Financial Results
FOR: ANGLO PACIFIC GROUP PLC
LSE SYMBOL: APF
TSX SYMBOL: APY
October 31, 2012
Financial Results
LONDON, UNITED KINGDOM--(Marketwire - Oct. 31, 2012) - Anglo Pacific Group PLC ('Anglo Pacific', the 'Company',
the 'Group') (LSE:APF)(TSX:APY) is pleased to announce its financial results for the three and nine months
ended September 30, 2012. The Group has published both the unaudited financial statements and the Management's
Discussion and Analysis, and these, together with this release, are available on both the Group's website at
www.anglopacificgroup.com and on SEDAR at www.SEDAR.com.
Highlights:
-- Royalty income for the quarter of GBP 5.0 million (Q3 2011: GBP 8.0
million (restated))
-- Cash and current receivables at September 30, 2012 of GBP 20.4 million
(GBP 44.5 million at December 31, 2011 (restated))
-- Increase in the independent valuation of coal royalties due to the
recently announced rise in Queensland coal royalty rates
-- Completion of Churchrock uranium royalty option and financing agreement
with Laramide Resources Ltd
-- Significant progress at a number of the Group's development royalties
-- Total assets of GBP 353.2 million at September 30, 2012 (GBP 371.0
million at December 31, 2011 (restated))
John Theobald, Chief Executive Officer of Anglo Pacific, commented:
"The Group achieved a solid performance in the period, despite the adverse commodity price environment. The
increase in the independent valuation of our coking coal royalties, following the rise in the Queensland coal
royalty rates announced in September 2012, has significantly offset the impact of current commodity prices on
our royalty asset value.
Favourable conditions for acquiring additional royalties exist and we have grown our royalty portfolio to a
total of 21, following the completion of the Churchrock royalty option this period. The Group has now acquired
two new royalties in 2012 and further new royalty opportunities are being assessed.
We have been particularly encouraged by the progress across a number of the Group's development royalties,
which we believe will bring forward future royalty cash flows, most notably the 132% increase in resources at
the Mount Ida project and the announcement of plans to commence production at the Four Mile project."
Results Webcast:
There will be an audio webcast for analysts on October 31, 2012 at 9:30am (GMT). The webcast will be accessible
through www.anglopacificgroup.com, following which there will be a replay facility available.
The full text of both the financial statements and the Management's Discussion and Analysis will be accessible
through http://www.anglopacificgroup.com/financial-reports.html.
Notes to editors:
Anglo Pacific Group PLC is a global natural resources royalties company. The strategy of the Group is to expand
its mineral royalty interests in long-life mining assets. The Group achieves this through both direct
acquisition and investment in projects at the development and production stage. It is a continuing policy of
the Group to pay a substantial proportion of these royalties to shareholders as dividends.
Royalties explained:
A royalty is an entitlement to an agreed percentage of a project's sales revenue, without any liability for
production costs or capital expenditure. This is the key benefit of owning a royalty.
In the mining industry, most royalties endure for the life of the resource and are paid on a regular basis.
Historically there have been different terms for royalties including Gross Revenue or Net Smelter Return ("GRR"
or "NSR") royalties, which are both based on the gross sales value of the actual mineral. Our model is based
around GRR or NSR royalties as they provide the best and clearest return.
Acquiring existing royalties
In this case we buy existing royalty agreements, such as those owned by exploration companies who may have
retained a residual royalty in a mine they helped discover. Royalty companies rarely sell their royalties, once
acquired.
Creating new royalties
Our new royalty agreements tend to come from providing financing for mining operations, usually to help
progress a mine into production.
Acquisitions
On August 13, 2012 the Group completed a financing agreement with Laramide Resources Ltd (''Laramide") in
connection with Laramide's variable rate gross revenue royalty on the development stage ISL uranium properties
owned by Uranium Resources Inc. (''URI") in the Grants Mineral District of New Mexico, United States (the
''Churchrock Properties").
In return for a facility of CDN$5 million, which is repayable in December 2015, Laramide has granted Anglo
Pacific an option to acquire a 5% gross revenue royalty (the "GRR") for an exercise price of US$15 million. As
part of the transaction, Laramide has also issued 650,000 warrants, each warrant entitling Anglo Pacific to
acquire one Laramide common share at an exercise price of $1.35 per share on or before December 31, 2015. The
CDN$5 million facility bears interest at a rate of 7% per annum payable quarterly in arrears.
URI's most recent guidance on the Churchrock Properties advises that it is continuing to refine the feasibility
study performed on Section 8. The GRR also covers a portion of the adjacent Section 17 and the Mancos area,
which comprises all of Section 13 and portions of Sections 7 and 12. URI has an NRC licence to produce up to 1
million pounds of uranium per year.
Producing Royalties
The Group's producing royalties turned in a solid performance in line with expectations. Production at Kestrel
coking coal mine continued at normal levels whilst the El Valle-Boinas/Carles gold and copper mine in Spain
continues to build up to full production.
Kestrel Coking Coal, Australia (Rio Tinto Coal Australia)
Production from the Group's private royalty area was in line with expectations with an invoiced volume of
981,776 tonnes for the quarter ended September 30, 2012 (933,615 for the comparable period in 2011), which
resulted in royalty income of GBP 4.5 million against GBP 6.8 million for the comparable period in 2011.
The scheduled longwall change over and lower productivity during the ramp-up in the first quarter resulted in
invoiced volumes for the nine months ended September 30, 2012 of 2,290,921 tonnes compared to 2,699,877 tonnes
during the same period in 2011.
Hard coking coal spot and monthly contract prices deteriorated during the quarter on the back of a weak steel
market in China although demand elsewhere held up reasonably well. The benchmark September 2012 hard coking
coal quarterly contract price was $225 per tonne (September 2011: $315 per tonne).
