Anglo Pacific - Interim Results for the three a...
FOR: ANGLO PACIFIC GROUP PLC
LSE SYMBOL: APF
TSX SYMBOL: APY
October 31, 2011
Anglo Pacific Group PLC Interim Results for the Three and Nine Months Ended September 30, 2011
LONDON, UNITED KINGDOM--(Marketwire - Oct. 31, 2011) - Anglo Pacific Group PLC ('Anglo Pacific', the 'Group')
(LSE:APF)(TSX:APY) is pleased to announce interim results for the three and nine months ended September 30, 2011. 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:
-- Increased royalty income for the quarter of GBP 8.3 million (GBP 6.6
million for Q3 2010)
-- Royalty cash flow per share for the nine months ended September 30, 2011
of 23.13p (21.06p for the comparable period in 2010)
-- Strong cash position at September 30, 2011 of GBP 23.5 million (GBP 28.3
million at December 31, 2010), with no borrowings or hedging
-- Completion of acquisition of royalties on Cliffs Natural Resources'
Black Thor, Black Label and Big Daddy chromite deposits
-- Completion of acquisition of Isua iron ore royalty from London Mining
Plc
-- Total assets of GBP 388.5 million at September 30, 2011 (GBP 415.6
million at December 31, 2010)
Peter Boycott, Chairman of Anglo Pacific, commented:
"We have continued to see a strong performance in our royalty portfolio and growth in our royalty income compared with
the corresponding period in 2010, which demonstrates the strength of both our business model and strategy. We continue
to benefit from top line revenue exposure at a time when the mining industry is subject to significant operating cost
inflation.
The Group has also realised significant gains during the period from the disposal of its equity interests following
takeovers of both First Coal Corporation and Goldminco Corporation. These and other disposals have provided valuable
liquidity at a time when the Group is examining a number of royalty opportunities offering significant long term returns
to shareholders. We have delivered on our stated goals of acquiring three to four new royalties annually with the
recently completed chromite and iron ore acquisitions. These provide further diversification to our royalty portfolio
and preserve our focus on projects owned and operated by established mining companies."
Conference call:
There will be a conference call for analysts on 31 October at 9:30am (GMT). The dial-in details are as follows:
Participant dial in number: +44 (0)20 7136 2056 / 2469473 (confirmation code). There will be a replay facility available
on the Group's website, at www.anglopacific.com, until 7 November.
The full text of both the financial statements and the Management's Discussion and Analysis may also be obtained by
following the following links in this press release:
Financial Statements: http://www.anglopacificgroup.com/i/pdf/111030Q3Financials
Management's Discussion and Analysis: http://www.anglopacificgroup.com/i/pdf/111030Q3MDA
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 low-cost, 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
Anglo Pacific has been successful in acquiring three royalties, in line with its stated goals, during the first nine
months of 2011. These royalties have provided further diversification through the addition of potential revenue streams
from nickel laterite, iron ore and chromite. This is consistent with the Group's focus on commodities leveraged to the
continuing growth in Asia and other developing regions.
On January 12, 2011 the Group completed the previously announced Royalty Option Agreement with Horizonte Minerals PLC
("Horizonte") for the Group to purchase a NSR royalty on all revenues from the advanced exploration stage Araguaia and
Lontra Nickel Projects ("Araguaia Project") in Brazil. The Group paid Horizonte the sum of US$0.5 million in exchange
for the six year option to acquire a 1.5% NSR royalty from the Araguaia Project for US$12.5 million.
On August 2, 2011, the Group announced the purchase of an existing 1% NSR royalty over the Black Label, Black Thor and
Big Daddy chromite deposits in Ontario, Canada, from KWG Resources Inc ("KWG"). These projects are operated by Cliffs
Natural Resources ("Cliffs") and form part of Cliffs' organic growth plans in the "Ring of Fire" area in northern
Ontario. The consideration for the acquisition was US$18 million.
