What we own

In March 2015, the Group acquired a royalty interest in the Narrabri coal project, a major thermal coal and Pulverised Coal Injection (‘PCI’) coal mine located in New South Wales, Australia operated by Australian Stock Exchange listed Whitehaven Coal Limited (‘Whitehaven’). The Narrabri Royalty entitles the holder to royalty payments equal to 1% of gross revenue on all coal produced from within the area.

Performance

The Group received royalty income of £1.9m for the six months ended June 30, 2017, compared to £1.4m for the same period in 2016. Thermal coal prices have performed better than most commentators expected in the first half of 2017, benefiting from weather related disruption in Australia.

Valuation

The Narrabri royalty is classified as a royalty intangible asset on the balance sheet. As such, this asset is carried at cost less amortisation and impairment and does not benefit from any valuation uplift resulting from the positive developments in the year, as described above.