The combination of these factors resulted in royalty income from Kestrel for the nine months ended September
30, 2012 of GBP 10.3 million (A$15.6 million) based on a 50% share of invoiced volumes. This is compared to GBP
16.7 million (A$25.9 million) for the comparable period in 2011.
In the 2012-2013 Queensland State Budget, the Queensland Government announced an increase in the royalty rates
for coal sold, disposed of or used on or after October 1, 2012, which will also apply to the Group's Kestrel
royalty. The effective royalty rate for a particular period depends on the average price per tonne of coal for
the return period and is calculated on a tiered system. Where the average price per tonne is over A$100 and up
to and including A$150 the royalty rate has risen from 10% to 12.5%, with an additional band of 15% where the
average price is more than A$150 per tonne. The first A$100 will continue to attract a royalty rate of 7%.
The increase to the Queensland coal royalty rates have been reflected in the independent valuation of the
Kestrel royalty at September 30, 2012, and have contributed to an increase of A$19.3 million to the underlying
valuation to A$271.3 million (GBP 174.6 million) from A$252.0 million (GBP 166.0 million) at December 31, 2011
(restated).
Amapa Iron Ore, Brazil (Anglo American PLC 70% and Cliffs Natural Resources Inc 30%)
Production from Amapa was in line with expectations with an invoiced volume of 1,346,310 for the quarter ended
September 30, 2012 which resulted in royalty income of GBP 0.5 million (2011, GBP 0.8 million). For the nine
months ended September 30, 2012 royalty income was GBP 1.5 million (GBP 1.8 million for the comparable period
in 2011).
El Valle-Boinas/Carles Gold, Silver and Copper, Spain (Orvana Minerals Corp.)
The Group received GBP 1.04 million in royalties during the nine months ended September 30, 2012 from the El
Valle-Boinas/Carles ("EVBC") gold, silver and copper mine in northern Spain. This related to the production of
15,260 ounces of gold, 50,928 ounces of silver and 1.684 million pounds of copper for the six months ended June
30, 2012.
On October 18, 2012 Orvana Minerals Corp announced production of 10,464 ounces of gold, 24,718 ounces of silver
and 0.8 million pounds of copper for the quarter ended September 30, 2012. The Group's royalty receipts from
EVBC for the third quarter's production will be received during the quarter ended December 31, 2012.
The royalty receipts from EVBC are currently repayment of principal and are applied against the debenture
instrument. They are not included in the income statement but are included in the receipts from royalty
instruments in the cash flow statement.
Crinum Coking Coal, Australia (BHP Billiton Mitsubishi Alliance)
The Group received GBP 0.1 million (A$0.2 million) in royalties during the nine months ended September 30, 2012
compared to GBP 5.8 million (A$9.0 million) in the comparable period in 2011, the royalty income is
predominantly due to sales from stockpiles. The Crinum longwall has left the Group's private royalty ground and
no significant future royalty receipts are anticipated. In the Group's coal royalty valuation Crinum is
ascribed no value.
Development Royalties
Four Mile Uranium, Australia (Quasar Resources Pty Ltd 75% and Alliance Resources Ltd 25%)
On October 24, 2012 Alliance Resources Ltd(1) announced that a decision has been made to recommence the
development of the Four Mile Project (Quasar Resources Pty Ltd ("Quasar") 75%, Alliance Craton Explorer Pty
Ltd, 25%). The start-up plan comprises uranium capture at Heathgate Resources Pty Ltd's ("Heathgate") Pannikan
satellite plant with elution, precipitation, drying and packing at Heathgate's Beverley processing plant. In-
situ recovery ("ISR") operations will commence at Four Mile East in Q2 2013 and at Four Mile West in Q4 2013;
first uranium sales are scheduled for Q3 2013. Quasar is an affiliated company of USA based General Atomics who
through another affiliate company, Heathgate, operate the adjacent Beverley ISR uranium mine. The Group holds a
1% NSR royalty over the Four Mile Project. For further information see www.allianceresources.com.au.
Jogjakarta Iron Sands and Pig Iron, Indonesia (Indo Mines Ltd 70%)
On September 24, 2012 Indo Mines Ltd(2) ("Indo") announced that it had entered into a binding subscription
agreement to complete a A$50 million placement to the Rajawali Group. Pursuant to the agreement, the Rajawali
Group will increase its holding in the company to 57.12%, subject to approval by Indo's shareholders. The
significant cash injection from the Rajawali Group will provide funding to assist with the staged
implementation of the 2 million tonne per annum iron concentrate facility, ongoing studies into the
requirements for pig iron production, completion of financing due diligence and working capital. The Rajawali
Group, which was founded in 1984, is one of the largest privately owned conglomerates in Indonesia.
Further positive news was announced by Indo on October 25, 2012, as the Indonesian Ministry of Energy and
Mineral Resources issued a decree confirming approval for commencement of the construction phase of the
Jogjakarta Iron Project within the Contract of Works area. This approval is a major milestone for Indo,
completing the government approvals required to commence construction of the commercial scale facility.
Mount Ida Magnetite, Australia (Jupiter Mines Ltd)
On September 4, 2012, Jupiter Mines Ltd(3) ("Jupiter") announced a 132% increase in Mount Ida magnetite
resources with a JORC compliant indicated resource of 1.062 billion tonnes at 30.23% Fe and a JORC compliant
inferred resource of 170 million tonnes at 27.03% Fe. Further details can be found at www.jupitermines.com.
