Anglo Pacific Share Discussion Threads

[goodgrief] 24/2/2021 20:10

Boo hoo... PrimaryBid raising only went to existing shareholders as oversubscribed!

[donaferentes] 24/2/2021 19:32

I have only recently signed up to PB. I only got allocated 52.5% of what I asked for on another placing. It costs nothing, so nothing lost, but I hope they don't waste my time more often than not.

[amunro] 24/2/2021 19:26

Sorry to hear that dona. I am an existing holder. Will keep an eye out on offers in PB; worth signing up for anyway.

[donaferentes] 24/2/2021 19:22

Ahh, just been told by PB that no shares were allotted to me - but disappointing, having just got all excited about it. Why pretend, when it's never going to happen with the institutions being so keen. Only existing holders allocated.

[amunro] 24/2/2021 19:22

Woohoo, got some shares via Primary Bid. 128p. Not as much as I wanted but not bad. Admission date 26/2.

[boystown] 24/2/2021 19:07

Tipped in the IC (but forewarning, it's charting nonsense)

Anglo Pacific poised to pop

Michael Taylor thinks that shares in the mining royalty company could be on the cusp of a breakout

...my attention has turned to Anglo Pacific (APF), a mining company that is focused on base metals. It has non-operating interests in mining projects globally and for this receives a proportion of the proceeds of these assets. One would be tempted to think of Anglo Pacific as an investment company, but that doesn’t stop the chart from looking attractive.

We can see in Chart 1 that in 2020 the classic warning signs that regular readers of my column should now be able to stop: failure to break new highs, and the stock rolling over along with the moving averages. Anglo Pacific is SETS traded and so exiting this stock is much easier than dealing with a market maker – especially now since some market makers just aren’t answering their phones. Remember, having a broker that picks up in two rings is all well and good – but if the market makers are offering poor prices and won’t answer the phone then the broker is about as much use as a wet towel. Therefore, if you do ever need to exit in a hurry, it’s certainly better to do it on the London Stock Exchange’s flagship platform rather than any of the SETSqx listed stocks. Chart 1 shows a clear line of support at 100p. We can see that the stock has tested and bounced from here four times – proving that 100p is a significant zone of support. Couple that in October 2020 with a clear ramp up in volume as marked by my arrow and we can see it’s obvious that strong buying is stepping in to support the price at this level. That tells us that this is a potential change in trend if buyers are now starting to overpower the sellers.

Moving across to Chart 2, we can see that the stock is now trading above all its moving averages and that the stock is firming and trending upwards. I have marked a line of resistance at 140p as we can see that the stock has hit this level twice now and come off the high. If the stock can take out 140p I think that it’s worth taking a long position to try and capture a move.

Mining royalty specialist's shares are testing resistance levels

The show must go on, though, and this week my attention has turned to Anglo Pacific (APF), a mining company that is focused on base metals. It has non-operating interests in mining projects globally and for this receives a proportion of the proceeds of these assets. One would be tempted to think of Anglo Pacific as an investment company, but that doesn’t stop the chart from looking attractive.


We can see in Chart 1 that in 2020 the classic warning signs that regular readers of my column should now be able to stop: failure to break new highs, and the stock rolling over along with the moving averages. Anglo Pacific is SETS traded and so exiting this stock is much easier than dealing with a market maker – especially now since some market makers just aren’t answering their phones. Remember, having a broker that picks up in two rings is all well and good – but if the market makers are offering poor prices and won’t answer the phone then the broker is about as much use as a wet towel. Therefore, if you do ever need to exit in a hurry, it’s certainly better to do it on the London Stock Exchange’s flagship platform rather than any of the SETSqx listed stocks. Chart 1 shows a clear line of support at 100p. We can see that the stock has tested and bounced from here four times – proving that 100p is a significant zone of support. Couple that in October 2020 with a clear ramp up in volume as marked by my arrow and we can see it’s obvious that strong buying is stepping in to support the price at this level. That tells us that this is a potential change in trend if buyers are now starting to overpower the sellers.

Moving across to Chart 2, we can see that the stock is now trading above all its moving averages and that the stock is firming and trending upwards. I have marked a line of resistance at 140p as we can see that the stock has hit this level twice now and come off the high. If the stock can take out 140p I think that it’s worth taking a long position to try and capture a move.

I have marked two arrows on the chart as we can see that the pink line (the 200-day exponential moving average, or EMA) has been a price action zone where the price has been both support and resistance. If the price falls below the 200-day EMA then this would suggest the price is not yet ready to move north.

