Anglo Pacific Share Discussion Threads

[stevie blunder] 05/6/2014 10:43

Thanks for that link QuePassa.

Fortunately most of Kestrel production is coking coal where the price slide has been somewhat less. Still down tho. Unfortunately with limited information about how much of the Kestrel mine current production is from APF land it is difficult to see what current year royalties might be. However the conference call re-emphasised the importance attached to maintaining and later growing the dividend
so management seem to think they can do it. So far so good ;-)

The Canadian coal assets contain a lot of anthracite, which is the highest value coal.

High cost mines being mothballed is the natural response to low prices and is the means by which the market comes back into balance, so actually good news to see this happening. The UBS figures for globally traded coal in the article are supply: 999 million, demand: 987 million.

When will the market turn? Not a clue. When demand exceeds supply.

Of course Obama's latest actions on CO2 will tend to lower demand in NA in future years. So the price outlook got worse since the article was written on that basis.

Food for thought, keep it coming :-)

[quepassa] 05/6/2014 10:04

Endless views and reports about coal price supply/demand, prices and projections.

You pay your money and take your chance about which ones you listen to.

The following report dated 23rd. April 2014 from trusted Bloomberg seems to be a real melting pot of views from varying banks and analysts and sound-bites from major producers.

References to Australian coal. References to idling output and suspending projects in Canada.

When you see that Goldman Sachs, Standard Bank and Credit Suisse are cutting coal price predictions, it is for me at least hard to follow that coal-related revenues at APF are not going to be affected.

Overall, a fascinating amalgam of views but not a happy read about prospects for coal.

It makes me personally doubtful about the robustness or otherwise of APF's royalty revenues from their coal interests.

And it is these coal royalty revenues which are used in the main to support the hefty dividend where dividend cover is so very tight.



ALL IMO. DYOR.
QP

[stevie blunder] 04/6/2014 08:50

Sorry, Christh, I dont get that, why would the royalty increase to 20%?

This is what I said on the other thread:

This is how I see it, could have something wrong.

11400 tonnes x 2200 = 25.08 million lbs

Using 6.37 usd/lb from Project economics page here:

That is 160 million usd/year, at 2% = 3.2 Million. With a max cost of 25 million, ignoring the warrants, that is a cash return of 12.8%.

That looks like a decent deal. With 5% more shares in issue they have raised potential royalties. Last years royalties were 14.7 million£ so say 24 Million USD. 3.2 more is a 13% rise, so I see no dilution.

------------------------------
It is worth noting also that the royalty covers all production, not just Vanadium. There is the possibility of platinum group metals in the future and there is an iron ore byproduct.

This project is not huge, will not transform the company, but is a useful brick in the wall.

[buywell2] 04/6/2014 08:13

No demand for extra placed shares then

[christh] 04/6/2014 07:44

Stevie Blunder 3 Jun'14 - 13:59 - 6606 of 6606

As you mentioned in your post the royalties have increased by 13%!!

The new royalty will be for 29 years the life of the mine.

So if we work out the maths.....................

29 years x 13% new royalty =377% total royalties assuming the production stays at 13%.

If the production increases and the royalty rises to 20%
then 29 x 20%=580% total royalties

[stevie blunder] 03/6/2014 13:59

Re dilution it is worth listening to to analyst webcast on the website
They quote rates of return on the cost price which are auite attractive
In simple arithmetical terms they issued 5% more shares and have probably increased gross royalties by 13% or more
They are quite explicit on the web cast that dividend cover is enhanced
I can live with that kind of 'dilution'

[quepassa] 03/6/2014 12:42

As always some very good (and polite/amicable) posts on this bb which are excellent food for thought - and a great debate.

QP

[haydock] 03/6/2014 12:34

Q.P.
Suggest visit to the other site Piedro Highway to the future.


Look at this item
'APF's neighbour at Groundhog' - have upgraded their anthracite coal resource to 1.57 billion tonnes :

The company, as the chart produced there reveals, has been on rocket fuel.

