Anglo Pacific Share Discussion Threads

[laurence llewelyn binliner] 01/4/2022 21:24

Some fair and valid points, APF are or seem to be not only in a transition phase from coal to clean energy royalties, but also trying to strike a balance between yield and growth, a double edged sword but #The Deacon is correct that other RS companies are paying far less and growing quicker, so we do need to adjust to a growth focus and paying out 7/8% is not going to help much, holders at 100p are doing just fine and it is still a 7% return on capital, but for newer investors the ROI will be lower at nearer 4%..

Growth is key in this sector with depleting resources constantly needing renewal, an interesting year post VB as we smash the debt down to be able to grow..

The Dugbe DFS due before end of April will be a zero cost step forward, Incoa tranche2 is now slated for H2-2022, and Piaui is coming together very nicely with maiden Nickel/Cobalt due in H1..

Kestrel income for 2023 is now secured, and if prices hold up it will still yield some very nice income on 50% volumes.. :o)

[the deacon] 01/4/2022 19:17

I understand what you're saying, but I think that one of the key reasons why APF has underperformed vs majority of other royalty and streamers is its pipeline and lack of visibility. Yes there's Piaui, Incoa fairly close, but Canariaco, Dugbe and anything else are still a long way off. At the moment there's a big question mark about a gap in earnings when Kestrel really drops off. Looking at other players in the sector you see the likes of Osisko providing 5 year guidance which shows them increasing their GEO's (gold equivalent ounces) from 80k this year to 140k in 2026, laying out where that growth is coming from - already paid for within their portfolio. Similarly there's Wheaton providing 10 year guidance. This sort of info really puts investor minds at rest, knowing that organic growth is there irrespective of how commodity prices perform to a large extent. Compare that to APF and it's difficult to predict where attributable production will be on a quarter by quarter basis - especially with the elephant in the room sized Kestrel uncertainty. With the big precious metals players looking at copper deposits and their associated precious metals credits as a way to grow, it's going to be very hard for APF to build a credible pipeline. Anyone can throw a portfolio of royalties together. The trick is to be able to select the development stage projects that have a better than average chance of getting to production, that are led by credible teams.

[cocopah] 01/4/2022 19:00

#TheDeacon I can’t argue with what you are saying, however if the share price gets to £2.50 the yield will be a paltry 2.8% at a 7p divi. JT was canny, IMHO he knew he could attract and retain investors through his dividend policy (especially when he pivoted to cobalt).

Now it’s more expensive to find deals so we are looking further back in the mining process (with longer lead times to income generation). Currently prices are elevated because not enough mines are in production for battery metals … but there’s a rush to production that is bound to filter through to lower commodity prices over the next few years

In the meantime instead of a progressive dividend we (hopefully) will see a rise in the share price … which may or may not be sustained. Jam tomorrow maybe …but no cream with it.🤷‍♂️ԍ00;

[the deacon] 01/4/2022 18:33

It's a tough one for APF. They pay the highest yield by quite a margin within th royalty and streaming space. Nomad probably second with around 2%. The key for a royalty and streamer is to continually replace/improve on what is being continually depleted. The balancing act is the shareholder base in the UK. They mostly see APF as a solid income stock where they can get relatively safe exposure to the resource sector. If APF is to grow akin to its precious metals peers then it needs to recycle as much cash as possible into dealflow. I think MBL would like to see the focus more on growth and reaching a critical mass. Less focus on the dividend and more on what exposure the portfolio and associated optionality brings. A yield of circa 4% would still be a sector leading dividend.

