Anglo Pacific Group PLC (“Anglo Pacific”, the “Company” or the “Group”) (LSE: APF, TSX: APY) issues the following trading update for the period 1 October 2019 to 17 January 2020, which includes certain information for the year ended 31 December 2019. The Company expects to release its full year results on 25 March 2020. Unless otherwise stated, all unaudited financial information is for the quarter or year ended 31 December 2019.
Portfolio Contribution History
|Total portfolio contribution1||£57-59||£49.3||£42.4||£19.8||£8.9||£3.5|
- ~20% increase in portfolio contribution in 2019 to £57-59m from £49.3m in 2018 – another record year for Anglo Pacific
- Significant volume increases at Kestrel, as targeted by the operator at the beginning of 2019, delivered increasing Kestrel portfolio contribution
- Strong contribution from LIORC in the period, with total dividends for 2019 received of C$4.00 per share, representing an implied yield of ~16%, the Group’s second largest source of revenue in 2019
- Maiden royalty receipts of ~£1.0m received from Mantos Copper
- Noticeable sales volume increases at Narrabri despite softer thermal coal prices in H2 19
- EVBC continues to provide the Group with stable revenue aided by continued plant optimisation and a higher gold price in H2 2019
- Revenue from Four Mile and the Denison financing arrangement was in line with expectations, but weakness in the vanadium price resulted in lower revenue from Maracás Menchen
- Net debt at the end of 2019 of £28.9m, following £62.5m of investment and £14.4m of dividend payments – the Group continues to operate well within its debt capacity limits with operating leverage of ~0.6x and further liquidity available
- Total dividend for 2019 will be at least 9p (2018: 8p) of which 4.875p has already been paid or declared
- With anticipated volume growth to come from the portfolio, along with a full year of contribution from Mantos and the additional LIORC acquired in H2 19 we look forward to what should be another year of growth in 2020
1 Total portfolio contribution includes royalty income, cashflows from Denison/McClean Lake and other royalty financial instruments accounted for in accordance with IFRS 9, for example El Valle Boinás-Carlés
Julian Treger, Chief Executive Officer of the Company, commented:
“We are pleased to report yet another record year of income for Anglo Pacific, the second year in a row in which we have done so. Including the cash received from the Denison financing arrangement, total portfolio contribution for the year is expected to be £57-59m, which represents growth of ~20% on the £49.3m generated in 2018.
Our income benefitted mainly from volume increases in the year, somewhat offset by the softening in commodity prices, particularly coal and vanadium, during H2 2019. We anticipate further volume growth to come in 2020, with increases expected at Kestrel, Narrabri and Maracas.
The strong levels of cash generated in 2019 enabled us to use our balance sheet to acquire £62.5m (US$75m) in income generating royalties. In the same period, we paid out £14.4m (US$18.5m) in dividends. Our balance sheet remains in a very strong position and we continue to operate with appropriately conservative levels of operational leverage.
It is likely that the extractive industry will face further headwinds in 2020 and accessing capital will be more difficult. This should create opportunities for Anglo Pacific, and we will prioritise those commodities essential to deliver the technology required to achieve environmental and climate change targets in the years ahead.”
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