Anglo Pacific Group PLC - Shares Magazine
Transcript of Anglo Pacific Group PLC - Shares Magazine
Anglo Pacific Group PLC
FINANCING INVESTMENT IN NATURAL RESOURCES TO ENABLE A SUSTAINABLE FUTURE
April 2021
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IMPORTANT DISCLAIMER
This document has been prepared and issued by and is the sole responsibility of Anglo Pacific Group PLC (the “Company”) and its subsidiaries (the “Group”) for selected recipients. It comprises the written materials for a presentation to investors and/or industry professionals concerning the Group’s business activities. It is not an offer or invitation to subscribe for or purchase any securities and nothing contained herein shall form the basis of any contract or commitment whatsoever. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in the Company in any jurisdiction nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract commitment or investment decision in relation thereto nor does it constitute a recommendation regarding the securities of the Company. This presentation is for informational purposes only and may not be used for any other purposes.
Certain statements in this presentation are forward-looking statements based on certain assumptions and reflect the Group’s expectations and views of future events. Forward-looking statements (which includes any statement which constitutes ‘forward-looking information’ for the purposes of Canadian securities legislation) may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, cash flow, requirement for and terms of additional financing, performance, prospects, opportunities, priorities, targets, goals, objectives, strategies, growth and outlook of the Group including the outlook for the markets and economies in which the Group operates, costs and timing of acquiring new royalties and making new investments, mineral reserve and resources estimates, estimates of future production, production costs and revenue, future demand for and prices of precious and base metals and other commodities and future demand for products which include precious and base metals and other commodities, for the current fiscal year and subsequent periods. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as, amongst others, ‘expects’, ‘anticipates’, ‘plans’, ‘believes’, ‘estimates’, ‘seeks’, ‘intends’, ‘targets’, ‘projects’, ‘forecasts’, ‘potential’, ‘positioned’, ‘strategy’, ‘outlook’, ‘predict’ or negative versions thereof and other similar expressions, or future or conditional verbs such as ‘may’, ‘will’, ‘should’, ‘would’ and ‘could’. These include statements regarding our intentions, beliefs or current expectations concerning, amongst other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the economic and business circumstances occurring from time to time in the countries and markets in which the Group operates.
Forward-looking statements are based upon certain material factors that were applied in drawing a conclusion or making a forecast or projection, including assumptions and analyses made by the Group in light ofits experience and perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances. The material factors and assumptions upon which such forward-looking statements are based include: the stability of the global economy; the stability of local governments and legislative background; the relative stability of interest rates; the equity and debt markets continuing to provide access to capital; the continuing of ongoing operations of the properties underlying the Group’s portfolio of royalties, streams and investments by the owners or operators of such properties in a manner consistent with past practice and/or with production projections, including the on-going financial viability of such operators and operations; no material adverse impact on the underlying operations of the Group’s portfolio of royalties, steams and investments from the global pandemic; the accuracy of public statements and disclosures (including feasibility studies, estimates of reserve, resource, production, grades, mine life and cash cost) made by the owners or operators of such underlying properties; the accuracy of the information provided to the Group by the owners and operators of such underlying properties; contractual terms honoured of the Group’s royalty and stream investments, together with those of the owners and operators of the underlying properties; no material adverse change in the price of the commodities produced from the properties underlying the Group’s portfolio of royalties, streams and investments; no material adverse change in foreign exchange exposure; no adverse development in respect of any significant property in which the Group holds a royalty or other interest, including but not limited to unusual or unexpected geological formations and natural disasters; successful completion of new development projects; planned expansions or additional projects being within the timelines anticipated and at anticipated production levels; and maintenance of mining title.
