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Half Year 2022 Trading Update Record $49.2m portfolio contribution in second quarter - Anglo Pacific Group

Anglo Pacific Group PLC (LSE: APF, TSX: APY), issues the following trading update for the period 1 April 2022 to 27 July 2022. Unless otherwise stated, all unaudited financial information is for the quarter ended 30 June 2022.

This update is ahead of the release of the full Group audited half year results on 24 August 2022.

Highlights:

  • Record portfolio contribution of $49.2m in Q2 2022, (Q2 2021: $13.6m), a fourth consecutive quarterly record – 13% higher than the previous record of $43.6m in Q1 2022.
  • $92.8m total portfolio contribution for H1 2022, surpassing the $85.6m generated in FY 2021 as a whole.
  • Results have benefitted from consistent volumes and very strong commodity prices during the first half of the year.
  • Q2 2022 expected to be the strongest quarter of the year, with commodity prices trading off thus far in H2 2022 and the gradual step down in Kestrel volumes likely to commence at the end of the year.
  • Queensland Government’s increase to the statutory royalty rate regime applicable to the Group’s Kestrel royalty entitlement effective as of 1 July 2022 and expected to partially offset lower coking coal prices during H2 2022.
  • $185m acquisition of an advanced development stage copper and nickel royalty portfolio from South32, largely financed from record portfolio contribution and designed to replace Kestrel mid-decade.
  • Brazilian Nickel PLC announced on 5 July 2022 the commencement of production from the small scale PNP1000 plant at the Piauí Nickel Project in Brazil where Anglo Pacific holds a 1.25% royalty on the project.
  • Agreed with lending syndicate to maintain the Group’s revolving credit facility at $150m whilst adding a $50m accordion feature for future acquisitions.
  • Net debt at 30 June 2022 was $21m. Pro-forma net debt at 30 July 2022 post completion of the South32 transaction, is estimated to be $55m.
  • ~$145m+ of liquidity available to finance further growth opportunities, along with residual $20m LIORC stake.

Portfolio Contribution:

    Q2 2022

$m

 

QoQ %

Q1 2022

$m

Q2 2021

$m

Kestrel 37.4 12% 33.5 4.9
Voisey’s Bay 7.2 7% 6.7 3.1
Mantos Blancos 1.6 7% 1.5 1.4
Maracás Menchen 1.3 86% 0.7 0.8
Four Mile 0.3 (40%) 0.5 0.1
Narrabri (disposed of on 31 December 2021) n/a n/a n/a 0.4
Royalty income 47.8 11% 42.9 10.7
Dividends – LIORC & Flowstream 0.8 60% 0.5 2.0
Interest – McClean Lake 0.6 0.6 0.6
Royalty related revenue   49.2 12% 44.0 13.3
EVBC*   0.7 17% 0.6 1.0
Principal repayment – McClean Lake   0.9 80% 0.5
Less:      
Metal streams cost of sales (1.6) 7% (1.5) (0.7)
Total portfolio contribution 49.2 13% 43.6 13.6

* Following the application of IFRS 9, the royalties received from EVBC are reflected in the fair value movement of the underlying royalty rather than recorded as royalty income.

Marc Bishop Lafleche, Chief Executive Officer of the Company, commented:

“The portfolio continued to generate record levels of income during Q2, and along with the contribution from Q1 provided ~$93m of revenue, which in large part has been recycled into the acquisition of a high-quality royalty portfolio from South32. These record levels of income are not expected to be sustained in the second half of the year as commodity prices have pulled back, although the increase in the Queensland royalty rates will offset some of the impact of lower coking coal prices at Kestrel.

The recent volatility in commodity prices across the board may also present opportunities for us to pursue further value-enhancing acquisitions and with over $160m of firepower we remain well capitalised to transact.”

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