Anglo Pacific reaps windfall as storms batter Australian coal sector

Anglo Pacific Group plc‘s (LON:APF TSE:APY) trading in 2017 will be even better than previously expected after heavy storms in Australia caused another spike in the price of coking coal.

The price had already surged compared to a year ago, but the storms in Australia  affected both infrastructure and supplies, a combination that during the second quarter sent them soaring above the levels Anglo anticipated at the beginning of 2017.

“It is our view that higher coking coal prices will now prevail for longer in 2017. With Kestrel’s operations reportedly unaffected by weather events, we now anticipate an even stronger year of growth for Anglo Pacific than at the time we reported our 2016 results.”

Anglo has royalty interests in two coal mines in Australia: Kestrel and Narrabri. In the three months to March, and before the latest spike, Kestrel saw a 130% increase in its average coal price while Narrabri was up 56%.

That helped royalty income royalty income jump to £7.5m from a comparable £1.9m, while there was an additional £2.5mln (C$4.0mln) from the Denison financing and streaming agreement signed in February while the recovery in vanadium prices boosted revenues from Maracás Menchen to £0.4mln from £0.1mln.

Anglo added that this quarter is also expected to see the lowest sales volumes from Kestrel and Narrabri in 2017, while it would also be there will be any material production from Kestrel from e outside of its royalty land for the foreseeable future.

Total free cash flow generated in the period is £13.4mln  (£3.3mln)  and Anglo now expects to be debt free by mid-2017.    

Julian Treger, chief executive, added:  ”The additional £2.5mlm generated from the recent Denison transaction is further evidence of the importance of continuing to diversify our portfolio.

“We feel now is the right time to put capital to work in the sector and are continuing to work hard to identify and execute new royalties which will provide meaningful additional revenue over many years to come.”

Story by ProactiveInvestors