On August 3, 2011 the Group announced its agreement to advance US$30 million to London Mining PLC ("London Mining") in
exchange for a 1.0% GRR royalty over the Isua iron ore project in Greenland. The agreement contains a number of
benchmarks. In the event of these not being met the Group retains the right to be repaid in cash or, at London Mining's
option, in shares at the market price at the time.
The Group continues to evaluate a number of opportunities to acquire or create more royalties in order to further
diversify and increase the Group's revenue stream.
Royalty portfolio
The Group's portfolio of producing royalties continues its strong performance with growth in royalty income when
compared with the corresponding period in 2010. This demonstrates the strength of both the Group's business model and
strategy.
Kestrel
During the third quarter production volumes at Kestrel recovered following the completion of the longwall changeout,
increasing by 172% compared to the second quarter, and were 20% higher than for the same period in 2010. Despite
commodity prices coming under pressure during the quarter due to uncertainty surrounding world economic growth, a number
of Queensland coking coal producers have taken longer than expected to recover from January's flooding and as a result
coking coal prices have stayed firm, exceeding US$280 per tonne during the quarter.
These higher prices have resulted in Kestrel coal royalties for the quarter ended September 30, 2011 of GBP 7.1 million
(A$10.9 million) compared to GBP 5.0 million (A$8.6 million) for the comparable period in 2010.
Crinum
As the Crinum longwall leaves the Group's private royalty ground royalties for the quarter ended September 30, 2011
reduced to GBP 0.4 million (A$0.6 million) compared to GBP 1.6 million (A$2.8 million) for the same quarter of 2010. In
the Group's coal royalty valuation future production from Crinum continues to be difficult to evaluate and as a result
is ascribed no value.
Amapa
Royalty receipts for the quarter ended September 30, 2011 were GBP 0.8 million. This represented an increase of 77% over
the second quarter of 2011. This is the first year the Group has owned the Amapa royalty. Continued strong iron ore
contract pricing provides the Group with confidence in the future revenues from this royalty.
El Valle
The El Valle project commenced commissioning during the second quarter, with first sales from the project occurring in
the three months ended September 30, 2011. The first royalty payment from this gold and copper mine is due in November
2011.
Engenho
Royalty payments during the three months to September 30, 2011 were GBP 0.1 million compared to GBP 0.1 million in the
comparable quarter of 2010. Delays in permitting the adjacent Crista deposit have resulted in the Engenho operations
being put on care and maintenance until the Crista permits have been resolved. In addition to Engenho, the Group's
royalty covers Crista and other adjacent deposits. Royalty payments under this repayable debenture are classified as
repayments of principal and interest until the debenture is repaid.
Financial performance
Group royalty revenue for the nine months ended September 30, 2011 increased to GBP 24.7 million compared to GBP 22.3
million for the first nine months of 2010. Cash flows from these royalties and the Group's royalty debentures increased,
resulting in royalty cash flow per share for the nine months ended September 30, 2011 of 23.13p per share compared with
21.06p per share for the nine months ended September 30, 2010.
The Group's operating expenses decreased from GBP 2.4 million in the first nine months of 2010 to GBP 2.0 million in the
nine months to September 30, 2011. This change was largely due to significantly decreased external legal fees. These
fees were lower due to the "one-off" nature of the Group's listing on the Toronto Stock Exchange and more legal
documentation being performed internally following the appointment of a Group counsel. Both this appointment and the
addition of an internal analyst did however contribute to employee benefit expenses increasing by GBP 0.3 million for
the nine months ended September 30, 2011, compared to the same period in 2010.
Gains on disposal during the nine months to September 30, 2011 were GBP 18.8 million, compared with GBP 19.2 million
realised during the comparable period in 2010.
The Group realised a net foreign exchange loss in the nine months to September 30, 2011 of GBP 0.8 million, compared to
a net foreign exchange gain of GBP 0.1 million in the comparable period of 2010. The Group benefited from the strength
in the Australian and Canadian currencies relative to sterling for much of the first nine months of 2011, although both
of these currencies weakened prior to the period end. Management continue to examine ways of reducing potential foreign
exchange risks and minimise exchange rate related fluctuations in the Group's financial performance and position.
