JOHANNESBURG (miningweekly.com) – Dual-listed Anglo Pacific Group announced on Thursday that it would reduce its 2015 dividend to 3p, from the previous level of 4p per half year. This brings the total dividend for the year ended December 31, 2015 to 7p a share for the year, though the company had intended to pay 8 p.The company noted that its revised dividend reflected lower income expectation owing to an estimated decline in coking and thermal coal prices during 2015 of between 15% and 25%.
“Like everyone in the sector, we have been affected by the commodity environment and weakening coal prices have reduced our revenue. This decline, combined with a lower commodity price outlook, has led the board to reconsider our dividend policy,” noted Anglo Pacific CEO Julian Treger, who added that the company, nevertheless, remained committed to paying attractive dividends and maximising shareholder value.
“We continue to believe these challenging times for the mining sector will provide opportunities for Anglo Pacific to identify attractive new royalties that will enhance the lifespan and diversity of our portfolio,” he said.
Anglo Pacific holds a continuing policy of paying a substantial portion of its royalties to shareholders as dividends, with a long-term target dividend of 65% adjusted earnings.
RESULTS HIGHLIGHTS
The company earned royalties of between £2.7-million and £3-million for the fourth quarter, ended December 31, a significant boost from the £0.4-million it earned in the comparative period of 2014.
This brought the company’s full-year royalty income to between £8.5-million and £8.8-million, up £5-million from the previous year.
Treger commented that the group was pleased with the underlying performance, particularly in light of the current market environment.
He noted that the group expected further income growth from its royalties in the year ahead.
Anglo Pacific at end-December had unaudited cash and cash equivalents of £5.7-million and unaudited net debt of £1.8-million.
Mines in the group’s portfolio included Rio Tinto’s Kestrel and Whitehaven’s Narrabri mine, in Australia.
Updated tonnage sales forecasts from Rio Tinto, in accordance with Anglo Pacific’s Kestrel information rights, confirmed that a previous guidance of 60% to 65% of Kestrel coal production would be within the group’s royalty area during the year, while Narrabri mine’s production continued to outperform the group’s expectations, setting an yearly production record of 8.3-million tons run-of-mine coal for 2015, well in excess of the original design capacity of 6-million tons a year.
The group expected coking coal price weakness to result in a fourth quarter pre-tax reduction in the carrying value of the group’s Kestrel royalty in the range of A$28-million to A$33-million, with a corresponding reduction in the associated deferred tax liability.