Forward-looking statements are provided for the purposes of assisting readers in understanding the Group’s financial position and results of operations as at and for the periods ended on certain dates, and of presenting information about management’s current expectations and plans relating to the future. It is believed that the expectations reflected in this presentation are reasonable but they may be affected by a wide range of variables that could cause actual results to differ materially from those currently anticipated. Readers are cautioned that such forward-looking statements may not be appropriate other than for purposes outlined in this presentation. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions, that may be general or specific, which could cause actual results to differ materially from those forecast, anticipated, estimated or intended in the forward-looking statements. Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser. The forward-looking statements made in this presentation relate only to events or information as of the date on which the statements are made and, except as specifically required by applicable laws, listing rules and other regulations, the Group undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
No statement in this communication is intended to be, nor should it be construed as, a profit forecast or a profit estimate and no statement in this presentation should be interpreted to mean that earnings per share for the current or any future financial periods would necessarily match, exceed or be lower than the historical published earnings per share. Forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual future financial condition, performance and results to differ materially from the plans, goals, expectations and results expressed in the forward-looking statements and other financial and/or statistical data within this presentation. . Such risks and uncertainties include, but are not limited to: the failure to realise contemplated benefits from acquisitions and other royalty and stream investments; the effect of any mergers, acquisitions and divestitures on the Group’s operating results and businesses generally; current global financial conditions; royalty, stream and investment portfolio and associated risk; adverse development risk; financial viability and operational effectiveness of owners and operators of the relevant properties underlying the Group’s portfolio of royalties, streams and investments; royalties, steams and investments subject to other rights; and contractual terms not being honoured, together with those risks identified in the ‘Principal Risks and Uncertainties’ section of our most recent Annual Report, which is available on our website. If any such risks actually occur, they could materially adversely affect the Group’s business, financial condition or results of operations. Readers are cautioned that the list of factors noted in the section herein entitled ‘Risk’ is not exhaustive of the factors that may affect the Group’s forward-looking statements. Readers are also cautioned to consider these and the other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements.
This presentation also contains forward-looking information contained and derived from publicly available information regarding properties and mining operations owned by third parties. This presentation contains information and statements relating to the Kestrel mine that are based on certain estimates and forecasts that have been provided to the Group by Kestrel Coal Pty Ltd (“KCPL”), the accuracy of which KCPL does not warrant and on which readers may not rely.
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ANGLO PACIFIC SNAPSHOT3
1. Market data as of 8 April 2021.
GEOGRAPHIC FOOTPRINT
HIGHLIGHTS
• Anglo Pacific Group (“APG”) is the largest LSE listed non-precious focused
royalty and streaming company with a market cap of ~US$400m (1)
• A leading royalty and streaming company focused on commodities which are
integral to a sustainable future and a new wave of electrification
• Listed on the London Stock Exchange (LSE: APF), with secondary listing on
the Toronto Stock Exchange (TSX: APY)
• Global geographic footprint
• Management focused on delivering further growth
Capabilities
✓ Experienced Management team and
independent Board
✓ Track record of royalty investing
✓ Capital markets and dedicated IR team
Global Assets
9 producing royalties
4 development stage
4 early stage
17assets
Counterparties
Commodities
Copper Iron Ore Cobalt Nickel
Met Coal Gold Vanadium Uranium
McClean Lake Mill
EVBC
Salamanca
Groundhog
Ring of Fire
INCOA
Cañariaco
Dugbe 1
Mantos Blancos Maracás
Menchen
Piauí
Kestrel
Narrabri
Pilbara
Four MileProduction
Early-Stage
Development
IOC / LIORC
Voisey’s Bay
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INVESTOR BENEFITS 4
» ~$450 million invested over the last 7 years
accelerating the diversification of the portfolio away
from coal and pivoting towards becoming the leading
growth royalty and streaming company, focused on
base and battery metals
» Strong dividend yield
» Currently trading at a relative discount to Canadian
royalty company peers
» Growth requires minimal increase in cost base
driving high operating margins
» Limited exposure to mine operator cost base
» Demonstrably lower correlation to MSCI World Index
than global mining peers
» Diversified portfolio of commodities focused on base and
battery metals.
» Strong governance, expertise and rigorous DD process
reduces risks and enables us to better determine the
long-term success of a project
» Investments in high quality projects in preferred
jurisdictions with significant upside potential
» underpinned by strong ESG principles
Relative valuation
High margin, scalable business model
Reduced risk commodity exposure
Uncorrelated investment opportunity
Proven Track Record High quality portfolio with strong ESG focus
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APG HAS PROVEN ITS ABILITY TO DRIVE VALUE ACCRETIVE GROWTH
Acquisition
Consideration
(M)
Consensus
NAV
(M)
Cumulative
Income (4)
(M)
Cum. Income
& Cons. NAV
as % of Acq.
