What we own

Anglo Pacific has a 2% NSR royalty on all mineral products sold from the area of the Maracás Menchen project to which the royalty interest relates. The project is located 250km south-west of the city of Salvador, the capital of Bahia State, Brazil and is 99.97% owned and operated by TSX Venture Exchange listed Largo Resources Limited (‘Largo’).


Royalties from the Maracás Menchen mine totalled £0.5m for the year ended 31 December 2020, compared to £2.7m in 2019, a fall of 78%, despite Largo reporting slightly higher sales of 10.3Kt compared to 10.2Kt in 2019. The reduction in the Group’s royalties from the Maracás Menchen mine is primarily attributable to the one-off pricing adjustment of US$1.3m which
arose on the termination of the offtake agreement between Largo and Glencore.

The level of royalty income payable to Anglo Pacific in 2020 compared to 2019 was also impacted by the sustained weakness in the underlying vanadium price during 2020, which reduced from an average price in 2019 of U$20.35/Kg to U$12.27/Kg in 2020.

The production level in 2020 from the Maracás Menchen mine represents a new annual record of 11.8Kt, and was within Largo’s announced production guidance for 2020 of 11.8-12.3Kt. Largo also achieved a record production quarter in Q4 2020 of 3.3Kt following the successful completion of its expansion and optimisation of the processing plant, which has increased the nameplate capacity of the plant to ~1Kt V2O5 per month, an increase of 20%. Largo continues to optimise the plant in 2021 and has flagged further growth this year from the commissioning of a V2O3 plant, as described in more detail below.

The stark difference between production and sales levels is due to the building of V2O5 stockpiles in Q2 and Q3 2020 as Largo transitioned to an in-house sales and marketing function following the expiry and termination of the Glencore offtake arrangement in April 2020. As a result, there was an expected time lag between shipping product and the receipt of proceeds which resulted in limited sales in May and June.

Following the payment to Anglo Pacific of royalty related to sales of 3.2Kt of V2O5 in Q1 2020, the Group triggered the second and final of two deferred US$1.5m (£1.2m) payment instalments to the previous owner of the royalty as agreed at the time of the original royalty acquisition. This consideration was paid in May 2020.