- Anglo American
- 24 February 2025 13:10:37
Source: Sharecast
Berenberg updated its model following Anglo American's FY24 results, with the shares having outperformed since the release as the market reacted positively to a better net debt balance, driven mainly by positive working capital flows and an agreement with Codelco to enter into a joint mine plan for the Los Bronces and Andina mines in Chile.
"The revised mine plan, which is expected to take effect from 2030 and will need revised permits, will lead to higher-grade ore from Andina filling latent processing capacity at Los Bronces, lifting volumes by c120ktpa (100%) and reducing costs by c15%, releasing, in Anglo’s view, at least $5.0bn of value," said Berenberg.
The German bank said this was a good example of the sort of value creation that it thinks should be executed more by mining companies, and said "the pressure is now on" for Anglo, Glencore and Teck Resources to agree a similar deal on the Collahuasi and QB2 mines, also in Chile. However, Berenberg stated this will need "all partners to be on the same page".
"We update our model for the results and guidance. We also add in extra conservatism for De Beers and make some more conservative assumptions on cost savings, which are key drivers of our softer EPS in 2026. We lift our EV/EBITDA multiple to 6x from 5.5x; our price target trims to 2,000.0p per share. Anglo is trading on 6.9x 2025E EBITDA and 1.52x NAV; we see better value in Rio Tinto (trading on 0.84x NAV and 5.6x 2025E EBITDA)," said Berenberg, which reiterated its 'sell' rating on the stock.
Reporting by Iain Gilbert at Sharecast.com