Price
Maracás
Menchen(Jun-14)
£14.4 £26.5 £11.7 265%
Narrabri(Mar-15)
£41.7 £42.5 £18.1 145%
McClean Lake
/ Cigar Lake(Feb-17)
£26.6 £20.8 £13.1 127%
Currrent
LIORC Stake(Aug-18 to Feb-
20) (5)
C$29.3 C$43.7 C$7.8 176%
-
£15
£30
£45
£60
2014 2015 2016 2017 2018 2019
Maracás
Menchen
Royalty
Acquisition
Narrabri
Royalty
Acquisition
Denison /
McClean
Lake Financing
Piaui
Royalty
Acquisition
LIORC 4.3%
Stake Purchase
Mantos
Blancos
Royalty
Acquisition
LIORC ~2.0%
APG Portfolio Pre-2014 (1) Acquisitions 2014 Onwards (2) (3)
PORTFOLIO CONTRIBUTION CAPITAL ALLOCATION
(In GBP million)
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1. Includes Kestrel, EVBC, Four Mile and Jogjakarta royalties.
2. Includes Narrabri royalty, Maracás Menchen royalty, Mantos Blancos royalty, Denison/McClean Lake financing and LIORC stake.
3. Denison / McClean Lake 2017 royalty related income includes £1.7M of toll milling revenue to Denison during H2 2016 and received by the
Group in February 2017 at transaction close.
4. As of 30 June 2020. LIORC cumulative income as of 31 December 2020.
5. LIORC market price of C$36.01 per share as of 7 April 2021. APG ~1.2 million LIORC shares as of 12 February 2021.
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6p
7p
8p
9p 9p
2016 2017 2018 2019 2020
RETURN OF CAPITAL AND TRADING MULTIPLES6
DIVIDEND COVER (2)
1.6x 2.4x 2.3x 2.3x
DIVIDEND PER SHARE (1)
(In GBP per share)
PEER BENCHMARKING – TRADING MULTIPLES (3)
1. Recommended final dividend for 2020 of 3.75p subject to shareholder approval at the forthcoming AGM.
2. Dividend cover calculated as adjusted earnings per share divided by total dividend per share.
3. Source: Broker reports, company information, S&P Capital IQ as of 08.04.2021
4. Includes Altius and Deterra
5. Includes Franco, Wheaton, Royal Gold, Maverix, Sandstorm, Nomad, Osisko
APG
Non-
Precious
Peers (4)
EV / 2021E EBITDA
(Ratio)
P / 2021E CF
(Ratio)
P / 2021E NAV
(Ratio)
2021E Div. Yield
(%)
17.6x
14.5x
8.6x
Precious RoyaltyCo
Non-Precious Peers
APG
18.9x
18.0x
8.4x
Precious RoyaltyCo
Non-Precious Peers
APG
1.1%
2.3%
6.4%
Precious RoyaltyCo
Non-Precious Peers
APG
1.53x
1.15x
0.86x
Precious RoyaltyCo
Non-Precious Peers
APG
Precious
Peers (5)
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VOISEY’S BAY
• An operating nickel-cobalt-copper mine, located in Canada, a well-
established mining jurisdiction
• Operated by Vale Canada Ltd, a subsidiary of Vale S.A., one of the
worlds largest mining companies
• Projected mine life to 2034, based on current reserves, with potential
for further mine life extensions
• APG entitled to 22.82% of total cobalt produced, with a step down to
11.41% once certain delivery thresholds reached (2)
• Ongoing payment of 18% of the cobalt reference price, increasing to
22% when the original upfront amount reduced is to nil (2)
• Downside protection if mill throughput does not reach 85% of targeted
levels by Dec 2025
• Expected annual run-rate portfolio contribution of approximately $23
million(5) (2021E $13-16 million (6))
STREAM MECHANICS
TRANSACTION TERMS
• Total upfront cash consideration of US$205 million
• Potential additional payments of up to $27 million over a period to June
2025, subject to higher cobalt prices and minimum production volumes
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21ST CENTURY COMMODITIES ENCOMPASS ENVIRONMENTAL BENEFITS, MANY OF WHICH ARE CRUCIAL TO
THE ELECTRIFICATION OF ENERGY CONSUMPTION.
