Anglo Pacific Share Discussion Threads

[nielsc] 02/11/2012 08:54

haydock,

This is indeed a good bb. Not daft ramping or deramping and plenty of interesting posts.

"I would simply say that when you invest in APF you are buying one intangible, the management, which has always been, first class, if a little quiet, & very well invested."

This is exactly why I have held APF since around the £1 mark.


Cheers,
Niels

[nielsc] 02/11/2012 08:48

QuePassa,

I am only going by what you have stated. That you would buy back into APF at around 200p, which I have no issue with.
What I am finding a little grating is that if you think APF results are so poor why would you buy in at any level.

You have shown that you have a reasonable understanding of APF and that the reduced royalties from Kestrel shouldn't have come as a surprise to you. I am pretty sure you are aware that Kestrel royalty stream will move back towards where is was.

I welcome your views and I would hardly say I am shouting you down or trying to rubbish what you are saying. I just find the fact that you are wishing to take a position at 200p a little at odds with your downbeat take on APF currently.

I have am currently in a similar position to you with another company I wish to buy into later in 2013. I have stated that I don't hold any shares and that I am waiting to purchase later next year. I have been pretty careful to state why I buying later rather than now and I have made it clear that I may well not get a lower price than the current price. For me the project will be further derisked by the time I purchase and perhaps the market won't have yet picked up on this.

I don't particularly see the APF story as broken, rather just a hiccup that it has now got over. Ok the depressed commodity markets aren't giving it a great boost currently. So no I don't see the recent results as poor. They were pretty much what the market has priced in. They would have been poor if they indicated a downward trend in performance. This I don't think they do.

"Perhaps, Niels , I should ask if you are connected to the Company as you seem to be their self-appointed St. George."
Lol. No I'm not connected with the company other than my shareholding and as for being a St.George I find that unlikely being Scottish ;-)


Cheers,
Niels

[haydock] 02/11/2012 08:30

Niels
Has a valid point of view & in no way has the standard of debate on this bb. been compromised.

Your opinion is also valid QP.

It is perhaps about time someone on here pointed out the problems of APF.

Some of us may have become a little complacent over the years as we have enjoyed a superb run with APF.

I agree with the point of view that values APF as an investment trust, one of the very best on the returns.

I have always said that was my view.

I would simply say that when you invest in APF you are buying one intangible, the management, which has always been, first class, if a little quiet, & very well invested.

We will never be able to quantify accurately, at all times all the other assets, particularly the CDN. coal potential.

[quepassa] 02/11/2012 07:48

I hope Kestrel works out for everybody and that the Royalty streams rehabilitate.

I don't like the suggestion that I am doing anything for my own purpose. A little lonely voice on an extremely quiet bulletin board on an even lesser understood share is hardly of any market importance whatsoever.

You have now indeed gone down in my estimation.

Sometimes you get intelligent conversation with some serious posters on occasional bulletin boards where open, rounded and VARIED views were tolerated and you could have some high quality debates from knowledgeable posters who engage in good two-way discussion which were of great benefit to everybody. I thought this was one of them.

Perhaps, Niels , I should ask if you are connected to the Company as you seem to be their self-appointed St. George.

Enough.

ALL IMO. DYOR.

QP

[nielsc] 02/11/2012 06:46

QuePassa,The reduced royalty income was well flagged to the market with the lower production at Kestrel due to standard mining operation (nothing untoward). The market is looking forward to more normal royalty income going forward. I am surprised that you weren't expecting the results that were just released as they have been discussed on here previously.I feel the current slump in the commodity sector is setting APF up nicely for the next several years and I expect their progressive dividend policy to continue.If you feel APF is faltering then why would a £2 be a good entry point for you? I feel you are making these points for your own benefit, which is perhaps a bit disingenuous. Cheers,Niels

[trytotakeiteasy] 01/11/2012 23:50

Que Passa - what about increasing Kestral royalty income going forward due to higher royalty rates??? Kestral value is up as opposed to the start of the year due to this...

Understand you concerns on EPS... lots of companies just carry on regardless when issues arise increasing the dividend and so forth.... Will have a look further to see why Q3 was so weak..

[quepassa] 01/11/2012 23:25

Fundamentally disagree on this point.

The market has judged APF on its terrific ability to spin off cash as a ROYALTY company.

The Company has always set out its stall as a ROYALTY company and played on its ability to spin off cash and pay hitherto handsome dividends. APF goes to great lengths to promote its UNIQUE SELLING PROPOSITION as such, not so much as an asset-based company. Just read the Company blurb for yourself.

If its ROYALTY cash flow is hampered, diminished, threatened or reduced, then that will be reflected in market perception and likely in the market valuation of the Company in my view.

Personally speaking, I felt the RNS yesterday focused attention yesterday on the asset base rather than the ROYALTY flows which was somewhat disingenuous in my view but not surprising given the enormous eps fall in earnings from 29p to 10.5p .

