Anglo Pacific Group PLC ("Anglo Pacific" or the "Company") (LSE: APF, TSX: APY), the London and Toronto listed royalty company, issues the following trading update, along with certain unaudited financial information, for the twelve months ending December 31, 2014.
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Anglo Pacific faced challenging commodity market conditions during 2014. However, the number of royalties over mines currently at the production stage increased from three to five and the Company generated cash through disposals of non-core equity investments
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Gross royalty income expected to be in the region of £3.2m to £3.6m for 2014
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Gross proceeds from disposals of non-core equity and debt investments of approximately £8.7m
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Cash and cash equivalents of approximately £8.8m as at December 31, 2014
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Anglo Pacific expects royalty income from Kestrel to increase substantially as mining re-commences within our royalty lands during 2015
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Julian Treger, Chief Executive Officer, commented:
"We expect a further ramp up in production levels at Rio Tinto's Kestrel mine during 2015, and expect tonnage mined within our lands to increase substantially in 2015 with these trends continuing into 2016 and 2017.
The challenges facing natural resource companies are increasing the demands for alternative financing as reflected by the increasing number of prospective royalty acquisition opportunities in the Anglo Pacific pipeline."
Producing royalties
Kestrel
Kestrel mined approximately 5% of production within the Company's royalty lands during H2 2014, based on current information from Rio Tinto. This was impacted by the Kestrel mine experiencing lower than expected production levels in 2014 as a result of a slower than expected production ramp-up and a panel change out during Q4 2014 that was not expected in previous guidance for production from the Company's royalty land. We expect to see higher levels of production during 2015 following completion of the panel change out.
Anglo Pacific expects production within the Company's royalty lands from the Rio Tinto Kestrel mine to be in the range of 20% to 25% for H1 2015 and 70% to 75% for H2 2015 based on Rio Tinto guidance. The Company anticipates that this trend of increasing production within its royalty lands is to continue throughout 2016 and 2017.
Financial position
Cash and cash equivalents as at December 31, 2014 was approximately £8.8m, and the Company had undrawn credit facilities of USD15.0m. Non-core mining and exploration interests and receivables as at December 31, 2014 was approximately £10.0m.
Scrip dividend
As previously announced, forms of election from shareholders to receive the scrip dividend alternative for the interim dividend of 4.45p per share for the year ending December 31, 2014 must be returned by 5.00pm on January 14, 2015. The scrip dividend alternative is subject to the condition that if on January 14, 2015 the ordinary share price is equal to or less than 92p, the scrip dividend alternative will automatically be cancelled and a cash dividend paid as if the offer and elections pursuant to it had not been made.