Good morning, everyone. Thank you for joining us today to discuss Anglo Pacific's half-year 2022 results. We are incredibly proud to report our best half-year results in the group's history. Each of portfolio contribution, adjusted net income, and cash flow per share were records for the half-year period. What we're seeing is that the low-risk nature of our business model as a royalty and streaming company is incredibly pronounced in today's inflationary environment. Our top-line royalty and stream interests helped us generate our highest ever levels of EBITDA at a margin of over 90%.
The company is in a very strong position for further growth, with $180 million of liquidity available to fund further royalty and stream acquisitions, and that follows our recent acquisition of a royalty portfolio from South32 for $885 million in July. In summary, Anglo Pacific has delivered strong financial performance, a significantly enhanced growth profile. We've maintained our balance sheet strength, and furthermore, we've established ourselves as the leading future-facing metal commodity royalty business. All in all, it's been a great half-year period for the company.
Looking ahead, we have also announced today that we plan on renaming the company, which fundamentally reflects an evolution of our portfolio, which at its core has seen a change in its composition, but also its commodity exposure, such that with around 90% of our contribution to come from future-facing commodities in the next years, we think it is appropriate and the right time to reflect the change in the underlying nature of the business, and we'll be making a further announcement on this in the coming weeks. With that, I'll hand it over to you, Kevin.
Thanks, Marc. Good morning, everybody. If we could turn to the financial highlights slide, please. Yeah, I echo Marc's comments. Very pleased to present what are record results for Anglo Pacific for the first half of the year. If we look on the left-hand side of the page, we can see the portfolio contribution chart showing that the first six months of 2022 surpassed the whole of 2021. A phenomenal achievement from the portfolio in that period. These record results were largely driven by pricing, as volumes in the first six months were largely consistent with the comparative period in 2021. Looking at pricing specifically, coking coal was up about 260%, and cobalt was up 75%.
One of the main virtues of our model, as Marc j ust touched on, is that the majority of these revenues fall through to the bottom line. We can see this in the middle chart in adjusted earnings per share, which were up almost four times on the same period in 2021. Now this correlation between income and profit is not being experienced in many other sectors right now, where inflation is rampant, which is resulting in significant margin erosion. The royalty model, as we have been saying, is very defensive in times like this. We ended the period with very strong dividend cover, and we'll touch on this later. The dividend very well covered by the portfolio excluding Kestrel. Without the inflation threat facing other industries, the dividend is very well protected going forward.
If we turn to slide 6, please, which summarizes the income statement, and I'll use this slide to provide some commentary on some of the recent updates in our portfolio as well. Overall contribution was up 300% compared to the previous period, predominantly driven by Kestrel and the record levels of coking coal prices achieved in the first half of the year and in the first quarter in particular. Now it's worth remembering Kestrel is very unique in our portfolio as the royalty rate here increases through a ratchet mechanism with commodity prices. Not only did the price increase during the period, but the weighted average royalty rate increased from 8.3% to about 12.3%, so a 50% increase as well, which really shows when commodity prices are very high, there's a real compounding impact for Kestrel.
This drove earnings from that royalty alone to be $70 million in the first six months. Although coking coal prices have traded off a little bit from these highs in Q3 thus far, the announcement recently of the new higher Queensland royalty rates, which Marc will discuss a little bit later, should compensate in the second half of the year for a large part of these pricing decreases. Looking elsewhere, we had a very good half from Voisey's Bay, which generated almost $14 million of revenue, again, buoyed by very strong cobalt prices in the period. Now we think of our total volume deliveries, about two-thirds of these have occurred in the first half of the year. We wouldn't expect the same run rate to happen in the second half.
Overall, very pleased with the contribution from our most recent producing addition to the portfolio. Mantos and Maracás both had solid performances in the first half. Marc, again, later on, will outline why there are grounds for optimism to come from these assets going forward. While in the short term, the fundamentals for copper and vanadium, in our view, seem very favorable. We're hopeful of near-term volume increases from Mantos as they continue their debottlenecking project. The operator of Maracás has reduced their guidance by around 8% for their financial year 2022 as a result of some weather and production issues.
Some of this volume reduction has already occurred in the first half of the year, though. Our Four Mile royalty dispute, we received a favorable judgment on this case in the first half of the year, which will result in backdated royalty payments and interests to come. As the operator has chosen to appeal the decision, we are not currently recognizing these back payments until the outcome of the appeal is known with more certainty. LIORC was perhaps an outlier in the portfolio. The dividend income in the first half from this asset reduced by around 50%, reflecting a pullback in the iron ore price, which has endured into the third quarter of the year. As part of the Voisey's Bay transaction, we reduced our stake in this asset by about 75%.