Income tax expense for the nine months ended September 30, 2011 was GBP 9.5 million, compared to GBP 9.0 million for the
nine months ended September 30, 2010.
Overall the Group's profit before tax for the nine months ended September 30, 2011 was GBP 41.6 million compared to GBP
39.9 million for the nine months ended September 30, 2010. Group earnings per share for the nine months ended September
30, 2011 were 29.52p compared to 28.53p for the first nine months of 2010.
Financial position
Total assets of GBP 388.5 million at September 30, 2011 compared to GBP 415.6 million at December 31, 2010.
At September 30, 2011 the Group's Australian coal royalty interests have been independently valued at GBP 191.4 million
compared to GBP 177.1 million at December 31, 2010. The change was primarily due to an increase in expected long term
coking coal prices. The Group's royalty instruments following fair value adjustments were valued at GBP 22.2 million at
September 30, 2011 compared to GBP 28.1 million at December 31, 2010. This decrease is due to adjustments to future
foreign exchange and commodity price assumptions.
The total cost of royalties treated as intangibles was GBP 60.8 million at September 30, 2011, compared to GBP 42.1
million at December 31, 2010. The increase is due to the acquisition of the Isua iron ore and Ring of Fire chromite
royalties during the period.
Coal Royalty Royalty Royalty
royalties Instruments Intangibles Options Total
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
September 30, 2011
Number 2 4 9 4 19
Cost 195 12,493 60,810 728 74,226
Valuation 191,360 22,169 69,422 728 283,679
Accounting treatment Valuation Valuation Cost Cost
December 31, 2010
Number 2 4 6 2 14
Cost 166 12,493 42,130 406 55,195
Valuation 177,130 28,061 54,155 406 259,752
Accounting treatment Valuation Valuation Cost Cost
For further information on royalty instruments and intangibles refer to note 2.
At September 30, 2011, the Group's quoted and unquoted equity investments, including royalty options, were valued at GBP
69.2 million compared to GBP 128.5 million at December 31, 2010. The private equity interests and royalty options remain
accounted for at cost. The reduction in the market value of the Group's quoted equity interests was primarily a result
of lower mining equity prices following significant volatility during the nine month period to September 30, 2011, as
well as a number of disposals where the Group's Investment Committee deemed a royalty opportunity was no longer likely.
At September 30, 2011 the Group had cash of GBP 23.5 million compared to GBP 28.3 million at December 31, 2010, with no
borrowings or hedging. Combined with royalty and trade receivables, the Group's total cash and receivables at September
30, 2011 was GBP 34.0 million compared to GBP 37.1 million at December 31, 2010. This reduction was due to the
acquisition of two new royalties in the period, which was largely offset by the receipt of royalties due and proceeds
from disposals of equity interests.
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. Management
also believe the Group has sufficient capital and working capital resources to continue to deliver its strategy of
acquiring new royalties.
The Group remains debt free and its liquid resources are held in a spread of currencies and financial institutions,
however 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, 2011 was GBP 388.5 million compared to GBP 415.6 million at
December 31, 2010. 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 Group's royalty cash flows continue to benefit from the underlying demand for commodities in the world's developing
economies. The Group's existing royalty exposure to steel-related commodities in the form of coking coal, iron ore and
chromite provide it with exposure to the strong, long-term fundamentals of the continuing growth in Asia and other
developing regions. In addition the Group now holds a number of high quality, long life assets with the potential for
significant returns.
The Group's strategy of acquiring additional royalties continues to benefit from difficult debt and equity markets for
mine developers. In this environment the Group is well placed with its strong balance sheet and royalty revenues to
target acquisition opportunities that will add value for its shareholders.
