitudes towards coal mining and pollution, production of the dirtiest coal is being aggressively phased out in favour of the highest quality coal.

This type of coal also commands the highest margin, and those that have it are quids in.

Dirty coal: bad; clean coal: good (or not so bad)

This is true in the case of Anglo Pacific, which derives the bulk of its royalty income from Kestrel, a high-quality clean-coal mine in Australia operated by Rio Tinto.

Anglo Pacific doesn’t hold a royalty over the entire mine, and nor is the quality of the ground over which it does hold its royalty completely consistent, so, three years ago, when Rio wasn’t mining as much of the Anglo royalty area as it is now, and when the coal price was lower, there was less money for Anglo Pacific. It is not surprising that the share price dipped back then and took some time to recover.

Since then, Treger’s been active; he’s raised money and acquired more royalties for the company, in clean coal at Whitehaven’s Narrabri mine, but also in other commodities.

READ: Anglo Pacific has the fire power and looking to 'bring home the deals'

“Coal isn’t going to go away,” he says. “It’s cheaper for the poorer economies of the world. The more thoughtful response isn’t no coal, but cleaner coal.”

Even so, the overall percentage of Anglo Pacific’s portfolio devoted to coal is now smaller, given the overall exposure to uranium, vanadium, gold, copper, silver, cobalt, iron ore and nickel.

“Generally we’ve done one or two transactions per year, but this year I hope we can do three or four,” says Treger.

He’s helped by higher share price, of course, but also by a market that seems open to business, and seems well and truly over the optimistic sky-high valuations that were generated by the last boom.

What type of deal would he like to do, bearing in mind that different markets around the world have had different responses to the new technologies that are emerging?

“Toronto has been a bit subdued,” he says.

“But Australia has been on a lithium, electric vehicle bandwagon for probably about 18 months now. There’s been a bull market for the more speculative mining stocks, but that’s a sort of universe on its own. We try to block out the chatter but other than in the energy space, we’re not seeing yet a very hyped story.”

Cobalt, for example, he thinks is probably nearing the end of its run. The emphasis instead, goes on general, longer-term global economic development.

“Base metals like zinc, copper and nickel could still run. The price of copper bottomed out at US$2.00. It’s now US$3.20 but it could go to US$4.00 or US$5.00 or more. We’ll have to see.”

In that sense, Anglo Pacific stands out from most of its peers, in that it’s not focussed on gold and silver royalties. Instead, this is a royalty company that’s geared to the global economy and advancing technology.

“We as a sector are actually a beneficiary of disruption and there’s an opportunity for us to become the go-to royalty vehicle for the twenty-first century,” Treger believes.

Broker sees plenty of opportunities for more royalty acquisitions

Peel Hunt appears to be coming round to this point of view.

Strong coal prices should give Anglo another year of solid income in 2018, it said.

The broker, which has upgraded the stock to 'add' from 'hold', thinks the current coal price environment could enable management to start acquiring royalties from internal cash resources.

Anglo Pacific currently derives the bulk of its royalty income from Kestrel, a high-quality clean-coal mine in Australia operated by Rio Tinto, but is always on the look-out for more royalties.

“Ongoing coal price strength or royalty acquisitions can each plot a route to a valuation range of 220p-250p, suggesting further upside beyond our revised 160p base case target price,” Peel Hunt said.

WATCH: A mini renaissance likely for London's coal companies

Coal prices have already held up better than many expected so far in 2018.

The broker's cash flow estimates plus an undrawn US$40mln credit facility suggests a budget of up to US$135mln for royalty deals in 2018 without the need for the company to issue shares.

At a 10% acquisition yield, this could add 25-40% to the broker's medium-term operating cash flows.

Furthermore, based on the broker's recent meetings with management, it is clear the company has confidence in the deals coming down the pipe.

It did two deals in 2017 but is looking to top that in 2018.

“The overarching trend is for further base metal exposure but, that said, no commodity would be ruled out if the transaction surpasses management’s internal metrics of quality, jurisdiction, and yield. This is particularly the case in the secondary royalty market,” the broker noted.

Royalty income in 2017 rose 90% to £37mln-£37.75mln from the year before, with a further £4.7mln/£5mln to come from uranium operation Denison/McClean.

READ: Record year for Anglo Pacific as coal prices recover

The broker is forecasting adjusted profit before tax of £33.2mln in 2017, up from £16.8mln in 2016, and sees this rising to £43.2mln in 2018 on the back of a rise in sales to £43.3mln.

The cash generation should not only assist in landing more royalty deals for Anglo but should also underpin Peel Hunt's forecast of an 8.5p dividend in 2018.

Based on Anglo's current share price of around 144p, that would give a dividend yield of 5.9%.

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Mon, 29 Jan 2018 11:22:00 +1100 https://www.proactiveinvestors.com.au/companies/news/190752/anglo-pacific-could-become-the-go-to-royalty-vehicle-for-the-21st-century-190752.html
<![CDATA[Media files - A mini renaissance likely for London's coal companies ]]> https://www.proactiveinvestors.com.au/companies/stocktube/8670/a-mini-renaissance-likely-for-london-s-coal-companies-8670.html Fri, 26 Jan 2018 12:38:00 +1100 https://www.proactiveinvestors.com.au/companies/stocktube/8670/a-mini-renaissance-likely-for-london-s-coal-companies-8670.html <![CDATA[Media files - Anglo Pacific has the fire power and looking to 'bring home the deals' ]]> https://www.proactiveinvestors.com.au/companies/stocktube/8447/anglo-pacific-has-the-fire-power-and-looking-to-bring-home-the-deals--8447.html Wed, 29 Nov 2017 20:42:00 +1100 https://www.proactiveinvestors.com.au/companies/stocktube/8447/anglo-pacific-has-the-fire-power-and-looking-to-bring-home-the-deals--8447.html <![CDATA[News - Anglo Pacific investors eye with interest Orvana Minerals Corp's drill results in Northern Spain ]]> https://www.proactiveinvestors.com.au/companies/news/187887/anglo-pacific-investors-eye-with-interest-orvana-minerals-corp-s-drill-results-in-northern-spain-187887.html One of our eagle-eyed correspondents in Canada spotted an interesting release from Orvana Minerals Corp (TSX:ORV) that has a read-across for London-listed Anglo Pacific Group plc (LON:APF).

It was a drilling report from the El Valle-Boinàs and Carlés copper-gold mines in northern Spain (collectively known as EVBC).

READ: Higher coal and vanadium prices sees Anglo Pacific post 89% increase in Q3 royalty income

The head-turner from the programmes was the bonanza-grade 64.27 grams per tonne of gold found in a near five-metre section at El Valle.

Another hole on the site intersected 8.29 grams of gold over 9.6 metres with kicker of copper at a decent grade (1.92%).

Open at depth

Over at Carlés the exploration team found 12.54 grams per tonne of the yellow metal over 10.2 metres in a skarn orebody that remains open at depth.

