Stock Analysis & Valuation Anglo Pacific Group plc (APF.L)

• Previous Close: £157.00
• Sector Valuation Confidence Level: Low

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method	0.91	-99
Graham Formula	31.66	-80

Strategic Investment Analysis

Company Overview

Anglo Pacific Group plc (LSE: APF.L) is a London-based natural resources royalty and streaming company specializing in diversified mining investments. Established in 1967, the company holds royalties and streaming agreements across key commodities, including cobalt, coking coal, iron ore, copper, vanadium, uranium, and gold. Its portfolio spans high-potential mining regions in Australia, North and South America, and Europe. Unlike traditional mining firms, Anglo Pacific generates revenue through royalties and streaming agreements, providing exposure to commodity price upside while minimizing operational risks. The company operates in the energy sector, with a focus on coal-related royalties, but has strategically diversified into battery metals like cobalt and vanadium, aligning with global decarbonization trends. Anglo Pacific’s asset-light model and disciplined capital allocation make it a unique player in the natural resources investment space.

Investment Summary

Anglo Pacific Group offers investors leveraged exposure to commodity price movements without direct operational risks, thanks to its royalty and streaming model. The company reported strong financials in FY 2021, with revenue of £85.3 million and net income of £37.5 million, supported by robust cash flow from operations (£55.8 million). A notable dividend yield (145.49p per share) enhances its appeal to income-focused investors. However, reliance on coal royalties (~50% of revenue) poses long-term risks amid the global energy transition. The company’s diversification into battery metals (cobalt, vanadium) mitigates some of these risks, but investors should monitor commodity price volatility and geopolitical risks in key mining jurisdictions. With a beta of 0.80, the stock is less volatile than the broader market, appealing to risk-averse investors.

Competitive Analysis

Anglo Pacific Group differentiates itself through a pure-play royalty and streaming model, avoiding the capital-intensive risks of traditional mining operations. Its competitive advantage lies in a diversified portfolio of high-quality royalties, including long-life assets like the Kestrel coking coal mine (Australia) and Voisey’s Bay cobalt stream (Canada). The company’s focus on battery metals (cobalt, vanadium) positions it well for the EV and renewable energy boom, though coal remains a significant revenue contributor. Compared to peers, Anglo Pacific has a smaller scale but maintains a disciplined approach to acquisitions, targeting assets with low-cost production and strong counterparties. Its London listing provides access to deep capital markets, while its experienced management team has a track record of value-accretive deals. However, competition from larger royalty firms like Franco-Nevada and Wheaton Precious Metals limits its ability to secure premium assets. The company’s geographic diversification reduces country-specific risks, but exposure to Australia (coal) and Canada (cobalt) ties its performance to regulatory and commodity cycles.

Major Competitors

• Franco-Nevada Corporation (FNV.TO): Franco-Nevada is the largest royalty and streaming company globally, with a diversified portfolio across gold, silver, and energy. Its scale and financial strength allow it to outbid smaller players like Anglo Pacific for premium assets. However, its focus on precious metals limits direct competition in coal and battery metals. Franco-Nevada’s lower-risk profile and strong balance sheet make it a safer but less growth-oriented investment.
• Wheaton Precious Metals Corp. (WPM.TO): Wheaton specializes in precious metal streaming, with a focus on silver and gold. Unlike Anglo Pacific, it has minimal exposure to coal or battery metals. Wheaton’s high-margin business and long-life streams make it a favorite among investors, but its lack of diversification outside precious metals reduces overlap with Anglo Pacific’s strategy.
• Osisko Gold Royalties Ltd (OR.TO): Osisko focuses on gold royalties but has expanded into base metals and diamonds. Its smaller size compared to Franco-Nevada makes it a closer peer to Anglo Pacific. Osisko’s aggressive acquisition strategy and higher leverage contrast with Anglo Pacific’s conservative approach, offering higher growth potential but greater risk.
• Sandstorm Gold Ltd (SAND.L): Sandstorm is a mid-tier royalty company with a focus on gold and copper. Its portfolio is less diversified than Anglo Pacific’s, lacking exposure to coal or battery metals. Sandstorm’s smaller scale and higher-risk asset base make it a more speculative play compared to Anglo Pacific’s balanced approach.