Anglo Pacific Share Discussion Threads

[fabius1] 05/9/2014 10:22

christh - I am sure there will be a reply but I doubt it will be too explicit. Plans and practice are often difficult to reconcile and to be fair, in their defence, there is a lot of uncertainty in the industry short term. It's a cyclical business. APF have to run a tight ship and keep a keen eye on opportunities for the future. I guess we are all mindful of the cash position which has historically been a strength.

[christh] 03/9/2014 13:37

gavapentin 3 Sep'14 - 08:12 - 6683 of 6683

I’m not sure they would reply!


Off course they do, they reply to each email.
I have spoken to directors, board members and investors relation personnel.

So DO NOT ASSUME THINGS AND STORIES OR SENARIOS unless off course you heard it from the horses mouth.

So far I am bullish with the company.

[gavapentin] 03/9/2014 08:12

I’m not sure they would reply!

[christh] 02/9/2014 15:11

QuePassa 2 Sep'14 - 14:44 - 6681 of 6681

My concerns have been allayed as I got a satisfactory reply from the investor relations officer.

You could do the same if you want.
Ask them the harsher problems you have with the company and let us know, like I did.

[quepassa] 02/9/2014 14:44

Thank you for posting the APF response to your "concerns".

But what about the collapsing Net Asset Value per share? I'd be fascinated to hear management's response about the major collapse in Net Asset Value per share in recent times. And indeed the collapse in share price from 350p+ in 2011 to around 160p now. They talk a lot in my opinion about the importance/priority of maintaining the dividend but what about about the importance/priority of maintaining the net asset value per share?

The dividend cover is now completely under water in my view.

In my opinion - and without reference to APF- it may or may not generally speaking be considered by many a reckless strategy for any company to maintain a dividend if it has to be partially supported by any company continuing to cannibalise itself rather than paying dividends from income.


In the case of APF, the latest RNS clearly states:- "Net assets reduced by a further GBP11.5m because of the Group's dividends.". If the net assets go down as a result of dividends being paid, it shrinks the asset base of a company. That's not good. Dividends would generally be expected to be paid out of income and profits, not when a Company is loss-making.


Perceived wisdom is that you pay dividends when you make profits. Perceived wisdom is that you don't pay dividends when you make losses.- A dividend is after all by definition generally meant to mean a share in the profits of a Company.


Moreover, according to the recent results, Net Assets were £216.9m on 1st. January 2014 and just six months later they have plummeted to £192million.

That is some £23million+ of losses in just six months!! That's dire performance in my view.

For the six months, there was a loss per share of 20.84pence but a dividend of 4.45p. Those two figures net out at a figure of minus 16.4p per share.

The NAV per share has correspondingly plummeted from 196p per share to 165p per share. - And it is clear that the share price currently tracks the NAV per share.

Do the maths for yourself. If H1 2015 income from their main royalty of Kestrel is already known to be minimal, where will they get the money from to maintain the promised dividend next year? It will likely perhaps come out (in part or majority) of the asset base of the Company. It seems very unlikely to me that the other royalties will make up for the known reduction in Kestrel income. So the NAV may or may not likely be negatively impacted again.


And that's after APF have to find the money to pay the second and final dividend for this 2014 year, the first half of which has been a major disappointment.


If we now turn to the topic of Deferred Tax Liabilities. -I have never personally been a fan of Deferred Tax Liabilities being classed as an asset which may or may not have the effect of flattering or increasing the asset base of a Company. One notes the derecognition of not insignificant Deferred Tax Liabilities in the recent results. One notes that there remain significant Deferred Tax Liability items on the APF accounts. It would be interesting to know whether there is any scope for further "derecognition" of such Deferred Tax Liability assets.

As far as their main Kestrel royalty is concerned, I can but believe that many investors would urgently like to see the concrete evidence in the forthcoming mentioned reports that Rio will start digging again from APF royalty lands after H1 2015.


Perhaps there is a genuine geological reason for Rio to start digging again after H1 2015 in APF royalty lands because they need to follow seams of coal. Perhaps the new mine extension to Kestrel South is so vast that Rio can continue digging for the most part outside APF royalty lands as will anyway be the case in H1 2015 and therefore avoid the APF royalty payment . The detailed forecast reports will be key. Expectations can sometimes have a nasty habit of perhaps leading to disappointment. And APF have disappointed a lot in recent times in my opinion.


A tricky situation perhaps. The dividend helps support the share price. But the significant losses and great reduction in income do not in my opinion support the dividend.


The collapse in NAV per share is the canary in my view. And that little bird is singing quite a song at the moment in my opinion. A louder song perhaps than the strategy to maintain the dividend.



ALL IMO. DYOR.

QP

[christh] 29/8/2014 17:09

REPLY TO MY EMAIL TO THE CEO
------------------------------------------
Dear Mr cxxxxxxxxxx,

Thank you for your concerns.

We are aware of these issues and are confident of our ability to address these challenges. As significant shareholders we are motivated to ensure the success of the business and will deliver the potential we see in the business model in the periods ahead.

The kestrel royalty will in any event recover in late 2015 and then more significantly in 2016 - and you and other shareholders will receive a high yield in the interim.

You should note we have committed to maintaining and increasing the dividend when appropriate so, in the absence of unforeseen events, your fears of a collapsing dividend should not become reality.

Kind regards.

Rxxxx Dxxx, for and on behalf of Julian Treger, CEO

[christh] 28/8/2014 08:16

Not bad results as feared.
The Canadian coal is now utilised and expect to earn royalties in
the future
rather than been sitting idle.Good move.

The dividend is maintained so is a good yield at the current
price.