I note that Anglo Pacific has announced an accelerated bookbuild this week (yet to be concluded) in order to raise capital for a cobalt stream acquisition from the Voisey’s Bay mine in Canada. Therefore, there may be some churn in the stock in the coming weeks.

[swanvesta] 24/2/2021 18:57

donaferentes, are you spotting the same glitch I am? Though from your wording I'm not sure you understand that APF must pay a (small) amount for the stream. This stream cost starts at 18%, and after a certain amount of revenue has been received, it goes up to 22%.

That revenue trigger is stated to be $300m, which is the same as it was in the original stream (at 32.6%), whereas I would expect it to be reduced to $205m to be in line with the other terms. Of course the higher the better, as it defers the extra cost, it's just that it doesn't make sense.

[swanvesta] 24/2/2021 18:48

Sammu, I was talking about the trigger for the cost step-up ($300m revenue) - surely that would be shared with whoever has the other 9.8%?

[laurence llewelyn binliner] 24/2/2021 18:40

Vale concluded two cobalt stream agreements for a combined 75% of the total cobalt output of the mine with Wheaton and Cobalt 27 in June 2018..

Cobalt 27 will have a 32.6% stake in the total cobalt by-products of the Voisey’s Bay nickel mine from January 2021 onwards, while the remaining 42.6% will be claimed by Wheaton precious metals..

The Voisey’s Bay nickel mine was estimated to hold approximately 28.9 million tonnes (Mt) of proven and probable ore reserves grading 2.11% nickel, 0.92% copper, and 0.13% cobalt..

The Voisey’s Bay nickel mine produced approximately 35,400 tonnes of nickel, 25,000 of copper, and 1,600 of cobalt in concentrate in 2019..

The Voisey’s Bay underground project is expected to produce up to 45,000t of nickel, 20,000t of copper, and 2,600t of cobalt a year..

2021 estimated output 800 tonnes
2022-2024 underground ramp up to 1800 tonnes
2025-2033 estimate 2600 tonnes

APF entitled to 22.82% of total cobalt produced with a step down to 11.41% after 7,600 tonnes delivery is reached.., initial 18% payment or 82% smelter return from sales until USD300M has been recovered, then 22%/78% return..

USD 50,000 per tonne reference price for income estimates .

2021 | 800 tonnes | USD9M
2022-2024 | 1800 tonnes | USD20.5M per year
2025-2033 | 2600 tonnes | USD 30M per year until the 1st 7,600 tonnes cap are delivered.

Total value of income estimate at 50,000 Cobalt results in USD380M to the cap, but with significant (25-50%) upside if Cobalt takes off, which given the EV revolution is quite likely given the past 3 months performance..

Upside potential:

2021 | 800 tonnes | USD 1M a month
2022-2024 | 1800 tonnes | USD 2M a month
2025-2033 | 2600 tonnes | USD 3M a month

Anyone want to have a go at the income generated and concur ...?

Happy days.. :o)

[donaferentes] 24/2/2021 18:35

There is something wrong with the second of these two paragraphs

Stream details:
o Anglo Pacific is entitled to receive 22.82%2 of all cobalt production from Voisey’s Bay up until 7,600 tonnes of finished cobalt has been delivered, which then reduces the stream to an 11.41% entitlement thereafter;
o Anglo Pacific will make ongoing payments equal to 18% of an industry cobalt reference price for each pound of cobalt delivered under the cobalt stream, until Anglo Pacific has recovered the US$300m original upfront amount paid for the stream (through accumulating credit from 82% of the cobalt reference price) through cobalt deliveries; thereafter, the ongoing payments will increase to 22% of the cobalt reference price.

My guess - no evidence - is that

either, the 2nd paragraph should start with the name Voisey who are the ones doing the paying. Anglo is receiving. And the reference to $300m original upfront amount may be a hang over from an earlier structure to the deal and should now read $232,000 (incl. the uplift, if applicable.

or, the second mention of Anglo in the 2nd para should refer to the party they are buying this stream off, if not Voisey, and the $300m recovery relates to their recovery of their investment

Nothing else makes sense.

Still can't understand why Anglo's payments increase to 18% at around the time when their receipt drops to 11.4%

7,600 tonnes of Cobalt at today's price = $380m

What is the name of the entity from whom they are acquiring this holding company?

Anyone have any contact with JT to ask if this is actually what he meant to say?

