Half Year 2019 Trading Update

Anglo Pacific Group PLC (“Anglo Pacific”, the “Company” or the “Group”) (LSE: APF, TSX: APY), the London and Toronto listed royalty company, is pleased to issue the following trading update. Unless otherwise stated, all unaudited financial information is for the quarter or half year ended 30 June 2019.

This update is ahead of the release of the full Group audited half year results on 22 August 2019.

Highlights

  • ~60% year on year increase in portfolio contribution for the six months ended 30 June 2019, to £33-33.5m (H1 2018: £20.8m)
  • Record six months of income from Kestrel due to substantial volume increases and resilient pricing levels
  • £3.2m earned from the Group’s LIORC investment due to the ongoing strength of the iron ore and iron ore pellet market, which now represents the Group’s second largest source of revenue
  • Strong recovery in production at Narrabri during H1 2019, although higher than normal stock levels at the end of Q2 2019 impacted royalty receipts in the period
  • Whilst production volumes were in line with H1 2018 the revenue from Maracás Menchen was impacted by the decline in vanadium prices from the record levels seen in H2 2018, although prices remain well above our price assumptions at the time of acquisition
  • Borrowings repaid in full during H1 2019 with cash of £14.5m at the end of June 2019
  • Including the Company’s undrawn borrowing facility, the Group has liquidity of ~£86.5m (~$108m) available to finance its growth ambitions
  • Currency had a favourable impact on the Group’s results in the period, with the GBP:USD and AUD:USD both showing favourable movements, offset slightly when translating the Group’s Australian income into British pounds at the reporting date
  • Outlook for the remainder of the year remains positive, with several royalties expected to benefit from volume increases and pricing for premium bulk commodities is expected to remain resilient in the short-term

Julian Treger, Chief Executive Officer of the Company, commented:

“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. In addition, the prices realised for premium, lower polluting bulk commodities enjoyed another strong quarter and the outlook remains positive.

We are particularly pleased with our latest acquisition, the LIORC investment, which earned revenue of £3.2m in H1 2019 from a combination of a strong iron ore price environment, resilient 65% iron ore concentrate and iron ore pellet premiums along with the distribution of previously retained cash by the company. The total income from the LIORC investment over the past twelve months of £5.2m represents a 13% payback on our investment and a very healthy running yield.

Elsewhere in the portfolio, we were pleased to see Whitehaven Coal report a strong half year in terms of production at Narrabri. Volumes were in line with 2018 levels at Maracás, and although the vanadium price fell from record highs seen in H2 2018 to more normal levels during H1 2019, the prices are well above our assumptions at the time of acquisition.

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 $100m of liquidity available, we are well placed to finance further acquisitions.”

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