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Interim results for the six months ended 30 June 2021 - Anglo Pacific Group

Anglo Pacific Group PLC (“Anglo Pacific”, the “Company”, the “Group”) (LSE: APF) (TSX: APY) is pleased to announce interim results for the six months ended 30 June 2021 which are available on both the Group’s website at www.anglopacificgroup.com and on SEDAR at www.SEDAR.com.
Following the transformational $205m Voisey’s Bay cobalt stream acquisition in March 2021 and the associated financing, the Company has determined that it is now appropriate to commence reporting results in US dollars rather than in British pounds. With four of the Group’s nine royalties being received in US dollars, the majority of Anglo Pacific’s revenue, and the remaining ones largely being based on US dollar prices but then converted to local currency, the Company feels now is the right time to transition its presentation currency to one that more appropriately reflects the underlying performance of the business and is in line with its peers.
The change in presentation currency does not impact the underlying business nor dividends, in particular the previously announced interim dividends of 1.75p per share to be paid in November 2021, December 2021 and February 2022.
Results

HY1 2021 HY1 2020 HY1 2021 HY1 2020
$m YoY% $m £m YoY% £m
Kestrel 9.55 (37%) 15.10 6.88 (43%) 11.97
Voisey’s Bay 3.12                – 2.25                –
Narrabri 1.15 (43%) 2.00 0.83 (48%) 1.59
Mantos Blancos 2.75 82% 1.51 1.98 65% 1.20
Maracás Menchen 1.46 484% (0.38) 1.05 439% (0.31)
Four Mile 0.10 (41%) 0.17 0.07 (46%) 0.13
Royalty and stream income 18.13 (1%) 18.40 13.06 (10%) 14.58
Dividends – LIORC & Flowstream 2.86 (1%) 2.89 2.06 (10%) 2.30
Interest – McClean Lake 1.23 10% 1.12 0.89 0% 0.89
Royalty and stream related revenue 22.22 (1%) 22.41 16.01 (10%) 17.77
EVBC* 1.59 34% 1.19 1.15 19% 0.97
Principal repayment – McClean Lake (100%) 0.50 (100%) 0.40
Less:
Metal streams cost of sales (0.77) (0.55)
Total portfolio contribution 23.04 (4%) 24.10 16.61 (13%) 19.14

* 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.
Highlights:

  • Portfolio contribution of $23.0m in H1 21 compared to $24.1m in H1 20, reflects lower coking coal prices and volumes at both Kestrel and Narrabri, primarily in Q1 21, but is offset by maiden contributions from the Group’s Voisey’s Bay stream of $2.4m
  • 62% of the Group’s asset value is derived from battery materials (31 December 2020: 22%) with coal exposure reducing 19% (31 December 2020: 33%)
  • 53% of the Group’s portfolio contribution is derived from non-coal revenue (H1 2020: 29%)
  • Successful integration of the Voisey’s Bay cobalt stream acquisition into the business, with 14 deliveries processed thus far
  • 90% increase in the spot price of coking coal in the last three months and an 80% increase for thermal coal both of which are the strongest performing commodities within the period and will assist in driving H2 21 revenue
  • Dividends from LIORC of C$2.75 per share declared in H1 21 compared to C$0.80 per share in H1 20 – benefitting from continued strong iron ore pricing throughout the first six months of 2021
  • Realised copper and vanadium prices (vanadium is up 80% year to date) were higher in the period which benefitted the Company’s Mantos Blancos and Maracás Menchen revenue (the latter was impacted by a one-off off-take adjustment charge in H1 20)
  • All of 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
  • Adjusted earnings of 5.5c (H1 20: 7.7c), or ~3.95p, which should be viewed in the context that the majority of the Group’s earnings are expected to come through in H2 21
  • Net debt of $108.9m at the end of June 2021 ($33.3m at the beginning of the year) reflecting the acquisition of the Voisey’s Bay cobalt stream in Q1 21, with operating leverage under 2.5x
  • With $29.0m of undrawn borrowings, ~US$33.0m residual position in LIORC and ~US$8.0m of treasury shares, the Group has financing flexibility of ~US$70.0m to finance further growth opportunities
  • Strategic review under way to consider options in relation to a possible divestment of the Narrabri thermal coal royalty, which would see the Group being thermal coal free
  • Next quarterly dividend payment of 1.75p to be paid on 10 November 2021 to shareholders on the register at 7 October 2021

Anglo Pacific expects H2 21 to be much stronger given that coal prices are trading at 52-week highs and that the majority of these increases will only impact on cash flow in Q3 21. Cobalt prices are up 20% in the last three months which, along with increased deliveries to come during H2 21, will benefit revenue from the Voisey’s Bay stream.
Julian Treger, Chief Executive Officer, commented:
The first half results do not reflect what appears likely to be a strong year for Anglo Pacific. The recent increase in coking and thermal coal spot prices, currently at 52-week highs, accelerated at the beginning of June, lagging the increases which took hold for other commodities at the beginning of the year. Coking coal prices have increased 120% in the year to date, with 90% of this occurring in the last three months. Thermal coal is up by 102% year to date and 80% in the last three months. With stability now appearing to have returned to coal markets, we are cautiously optimistic that these price levels can be sustained through the second half of 2021.
In addition to coal prices, cobalt has increased by 20% in the last three months, which looks set to benefit the transformational $205m Voisey’s Bay stream acquisition completed at the end of Q1 21.
The outlook for commodities in general continues to be well supported by significant infrastructure commitments outlined by some of the largest economies as a means to ensure no lasting damage caused by the COVID pandemic. This is most recently evidenced by the approval of the $1tn stimulus package in the US. Coupled with ongoing momentum in the development of decarbonisation technology, and the possibility of rising inflation, we see solid fundamentals for sustained pricing levels for commodities. As a result, we are confident that the second half will see a significantly higher outturn than that of the first six months of the year.
We continue to be busy appraising further growth opportunities and have ~US$70m of financing flexibility to do so.”
Analyst presentation
There will be an analyst presentation webcast at 9:30am (BST) on 25 August 2021. The presentation will be hosted by Julian Treger (CEO), Kevin Flynn (CFO) and Marc Bishop Lafleche (CIO).
Please join the event 5-10 minutes prior to the scheduled start time. When prompted, provide the confirmation code or event title.

Event Conference Title Anglo Pacific Interim Results
Time Zone Dublin, Edinburgh, Lisbon, London
Start Time/Date 09:30 (BST) / Wednesday 25 August 2021
Duration 60 minutes
Phone +44 (0)330 336 9434
  UK Tollfree/freephone 0800 279 7209
Confirmation Code 5853511
Webcast Link https://webcasting.brrmedia.co.uk/broadcast/611d0b81c97de6636c2d993d

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