Anglo Pacific Group PLC (LSE:APF, TSX:APY, OTC:AGPIF, FRA:HGR) is optimistic about the remainder of 2021 after the natural resources royalty and streaming company saw its portfolio contribution fall in the first half.
The portfolio contribution dipped to £16.2mln, from £19.1mln in the first half of 2020, as lower coking coal prices and volumes at both Kestrel and Narrabri, mainly in the first quarter, outweighed maiden contributions from the group’s Voisey’s Bay cobalt stream of £1.7mln.
In a trading update, Anglo Pacific said it expects the second half of 2021 to be stronger helped by a rally in cobalt prices and the full effect of the Voisey’s Bay stream being recognised, strong copper and iron ore prices and a recovery in the coal market.
The company has previously announced that all of its producing assets are back in operation after activities at the McClean Lake Mill resumed following a period of COVID-19 related care and maintenance.
“Anglo Pacific has had a stable first half of 2021, with 8 cobalt deliveries now processed under our Voisey’s Bay stream which has generated cash to the end of July 2021 of US$4.0m,” said chief executive Julian Treger.
“Voisey’s Bay was a transformational acquisition during the period for Anglo, not only in terms of it being the group’s largest and most significant transaction to date, but also in terms of transitioning our portfolio towards 21st century commodities that support a more sustainable future.
“While prices for our commodities were weaker in Q1 2021, they began to recover in Q2 2021,” he said, noting that cobalt prices have risen about 20% in the last month and both copper and iron ore have increased by more than 20% in the year to date.
In addition, coking coal and thermal coal prices have started to recover, resulting in a more favourable outlook for the second half.
“Infrastructure spending should continue to benefit iron ore, coking coal and copper whilst the longer-term fundamentals for cobalt and vanadium remain positive due to continued expected demand from electric vehicle and battery manufacturers.
“Spot prices continue to remain higher than consensus prices in the near-term, and with our producing assets all in operation we expect a stronger performance from our portfolio in the second half of the year,” said the CEO.
Net debt grew to £78.7mln at the end of June 2021, versus £24.4mln at the start of the year, reflecting the acquisition of the Voisey’s Bay cobalt stream in the first quarter.
The group said it has financing flexibility of about US$76mln to finance further growth opportunities.
“We look forward to updating the market in relation to our investment activity at the half year, and we remain busy advancing our pipeline in order to continue adding royalties and streams to our portfolio,” Treger concluded.
The trading update was released ahead of the company’s interim results due on 25 August.
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