The APF coal is top quality, not just power station fodder, so I suggest that the demand will be maintained.

[gavapentin] 03/6/2014 12:33

Good post.
My counter is simply that talk is cheap but action and money talks....
i.e. whilst Obama is correct, and the trend is undeniable, it will be many years before suitable alternatives are found and thus APF have time to diversify

[quepassa] 03/6/2014 12:13

You chaps know more detailed stuff about Canadian Coal than I ever will.

But trends are worrying. On the macro front things are very worrying.

The front page of the FT today has a big article headed:- "Obama leads biggest push by US to combat climate change". All about cutting down emissions and cleaning up coal-powered power generation .

The same FT article continues onto almost the whole of page six. Here are some snippets:-

" So will this kill the US coal industry?.... but it would be very bad news for US coal miners......and coal prices would fall up to 17%"

Please see today's FT for the full article and the correct context.

This does not in my view serve generally as a positive read-across for North American coal reserves in Canada.


I know someone will soon jump up and say, but Canada will sell coal to the New Worlds.

Maybe so, but it seems to me that the Far East have opened up so many coal mines of their own.

You really want and need to take a look at the frightening share price graph of a major North America coal-miner over five years called Walter Energy Inc ( ticker NYSE:WLT ). It's gone from almost $140 in 2011 to $4.50 ( yes four and a half dollars) now.

This is a Company which Julian Treger was not so long ago agitating against when he was doing his activist stuff at Audley Capital.

I do ask myself about the much vaunted APF Canada coal interests which are undeniably there and a cheap and vast resource. But the equally undeniable phenomenon of Global Warming is increasingly forcing more and more major governments to frown upon and draw back from dirty power generation.

It is also very interesting to note that the newly announced royalty is in Vanadium. And if memory serves correctly, they mentioned on the latest webcast wanting to find perhaps oil and gas royalties.

Isn't that the enormous challenge facing this company that they are so very heavily exposed to coal - if not over-exposed? - And that is where the lion's share of their current income derives from.

ALL IMO. DYOR.
QP

[haydock] 03/6/2014 11:35

Unless you have hidden & I note again unquestioned assets in Canada, that could be game changing ?

You are talking sound ideas, the old board clearly got caught on the hop by the cycle.

The new lad has ideas & energy.

He has made a start which whilst not too clever initially in the dilution stakes adds immediate value, to the cash flow & the company.

A sound first move.
Cheers Hay.

[quepassa] 03/6/2014 10:47

Hi Haydock,

Well let's see what happens.

I have been sceptical about the dividend cover and the wisdom or otherwise of paying such a high dividend in these straitened times. And remain so.

Already we have seen their cash pile much reduced. The first time also that I can ever recall them putting a bank borrowing line in place.

And of course, the new royalty was funded by equity which means dilution for all existng shareholders and an increased amount of shares to service.

They talk of further deals later this year and "keeping their powder dry" to fund them.

Just as I long suspected about the valuation of their assets post the end of the mining super-cycle, in my view something will likely have to give sooner or later vis-à-vis the dividend.

Personally in my opinion only, I think it is somewhat foolhardy to pay such a high dividend which is barely if at all covered by profits rather than putting aside some of the diminished earnings into the piggy-bank in order to spend them on new royalties, rather than selling more equity.

The maths seem clear to me. They spend all their earnings currently on divis. So to fund the new pipeline it must come from further diminishing cash, borrowings, equity raisings or sales of existing assets.

I personally don't think this is a particularly clever way to run a royalties fund. They can only go back to the equity trough occasionally. Surely retaining some earnings is the sound and sensible thing to do.


Good luck to all holders.

ALL IMO. DYOR.
QP

[haydock] 03/6/2014 10:00

Just for you Q.P.
Last comment right at the end :
The maintenance of the dividend is the priority.

