TIDMAPF
RNS Number : 6663E
Anglo Pacific Group PLC
10 May 2017
May 10, 2017
Anglo Pacific Group PLC
Q1 2017 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
January 1, 2017 to May 10, 2017. Unless otherwise stated, all
unaudited financial information is for the quarter ended March 31,
2017.
Highlights
-- Total free cash flow generated in the period of GBP13.4m, up
from GBP3.3m in Q1 2016
-- Total contribution of GBP10.0m
o Royalty income of GBP7.5m in Q1 2017 - a 295% increase on Q1
2016 of GBP1.9m
o Additional contribution of GBP2.5m (C$4.0m) from the Denison
financing and streaming agreement entered into in February
2017(1)
-- Increase in income from Q1 2016 mainly due to a 130% increase
in average coal price achieved at Kestrel and a 56% increase at
Narrabri
-- Significant increase in revenue from Maracás Menchen in the
period to GBP0.4m from GBP0.1m in Q1 2016 as a result of recent
record operational performance and a near doubling in the vanadium
price
-- Net debt at March 31, 2017 of GBP6.5m, post the funding of
the Denison financing and streaming agreement and 2016 interim
dividend with expectation to be debt free by mid-2017
-- Outlook for 2017 has improved considerably following the
sustained increase in coking coal prices above the levels
anticipated at the beginning of the year due to weather related
supply disruptions in Australia
Trading Update
The Company is pleased to report a very strong performance in Q1
2017, firmly supporting our view that this year will see
significant organic growth for Anglo Pacific.
Combining our royalty income of GBP7.5m with the GBP2.5m
(GBP1.8m of which relates to backdated receipts from H2 2016) from
our Denison financing agreement resulted in a total contribution
from our portfolio of GBP10.0m compared to GBP1.9m in Q1 2016.
Higher coal prices have driven the near 300% increase in royalty
revenue, with the average price from Kestrel more than double that
of Q1 2016 and Narrabri being 56% higher. In addition, revenue from
Maracás Menchen has increased significantly in the period to
GBP0.4m as a result of recent record operational performance and a
near doubling in the vanadium price.
Encouragingly, Q1 2017 is expected to be our lowest quarter in
terms of sales volumes from both Kestrel and Narrabri in 2017.
Importantly, this is also the last time that we expect any material
production from Kestrel to be outside of our royalty land for the
foreseeable future.
When we reported our 2016 annual results at the end of March, we
were confident that 2017 would be another significant year of
growth for Anglo Pacific. This was when the outlook for spot coal
prices was coming off. However, recent weather events in Australia
significantly impacted upon the supply of coking coal as both
operations and infrastructure were hampered. This resulted in
another noticeable spike in coking coal prices during the second
quarter, above the levels which we were anticipating at the
beginning of 2017.
It is our view that higher coking coal prices will now prevail
for longer in 2017. With Kestrel's operations reportedly unaffected
by weather events, we now anticipate an even stronger year of
growth for Anglo Pacific than at the time we reported our 2016
results.
Total free cash flow generated in the period is GBP13.4m
compared with GBP3.3m in Q1 2016, with net debt at March 31, 2017
of GBP6.5m, post the funding of the Denison financing and streaming
agreement and 2016 interim dividend. The Group expects to be debt
free by mid-2017.
As previously stated, the Board will reconsider dividend levels
at the time of the interims, when we have greater visibility as to
coal price movements for the full year and the outlook for the next
few years.
Julian Treger, Chief Executive Officer of the Company,
commented:
"The additional GBP2.5m generated from the recent Denison
transaction is further evidence of the importance of continuing to
diversify our portfolio. We feel now is the right time to put
capital to work in the sector and are continuing to work hard to
identify and execute new royalties which will provide meaningful
additional revenue over many years to come."
(1) Income from the Denison financing and streaming transaction
will not appear as royalty revenue as the transaction is structured
initially as a loan. As such, cash receipts will be apportioned
between interest (income statement) and debt repayment (balance
sheet). This income will, however, be included in our free cash
flow measure. Of the total of GBP2.5m, GBP1.8m related to back
payments in lieu of H2 2016 toll revenue.
For further information:
+44 (0) 20 3435
Anglo Pacific Group PLC 7400
Julian Treger - Chief Executive
Officer
Kevin Flynn - Chief Financial
Officer and Company Secretary
Website: www.anglopacificgroup.com
+44 (0) 20 7664
BMO Capital Markets Limited 8020
Jeffrey Couch / Neil Haycock /
Tom Rider
+44 (0) 20 3037
Macquarie Capital (Europe) Limited 2000
Raj Khatri / Nicholas Harland / Ariel
Tepperman
+44 (0) 20 7418
Peel Hunt LLP 8900
Matthew Armitt / Ross Allister
+44 (0) 20 7382
Redleaf Communications 4769
Charlie Geller / Elise Palmer
/ Sam Modlin
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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