TIDMAPF
RNS Number : 0281S
Anglo Pacific Group PLC
12 March 2021
News Release
12 March 2021
Anglo Pacific Group PLC
Completion of US$205m Voisey's Bay Cobalt Stream Acquisition
Further to the announcement on 24 February 2021, Anglo Pacific
Group PLC ("Anglo Pacific", the "Company", the "Group") (LSE: APF,
TSX: APY) is pleased to announce the completion of the acquisition
of a 70% net interest in a stream on cobalt production from the
Voisey's Bay mine in Canada from private equity sellers for cash
consideration of US$205 million at closing and further contingent
consideration of up to US$27 million (the "Acquisition").
The Acquisition was financed through an oversubscribed equity
placing and retail offer of US$66m, the previously announced
profitable monetisation of a portion of the Group's Labrador Iron
Ore Royalty Corporation ("LIORC") investment, and the completion of
the new US$180 million credit facility from a syndicate of leading
Canadian banks, comprising Scotiabank, RBC Capital Markets, and
Canadian Imperial Bank of Commerce.
Julian Treger, Chief Executive Officer of the Company,
commented:
"I am extremely pleased to announce the completion of the
Voisey's Bay cobalt stream acquisition. This transaction is not
only the largest in our Company's history, but it also marks the
start of a fundamental transformation, as we reposition the
business towards 21(st) century commodities and become an
increasingly battery metals focused royalty and streaming
company.
The transaction provides Anglo Pacific with significant exposure
to a strategic mineral coupled with additional scale with which to
undertake similar transactions to further expand our commodity
exposure in high growth sectors. We have a US$20m funding
commitment (subject to the satisfaction of certain conditions) with
Incoa and a further US$70m of optionality within our business with
Piauí, along with several prospective deals within our pipeline for
similar commodities aligned to the battery storage and electric
vehicle revolutions.
This is the ideal time to proactively redeploy capital from the
iron ore sector and invest in cobalt. Since the start of 2021, the
cobalt price has increased 60% reaching two-year highs at
US$24.95/lb (1) ; and has increased 4% since Anglo Pacific
announced the acquisition, whilst the iron ore price has fallen 4%.
The increase has been driven by continued demand from the
lithium-ion battery sector as electric vehicle sales reached record
highs in 2020, with projected EV battery demand growth of 17% per
annum forecast over the period to 2040.
Fundamentals of the cobalt market and future outlook for the
commodity are firmly backed by the financial stimulus and policy
frameworks adopted by western governments in order to aid the green
revolution through emissions free transport, as well as the
ambitious goals set out by individual automakers to become fully
electric; most recently joined by Volvo and Jaguar.
Again, I would like to thank all of our stakeholders for their
continued support; this new cornerstone asset will help underpin
Anglo Pacific's ability to deliver further growth and sustainable
future returns for our shareholders."
Transaction Highlights:
-- A new cornerstone asset : Voisey's Bay is an established
nickel-cobalt-copper mine, located in Canada, a well-established
mining jurisdiction, and is an important operation of Vale Canada
Ltd (a subsidiary of Vale S.A., one of the world's largest mining
companies). It is a long-life operation, supporting the Group's
sustainable, through-the-cycle cash flow generation.
-- Strong cobalt fundamentals : The long-term fundamentals of
the cobalt market are expected to be very favourable and benefit
from the accelerating trend toward the adoption of electric
vehicles.
-- Repositioning to materials of the 21st century : 61% of the
pro-forma royalty portfolio will be attributable to battery related
materials and significantly reduces the Company's exposure to
coal.
-- World class operation : Voisey's Bay is a world class
nickel-cobalt-copper mine, positioned in the 2(nd) lowest quartile
of the industry cost curve and provides exposure to one of the
largest sources of cobalt outside of the Democratic Republic of the
Congo ("DRC").
-- Environmental credentials : Within the industry, Voisey's Bay
ranks amongst the lowest global emitters of CO(2) (2) , supported
by a leading sustainability and safety track record.
-- Accretive transaction for Anglo Pacific's shareholders : The
Acquisition is expected to be immediately accretive and to provide
a platform for long term earnings growth, as Kestrel's contribution
to the portfolio declines.
-- Stream details :
o Anglo Pacific is entitled to receive 22.82%(3) of all cobalt
production from Voisey's Bay up until 7,600 tonnes of finished
cobalt has been delivered, which then reduces the stream to an
11.41%(3) entitlement thereafter.
o Anglo Pacific will make ongoing payments equal to 18% of an
industry cobalt reference price for each pound of cobalt delivered
under the cobalt stream, until Anglo Pacific has recovered the
US$300m original upfront amount paid for the stream (through
accumulating credit from 82% of the cobalt reference price) through
cobalt deliveries; thereafter, the ongoing payments will increase
to 22% of the cobalt reference price.
-- Downside protection : The stream agreement provides that if
mill throughput does not reach 85% of targeted levels by 31
December 2025, some or all of the original upfront amount may be
refunded or the applicable cobalt stream percentages may be
increased, providing downside protection.
