London-based resource royalties firm Anglo Pacific has reported continued growth in its income during the first half of 2018, with the company swinging to a profit of £13-million, from a loss of £2.5-million in the prior-year period.

Total income from the group’s portfolio increased by 20% to £20.8-million.

The turnaround was largely the result of strong prices for the commodities from which the group’s revenue is derived, Anglo Pacific said on Thursday, noting that high-quality, low-polluting premium products are attracting significant attention in developed nations in Asia.

The company, which also maintains a listing on the TSX, stated that it continued to see stronger demand for high-quality products and that the shift was a feature that was likely to endure.

The shift had been particularly evident in coal price, Anglo Pacific stated, noting that the more developed economies in Asia were increasingly turning towards higher quality, lower polluting coal, mainly from Australia, as it was seen as a quick remedy to pollution and internal sustainability issues.

The royalty firm, which derives an income from the Kestrel coking coal and Narrabri thermal coal mines in Australia, believes that coal, although out of favour in Western economies, should continue to play a key role in the needs of developing countries.

The preference for premium products is one of the reasons why Anglo Pacific was attracted to the Labrador Iron Ore Royalty Corporation (LIORC), in which it recently invested $50-million for a 4.25% shareholding. LIORC’s underlying operation produces pellets with low alumina, silica and phosphorous content in Canada.

CEO Julian Treger said that Anglo Pacific had enjoyed a successful start to 2018 and that it had entered the second half in a strong position.

He noted that the firm actively pursued and appraised other royalty opportunities to add to the two acquisitions that had been completed this year.

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Royalty income from Kestrel increased by 12.9% in the period to £14.2-million. This was largely a function of a 9.5% increase in the average price achieved in the period. The higher price also resulted in a higher weighted average royalty rate of 11% in the first half 2018.

Although Kestrel continues to represent a significant portion of the group's income, Maracás Menchen, in Brazil, was the standout performer in the first six months of 2018. The mine's owner, Largo Resources, increased its production by 10% in the first half of the year. Anglo Pacific generated £2.1-million in royalty revenue from the mine, compared with £785 000 a year earlier.