[haydock] 27/8/2014 08:26

haydock
27 Aug'14 - 08:24 - 1006 of 1006 0 0 edit


Piedro :
If you take part in the call ?
Ask them about the CDN. coal please.
Nobody else will !

Or anyone else ?

[haydock] 27/8/2014 08:25

Piedro
27 Aug'14 - 07:45 - 1005 of 1006 0 0


Interim results tomorrow + conference call at 9:30am (BST)

[haydock] 21/8/2014 19:42

Clearly cannot disagree on the figs.
The thing is that APF have taken on very small early stage royalties, in a period of mining company negative development.
For better or for worse that's the facts.

Like F.N. in the long run these royalties if they come to fruition, may provide great returns as outlined in the piece.
F.N was clearly able to benefit from more mature royalties, that has yet to happen in the main to APF, if it ever does.

It does give the new bod an incentive & a clue to what can be achieved in the field & one has to respect their past experience, putting them perhaps in the right place at the right time ?

[quepassa] 21/8/2014 13:54

Thank you Haydock for a very useful contribution and link which makes fascinating reading.
Two observations about Fraco-Nevada who have been very sucesfull.

1.It would be interesting to compare closely their peformance alongside APF. Franco Nevada have increased in value from $1.2bn in 2009 to $9bn now.

2.Franco-Nevada say that now is a great time to buy royalties. And they have raised a lot of extra money to do that. A great strategy surely.


But this goes to the heart of the matter at APF in my view. They have little/no money to invest. And what little income they have is spent on paying dividends.

Just why has Franco-nevada gone up 700% in value since 2009 and APF halved.
They are both royalty companies. What is one doing so right to get this great performance?

Thanks again.

ALL IMO. DYOR.
QP

[haydock] 21/8/2014 09:49

Seminal piece here from Piedro: why you should consider being invested in APF long term.

[buywell2] 19/8/2014 17:31

so what price did you sell at ?

[christh] 19/8/2014 10:32

QuePassa 19 Aug'14 - 09:20 - 6670 of 6671

Yes, buywell2 answer the man or both of you will start crying.

If you want to know the answer call the directors and you will get a reply,
like I have.

[buywell2] 19/8/2014 09:21

Answer the man

[quepassa] 19/8/2014 09:20

If APF will get minimal income in H1 2015 from Kestrel South because Rio are mining outside APF's royalty lands, how can anyone be certain that it won't continue like that after H1 2015?

What happens after APF's H1 2015 if Rio continue mining Kestrel South from areas outside APF royalty lands?

I suppose that is one of the reasons why there was an RNS yesterday detailing the new agreement and need for detailed (forecast) mining info. It's an uncertain area.

And I reiterate my question from yesterday. If APF will get minimal Kestrel royalty income in H1 2015, just where will they get the income from to continue maintaining the dividend next year?

ALL IMO. DYOR.
QP

[buywell2] 19/8/2014 08:35

No bottom formation in yet

[gengulphus] 19/8/2014 08:32

If Mr Market knows best and the Trend is your friend - one would never get undervalued companies or turnaround situations or any of the other common and often mispricing that goes on which represent investment opportunities!

Quite possibly - but people believing such things creates such opportunities! E.g. a share whose price has been falling and has reached what one might reasonably regard as 'fair value' is not going to have people who invest on the fundamentals racing to buy it (they're looking for undervalued shares, not fairly-valued ones), while people who believe "the trend is your friend" will see it as being in an unbroken downtrend and keep selling / shorting it. And so overall, there will be more selling pressure than buying pressure, the price will fall further, those who believe "the trend is your friend" will feel vindicated, and the share will drop from fairly-valued to undervalued.

And that feedback loop of it being in a downtrend because there is more selling pressure than buying pressure and of the selling pressure resulting from it being in a downtrend and people believing "the trend is your friend", will basically continue until it's undervalued enough to generate significant buying pressure from those who invest on the fundamentals. Which makes "the trend is your friend" one of the things that creates the opportunities they're looking for... :-}

Gengulphus

[buywell2] 19/8/2014 08:14

Learn about chart bottoms



bhoddhisattva 18 Aug'14 - 09:48 - 6659 of 6666 0 1

If Mr Market knows best and the Trend is your friend - one would never get undervalued companies or turnaround situations or any of the other common and often mispricing that goes on which represent investment opportunities!

[quepassa] 18/8/2014 14:35

Funny old RNS in my opinion about an agreement to get info on the output from the mine on which they own royalties. I am personally amazed that they weren't getting that detailed info already without having to enter into some special agreement.

However....




Like their business sector, you have to dig and sift through all the rough to get to the real gems, of which this is in my view the key extract:-

QUOTE

We expect minimal royalty income from Kestrel during the period H1 2015, but Anglo Pacific management expects a substantial recovery thereafter as Rio Tinto mines more coal within our royalty lands.

UNQUOTE




Minimal income from Kestrel in H1. 2015 - Woops that sounds pretty terrible.

Also we EXPECT recovery. Doesn't sound very concrete to me.

With minimal income in H1 2015 from their leading Royalty, it will be interesting to see how they continue to service that burdensome dividend.

Time to run for the hills??

ALL IMO. DYOR.
QP

[quepassa] 18/8/2014 12:42

You are wrong again.

QP

[christh] 18/8/2014 12:33

QuePassa 18 Aug'14 - 10:52 - 6662 of 6662

You have been shorting this stock since you first appear in this thread.
I have been adding to this stock every time it has dropped.
Happy with the divi and no matter what you will say about them I will not
do you the favour to sell.

The mining might be weak but APF is not directly involved in mining but royalties which is based on production not sales!

The only thing to watch is how many royalties are coming in this quarter.