BofA stays at 'buy' on Anglo Pacific Group as pivot towards 'future facing commodities' continues

Analysts at BofA Securities reiterated their 'buy' rating for shares of Anglo Pacific Group, telling clients that its recent acquisition of four royalties from South32 reflected its pivot away from coal towards electrification metals.

On 12 July, the royalty and streaming company purchased the four royalties in copper and nickel for $200m, including contingent payments, an amount equivalent to half the company's market value.

They said they liked the transaction from a strategic point of view as the company pivoted towards so-called 'future facing commodities', which include battery metals, copper, nickel and cobalt.

And after including the transaction and the group's royalty on Brazilian Nickel's Piaui project, their target price was lifted from 220.0p to 230.0p, or one times' the value of its discounted cash flow-derived net present value.

"Reiterate Buy, we see rerating potential as APF executes on its strategy. We also see the royalty business model as defensive during periods of volatile prices & high cost inflation."