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Anglo Pacific eyeing portfolio additions after strong first half

"We are pleased to once again announce another significant increase in our income for the first half of 2019. This is largely attributable to the production increases achieved at Kestrel as the new owners move towards their target of increasing production by 40% in 2019."

Pile of coal
Old King Coal's reign is not over yet

Anglo Pacific Group PLC (LON:APF) (TSE:APY), the mining royalty company, posted a significant increase in half-year income and is positive on the full-year income.

The group said its portfolio of royalties contributed around £33mln to £33.5mln in the first half of 2019, up from £20.8mln the year before. In the first quarter of 2019, royalty income was £14.3mln.

READ Anglo Pacific in confident mood after another record quarter

Anglo highlighted a record six months of income from the Kestrel underground coal mine in Queensland, Australia; the mine enjoyed substantial volume increases and resilient pricing levels.

The group's investment in the Labrador Iron Ore Royalty Corp (LIORC) earned it £3.2mln in the period due to the ongoing strength of the iron ore and iron ore pellet market.

There was a strong recovery in production at the Narrabri coal mine in Australia but higher than normal stock levels at the end of June had an impact on royalty receipts in the period.

The revenue from Maracás Menchen in Brazil was affected by the decline in vanadium prices from the record levels seen in the second half of 2018, although prices remain well above Anglo's price assumptions at the time of acquisition of the 2% net smelting royalty.

The debt-free company has liquidity of around £85mln when factoring in its undrawn borrowing facility.

The outlook for the rest of the year remains positive, with several royalties expected to benefit from volume increases while pricing for premium bulk commodities is expected to remain resilient in the short-term.

“We continue to see strong demand for our royalty and streaming financial products and are working hard towards making further additions to our portfolio. Capital remains scarce for mining operators which is presenting new opportunities for the group. With over US$100mln of liquidity available, we are well placed to finance further acquisitions," said Julian Treger, the chief executive officer of Anglo Pacific.

Quick facts: Anglo Pacific Group PLC

Price: 104.6 GBX

Market: LSE
Market Cap: £190.12 m

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