The interest to Anglo Pacific investors? Well, it’s quite simple: the UK mining investment house has a 2.5% net smelter royalty over EVBC, rising to 3% when the price of gold tops US$1,100 an ounce (the current price is closer to US$1,300).  

As one analyst pointed out: “The royalty is on the mill, which means all material pushed through it - ie all near-mine exploration - will be paid.”

A nice little earner. But interestingly, on Anglo’s site it reveals EVBC is classified as “an available-for-sale equity financial asset”.

One suspects Anglo will be receiving quite few calls from potential buyers after the latest round of drill results.

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Tue, 28 Nov 2017 09:30:00 +1100 https://www.proactiveinvestors.com.au/companies/news/187887/anglo-pacific-investors-eye-with-interest-orvana-minerals-corp-s-drill-results-in-northern-spain-187887.html
<![CDATA[Media files - Higher coal and vanadium prices sees Anglo Pacific post 89% increase in Q3 royalty income ]]> https://www.proactiveinvestors.com.au/companies/stocktube/8344/higher-coal-and-vanadium-prices-sees-anglo-pacific-post-89-increase-in-q3-royalty-income-8344.html Thu, 09 Nov 2017 09:31:00 +1100 https://www.proactiveinvestors.com.au/companies/stocktube/8344/higher-coal-and-vanadium-prices-sees-anglo-pacific-post-89-increase-in-q3-royalty-income-8344.html <![CDATA[News - Anglo Pacific on a roll as commodities move in its favour ]]> https://www.proactiveinvestors.com.au/companies/news/186037/anglo-pacific-on-a-roll-as-commodities-move-in-its-favour-186037.html Anglo Pacific Group PLC (LON:APF TSE:APY) is set for a strong year in 2017 as commodity prices have moved in its favour.

The mining royalty specialist’s results have already been aided by a rally in the price of coking coal and vanadium

WATCH: Anglo Pacific to give investors more regular income with quarterly dividend

Anglo has royalty interests in two coal mines in Australia: Rio Tinto’s Kestrel and Whitehaven’s Narrabri.

Royalty income shot up by 295% to £16.1mln in the half year to June as strong production led to a record performance at the Maracás Menchen project in Brazil and a significant improvement in vanadium prices to an average of US$5.46 per pound from US$3.15 last year.

Anglo has a 2% net smelter return royalty on all mineral products sold from the project to which the royalty interest relates.

Kestrel mine supported by rebound in coking coal price

Royalty income was also boosted by a favourable exchange rate and an increase in mining within the company’s private royalty land at the Kestrel underground coal mine in Queensland, Australia.

“It is pleasing to see that this increased volume in mined coal that is subject to the group's royalty has coincided with a strong rebound in the coking coal price,” said chief executive Julian Treger in a statement.

“This, along with the contribution from the rest of the portfolio and the recent Denison financing arrangement, has seen us post a doubling of income over the last two years and a similar outcome is expected this year.”

READ: Anglo Pacific Group reveals steep rise in royalty income

Adjusted earnings for the period came to £12.9mln, up 438% on the previous year.

The company declared an interim dividend of 3p per share as it ended the period debt free after repaying all its loans following the receipt of royalty income in the second quarter and paying a 2016 final dividend. In June, Anglo said it would be making quarterly dividend payments.

Anglo had net assets of £209.6mln at the end of the period.

Treger added that the company has access to between US$30.0-US$40.0mln of cash and borrowing facilities for further royalty investments, which will be “very much the focus” for the second half of the year.

Positioned for electric cars

In keeping with that, the group acquired a royalty over a nickel-cobalt mine in Brazil to position itself for the expected surge in electric car usage.

Cobalt, alongside lithium, is a key component in battery packs for electric vehicles and is in scarce supply.

Initially, Anglo will pay Brazilian Nickel Limited (BRN) US$2mln for a 1% gross revenue royalty (GRR) on the Piauí nickel – cobalt project in the north-east of the country.

WATCH: Anglo Pacific widens portfolio with nickel-cobalt acquisition

Anglo-Pacific also has an option to spend up to an additional US$70mln to increase the gross royalty on Piaui by up to a further 4.5 percentage points dependent on when it is exercised and how the project has developed.

Julian Treger, Anglo Pacific’s chief executive, said: "The Piauí royalty reflects the company's strategy of investing into earlier stage, high growth potential royalties.

“Combined with our Maracás Menchen vanadium royalty, this investment also represents a continuing strategic pivot into metals which are exposed to the burgeoning electric vehicle story.”

BRN will use the initial funding for a pilot plant with nameplate annual production capacity of 1,000 tonnes of saleable nickel, which, if successful, will be followed by a full plant producing 24,000t of nickel each year and 1,000t of cobalt.

WATCH: Anglo Pacific boss says first quarter 'the sign of a good year ahead' 

Anglo Pacific has already notched up a major success in backing the Salamanca uranium project in Spain, held by the consummate operators at Berkeley Energia (LON:BKY).

And it followed that up with a substantial stake in a North American operation, securing an income stream from processing ore from the famous Cigar Lake uranium mine in Canada.

Under the terms of the deal, Denison Mines (TSE:DML), a famous name in uranium mining, sold a right to 22.5% of the toll milling proceeds from the McClean Lake Mill, which takes ore from Cigar Lake.

The transaction comprised an up-front payment of C$2.7 mln, plus the granting to Denison of a C$40.8 mln loan.

It took Anglo Pacific into partnership with another great name in uranium production, Areva, which owns 70% of the McClean Lake Mill and 37.1% of Cigar Lake, and really begins to set it amongst the big leagues. 

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Mon, 23 Oct 2017 13:46:00 +1100 https://www.proactiveinvestors.com.au/companies/news/186037/anglo-pacific-on-a-roll-as-commodities-move-in-its-favour-186037.html
<![CDATA[Media files - Anglo Pacific widens portfolio with nickel-cobalt acquisition ]]> https://www.proactiveinvestors.com.au/companies/stocktube/8080/anglo-pacific-widens-portfolio-with-nickel-cobalt-acquisition-8080.html Thu, 14 Sep 2017 08:15:00 +1000 https://www.proactiveinvestors.com.au/companies/stocktube/8080/anglo-pacific-widens-portfolio-with-nickel-cobalt-acquisition-8080.html <![CDATA[News - Anglo Pacific to take royalty on Brazil nickel and cobalt project ]]> https://www.proactiveinvestors.com.au/companies/news/183959/anglo-pacific-to-take-royalty-on-brazil-nickel-and-cobalt-project-183959.html Anglo Pacific Group plc (LON:APF TSX:APY) has acquired of a royalty over a nickel-cobalt mine in Brazil to position itself for the expected surge in electric car usage.

Cobalt, alongside lithium, is a key component in battery packs for electric vehicles and is in scarce supply.