The impact here is not as material as it would have been a year and a half ago. EVBC probably did fall short of levels achieved in H1, mainly volume driven, due to ongoing challenges being worked through by the operator. McClean Lake, this was operational throughout the first half of this year, resulting in combined contribution of GBP 2.6 million. You might remember that this operation had been placed on care and maintenance for a part of the first half of 2021, due to COVID protection measures. We did note the announcement by Cameco, post half-year, of its intention to operate the mine at 75% capacity from 2024 onwards in order to stabilize the uranium market.
Now, they haven't indicated how long that these measures will be put in place for, but if and when that should occur, we should expect to see slightly lower contributions. Overall, the first half of 2022 produced an outstanding performance from the portfolio and sets the full year up very nicely for another record year for Anglo Pacific Group. We expect H2 to be strong, but probably not quite as strong as the first half, given the recent pullback in coking coal and cobalt prices in particular. That said, there are some very clear catalysts for growth in our portfolio moving forward, and Marc will touch on these a little bit later. If we can move to the next slide, which is a summary of our income statements.
I won't spend too much time on this slide as we've touched the main areas that drive the significant increase in bottom line profit after tax. It's worth noting that our operating expenses were largely in line with the same period last year, something which not many other business models can report at the moment. Finance costs reduced in the period as we had lower average borrowings. We had some one-off finance costs in the first half of last year associated with the refinancing of our borrowing facility associated with the Voisey's Bay transaction. Overall, profit after tax was just under $100 million.
Excluding the non-cash and valuation items in the income statement, such as the $42 million Kestrel royalty revaluation, our adjusted earnings in the period were around $60 million, which is a record for the group and producing adjusted earnings per share of $0.28 in the period, four times higher than the comparative period. Turning to slide 8, this is a snapshot of our balance sheet at 30th of June, and clearly this predates the most recent $185 million acquisition that we undertook. This slide is probably a bit out of date. We'll look at the cash and debt position on the next slide. But it's worth noting that the Kestrel royalty valuation increased in the period due to both higher pricing inputs going forward, but also now the new higher royalty rate.
The majority of the value of this asset will be realized in the next 2 years as volumes from Kestrel really start to step down at the beginning of next year as we start to see the transition into and out of the private royalty area. That said, with current coking coal prices of around $250 a ton, these are still significantly above the long-term average, and we're really well placed here to capture meaningful contributions from the royalty as it moves towards the end of its economic life. Turning to slide 9. Similar to the balance sheet, this slide is a bit out of date given the recent acquisition. You can clearly see the impact of our strong first half results, dropping right through to the bottom line, and deleveraging in the first six months.
Absent the South32 acquisition we announced recently, we'd be in a net cash position at the end of this quarter, which really is a remarkable achievement given that we drew $123 and a half million to finance the Voisey's Bay acquisition, and that was only 15 months ago. The South32 acquisition, we structured this in a way really to preserve balance sheet strength and financing flexibility, for the short to medium term. The day one cash payment of $48 million brought total net debt to just under $70 million on completion. This number has come down to about $50 million currently, following the receipt of the monthly Kestrel installments.
With coking coal prices where they are, about $250 a ton, and obviously the new Queensland royalty rate as well, we'd expect that the portfolio should generate sufficient free cash flow to largely finance the $9.6 million quarterly deferred consideration payments associated with the South32 acquisition. Looking into the short term, we'd expect the Incoa $20 million financing is probably going to be made in early 2023. Given that and the deferred consideration payments associated with South32, we think our net debt should, based on current spot prices, remain under $100 million in 2023 and reducing thereafter.
This is all with moderate gearing levels. With our new refinance facility, which provides up to $200 million for growth, we have a $23 million residual stake in LIORC and around $8 million in treasury shares. We're now in very good shape from a balance sheet and financing perspective, with around $180 million of liquidity today to finance further growth. Slide 10 is our capital allocation policy. It's worth remembering that we've now acquired $400 million of royalties and streams in the past 16 months. As of right now, we only have $50 million of net debt in the business. Our balance sheet remains in a very strong position to add further growth.