[bolador] 24/2/2021 17:42

So this is the first transformational deal, bringing a significant reduction for coal as a percentage of annual revenue and a feather in the cap of the CEO who has bought 100000 shares in the placing along with other directors in lesser amounts. Good to see the board putting up hard cash.
With the acquisition of a cobalt revenue stream in size the company is backing up it's
ESG words. A change in sentiment must now be on the way with a probable move to a five percent yield implying an share price of 180p.

[donaferentes] 24/2/2021 17:33

7% yield at the issue price always very acceptable!

[sporazene2] 24/2/2021 17:31

I see the CFO didnt participate. Pretty poor show.

[laurence llewelyn binliner] 24/2/2021 17:17

That did not take long did it, and meaningfully oversubscribed too...

Value accretive immediately from closing, and earning at least double the interest due on the bank debt element...

Being able to raise GBP43M on a Wednesday morning from the board, IIs and PIs is quite an achievement..

Discounted shares no longer available..

Onward and upward .. :o)..

[the deacon] 24/2/2021 16:43

So, £47m raised at 128p

[sammu] 24/2/2021 14:55

Thanks swanvesta - yes of course, it isn't the whole stream. Not sure about the cost step-up - the same as it is just a percentage?

[swanvesta] 24/2/2021 13:09

"I'm not sure why private seller (is it Pala Investments?) would want to sell for $205m plus $27m"

They had a bigger stream (32.6%) so $205m seems about right pro rata. Presumably Pala kept the other 9.8%? The revenue step-down also looks to be pro rata (7600t vs 10.8t) but the cost step-up isn't. Which seems odd to me, even though it would be favourable to APF.

[laurence llewelyn binliner] 24/2/2021 12:36

#The Deacon, interesting to have the book build sown up in the morning, perhaps an RNS at COB and we will see the discount rate.., open market buying for ISA holders, but another USD5M per quarter income and at least double the return on 3.75% over LIBOR on the borrowed money.. :o)

December Cobalt USD 32,000/tonne
January Cobalt 37,000/tonne
February Cobalt 47,000/tonne

[woodhawk] 24/2/2021 12:33

Well, that looks to have been very tidily done. Onwards and upwards!

[sogoesit] 24/2/2021 12:15

swanvesta : many thanks too.
I tried to understand this deal but gave up in exasperation. Treger doesn't do anyone any favours by being so opaque imv.
(I'm an ex-holder looking again for income).

[sammu] 24/2/2021 12:14

Ah my subscription must have pushed it to speed up the close! ;)

The delivery on the deal started 1st Jan this year it seems.

[the deacon] 24/2/2021 12:06

Retail offer on PB closing within next half an hour. Clearly Interest is there

[illiswilgig] 24/2/2021 12:02

swan - sammu - thank you, that really helps to fill in some of the blanks.

For me this also fills in a big blank in the progress of transition from coal based royalty company to a company focused upon 'new economy' materials.

I've decided not to participate in the retail offer as APF is already my largest holding (just) after its recent rise. I shall be more than happy if this deal raises the value of the shares I already own.

cheers

[laurence llewelyn binliner] 24/2/2021 11:35

We should get a raise price RNS after the book-build has concluded in the morning, and I look forward to seeing that number being released, did I hear in the interview the word 'discount'..? to be set by the book runner pending uptake levels and at their discretion..?

[swanvesta] 24/2/2021 11:28

OK, I should correct my comments above. The $300m threshold only applies to the stream cost. The stream revenue reduces after 7600 tons have been delivered, which looks to be 12.5-13 years at 2600 tpa irrespective of Cobalt price, so could turn out much higher than $300m. Which is good.

6. Key cobalt stream details

Effective from closing of the Transaction, Anglo Pacific will be entitled to 22.82% of all cobalt production from Voisey's Bay. This will step down to 11.41% once 7,600 tonnes of finished cobalt has been delivered. The stream covers Voisey's Bay's open pit and underground production.

Anglo Pacific will pay 18% of an industry cobalt reference price until the original upfront amount paid for the stream of US$300m is reduced to nil (through accumulating credit from 82% of the cobalt reference price), increasing to 22% thereafter. Vale will deliver physical cobalt metal, with the cobalt sold under an offtake agreement with a global metals trader on a take or pay basis. I f the mill throughput does not reach 85% of targeted levels by 31 December 2025, some or all of the original upfront payment to Vale may be refunded or the applicable cobalt stream percentages may be increased. This provides downside protection to the Company.