Initially, royalty specialist Anglo will pay Brazilian Nickel Limited (BRN) US$2mln for a 1% gross revenue royalty (GRR) on the Piauí nickel – cobalt project in the north-east of the country.

WATCH: Anglo Pacific widens portfolio with nickel-cobalt acquisition

Anglo-Pacific also has an option to spend up to an additional US$70mln to increase the gross royalty on Piaui by up to a further 4.5 percentage points dependent on when it is exercised and how the project has developed.

Julian Treger, Anglo Pacific’s chief executive, said: "The Piauí royalty reflects the company's strategy of investing into earlier stage, high growth potential royalties.

“Combined with our Maracás Menchen vanadium royalty, this investment also represents a continuing strategic pivot into metals which are exposed to the burgeoning electric vehicle story.”

BRN will use the initial funding for a pilot plant with nameplate annual production capacity of 1,000 tonnes of saleable nickel, which, if successful, will be followed by a full plant producing 24,000t of nickel each year and 1,000t of cobalt.

The project is close to water, power and transport and BRN currently estimates it can produce nickel at below US$3 per pound. The nickel spot price currently US$5.08 per lb.

Shares rose 1% to 137.4p.

-- adds interview, share price --

 

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Thu, 14 Sep 2017 07:31:00 +1000 https://www.proactiveinvestors.com.au/companies/news/183959/anglo-pacific-to-take-royalty-on-brazil-nickel-and-cobalt-project-183959.html
<![CDATA[Media files - Significant income, cash flow and profits growth in first half for Anglo Pacific Group ]]> https://www.proactiveinvestors.com.au/companies/stocktube/7980/significant-income-cash-flow-and-profits-growth-in-first-half-for-anglo-pacific-group-7980.html Wed, 23 Aug 2017 09:12:00 +1000 https://www.proactiveinvestors.com.au/companies/stocktube/7980/significant-income-cash-flow-and-profits-growth-in-first-half-for-anglo-pacific-group-7980.html <![CDATA[News - Anglo Pacific Group posts first half jump in royalty income and free cash flow ]]> https://www.proactiveinvestors.com.au/companies/news/182846/anglo-pacific-group-posts-first-half-jump-in-royalty-income-and-free-cash-flow-182846.html Anglo Pacific Group PLC (LON:APF) said it made a “very strong” start to the year after free cash flow and royalty income surged in the first half.

The mining royalty business reported a 300% jump in free cash flow to £18.9mln in the six months ended 30 June, compared to the same period a year earlier, including an impact of the Denison financing arrangement of £3.3bn.

WATCH: Significant income, cash flow and profits growth in first half for Anglo Pacific Group

Royalty income shot up 295% to £16.1mln with a record performance at the Maracás Menchen project in Brazil due to strong production and a significant improvement in vanadium prices to an average of US$5.46 per pound from US$3.15 last year.

Anglo has a 2% net smelter return royalty on all mineral products sold from the project to which the royalty interest relates.

Kestrel mine supported by rebound in coking coal price

Royalty income was also boosted by a favourable exchange rate and an increase in mining within the company’s private royalty land at the Kestrel underground coal mine in Queensland, Australia.

“It is pleasing to see that this increased volume in mined coal that is subject to the group's royalty has coincided with a strong rebound in the coking coal price,” said chief executive Julian Treger in a statement.

“This, along with the contribution from the rest of the portfolio and the recent Denison financing arrangement, has seen us post a doubling of income over the last two years and a similar outcome is expected this year.”

However, the Kestrel valuation dropped 8% to £107.5mln at June 2017 from £116.9mln at the beginning of the year, primarily as a result of resource depletion and forward pricing assumptions.

READ: Anglo Pacific Group reveals steep rise in royalty income Anglo Pacific's earnings soar 

Adjusted earnings for the period came to £12.9mln, up 438% on the previous year.

The company declared an interim dividend of 3p per share as it ended the period debt free after repaying all its loans following the receipt of royalty income in the second quarter and paying a 2016 final dividend. In June, Anglo said it would be making quarterly dividend payments.

Anglo had net assets of £209.6mln at the end of the period, compared to £210.1mln on 31 December, equating to net assets per share of 116p, down from 124p.  

“Anglo Pacific has had a very strong start to 2017, which has seen us add to our portfolio with the Denison financing arrangement, report significant further increases in royalty revenue, and become debt free,” Treger said.

“This gave us the confidence to implement the payment of our dividend on a quarterly basis, to match the timing of our quarterly revenue, and also to accelerate the timing of dividend payments post declaration.”

Treger added that the company has access to between US$30.0-US$40.0mln of cash and borrowing facilities for further royalty investments, which will be “very much the focus” for the second half of the year.

WATCH: Zak Mir: Anglo Pacific Group looking at 150p

Shore Capital analysts said: “For the second half, Anglo Pacific’s focus will continue to be on adding further royalties to its portfolio. Given its revolving credit facility, relatively strong coking coal and vanadium prices and a relatively weak pound, we see Anglo Pacific as being well-positioned in this respect.”

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Wed, 23 Aug 2017 07:42:00 +1000 https://www.proactiveinvestors.com.au/companies/news/182846/anglo-pacific-group-posts-first-half-jump-in-royalty-income-and-free-cash-flow-182846.html
<![CDATA[Media files - Anglo Pacific in very good financial health after boost in royalty income ]]> https://www.proactiveinvestors.com.au/companies/stocktube/7858/anglo-pacific-in-very-good-financial-health-after-boost-in-royalty-income-7858.html Mon, 31 Jul 2017 13:40:00 +1000 https://www.proactiveinvestors.com.au/companies/stocktube/7858/anglo-pacific-in-very-good-financial-health-after-boost-in-royalty-income-7858.html <![CDATA[Media files - Zak Mir: Anglo Pacific Group looking at 150p ]]> https://www.proactiveinvestors.com.au/companies/stocktube/7857/zak-mir-anglo-pacific-group-looking-at-150p-7857.html Mon, 31 Jul 2017 10:47:00 +1000 https://www.proactiveinvestors.com.au/companies/stocktube/7857/zak-mir-anglo-pacific-group-looking-at-150p-7857.html <![CDATA[News - Anglo Pacific Group reveals steep rise in royalty income ]]> https://www.proactiveinvestors.com.au/companies/news/181693/anglo-pacific-group-reveals-steep-rise-in-royalty-income-181693.html Mining royalty business Anglo Pacific Group plc (LON:APF) revealed a steep rise in free cash flow as it reported a trading update for the six months to July 31.

Anglo Pacific said that free cash flow for the half would be between £18.5mln and £19mln, compared to £4.7mln in the same period of 2016, adding that the figure includes the impact of the Denison financing arrangement (this impact was seen between £3.1mln and £3.4mln).

Royalty income was up 290% for the period, at between £15.9mln and £16.3mln, mostly attributable to an increase in sales from the Kestrel mine which is now paying royalties on around 95% of its sales.