[christh] 02/6/2014 18:44

ANGLO PACIFIC GROUP PLC
Results of placing of 5,544,371 new ordinary shares at a placing price of 180 pence per share

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, JAPAN, JERSEY, SOUTH AFRICA OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL. THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES IN THE UNITED STATES, CANADA, SOUTH AFRICA, AUSTRALIA, JAPAN, JERSEY OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.

Anglo Pacific Group PLC ("Anglo Pacific" or the "Company") (LSE: APF, TSX: APY) is pleased to announce the completion of the placing announced earlier today (the "Placing").

A total of 5,544,371 new ordinary shares of 2 pence each in Anglo Pacific (the "Placing Shares") have been placed by Barclays Bank PLC and BMO Capital Markets Limited at a price of 180 pence per Placing Share, raising gross proceeds of approximately £10 million (US$16.7 million). The Placing Shares being issued represent approximately 5.0 per cent. of the Company's issued ordinary share capital prior to the Placing.

The Placing Shares will, when issued, be credited as fully paid and will rank equally in all respects with the existing ordinary shares of 2 pence each in the capital of the Company, including the right to receive all dividends and other distributions declared, made or paid in respect of such shares after the date of issue of the Placing Shares.

Application will be made to the Financial Conduct Authority for admission of the Placing Shares to the premium listing segment of the Official List and to the London Stock Exchange (the "LSE") for admission to trading of the Placing Shares on the LSE's main market for listed securities (together "Admission"). It is expected that Admission will take place at 8:00 a.m. on June 5, 2014 (at which time the Placing will become unconditional) and that dealings in the Placing Shares on the LSE's main market for listed securities will commence at the same time. An application to the Toronto Stock Exchange (the "TSX") has been made to list the Placing Shares.

The Directors have subscribed for shares in the Placing amounting to 91,538 Placing Shares in aggregate. Immediately following Admission, the Directors' holdings, in aggregate, are expected to represent 9.0 per cent. of the issued ordinary shares of the Company.
The Directors' shareholdings as at the date of this announcement and expected shareholdings immediately following Admission are set out below:


NAME SHARES HELD % SHARES AFTER %
P.N.R. Cooke ---8,949,904 8.1% ---8,949,904 7.7%
J.A. Treger ---1,230,768 1.1% ---1,292,306 1.1%
A.H. Yadgaroff -175,460 0.2% ---175,460 0.2%
M.R. Potter --51,281 0.0% 81,281 0.1%
J.G. Whellock --13,084 0.0% 13,084 0.0%
W.M. Blyth --- 10,000 0.0% 10,000 0.0%
M.H. Atkinson --7,422 0.0% 7,422 0.0%
R. C. Rhodes - - - -
R.H. Stan - - - -


Anglo Pacific's enlarged issued ordinary share capital immediately following the issue of the Placing Shares will be 116,431,796 ordinary shares. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in interest in, the share capital of the Company under the Disclosure and Transparency Rules.

Barclays Bank PLC and BMO Capital Markets Limited are acting as joint bookrunners in respect of the Placing.

[truthteller3] 02/6/2014 17:41

"bhoddhisattva

2 Jun'14 - 08:28 - 6591 of 6605 1 1
Agreed QP - and as a PI it really stinks that shares will be issued that will rank "parri passu" with ours ... yet as holders we ARE NOT treated "parri passu" with the institutions in terms of being allowed to buy these!"




There you go again, trying to appear clever when you are not. And twice in one post!

If you use foreign language words please learn to spell them. It's 'pari passu' not what you wrote.

[christh] 02/6/2014 16:41

Noslien
2 Jun'14 - 16:02 - 6594 of 6594

Common sense is do not spend your savings or get in debt.
If they can raise the money to buy the royalty by printing new shares
is not going to affect their bank balance.
They might saving the money for another investment when the opportunity comes.

Or
they will have enough money to pay for the dividends.

However the share placing will pay for the new royalty and add another asset to the company.
Vanadium is an essential raw material to combine with iron ore to create a new
metal stronger for use in tools etc.

