Anglo Pacific Share Discussion Threads

[gavapentin] 21/10/2013 10:27

Do I detect a potential change of heart QP...? ;)

[quepassa] 21/10/2013 07:48

With a new Chief Exec and a new Chief Investment Officer suddenly announced today, in my opinion only there will now be a likely significant phase of inward-looking for this Company including re-assessing current investments and strategy, perhaps further tidying-up the balance-sheet before any second phase of an outward-looking process begins.

Who knows what phase one may bring? Phase two could be interesting.

ALL IMO. DYOR.

QP

[christh] 21/10/2013 07:28

Pilbara is taking off with Rio Tinto expanding its iron ore business.
The share price will be above 300p next year.

[haydock] 18/10/2013 10:17

October 18, 2013

Callinan Royalties Is Taking Advantage Of Current Market Conditions To Build An Impressive Royalty Portfolio

By Ryan Jackson in Vancouver


Roland Butler of Callinan Royalties has seen downturns come and go in the past.


Roland Butler
Roland Butler

This isn't his first rodeo.



"At Callinan we try to figure out how to make the most of what is a pretty tough situation for a lot of companies in the industry", says Roland.



"Really, in a relative sense, we're in pretty good shape. We've got a healthy treasury and money coming in, but at the same time there's a lot of opportunities that we are reviewing. This downturn is offering up a lot of opportunities and I think we are going to see a lot of creativity in royalty financing."



Even though the downturn has put a damper on exploration, new mine commissioning and M&A activity, Callinan's deal flow has been robust in the last year.



In fact, the Callinan team has been working on overdrive to sort through the opportunities on offer.



"A lot of them, for whatever reason, don't seem to be a good fit", says Roland.



"With every project there's an issue somewhere and as we do our due-diligence we've got to find out what those issues are and decide whether it still meets our criteria."



Political risk and geology are the major factors which can immediately rule out a potential deal, according to Roland.



"The jurisdiction has to be safe for people and for capital", he explains. "If your asset is going to be a royalty asset, you need a strong legal system and an established mining industry. The overlay of those things really does nail down the geography quite a bit."



Thus Callinan's portfolio, consists primarily of royalty agreements located in North America, although there some parts of South America, select parts of Europe, and Australia are also represented.



In addition to political stability and a strong legal system, a jurisdiction must have low enough taxes and government royalties in order that a mining company is able to support a private sector royalty.



"There's a lot of competition in the royalty sector between companies but our biggest competition is the government of the host country", says Roland.



"Around the world we're seeing governments raise taxes and mining royalties. If the royalty rates are too high, there's no room for a royalty company."



If the political and legal situation is favourable and the tax load is reasonable, the next step for Callinan is to evaluate the geological opportunity and the aptitude of the project team.



"When we look at a property, number one is geology because there no point in having a great royalty on poor geology", says Roland.



Avrupa Minerals is a recent case in point. Avrupa's exploration focus is on VMS deposits in Portugal. Callinan will fund US$150,000 of generative exploration during the first year with the option to fund up to US$100,000 in each of the two subsequent years.



In return, Avrupa will grant Callinan the option to receive a 0.5% net smelter return on any new projects acquired as a result of the generative exploration work. Alternatively, Callinan has the option of funding an additional US$150,000 on any of the new projects in exchange for a 1.5 per cent NSR royalty.



"Avrupa is working in Portugal and the star of Portugal is the Neves-Corvo mine, one of Europe's largest copper mines", says Roland. "If you look around the world and ask yourself where are the great VMS districts, Portugal gets high on that list."



Another recent deal was the acquisition of a royalty on Excelsior Mining's Gunnison copper project in Arizona, USA. Gunnison is another VMS project which is located in the heart of Arizona's copper porphyry district.



Callinan has invested C$1 million by way of a private placement in Excelsior and C$2 million to purchase a 0.5 per cent Gross Revenue Royalty (GRR).



In addition, Callinan has been granted options to acquire up to a three per cent GRR on the Gunnison copper project for a total of C$19 million following completion of key development and construction milestones.