FOCUS ON COMMODITIES THAT SUPPORT A MORE SUSTAINABLE WORLD
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ANGLO PACIFIC’S COMMODITY EXPOSURE HAS BEEN TRANSFORMED…8
1. Book value of Anglo Pacific’s royalty related assets as of 31 December 2013, net of deferred tax where applicable, excluding the Cresso, Bulqiza and Amapá which have been impaired to nil carrying value, the Isua royalty which was subsequently disposed, and Jogjakarta which was subsequently bought back.
2. Book value of Anglo Pacific’s royalty related assets as of 31 December 2020 (net of deferred tax where applicable) adjusted for an illustrative US$205 million Voisey’s Bay Cobalt Stream acquisition and a ~75% monetisation of the LIORC stake..
3. Kestrel production primarily coking coal. Narrabri production primarily thermal coal.
4. South American exposure includes Brazil, Chile, and Peru. Europe exposure includes Spain.
YEAR END 2020 ADJUSTED FOR VOISEY’S BAY COBALT STREAM (2)
YEAR END 2013 (1)
Nil%
Battery
Metals
COMMODITY EXPOSURE
Coking coal (3) 76%
9%Iron Ore
Other
4%~60%
Battery
Metals
COMMODITY EXPOSURE
Cobalt 45%
Base metals 11%
Vanadium 4%
Coking coal (3) 12%
Thermal coal (3)
Iron ore
11%
9%
Uranium 7%
Canada 59%
Australia 25%
South America (4) 15%
Europe (4) 1%
GEOGRAPHIC EXPOSURE
Other <1%
GEOGRAPHIC EXPOSURE
Australia 87%
Europe (4) 9%
Canada 4%~93%
OECD
~95%
OECD
Uranium
11%
Other 2%
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RENEWABLE ENERGY LEADS THE TRANSITION TO A LOWER-CARBON ENERGY MIX 9
1. BP Energy Outlook: 2020 edition.
2. The Business-as-usual scenario assumes that government policies, technologies and social preferences continue to evolve in a manner and speed seen over the recent past, leading to only a 10% reduction in carbon emissions from energy use between 2018-2050.
3. The Net zero scenario assumes that policy measures and shifts in societal behaviour and preferences accelerate the reduction in carbon emissions from energy, reducing them by over 95% by 2050 (broadly consistent with limiting temperature rises to 1.5 degrees Celsius).
4. Renewable energy includes wind, solar, geothermal and bioenergy.
5. Carbon-based energy includes oil, natural gas and coal.
PRIMARY ENERGY CONSUMPTION BY SOURCE (1)
(In EJ)
SHARES OF PRIMARY ENERGY (1)
-
20%
40%
60%
80%
100%
201
8
202
5
203
0
203
5
204
0
2045
2050
-
20%
40%
60%
80%
100%
201
8
202
5
203
0
203
5
204
0
204
5
205
0
Renewable energy (4) Carbon-based energy (5)
Natural GasOil
Hydro
NuclearCoal
Renewable (4)
Business-as-usual (2) Net zero (3)
-
100
200
300
400
500
600
700
800
2018 Business-as-usual Net zero
2050
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COMMODITIES THAT SUPPORT THE TRANSITION TO A MORE SUSTAINABLE WORLD 10
Copper Nickel Zinc Cobalt Tin Lithium Vanadium Manganese Graphite
Rare
Earths
Green
Hydrogen
Zero-
Emissions
Transport✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Batteries /
Storage ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Solar
Energy ✓ ✓ ✓ ✓
Wind Energy ✓ ✓ ✓ ✓ ✓ ✓
Carbon
Capture ✓ ✓ ✓ ✓ ✓
Energy /
Grid Storage ✓ ✓ ✓ ✓ ✓
Zero-
Emissions
Transport
Energy /
Grid
Storage
Carbon
Capture
Wind
Energy
Solar
Energy
Batteries /
Storage
CuCopper
NiNickel
ZnZinc
CoCobalt
SnTin
LiLithium
VVanadium
MnManganese
CGraphite
REERare Earths
HHydrogen
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ELECTRIC VEHICLES EXPECTED TO UNDERPIN COBALT DEMAND GROWTH
FORECAST EV SALES & MARKET SHARE (9)
(LHS: EV sales in millions, RHS: Total car sales)
EV Sales EV market share
2
9
26
54
2.7%
10%
28%
58%
0%
10%
20%
30%
40%
50%
60%
10
20
30
40
50
60
2020 2025 2030 2040
OVERVIEW (8)
• Cobalt has a variety of end-uses including: batteries, superalloys,
catalysts and carbides
• Automotive batteries is the fastest growing end-market
• Projected EV battery demand CAGR of ~17% (over period to 2040)
▪ Driven by stricter emission legislation, cost competitiveness and
increasing vehicle choice
▪ Higher EV production volumes expected to offset thrifting in next
generation cathodes
15 February 2021
“Jaguar to become an all-electric luxury brand from 2025”
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1. SFA Oxford “Cobalt Market Study” (November 2020). Supply-demand curve illustrated in Benchmark Mineral Intelligence - Q3 2020 Cobalt Forecast.
