Half Year 2021 Trading Update

Anglo Pacific Group PLC (“Anglo Pacific”, the “Company” or the “Group”) (LSE: APF, TSX: APY), 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 2021.

This update is ahead of the release of the full Group audited half year results on 25 August 2021.

Highlights

  • Portfolio contribution1 for Q2 2021 of £9.4m, a 38.2% increase compared to £6.8m in Q1 2021, includes maiden deliveries under the Voisey’s Bay stream following completion of the acquisition at the end of Q1 2021. The Group’s Q2 2021 portfolio contribution has benefitted from 5 deliveries from the stream, and when combined with the 3 deliveries thus far in July 2021, the Group has realised total proceeds of US$4.0m (£2.8m)
  • Portfolio contribution of £16.2m in H1 2021 compared to £19.1m in H1 2020, reflects lower coking coal prices and volumes at both Kestrel and Narrabri, primarily in Q1 2021, but is offset by maiden contributions from the Group’s Voisey’s Bay stream of £1.7m
  • Coal prices in the earlier part of 2021 were impacted by the Chinese import ban on Australian coal – this position reversed in late Q2 2021, resulting in a more favourable outlook for H2 2021
  • Dividends from LIORC of C$2.75 per share declared in H1 2021 compared to C$0.80 per share in H1 2020 – benefitting from continued strong iron ore pricing throughout the first six months of 2021
  • Realised copper and vanadium prices were higher in the period which benefitted Mantos Blancos and Maracás Menchen revenue (the latter was impacted by a one-off off-take adjustment charge in H1 2020)
  • All the Group’s producing assets are back in operation, following the recommencement of activities at the McClean Lake Mill after a period of COVID-19 related care and maintenance (as announced at the Group’s Q1 2021 Trading Update)
  • Net debt of £78.7m at the end of June 2021 (£24.4m at the beginning of the year) reflecting the acquisition of the Voisey’s Bay cobalt stream in Q1 2021
  • With ~US$29m of undrawn borrowings, ~US$39m residual position in LIORC and ~US$8.0m of treasury shares, the Group has financing flexibility of ~US$76m to finance further growth opportunities

Anglo Pacific expects H2 2021 to be stronger, in light of a rally in cobalt prices and the full effect of the Voisey’s Bay stream being recognised in the Group’s portfolio, strength in copper and iron ore prices and a recovery in the coal market, supported by the backdrop of strong infrastructure spending and continued anticipated demand for 21st century commodities

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

“Anglo Pacific has had a stable first half of 2021, with 8 cobalt deliveries now processed under our Voisey’s Bay stream which has generated cash to the end of July 2021 of US$4.0m. Voisey’s Bay was a transformational acquisition during the period for Anglo, not only in terms of it being the Group’s largest and most significant transaction to date, but also in terms of transitioning our portfolio towards 21st century commodities that support a more sustainable future. It is pleasing to see the stream operate smoothly and in line with our expectations.

While prices for our commodities were weaker in Q1 2021, they began to recover in Q2 2021.

In particular, cobalt prices are up ~20% in the last month and are higher than our Voisey’s Bay investment case. In addition, both copper and iron ore have increased by over 20% year to date and our Mantos Blancos and LIORC revenues have benefitted from this.

It was also pleasing to see the coal markets turn during the second quarter, with coking coal now more than $200/t (from a low of ~$100/t) and thermal coal at ~$150/t, which should benefit our revenue in H2 2021. Infrastructure spending should continue to benefit iron ore, coking coal and copper whilst the longer-term fundamentals for cobalt and vanadium remain positive due to continued expected demand from electric vehicle and battery manufacturers.

Spot prices continue to remain higher than consensus prices in the near-term, and with our producing assets all in operation we expect a stronger performance from our portfolio in the second half of the year.

We look forward to updating the market in relation to our investment activity at the half year, and we remain busy advancing our pipeline in order to continue adding royalties and streams to our portfolio.”

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