Anglo Pacific Share Discussion Threads

[haydock] 14/12/2011 10:16

Wonder if they may have sacked the part-time Aus tea lady to cut the head office costs ?
It may be actually nearer 9 as they took on a couple of folk for Canada, a while back

[nielsc] 14/12/2011 09:18

Sigala,

Thanks for those calculations. It looks good. It'll add nicely to the bottom line come the next set of results.
This is a very quiet bb as you might have gathered. APF is one of my long term holds with management doing a superb job. Is it 7.5 staff APF have?


Cheers,
Niels

[sigala] 13/12/2011 19:17

Hi Haydock + nielsc,

I am trying to relate my EVBC revenue estimate to relevant information that we already know.

If we take APF's producing NSR royalty on the Engenho gold mine - in 2010 APF received £0.3m from about 20koz of production. The Engenho NSR is set at a lower rate of 2.5%.

Gold prices averaged about US1200/oz over that period.

So converting these figures to a 3% rate at gold prices of $1600/oz and 105koz production (EVBC forecast production) I got a revenue of approximately £2.5m.

This compares to the £3.25m per annum calcultion I got just by calculating 3% of gold production.

So this might be closer to the true figure after the deductions are taken away.

This is probably as close as I can get by guess-timation!

Best regards,

Sigala

[sigala] 13/12/2011 18:12

Hi Haydock, nielsc,

Just reviewing my calculations for the EVBC royalty I realise I should add a caveat.

Having looked into it a bit further I see that EVBC is a Net Smelter Return, as opposed to a Gross Revenue Royalty. I note from APF's literature that:

"An NSR generally relates to the value of production or net proceeds from a smelter or refinery. Certain deductions or charges, such as a proportionate share of related transportation, smelting and refining costs will often be taken out of the proceeds."

I cannot find any specific details regarding the EVBC royalty that indicate what deductions (if any) will be taken but I think we have to assume there will be some. How much they will ammount to I cannot say without further information.

The other point that is not clear to me is whether the NSR will apply to all the production from EVBC or just the gold. The royalty rate is tied to the price of gold but EVBC is also forecast to produce 4Kt Copper and 160Koz Silver per annum. When I calculated the potential reveune from the royalty I had assumed that the Copper and Silver would not be included, but perhaps because it is a rate attached to the smelter then they might be included.

So what we have is:

3% of 105koz assuming $1,600 per oz = $5.04m or £3.25m per annum

If we include the Copper and Silver....

3% of 4kt Copper assuming $6000 per tonne = $0.72m or £0.45m per annum
3% of 160koz Silver assuming $30 per oz = $0.144m or £0.0925m per annum

So if we include all the metals produced then 3% of the forecast ramped-up production would be approximately £3.9m per annum at today's prices. Out of that the deductions would be taken.

That is the best I can do at this point to put some figures on it. It will be interesting to see the EVBC income is when the final results are released - that will give us a lot more to go on.

Best regards,

Sigala

[nielsc] 13/12/2011 12:34

haydock,

Thanks for that. Looks like my maths was about right.
Nice to see that the cost of buying the royalty will be covered in around 2 years. Then the next 5 years or more are all for free.

Great deal by the management again.

I noted that SHG, a Tanzanian Gold miner, had approached APF for cash, but in the end declined APF's offer as it didn't offer good value for money. So they definitely get good deals and when the gold explorers moving into production find it difficult to raise cash. :-)

Cheers,
Niels

[haydock] 09/12/2011 20:49

With thanks to 3i sigala

Yes - I agree that the El Valle royalty will be a useful source of additional revenue.

Another thing to consider is what APF paid for the royalty and then look at what it might yield.

They bought the royalty in 2008 for C$7.5m (not sure what the conversion rate was then but call it £5m).

So a £5m pound investment is buying income of nearly £2m in the first year and perhaps £3m+ per annum after that (if production ramps up and prices stay at this level) . Mine life is given conservatively at 7 years but Orvana are working to prove up a greater resource - so if things go according to plan in the next few years APF will get quite a return on this particular investment.

All in all not a bad piece of business (IMHO).

Best regards,

Sigala

[nielsc] 08/12/2011 15:21

So does that work out at around $3m of royalties from EVBC per annum?

Not bad :-)

Cheers,
Niels

[atflores] 03/12/2011 15:48

More good news about coal:

'Coal – confirmed by NASA as getting cleaner
Posted on December 3, 2011 by Anthony Watts

Oh Dear, It's another Joe Romm head exploder. The improvement is verified by satellite data and the results are peer reviewed. Yet the EPA still insists on closing coal plants nationwide.

NASA Satellite Confirms Sharp Decline in Pollution from U.S. Coal Power Plants

A team of scientists have used the Ozone Monitoring Instrument (OMI) on NASA's Aura satellite to confirm major reductions in the levels of a key air pollutant generated by coal power plants in the eastern United States. The pollutant, sulfur dioxide, contributes to the formation of acid rain and can cause serious health problems.'

[mozy123] 30/11/2011 18:36

anyone know when the dividend is paid into our accounts?

