4th Feb 2015 07:50
LONDON (Alliance News) - Anglo Pacific Group PLC Wednesday said it has bought a royalty interest on coal sales from a major coal mine in Australia for USD65 million in cash and shares, said it will help fund the deal with a share placing, and also proposed an enhanced dividend policy to reflect the deal.
In a statement, the resources company said it has agreed with a private party to buy its royalty interest in the Narrabri coal project, a thermal coal and pulverised coal injection mine located in New South Wales, Australia. The royalty entitles the holder to royalty payments equal to 1% of gross revenue on all coal produced from the area covered by the royalty.
Anglo Pacific said it will pay the seller USD60 million in cash and USD5 million in Anglo Pacific shares.
It said it wants to raise between USD55 million and USD60 million through a placing and open offer, and it will also fund the deal using a three-year USD30 million revolving credit facility from Barclays. It said it intends to raise between USD22.5 million and USD32.5 million through a firm placing, and between USD22.5 million and USD32.5 million through a placing and open offer. Bookrunners Macquarie Capital (Europe) Ltd and BMO Capital Markets Ltd have partially underwritten the issue up to USD7.5 million.
Separately, the company said it had decided to revise its dividend policy in light of its new royalty deal, even though royalty income from the Rio Tinto Kestrel mine in the fourth quarter of 2014 was well below the company's previous expectations due to lower than expected mining.
Anglo Pacific said it is considering paying a 4 pence final dividend for 2014 following the completion of the Narrabri deal. In the medium-term, it said it's now committed to a minimum total annual dividend of 8p, subject to the level of adjusted earnings, proceeds of disposals and prospective investment opportunities. In the longer-term, it said it intends to adopt a policy paying dividends of a minimum of 65% of adjusted earnings.
The Narrabri mine is operated by Australian Securities Exchange-listed Whitehaven Coal Ltd. It has an estimated 22 years of mine life remaining at Narrabri North, and the potential to extend production in the future through the development of Narrabri South, according to Anglo Pacific.
"The Narrabri royalty will immediately enhance our portfolio of producing royalties and diversify our royalty income. The acquisition is also consistent with Anglo Pacific's strategy to acquire royalties on mining assets that are competitively positioned on the cost curve, cash or near-term cash producing and located in established mining jurisdictions and, in Whitehaven, the royalty has an operator with an established track record of operational expertise," Chief Executive Julian Treger said in a statement.
By Steve McGrath; [email protected]; @stevemcgrath1
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