Julian Treger, co-founder of activist investor Audley Capital Advisors LLP, will mimic North America’s biggest royalty companies by focusing on bulk commodities after taking over at Anglo Pacific Group (APF) Plc.
Treger, appointed chief executive officer of Anglo Pacific last week, is seeking to increase the company’s royalties in coking coal and look to add positions in copper, iron ore, zinc and uranium, he said in a telephone interview. He may also look at oil and gas.
Royalty companies hold rights that entitle them to a percentage of a mine’s sales in return for help paying for the project. Anglo Pacific has royalties in coal mines in Australia operated by BHP Billiton Ltd. (BHP) and Rio Tinto Group. Opportunities in precious metals are limited in a market dominated by Canada’s Silver Wheaton Corp (SLW), the world’s largest precious-metals finance company, and gold-investor Franco-Nevada Corp. (FNV), Treger said.
“Franco-Nevada and Silver Wheaton have done an excellent job in scaling their businesses,” Treger said. “It’s difficult for us to compete with them. There is a big gap in the market with respect to bulk commodities and non-precious commodities where we think we could become the go-to player.”
The company will avoid long-term speculative mine development and focus on investments that allow it to increase dividend payments in the next 18 to 24 months, he said. Treger, who has an interest in 1.1 percent of Anglo Pacific shares, said he intends to increase his stake further and possibly have Audley invest too.
Treger, who has twice attempted to compel change at Walter Energy Inc. (WLT), a coal producer, to reduce debt and corporate expenses to boost profit, said he’s prepared to deal with activist shareholders as CEO.
“Shareholders have the right to expect delivery from the management,” he said. “If we don’t do so, they’re within their rights to ask for changes.”
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