"We are encouraged by the level of royalty income received in the first half of the year, and expect this trend to continue into the second half now that we anticipate being paid a royalty on almost all sales by Rio Tinto at Kestrel,” said Julian Treger, Anglo Pacific chief executive.

“However on the flip side of such strong revenue from Kestrel is that it will impact on the valuation of the asset through resource depletion.”

“The level of cash generated during the first six months is also pleasing, and is already ahead of that generated in 2016 as a whole.”

Treger added: “With the full availability of our US$30m revolving credit facility, a recent strengthening of the spot coking coal price, further weakening of the pound against our income currencies and a comfortably covered dividend expected in 2017, we are in a healthy financial position with good liquidity to pursue further royalty acquisitions and provide meaningful returns to our shareholders."

 

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Mon, 31 Jul 2017 08:27:00 +1000 https://www.proactiveinvestors.com.au/companies/news/181693/anglo-pacific-group-reveals-steep-rise-in-royalty-income-181693.html
<![CDATA[Media files - Anglo Pacific to give investors more regular income with quarterly dividend ]]> https://www.proactiveinvestors.com.au/companies/stocktube/7690/anglo-pacific-to-give-investors-more-regular-income-with-quarterly-dividend-7690.html Mon, 26 Jun 2017 08:35:00 +1000 https://www.proactiveinvestors.com.au/companies/stocktube/7690/anglo-pacific-to-give-investors-more-regular-income-with-quarterly-dividend-7690.html <![CDATA[News - Anglo Pacific yield looking increasingly anomalous suggests broker Macquarie ]]> https://www.proactiveinvestors.com.au/companies/news/177668/ When it rains in Australia it pours, but for Anglo Pacific Group PLC (LON:APF TSE:APY) that has proved a boon in  2017.

The mining royalty specialist’s results are set to be even better than previously expected after heavy storms (cyclone Debbie) caused another spike in the price of coking coal.

It had already surged compared to a year ago, but the storms affected both infrastructure and supplies, a combination that has sent prices beyond the levels Anglo anticipated at the beginning of 2017.

WATCH: Anglo Pacific to give investors more regular income with quarterly dividend

“It is our view that higher coking coal prices will now prevail for longer in 2017. With Kestrel's operations reportedly unaffected by weather events, we now anticipate an even stronger year of growth for Anglo Pacific than at the time we reported our 2016 results.”

Two coal mines, uranium and vanadium

Anglo has royalty interests in two coal mines in Australia: Rio Tinto’s Kestrel and Whitehaven’s Narrabri.

In the three months to March, and before the latest spike, Kestrel saw a 130% increase in its average coal price over a year ago while Narrabri was up 56%.

WATCH: Anglo Pacific boss says first quarter 'the sign of a good year ahead' 

That helped royalty income jump to £7.5mln from a comparable £1.9mln.

An additional £2.5mln (C$4.0mln) came from the Denison [uranium] financing and streaming agreement signed in February while the recovery in vanadium prices boosted revenues from Maracás Menchen to £0.4mln from £0.1mln.

Anglo added that this quarter is also expected to see the lowest sales volumes from Kestrel and Narrabri in 2017, with all material production at Kestrel also set to be on its royalty land for the foreseeable future.

Total free cash flow generated in the period was £13.4mln (£3.3mln) and Anglo now expects to be debt free by mid-2017.  

Julian Treger, chief executive, said:  "The additional £2.5mln generated from the recent Denison transaction is further evidence of the importance of continuing to diversify our portfolio.

Treger has stated previously its focus is to add further royalties to the portfolio.

“We see a number of prospective opportunities in the mid-tier and development arena where the lack of recent M&A activity, combined with underinvestment in growth, should spur renewed interest in developing the next wave of projects that will be required to meet expected supply deficits in the future.”

A flavour of that came last year 

Anglo Pacific has recorded a major success in backing the Salamanca uranium project in Spain, held by the consummate operators at Berkeley Energia (LON:BKY). adn it followed that up with a substantial stake in a North American operation, securing an income stream from processing ore from the famous Cigar Lake uranium mine in Canada.

Under the terms of the deal, Denison Mines (TSE:DML), a famous name in uranium mining, sold a right to 22.5% of the toll milling proceeds from the McClean Lake Mill, which takes ore from Cigar Lake.

The transaction comprised an up-front payment of C$2.7 mln, plus the granting to Denison of a C$40.8 mln loan.

It took Anglo Pacific into partnership with another great name in uranium production, Areva, which owns 70% of the McClean Lake Mill and 37.1% of Cigar Lake, and really begins to set it amongst the big leagues.

Dividend focus …

The group paid a dividend of 6p in 2016 and had already said it would consider the dividend level at the half year point of the current year, something that it reiterated again with the latest update.

Macquarie keen  

Aussie broker Macquarie reckons the shares are worth 190p ignoring any windfall benefit from the latest coal price gain.

“The stubbornly high 5.8% dividend yield currently on offer places the company well ahead of the ~2% yield offered by peers.

“A rerating to between 2-3% would imply a valuation range of £2.00-3.00/sh (TP: £1.90), and with FCF [free cash flow] dividend around 2 times going forward, there is a significant margin for error in our cash flow forecasts, even if coal prices weaken significantly from current levels.”

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Thu, 11 May 2017 13:41:00 +1000 https://www.proactiveinvestors.com.au/companies/news/177668/
<![CDATA[Media files - First quarter 'the sign of a good year ahead' - Anglo Pacific's Julian Treger ]]> https://www.proactiveinvestors.com.au/companies/stocktube/7432/first-quarter-the-sign-of-a-good-year-ahead-anglo-pacific-s-julian-treger-7432.html Wed, 10 May 2017 13:52:00 +1000 https://www.proactiveinvestors.com.au/companies/stocktube/7432/first-quarter-the-sign-of-a-good-year-ahead-anglo-pacific-s-julian-treger-7432.html <![CDATA[News - Anglo Pacific reaps windfall as storms batter Australian coal sector ]]> https://www.proactiveinvestors.com.au/companies/news/177568/anglo-pacific-reaps-windfall-as-storms-batter-australian-coal-sector-177568.html Anglo Pacific Group plc's (LON:APF TSE:APY) trading in 2017 will be even better than previously expected after heavy storms in Australia caused another spike in the price of coking coal.

Prices had already surged compared to a year ago, but the storms in Australia affected both infrastructure and supplies during the second quarter and sent them soaring above the levels Anglo anticipated at the beginning of 2017.

“It is our view that higher coking coal prices will now prevail for longer in 2017. With Kestrel's operations reportedly unaffected by weather events, we now anticipate an even stronger year of growth for Anglo Pacific than at the time we reported our 2016 results.”

Anglo has royalty interests in two coal mines in Australia: Kestrel and Narrabri. In the three months to March, and before the latest spike, Kestrel saw a 130% increase in its average coal price while Narrabri was up 56%.