Roland extols the benefits in familiar terms. It is, he says, "a substantial copper resource, very pro-mining jurisdiction, and good people working on a project that needs financing".



It's no coincidence that these latest two deals are on large scale VMS style opportunities. Callinan's major producing royalty is on the 777 Mine in Manitoba which is run by Hudbay Minerals. This has been a steady producer and a highly profitable royalty asset.



Though Callinan's income has suffered to some degree due to the lower metals prices in 2013, Hudbay is maintaining its production targets and Roland expects the royalty to continue to provide Callinan with strong cash flow with which it can explore new opportunities. It's only natural, given the long term success of the 777 royalty, that the Callinan team are attracted to similar scenarios.



But the company doesn't take a blinkered view. "When it comes to commodities, our question is: is the commodity mined and preferred by major mining companies?" says Roland.



"If it is not, then it's probably not as attractive." Among the commodities of highest interest for Callinan are gold, silver, iron ore, coal, uranium, and potash.



Projects with a long mine life and good exploration potential are particularly interesting since they can provide a long-lived royalty stream, and exploration can add value to the royalty going forward.



Having said all that, even in the midst of this downturn Roland has found that existing royalties are priced quite highly due to the success of the major royalty companies over the past few years.



So, instead of searching for existing royalties to purchase, Callinan is taking advantage of the large number of mining companies looking for capital in these tough times and creating new, custom tailored, royalties for these companies.



By crafting new royalties which mix a number of financing tools together, Callinan can custom fit the agreement to the particular needs and concerns of each company's management team.



"It's a tough business", says Roland. "Really there are only a small number of royalty companies worldwide. You have the big ones which are the big success stories but, beyond that, there are no medium sized global royalty companies. Then there's a bunch of smaller royalty companies of which Callinan is one. It's a tough time for the mining industry as a whole but for a royalty creation company it's perhaps one of the better times."

Back Print this news item

Minesite

[haydock] 16/10/2013 13:57

New Presentation

Highlights just how undervalued the company is how it will be valued when it either produces or is taken out c 2015 ?


Still on course & vastly under valued by a fig.
of minimumum 6x.
Very old values, should be below min.

See last slide of presentation.

Revaluation Qi 2014 on study completion.

Always understood this lot were classed as developers by those in the know on the mkt,so taken out next year is on the cards, for a lot more than 6x.

In the meantime cashed up & progressing permits.
The gold holdings are completely out of the picture, & now very minor, but still held.

Time for the mkt to realise that the end game is near.
They are focusing on the huge cash needed by a small company at the moment.

Big resource, world class & in Brazil, the right place @ the right stage @ the right time in the cycle = Buy out.

[rcturner2] 15/10/2013 13:06

I have bought back in today after a long period on the sidelines.

[mozy123] 15/10/2013 12:51

Rio - solid production numbers!!

[dgellissnr] 15/10/2013 12:05

coal to china on the up good for APF

[haydock] 04/10/2013 21:37

Gasification is up & proposed in the U.K.

Anyway N. Sea & nr. Whitehaven, applications made.

Operational in Aus ?

[piedro] 04/10/2013 17:15

"... gasify the seams if they leave it too long"

That was the Westhawk idea and they went bust.
Atrium must have picked up those licenses really cheap.

[piedro] 04/10/2013 17:08

Another comment - my dissatisfaction with the company started with the "We are a Royalty Company" talk,

OK - let them try on their new image, modify the accounting to fit the idea, prance about a bit and complain that they are not understood, etc .....

Much better off as a Mining Finance House - clear, simple, understandable and without restrictions - IMO ... ... hopefully it will pass.

If those JORC resource numbers keep going up, the royalty projects advance and the 'highway' gets closer, then I can wait.

A return of +20% pa is not to be shunned though some have done better

[piedro] 04/10/2013 16:42

Some comments:

re: Investment Portfolio
1 - I believe Matthew Tack was responsible for its management and he quietly disappeared without much explication

2 - Although recent royalty acquisitions have been undertaken without previous share holdings it does not seem to have been so in the past ...

