TIDMAPF
RNS Number : 6078W
Anglo Pacific Group PLC
10 November 2014
News Release
November 10, 2014
Anglo Pacific Group PLC
Interim Management Statement
Anglo Pacific Group PLC ("Anglo Pacific", the "Company" or the
"Group") (LSE: APF, TSX: APY) today releases its interim management
statement for the period July 1, 2014 to November 9, 2014.
Highlights
-- Royalty related income in the third quarter of GBP0.5m (Q3 2013: GBP3.2m)
-- Non-core mining and exploration realisations of GBP1.8m in
the third quarter, with a remaining GBP14.3m of value in non-core
mining and exploration interests and receivables
-- Cash and cash equivalents of GBP9.2m as at September 30, 2014 (GBP14.4m at June 30, 2014)
-- The Board is committed to maintaining the absolute level of
the dividend and increasing it when appropriate, subject, amongst
other things, to market conditions, the level of royalty income and
proceeds from the disposals of non-core mining and exploration
interests
-- Anglo Pacific estimates that the Rio Tinto forecast for
mining within our Kestrel royalty lands during Q4 2014 represents
approximately 50% of production and approximately 25% during the
period January 1, 2015 to September 30, 2015
-- First production and sales achieved at Maracáswhich we expect
to contribute to royalty income during 2015
-- First production achieved at Four Mile, with 2015 production
expected to be 2.6Mlbs of uranium ore concentrate, but royalty
income deferred until 2016
-- Continued sales of non-core mining and exploration interests
to realise cash, along with the sale of Anglo Pacific's Panorama
coal properties in British Columbia, Canada to Atrum Coal Limited
for US$0.5m of cash, a US$2.0m promissory loan note, 1.0m Atrum
Coal shares and a retention of a royalty
-- An impairment charge of approximately GBP15.0m for the Isua
royalty, an early stage iron ore project owned by London Mining
PLC
-- Appointment of Mr David Archer as an independent non-executive director
Julian Treger, the Chief Executive Officer of Anglo Pacific,
commented:
"The Company was pleased to see the achievement of first
production from the Maracás vanadium mine and the Four Mile uranium
mine, increasing the Group's royalties over mines in production
from three to five.
In addition, the Board is committed to maintaining the absolute
level of the dividend and increasing it when appropriate, subject,
amongst other things, to market conditions, the level of royalty
income and proceeds from the disposals of non-core mining and
exploration interests.
We are pursuing a number of royalty transactions over producing
bulk material and base metals mines and will update the market on
these as and when appropriate."
Royalty Portfolio Update
Kestrel
In line with the Group's expectations, during the third quarter
the Group received minimal royalty income from Kestrel. Anglo
Pacific estimates that the Rio Tinto forecast for mining within its
Kestrel royalty lands during Q4 2014 represents approximately 50%
of production and approximately 25% during the period January 1,
2015 to September 30, 2015.
The Group continues to expect a substantial increase in coal
mined within its royalty lands during 2016.
Maracás
The Group is pleased to announce that during the past quarter,
Largo Resources Limited ("Largo") successfully completed its maiden
sale from the Maracás mine ("Maracás"), the Brazilian vanadium
pentoxide mine over which the Group owns a 2% NSR royalty. The
Group is expecting to receive first royalty payments in relation to
Maracás during Q1 2015.
After achieving first production in August 2014, Maracás
continues to successfully ramp-up production to nameplate capacity.
Most recently, Largo announced that production over a 24-hour
period reached approximately 71% of the plant's Phase 1 design
capacity. Largo appears to be in line with expectations to achieve
Phase 1 nameplate production capacity of 9,600 tonnes of vanadium
pentoxide per annum within 12 months of first production.
Four Mile
The Group is equally pleased that the Four Mile uranium mine
("Four Mile"), an Australian uranium mine over which the Group owns
a 1% NSR royalty, shipped its first 300,000 pounds of uranium ore
concentrate in September. Total production since commencement of
mining to November 30, 2014 is forecast to be 1.4Mlbs of uranium
ore concentrate. The minority joint venture partner of Four Mile,
Alliance Resources Limited, announced on November 7, 2014 that
Quasar Resources Pty Ltd, the majority owner and operator, intends
to produce 2.6Mlbs of uranium ore concentrate in 2015, and intends
to stockpile all 2014 and 2015 production. As a result, the Group
does not anticipate receiving any royalty payments until this
inventory is sold in 2016.
El Valle-Boinás/Carlés ("EVBC")
Orvana Minerals Corp, the operator of EVBC, announced on October
27, 2014 for the 12 month period ending September 30, 2014, EVBC
production of 62,957 ounces of gold, 156,977 ounces of silver and
5.6 Mlbs of copper, as well as its production guidance for EVBC for
the 12 month period ending September 30, 2015 of 63,000 to 72,000
ounces of gold, 150,000 to 180,000 ounces of silver and 6.0Mlb to
7.0Mlb of copper.