WATCH: Anglo Pacific boss says first quarter 'the sign of a good year ahead' 

That helped royalty income royalty income jump to £7.5mln from a comparable £1.9mln, while there was an additional £2.5mln (C$4.0mln) from the Denison [uranium] financing and streaming agreement signed in February while the recovery in vanadium prices boosted revenues from Maracás Menchen to £0.4mln from £0.1mln.

Anglo added that this quarter is also expected to see the lowest sales volumes from Kestrel and Narrabri in 2017, while it is also unlikely there will be any material production at Kestrel outside of its royalty land for the foreseeable future.

Total free cash flow generated in the period was £13.4mln (£3.3mln) and Anglo now expects to be debt free by mid-2017.    

Julian Treger, chief executive, added:  "The additional £2.5mln generated from the recent Denison transaction is further evidence of the importance of continuing to diversify our portfolio.

“We feel now is the right time to put capital to work in the sector and are continuing to work hard to identify and execute new royalties which will provide meaningful additional revenue over many years to come."

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Wed, 10 May 2017 08:04:00 +1000 https://www.proactiveinvestors.com.au/companies/news/177568/anglo-pacific-reaps-windfall-as-storms-batter-australian-coal-sector-177568.html
<![CDATA[Media files - Anglo Pacific's Julian Treger looking forward to a 'year of continued organic growth' ]]> https://www.proactiveinvestors.com.au/companies/stocktube/7189/anglo-pacific-s-julian-treger-looking-forward-to-a-year-of-continued-organic-growth--7189.html Thu, 30 Mar 2017 11:45:00 +1100 https://www.proactiveinvestors.com.au/companies/stocktube/7189/anglo-pacific-s-julian-treger-looking-forward-to-a-year-of-continued-organic-growth--7189.html <![CDATA[News - Anglo Pacific Group reports surge in 2016 royalty income, to reconsider its dividend levels with interims ]]> https://www.proactiveinvestors.com.au/companies/news/175665/anglo-pacific-group-reports-surge-in-2016-royalty-income-to-reconsider-its-dividend-levels-with-interims-175665.html Anglo Pacific Group PLC (LON:APF, TSE:APY) has reported a surge in royalty income in full-year 2016, mainly thanks to a significant increase in overall saleable tonnes from its Kestrel mine in Australia and is to reconsider its dividend levels with its 2017 interims.

The group reported a 127% increase in royalty income for the full-year to December 31 to £19.7mln, up from £8.7mln in 2015.

The group also saw a significant increase in basic earnings per share to 15.60p, after a loss of 14.06p in 2015, with adjusted earnings per share jumping to 9.76p from 2.47p.

WATCH: Anglo Pacific boss looks forward to year of "continued organic growth" ...

It pointed out that its earnings benefitted from upward revisions to coal prices and the weakening of the pound following June’s EU Referendum Brexit vote.

The firm said the improved earnings translated into free cash flow generation of £13.2mln in 2016, up from £4.7mln a year earlier, with net debt reduced to £1.0mln as at December 31 2016.

Julian Treger, Anglo Pacific’s chief executive officer of Anglo Pacific, said: "2017 should be a year of significant organic growth for Anglo Pacific as production at Kestrel moves increasingly into our royalty lands and we benefit from planned production increases at Narrabri.

“Coal prices remain much higher than in the previous year and this, we believe, has set a new base level for prices above those forecast this time last year”.

He added: “Our focus continues to be on adding further royalties to the portfolio. We see a number of prospective opportunities in the mid-tier and development arena where the lack of recent M&A activity, combined with underinvestment in growth, should spur renewed interest in developing the next wave of projects that will be required to meet expected supply deficits in the future.”

Dividend focus …

The group has recommended a final dividend of 3.00p per share resulting in a total dividend for 2016 of 6.00p, albeit down from the 7.00p paid in 2015.

Treger concluded: “The strong results reported today means that we will reconsider dividend levels at the time of the interims, when we have greater visibility as to coal price movements for the year and the outlook for the next few years.”

In an initial reaction to the Anglo Pacific numbers, analysts at Shore Capital said: “2016 financials significantly improved, profits ahead of our expectations.”

In early trading, Anglo Pacific shares were 4%, or 4.5p higher at 117.0p.

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Thu, 30 Mar 2017 08:27:00 +1100 https://www.proactiveinvestors.com.au/companies/news/175665/anglo-pacific-group-reports-surge-in-2016-royalty-income-to-reconsider-its-dividend-levels-with-interims-175665.html
<![CDATA[Media files - Anglo Pacific's Julian Treger talks of 'very positive' shareholder response to uranium acquisition ]]> https://www.proactiveinvestors.com.au/companies/stocktube/6956/anglo-pacific-s-julian-treger-talks-of-very-positive-shareholder-response-to-uranium-acquisition-6956.html Tue, 21 Feb 2017 08:43:00 +1100 https://www.proactiveinvestors.com.au/companies/stocktube/6956/anglo-pacific-s-julian-treger-talks-of-very-positive-shareholder-response-to-uranium-acquisition-6956.html <![CDATA[News - Anglo Pacific appoints new chairman ]]> https://www.proactiveinvestors.com.au/companies/news/173447/anglo-pacific-appoints-new-chairman-173447.html Anglo Pacific Group PLC (LON:APF, TSX:APY) has appointed investment bank veteran Patrick Meier as its new chairman.

A non-executive at the royalty specialist since 2015, Meier has thirty years experience in investment banking at RBC Capital Markets in Europe and Asia.

He will take over from current chairman Mike Blyth following the 2017 Annual General Meeting. Blyth is to stay on as a non-executive. 

Meier said: “The Company is well placed to benefit from the improved sentiment in the sector, and has both a strong balance sheet and growth prospects.”

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Tue, 21 Feb 2017 08:27:00 +1100 https://www.proactiveinvestors.com.au/companies/news/173447/anglo-pacific-appoints-new-chairman-173447.html
<![CDATA[News - Anglo Pacific's McLean Lake mill done and dusted ]]> https://www.proactiveinvestors.com.au/companies/news/173103/anglo-pacific-s-mclean-lake-mill-done-and-dusted-173103.html Anglo Pacific Group PLC (LON:APF, TSE:APF) has completed the financing agreement relating to its recent deal with Denison Mines (TSE:DML).

Read Anglo Pacific doubles down again on energy with Denison deal

The acquisition, which saw Anglo acquire the right to 22.5% of the toll milling proceeds from the McClean Lake Mill, is now complete.

The financing was partly funded through a placing of shares and partly from the company’s banking facility.

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Tue, 14 Feb 2017 07:21:00 +1100 https://www.proactiveinvestors.com.au/companies/news/173103/anglo-pacific-s-mclean-lake-mill-done-and-dusted-173103.html
<![CDATA[News - Anglo Pacific upgraded after Denison uranium deal ]]> https://www.proactiveinvestors.com.au/companies/news/172709/anglo-pacific-upgraded-after-denison-uranium-deal-172709.html Anglo Pacific PLC’s (LON:APF TSE:TPY) acquisition of a royalty stake in Denison’s high grade uranium mine is an interesting diversification reckons Peel Hunt, which has upgraded to ‘buy’.