[cocopah] 01/4/2022 18:07

#LLB As you no doubt did, I listened intently to the APF briefing and was left (in no uncertain terms) that dividends are now a low priority. I fully intend to hold my shares until I see a realisable share price somewhere around d £2.50 per share, then sell and recycle into dividend paying stock at 5% plus. When pressed in the question and answer session the new CEO was more than happy to put reduction of the debt and capital allocation into new development royalties before any change in the 7p dividend. As I have said before this is fine for a company deciding to grow but my initial investment here was all based around the dividends. A pity really because I hoped to hold this stock long-term and be rewarded with gradual rising share price and healthy dividends. At my age income is king.🤷‍;♂️

[laurence llewelyn binliner] 01/4/2022 12:17

Building a stronger company with a cash surplus and less exposure to debt and interest is the right thing to do as rates are going up, hammering down the debt now is more important while we still have Kestrel spinning off the cash to do it, Met coal volumes could reduce 50% in 2023 which does not matter while prices are double 2021, but prices can fall back just as quickly as they go up, so getting on top of debt now IS the priority..

Interviews given through 2021 covered the 7p payout and have discussed the reasons why, if perhaps it was not written down in an RNS so it was not a surprise at all..

Q1 will set our income stall out for the year in 3/4 weeks time then onto 200/225/250p.. :o)

[phillis] 01/4/2022 11:32

you could also view it as a recognition of historic over distribution
Look at at the average historic divi cover

No bad thing in my view

[haywards26] 01/4/2022 10:49

It feels to me like the dividend regression is a short term blip for the greater good. In the medium to longer term this blip should be more than made up for with increased divi's and share prices.

[woodhawk] 01/4/2022 10:27

I primarily bought in for the quarterly dividend when the yield was nearly 9% (9p) at a share price 102p. I am disappointed that the yield has now become regressive and is now just 4% at the current share price I see no compelling reason for the effective reduction of over 20%, nor was any real explanation given in the results. Admittedly, I have been very well rewarded by the rise in the s.p., nevertheless, I am currently considering my position in APF.

[laurence llewelyn binliner] 31/3/2022 18:39

#Cocopops, I can let it ride for this year, but over time I want to see the missing 2 pence coming back my way, a concession this year, but with bumper earnings for 2022, it's fair and reasonable to expect a slice of the pie after the debt is hammered out..

[cocopah] 31/3/2022 17:50

#LLB I can't say I'm not happy with the direction of the business, the acumen of our departing CEO and the top team, the results and the outlook for 2022 (and probably 2023 too) however of the 18p earnings per share we received 7p (well short of the 65% - I think - intended payout ratio).

If the dividend had been supported by a statement saying ... "Investors, we intend to use Q1 & Q2 income to pay down an additional significant amount of the debt and (given commodity prices in the current range) we intend to pay a full year bonus of 2p for 2021 in the second half of 2022" ... then I would have been happier.

From progressive dividend payments we have gone backwards albeit for a sound business reason/rationale (smashing the debt down)and that means an uncertain future with respect to dividends. If they remain at 7p (with the additional fx risk of being $ denominated) then the company becomes less appealing as a divi stock. It will then be more appealing for those seeking capital growth ... not an issue unless one is a dividend investor.

[officehead] 31/3/2022 13:50

Just watched the Pro Active video. Noted whenever MBL talked about Q1 earnings you could see him trying to hide the grin off his face, like a cat that got the cream. Thanks to all the contributors here, making this such a constructive conversation.

[laurence llewelyn binliner] 31/3/2022 07:07

#Cocopops, 208M shares in issue, a GBP500M MCAP (240p pence per share) later this year is entirely possible, at an adjusted EPS of 18p/25c we are trading off a trailing PE of 9, whereas a similar Canadian RS company would trade off 15 with the 7p dividend covered *2.6..

184p/185p paid this morning..

Q4-2021 income USD38M
Q1-2022 income USD44M..?
Q2-2022 income USD50M..?

We have added a new 500 series panel at Kestrel and this could support another years income, if you look at the table of commodity prices in yesterday’s results and the spot uplift to the 2021 averages they are tremendously encouraging numbers.. :o)

The Q1 update April 27th will make us all smile, the strength of those earnings setting us up for a stellar year and should begin to get priced in on the run up to reporting time..

