Mining firm extracts a wealth of royalties

ANGLO Pacific occupies a unique position on the London Stock Exchange, as the only listed business that is focused on mining-related royalties. The company lends money to mining groups, in return for a percentage of their revenues.

Midas recommended the shares in December 2014 when they were 105p. Today, they are 144.5p and should continue to gain ground. The dividends are generous too.

Last week, chief executive Julian Treger said the 2017 dividend would be 7p, putting the stock on a yield of more than 4.5 per cent. The company also reported an almost doubling in royalty income from £19.7 million in 2016 to over £37 million for last year.

Anglo makes most of its money from a longstanding agreement with Rio Tinto, which entitles the group to income from the Kestrel coal mine in Australia. But Treger’s strategy centres on providing finance for a wide range of projects in different parts of the world, covering commodities from uranium to coal. Some are already in production; others are at an earlier stage but most are in stable, well-known mining regions, such as Canada, Australia and Brazil.

Back in 2014, commodity prices were struggling. Today, the outlook is brighter and Anglo Pacific is already promising to increase dividends in 2018. Midas verdict: Anglo Pacific shareholders have benefited from share price gains and dividend growth over the past four years. That trend should continue. Existing shareholders should hold. New investors could also snap up some stock at 144.5p.