Analyst and Investor presentation webcast replay
We are pleased to provide a replay of the Voisey's Bay
acquisition presentation recorded at 9 am (GMT) on 24 February
2021, hosted by Julian Treger (CEO), Kevin Flynn (CFO) and Marc
Bishop Lafleche (CIO).
https://webcasting.brrmedia.co.uk/broadcast/602ec5f61fc46330548fabb0/603611d6318c486b2e86d787
For further information, please contact:
Anglo Pacific Group PLC +44 (0) 20 3435 7400
Julian Treger - Chief Executive Officer
Kevin Flynn - Chief Financial Officer
Marc Bishop Lafleche - Chief Investment Officer
Website: www.anglopacificgroup.com
RBC Capital Markets - Lead Financial Advisor
Farid Dadashev / Marcus Jackson / Jamil Miah +44 (0) 20 7653 4000
Peel Hunt LLP
Ross Allister / Alexander Allen / David McKeown +44 (0) 20 7418 8900
Berenberg
Matthew Armitt / Jennifer Wyllie / Varun Talwar
/ Detlir Elezi +44 (0) 20 3207 7800
Camarco
Gordon Poole / Owen Roberts / James Crothers +44 (0) 20 3757 4997
Notes to Editors
About the Company
Anglo Pacific PLC is a global natural resources royalty and
streaming company. The Company's strategy is to become a leading
natural resources company through investing in high quality
projects in preferred jurisdictions with trusted counterparties,
underpinned by strong ESG principles. It is a continuing policy of
the Company to pay a substantial portion of these royalties and
streams to shareholders as dividends.
This Announcement is not intended to, and does not constitute,
or form part of, any offer to sell or issue or any solicitation of
an offer to purchase, subscribe for, or otherwise acquire, any
securities or a solicitation of any vote or approval in any
jurisdiction.
Any securities referred to herein have not been registered under
the Unites States Securities Act of 1933 and may not be offered or
sold in the United States absent registration or an applicable
exemption from registration requirements
RBC Europe Limited ("RBC") is authorised and regulated in the
United Kingdom by the Prudential Regulation Authority and is
regulated by the Financial Conduct Authority ("FCA"). Peel Hunt LLP
("Peel Hunt") is authorised and regulated in the United Kingdom by
the FCA. Berenberg Gossler & Co. KG, London Branch ("Berenberg"
and together with RBC and Peel Hunt, the "Banks") is authorised by
the German Federal Financial Supervisory Authority (BaFin) and
subject to limited regulation in the United Kingdom by the FCA.
Each Bank is acting solely for the Company and no one else in
connection with the Acquisition and will not be responsible to
anyone other than the Company for providing the protections
afforded to its clients nor for providing advice in relation to the
Acquisition and/or any other matter referred to in this
Announcement. Apart from the responsibilities and liabilities, if
any, which may be imposed on the Banks by FSMA or by the regulatory
regime established under it, neither Berenberg, Peel Hunt, RBC nor
any of their affiliates accepts any responsibility whatsoever for
the contents of the information contained in this Announcement or
for any other statement made or purported to be made by or on
behalf of any Banks or any of their affiliates in connection with
the Company or the Acquisition. Berenberg, Peel Hunt and RBC and
each of their affiliates accordingly disclaim all and any
responsibility and liability whatsoever, whether arising in tort,
contract or otherwise (save as referred to above) in respect of any
statements or other information contained in this Announcement and
no representation or warranty, express or implied, is made by any
Banks or any of their affiliates as to the accuracy, completeness
or sufficiency of the information contained in this
Announcement.
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) 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'. 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 acquiring new royalties and 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 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; the 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, streams and investments by the
owners or operators of such properties in a manner consistent with
past practice; no material adverse impact on the underlying
operations of the Group's portfolio of royalties, steams and
investments from a global pandemic; 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 or operators of such underlying
properties; the 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,
streams and investments; no material adverse change in foreign
exchange exposure; no adverse development in respect of any
significant 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.
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 and investments, and could cause actual
results to differ materially from those suggested by any
forward-looking information. Such risks and uncertainties include,
but are not limited to current global financial conditions,
royalty, stream and 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, streams and
investments; royalties, steams 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.
Forward-looking statements are provided for the purposes of
assisting readers in understanding the Group's financial position
and results of operations as at and for the periods ended on
certain dates, and of presenting information about management's
current expectations and plans relating to the future. Readers are
cautioned that such forward-looking statements may not be
appropriate other than for purposes outlined in this announcement.
Forward-looking statements are not guarantees of future performance
and involve risks, uncertainties and assumptions, that may be
general or specific which could cause actual results to differ
materially from those forecast, 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. 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. No
statement in this communication is intended to be, nor should it be
construed as, a profit forecast or a profit estimate.
This announcement also contains forward-looking information
contained and derived from publicly available information regarding
properties and mining operations owned by third parties.
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