JOHANNESBURG (miningweekly.com) – LSE- and TSX-listed Anglo Pacific Group has continued to achieve growth in royalty income in the third quarter of the year.
The group on Friday posted a significant rise in royalty earnings for the third quarter to September 30, with royalty-related income increasing from £500 000 in the corresponding quarter in the prior year to £1.9-million in the three months under review, despite headwinds in the price of commodities.
“We are pleased to build on the half-year performance and report a significant increase in royalty income compared with the third quarter of last year.
“The increase in the group's royalty income is largely due to the royalty income received from the Narrabri royalty, acquired in the first half of the year, and has been achieved in a period where commodity prices have remained under significant pressure,” CEO Julian Treger said.
With the successful completion of longwall changeouts at both Kestrel and Narrabri during the quarter, and with full-year production targets unchanged, the company expected a strong finish to 2015.
“There have also been additional positive developments at our Narrabri and Salamanca royalties following the end of the quarter, which have the potential to significantly enhance our near-term royalty flows,” he explained.
Impacted by Rio Tinto’s planned longwall changeouts, the Kestrel mine produced 540 000 t of hard coking coal and 110 000 t of run of mine (RoM) thermal coal, a decline on the respective output of 940 000 t and 180 000 t in the preceding second quarter.
Anglo Pacific expected total production at the Kestrel mine to recover during the fourth quarter, as production rates continued to improve towards nameplate longwall capacity of around six-million tonnes a year.
During the third quarter, Whitehaven Coal’s planned longwall changeout led to a 52% year-on-year drop from 2.1-million tonnes of RoM coal production in the third quarter of last year to one-million tonnes during the three months to September 2015.
“A key part of the group's strategy is to diversify its sources of royalty income. The group has gone some way to achieving this strategy through its acquisition of the Narrabri royalty, which generated royalty-related income of £2.5-million, representing 44% of the group's total royalty-related income of £5.7-million for the nine months ended September 30, 2015,” said Treger.
After a “low point” in royalties during 2014, Anglo Pacific was encouraged that royalty income for 2015 would be considerably higher year-on-year.
Anglo Pacific declared an interim dividend of 4p a share for 2015.