2. Bloomberg NEF “Electrical Vehicle Outlook 2020”.
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SUPPLY MAY STRUGGLE TO MEET DEMAND GROWTH RESULTING IN MARKET DEFICITS
FORECAST COBALT SUPPLY AND DEMAND (8)
(In Mt)OVERVIEW (8)
• Limited supply growth with production mostly in the form of by-
products
• Trend towards ethical sourcing challenged by 70% of global supply in
2019 originating from the Democratic Republic of Congo (“DRC”)
• 70% of refining capacity located in China
• Top 6 producers control 74% of global supply
• Limited contribution from battery recycling before 2035 owing to lack of
meaningful volumes of EV batteries reaching end of life
COBALT SOURCE BY GEOGRAPHY (8)
DRC 70%
Oceania 8%
Other Africa 6%
Rest of the World 16%
2019
OECD
~9%
0.0
0.3
0.5
0.8
1.0
1.3
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
Highly probably additional tonnesOperational supply
Secondary supply
Possible additional tonnesProbable additional tonnes
Total demand
11
1. SFA Oxford “Cobalt Market Study” (November 2020). Supply-demand curve illustrated in Benchmark Mineral Intelligence - Q3 2020 Cobalt Forecast.
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HIGHLIGHTS AND OUTLOOK13
HIGHLIGHTS
• World class royalty and streaming portfolio
• Demonstrated ability to grow and diversify the portfolio
• Milestone cobalt stream acquired in March 2021, setting Anglo Pacific on the road to become the leading growth
royalty and streaming company, focused on base and battery metals
• Significant progress made on ESG
• Commitment made to make no further investment in thermal coal
OUTLOOK
• Closely monitoring and evaluating the impact of COVID-19
• At this time, the mines underlying the Company’s material royalty related revenue remain in production
• All Anglo Pacific staff members remain working remotely, and investment opportunities being pursued
• Commodity prices underpinning the Group’s revenues have seen mixed impact year to date, although most
have started recovering
• Healthy organic portfolio contribution growth expected in 2021
• Active pipeline and financial flexibility to continue to add to its world class royalty and streaming portfolio
• Strong dividend yield
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MORE TO COME …
SOLID PLATFORM FOR INVESTORS
& WELL POSITIONED FOR GROWTH AND TO BECOME THE LEADING ROYALTY
AND STREAMING COMPANY IN BASE AND BATTERY METALS
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MORE TO COME …
… THANK YOU
14
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APPENDIX
15
• PORTFOLIO OVERVIEW
• ROYALTIES AND STREAMING EXPLAINED
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17 PRINCIPAL ROYALTY AND STREAMING RELATED ASSETS OVER FIVE CONTINENTS16
MCCLEAN LAKE MILL
GROUNDHOG
RING OF FIRE
CAÑARIACO
PIAUÍ
MARACÁS MENCHEN
DUGBE 1
PILBARA
FOUR MILE
NARRABRI
KESTREL
SALAMANCA
EVBC
MANTOSBLANCOS
PRODUCING
ROYALTY / STREAM COMMODITY OPERATOR LOCATION ROYALTY RATE /
STREAM VOLUME 1
VOISEY’S BAY 2 COBALT VALE CANADA 22.82% CO STREAM
KESTREL 3 COKING &
THERMAL COAL
EMR CAPITAL /
PT ADARO ENERGY
AUSTRALIA 7 – 15% GRR
MANTOS
BLANCOS
COPPER MANTOS COPPER CHILE 1.525% NSR
IRON ORE COMPANY
OF CANADA4
IRON ORE &
IRON ORE PELLETS
RIO TINTO CANADA 7% GRR
MARACÁS
MENCHEN