It's a difficult game to play on the asset side because valuations can fluctuate wildly whereas the expectations ( perhaps somewhat erroneously) were that the ROYALTY flows were a rock steady cash-cow which could only increase over time. This has proven not to be the case ( for this year at least ) due to a wide variety of macro-economic, political, demand-supply reasons, not to mention natural disasters/flooding.

Seen too many companies where NAVPS -when used as the valuation metric- becomes their Achilles Heel. If the market starts valuing APF as a property company or investment trust as you feel may be appropriate, I hope for everyone's sake that APF don't rapidly fall to a discount to NAV of 50% which is certainly not uncommon at the moment for many companies of this size in your suggested sectors. That would potentially be bad news for the share price

ALL IMO. DYOR.

QP

[zoolook] 01/11/2012 22:03

Stephen Bland of the Fool has taken the same view that APF can be primarily judged on its assets - which he generally regards as the strongest value criteria

"Anglo Pacific is a play on the mining markets, which is why its share price ..., and the key to it as a value play is not so much eps in my opinion but asset value. In this respect it resembles somewhat an investment trust or property company."

[piedro] 01/11/2012 20:38

QP,

Strange beast this APF. They really don't respect
the ESP model that the market is so fond of.

FinnCap is forecasting
EPS-2012 of 15.80p and,
EPS-2013 of 30.60p

.. if so the dividend argument does not really
matter as it will be compensated in 2013.

IMHO, FinnCap are exaggerating, one day, perhaps
in 5-6 years more the EPS will become a more settled
growth affair, but I don't believe it, mining and
commodities being what they are.

I think the NAVPS is a much better growth indicator
for this company that deals in hidden assets.

Here is a chart of the story - NAVPS 6-bagger since
2003 - [SP 35-40 back then]


[f12 & f13 - my estimates (not FinnCap]

Regards,
P.

[quepassa] 01/11/2012 19:12

Last year 2011, APF paid a total ( interim + final ) dividend of 9.75p.

They have already declared in August this year an interim dividend of 4.45p.

However the earnings per share declared yesterday were only 10.51p for the nine months to date compared to almost three times that of 29.39p for the comparable period last year. This is an enormous reduction in eps.

If we gross up the 10.51p for the current nine months to a full year, that would give a theoretical figure of 14.01p eps for the full year.

On this basis, the Dividend Cover would be looking anaemic and very weak compared to previous years. And would require APF, if they maintain dividend payments, to pay out a dividend representing some 70% of theoretical current year eps (divi of interim and final totalling 9.75p+ versus theoretical eps of 14.01p ).

A very different picture to the last few years.

ALL IMO. DYOR.

QP

[haydock] 31/10/2012 15:47

Splashing the cash, champers at our expense as usual, is there no end to this extravagence.
A £350m company, & the directors are once again spending like water, year in year out.

I'm out { when they hit £1b, i'll consider it anyway !!!}

The Group's operating expenses, including salaries and wages, share-based compensation, audit, tax, legal
advisory fees and general office expenses, increased from GBP 2.0 million in the nine months ended September
30, 2011 to GBP 2.5 million for the same period in 2012. The operating expenses in the quarter ended September
30, 2012 were GBP 0.9 million compared to GBP 0.7 million in the comparable period in 2011. This reflects
additional headcount in the first quarter and other costs incurred in exploring new investment opportunitiesl

[fieldhouse] 31/10/2012 11:43

Asset of £353 million.
Company share price value £277 million.
4% divi
No debt.

Just a few positives.

[nielsc] 31/10/2012 10:14

haydock:

Will definitely help offset the price drop of coking coal (80% coking coal, 20% thermal coal from Kestrel).



"For calendar year 2013, the average price of coking coal would be $200-220 a tonne, he stated.

Japan, the biggest player in the sea-borne coking coal trade, is expected to increase its imports, as it is rebuilding its economy. The country's July imports at 6.81 million tonnes was up 32.1 per cent compared to the corresponding period of 2011. The island nation had imported 73 million tonnes in 2011.

Meanwhile, the production cut planned by BHP is likely to have a significant bearing on Indian consumers.

"India is one of the large coking coal importers from Australia after Japan and accounts for 20 per cent of the total met coal exported by Australia. Any significant cut in production by Australian miners resulting in short supply of coking coal will impact the volume available for Indian importers and may lead to a price increase," said Sethiya."


QuePassa:

"I will now officially down-grade myself from a long-term holder on the back of these poor results to a long-term follower."
lol ;-)


Cheers,
Niels

[haydock] 31/10/2012 09:13

Here come the cavalry: never thought i would be glad of the help of the politico's !

