RBC Capital Markets slightly lowers target price on Anglo Pacific

RBC Capital Markets said Anglo Pacific's $200.0m royalty package acquisition from South32 had transformed the longer-term revenue profile for the group by roughly 50%, had improved its ESG positioning by adding more copper and nickel, and had also mitigated the rollover in income post Kestrel.

"The transaction is dilutive in the near-term, but we think med-term this 'cost' is outweighed by the benefits listed above," said the Canadian bank, which also reiterated its 'outperform' rating on the stock.

"We see this deal increasing the attractiveness of the equity, and considering APF remains discounted vs peers we continue to see scope for further rerating. We move our P/NAV target multiple to 1.4x NAV (prev 1.3x) to reflect the improved portfolio. Although softer metals prices are a headwind, upcoming potential catalysts like Piaui/Incoa financing and Voisey's Bay underground ramp up, together with additional deals, are likely to allow APF to continue to re-rate."

Reporting by Iain Gilbert at Sharecast.com