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Anglo-Pacific adds more firepower for acquisitions with new loan facility

Last updated: 11:06 24 Sep 2018 BST, First published: 09:06 24 Sep 2018 BST

Vanadium
Vanadium has soared in price

Mining royalty specialist Anglo-Pacific Group PLC (LON:APF) has doubled its loan facility to US$60mln to give it more liquidity as it looks for acquisitions.

Already this year, Anglo Pacific has acquired copper and iron ore royalty streams to add to its existing coal, vanadium and uranium interests, but is keen to add more.

Kevin Flynn, chief financial officer, said the facility reflected the strength of Anglo-Pacific's balance sheet and the levels of cash currently being generated.

WATCH: Anglo Pacific anticipating ‘significant volume growth’ ahead for portfolio

“With our current projections of returning to a net cash position by the end of the year, we will soon have about US$90mln of liquidity available.

“Not only does this reduce our dependence on raising equity to finance growth, it guarantees certainty of financing in royalty and stream negotiations."

The revolving facility runs for three years at a cost of LIBOR plus 2.75%.

Accordion feature with the facility

Peel Hunt added that the increased debt facility had been expected and also comes with a US$30m accordion or expansion feature that can be used for acquisitions.

The interest rate is slightly lower than the current facility.

"Having acquired a stake in Labrador Iron Ore and Royalty Corp in mid year this refinancing ensures that it has the funding capacity to make a further material royalty acquisition before year end."

The broker has assumed a US$50m royalty acquisition in coming to its 200p price target.

"The US$50m budget is roughly half the acquisition capacity we see over the next 12-18 months.

"At the current share price we see the shares trading at a 5.6% 2018 dividend yield, rising to 5.8% in 2019. This excludes any potential dividend uplift from further acquisitions."

Shares rose 1% to 154p.

 

-- adds broker comment-- 

 

 

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