Anglo Pacific Group PLC (LSE:APF, TSX:APY, OTC:AGPIF) generated its highest quarterly income ever in the final three months of 2021 as cobalt and coking coal prices soared to new records.
The royalty group made US$38.1mln in the fourth quarter, a 59% increase on the year before, taking the total for 2021 overall to US$85.2mln, up 44%.
“Importantly, both coking coal and cobalt prices have remained at recent record levels thus far in 2022 and so the outlook for short-term earnings looks encouraging" a statement said.
Current coking coal and cobalt prices of $400/t and $34/lb respectively are higher than the prices achieved during the fourth quarter, Anglo-Pacific added.
“The royalty model provides exposure to this commodity price upside while offering greater protection against operating cost increases and capex over-runs being seen across the mining sector as a result of the current inflationary pressures,” the company said.
The performance in the last quarter and over the year gives it scope for more acquisitions and would significantly accelerate the group's deleveraging of the business.
“These record results are largely attributable to a prolonged increase in coking coal and cobalt prices," Julian Treger, chief executive officer, said.
"The coking coal price has now been well in advance of $350/t over the past three months and is just over $400/t today in a market that is noticeably more stable than this time last year when the impact on the seaborne market of the Chinese import ban and the disruption to key import markets in Asia due to Covid was still being worked through.”
Cobalt has rallied significantly since the beginning of December to $34/lb today or 70% higher than at the time of Anglo-Pacific’s Voisey's Bay acquisition
Sales volumes from Australian coking coal producer Kestrel were lower than expected during 2021.
This shortfall is expected to be recovered during the first half of 2022, Anglo-Pacific added and 'delays the period in which mining moves away from our private royalty land by a further quarter'.
“With stronger coking coal prices at the beginning of this year compared to last, this bodes well for earnings in 2022,” Treger added.