(Alliance News) - Anglo Pacific Group PLC on Thursday reported a substantial fall in royalty income for the first half of 2020, due to a collapse in coal prices amid the Covid-19 pandemic.
For the six months to the end of June, the natural resource royalty company posted royalty income at GBP17.8 million, a 43% drop from GBP31.3 million the year before.
This decline was mainly due to the weak coal prices, a reduction in the royalty rate at the Kestrel mine, and a one-off charge from Maracas Menchen on the termination of the Glencore PLC offtake agreement.
Total portfolio contribution fell by 43% to GBP19.1 million from GBP33.3 million. As a result of this, Anglo Pacific swung to a pretax loss of GBP15.5 million, compared to profit of GBP41.2 million.
Looking ahead, Anglo Pacific said it expects to report stronger results across most of its portfolio, with Kestrel benefitting from improved coking coal prices and relaxed restrictions surrounding Indian ports.
The company anticipates a rise in royalty-related dividends as iron ore prices trade at 12-month highs, and increased cashflows from the Denishon financing agreement as operations at the McClean Lake mill recommences.
"Although we have been successful in diversifying away from coal, along with our firm commitment not to add any further thermal coal investments, our revenue will, in the short-term, continue to be weighted towards coking coal especially as we await revenue from our development portfolio. We will continue to reinvest the Kestrel revenue into non-coal royalties in line with our ESG and investment policy to offer stakeholders exposure to high quality and ethically operated base and bulk commodities," said Chief Executive Officer Julian Treger.
"We continue to be very active and are currently assessing a number of potential transactions. Anglo Pacific remains firmly open for business, is well capitalised and remains focused on growth and diversification for what should be a stronger half to come in the second half," Treger added.
Shares in Anglo Pacific were down 1.1% at 104.40 pence on Thursday in London.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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