Anglo Pacific (Toronto: APY) is a base metals and coal royalty and streaming company. It had a record year in 2021, notes Gavin Graham, a contributing editor to The Income Investor.
The newly acquired 22.25% royalty stream on the cobalt production from Voisey’s Bay contributed $16.5 million in revenues to the record total of $85.6 million, up 80% from 2020.
The cobalt price is now 70% higher than when the Voisey’s Bay deal was completed. This is due to rising battery demand and infrastructure disruption in the Democratic Republic of the Congo, which produces 70% of the world’s cobalt. All of this makes the economic case for the deal look better than ever.
The price of coking coal, used for steel making, rose from $100 a tonne to over $400 during the year, which meant the contribution from Anglo Pacific’s largest single asset, the Kestrel royalty in Queensland, more than doubled from $23.3 million to $48 million, while rising copper and manganese prices increased the contribution from its Mantos Blancas and Maracas Menchen properties in Brazil.
In recent developments, Anglo Pacific sold its 1% royalty on thermal (power) coal from the Narrabri mine in Australia to the mine’s operator, Whitehaven Coal, for up to $36 million. Of this, $21.6 million is fixed and receivable in installments, of which $13.4 million will be received in the next 18 months. This exits Anglo Pacific completely from thermal coal.
At the same time, CEO Julian Treger, who supervised the transformation of the company to have more than two-thirds of its assets in battery related minerals, announced his retirement after eight years. His replacement is Chief Investment Officer Marc Bishop Lafleche, who was responsible for the Voisey’s Bay acquisition and Narrabri disposal.
Action now: The stock is down 6.8% from its recommendation nine months ago. It offers a sustainable 6.4% yield and rapid growth in revenues and earnings. Anglo Pacific remains a strong Buy.
