Anglo Pacific: the mining investor's investor

There was no mention of the disposal in these results, but it carries two important implications for Anglo. The first is the prospect that new owners EMR Capital and PT Adaro Energy might choose to boost the mine’s output towards nameplate capacity – an inevitable fillip to income. Second, the $2.25bn (£1.6bn) price tag attached to the deal came in above analyst forecasts, and suggests that the £104m ascribed to the royalty on Anglo’s balance sheet may be significantly undervalued. Indeed, chief executive Julian Treger suggests it might be worth 30p a share to Anglo.

Investors should not get bogged down with the accounting treatment of the balance sheet, although it now boasts more than $50m of liquidity. Transactions await. Last year, the company committed £29.4m to investments, and expects to announce deals in copper, zinc or nickel in the coming months. In some cases, these streams can return money fast: last year’s £26m toll milling agreement with Denison Mines (CA:DML) has already netted Anglo £5m.

Others take a little longer to prove their worth. A case in point is the vanadium smelter royalty at Largo Resources’ (CA:LGO) Maracás Menchen mine, acquired in 2014 for $22m plus two output-linked deferred considerations of $1.5m. In November, the first of these payments was triggered as fourth-quarter output headed towards a record 2,539 tonnes, and just as vanadium prices were going through the roof. Since then, prices have continued to climb, suggesting the £2m income accrued to Anglo last year – 150 per cent up on 2016 – could again leap forward.

Peel Hunt forecasts full-year adjusted pre-tax profits of £43.2m and EPS of 20p, versus £33.2m and 16.2p in 2017.