[cocopah] 30/3/2022 20:51

#LLB Don’t get me wrong, I get the rationale (and the potential share price upside) … also if we are hoping for a market cap of £500m (c$650m) in the short-term, we need income to be at least $90m-$100m with net profit well north of $50m … but IMHO we will need to address the divi issue when the debt is smashed down. 4% won’t cut it for additional investments in this inflationary environment for me.

[phillis] 30/3/2022 20:50

Mean
What does it matter in the scheme of things
Haven’t you got anything better to post?

[laurence llewelyn binliner] 30/3/2022 20:40

#Cocopops, over time I would expect the missing 2 pence from 2021 to appear in the shape of a special dividend(s), perhaps later in the year but right now smashing the debt down is more important, adding to existing royalties then new ones, at 7 pence the dividend payout is GBP13M/USD20M so still quite a chunk of profits..A 179p closing UT today, we could breach 180p this week, 200p heading into the Q1 results, and step up again towards 225p by the H1 update.. :o)

[meanreverter] 30/3/2022 20:32

Phillis — How does a copying error turn 31 May into 1 June (or vice versa)?

[cocopah] 30/3/2022 20:20

It is frustrating when the divi is $ and the purchase price is £. Also the divi return is often misrepresented by ADVFN, LSE etc (doesn’t take account of fx). I have the same issue with BP (and had it with CEY when I held them).

Obvs I rely on my own spreadsheets for this and progressive divis make it less of an issue. Making additional investments at this share price (or higher) will yield less than 4% so the lack of the 2p bonus is not great for an income investor although I understand the reasons why. 🤷‍a94;️😎

[phillis] 30/3/2022 20:17

Of course it doesn’t!
It’s just a copy error that hasn’t been noticed

[meanreverter] 30/3/2022 19:34

The annual report has the final dividend payable on 31 May, in the section RESULTS AND DIVIDENDS on page 105, but the date is 1 June in Note 14 (DIVIDENDS AND ADJUSTED DIVIDEND COVER) on page 137.

It's no big deal, I know, but it is slightly disconcerting. It raises the question of what other discrepancies there might be in the accounts.

[laurence llewelyn binliner] 30/3/2022 18:29

#Grahamburn, USD dividends will start from Q1-2022, it does make sense as we now report in USD as well, and yes there is room for some slippage in the FX but typically the FX rate would be set for the payout just a few days or a week before the dividend is paid so any slippage will be minimus, swings and roundabouts over a year I would say..

28,000 shares matched in the last auction at 179 pence.. :o)

[phillis] 30/3/2022 18:15

Hopefully you can read read
And perhaps in future have a search in the obvious places yourself

[grahamburn] 30/3/2022 18:10

LLB. Think you misinterpreted my previous post. I was simply referring to the exchange rate variation between the announcement date and the record date.

PS Still none the wiser re: payment and ex date, but will investigate properly this evening when time permits. Always best to rely on oneself!

[phillis] 30/3/2022 16:12

Sorry mis click
Note 17 to the Accounts

The Directors propose that a final dividend of 1.75p per share be paid to shareholders on 1 June 2022, to make a total dividend for the year of 7.00p per share. This dividend is subject to approval by shareholders at the AGM and has not been included as a liability in these financial statements.
The proposed final dividend for 2021 will be payable to all shareholders on the Register of Members on 21 May 2022.

[laurence llewelyn binliner] 30/3/2022 15:43

#Grahamburn, subject to shareholder approval at the AGM, the Board proposes to pay the final dividend on 31 May 2022 to shareholders on the Company’s share register at the close of business on 20 May 2022. The shares will be quoted ex-dividend on the London and Toronto Stock Exchanges on 19 May 2022..

With a bit of luck the USD denominated dividends going forward will be larger, 2022 earnings will be fantastic and I expect to be rewarded through dividends, a short term hit in the FY2021 payout I am prepared to chew on to get us out of debt faster, but that is a 1 off as I, like many others here am an income investor..!