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Anglo Pacific Group encouraged by third quarter performance

The mine royalty business has not been materially impacted by the pandemic and it continues to provide returns to shareholders

Anglo Pacific Group PLC - Anglo Pacific Group PLC encouraged by performance in Q3

Anglo Pacific Group PLC (LON:APF) chief executive Julian Treger has described the company as encouraged by the operational performance across its mine royalty portfolio over the third quarter.

Mines have continued to function without material disruption due to the coronavirus (COVID-19) pandemic, he noted in a trading update.

“The actions taken by the underlying operators suggests that we could see a stronger finish to the year across the portfolio at a time when certain commodity prices are showing signs of improvement,” Treger said.

The royalty company reported that a total of £6.4mln was generated from its portfolio in the quarter ended September 30, 2020, compared to £6.5mln in the second quarter.

READ: Anglo Pacific kicks off £5mln share buy-back

Anglo Pacific noted that the decrease was the result of lower volumes at the Kestrel operation due to a longwall changeout which is not expected to reoccur and that Kestrel is now expected to increase output in the fourth quarter.

Looking at commodity pricing, the company highlighted that copper and iron ore prices have continued to rally – reaching multi-year highs – although metallurgical and thermal coal prices remained subdued.

The company said its net debt reduced to £34mln, from £39.8mln at the end of June, and that it had bought back 4.36mln shares since September 25.

A 1.75p per share interim dividend is due to be paid to shareholders on November 13, followed by a further 1.75p per share interim dividend in February 2021, and the company expects to recommend a final dividend payment for 2020 in the first quarter of 2021.

Treger noted that the company retains a strong financial position, with a “healthy” balance sheet and US$63.6mln of undrawn debt.

“We continue to generate and evaluate a significant number of opportunities and are confident in our pipeline and ability to further diversify the business by asset and commodity including investing in the materials of the future,” he added.

“Over and above the ability to draw down on our debt financing the company may also opportunistically consider other potential sources of funding should these be required, including hybrid equity debt instruments which would permit the company to benefit from the attractive current interest rate environment and thus fund the company's growth in an efficient and accretive manner."

Quick facts: Anglo Pacific Group PLC

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Price: 121 GBX

Market Cap: £258.67 m

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