The Group completed the first tranche of the acquisition of a 50% interest in the 1.5% GRR over the Mount Ida
iron ore project in Australia, from Red Rock Resources PLC in May 2012. The Royalty Sale Agreement provides for
a total of US$14 million being paid in three instalments as follows:
-- Tranche 1: US$6 million on completion and agreement of the terms of the
transaction, for a 0.3% GRR;
-- Tranche 2: US$4 million payment for a further 0.225% GRR following the
results of a positive definitive feasibility study ("DFS"), a formal
decision to mine and 20% of the pre-production capital costs outlined in
the DFS being provided for; and
-- Tranche 3: US$4 million for a further 0.225% GRR following the
commencement of commercial production, taking the total to a 0.75% GRR.
Following the completion of Tranche 1, the Group currently holds a 0.3% GRR royalty over the Mount Ida project.
Ring of Fire Chromite, Canada (Cliffs Natural Resources Inc)
On May 9, 2012 Cliffs Natural Resources Inc. ("Cliffs") announced that its Board of Directors had approved
advancing its proposed chromite project, located in the Ring of Fire area of Northern Ontario, from pre-
feasibility to feasibility. Cliffs also announced that it had reached an agreement in principle with the
Government of Ontario over key elements of the project including development of provincial infrastructure. In
the announcement, Cliffs believes the chromite deposits it controls are world class, and, based on successful
completion of the feasibility and other project milestones, Cliffs anticipates a majority of the project's
expected capital requirements will be made in 2014 and 2015. The Group holds a 1% NSR royalty over the Ring of
Fire project including the Black Thor and Big Daddy deposits.
Salamanca Uranium, Spain (Berkeley Resources Ltd)
On July 24, 2012, Berkeley Resources Ltd ("Berkeley") announced they had reached an agreement with Enusa
Industrias Avanzadas S.A. on terms which provide Berkeley with a 100% interest in and exploitation rights to
State Reserves 28 and 29. The Group has a 1% NSR royalty over all uranium resources in Spain and Portugal held
by Berkeley.
Financial performance
The Group's royalty revenue for the three months ended September 30, 2012 was GBP 5.0million compared to GBP
8.0 million for the three months to September 30, 2011, and for the nine months ended September 30, 2012 was
GBP 11.9 million, compared to GBP 24.3 million for the nine months to September 30, 2011. The Group's royalty
entitlement per share for the third quarter was 5.02p per share compared to 7.52p per share for the comparable
period in 2011 and was 12.11p per share for the nine months ended September 30, 2012 compared to 27.85p per
share for the comparable period in 2011.
The Group's operating expenses, including salaries and wages, share-based compensation, audit, tax, legal
advisory fees and general office expenses, increased from GBP 2.0 million in the nine months ended September
30, 2011 to GBP 2.5 million for the same period in 2012. The operating expenses in the quarter ended September
30, 2012 were GBP 0.9 million compared to GBP 0.7 million in the comparable period in 2011. This reflects
additional headcount in the first quarter and other costs incurred in exploring new investment opportunities.
Realised gains on disposal of mining and exploration interests during the nine months to September 30, 2012
were GBP 4.3 million compared with GBP 18.8 million for comparable period in 2011. Gains on disposals during
the quarter to September 30, 2012 were GBP 2.3 million compared with GBP 11.3 million realised in the third
quarter of 2011. These gains were the result of the disposal of some of the Group's mining investments where
the acquisition of royalties was considered unlikely to materialise.
The Group realised a net foreign exchange loss in the nine months to September 30, 2012 of GBP 0.5 million
compared to a net foreign exchange loss of GBP 0.8 million in the comparable period of 2011. The net foreign
exchange gain for the quarter ended September 30, 2012 was GBP 0.3 million, against a net foreign exchange gain
of GBP 0.5 million in the third quarter of 2011. The Group both receives and acquires royalties in foreign
currencies and is therefore subject to foreign exchange risk, particularly in relation to its Australian
activities.
The Group's profit before tax for the nine months ended September 30, 2012 was GBP 15.0 million compared to GBP
41.1 million for the nine months ended September 30, 2011. Group earnings per share for the nine months ended
September 30, 2012 were 10.51p compared to 29.39p for the comparable period of 2011. For the quarter ended
September 30, 2012 the Group's profit before tax was GBP 7.1 million compared to GBP 18.5 million for the
comparable quarter in 2011. The Group's earnings per share for the three months ended September 30, 2012 were
5.76p compared to 14.31p for the third quarter of 2011.
Financial position
Total assets of GBP 353.2 million at September 30, 2012 compared to GBP 371.0 million at December 31, 2011
At September 30, 2012, the Group's Australian coal royalty interests have been independently valued at GBP
174.6 million compared to GBP 166.0 million at December 31, 2011 (restated). The increase was primarily due to
the rise in the Queensland coal royalty rates announced by the Queensland State Government. The Group's royalty
instruments following fair value adjustments were valued at GBP 21.3 million at September 30, 2012 compared to
GBP 24.7 million at December 31, 2011. This decrease is due to adjustments to future foreign exchange and
commodity price assumptions.
The total amortised cost of royalties treated as intangibles was GBP 70.8 million at September 30, 2012,
compared to GBP 68.3 million at December 31, 2011. The increase is due to the acquisition of the gross revenue
royalty over the Mount Ida iron ore project in Western Australia. As part of the annual impairment review a
directors' valuation of these royalties has been undertaken using a discounted cash flow valuation model, which
uses forecast commodity prices and management's best estimate of an appropriate discount rate taking into
account project-specific risk factors. At September 30, 2012 the directors' valuation of these assets was GBP
104.3 million (December 31, 2011: GBP 120.5 million). This excess over amortised cost is not included in the
balance sheet.
Coal Royalty Royalty Royalty
royalties Instruments Intangibles Options Total
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
September 30, 2012
Number 2 4 10 5 21
Amortised cost 196 12,493 70,819 728 84,236
Valuation 174,582 21,285 104,266 728 300,861
December 31, 2011
Number 2 4 9 4 19
Amortised cost 196 12,493 68,334 728 81,751
Valuation 165,967 24,736 120,485 728 311,916
For further information on royalty instruments and intangibles please refer to note 2 below.
