The investment case for Anglo Pacific (APF) is principally about reliable income. But lately, the story has been as much about growth as it has dividends. This year, the mining royalty group has so far committed the equivalent of 2017’s entire income to two new streams: a small 0.5 per cent net smelter royalty on the long-dated Cañariaco copper project, and a 4.25 per cent stake in Toronto-listed Labrador Iron Ore Royalty Corporation (LIORC).
The latter came to £37m, 39 per cent of which was acquired by the end of June, and gives Anglo exposure to LIORC’s 7 per cent royalty revenue in The Iron Ore Company of Canada (IOC), which Rio Tinto (RIO) reportedly wants to float. A reported IPO valuation of $6bn (£4.7bn) would imply a significant upside to Anglo’s share purchases in LIORC to date. It’s also one of the two ways the UK group can benefit from Rio’s divestment spree.
Since completing their acquisition of Kestrel from Rio this month, new operators KMR and Adaro said they plan to double near-term production at Anglo’s chief income contributor, with coking coal prices at elevated levels. And income is already higher than the table below suggests. The structure of the Denison uranium toll, and receipts from the EVBC gold, copper and silver mine meant first-half free cash flows benefited from an extra £1.74m.
On average, analysts expect full-year adjusted pre-tax profits of £34.5m and EPS of 18.6p, narrowing to £35.3m and 16p in 2019.
| ANGLO PACIFIC (APF) | ||||
| ORD PRICE: | 141p | MARKET VALUE: | £255m | |
| TOUCH: | 140-144p | 12-MONTH HIGH: | 168p | LOW: 118p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 120p | NET CASH: | £5.2m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | † Dividend per share (p) |
| 2017† | 17.0 | -3.0 | -1.46 | 4.50 |
| 2018 | 19.1 | 18.6 | 7.24 | 3.25 |
| % change | +12 | - | - | -28 |
| Ex-div: | 4 Oct^ | |||
| Payment: | 15 Nov^ | |||
| ^Quarterly dividend of 1.625p a share. †2017 interim dividend includes Q3 payment of 1.5p as APF switched towards quarterly dividend payments. | ||||
