Q1 2021 Trading Update

Anglo Pacific Group PLC (“Anglo Pacific”, the “Company” or the “Group”) (LSE: APF, TSX: APY), is pleased to provide the following trading update for the period 1 January 2021 to 5 May 2021. Unless otherwise stated, all unaudited financial information is for the quarter ended 31 March 2021.

As previously announced, the Group completed the transformational U$205m acquisition of a cobalt stream from the Voisey’s Bay mine during Q1 2021, the Group’s largest and most significant transaction, pivoting the business from its coal heritage towards 21st century commodities that support a more sustainable future.

The Group’s total portfolio contribution reduced to £6.8m for Q1 2021, in large part reflecting the impact of the previously announced disposal of ~75% of its holding in LIORC to partially finance the Voisey’s Bay acquisition. Revenue from the stream has commenced in Q2 2021.

Highlights

    Q1 2021

£m

 

QoQ %

Q4 2020

£m

Q1 2020

£m

Kestrel 3.4 (10.5%) 3.8 8.3
Narrabri 0.6 0.6 0.6
Mantos Blancos 1.0 1.0 0.6
Maracás Menchen 0.4 (33.3%) 0.6 0.5
Four Mile (100%) 0.2 0.1
Royalty income 5.4 (12.9%) 6.2 10.1
LIORC dividends 0.6 (83.8%) 3.7 0.9
Interest – McClean Lake 0.4 0.4 0.4
Royalty related revenue   6.4 (37.9%) 10.3 11.4
EVBC   0.4 (33.3%) 0.6 0.5
Principal repayment – McClean Lake   (100%) 0.3 0.4
Total portfolio contribution 6.8 (39.3%) 11.2 12.3
  • All of the Group’s producing assets are now back in operation, following the recommencement of activities at the McClean Lake Mill after a period of COVID-19 related care and maintenance
  • The pricing discount at Kestrel has narrowed in the first quarter, although coking coal markets remain subdued
  • Lower volumes at Narrabri were offset by higher pricing during the quarter, which was ~13% higher than Q4 2020
  • Strong performance from Mantos Blancos, with volumes 15% higher and pricing 40% higher than Q1 2020
  • Higher vanadium prices slightly offset the lower sales volumes at Maracás Menchen following planned maintenance at the kiln during Q1 2021 – margins also benefitted from the sales of higher purity vanadium pentoxide for battery technology customers
  • Q1 2021 dividend of C$1.00 per share declared by LIORC, payable on 26 April 2021 and considerably higher than the C$0.25 in Q1 2020 as less capex is expected to be required in 2021
  • The Group has received its first deliveries under the cobalt stream from Voisey’s Bay and will record its first sales in Q2 2021
  • The Group remains in a strong financial position to pursue growth opportunities with liquidity of ~US70m available, subject to lender consent
  • As previously announced and subject to shareholder approval at the 2021 AGM, the board is recommending a final dividend for 2020 of 3.75p, payable on 18 August 2021 to shareholders who are on the register of members at the close of business on 9 July 2021

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

“The first quarter of 2021 has started satisfactorily for Anglo Pacific with the completion of the transformational acquisition of the Voisey’s Bay cobalt stream and the resumption of activity at McClean Lake returning the Group’s portfolio of producing assets to full operation.

Despite volumes across the portfolio being lower in Q1 2021, royalty income was only 13% lower than Q4 2020 following a recovery in the commodity prices underlying the Group’s producing assets. Copper has been a standout performer in the year to date, with strong supply demand fundamentals set to underpin prices in the near to medium term.  We have also seen gains in the vanadium price which, along with a higher portion of vanadium sales to the battery market, should result in increased revenue from our Maracás Menchen royalty.

We are pleased to report the receipt of the first deliveries of cobalt from our recent acquisition and the smooth integration of the stream into our existing business. We look forward to updating the market in due course as the stream begins to contribute to the Group’s revenues from Q2 2021.

The strength of the iron ore price has led to our remaining stake in LIORC being worth ~US$35m. Along with ~US$27m available under the existing credit facility and ~US$9m of shares held in treasury, the Group has ~US$70m of financing flexibility. We continue to assess opportunities to further diversify the portfolio and we look forward to the remainder of 2021 with cautious optimism for our portfolio and for commodities in general.”

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