VANADIUM LARGO RESOURCES BRAZIL 2% NSR
NARRABRI THERMAL &
PCI COAL
WHITEHAVEN
COAL
AUSTRALIA 1% GRR
DENISON /
MCCLEAN LAKE 5URANIUM
(TOLL MILLING)
DENISON MINES INC./
AREVA / CAMECO
CANADA ENTITLEMENT TO 22.5%
OF TOLL MILLING
REVENUE
EVBC 6 GOLD, COPPER
& SILVER
ORVANA
MINERALS
SPAIN 2.5 – 3% NSR
FOUR MILE URANIUM QUASAR
RESOURCES
AUSTRALIA 1% NSR
DEVELOPMENT
INCOA 7 CALCIUM
CARBONATE
INCOA PERFORMANCE
MINERALS
UNITED STATES /
DOMINICAN
REPUBLIC
~1.23% GROSS REVENUE
PIAUÍ NICKEL & COBALT BRAZILIAN NICKEL BRAZIL 1.25% GRR
SALAMANCA URANIUM BERKELEY ENERGIA SPAIN 1% NSR
GROUNDHOG 8 ANTHRACITE COAL ATRUM COAL CANADA 0.5 – 1.0% GRR
EARLY-STAGE
PILBARA IRON ORE BHP BILLITON AUSTRALIA 1.5% GRR
CAÑARIACO 9 COPPER, GOLD,
& SILVER
CANDENTE
COPPER
PERU 0.5% NSR
RING OF FIRE CHROMITE NORONT RESOURCES CANADA 1.0% NSR
DUGBE 1 GOLD HUMMINGBIRD
RESOURCES
LIBERIA 2 – 2.5% NSR
INCOA
WE INVEST IN HIGH QUALITY PROJECTS IN PREFERRED
JURISDICTIONS WITH TRUSTED COUNTERPARTIES,
UNDERPINNED BY STRONG ESG PRINCIPLES.
VOISEY’sBAY
IRON ORE COMPANY OF CANADA
1. GRR – Gross Revenue Royalty. NSR – Net Smelter Return royalty.
2. APG is entitled to 22.82% of all cobalt production until 7.6kt of finished cobalt is delivered; 11.41% thereafter (represents 70% share of theoriginal stream for 32.6% of Co production and 70% share of the original stream for 16.3% of Co production post-step down).
3. Kestrel royalty terms (Anglo Pacific entitlement): 3.5% of value up to A$100/tonne, 6.25% of the value over A$100/tonne and up toA$150/tonne, 7.5% thereafter.
4. Held indirectly through common shares of Labrador Iron Ore Royalty Corporation.
5. Anglo Pacific loan of C$40.8m to Denison to be repaid from the revenues which Denison receives through their entitlement to toll revenuegenerated through their part ownership of the McClean Lake Uranium Mill (operated by AREVA).
6. EVBC: El Valle-Boinás Carlés. 2.5% NSR royalty escalating to 3% for gold prices in excess of US$1,100 per ounce.
7. Under the terms of the Incoa financing, Anglo Pacific is entitled to approximately 1.23% of gross revenue generated from the sale of groundcalcium carbonate products. Anglo Pacific’s funding commitment is conditional upon the satisfaction of certain conditions precedent.
8. 0.5% GRR royalty over entire project converts to 0.1% royalty over Groundhog North Mining complex 10 years after the declaration of commercialproduction. Anglo Pacific also retains the higher of a 1% GRR or US$1.00 per tonne on certain areas of the Groundhog project acquired by AtrumCoal from Anglo Pacific during 2014.
9. Entrée Resources Ltd. entitled to 20% of any royalty income prior to 31 December 2029, 15% of income received between 1 January 2030 and31 December 2035, and 10% of any income received between 1 January 2035 and 31 December 2040.
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COUNTERPARTIES COMMITTED TO STRONG ESG PRINCIPLES 17
1. Skarn Associates for 2019 as of Q4 2020. Based on global nickel mines data reported by each asset where available and estimated using reported energy data, reconciled to divisional or corporate totals, extrapolated from historic data or benchmarked where not reported. Inclusive of Scope 1, Scope 2, freight & port and downstream processing emissions.