On growth, we continue to see very good opportunities to continue adding further royalty and streams to the portfolio like we've been doing recently. As I mentioned just now, as part of the South32 acquisition, we modified the borrowing facility, which preserved the $150 million headline number, which eliminated the $25 million step down, which was due to take place this month. We've also agreed a $50 million accordion feature with the banks, which will be available for further investments. This is really important to us because it enables us to act very quickly and opportunistically to continue growing our business. Our quarterly dividend remains unchanged. I think the next payment is due at the end of this month. It's fully covered and importantly protected from the impact of inflation.
As I mentioned earlier, our 7p annual dividend is currently well covered from our core portfolio, which now excludes Kestrel due to its short-term nature. We do intend to switch to a US dollar denominated dividend in the second half of the year just to bring this in line with our presentation currency. We'll be providing the US dollar equivalent of 7p per share, but we'll provide more details in due course in relation to the mechanics of this. That's it from the financing perspective. Having run through the record numbers and outlining our current healthy liquidity position, I'll hand back to Marc to provide an update on the company.
Thank you, Kevin. Turning to slide 12, please, operator. This slide is, it reflects our asset base as of the half year period, pro forma for the South32 royalty acquisition. Not a material change from when we last showed this slide when, at the time of that transaction. 75% of our exposure is approximately to base metals and copper and nickel, cobalt, which is exactly where we would like the portfolio to be positioned for the next decade. Furthermore, we have seen our coking coal exposure tick up to slightly over 10%, as Kevin mentioned, as a function of the revised Kestrel royalty rates and near term short term met coal price outlook.
That being said, this does represent a milestone for the group where over the next few years that 13% should be a peak level running down to close to materially nil in the next few years. Such that close to 90%+ of our exposure will be to future facing commodities. On the slide 13, we've summarized historical commodity prices because we think that we wanted to highlight that despite the pullback in some of our key commodities underlying our portfolio in the past, say, 6-8-week period, prices themselves still do remain at very healthy levels, especially if we look back to say 2020 or earlier.
Coking coal, for example, at $250 per ton is actually double the average of coking coal price in 2020. At cobalt price at $25 per pound, that first of all remains well above the price we assumed in for the calendar year 2022 at the time of our Voisey's Bay acquisition. But furthermore, there's a really positive outlook for electric vehicles where we've seen, for example, in the first half of the year, 50% increase in EV sales, which is quite remarkable. Furthermore, recently the Chinese State Reserve Bureau has announced that it could look to expand its strategic cobalt stockpile during the second half. If that happens, we would also anticipate some fairly positive price support.
To make this point in a simpler way, and to echo what Kevin has already said, we don't expect in the second half of the year, the same level of record performance from the portfolio. Certainly we do expect a strong showing in the context of prior years. Slide 14 provides a bit more detail, and sensitivity to the revised Kestrel royalty rates. As Kevin mentioned, this royalty is quite unique in that it's ratcheted. Another feature of the royalty, which is quite unique, is that our royalty entitlement is derived from the rate set by the Queensland government. Therefore, as of first of July this year, as Kevin mentioned, we saw the introduction of a number of new royalty rates when coal prices exceed AUD 175 per ton, in Australian dollar terms.
The right-hand side of the page, we've illustrated the impact on a per ton basis of royalty revenue to Anglo Pacific Group from the prior regime to the current regime at ± the current spot price of $250 per ton. What this means is that all else being equal per ton of coal sold, Anglo Pacific would expect incrementally US dollars, approximately $10 more per ton. If in a more bullish scenario, assuming $400 per ton, on an illustrative basis, that would mean almost $30 more per ton or almost double what we would have received from that royalty. As you can see here, there is significantly more torque and a fantastic tailwind as we approach the end of this royalty's life.
Turning to slide 15, the next 12 months are going to be quite busy across a number of our assets in our portfolio. Some really key milestones and catalysts to highlight here today. First of all, Voisey's Bay is now, as reported by Vale, beginning a transition from the Ovoid open pits to the underground operations. That's expected to last the next 12-18 months, and therefore, volumes on 2023 are expected to be, in terms of delivered volumes, Anglo Pacific under our stream, expected to be roughly flat year-on-year, 2022 to 2023, ramping up thereafter up to 2,600 tons of cobalt produced by Voisey's Bay mine per annum in 2025. Piauí is one that we've highlighted on almost every call we've had the past years.
We've seen some big milestones here already and expect more to come later this year. First of all, we saw first production at Piauí's starter plant. Second, we saw the completion of a bankable feasibility study with some details to be released publicly by Brazilian Nickel later this quarter. Third, we've seen the group initiate financing activities. All in all, we're one that we're monitoring exceptionally carefully over the next 12 months. At Mantos, Kevin's already mentioned the near completion of the debottlenecking project. But turning ahead, at the time of the acquisition of this royalty, we did flag and we're quite excited by the prospect of two sources of potential upside.
