[vc_row][vc_column width=”1/1″][vc_column_text]Anglo Pacific Group PLC (“Anglo Pacific”, the “Company” or the “Group”) (LSE: APF, TSX: APY), the London and Toronto listed royalty company, issues the following trading update for the period July 1, 2016 to November 1, 2016. Unless otherwise stated, all unaudited financial information is for the quarter ended September 30, 2016.
Q3 2016 Highlights
- Royalty related income of £4.7m in Q3 2016 (Q3 2015: £1.9m), an increase of 147%
- Royalty related income of £9.0m for the nine months ended September 30, 2016 (nine months ended September 30, 2015: £5.7m; and FY2015: £8.7m), an increase of 58%
- Cash and cash equivalents of £4.0m as at September 30, 2016 (December 31, 2015: £5.7m) and net debt of £8.2m as at September 30, 2016 (December 31, 2015: £1.8m), both prior to receipt of Q3 2016 royalty income
- Significant increases in both coking and thermal coal prices since the half year, with spot prices up 229% and 110% year to date respectively, which should benefit royalty income in Q4 2016
- Royalty income for 2016 expected to be considerably higher than previous expectations
- Net debt currently stands at £4.2m following receipt of the Q3 2016 royalty income
- Currency hedging measures implemented to protect a significant portion of forecast next six months’ Australian dollar income at spot rates of approximately GBP:AUD 1.60, following the continued weakness of sterling post the outcome of the EU referendum
- Full dividend cover now expected for 2016 ahead of previous guidance, and acceleration in the timeframe when the Group can consider gradually increasing its dividend
Julian Treger, Chief Executive Officer of the Company, commented:
“We are delighted by the Group’s progress this year, underlined by the significant increase in royalty income which is already ahead of 2015 as a whole. Encouragingly, we believe that more good news is still to come in Q4 2016, when increased coal prices and mining in our royalty areas should benefit the Company still further.
“With the outlook for robust coal prices set to continue through H1 2017, we look forward to the corresponding benefit to our dividend cover. We remain very excited about the Group’s prospects, as Anglo Pacific continues to be one of the only listed royalty companies that provides such high levels of exposure to coking coal price increases.”
Trading update additional information
- Increase in income for the first nine months of 2015 has been driven largely by increases in volume in the Group’s royalty land at Kestrel and the weakness of the sterling (sterling is approximately 20% lower against the Australian dollar compared to the level at the beginning of the year), with the full benefit of recent coal price increases expected to come through in the final quarter of the year
- Although Rio Tinto has not published the price at which they have contracted coking coal sales for Q4 2016, both Peabody and Glencore have settled contracts at US$200/t. This marks a 117% increase on the Q3 2016 contract price of $92/t. Should Rio Tinto achieve this price, when combined with the majority of production at Kestrel expected to be within Anglo Pacific’s land in Q4 2016, Anglo Pacific can reasonably expect a much higher amount of royalty income in Q4 2016 compared to expectations at the half year. The company will make an announcement to the market in due course once the coking coal price has been set for Q4 2016 .
- Although the coking coal price increase has been most pronounced, the price of thermal coal is also up sharply as is the price of intermediate quality PCI coal. The royalty the Group acquired in March 2015 over the Narrabri mine should thus also show considerable growth in Q4 2016
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