At September 30, 2012, the Group's quoted and unquoted equity investments, including royalty options, were
valued at GBP 60.0 million compared to GBP 64.6 million at December 31, 2011. The private equity interests and
royalty options remain accounted for at cost.
At September 30, 2012, the Group had cash of GBP 15.2 million compared to GBP 32.2 million at December 31,
2011, with no borrowings or hedging. Combined with royalty and trade receivables, the Group's total cash and
receivables at September 30, 2012 was GBP 23.5 million compared to GBP 44.5 million at December 31, 2011. This
reduction was due to the lower production at Kestrel in the first quarter of 2012, recovery of royalties
overpaid in previous years and further strategic mining investments with a view to royalty acquisitions.
The Group has limited capital expenditure requirements other than for the acquisition of additional royalties.
Management believe that the Group's current cash resources and future cash flows from continuing royalty
revenues will be sufficient to cover the cost of general and administrative expenses, income taxes and dividend
payments.
The Group remains debt free and its liquid resources are held in a spread of currencies and financial
institutions. The Group's mining interests and royalty revenues are mainly denominated in Australian and
Canadian dollars.
The book value of the Group's total assets at September 30, 2012 was GBP 353.2 million compared to GBP 371.0
million at December 31, 2011. As at the period end, this does not include any increase in value over cost that
may be attributable to the Group's Panorama and Trefi coal projects and royalty intangibles.
Outlook
The uncertain outlook for much of the world economy has created difficult mining capital markets. As a result,
favourable conditions remain for acquiring existing royalties and for creating new royalties through the
provision of mining finance. The Group continues to identify and assess new opportunities and remains confident
of securing additional royalties.
The progress made during the year at a number of the Group's development royalties has been positive and should
bring forward future royalty cash flows.
The Group's revenue is directly linked to the top line of a number of mining operations, whilst avoiding
exposure to the current inflationary escalation in their mining costs. The Group itself has no operating mines
of its own and consequently has limited overheads.
The Group maintains its belief that the long term urbanisation of the developing world should continue to drive
demand for commodities.
Standards of disclosure for mineral projects
National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") contains certain
requirements relating to the use of mineral resource and mineral reserve categories of an "acceptable foreign
code" (as defined in NI 43-101) in "disclosure" (as defined in NI 43-101) made by Anglo Pacific Group PLC with
respect to a "mineral project" (as defined in NI 43-101), including the requirement to include a reconciliation
of any material differences between the mineral resource and mineral reserve categories used under an
acceptable foreign code and the standards developed by the Canadian Institute of Mining, Metallurgy and
Petroleum, as the CIM Definition Standards on Mineral Resources and Mineral Reserves adopted by CIM Council, as
amended (the "CIM Standards") in respect of a mineral project. Pursuant to an exemption order granted to Anglo
Pacific Group PLC by the Ontario Securities Commission (the "Exemption Order"), the information contained
herein with respect to the Four Mile Uranium Project, the Jogjakarta Iron Sands and Pig Iron Project and the
Mount Ida Magnetite Project has been extracted from information publicly disclosed, disseminated, filed,
furnished or similarly communicated to the public by an issuer whose securities trade on a "specified exchange"
(as defined under NI 43-101) that discloses mineral reserves and mineral resources under one of the JORC Code,
the PERC Code, the SAMREC Code, SEC Industry Guide 7 or the Certification Code (each as defined in NI 43-101).
As the definitions and standards of the JORC Code, the PERC Code, the SAMREC Code, SEC Industry Guide 7 and the
Certification Code are substantially similar to the CIM Standards, a reconciliation of any material differences
between the mineral resource and mineral reserve categories reported under the JORC Code, the PERC Code, the
SAMREC Code, SEC Industry Guide 7 and the Certification Code, as applicable, to categories under the CIM
Standards is not included and no Form 43-101F1 technical report will be filed to support the disclosure based
upon such exemption.
Cautionary note to U.S. investors concerning estimates of measured, indicated and inferred resources: Certain
technical disclosure in this press release has been prepared in accordance with the requirements of Canadian
securities laws, including NI 43-101, in certain cases as modified by the Exemption Order referred to above,
which differ from the requirements of U.S. securities laws. This press release uses the terms "measured
resources", "indicated resources" and "inferred resources". U.S. investors are advised that while such terms
are recognised and required by Canadian Securities laws, the Securities and Exchange Commission does not
recognise them. "Inferred resources" have a great amount of uncertainty as to their existence and as to their
economic and legal feasibility. It cannot be assumed that all or any part of an inferred resource will be
upgraded to a higher category. Under Canadian Securities laws, estimates of inferred resources may not form the
basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that all or any part
of measured resources or indicated resources will ever be converted into reserves. U.S. investors are also
cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or
legally mineable.
Anglo Pacific Group PLC
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2012
----------------------------------------------------------------------------
Three months ended Nine months ended
Restated Restated
September September September September
30, 2012 30, 2011 30, 2012 30, 2011
GBP '000 GBP '000 GBP '000 GBP '000
Royalty income 5,020 8,016 11,891 24,265
Finance income 116 392 475 1,150
Amortisation of
royalties (254) (254) (763) (763)
Operating expenses (865) (653) (2,464) (1,993)
------------- ------------- ------------- -------------
Operating
profit/(loss) 4,017 7,501 9,139 22,659
Gain on sale of
mining and
exploration
interests 2,256 11,326 4,295 18,790
Other income 642 229 1,336 638
Other gains/(losses) 186 (534) 271 (937)
------------- ------------- ------------- -------------
Profit before tax 7,101 18,522 15,041 41,150
Income tax expense (854) (3,035) (3,643) (9,329)
------------- ------------- ------------- -------------
Profit attributable
to equity holders 6,247 15,487 11,398 31,821
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Total and continuing
earnings per share
Basic earnings per
share 5.76p 14.31p 10.51p 29.39p
Diluted earnings per
share 5.76p 14.30p 10.51p 29.39p
The results for the three and nine months ended September 30, 2012 and 2011 have neither been audited nor
reviewed by the Group's auditors.
