TIDMAPF
RNS Number : 4172U
Anglo Pacific Group PLC
18 January 2017
News Release
January 18, 2017
Anglo Pacific Group PLC
Q4 2016 Trading Update
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 (as amended)
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
October 1, 2016 to December 31, 2016, ahead of the release of its
full year results on March 30, 2017. Unless otherwise stated, all
unaudited financial information is for the quarter ended December
31, 2016.
Highlights
-- 240% increase in royalty income for the year to GBP20.5 -
GBP21.5m (2015: GBP8.7m), mainly driven by the significant increase
in saleable tonnes at Kestrel being derived from the Group's
private royalty lands
-- Royalty income for Q4 2016 in the range of GBP11.6m -
GBP12.6mm (Q3 2016: GBP4.8m, Q4 2015: GBP3.0m)
-- 88% and 67% of Kestrel's saleable tonnes in H2 2016 and FY
2016 respectively derived from the Group's private royalty
lands
-- The Group continues to expect 85-90% of Kestrel's saleable
tonnes will be derived from its private royalty lands in 2017
-- Narrabri performed in line with the Group's expectations in
H2 2016 with further production growth expected in 2017 through the
imminent expansion of the longwall infrastructure
-- Kestrel valuation expected to be A$195.0m - A$205.0mm at
December 31, 2016 (June 30, 2016: A$147.8m)
-- Expected impairment charges of GBP5.0 - GBP8.0m relating to
the Group's Amapá and Dugbe 1 royalties
-- Net debt at December 31, 2016 of GBP0.9m (September 30, 2016:
GBP8.2m)
-- Dividend cover for 2016 expected to be approximately 1.5x
Julian Treger, Chief Executive Officer of the Company,
commented:
"Anglo Pacific enjoyed a strong second half of 2016, principally
due to the significant increase in saleable tonnes from Kestrel
being derived from the Group's private royalty lands and another
strong and consistent production quarter from Narrabri. The Group
expects to report income of GBP11.6m - GBP12.6m in the fourth
quarter alone, which is approximately 147% and 299% higher than
both the immediately preceding quarter and the same quarter in the
previous year respectively. Combined with the GBP8.9m earned to the
end of Q3 2016, this should result in overall royalty income for
2016 of GBP20.5 - GBP21.5m. Such an outcome would represent the
highest level of annual income reported by the Group since
2011.
Equally encouraging is our outlook for 2017, where we expect
further growth in our income as 85-90% of Kestrel's saleable tonnes
are expected to be derived from our private royalty area, a
significant uplift from the 67% in 2016. Our royalty income is also
expected to be strong in Q1 2017 following the settlement of coking
coal contract prices at $285/t. The combination of increased
saleable tonnes and higher prices, along with the potential for the
pound to remain weak in the near term, should translate into
further growth in royalty income for this year.
The Group ended the year with very little net debt and has the
flexibility to draw down on its facility to finance future
acquisitions. The additional income generated in H2 2016 has also
directly benefited our dividend cover which is expected to be in
excess of 1.5x for 2016 as a whole.
We are pleased with the improvement in our financial position,
though the Board is mindful that the coking coal price is widely
anticipated to level off during the course of the year. As such, we
feel it is prudent to monitor the level of income received during
2017 and reassess the dividend should income grow as expected.
In addition to its reassessment of the dividend, the Board is
also considering investing some surplus cash in growth royalties
where these opportunities meet our strict investment criteria.
Although cash producing royalties will remain at the forefront of
our strategy, we now feel that we are in a position to deploy a
modest amount of capital in development royalties which, by their
nature, should result in higher returns over time. We have seen
some opportunities in this area, which is still largely closed to
more conventional sources of capital, and will cautiously select
certain projects which are consistent with our strict investment
criteria but have the ability to provide exceptional returns over
the next decade.
Overall, we are very pleased with the progress we have made in
2016 and our outlook for the year ahead."
For further information:
Anglo Pacific Group PLC +44 (0) 20 3435 7400
Julian Treger - Chief Executive
Officer
Kevin Flynn - Chief Financial
Officer and Company Secretary
Website: www.anglopacificgroup.com
BMO Capital Markets Limited +44 (0) 20 7664 8020
Jeffrey Couch / Neil Haycock /
Tom Rider
Macquarie Capital (Europe) Limited +44 (0) 20 3037 2000
Raj Khatri / Nicholas Harland / Ariel
Tepperman
Peel Hunt LLP +44 (0) 20 7418 8900
Matthew Armitt / Ross Allister
Redleaf Communications +44 (0)20 7382 4769
Charlie Geller / David Ison
Notes to Editors
About Anglo Pacific
Anglo Pacific Group PLC is a global natural resources royalty
company. The Company's strategy is to develop a leading
international diversified royalty company with a portfolio centred
on base metals and bulk materials, focusing on accelerating income
growth mainly through acquiring royalties on projects that are
currently cash flow generating or are expected to be within the
next 24 months. 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 information contained in this announcement, including
any information as to future financial or operating performance and
other statements that express management's expectation or estimates
of future performance, constitute "forward looking statements". The
words "expects", "anticipates", "plans", "believes", "estimates",
"seeks", "intends", "targets", "projects", "forecasts", or negative
versions thereof and other similar expressions identify
forward-looking statements. Forward-looking statements are
necessarily based upon a number of estimates and assumptions that,
while considered reasonable by management, are inherently subject
to significant business, economic and competitive uncertainties and
contingencies. Further, forward-looking statements are not
guarantees of future performance and involve risks and
uncertainties which could cause actual results to differ materially
from those anticipated, estimated or intended in the
forward-looking statements. Furthermore, this announcement contains
information and statements that are based on certain estimates and
forecasts that have been provided to the Group by Kestrel Coal Pty
Ltd ("KCPL"), the accuracy of which KCPL does not warrant and on
which readers may not rely. The material assumptions and risks
relevant to the forward-looking statements in this announcement
include, but are not limited to: stability of the global economy;
stability of local government and legislative background;
continuing of ongoing operations at the properties underlying the
Group's portfolio of royalties in a manner consistent with past
practice; accuracy of public statements and disclosures (including
feasibility studies and 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. If any such
risks actually occur, they could materially adversely affect the
Group's business, financial condition or results of operations. For
additional information with respect to such risks and
uncertainties, please refer to the "Principal Risks and
Uncertainties" section of our most recent Annual Report on the
Group's website www.anglopacificgroup.com. Readers are cautioned to
consider these and other factors, uncertainties and potential
events carefully and not to put undue reliance on forward-looking
statements. The forward-looking statements contained in this
announcement are made as of the date of this announcement only and
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 holder, 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, 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, as available at the date of
this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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