2019 Trading Update and Record Income for the year

News Release

20 January 2020

 

 

Anglo Pacific Group PLC

Anglo Pacific Announces 2019 Trading Update and Record Income for the year

Anglo Pacific Group PLC ("Anglo Pacific", the "Company" or the "Group") (LSE: APF, TSX: APY) issues the following trading update for the period 1 October 2019 to 17 January 2020, which includes certain information for the year ended 31 December 2019. The Company expects to release its full year results on 25 March 2020. Unless otherwise stated, all unaudited financial information is for the quarter or year ended 31 December 2019.

 

Portfolio Contribution History

 

£m	2019	2018	2017	2016	2015	2014
Total portfolio contribution1	£57-59	£49.3	£42.4	£19.8	£8.9	£3.5

 

Highlights

 

§ ~20% increase in portfolio contribution in 2019 to £57-59m from £49.3m in 2018 - another record year for Anglo Pacific

 

§ Significant volume increases at Kestrel, as targeted by the operator at the beginning of 2019, delivered increasing Kestrel portfolio contribution

 

§ Strong contribution from LIORC in the period, with total dividends for 2019 received of C$4.00 per share, representing an implied yield of ~16%, the Group's second largest source of revenue in 2019

 

§ Maiden royalty receipts of ~£1.0m received from Mantos Copper

 

§ Noticeable sales volume increases at Narrabri despite softer thermal coal prices in H2 19

 

§ EVBC continues to provide the Group with stable revenue aided by continued plant optimisation and a higher gold price in H2 2019   

 

§ Revenue from Four Mile and the Denison financing arrangement was in line with expectations, but weakness in the vanadium price resulted in lower revenue from Maracás Menchen

 

§ Net debt at the end of 2019 of £28.9m, following £62.5m of investment and £14.4m of dividend payments - the Group continues to operate well within its debt capacity limits with operating leverage of ~0.6x and further liquidity available

 

§ Total dividend for 2019 will be at least 9p (2018: 8p) of which 4.875p has already been paid or declared

 

§ With anticipated volume growth to come from the portfolio, along with a full year of contribution from Mantos and the additional LIORC acquired in H2 19 we look forward to what should be another year of growth in 2020

 

¹ Total portfolio contribution includes royalty income, cashflows from Denison/McClean Lake and other royalty financial instruments accounted for in accordance with IFRS 9, for example El Valle Boinás-Carlés

 

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

 

"We are pleased to report yet another record year of income for Anglo Pacific, the second year in a row in which we have done so. Including the cash received from the Denison financing arrangement, total portfolio contribution for the year is expected to be £57-59m, which represents growth of ~20% on the £49.3m generated in 2018.

 

Our income benefitted mainly from volume increases in the year, somewhat offset by the softening in commodity prices, particularly coal and vanadium, during H2 2019. We anticipate further volume growth to come in 2020, with increases expected at Kestrel, Narrabri and Maracas.  

 

The strong levels of cash generated in 2019 enabled us to use our balance sheet to acquire £62.5m (US$75m) in income generating royalties. In the same period, we paid out £14.4m (US$18.5m) in dividends. Our balance sheet remains in a very strong position and we continue to operate with appropriately conservative levels of operational leverage.

 

It is likely that the extractive industry will face further headwinds in 2020 and accessing capital will be more difficult. This should create opportunities for Anglo Pacific, and we will prioritise those commodities essential to deliver the technology required to achieve environmental and climate change targets in the years ahead."

 

For further information:

 

Anglo Pacific Group PLC Julian Treger - Chief Executive Officer Kevin Flynn - Chief Financial Officer and Company Secretary	+44 (0) 20 3435 7400
Website:	www.anglopacificgroup.com
Berenberg	+44 (0) 20 3207 7800
Matthew Armitt / Jennifer Wyllie / Detlir Elezi
Peel Hunt LLP	+44 (0) 20 7418 8900
Ross Allister / James Bavister
RBC Capital Markets	+44 (0) 20 7653 4000
Farid Dadashev / Marcus Jackson / Jamil Miah
Capital Market Communications Limited (Camarco)	+44 (0) 20 3757 4997
Gordon Poole / Owen Roberts / James Crothers

 

Notes to Editors

About Anglo Pacific

Anglo Pacific Group PLC is a global natural resources royalty and streaming company. The Company's strategy is to develop a leading international diversified royalty and streaming company with a portfolio centred on base metals and bulk materials, focusing on accelerating income growth through acquiring royalties on projects that are currently cash flow generating or are expected to be within the next 24 months, as well as investment in earlier stage royalties. It is a continuing policy of the Company to pay a substantial portion of these royalties to shareholders as dividends.