Anglo Pacific Group PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012
----------------------------------------------------------------------------
Three months ended Nine months ended
Restated Restated
September September September September
30, 2012 30, 2011 30, 2012 30, 2011
GBP '000 GBP '000 GBP '000 GBP '000
Profit for the
financial period 6,247 15,487 11,398 31,821
Other comprehensive
income
Net gain on
revaluation of coal
royalties 13,411 23,380 12,396 19,456
Net loss on
revaluation of
available for sale
investments (2,636) (29,435) (18,233) (52,422)
Net exchange loss on
translation of
foreign operations (6,516) (13,601) (4,311) (5,855)
Deferred tax (265) (1,369) 5,793 1,041
------------- ------------- ------------- -------------
Net income/(expense)
recognised directly
in equity 10,241 (5,538) 7,043 (5,959)
------------- ------------- ------------- -------------
Transferred to income
statement on
disposal of
available for sale
investments (1,522) (6,578) (2,668) (8,919)
------------- ------------- ------------- -------------
Total transferred
from equity (1,522) (6,578) (2,668) (8,919)
------------- ------------- ------------- -------------
Total comprehensive
income/(expense) for
the financial period 8,719 (12,116) 4,375 (14,878)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
The results for the three and nine months ended September 30, 2012 and 2011 have neither been audited nor
reviewed by the Group's auditors.
Anglo Pacific Group PLC
CONSOLIDATED BALANCE SHEET (UNAUDITED) AS AT SEPTEMBER 30, 2012
----------------------------------------------------------------------------
Restated Restated Restated
September September December December
30, 2012 30, 2011 31, 2011 31, 2010
GBP '000 GBP '000 GBP '000 GBP '000
------------- ------------- ------------ ------------
Non-current assets
Property, plant and
equipment 2,128 2,118 2,152 2,144
Coal royalties 174,582 183,512 165,967 169,304
Royalty instruments 21,285 22,169 24,736 28,061
Intangibles 71,725 69,606 69,138 42,741
Mining and exploration
interests 59,966 69,225 64,551 128,479
Other receivables 3,181 - - -
------------- ------------- ------------ ------------
332,867 346,630 326,544 370,729
Current assets
Trade and other
receivables 5,166 10,491 12,298 8,813
Cash and cash
equivalents 15,201 23,533 32,197 28,258
------------- ------------- ------------ ------------
20,367 34,024 44,495 37,071
------------- ------------- ------------ ------------
Total assets 353,234 380,654 371,039 407,800
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------
Non-current liabilities
Deferred tax 47,232 58,817 54,667 60,212
------------- ------------- ------------ ------------
47,232 58,817 54,667 60,212
Current liabilities
Current income tax
liabilities 3,201 2,861 3,731 4,987
Trade and other
payables 400 5,249 5,472 5,177
------------- ------------- ------------ ------------
3,601 8,110 9,203 10,164
------------- ------------- ------------ ------------
Total liabilities 50,833 66,927 63,870 70,376
------------- ------------- ------------ ------------
Capital and reserves
attributable to
shareholders
Share capital 2,192 2,184 2,184 2,175
Share premium 26,853 25,539 25,539 24,207
Coal royalty
revaluation reserve 88,853 96,809 80,285 83,405
Investment revaluation
reserve (17,190) (4,066) (4,843) 51,780
Share based payment
reserve 291 189 177 65
Foreign currency
translation reserve 38,370 35,429 41,614 39,686
Special reserve 632 632 632 632
Investment in own
shares (2,601) (2,601) (2,601) (1,295)
Retained earnings 165,001 159,612 164,182 136,769
------------- ------------- ------------ ------------
Total equity 302,401 313,727 307,169 337,424
------------- ------------- ------------ ------------
Total equity and
liabilities 353,234 380,654 371,039 407,800
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------
Anglo Pacific Group PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) FOR THE TWENTY-ONE
MONTHS ENDED SEPTEMBER 30, 2012
----------------------------------------------------------------------------
Coal
royalty Investment Share based
Share Share revaluation revaluation payment
capital premium reserve reserve reserve
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
----------------------------------------------------------------------------
Balance at January
1, 2011 (a
previously
reported) 2,175 24,207 88,883 51,780 65
Impact of
restatement - - (5,478) - -
---------------------------------------------------------
Balance at January
1, 2011 (as
restated) 2,175 24,207 83,405 51,780 65
Profit for the
period (restated) - - - - -
Other comprehensive
income:
Coal royalties:
Royalties
valuation
movement taken to
equity - - 19,456 - -
Deferred tax on
valuation - - (6,052) - -
Available-for-sale
investments:
Valuation movement
taken to equity - - - (52,422) -
Deferred tax on
valuation - - - 5,495 -
Transferred to
income statement
on disposal - - - (8,919) -
Foreign currency
translation - - - - -
---------------------------------------------------------
Total comprehensive
income - - 13,404 (55,846) -
---------------------------------------------------------
Dividends paid - - - - -
Issue of share
capital under
share-based
payment 9 1,332 - - 124
---------------------------------------------------------
9 1,332 - - 124
---------------------------------------------------------
Balance at
September 30, 2011
(restated) 2,184 25,539 96,809 (4,066) 189
---------------------------------------------------------
----------------------------------------------------------------------------
Foreign
currency Investment
translation Special in Retained Total
reserve reserve Own Shares earnings equity
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
----------------------------------------------------------------------------
Balance at January
1, 2011 (a
previously
reported) 39,686 632 (1,295) 139,755 345,888
Impact of
restatement - - - (2,986) (8,464)
---------------------------------------------------------
Balance at January
1, 2011 (as
restated) 39,686 632 (1,295) 136,769 337,424
Profit for the
period (restated) - - - 31,821 31,821
Other comprehensive
income:
Coal royalties:
Royalties
valuation
movement taken to