What I am really annoyed is insider knowledge and insider dealing!!!!!!!!
How did the news leaked out last week and the price fallen from 189p to 179p?????

[noslien] 02/6/2014 16:02

What I don't understand is why they didn't use their untapped line of credit to make this acquisition? Any thoughts anyone?

[gavapentin] 02/6/2014 11:42

sp holding up well though.....

[christh] 02/6/2014 09:04

FROM RIO TINTO news

A US$2 billion extension of the Kestrel Mine was completed last year and studies are currently underway into options to extend the life of Hail Creek Mine, subject to future investment decisions.

[bhoddhisattva] 02/6/2014 08:28

Agreed QP - and as a PI it really stinks that shares will be issued that will rank "pari passu" with ours ... yet as holders we ARE NOT treated "pari passu" with the institutions in terms of being allowed to buy these!

[quepassa] 02/6/2014 08:23

"Told you so" that they had in my view run down their cash pile and paid too much away in dividends to allow the acquisition of new royalties from existing financial resources.

Existing shareholders will now be diluted. It will be interesting to see going forward how APF service the expanded number of shares in issue after the Placing as to the current dividend.

PI's apparently precluded from taking part in the Placing. One can ask oneself, how fair is that vis-à-vis long-standing loyal shareholders who might have wanted to grab a piece of the action especially if the new shares were issued at a discount which may or may not be a possibility.

What price the new shares?? - Possibly Hard Hat time in my opinion for existing shareholders (see below "...and any discount...):-

3. The Bookbuild will establish a single price payable in respect of the Placing Shares (the "Placing Price") to the Banks by all Placees whose bids are successful. The Placing Price and the aggregate proceeds to be raised through the Placing will be agreed between the Banks and the Company following completion of the Bookbuild and any discount to the market price of the Ordinary Shares will be determined in accordance with the listing rules of the UK Listing Authority. The Placing Price and the number of Placing Shares to be issued will be announced on a Regulatory Information Service following the completion of the Bookbuild.


In my opinion only the share price is going down.


ALL IMO. DYOR.
QP.

[christh] 02/6/2014 08:17

Vanadium products!






Will the investors/shareholders offered any or they will be offered directly to the institutions probably with a discount of some sort.

US$25 million is serious money for APF but if they are start producing in the future 11,400 tonnes V2O5 equivalent over a 29 years.

Largo has also entered into an off-take agreement with Glencore International AG for all vanadium products produced
at the Maracás Project for the first 6 years of commercial production.

[bhoddhisattva] 02/6/2014 07:58

Proposed placing of new shares (5% dilution resulting) www.investegate.co.uk/article.aspx?id=201406020701025552I&fe=1

to be used for a royalty purchase of a vanadium mine:



So that's why the price dropped on Friday. And who says insider dealing is dead and doesn't happen? Somebody should report all transactions on Friday to the FCA but based on previous dealings with the same people (but then called FSA) they will do nothing ... a toothless watchdog quango ... again!

[haydock] 19/5/2014 08:43

With thanks:

Hedgehog 100
18 May'14 - 20:52 - 3359 of 3359 0 0


Horizonte Minerals is in the latest edition of "Shares" magazine (15th. May), on the "PLAYS UPDATES" page.

Only the start of the piece is available online at present to non-subscribers:

"Plays update: Horizonte Minerals
6.5p Loss to date: 5.5% A near-50% rise in the nickel price since January has failed to lift nickel explorer Horizonte Minerals (HZM:AIM), much to our surprise. Horizonte is sitting on a decent project in Brazil that has compelling ... "
hxxp://www.sharesmagazine.co.uk/articles/plays-update-horizonte-minerals

In summary, the rest of the piece says that HZM hasn't risen because of concerns about how it will fund its project work: Anglo Pacific is currently considering its options regarding this, as it has other choices for using its money. "Shares" is optimistic that the funding issue can be resolved.