 

 

Cautionary statement on forward-looking statements and related information

Certain statements in this announcement, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect the Group's expectations and views of future events. Forward-looking statements (which include the phrase 'forward-looking information' within the meaning of Canadian securities legislation) are provided for the purposes of assisting the reader in understanding the Group's financial position and results of operations as at and for the periods ended on certain dates, and to present information about management's current expectations and plans relating to the future. Readers are cautioned that such forward-looking statements may not be appropriate for other purposes than outlined in this announcement. These statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, cash flow, requirement for and terms of additional financing, performance, prospects, opportunities, priorities, targets, goals, objectives, strategies, growth and outlook of the Group including the outlook for the markets and economies in which the Group operates, costs and timing of making new investments, mineral reserve and resources estimates, estimates of future production, production costs and revenue, future demand for and prices of precious and base metals and other commodities, for the current fiscal year and subsequent periods.

 

Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as 'expects', 'anticipates', 'plans', 'believes', 'estimates', 'seeks', 'intends', 'targets', 'projects', 'forecasts', or negative versions thereof and other similar expressions, or future or conditional verbs such as 'may', 'will', 'should', 'would' and 'could'. Forward-looking statements are based upon certain material factors that were applied in drawing a conclusion or making a forecast or projection, including assumptions and analyses made by the Group in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances. The material factors and assumptions upon which such forward-looking statements are based include: the stability of the global economy; stability of local governments and legislative background; the relative stability of interest rates, the equity and debt markets continuing to provide access to capital; the continuing of ongoing operations of the properties underlying the Group's portfolio of royalties and investments in a manner consistent with past practice; the accuracy of public statements and disclosures (including feasibility studies, estimates of reserve, resource, production, grades, mine life, and cash cost) made by the owners and operators of such underlying properties; accuracy of the information provided to the Group by the owners and operators of such underlying properties; no material adverse change in the price of the commodities produced from the properties underlying the Group's portfolio of royalties and investments; no material adverse change in foreign exchange exposure; no adverse development in respect of any property in which the Group holds a royalty or other interest, including but not limited to unusual or unexpected geological formations and natural disasters; successful completion of new development projects; planned expansions or additional projects being within the timelines anticipated and at anticipated production levels; and maintenance of mining title. 

 

Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions, which could cause actual results to differ materially from those anticipated, estimated or intended in the forward-looking statements.  Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.  No statement in this communication is intended to be, nor should it be construed as, a profit forecast or a profit estimate.  By its nature, this information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate; that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of material factors, many of which are beyond the Group's control, affect the operations, performance and results of the Group, its businesses, royalties and investments, and could cause actual results to differ materially from those suggested any forward-looking information. Such risks and uncertainties include, but are not limited to current global financial conditions, investment portfolio and associated risk, adverse development risk, financial viability and operational effectiveness of owners and operators of the relevant properties underlying the Group's portfolio of royalties and investments, royalties and investments subject to other rights, and contractual terms not being honoured, together with those risks identified in the 'Principal Risks and Uncertainties' section of our most recent Annual Report, which is available on our website. If any such risks actually occur, they could materially adversely affect the Group's business, financial condition or results of operations. Readers are cautioned that the list of factors noticed in the 'Principal Risks and Uncertainties' section of our most recent Annual Report is not exhaustive of the factors that may affect the Group's forward-looking statements. Readers are also cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements.

 

This announcement also contains forward-looking information contained and derived from publicly available information regarding properties and mining operations owned by third parties. The Group's management relies upon this forward-looking information in its estimates, projections, plans, and analysis.  Although the forward-looking statements contained in this announcement are based upon what the Group believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. The forward-looking statements made in this announcement relate only to events or information as of the date on which the statements are made and, except as specifically required by applicable laws, listing rules and other regulations, the Group undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

 

Third party information

As a royalty and streaming company, the Group often has limited, if any, access to non-public scientific and technical information in respect of the properties underlying its portfolio of royalties and investments, or such information is subject to confidentiality provisions.  As such, in preparing this announcement, the Group has largely relied upon the public disclosures of the owners and operators of the properties underlying its portfolio of royalties and investments, as available at the date of this announcement.