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Anglo Pacific lifts dividend 13% despite profit drop

The London Stock Exchange’s only mineral royalty streamer Anglo Pacific Group on Tuesday reported a rise of about 32% in its final dividend for 2019 despite lower full-year profit on the back of higher costs and a loss on the revaluation of coal royalties.
Anglo Pacific lifts dividend 13% despite profit drop Anglo Pacific lifts dividend 13% despite profit drop Anglo Pacific lifts dividend 13% despite profit drop Anglo Pacific lifts dividend 13% despite profit drop Anglo Pacific lifts dividend 13% despite profit drop

The Kestrel coal mine in Australia underpinned strong 2019 performance for royalty company Anglo Pacific Group despite a revaluation of royalties on the operation

The company, which has royalties on coking coal, iron ore and uranium in Australia, Canada and Chile, reported a 15.5% year-on-year drop in pre-tax profit to £37.6 million from £44.5 million in 2018.

This was mainly owing to higher operating expenses of £7.1 million, versus £6 million the year before, and a revaluation of coal royalties from the Kestrel coking coal mine in Australia operated by EMR Capital and PT Adaro Energy.

Anglo Pacific said royalty revenues increased by 21% year-on-year to £55.7 million from £46.1 million in the prior year, driven by a strong performance from Kestrel, the Narrabri thermal coal mine in New South Wales, Australia, and a contribution from Mantos Blancos copper project in Chile.

On the back of the record royalty revenue growth, Anglo Pacific will pay a final dividend of 4.125p per share, up 32% over the 2018 final dividend and bringing the total payout to 9p, up 13% from 8p.

"Anglo Pacific enjoyed a very successful 2019, with a record level of investment and portfolio contribution. We are pleased to recommend a full year dividend for the year of 9p, consistent with our previous statement that it would not be less than this level despite the ongoing and ever evolving market turmoil," said CEO Julian Treger.

"The most material mines from which we generate the majority of our revenue remain in production and are able to ship and sell. We have seen some instances of COVID-19 related shutdowns at EVBC and McClean Lake which are currently expected to last for between two to four weeks. We would expect to see production volume growth in the year ahead absent any further shutdowns," Treger said.

"Anglo Pacific remains well-positioned even in a downside scenario thanks to the group's royalty and streaming business model and high levels of liquidity," RBC Capital Markets said in a note.

Shares in Anglo Pacific (LSE:APF/TSX:APY) closed 19% higher at 135.4p on Tuesday in London, and flat at C$1.87 in Toronto.