equity (5,247) - - - 14,209
Deferred tax on
valuation 1,545 - - - (4,507)
Available-for-sale
investments:
Valuation movement
taken to equity (355) - - - (52,777)
Deferred tax on
valuation 53 - - - 5,548
Transferred to
income statement
on disposal - - - - (8,919)
Foreign currency
translation (253) - - - (253)
---------------------------------------------------------
Total comprehensive
income (4,257) - - 31,821 (14,878)
---------------------------------------------------------
Dividends paid - - - (8,978) (8,978)
Issue of share
capital under
share-based
payment - - (1,306) - 159
---------------------------------------------------------
- - (1,306) (8,978) (8,819)
---------------------------------------------------------
Balance at
September 30, 2011
(restated) 35,429 632 (2,601) 159,612 313,727
---------------------------------------------------------
----------------------------------------------------------------------------
Coal
royalty Investment Share based
Share Share revaluation revaluation payment
capital premium reserve reserve reserve
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
----------------------------------------------------------------------------
Balance at October
1, 2011
(restated) 2,184 25,539 96,809 (4,066) 189
----------------------------------------------------------
Profit for the
period (restated) - - - - -
Other
comprehensive
income:
Coal royalties:
Royalties
valuation
movement taken
to equity - - (23,595) - -
Deferred tax on
valuation - - 7,071 - -
Available-for-sale
investments:
Valuation
movement taken
to equity - - - 753 -
Deferred tax on
valuation - - - (359) -
Transferred to
income statement
on disposal - - - (1,171) -
Foreign currency
translation - - - - -
----------------------------------------------------------
Total
comprehensive
income - - (16,524) (777) -
----------------------------------------------------------
Dividends paid - - - - -
Issue of share
capital under
share-based
payment - - - - (12)
----------------------------------------------------------
- - - - (12)
----------------------------------------------------------
Balance at
December 31, 2011
(restated) 2,184 25,539 80,285 (4,843) 177
----------------------------------------------------------
----------------------------------------------------------------------------
Foreign
currency Investment
translation Special in Retained Total
reserve reserve Own Shares earnings equity
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
----------------------------------------------------------------------------
Balance at October
1, 2011
(restated) 35,429 632 (2,601) 159,612 313,727
----------------------------------------------------------
Profit for the
period (restated) - - - 4,551 4,551
Other
comprehensive
income:
Coal royalties:
Royalties
valuation
movement taken
to equity 6,050 - - - (17,545)
Deferred tax on
valuation (1,781) - - - 5,290
Available-for-sale
investments:
Valuation
movement taken
to equity 118 - - - 871
Deferred tax on
valuation (40) - - - (399)
Transferred to
income statement
on disposal - - - - (1,171)
Foreign currency
translation 1,838 - - - 1,838
----------------------------------------------------------
Total
comprehensive
income 6,185 - - 4,551 (6,565)
----------------------------------------------------------
Dividends paid - - - - -
Issue of share
capital under
share-based
payment - - - 19 7
----------------------------------------------------------
- - - 19 7
----------------------------------------------------------
Balance at
December 31, 2011
(restated) 41,614 632 (2,601) 164,182 307,169
----------------------------------------------------------
----------------------------------------------------------------------------
Coal
royalty Investment Share based
Share Share revaluation revaluation payment
capital premium reserve reserve reserve
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
----------------------------------------------------------------------------
Balance at January
1, 2011 (restated) 2,184 25,539 80,285 (4,843) 177
---------------------------------------------------------
Profit for the
period - - - - -
Other comprehensive
income:
Coal royalties:
Royalties
valuation
movement taken to
equity - - 12,396 - -
Deferred tax on
valuation - - (3,828) - -
Available-for-sale
investments:
Valuation movement
taken to equity - - - (18,233) -
Deferred tax on
valuation - - - 8,554 -
Transferred to
income statement
on disposal - - - (2,668) -
Foreign currency
translation - - - - -
---------------------------------------------------------
Total comprehensive
income - - 8,568 (12,347) -
---------------------------------------------------------
Dividends paid - - - - -
Issue of ordinary
shares 8 1,314 - - -
Value of employee
services - - - - 114
---------------------------------------------------------
8 1,314 - - 114
---------------------------------------------------------
Balance at
September 30, 2012 2,192 26,853 88,853 (17,190) 291
---------------------------------------------------------
----------------------------------------------------------------------------
Foreign
currency Investment
translation Special in Retained Total
reserve reserve Own Shares earnings equity
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
----------------------------------------------------------------------------
Balance at January
1, 2011 (restated) 41,614 632 (2,601) 164,182 307,169
---------------------------------------------------------
Profit for the
period - - - 11,398 11,398
Other comprehensive
income:
Coal royalties:
Royalties
valuation
movement taken to
equity (3,781) - - - 8,615
Deferred tax on
valuation 1,117 - - - (2,711)
Available-for-sale
investments:
Valuation movement
taken to equity (324) - - - (18,557)
Deferred tax on
valuation (50) - - - 8,504
Transferred to
income statement
on disposal - - - - (2,668)
Foreign currency
translation (206) - - - (206)
---------------------------------------------------------
Total comprehensive
income (3,244) - - 11,398 4,375
---------------------------------------------------------
Dividends paid - - - (10,579) (10,579)
Issue of ordinary
shares - - - - 1,322
Value of employee
services - - - - 114