Anglo Pacific Group PLC
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011
----------------------------------------------------------------------------
Three months ended Nine months ended
---------------------- ----------------------
September September September September
30, 2011 30, 2010 30, 2011 30, 2010
GBP '000 GBP '000 GBP '000 GBP '000
Royalty income 8,329 6,614 24,690 22,294
Finance income 217 162 708 504
Amortisation of royalties (254) - (763) -
Operating expenses (658) (928) (1,997) (2,387)
---------- ---------- ---------- ----------
Operating profit 7,634 5,848 22,638 20,411
Share of profits of associates - - - 262
Gain on sale of mining and
exploration interests 11,326 1,808 18,790 19,179
Other income 405 93 1,081 289
Other (losses)/gains (534) 434 (937) (231)
---------- ---------- ---------- ----------
Profit before tax 18,831 8,183 41,572 39,910
Income tax expense (3,129) (2,037) (9,457) (9,032)
---------- ---------- ---------- ----------
Profit attributable to equity
holders 15,702 6,146 32,115 30,878
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Total and continuing earnings
per share
Basic earnings per share 14.44p 5.68p 29.52p 28.53p
Diluted earnings per share 14.43p 5.68p 29.52p 28.53p
Anglo Pacific Group PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011
----------------------------------------------------------------------------
Three months ended Nine months ended
---------------------- ----------------------
September September September September
30, 2011 30, 2010 30, 2011 30, 2010
GBP '000 GBP '000 GBP '000 GBP '000
Profit for the financial
period 15,702 6,146 32,115 30,878
Other comprehensive income
Net gain/(loss) on revaluation
to coal royalties 539 (5,374) 19,721 988
Net (loss)/gain on revaluation
of available for sale
investments (17,188) 22,052 (52,422) 19,106
Net exchange (loss)/gain on
translation of foreign
operations (10,540) 15,528 (6,098) 17,179
Share of other comprehensive
income of associates - (141) - (38)
Deferred tax 4,932 (4,961) 1,035 (6,596)
---------- ---------- ---------- ----------
Net (expense)/income
recognised directly in equity (6,555) 33,250 (5,649) 61,517
---------- ---------- ---------- ----------
Transferred to income
statement disposal of
available for sale
investments (2,898) (88) (8,919) (16,327)
---------- ---------- ---------- ----------
Total transferred from equity (2,898) (88) (8,919) (16,327)
---------- ---------- ---------- ----------
Total comprehensive income for
the financial period (9,453) 33,162 (14,568) 45,190
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Anglo Pacific Group PLC
CONSOLIDATED BALANCE SHEET (UNAUDITED) AS AT SEPTEMBER 30, 2011
----------------------------------------------------------------------------
Unaudited Unaudited Audited
September September December
30, 2011 30, 2010 31, 2010
GBP '000 GBP '000 GBP '000
---------- ---------- ----------
Non-current assets
Property, plant and equipment 2,118 2,086 2,144
Coal royalties 191,360 166,778 177,130
Royalty instruments 22,169 25,178 28,061
Intangibles 69,606 23,986 42,741
Mining and exploration interests 69,225 108,913 128,479
Investments in associates - - -
---------- ---------- ----------
354,478 326,941 378,555
Current assets
Trade and other receivables 10,490 7,421 8,813
Cash and cash equivalents 23,533 27,768 28,258
---------- ---------- ----------
34,023 35,189 37,071
---------- ---------- ----------
Total assets 388,501 362,130 415,626
---------- ---------- ----------
---------- ---------- ----------
Non-current liabilities
Deferred tax 62,579 55,461 63,838
---------- ---------- ----------
62,579 55,461 63,838
Current liabilities
Current income tax liabilities 2,860 7,417 4,987
Trade and other payables 560 753 913
---------- ---------- ----------
3,420 8,170 5,900
---------- ---------- ----------
Total liabilities 65,999 63,631 69,738
---------- ---------- ----------
Capital and reserves attributable to
shareholders
Share capital 2,184 2,171 2,175
Share premium 25,539 23,262 24,207
Coal royalty revaluation reserve 102,473 89,170 88,883
Investment revaluation reserve (4,066) 38,121 51,780
Share based payment reserve 189 2 65
Foreign currency translation reserve 35,259 31,257 39,686
