Anglo Pacific Group PLC (LSE:APF, TSX:APY, OTC:AGPIF) reported a record portfolio contribution in the first half, boosted by a surge in coking coal and cobalt prices.
The natural resources royalty and streaming company said its portfolio contribution jumped 303% from the year-earlier period to US$92.8mln, exceeding the US$85.6mln contribution generated for the whole of 2021.
The increase was driven by higher commodity prices with coking coal and cobalt up 257% and 75% respectively versus the same period in 2021.
Although commodity prices have softened recently, the group said it expects to deliver a strong performance in the second half of the year.
The spot coking coal price is about 45% lower than the record average level achieved in the second quarter of 2022 and spot cobalt prices have fallen 23%, however current price levels remain higher than those seen in recent years, it said.
Its pretax profit leapt to US$130.0mln in the six months to end-June from US$11.8mln.
The company noted that the royalty and streaming business model excels in times of heightened inflation. Its operating costs were steady versus the comparative period, “in stark contrast to the margin erosion and capital expenditure revisions being felt in the wider mining industry,” it said.
Net debt fell to US$20.5mln at end-June from US$90.0mln at the end of December 2021, although it increased to US$49.8m at the end of July 2022 following the acquisition of a portfolio of advanced development stage copper and nickel royalties from South32.
Future-facing commodities
"We are pleased to announce another record period with the portfolio contribution generated in the first half of 2022 exceeding the entirety of 2021,” said Marc Bishop Lafleche, who took over as chief executive in April 2022.
“The outstanding financial performance has enabled us to significantly reduce debt and strengthen our balance sheet, providing the financial flexibility to pursue further growth.”
Substantial supply growth of commodities such as copper, nickel, lithium and cobalt will be required to meet expected demand as global economies decarbonise, it said, adding that the significant capital required to expand capacity will create additional investment opportunities for Anglo Pacific.
The board plans to rename the company to reflect the evolution of the portfolio, from which 90% of its contribution is expected to come from future-facing commodities by 2026, and the group expects to make a further announcement on this in the coming weeks.