---------------------------------------------------------
- - - (10,579) (9,143)
---------------------------------------------------------
Balance at
September 30, 2012 38,370 632 (2,601) 165,001 302,401
---------------------------------------------------------
Anglo Pacific Group PLC
CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012
----------------------------------------------------------------------------
Three months ended Nine months ended
September September September September
30, 2012 30, 2011 30, 2012 30, 2011
GBP '000 GBP '000 GBP '000 GBP '000
Cash flows from
operating activities
Profit before
taxation 7,101 18,522 15,041 41,150
Adjustments for:
Interest received (431) (393) (1,200) (1,151)
Unrealised foreign
currency (gain)/loss (371) (740) (1,238) 617
Depreciation of
property, plant and
equipment 6 6 16 16
Amortisation of
Intangibles -
royalties 254 254 763 763
Gain on disposal of
mining and
exploration
interests (2,256) (11,326) (4,295) (18,790)
Loss on write down of
assets - - - 147
Share based payments 38 49 115 124
------------- ------------- ------------- -------------
4,341 6,372 9,202 22,876
(Increase)/Decrease
in trade and other
receivables (1,744) (3,234) 7,132 (1,678)
(Decrease)/Increase
in trade and other
payables (1,460) 412 (5,072) 72
Receipt from royalty
instruments 374 120 1,197 467
------------- ------------- ------------- -------------
Cash generated from
operations 1,511 3,670 12,459 21,737
Income taxes paid 72 (4,978) (4,126) (12,052)
------------- ------------- ------------- -------------
Net cash from
operating activities 1,583 (1,308) 8,333 9,685
------------- ------------- ------------- -------------
Cash flows from
investing activities
Proceeds on disposal
of mining and
exploration
interests 7,790 24,058 12,968 47,986
Purchase of mining
and exploration
interests (3,986) (2,992) (22,963) (26,189)
Purchases of royalty
interests - (27,599) (2,497) (27,599)
Purchases of
property, plant and
equipment - - - (48)
Funding of royalty
financing
arrangements (3,181) - (3,181) -
Exploration and
evaluation
expenditure (70) (8) (125) (26)
Interest received 791 176 1,048 443
------------- ------------- ------------- -------------
Net cash
generated/(used) in
investing activities 1,344 (6,365) (14,750) (5,433)
------------- ------------- ------------- -------------
Cash flows from
financing activities
Dividends paid (5,978) (5,520) (10,579) (8,977)
------------- ------------- ------------- -------------
Net cash used in
financing activities (5,978) (5,520) (10,579) (8,977)
------------- ------------- ------------- -------------
Net decrease in cash
and cash equivalents (3,051) (13,193) (16,996) (4,725)
Cash and cash
equivalents at
beginning of period 18,252 36,726 32,197 28,258
------------- ------------- ------------- -------------
Cash and cash
equivalents at end
of period 15,201 23,533 15,201 23,533
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
The results for the three and nine months ended September 30, 2012 and 2011 have neither been audited nor
reviewed by the Group's auditors.
1 Summary of significant accounting policies
1.1 Basis of preparation
The condensed consolidated interim financial information of Anglo Pacific Group PLC contained in this release
is for the three and nine months ended September 30, 2012. This information has been prepared in accordance
with IAS 34 'Interim Financial Reporting', as adopted by the European Union, however this release does not
include sufficient information to comply with IFRS, and should be read in conjunction with the consolidated
financial statements of the Group for the year ended December 31, 2011 and the condensed consolidated interim
financial statements for the period ended September 30, 2012.
The condensed consolidated interim financial statements have been prepared in accordance with the accounting
policies adopted in the last annual financial statements for the year to December 31, 2011, which were prepared
in accordance with IFRS, as adopted by the European Union.
This condensed consolidated quarterly and year to date financial information does not comprise statutory
accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended
December 31, 2011 were approved on March 6, 2012. These accounts which contained an unqualified audit report
under Section 495 of the Companies Act 2006 and which did not make any statements under Section 498 of the
Companies Act 2006, have been delivered to the Registrar of Companies in accordance with Section 441 of the
Companies Act 2006.
Financial results presented for the three and nine months ended September 30, 2012 and 2011, together with all
other quarterly results have neither been audited nor reviewed by the Group's auditors.
1.2 Prior period adjustment
As reported in the Group's condensed consolidated interim financial statements for the three and six months
ended June 30, 2012, an audit by the Queensland Office of State Revenue identified a misallocation of royalty
revenue attributable to the Group of A$7.1 million more than it was entitled to, over a six year period ended
December 31, 2011. In accordance with IAS 8, the prior periods financial statements are restated to reflect
what the position would have been, taking into account this information.
The restatement has resulted in a reduction in income of GBP 425,000 to GBP 24,265,000 for the nine months
ended September 30, 2011. Allowing for income tax credits, the reported profit after tax has reduced by GBP
294,000 to GBP 31,821,000 for the nine months ended September 30, 2011.
The Group's independent valuation of coal royalties was restated to reflect future income now set aside for the
State, resulting in a GBP 7,800,000 reduction in their carrying value to GBP 183,512,000 as at September 30,
2011. Allowing for a deferred tax credit of GBP 4,000,000 and after reflecting a payable to the State of GBP
4,700,000, net assets reduced from GBP 322,500,000 as originally reported to GBP 313,700,000 as now shown on
the balance sheet as at September 30, 2011.
2 Non-current assets
(a) Coal royalties
The Group's coal royalties comprise the Kestrel and Crinum coal royalties in Queensland, Australia.
