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Anglo Pacific expecting a second-half pick-up

The coronavirus pandemic has had little impact on Anglo's main producing assets but it did have an impact on commodity prices in the first half of the year

Anglo Pacific Group PLC -

Anglo Pacific Group PLC (LON:APF, TSE:APY), the mining royalties company, said it is expecting a better second-half performance as demand for minerals recovers with the easing of the coronavirus (COVID-19) pandemic.

Funds received or receivable from the group's underlying royalty related assets – what Anglo calls the portfolio contribution – declined to between £18.5mln and £19.0mln in the first half of 2020 from £25.5mln in the preceding six months and £33.31mln in the first half of 2019.

Despite iron ore prices holding up particularly well due to the supply issues persisting in Brazil, income from the Labrador Iron Ore Royalty Corporation (LIORC) was lower due to planned capital expenditure at the underlying operation, which resulted in this year’s special dividend being lower than in the first half of last year.

Anglo Pacific reinvested dividends received from LIORC back into the company in the first quarter, lifting its stake to 7.0% - just ahead of the share price recovery in the second quarter.

Net debt at the end of June stood at roughly £40mln, compared to £28.8mln at the end of 2019, after the company paid out £10.4mln of dividends, £9.3mln of tax and a deferred consideration payment of US$1.5mln in respect of the Maracás Menchen acquisition.

The group is expecting the second half of the year to be stronger with mineral prices recovering as demand from China increases; the company added that prices have already started to head north in the third quarter.

"Although we have seen limited COVID-19 operational disruptions at our main producing assets, we have been impacted through a softer pricing environment during the second quarter,” Julian Treger, the chief executive officer of Anglo Pacific said in the half-year trading update.

“We continue to evaluate opportunities, and we hope to make progress in terms of executing transactions in H2 2020. We remain focused on delivering growth during the course of the second half of the year,” he added.

Quick facts: Anglo Pacific Group PLC

Price: 106 GBX

LSE:APF
Market: LSE
Market Cap: £192.66 m
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