Those two are really now coming to light, and we expect further visibility and daylight into how and what that might look like in the next 12 months. First, there's the potential to further increase the production capacity of the sulfide concentrator plant from 7.3 million to 10 million tons. Second, Capstone is currently evaluating potential to extend the life of the copper cathode production. Capstone has announced that a pre-feasibility study in relation to both these initiatives was completed in Q2, and that they're proceeding to advance basic engineering, which is expected to complete in Q4 this year.
Turning to look at West Musgrave, the first piece of news here since we last updated you on West Musgrave is that OZ Minerals has received all regulatory approvals required to proceed with construction, and they're currently finalizing agreements with local communities and Indigenous peoples. OZ Minerals has restated that it's targeting a final investment decision later this year. That is one that we anticipate in H2. More generally in relation to OZ Minerals, OZ Minerals has announced that it received an indicative proposal from BHP to acquire all shares in OZ Minerals. As a third-party royalty company, we aren't in a position to comment or speculate on that approach or OZ Minerals response or any of the specifics.
We would point out, however, that we see this as a positive validation of our investment case underlying our recent West Musgrave royalty acquisition, both in terms of the quality of the project, but also the asset's longer term upside potential. At Santo Domingo, we expect in early 2023 or in the first half of 2023 an updated feasibility study that'll include the wider district synergies. At Incoa, the project is progressing well, although it's probably likely that the CPs triggering our $20 million investment will be met in H1 of next year rather than Q4. At Maracás, Largo continues the construction of an ilmenite byproducts plant, and that's progressing on track for first production in 2023 based on Largo's disclosure. Turning now to look more generally at some of our uranium exposure.
In the past six months, we've certainly seen a strengthening in the uranium market fundamentals, but most recently, we've seen a pretty material strengthening in the near to long-term outlook, where we note that in the past 24 hours, a reported change in Japan's energy policy, which would see a near-term restart of a number of idled reactors in 2023. Beyond that, the possibility of extending the life of the existing fleet, as well as the construction of new next generation technology reactors. All in all, that is quite positive for our uranium exposure. On slide 16, last month, we announced the acquisition of a high-quality portfolio of advanced stage development, nickel and copper royalties from South32.
In a nutshell, without going into too much detail, this transaction allowed for the recycling of the significant cash flow generated largely by our coking coal royalty into copper and nickel, which, as everyone who has been tracking Anglo Pacific will be aware that is straight down the fairway in terms of delivering on our stated strategy. Kevin mentioned already that the transaction structure was specifically designed to maintain balance sheet strength and flexibility to keep growing the business. Certainly the last point, but not to be diminished, these were the key royalties in this acquisition relate to what we view as world-class projects with well-regarded operators, with strong development track record or strong sustainability credentials, and all located in OECD jurisdictions.
On slide 17, we've highlighted here an interesting dynamic where the key strategic challenge at Anglo Pacific in the past has certainly been to replace the Kestrel royalty. That's really been the core of our business development strategy for the past 9 years. We are really proud and delighted to show that the acquisitions completed over the past 8 years have transformed not only our commodity exposure, but also our medium-term income profile, such that as the Kestrel royalty runs off in the next 2-3 years, based on the existing producing assets and growth in medium-term growth in Anglo Pacific's royalty book, we have a line of sight on income of $100 million, excluding Kestrel. Turning now to slide 18 to summarize.
Our portfolio has performed exceptionally well in the first half of the year. While commodity prices have indeed pulled back, we do remain well above lows that we've seen in the last five years, such that we do in a historical context, our portfolio appears well positioned for a strong second half. We continue the virtues of the royalty and streaming model to continue to shine in the context of the strong inflationary pressures seen across the mining sector. The revised royalty rate at Kestrel is an exceptionally helpful tailwind prior to the royalties runoff, which will see us continue to recycle met coal royalty cash flows to deleverage the balance sheet, and should we see opportunities into future-facing commodity royalty and stream acquisitions. In the medium and long term, the structural demand trends for future-facing commodities remains very, very strong.
All the while, having now completed almost $400 million of acquisitions in the last circa year and a half, we retain balance sheet flexibility with firepower in excess of $150 million, and furthermore, strong balance sheet to underpin our which should hopefully underpin investor confidence in a baseline dividend, its level of 7p. To conclude on our pipeline. At the moment, we're seeing equity valuations which are quite challenging for both mine developers but also producers. These equity valuations are particularly depressed in this high inflationary environment, and that suggests that we may see opportunities to put capital to work with good projects or producing assets.