The deal with Denison Mines gives Anglo Pacific exposure to the highest grade uranium mine in the world, run by Cameco and Areva and in a sensible geography in Canada, said Cantor.

It will receive 22.5% of toll milling revenues from the treatment of Cigar Lake ore at the Mclean Lake mill.

Cantor said it was an accretive deal and highlights the strategy to target tier one assets, backed by strong operators, in appealing geographies.

The target price rises to 156p (from 147p) with the rating now ‘buy’ from ‘add’.

“We see this deal as being instantly accretive to the valuation and dividend cover.

APF is also exposed to the considerable geological upside which is already pointing us to expect meaningful extension of the current mine life. 2017 outlook: With the new income instantly benefiting the financial position of the business (given that the deal is backdated to 1 July 2016), the outlook for the group has strengthened in 2017. “

As a consequence, Cantor is now more confident of its dividend forecasts (6p in 2016, 8p in 2017 and 10p in 2018) especially with rising income from the Kestrel mine.

Shares rose slightly to 130.9p.

 

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Mon, 06 Feb 2017 12:34:00 +1100 https://www.proactiveinvestors.com.au/companies/news/172709/anglo-pacific-upgraded-after-denison-uranium-deal-172709.html
<![CDATA[News - Anglo Pacific doubles down again on energy with Denison deal ]]> https://www.proactiveinvestors.com.au/companies/news/172571/anglo-pacific-doubles-down-again-on-energy-with-denison-deal-172571.html You only have to look at a recent Anglo Pacific (LON:APF) share price graph to know whether Julian Treger’s decision to double down on coal has paid off.

The company’s shares have risen by a factor of more than 150% in the past 12 months as the full impact of the acquisition of the Narrabri coal royalty began to show through, and as the coal price in turn improved on the back of increased demand in Asia.

To be sure, sentiment in the wider mining sector has improved too, but not all companies have enjoyed a corresponding uplift. Copper, for example, has remained unrelentingly flat.

So too, has uranium. But, against the run of play Anglo Pacific has had a major success in backing the Salamanca uranium project in Spain, held by the consummate operators at Berkeley Energia (LON:BKY).

Berkeley shares have enjoyed a run out of all proportion to anything that’s happening in the wider uranium market, up by more than 600% in the past 18 months, and Salamanca hasn’t even come on stream yet.

But will one success in uranium breed another?

Julian Treger is certainly hoping so, as his latest deal takes a substantial stake in a North American operation, securing an income stream from processing ore from the famous Cigar Lake uranium mine in Canada.

Under the terms of the deal, Denison Mines (TSE:DML), another famous name in uranium mining, will sell a right to 22.5% of the toll milling proceeds from the McClean Lake Mill, which takes ore from Cigar Lake.

The transaction takes the form of an up-front payment of C$2.7 mln, plus the granting to Denison of a C$40.8 mln loan.

It takes Anglo Pacific into partnership with another great name in uranium production, Areva, which owns 70% of the McClean Lake Mill and 37.1% of Cigar Lake, and really begins to set it amongst the big leagues.

Anglo Pacific’s other major asset is a coal royalty on the producing Kestrel mine in Australia, owned and operated by BHP Billiton.

Treger has done well out of coal, but he’s happy to be diversifying Anglo Pacific’s exposure, both in terms of commodity and in terms of jurisdiction. The timing is important too.

“We like getting more exposure to uranium when the uranium price is low,” he says.

“In mining you’ve got to be contrarian to generate good returns. We think it will be accretive to our earnings this year.”

The market seemed to support that view, as half the deal will be funded by new equity, in the form of £13.7 mln raised at 131.75p, a modest discount of 5% to the market price then prevailing.

Even allowing for the small correction that followed, the shares are still bumping along at close to 12 month highs.

“This transaction ticks all the boxes for Anglo Pacific,” says Treger. It will be interesting to see what he does next.

 

 

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Thu, 02 Feb 2017 14:05:00 +1100 https://www.proactiveinvestors.com.au/companies/news/172571/anglo-pacific-doubles-down-again-on-energy-with-denison-deal-172571.html
<![CDATA[Media files - Uranium deal 'about expanding our portfolio into a new area' says Anglo Pacific CEO ]]> https://www.proactiveinvestors.com.au/companies/stocktube/6845/uranium-deal-about-expanding-our-portfolio-into-a-new-area-says-anglo-pacific-ceo-6845.html Thu, 02 Feb 2017 09:40:00 +1100 https://www.proactiveinvestors.com.au/companies/stocktube/6845/uranium-deal-about-expanding-our-portfolio-into-a-new-area-says-anglo-pacific-ceo-6845.html <![CDATA[News - Anglo Pacific adds to its uranium exposure with £26mln tie-up ]]> https://www.proactiveinvestors.com.au/companies/news/172477/anglo-pacific-adds-to-its-uranium-exposure-with-26mln-tie-up-172477.html Fresh from a successful 2016, mining royalties company Anglo Pacific Group PLC (LON:APF) has inked a £26.4mln streaming agreement that will give it exposure to the highest grade uranium operation in the world.

The deal with Denison Mines Inc. (TSE:DML) means Anglo will now receive Denison’s 22.5% share of the proceeds from the McClean Lake mill in Canada, which is operated by AREVA Resources Canada.

The mill earns toll revenue for each pound of triuranium octoxide – a stable, yellow powder and a common form of uranium – that it processes.

Under the terms of the deal, Anglo is entitled to toll milling revenues dating back to 1 July 2016.

“This transaction ticks all the boxes for Anglo Pacific and moves forward our growth and diversification in a material way,” said Anglo chief executive Julian Treger.

“The transaction should be accretive to our 2017 income, building on the more than doubling of income in 2016.”

All of the ore processed at the McClean Mill comes from the Cameco Corp-operated Tier 1 Cigar Lake uranium mine in Canada.

It currently processes 18 million pounds (Mlbs) of ore each year from Cigar Lake but has the scope to increase this to 24Mlbs, which could result in increased income for Anglo.

Funding

To fund the acquisition, in addition to an upfront payment of £1.64mln, Anglo has secured an initial £24.8mln, 13-year loan which bears interest of 10% per annum.

The loan is payable each quarter in cash and is fairly flexible in that it allows Anglo to repay more when toll revenues come in ahead of expectations or roll over to the next payment should revenues not equal the accrued interest.

Anglo confirmed it had conditionally raised £13.7mln through the issue of new shares which is being conducted through an accelerated bookbuilding process.

At 3.15pm, the shares, up 130% in the last year, were changing hands for 129p each.