The Group commissioned a valuation of the coal royalties as at September 30, 2012, based on a net present value
of the pre-tax cash flow discounted at a rate of 7%, which produced a valuation of A$271.3 million (GBP 174.6
million). At present the net royalty income is taxed in Australia at a rate of 30%. Were the coal royalties to
be realised at the revalued amount there are GBP 2.0 million (A$3.1 million) of capital losses potentially
available to offset against taxable gains. These losses have been included in the deferred tax computation.
(b) Royalty instruments
Royalty instruments represent the Group's interests in four mineral properties which, through the issue of
convertible debentures, the Group has acquired GRR or NSR royalties. These are the Engenho property in Brazil,
the El Valle-Boinas/Carles property in Spain, the Jogjakarta Iron Sands Project in Indonesia and the Midway-
McKenzie Break properties in Canada. In the Group's latest annual financial statements for the year ended
December 31, 2011, these interests were described as "Royalty Instruments". No change has been made to the
accounting treatment of these interests.
(c) Intangibles
Intangible royalty interests represent the NSR royalties acquired on the Four Mile project in South Australia,
the Salamanca uranium project in Spain, the Black Thor, Black Label and Big Daddy chromite projects in Northern
Ontario, Canada and a number of tenements in the Athabasca Basin region of Canada, together with the gross
revenue royalties covering the Amapa iron ore system in Brazil, the Isua iron ore project in Greenland, the
Mount Ida magnetite project in Western Australia and three exploration licences, including the Railway iron ore
deposit, in the central Pilbara region of Western Australia.
Acquisition costs of royalty interests on feasibility stage mineral properties are not amortised. At such time
as the associated mineral interests are placed into production, the cost base is amortised over the expected
life of mine. Amortisation rates are adjusted on a prospective basis for all changes to estimates of the life
of mine.
Also included within intangibles are the deferred exploration costs of GBP 905,000 (December 31, 2011: GBP
804,000) associated with the Group's Panorama and Trefi Projects in British Columbia, Canada.
(d) Mining and exploration Interests
The investments in mining and exploration interests represent investments in listed and unlisted equity
securities which are acquired as part of the Group strategy to acquire new royalties. Gains may be realised
where it is deemed appropriate by the Investment Committee. The fair values of these securities are based on
quoted market prices for listed securities and cost for unlisted securities based on the variability of cash
flows being so significant that an alternative valuation technique would not provide a useful value. The fair
values are reviewed for impairment biannually. In the statement of changes in equity these interests are
classified as "available-for-sale investments". For a full explanation of the Group's accounting policies in
relation to the mining and exploration interests please see the 2011 Annual Report.
Cautionary statement on forward-looking statements and related information
Certain information contained in this press release, including any information as to future financial or
operating performance and other statements that express management's expectation or estimates of future
performance, constitute "forward-looking statements". The words "expects", "anticipates", "plans", "believes",
"estimates", "seeks", "intends", "targets", "projects", "forecasts", or negative versions thereof and other
similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon
a number of estimates and assumptions that, while considered reasonable by management, are inherently subject
to significant business, economic and competitive uncertainties and contingencies. Further, forward-looking
statements are not guarantees of future performance and involve risks and uncertainties which could cause
actual results to differ materially from those anticipated, estimated or intended in the forward-looking
statements.
The material assumptions and risks relevant to the forward-looking statements in this press release include,
but are not limited to: stability of the global economy; stability of local government and legislative
background; continuing of ongoing operations of the properties underlying the Group's portfolio of royalties in
a manner consistent with past practice; accuracy of public statements and disclosures (including feasibility
studies and estimates of reserve, resource, production, grades, mine life, and cash cost) made by the owners or
operators of such underlying properties; no material adverse change in the price of the commodities underlying
the Group's portfolio of royalties and investments; no material adverse change in foreign exchange exposure; no
adverse development in respect of any significant property in which the Group holds a royalty or other
interest, including but not limited to unusual or unexpected geological formations and natural disasters;
successful completion of new development projects; planned expansions or additional projects being within the
timelines anticipated and at anticipated production levels; and maintenance of mining title. If any such risks
actually occur, they could materially adversely affect the Group's business, financial condition or results of
operations. For additional information with respect to such risks and uncertainties, please refer to the "Risk
Factors" section of our most recent Annual Information Form available on www.SEDAR.com and the Group's website
www.anglopacificgroup.com. Readers are cautioned to consider these and other factors, uncertainties and
potential events carefully and not to put undue reliance on forward-looking statements. The forward-looking
statements contained in this press release are made as of the date of this press release only and the Group
undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of
new information, future events or otherwise, after the date on which the statements are made or to reflect the
occurrence of unanticipated events.
(1) Alliance Resources Limited is listed on the Australian Securities Exchange and reports in accordance with
the JORC Code.
(2) Indo Mines Limited is listed on the Australian Securities Exchange and reports in accordance with the JORC
Code.
(3) Jupiter Mines Limited is listed on the Australian Securities Exchange and reports in accordance with the
JORC Code.
FOR FURTHER INFORMATION PLEASE CONTACT:
Anglo Pacific Group PLC
John Theobald
Chief Executive Officer
+44 (0) 20 3435 7400
OR
Anglo Pacific Group PLC
Chris Orchard
Chief Investment Officer
+44 (0) 20 3435 7400
www.anglopacificgroup.com
OR
Liberum Capital
Chris Bowman
+44 (0) 20 3100 2000
OR
Liberum Capital
Christopher Kololian
+44 (0) 20 3100 2000
OR
Pelham Bell Pottinger
Lorna Spears
+44 (0) 20 7861 3232
OR
Pelham Bell Pottinger
James MacFarlane
+44 (0) 20 7861 3232
Anglo Pacific Group Plc
Latest directors dealings
- 11 minutes ago Wizz Air Holdings
- 20 minutes ago Trifast
- 29 minutes ago Molten Ventures
- 1 hour ago XPS Pensions Group
- 1 hour ago Eneraqua Technologies