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Anglo Pacific lowers dividend as coal price slide bites

Published: 07:53 28 Jan 2016 GMT

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Anglo Pacific will now pay a final dividend of 3p, compared to 4p per at the half year

Weak coal prices have prompted royalty income specialist Anglo Pacific (LON:APF) to reduce its dividend for 2015.

Anglo Pacific gets an income stream from two coal mines in Australia, Kestrel and Narrabri.

The mines' performances were better than expected but coking and thermal coal prices fell between 15% and 25%.

The drop in coking coal prices will mean a write-down in the carrying value of the group's Kestrel royalty in the range of A$28 - A$33m (£14-6.5mln), Anglo Pacific said.

Julian Treger, chief executive, said he was pleased with the underlying performance but, like the sector generally, it had been affected by the commodity environment and weakening coal prices had reduced its revenue.

This decline, combined with a lower commodity price outlook, has led the board to reconsider the dividend policy, he added.

Anglo Pacific will now pay a final dividend of 3p, compared to 4p per at the half year, and making a total of 7p for the year. Anglo had intended to pay 8p.

The long -term policy of the company is to pay 65% of adjusted earnings out as a dividend.

Royalty income will be between £8.5-8.8mln for full year 2015 after £2.7mln-3mln in the final quarter.

"We continue to believe these challenging times for the mining sector will provide opportunities for Anglo Pacific to identify attractive new royalties that will enhance the lifespan and diversity of our portfolio," said Treger.

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