Anglo Pacific Doubles Royalty Income As Commodity Prices Take Off

Anglo Pacific Group PLC (LSE:APF, TSX:APY, OTC:AGPIF)’s royalty stream more than doubled in 2021 as commodity prices took off in the second half of the year and especially in the fourth quarter.

Coking coal investment Kestrel, in Australia, saw its contribution soar to US$48.1mln as prices jumped 182%, while vanadium mine Maracas Menchen’s income jumped nearly five-fold to US$3.3mln after a 50% hike in the stainless steel and battery additive.

Coking coal currently is at US$600 per tonne, a level never seen before, said Anglo Pacific, which added that in the final quarter of 2021 the average price was US$308/t.

These super high prices are not expected to last, said the royalty specialist, but volumes should hold up in 2022 and for every US$50 the coking coal price does rise it adds US3.5mln to quarterly revenues.

Voisey’s Bay also did exceptionally well in the last three months as nickel prices climbed, Anglo Pacific added.

Royalty income for 2021 in total rose to US$85.3mln (US$43.7mln) with a near US$90mln swing into a profit of US$54.6mln. The dividend for the year rises to 7p.

Marc Bishop Lafleche, chief executive designate, said that the near-term outlook overall is very strong and the company will use the cash flow being generated first to reduce net borrowings (of US$60mln) and then to look for new investments.

“Looking ahead, we continue to anticipate a period of strong commodity pricing in the medium-term, driven by growing demand for commodities required to achieve global climate change objectives which is likely to be intensified by underinvestment in new production capacity over the past decade.

“ With our business model’s natural inflation pass-through, a record commodity price environment, OECD portfolio footprint and ~$120mln financing capacity, we are well-positioned to continue to grow the business and generate value for our shareholders.”

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