That being said, we think it's likely that our next acquisition of meaningful scale will be a producing royalty or very close to production. But should we see a high quality development stage opportunity with a ticket size of $20-30 million, that may all be something that we would pursue. Thank you very much for joining us today on the presentation, and we're happy to begin the Q&A session.
Great. Thank you very much, guys. Our first question is from Cameron Needham from Bank of America. Cameron asks, "How are you thinking about some of the potential jurisdiction risks in Chile, specifically in relation to the Santo Domingo royalty?
Thank you, Cameron. Capstone has disclosed publicly a fair amount of detail in relation to a stability agreement agreed with the Chilean government. We'd be happy to provide further detail if that's helpful. I think our takeaway from that information and that disclosure from Capstone at this time is that arrangement should provide a base level of support for that project.
Great. Our second question is from Stephen Reeves, from SCR Holdings. Stephen asks, "Many successful companies like yourselves are making excellent profits at the moment, and in these inflationary times are raising dividends as a result. Given Anglo's profits are likely to start to fall back to more normal levels, if you keep the dividend flat, is there not a risk the share price will start to fall back?
Well, thank you very much for the question. It's difficult to speculate as to what may or may not happen in the future, given a number of factors that beyond the ongoing run rate of dividend. I think what we would say, though, is echoing a comment made by Kevin earlier, in terms of capital allocation, our first priority always remains to ensure that our balance sheet is in a very strong position. Second of all, at this time, we continue to see really attractive opportunities. That being said, we will maintain our very disciplined approach to growth. At the moment, we see an opportunity to continue to scale the business via a value-accretive royalty and stream transactions.
Okay. Our next question is from Andrew from PI. Is there any imminent news about the acquisition of an accretive paying royalty? Apologies.
Apologies. Could you please repeat the question?
Sorry, Marc. It's Andrew from PI. Is there any imminent news about the acquisition of an accretive paying royalty?
Thank you for the question. As I mentioned earlier, we would anticipate that the next transaction of material size would likely be in relation to a producing or near production royalty. That being said, we don't generally comment publicly as to the near-term nature or medium or long-term nature of our pipeline. I think it's clear. One point that should be clear, however, is that we are constantly reviewing opportunities. To round that answer out, I would also highlight the fact that our portfolio today has a fairly significant amount of organic growth potential, as I mentioned earlier, when highlighting some of the near-term key catalysts across our royalty book, which includes both producing assets but also development stage assets.
Great. Well, our last question is from Adrian Beaumont from AB. What are your thoughts on carbon credits/sequestration royalties? Is this something Anglo Pacific might pursue in the future?
Yeah, thank you for the question. The carbon space is incredibly dynamic at the moment, and in some ways, on the carbon capture side, for example, the United States almost transformed overnight with the latest inflation legislation that was passed quite recently. We've monitored the space, and at this time, we're strategically focused on our core area of strength, which is fundamentally to acquire future-facing metal royalty and stream acquisitions. We may consider carbon streaming, and while of course, any carbon stream would need to stand on its own two legs on its own merits, that would probably be more in terms of the context of maintaining carbon neutrality for Anglo Pacific Group rather than as purely a economic investment on its own legs.
Simply to position the portfolio towards carbon exposure, but that can change. It's something that we're monitoring, but not something that we're actively pursuing at this time.
We've had another question. It's from David Crome, from Fort William Merchant Securities Ltd. David asks, given the likelihood of continuing pressure on base metal prices in the current economic environment, will Anglo Pacific consider such rather than future metals?
We would very much include base metals within the remit of the nomenclature of future-facing commodities. When we think about future-facing commodities, we're considering two groups. The first, those groups that are directly required as part of the electrification of energy consumption, or in other words, decarbonization. Second, commodities or mine projects that have relatively, cleaner, pure, greener operational footprints or products. I think it's worth just highlighting that base metals are absolutely within this remit, and in that context, underpin our strategy to position our portfolio with approximately 75% exposure to copper, nickel and cobalt.
Great. That's been all the questions we've had today. Marc, I'll pass back to you for any closing remarks.
Well, thank you very much everyone for joining us today on this half year results. It's been a really strong half year, while there's no shortage of interesting developments across the commodity sector, already only a few months into the second half of the year, we look forward to having and showing what we're on track for a record 2022.