In the 2012-2013 Queensland State Budget, the Queensland Government announced an increase in the royalty rates
for coal sold, disposed of or used on or after October 1, 2012, which will also apply to the Group's Kestrel
royalty. The effective royalty rate for a particular period depends on the average price per tonne of coal for
the return period and is calculated on a tiered system. Where the average price per tonne is over A$100 and up
to and including A$150 the royalty rate has risen from 10% to 12.5%, with an additional band of 15% where the
average price is more than A$150 per tonne. The first A$100 will continue to attract a royalty rate of 7%.

The increase to the Queensland coal royalty rates have been reflected in the independent valuation of the
Kestrel royalty at September 30, 2012, and have contributed to an increase of A$19.3 million to the underlying
valuation to A$271.3 million (GBP 174.6 million) from A$252.0 million (GBP 166.0 million) at December 31, 2011

[haydock] 31/10/2012 08:53

Yes, thats mining for you.

Feel the width of the portfolio, growth company, someday Rodney....
Safe dividend miners are like gold dust.

[quepassa] 31/10/2012 08:52

Good point, Niels.

I think I agree with. I will now officially down-grade myself from a long-term holder on the back of these poor results to a long-term follower. And am not displeased that I did not re-invest over the last few volatile months despite some variable buoyancy in the share price

However, I cannot rule out the possibility that I will reinvest again in APF if my entry point of sub £2 is reached which now seems more likely to me on the back of APF's recent performance.

These are the points in today's RNS which are noteworthy from my point of view:-

The Group's profit before tax for the nine months ended September 30, 2012 was GBP 15.0 million compared to GBP
41.1 million for the nine months ended September 30, 2011. Group earnings per share for the nine months ended
September 30, 2012 were 10.51p compared to 29.39p for the comparable period of 2011. For the quarter ended
September 30, 2012 the Group's profit before tax was GBP 7.1 million compared to GBP 18.5 million for the
comparable quarter in 2011. The Group's earnings per share for the three months ended September 30, 2012 were
5.76p compared to 14.31p for the third quarter of 2011.




May the share continue to prosper for you.


ALL IMO. DYOR.

QP

[nielsc] 31/10/2012 08:43

At the current share price APF will be yielding around 4% in dividend payments for this coming year. I think that will keep the iis and pis looking for income shares happy.

Cheers,
Niels

[nielsc] 31/10/2012 08:36

QuePassa,

"Total assets of GBP 353.2 million at September 30, 2012 (GBP 371.0
million at December 31, 2011 (restated)) "

Kestrel is back up to normal production levels and
"In the 2012-2013 Queensland State Budget, the Queensland Government announced an increase in the royalty rates
for coal sold, disposed of or used on or after October 1, 2012, which will also apply to the Group's Kestrel
royalty."

The general commodity market has been pretty depressed over the last year or so. I see things picking up with the gold and silver miners next year and Uranium should start picking up for out than that.

Not a bad performance by APF all considered. Hopefully the royalties they have picked up in these hard times will perform nicely in the coming years.


QP I take it you haven't managed to buy back your "long term" holding. You might be a long term follower of APF, but you can't really say you are a long term holder even if you believe in the long term prospects of APF.

Cheers,
Niels

[quepassa] 31/10/2012 08:05

Aren't these just terrible results for both the last Quarter and the Nine Month period compared to before?

ALL IMO. DYOR.

QP

[nielsc] 29/10/2012 23:15

It sounds like very poor technical analysis with "steep angles of lines" and "the fall accelorating".

As many on here know APF doesn't really lend itself to TA being a rather complex beast fundamentally.

Now when do those increased coal royalties start rolling in?

Cheers,
Niels

[shavian] 29/10/2012 20:56

None of which is supported by the fundamentals

[buywell2] 29/10/2012 17:32

Yes because from where the red ones start there has been a succession of lower highs and lower lows

The angle of the lines is getting steeper indicating the fall is accelorating

the blue line is a chart support which could get hit around jan 2013 if things continue in downtrend mode

[prenvest] 29/10/2012 16:59

buywell2
Can you please explain why you drew the red lines where you did.
Thanks.

[buywell2] 28/10/2012 10:38

The divi has held this up BUT none the less the chart has continued to weaken since early 2010






200p support could be tested , next wed will be key

[haydock] 26/10/2012 12:00

Conclusion

Make no mistake; there is no shortage of uranium in the ground. What is in short supply is mined uranium.

It's obvious, that starting very soon, and continuing for at least a decade (the time needed to develop, permit and construct a uranium mine), there is going to be a significant shortfall of uranium supply. Where is the US, and the rest of the world, going to source its needed uranium from?

Perhaps the most relevant question for investors in the junior resource space is who is going to, in the very short term, commence production?

A looming uranium supply squeeze, and how to potentially profit from it, should be on all our radar screens. Have you got a near term uranium producer on your screen?

If not, maybe you should.

Richard (Rick) Mills is the owner of aheadoftheherd.com