Special reserve 632 632 632
Investment in own shares (2,601) (1,295) (1,295)
Retained earnings 162,893 115,179 139,755
---------- ---------- ----------
Total equity 322,502 298,499 345,888
---------- ---------- ----------
Total equity and liabilities 388,501 362,130 415,626
---------- ---------- ----------
---------- ---------- ----------
Anglo Pacific Group PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) FOR THE TWENTY-ONE
MONTHS ENDED SEPTEMBER 30, 2011
----------------------------------------------------------------------------
Coal
royalty Investment Share
revalua- revalua- based
Share Share tion tion payment
capital premium reserve reserve reserve
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
----------------------------------------------------------------------------
Balance at January 1,
2010 2,149 20,718 88,582 36,850 78
Profit for the period - - - - -
Other comprehensive
income:
Coal royalties:
Royalties valuation
movement taken to
equity - - 988 - -
Deferred tax on
valuation - - (400) - -
Available-for-sale
investments:
Valuation movement
taken to equity - - - 19,106 -
Deferred tax on
valuation - - - (1,508) -
Transferred to income
statement on disposal - - - (16,327) -
Reclassification as
investment in
associate - - - - -
Share of comprehensive
income of associates - - - - -
Foreign currency
translation - - - - -
----------------------------------------------------
Total comprehensive
income - - 588 1,271 -
----------------------------------------------------
Dividends paid - - - - -
Scrip dividend 11 1,199 - - -
Issue of share capital - - - - -
Issue of share capital
under share-based
payment 11 1,345 - - (76)
----------------------------------------------------
22 2,544 - - (76)
----------------------------------------------------
Balance at September
30, 2010 2,171 23,262 89,170 38,121 2
----------------------------------------------------
Balance at September
30, 2010 2,171 23,262 89,170 38,121 2
Profit for the period - - - - -
Other comprehensive
income:
Coal royalties:
Royalties valuation
movement taken to
equity - - (633) - -
Deferred tax on
valuation - - 346 - -
Available-for-sale
investments:
Valuation movement
taken to equity - - - 29,121 -
Deferred tax on
valuation - - - (5,138) -
Transferred to income
statement on disposal - - - (10,324) -
Reclassification as
investment in
associate - - - - -
Share of comprehensive
income of associates - - - - -
Foreign currency
translation - - - - -
----------------------------------------------------
Total comprehensive
income - - (287) 13,659 -
----------------------------------------------------
Dividends paid - - - - -
Scrip dividend 3 826 - - -
Issue of share capital - - - - -
Issue of share capital
under share-based
payment 1 119 - - 63
----------------------------------------------------
4 945 - - 63
----------------------------------------------------
Balance at December 31,
2010 2,175 24,207 88,883 51,780 65
----------------------------------------------------
Balance at January 1,
2011 2,175 24,207 88,883 51,780 65
Profit for the period - - - - -
Other comprehensive
income:
Coal royalties:
Royalties valuation
movement taken to
equity - - 19,721 - -
Deferred tax on
valuation - - (6,131) - -
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) -
Reclassification as
investment in
associate - - - - -
Share of comprehensive
income of associates - - - - -
Foreign currency
translation - - - - -
----------------------------------------------------
Total comprehensive
income - - 13,590 (55,846) -
----------------------------------------------------
Dividends paid - - - - -
Scrip dividend - - - - -
Issue of share capital - - - - -
Issue of share capital
under share-based
payment 9 1,332 - - 124
----------------------------------------------------
9 1,332 - - 124
----------------------------------------------------
Balance at September
30, 2011 2,184 25,539 102,473 (4,066) 189
----------------------------------------------------
---------------------------------------------------------------------------
Foreign Investment
currency in Total
translation Special Own Retained equity
reserve reserve Shares earnings GBP