ASSET ESG HIGHLIGHTS
MANTOS BLANCOSCOPPER
At least 50% of power provided to Mantos
Copper S.A will be from renewable energy
sources from 2025
LARGO RESOURCESVANADIUM
Between 91% and 96% of the water drawn at
Maracas is reused
Focus on local employment: 99%+ Brazilian
employees, 79% from Bahia state
MCCLEAN LAKE /
CIGAR LAKE TOLL
MILLING
AGREEMENT URANIUM
Ore mined at Cigar Lake is milled at McClean
Lake. There is no tailings management facility
and the jet boring mining method employed
generates less waste rock than other
methods
LABRADOR IRON
ORE
ROYALTY CORP IRON ORE
Pellet products typically result in lower Scope
3 carbon emission in steel production relative
to sinter feed products
VOISEY’S BAY – RANKED BY CO2 INTENSITY (1)
(In tonnes of CO2 eq. per tonne of saleable nickel)
COUNTERPARTY HIGHLIGHTS
0
45
90
135
180
225
270
(Cumulative nickel production in 000s of tonnes)
Voisey’s Bay
First Quartile Second Quartile Third Quartile Fourth Quartile
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18 SOURCES OF NEAR-TERM GROWTH FROM PRODUCING ASSETS
ASSET PRODUCTION UPSIDE MINE LIFE EXTENSION
KESTRELCOKING COAL
Purchase of Kestrel by EMR and Adaro completed on 1
August 2018. Operator has already achieved significant
volume increases and is on target to double production
Defined royalty area provides limited mine life extension upside
LABRADOR IRON ORE
ROYALTY CORP IRON ORE
Liquid asset with potential for underlying growth, as well
as flexibility to sell down or increase indirect exposure to
LIORC’s 7% GRR and stake in IOC
Reserves support a ~25-year mine life at planned IOC production
rates
IOC has sufficient mineral inventory to support future expansion
options
MANTOS BLANCOSCOPPER
Potential phase II sulphide ore mill capacity expansion to
~9.7 Mtpa from 7.3 Mtpa following the completion of the
debottlenecking project in 2021
Potential treatment of oxide ore stockpiles and mined oxides ores
beyond 2023 oxide ore Reserves based life
LARGO RESOURCESVANADIUM
Production capacity expansion completed with further
increase expected following scheduled kiln feed
improvements. Construction of ferrovanadium conversion
and vanadium trioxide plants approved increasing value
of product subject to royalty
Develop mineralisation within Maracás concession along strike length
of resources
NARRABRI THERMAL COAL
Permission granted to mine up to 11.0 Mt Conversion of the southern exploration license into a mining lease as
part of Stage 3 Project well advanced, expected to extend mine life
from 2032 to beyond 2040
MCCLEAN LAKE / CIGAR
LAKE TOLL MILLING
AGREEMENT URANIUM
Annual licensed production capacity of 24Mlbs U3O8
(Currently processing ~18M lbs U3O8 per year)
Anglo Pacific is in a position to benefit from the Phase II mine
expansion, which currently has Inferred Mineral Resources of c.17%
grade and 93Mlbs contained U3O8
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• ROYALTIES AND STREAMING EXPLAINED
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ADVANTAGES FOR ANGLO PACIFIC
INVESTMENT
PROPOSITION• Limited exposure to cost base with cash
flows linked to production levels or
revenues
• High margin, scalable business with
minimum management time required for
existing portfolio
• Counter cyclical capital deployment as
primary royalty and stream opportunities
often arise in low commodity price
environments
• Long term investment horizon covering
multiple commodity cycles
MATERIAL
UPSIDE
POTENTIAL• Mine life extensions
• Production upside
• Opportunity to acquire secondary or
existing royalties at good pricing
ADVANTAGES OF ROYALTY AND STREAM FINANCING20
ADVANTAGES FOR PROJECT OPERATOR
ADVANTAGES
VS. DEBT
FINANCING
• No maturity date when principal must be
repaid or refinanced
• No interest expense with royalty
payments linked to revenues; ongoing
payments to operator under streams
• Often simpler to execute than a debt
offering
• Long term investment horizon covering
multiple commodity cycles
ADVANTAGES
VS. EQUITY
FINANCING
• Avoids equity dilution and dividend
payments on equity
• Bi-laterally negotiated and not dependent
on the state of public capital markets
ANGLO
PACIFIC AS
PARTNER TO
THE PROJECT
OPERATOR
• Full alignment of interests between Anglo
Pacific and natural resource company
• Royalties and streams are generally
structured to be asset specific, often
leaving the remaining assets of the
developer fully unencumbered for raising
additional financing
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ANGLO PACIFIC’S DISCIPLINED APPROACH TO ROYALTY/STREAM ACQUISITIONS
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WE DILIGENTLY EVALUATE EACH PROJECT, ENSURING ITS VIABILITY FOR PRODUCTION AND POTENTIAL EXPLORATION UPSIDE. WE SELECT THE BEST OPERATIONS, DILIGENTLY GROWING REVENUE STREAMS.