Mantra Resources - takeover
Platinum Australia - sold
Cambrian Mining - sold
Western Canadian Coal - sold
Kinbauri Gold - Royalty
Indo Mines - Royalty
Hidefield Gold - Trefi Coal %
Herencia Resources -
Horizonte Minerals - Royalty option
West Hawk Development - ex-Groundhog partner
Laramide Resources - Royalty
Royalco Resources - failed takeover
Mundo Minerals - Royalty
Berkely Resources - Royalty
Empire Mining - Royalty

... ahh, those 'sold's - how the bb's complained!!

3 - Re: RCO - they didn't get it - it was still in the boom time. The Royalco said the offer was too cheap. Price now back down in the 30's and APF have withdrawn their director. (Reminds me a bit of Shanta Gold)

[haydock] 04/10/2013 15:21

Qp.
Not an unreasonable post & a sound argument.

You have not referred here to the dividend, which I know you think is barely covered.
It is a significant point for the long termer, & perhaps now safer than it was.
Also a long termer has to consider as I do the CDN coal possibilities.

I think that Peidro feels that they should have progressed this more along the lines of the nieghbours who are going great guns.
I certainly have to agree with that.

For me where they went wrong was the failure to press home the bid for Royalco, only to settle for 30% or so, of another Royalty company, who at the time were taking some in physical gold.

However the past is the past & for the I/C to look forward to !

If the mkt is forward looking, then APF has a great future.
There greatest skill is still the miserly house keeping.

Now is perhaps the time to pull the CDN rabbit from the hat, as coal may not be the force it is going forward.
They may have to gasify the seams if they leave it too long.If that is possible.

Cheers Hay.

[bhoddhisattva] 04/10/2013 12:36

Good post QP.

[haywards26] 04/10/2013 12:16

Thanks QP.

A very comprehensive and balanced post. I do agree with much that you have included. The bod have made some poor investment decisions IMO - but some of the hit has been incurred for reasons outside of their control e.g environmental (weather) and the price of commodities etc.

I do feel better times lay ahead. With the expansion of the Kestrel mine being very material to the future value of shareholders returns. I for one will be topping up if the price hits 180 or below.

Rgds

Haywards

[quepassa] 04/10/2013 12:01

Haywards,

What has badly affected/damaged APF in my opinion is primarily their Strategic Mining Interests Portfolio where they have dropped an absolute packet of £30 or £40 million or whatever. That is a horrible loss. And it was only after a lot of time that they somewhat suddenly came out and revealed that the mark-to-market value of these investments had, as I had long suspected, been severely impacted with bad consequences for the share price and shareholders.

But if you read their web-site, they repeatedly say they are a Royalties' business so I end up asking myself why they had so much in Strategic Investments and whether this significant diversification is/was good for APF and good for shareholders.

They also use some very convoluted accounting practices and techniques and frequent Restatements to Accounts which in my view make the accounts opaque and difficult to follow. However, I am encouraged that they appointed a new Non-Exec Director to the Board who is a highly experienced Accountant with a strong Baker Tilly pedigree who may help to simplify, I hope, the accounts and make them more transparent. Because now that the bull-run is over, investment professionals will certainly hone in on the balance-sheet itself in great detail. And believe you me, it is not an easy read.

In my view, I think APF have somewhat lost their way. Perhaps understandably getting caught up in the great fervour of the massive bull-run in natural resources which has now come to such an abrupt end with bad consequences.

However, I ask myself if APF had stuck to their knitting as a Royalties' outfit and not having taken on board so many Strategic Investments whether things would be different. And I think they would. For the positive.

To summarise, APF set out their stall as a Royalties company, yet they lost an enormous amount of money on something completely different, mining investments. The Royalties were fine. Up a bit, down a bit, a few bumps along the way here and there but still a highly reliable source of cash.

I also repeatedly garner good feedback on this board that investors wish APF would find more royalties and also diversify those royalties away from such a heavy weighting towards one country, Australia, and one mine, Kestrel. That's got to be a sound approach.