[mbu69] 30/11/2011 18:29

No increase in the share price yet please, i am still planning on buying in my SIPP, and the funds only get transferred in each quarter.

[atflores] 30/11/2011 18:17

We are in the early years of a new age of coal, and the shareprice footles about! The first age saw fantastic progress in Europe and the States, the second one is seeing it in China and India. Either or both of these nations will bring great things to mankind as a result.

So, could we please see a substantial rise in the price here!

[shavian] 23/11/2011 17:59

What a rock-solid compnay this is.

[haydock] 22/11/2011 09:45

Minesite:


Meanwhile, the well-respected investment gurus at Anglo Pacific announced that they had offloaded the company's 100 per cent interest in Trefi coal corporation, which holds licences in the Pine River area of British Columbia. The buyer was TSX-listed Cardero Resources, which was the subject of an interesting initiation note from Ocean Equities' Sam Spring this week. The total consideration, to be made in staged payments, amounts to C$9.5 million plus 500,000 Cardero shares, plus a million Cardero warrants. True to form, Anglo Pacific will retain a three per cent royalty on the Trefi properties. Shares in Anglo Pacific spiked mid-week, but had given back the gains by Friday, to close a mere 0.7p down at 277p.


Over in South American Horizonte Minerals has been continuing with drilling at its Falcao gold project in Carajas, northern Brazil. The latest results have delivered further encouragement, and among the best intersections have been 11.1 metres grading 1.21 grams per tonne, 48.9 metres grading 0.93 grams per tonne, and two high grade intervals: one grading 27.7 grams per tonne over 1.67 metres, and one grading 20.26 grams per tonne over one metre. Chief executive Jeremy Martin was clearly well satisfied with the results. "These initial results from the first phase of drilling at Falcao are highly encouraging" he said, "highlighting not only the presence of several target zones within the main anomaly but also determining the controls and style of mineralisation." Horizonte's shares closed up 0.13p at 10.88p.

[rcturner2] 18/11/2011 09:28

I bailed today at just over 280p.

[aylingd] 18/11/2011 09:25

Thanks Sigala, there is a lot more detail in the Cardero release - all is now is clear.

D.

[sigala] 17/11/2011 21:32

Hi Munin and Aylingd,

There is more detail on this proposal in the announcement from Cardero resources:



From their statement it seems pretty clear that Cardero will be financing the BFS:

"In order to exercise the First Option, the Company [Cardero] will be required to deliver a bankable feasibility study ("BFS") with respect to the Trefi Coal project within four years of closing. "

And another point in their statement makes it quite clear who's paying:

"If the BFS is positive, but the Company does not elect to make a production decision, then Anglo Pacific will have the option to reacquire the 50% of Trefi from the Company by paying the Company 50% of the total expenditures by the Company on the BFS. "

Best regards,

Sigala

[munin] 17/11/2011 20:15

Hmmm.... no longer sure what this means exactly.
Could it mean that they will be granted the option, but to exercise it, they need to produce a BFS within 4 years, and then pay the c$3.5m,etc?
Or, does it mean that they pay the C$3.5m now, and then they have 4 years to produce a BFS, and after that they get the 50%?
Either way, I still can't see APF knocking out a BFS.

That Stella always makes things more complicated .........

[munin] 17/11/2011 19:36

re AYLINGD

Nope, I can't see APF funding the BFS.
To me, "Cardero will be granted an option to acquire 50% of Trefi following delivery of a bankable feasibility study within four years, for total consideration of C$3.5million and 500,000 common shares of Cardero" means that they will be granted an option, AFTER they have delivered the BFS.

[aylingd] 17/11/2011 17:48

Thanks for the update & link haydock.

Interesting that Cardero have done this deal now yet given Trefi up to 4 years to produce a bfs. I guess they believe the resource is there and want to get an option on it now before anybody else does.

Presumably it will APF that will fund the bfs or have I read that wrong ?

D.

[haydock] 17/11/2011 09:55

Trefi
The Trefi project comprises seven coal exploration licences cocering 4,600 acres in northeast British Columbia in the heart of the productive and well developed Peace River coal field. Resources from The British Columbia Ministry of Energy and Mines are 121.5 million tons of low to medium very bituminous coal. The local infrastructure is excellent.

The smaller of the two holdings, APf has as usual, secured a future very valuable royalty.

For a total of £2m on the balence sheet for the 2 holdings, not a bad start.

Very much the way APF were always going to capitalise the CDN. coal.

Anglo Pacific will retain a 3% gross revenue royalty over the project.

[aylingd] 17/11/2011 09:42

H, looks like someone has been listening to you wrt the Trefi Coal.

Looks an interesting deal at first glance, maybe yourself or Piedro could comment further. Market non-plussed (as usual)!

D.

[haydock] 14/11/2011 10:48

I have pointed this out to the Mail on Sunday in the comments.

[haydock] 14/11/2011 10:37

Only here can you hear the story these days of the hidden assets of APF: the Canadian coal on the books for £2m.
Nobody else remembers, not even Minesite who first told the tale back in 2004.
all gone from the archive now.
Even the great Midas column, who tipped it yesterday missed the hidden goodies!!