The continued and expected performance of EVBC under the new
mine plan announced on August 13, 2014 provides the Group with
confidence in the ability of this mine to generate royalty income
during its remaining mine life.
The Group owns a 2.5% NSR royalty, escalating to 3% for gold
prices in excess of US$1,100 per ounce, over all products sold from
EVBC.
Panorama (Groundhog Project)
Anglo Pacific announced on August 28, 2014 that it had disposed
of its Panorama coal interests in British Columbia, Canada to Atrum
Coal. Disposal proceeds were US$0.5m of cash payable on completion,
a US$2.0m promissory note repayable within 12 months, and one
million Atrum Coal shares and the retention of a royalty of the
higher of 1% of gross revenues on a "mine gate" basis or US$1/tonne
over any coal mined or sold from the properties part of the sales
process.
On October 20, 2014 Atrum Coal announced an updated mine plan
for Groundhog North, which also includes the Group's royalty
areas.
Amapá
Shipments of iron ore from Amapá were suspended in March 2013
due to a serious incident at the Santana port, which impacted key
infrastructure at the loading bay. The Santana port is currently
being rebuilt with completion expected during Q1 2015.
During the course of 2014 there have been small shipments of
iron ore from Amapá from which Anglo Pacific is entitled to receive
royalty income. We expect minimal royalty income from Amapá during
the remainder of 2014.
Isua
On October 16, 2014 London Mining PLC, the operator of the
Group's Isua royalty, announced that it had appointed Russell Downs
and Peter Dickens of PricewaterhouseCoopers as joint administrators
of the company and that its Nominated Adviser and Broker had
resigned with immediate effect. Anglo Pacific continues to have
active discussions with PricewaterhouseCoopers and will continue to
update the market with any developments insofar as they concern
Anglo Pacific as and when appropriate. However, given the
uncertainty around this asset, Anglo Pacific has decided to make
full provision against its value. This has resulted in an
impairment charge of approximately GBP15.0m. Isua was not expected
to make any contribution to earnings and cashflow in the near
future prior to this impairment.
Board Changes
As announced on October 16, 2014 Anglo Pacific has continued to
strengthen its Board with the appointment of Mr David Archer as an
independent non-executive director. Mr Archer has over 34 years'
international resources industry experience in the Americas, Asia,
Australia and the Middle East. Mr Archer's experience in scaling
Savage Resources PLC and Hillgrove Resources Limited into
significant entities, combined with extensive board experience and
an in-depth knowledge of the Australian and African mining sector
will prove invaluable to Anglo Pacific as the Company seeks to grow
its royalty business via transformative transactions funded by debt
and equity.
Mr Paul Cooke stepped down as a director of the Company with
effect from October 15, 2014, in order to pursue other
interests.
Financial Position
The Group has GBP9.2m in cash deposits along with GBP14.3m of
non-core mining and exploration interests and receivables, an
undrawn US$15m unsecured revolving credit facility and no hedging
obligations. The maturity date of the revolving credit facility has
been extended until July 31, 2015.
Dividend
The Board is committed to maintaining the absolute level of the
dividend and increasing it when appropriate, subject, amongst other
things, to market conditions, the level of royalty income and
proceeds from the disposals of non-core mining and exploration
interests.
The Board has declared an interim dividend for 2014 of 4.45p per
share, maintaining the 2013 interim dividend per share. The
dividend will be paid on February 4, 2015 to shareholders on the
register at the close of business on November 28, 2014. The shares
will be quoted ex-dividend in Canada and London on November 27,
2014. The Company will be offering a scrip alternative, with the
last day for elections to be January 14, 2015.
Outlook
The Board is encouraged by the commencement of commercial
production at Maracás and Four Mile increasing the Group's
royalties over mines in production from three to five. Anglo
Pacific sees the currently challenging commodity market environment
as an opportunity for the Group to acquire royalties on high
quality assets with attractive returns. We are moving forward on
multiple fronts to capitalise on this and remain confident of the
prospects for value creation for all shareholders.
For further information:
Anglo Pacific Group PLC +44 (0) 20 3435 7400
Julian Treger, Chief Executive Officer
Mark Potter, Chief Investment Officer
Kevin Flynn, Chief Financial Officer
Website: www.anglopacificgroup.com
BMO Capital Markets Limited +44 (0) 20 7664 8121
Jeffrey Couch / Neil Haycock / Tom Rider / Jennifer Wyllie
Barclays Bank PLC +44 (0)20 7623 2323
Matthew Bungey / Bertie Whitehead
Bell Pottinger +44 (0) 20 7861 3232
Nick Lambert / Lorna Cobbett
Notes to Editors
About Anglo Pacific
Anglo Pacific 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. 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.
Largo Resources Limited is listed on the TSX Venture Exchange
and Orvana Minerals Corp is listed on the Toronto Stock Exchange,
and both report in accordance with NI 43-101. Alliance Resources
Limited is listed on the Australian Securities Exchange and reports
in accordance with the JORC Code.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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