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Anglo Pacific upgraded on coal price surge

Published: 09:36 20 Dec 2016 GMT

picture of coal being piled up
Worth a lot more than a year ago

A City broker has upgraded its valuation of Anglo Pacific Group PLC (LON:APF TSX:APY) following the latest round of coal price agreements.

Peel Hunt has raised its target to 141p a share from 128p and retains its ‘add’ on the stock. 

It comes in the wake of Nippon Steel’s deals with Glencore and Teck Resources from which the miners secured quarter-on-quarter price rises in the order 43% for their coking coal.

This bodes well for Anglo, which earns a royalty from Rio Tinto for production from the Kestrel Mine in Queensland, Australia.

“Nippon is the largest Japanese steel maker, which means the fix with two of the largest seaborne suppliers will be for meaningful volumes and is therefore likely to be the benchmark for subsequent agreements for the first quarter [of 2017],” said analyst Michael Stoner.

While its net asset value-based price target is 141p, the Peel Hunt number cruncher reckons there is “the potential for a 204p valuation” if the dividend yield remains static at 4.9%.

 At 9.30am, the shares were changing hands for 124p each. valuing the business at £211mln.

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