TIDMAPF
RNS Number : 0351O
Anglo Pacific Group PLC
15 May 2018
News Release
15 May 2018
Anglo Pacific Group PLC
Q1 2018 Trading Update
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
1 January 2018 to 15 May 2018. Unless otherwise stated, all
unaudited financial information is for the quarter ended 31 March
2018.
Highlights
-- Total free cash flow generated in Q1 2018 of GBP13.3m, in
line with the GBP13.4m generated in Q1 2017
-- Cash at 31 March 2018 of GBP18.7m (31 December 2017:
GBP8.1m), and full access to the US$40m undrawn revolving credit
facility
-- Well-publicised longwall changeouts and production shortfalls
at both Kestrel and Narrabri led to a 6% reduction in income from
the royalty portfolio compared to Q1 2017
-- Volumes from Kestrel and Narrabri are expected to recover in
the remaining three quarters, and neither Rio Tinto nor Whitehaven
have altered their guidance for FY 2018
-- Lower volumes partially offset by the continued strength of
commodity prices, in particular the price of vanadium which has
increased by 130% compared to Q1 2017
-- Significant increase in revenue from Maracás Menchen in the
period to GBP0.8m from GBP0.4m in Q1 2017 as a result of strong
operational performance and significant increases in the vanadium
price
-- Total contribution from the royalty portfolio of GBP7.9m in
Q1 2018 (Q1 2017: GBP8.2m + GBP1.8m related to H2 2016)
-- Received US$2.5m (GBP1.7m) in April 2018 in final settlement
of the Indo Mines debenture as part of its takeover by the Rajawali
Group - the debenture was carried at GBPnil on the Group's balance
sheet
-- Rio Tinto announced the sale of Kestrel for US$2.25bn,
significantly in excess of what commentators had expected the sale
to achieve twelve months ago
Trading Update
Anglo Pacific is pleased to report another very strong quarter
of cash generation, reflecting the resilient commodity pricing seen
across our royalty portfolio. Of particular note was the 130%
increase in the vanadium price in Q1 2018 compared to the
corresponding quarter in 2017. The outlook for commodity prices
looks set to strengthen further, with Q2 2018 consensus forecast
for coking coal now 50% higher than what was envisaged 12 months
ago. Consensus for 2019 is already 12% ahead of what was expected
at the beginning of 2018, and thermal coal shows a similar trend.
Given the improvement in outlook for commodity prices we expect to
report further organic growth for 2018, although not at the same
high levels experienced over the past few years.
The well-publicised longwall changeouts and production
shortfalls at both Kestrel and Narrabri during the quarter, which
caused a 6% reduction in like for like royalty income, are expected
to be made up in full over the remaining nine months of the year.
Both longwall changeovers are now complete, and our sales volumes
estimates for 2018 are unchanged, with both Rio Tinto and
Whitehaven maintaining their production targets for the full
year.
As a result of this maintained guidance for full year production
at Kestrel and Narrabri, coupled with the continued improvement in
commodity prices, the Group expects to accumulate significant cash
over the course of the year. With GBP18.7m (US$25m) in cash at the
end of March, the receipt of US$2.5m from the Indo Mines debenture
in April 2018 and with full access to its US$40m borrowing
facility, the Group is in a very strong financial position from
which to self-finance further opportunities and cover the dividend.
We are also currently in the process of enlarging our existing bank
facility to reflect our greater debt capacity and provide further
liquidity for growth.
The Group does however expect free cash flow to dip in Q2 2018
due to the Kestrel royalty being paid on account based on the prior
quarter. In Q1 2018 we were paid on account based on a very strong
Q4 2017 and this has led to the prepayments exceeding the actual
royalty by A$2.3m. As a result, there will be a clawback in Q2
2018, along with payments on account based on the lower Q1 2018
income. This has no Income Statement impact and is simply a timing
difference in receiving the Kestrel royalty.
Julian Treger, Chief Executive Officer of the Company,
commented:
"We continue to generate significant cash from our portfolio,
have immediate access to US$65m and are currently in the process of
upsizing our bank facility. The focus for the year is firmly on
growth and we continue to work very hard on exploring, evaluating
and appraising new opportunities.
The announced sale of Kestrel during the quarter was 50% higher
than what the market had anticipated in 2017, suggesting a
potential upside to our Royalty. This should benefit Anglo Pacific
as the beneficiary of the vast majority of royalty payments over
the next 8-10 years."
This announcement contains inside information for the purposes
of article 7 of EU regulation 96/2014 (as amended).
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
Juan Alvarez - Head of Investments
Website: www.anglopacificgroup.com
BMO Capital Markets Limited +44 (0) 20 7664 8020
Jeffrey Couch / Neil Haycock /
Tom Rider
Canaccord Genuity Limited +44 (0) 20 7523 8000
Martin Davison / James Asensio
Peel Hunt LLP +44 (0) 20 7418 8900
Ross Allister / James Bavister
/ David McKeown
Redleaf Communications +44 (0) 20 3757 6880
Charlie Geller / Ian Silvera /
Fiona Norman
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 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 opportunities. 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 and to the
"Risk Factors" section of our most recent Annual Information Form
available on www.sedar.com and 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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