Anglo Pacific Group PLC (LON:APF, TSX:APY) the London and Toronto listed royalty company, issued today the following trading update for the period 1 April to 25 July 2018. Unless otherwise stated, all unaudited financial information is for the quarter or half year ended 30 June 2018.
This update is ahead of the release of the half year results on 23 August 2018.
Highlights
- ~65% quarter on quarter and ~30% year on year increase in royalty income for Q2 2018 in the range of £11.0m – £11.5m (Q1 2018: £6.7m, Q2 2017: £8.6m)
- ~10% year on year increase in royalty income for the six months ended 30 June 2018, to £17.5m – £18.0m (H1 2017: £16.1m)
- Cash received from Denison/McLean Lake of £1.5m – £1.7m in addition to the above royalty income for the six months ended 30 June 2018 (H1 2017: £1.5m)
- ~15% increase in total contribution1 from royalty portfolio for the six months ended 30 June 2018 to £20.5m – £21.0m (H1 2017: £17.6m)
- ~165% increase in royalties from the Maracás Menchen vanadium mine, to a record £2.0m – £2.5m for H1 2018 (H1 2017: £0.8m) and already in advance of that received for 2017 as a whole
- Strong performance from Kestrel, with H1 2018 royalty income in the range of £14.0m – £14.5m, up ~15% on the same period in 2017 driven mainly by higher coal prices
- Kestrel volumes more than doubled in Q2 2018 compared to Q1 2018, and we expect production to remain at these levels into H2 2018, setting the stage for a strong full year
- Technical issues continue to persist at Narrabri, with H1 2018 royalty income down ~25% on the same period in 2017 to between £1.0m – £1.5m
- Closing of the Candente royalty acquisition, which provides longer term exposure to copper and has the potential to further diversify the Group’s exposure to Kestrel
1 Total contribution includes royalty income, cashflows from Denison/McLean Lake and other royalty financial instruments accounted for in accordance with IFRS 9, for example El Valle Boinás-Carlés
Julian Treger, Chief Executive Officer at Anglo Pacific Group PLC, commented: “It is pleasing to report another set of results in which our revenue continues to grow. Although this is once again derived in the main from Kestrel, it is very good to see that revenue from Maracás Menchen is now contributing more than 10% of our income, and revenue in H1 2018 from that royalty is already in advance of that received for the whole of 2017.
We are now confident that 2018 will see further organic growth in our income and cash generation. This is thanks to the continued resilience of commodity prices, noticeably thermal coal and vanadium, which are currently at recent five-year highs, and the increasing premia for higher quality product, which our portfolio provides exposure to.
Kestrel produced a strong operational result in Q2 2018, with volumes more than double those in Q1 2018. This is particularly encouraging in the lead up to the completion of its sale to EMR and Adaro. We see this change of ownership as a positive event for Anglo Pacific, with Adaro recently announcing that it intends to double output over the coming years. Given that virtually all mining is expected to be within our private royalty area over this period, there is the potential to see a corresponding doubling of our royalty income (depending on commodity prices), which would be a significant and material windfall for the Company and its stakeholders.
In the meantime, we have added a further royalty to our portfolio, with the recently announced Candente transaction, providing us with long-term exposure to a large copper resource.
We are very pleased with the progress we have made in the first half of 2018 and believe that we are well placed to report another year of growth, along with making significant additions to our royalty portfolio.”