That's why I find it tough to answer your question about the future share price in 2016. Because , for me at least, there is a gulf sometimes between what the Company says and does.

If the Company sticks to its knitting, does Royalty Financing. Expands its Royalty portfolio. Diversifies it. Makes the balance-sheet much more transparent, limits non-core, non royalty-financing to a bare minimum, then I think there will be a very bright future for APF and maybe your 300p 2016 projection could be far exceeded.

If they continue down this path of Accounts Restatements and non-core Strategic Mining Investments , then the waters are heavily muddied and it is not so clear to project what the future holds and where the share price will head.

Hopefully, this will provide all and sundry with food for thought.

ALL IMO. DYOR.

QP

[bhoddhisattva] 03/10/2013 17:21

QP, I didn't pick up any stone and merely asked a polite question.

Your response rather defines you and requires no embellishment or comment from me.

[haywards26] 03/10/2013 13:14

QP,

Simply the extension to the one material and producing Australian asset. As per the conference call the mine will be at full throttle and APF benefiting in full by the end of 2016. This will have a material impact on the APF income, profit levels, financial strength and shareholder returns (both in share price and dividends) IMO.

Hence why I think any patient investor with a minimum investing time period of 5 years plus will make a good return here and why I am invested here. After all Mr Buffett does state that anyone not able or willing to invest for 10 years should not be investing in the stock market.

[curt3] 03/10/2013 11:04

I was, repeat WAS, a fan of APF - I liked its strategy, its no nonsense management and its conservative financing. At that time coal, iron ore was booming and junior miners were in vogue and with the prospect of coal in Canada everything was bullish and rosy and bumper results ensued in 2010 (?) was it?. Since then we have had a slow down in China, the floods in Queensland, the destruction of value in junior miners in our portfolio, deferral in projects and an uncertain future. The market is only interested here and now valuations and will not react to blue sky reactions. I too got a bit down by QuePassa raining on our parade but he has been stating the facts and realities. Iwill keep a watching brief and good luck to all.

[quepassa] 03/10/2013 10:49

That is a good but very tough question to answer without giving the matter some serious consideration. - Looking three years into the future is difficult for any situation, let alone for a company involved esoterically in the natural resources sector.

To help me answer your question, what please is the basis or grounding for your confidence and projection?

ALL IMO. DYOR.

QP

[haywards26] 02/10/2013 21:17

I am confident that by the end of 2016 the share price will be in excess of 300p and divi in excee of 11.50p which at the current share price gives a yield of just under 6%. This is unless there is a major world incident. QP do you strongly disagree with this projection?

[quepassa] 02/10/2013 17:15

A polite enquiry. My Aunt Fannie!

Your post was not polite. It was bullying, threatening and manipulative in tone and designed to reflect upon me in a poor light.

I have no duty to reply to anything you ask. As you say, you are indeed an infrequent poster. You hide moreover behind being an unvalidated poster.

You suggest that I am refusing to give a straightforward and honest reply to your question, otherwise people will form their own opinion. Is this not clearly aggressive-manipulative language and behaviour?

But yet the reply was already there. Was it not?

Your post was aggressive and deserved what it received.

Frequent posters will recognise that I am generally always polite in my posts- although I am admittedly frequently putting forward challenging counter-arguments to the merits and demerits of this share and the current status quo of the natural resources sector.

That it unless someone picks up -like you- the first stone in which case they can expect to receive a similarly toned reply and similar treatment.

ALL IMO. DYOR.

QP

[quepassa] 02/10/2013 16:42

You can think what you like, sunshine. I really don't care
Are you stupid? Because you certainly haven't done your home-work before asking such a redundant question.
As you can write, I suppose you can read.
You are referred just twenty posts back to 6365 for example.

QP.

[bhoddhisattva] 02/10/2013 16:28

QP I hold - and am not embarrassed to say so having had dividends that put me well in the black on this share and not had to worry about trading or making another investment decision which I might get wrong.

I don't see why you refuse to give a straightforward and honest reply to my you question - in the absence of that the reader is entitled to form their own opinion and consider your comments in the light of that.