 ---adds result of placing, share price---

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Wed, 01 Feb 2017 08:05:00 +1100 https://www.proactiveinvestors.com.au/companies/news/172477/anglo-pacific-adds-to-its-uranium-exposure-with-26mln-tie-up-172477.html
<![CDATA[Media files - Outlook for gold in 2017 'quite good' says Mining Capital's Alastair Ford ]]> https://www.proactiveinvestors.com.au/companies/stocktube/6765/outlook-for-gold-in-2017-quite-good-says-mining-capital-s-alastair-ford-6765.html Fri, 20 Jan 2017 11:44:00 +1100 https://www.proactiveinvestors.com.au/companies/stocktube/6765/outlook-for-gold-in-2017-quite-good-says-mining-capital-s-alastair-ford-6765.html <![CDATA[Media files - Anglo Pacific expecting 'significant growth' in 2017, says CEO Julian Treger ]]> https://www.proactiveinvestors.com.au/companies/stocktube/6754/anglo-pacific-expecting-significant-growth-in-2017-says-ceo-julian-treger-6754.html Wed, 18 Jan 2017 13:51:00 +1100 https://www.proactiveinvestors.com.au/companies/stocktube/6754/anglo-pacific-expecting-significant-growth-in-2017-says-ceo-julian-treger-6754.html <![CDATA[News - Anglo Pacific has best year since 2011 as coal price surges ]]> https://www.proactiveinvestors.com.au/companies/news/171800/anglo-pacific-has-best-year-since-2011-as-coal-price-surges-171800.html Anglo Pacific Group PLC (LON:APF TSX:APY) has reaped the full benefit of coal prices hitting a five-year high.

Royalty income in 2016 will be 140% higher and in a range of £20.5mln - £21.5mln (2015: £8.7m), the company said.

An increase in saleable tonnes at the Rio Tinto operated Kestrel mine in Australia also boosted the numbers.

It is the best annual income Anglo has seen since 2011.

The group has royalty concessions at two coal operations in Australia – Kestrel (coking) and Narrabri (thermal), which is run by Whitehaven Coal.

Julian Treger, chief executive, said fourth quarter income would be between £11.6mln-£12.6mln or approximately 147% and 299% higher than the preceding quarter and a year ago.

“Equally encouraging is our outlook for 2017, where we expect further growth in our income as 85-90% of Kestrel's saleable tonnes are expected to be derived from our private royalty area, a significant uplift from the 67% in 2016.

“Our royalty income is also expected to be strong in Q1 2017 following the settlement of coking coal contract prices at $285/t. “

With a weak pound also boosting sterling earnings, this should translate into further growth in royalty income for this year.

Debt is also low said Treger while dividend cover will be above 1.5 times earnings for 2016 though the coking coal price is tipped to level off during the course of the year, which may affect any decision on the dividend in 2017.

Anglo is also looking at other possible investment opportunities, said Treger.

Shares were 2% higher at 129.8p.

--- Original reports from the company had royalty income for 2016 240% higher year-on-year ---

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Wed, 18 Jan 2017 09:09:00 +1100 https://www.proactiveinvestors.com.au/companies/news/171800/anglo-pacific-has-best-year-since-2011-as-coal-price-surges-171800.html
<![CDATA[News - Anglo Pacific upgraded on coal price surge ]]> https://www.proactiveinvestors.com.au/companies/news/170730/anglo-pacific-upgraded-on-coal-price-surge-170730.html A City broker has upgraded its valuation of Anglo Pacific Group PLC (LON:APF TSX:APY) following the latest round of coal price agreements.

Peel Hunt has raised its target to 141p a share from 128p and retains its ‘add’ on the stock. 

It comes in the wake of Nippon Steel’s deals with Glencore and Teck Resources from which the miners secured quarter-on-quarter price rises in the order 43% for their coking coal.

This bodes well for Anglo, which earns a royalty from Rio Tinto for production from the Kestrel Mine in Queensland, Australia.

“Nippon is the largest Japanese steel maker, which means the fix with two of the largest seaborne suppliers will be for meaningful volumes and is therefore likely to be the benchmark for subsequent agreements for the first quarter [of 2017],” said analyst Michael Stoner.

While its net asset value-based price target is 141p, the Peel Hunt number cruncher reckons there is “the potential for a 204p valuation” if the dividend yield remains static at 4.9%.

 At 9.30am, the shares were changing hands for 124p each. valuing the business at £211mln.

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Tue, 20 Dec 2016 09:36:00 +1100 https://www.proactiveinvestors.com.au/companies/news/170730/anglo-pacific-upgraded-on-coal-price-surge-170730.html
<![CDATA[Media files - 2017 has the potential to be a 'record year' for Anglo Pacific ]]> https://www.proactiveinvestors.com.au/companies/stocktube/6605/2017-has-the-potential-to-be-a-record-year-for-anglo-pacific-6605.html Tue, 13 Dec 2016 15:04:00 +1100 https://www.proactiveinvestors.com.au/companies/stocktube/6605/2017-has-the-potential-to-be-a-record-year-for-anglo-pacific-6605.html <![CDATA[News - Anglo Pacific set for triple boost as coking coal hits five year high ]]> https://www.proactiveinvestors.com.au/companies/news/170406/anglo-pacific-set-for-triple-boost-as-coking-coal-hits-five-year-high-170406.html Anglo Pacific Group PLC (LON:APF TSX APY) is set for a bumper year as coking coal hit its highest price for five years.

Anglo has royalty concessions at two coal operations in Australia – Kestrel (coking) operated by Rio Tinto PLC and Narrabri (thermal) by Whitehaven Coal.

Benchmark hard coking coal contracts for the first quarter of 2017 have settled at US$285 per tonne Anglo noted today or 43% more than the previous quarter.

It is the highest settlement price since the same period in 2011 and equal to the fourth highest on record in US dollar terms, Anglo added.

WATCH: Anglo Pacific chief Julian Treger speaks to Proactive's Andrew Scott

Key for Anglo, in addition to the price, is how much production from the mines comes from its concession areas and Julian Treger, chief executive, said this was looking promising as well. 

“Anglo Pacific has royalties over the sales of coking coal at the Kestrel mine in Australia where the majority of production is expected to be within the Group's private royalty land during the next twelve months.

"The recent hard coking contract price settlements are materially above the levels we have seen in the past years and significantly higher than our previous assumptions. This should markedly improve our income and dividend cover next year. 

“In addition, the weakness of the pound post Brexit should also improve our income figures in the first half of next year."

Shares rose 1% to 123.8p, and have more than doubled since the end of February.

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Tue, 13 Dec 2016 11:28:00 +1100 https://www.proactiveinvestors.com.au/companies/news/170406/anglo-pacific-set-for-triple-boost-as-coking-coal-hits-five-year-high-170406.html
<![CDATA[News - Anglo Pacific valuation upped to reflect booming coal price ]]> https://www.proactiveinvestors.com.au/companies/news/169406/anglo-pacific-valuation-upped-to-reflect-booming-coal-price-169406.html Anglo Pacific Group PLC (LON:APF) shares have the scope to advance a further 25% from their current price.