THIS STABLE CASHFLOW ALLOWS US TO BUY MORE ROYALTIES AND STREAMS ON MORE MINES, PROVIDING OUR INVESTORS WITH A DIVERSIFIED PORTFOLIO
▪ Lighter, greener materials, which encompass environmental benefits and many of which form part of the
new wave of technologies around electrification, including renewable energy
▪ Examples include higher quality and more energy efficient iron ore and pellets, base metals linked to
energy storage or power transition, specialist alloying materials like niobium, vanadium and aluminium and
battery materials like lithium, cobalt and nickel
▪ No further investment in thermal coal assets
▪ High-quality and low-cost assets
▪ Well established natural resources jurisdictions
▪ Strong ESG credentials
▪ Strong operational management teams
▪ Long-life assets
▪ Diversification of royalty portfolio
▪ Production and exploration upside potential
▪ Strong returns
Commodity
Focus
Investment
Criteria
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ANGLO PACIFIC
ANGLO PACIFIC
OVERVIEW OF A ROYALTY22
A ROYALTY IS AN AGREEMENT WHICH PROVIDES, IN EXCHANGE FOR AN UPFRONT PAYMENT MADE TO THE MINING COMPANY, THE RIGHT TO RECEIVE A PROPORTION OF THE REVENUE FROM A MINING OPERATION ONCE IN PRODUCTION WITHOUT THE CAPEX OR OPEX RISK
SPV
MINING HOLD CO.
ILLUSTRATIVE TRANSACTION SUMMARY
1
2
ROYALTY STRUCTURE
MINE
Upfront Payment
» APG makes upfront payment
» Major factors impacting size of upfront payment:
» Expected size of revenue subject to royalty
» Percent of revenue
» Years of operation
2 Periodic Royalty Payments
» Natural resource company makes periodic royalty payments
» Period payment calculated as:
» Revenue, less any deductions, multiplied by royalty percentage
1
SPV
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OVERVIEW OF A STREAM
STEP 1
» Miner sells right to future metal production to streamer
» The sale is typically for a percentage of production
STEP 2
» Consideration received by miner includes:
» Upfront payment
» Ongoing payment per unit delivered
» Ongoing payment upon delivery is typically a percentage of the spot price (~20-40% is common)
» Can also be structured as a fixed payment with potential inflation adjustment
KEY TRANSACTION TERMS
» Negotiated agreements, so terms are highly flexible and asset focused
PRIMARY STREAM TRANSACTION OVERVIEW ILLUSTRATIVE TRANSACTION STRUCTURE
Mining
Company
» Streaming Company
» Streaming Agreement
Metal production
(Settled physically or in cash)
Upfront payment
+
Ongoing fixed payment
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WHY COMPANIES ENGAGE WITH ANGLO PACIFIC
POTENTIAL DRIVERS FOR ENGAGING
WITH ANGLO PACIFIC
» Challenging financing environment
» Can be less dilutive than equity
» Less restrictive than debt
» Scope can be limited to a single asset or by-
product
PRIMARY ROYALTIES / STREAMS SECONDARY ROYALTIES / STREAMS
POTENTIAL DRIVERS FOR ENGAGING
WITH ANGLO PACIFIC
» Opportunity to monetise illiquid asset
» If privately held, risk can be highly concentrated
» Residual exposure possible via Anglo Pacific
shares
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