That at least is the opinion of BMO Capital, which increased its target price for the stock by 15% to 150p a share.

BMO’s Jessica Fung has made across-the-board upgrades to stocks in her coverage ‘universe’ to reflect the higher price assumptions for coal.

Fung expects metallurgical coal to hit US$250 a tonne in the first quarter of next year – 61% higher than her previous forecast – before subsiding towards US$130 as supply increases.

Is Kestrel flying?

Anglo Pacific is well established in the mineral, having drawn sizeable annual income for many years from a coal royalty that covers part of Rio Tinto’s Kestrel mine in Queensland.

This year the price of metallurgical coal has risen further than any other commodity in percentage terms; it has more than doubled according to data gathered by mining industry data specialists CRU.

CRU uses the Australian FOB price of US$108 at the time of writing in making its calculations, although some shipments as reported on Bloomberg and elsewhere in the media have traded at even higher spot rates.

King Coal back on his throne 

This is a remarkable turnaround from the multi-year lows hit back in February.

Back then, market sentiment was running in accordance with a well-established narrative: coal isn’t clean, international agreements are curtailing its use, and power stations are closing.

All true, up to a point. But not the whole story.

In an effort to tackle pollution, the Chinese government has ordered the closure of many coal mines. Others are on a limited production schedule. That, combined with recent heavy rains in the key mining province of Shanxi, have led to a supply shock. Supply has also come off in the Western World too.

All of which has given renewed vigour to companies with exposure to coal, like Anglo Pacific.

“It’s becoming clear that there will be some winners in coal,” said Julian Treger, Anglo Pacific’s chief executive in a recent interview.

Been there, seen it, done it...bought the t-shirt

He’s in a better position to judge than most. As a fund manager at Audley Capital during the mining boom he came to know the mining markets extremely well and his subsequent move to Anglo Pacific in 2013 was therefore of significant interest in the market.

He doubled down on coal with the acquisition in early 2015 of a 1% gross revenue royalty on the Narrabri mine in New South Wales.

Narrabri doesn’t have met coal, but it does have a significant PCI component to it. PCI, or pulverised coal injection, is half-way between met coal and thermal coal in terms of quality, and is priced accordingly.

And the thermal component at Narrabri has been increasing in value too, since thermal coal is up by more than 30% this year to close to US$70 per tonne.

All of which means that Anglo Pacific’s income is likely to be significantly impacted.

Re-rating a possibility

At Kestrel the royalty rate, prescribed by Queensland Mineral Resource Regulations, provides for a three tiered fixed percentage, increasing if the price per tonne of coal is over A$150

Since the current spot US dollar metallurgical price translates to well over A$200 per tonne, the company would appear to be comfortably within that range.

A crucial staging post on that journey will be the contract price that Rio Tinto settles on at Kestrel for the coming sales period, which is likely to be decided in the next couple of weeks.

Once that news is out and the numbers are confirmed, a re-rating of Anglo Pacific’s share price seems a real possibility.

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Wed, 23 Nov 2016 12:19:00 +1100 https://www.proactiveinvestors.com.au/companies/news/169406/anglo-pacific-valuation-upped-to-reflect-booming-coal-price-169406.html
<![CDATA[Media files - Anglo Pacific Group Plc 'well placed to ride out relaxing of China mining restrictions' ]]> https://www.proactiveinvestors.com.au/companies/stocktube/6418/anglo-pacific-group-plc-well-placed-to-ride-out-relaxing-of-china-mining-restrictions--6418.html Fri, 18 Nov 2016 10:30:00 +1100 https://www.proactiveinvestors.com.au/companies/stocktube/6418/anglo-pacific-group-plc-well-placed-to-ride-out-relaxing-of-china-mining-restrictions--6418.html <![CDATA[News - Anglo Pacific set to cheer with rising divis ]]> https://www.proactiveinvestors.com.au/companies/news/168613/anglo-pacific-set-to-cheer-with-rising-divis-168613.html A rising coal price points to rising dividends from Anglo Pacific Group PLC (LON:APF), suggests broker Peel Hunt.

Last week, the resource investor reported a 147% increase in royalty income in its third quarter.

Spot prices of coking coal, used in making steel, are up 229% in the year so far and 110% for thermal coal (used, among other things, in generating  electricity).

Peel notes that the group's third quarter delivered 52% of the year to date income from a period even before the strongest rise in the coal price and further increase in attributable volumes at its Kestrel royalty in Australia.

If the coal price were to sustain at current spot levels, in 2017 it would add 8p to Peel's risked net asset value for Anglo, 12p for 2018, and rising to 226p if sustained in perpetuity, the broker said.

"As a result of the run in the share price our recommendation moves to Add (from Buy) with a rising dividend likely to be the primary driver of performance if the coal prices sustain at these levels," it added.

The target price is lifted to 128p from 108p

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Mon, 07 Nov 2016 10:34:00 +1100 https://www.proactiveinvestors.com.au/companies/news/168613/anglo-pacific-set-to-cheer-with-rising-divis-168613.html
<![CDATA[News - Anglo Pacific delighted at royalty income boost ]]> https://www.proactiveinvestors.com.au/companies/news/168388/anglo-pacific-delighted-at-royalty-income-boost-168388.html Anglo Pacific Group PLC (LON:APF) is benefiting from increased coal prices and saw a 147% increase in royalty income in its third quarter.

The resource investor is heavily exposed to coal assets, with the group more than 48% exposed to coking coal and around 24% to thermal coal, and one of its assets is part of Rio Tinto's Kestrel mine in Queensland.

Spot prices of coking coal, used in making steel, are up 229% in the year to date and 110% for thermal coal (used, among other things, in generating  electricity), the firm revealed.

READ - Coal price boom should deliver considerable boost to Anglo Pacific

In the three months to end-September, Anglo's royalty income was £4.7mln compared to £1.9mln in the same three months of 2015, and it expects royalty income for the full year to be "considerably" higher than previously thought.

 

A delighted Julian Treger, chief executive, said this year's royalty income was already ahead of 2015 as a whole.

"Encouragingly, we believe that more good news is still to come in Q4 2016, when increased coal prices and mining in our royalty areas should benefit the company still further," he added.

"With the outlook for robust coal prices set to continue through H1 2017, we look forward to the corresponding benefit to our dividend cover.

"We remain very excited about the group's prospects, as Anglo Pacific continues to be one of the only listed royalty companies that provides such high levels of exposure to coking coal price increases."

The group had cash of £4mln as at September 30 (end-2015: £5.7m) and net debt of £8.2mln (end-2015: £1.8mln), both of which were before the receipt of third quarter 2016 royalty income.

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Wed, 02 Nov 2016 07:35:00 +1100 https://www.proactiveinvestors.com.au/companies/news/168388/anglo-pacific-delighted-at-royalty-income-boost-168388.html