GBP '000 GBP '000 GBP '000 GBP '000 '000
---------------------------------------------------------------------------
Balance at January 1,
2010 18,804 632 - 92,223 260,036
Profit for the period - - - 30,878 30,878
Other comprehensive
income:
Coal royalties:
Royalties valuation
movement taken to
equity 15,893 - - - 16,881
Deferred tax on
valuation (4,688) - - - (5,088)
Available-for-sale
investments:
Valuation movement
taken to equity 84 - - - 19,190
Deferred tax on
valuation - - - - (1,508)
Transferred to income
statement on disposal - - - - (16,327)
Reclassification as
investment in
associate - - - - -
Share of comprehensive
income of associates (38) - - - (38)
Foreign currency
translation 1,202 - - - 1,202
----------------------------------------------------
Total comprehensive
income 12,453 - - 30,878 45,190
----------------------------------------------------
Dividends paid - - (6,725) (6,725)
Scrip dividend - - (1,210) -
Issue of share capital - - - - -
Issue of share capital
under share-based
payment - - (1,295) 13 (2)
----------------------------------------------------
- - (1,295) (7,922) (6,727)
----------------------------------------------------
Balance at September
30, 2010 31,257 632 (1,295) 115,179 298,499
----------------------------------------------------
Balance at September
30, 2010 31,257 632 (1,295) 115,179 298,499
Profit for the period - - - 25,405 25,405
Other comprehensive
income:
Coal royalties:
Royalties valuation
movement taken to
equity 10,986 - - - 10,353
Deferred tax on
valuation (3,240) - - - (2,894)
Available-for-sale
investments: -
Valuation movement
taken to equity 440 - - - 29,561
Deferred tax on
valuation (24) - - - (5,162)
Transferred to income
statement on disposal - - - - (10,324)
Reclassification as
investment in
associate - - - - -
Share of comprehensive
income of associates (2) - - - (2)
Foreign currency
translation 269 - - - 269
----------------------------------------------------
Total comprehensive
income 8,429 - - 25,405 47,206
----------------------------------------------------
Dividends paid - - - - -
Scrip dividend - - - (829) -
Issue of share capital - - - - -
Issue of share capital
under share-based
payment - - - - 183
----------------------------------------------------
- - - (829) 183
----------------------------------------------------
Balance at December 31,
2010 39,686 632 (1,295) 139,755 345,888
----------------------------------------------------
Balance at January 1,
2011 39,686 632 (1,295) 139,755 345,888
Profit for the period - - - 32,115 32,115
Other comprehensive
income:
Coal royalties:
Royalties valuation
movement taken to
equity (5,490) - - - 14,231
Deferred tax on
valuation 1,618 - - - (4,513)
Available-for-sale
investments:
Valuation movement
taken to equity (354) - - - (52,776)
Deferred tax on
valuation 53 - - - 5,548
Transferred to income
statement on disposal - - - - (8,919)
Reclassification as
investment in
associate - - - - -
Share of comprehensive
income of associates - - - - -
Foreign currency
translation (254) - - - (254)
----------------------------------------------------
Total comprehensive
income (4,427) - - 32,115 (14,568)
----------------------------------------------------
Dividends paid - - - (8,977) (8,977)
Scrip dividend - - - - -
Issue of share capital - - - - -
Issue of share capital
under share-based
payment - - (1,306) - 159
----------------------------------------------------
- - (1,306) (8,977) (8,818)
----------------------------------------------------
Balance at September
30, 2011 35,259 632 (2,601) 162,893 322,502
----------------------------------------------------
Anglo Pacific Group PLC
CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011
---------------------------------------------------------------------
Three months ended Nine months ended
--------------------- ---------------------
September September September September
30, 2011 30, 2010 30, 2011 30, 2010
GBP '000 GBP '000 GBP '000 GBP '000
Cashflows from operating
activities
Profit before taxation 18,831 8,183 41,572 39,910
Adjustments for:
Interest received (393) (196) (1,151) (766)
Unrealised foreign currency
(gain)/loss (740) 1,168 617 1,164
Depreciation of property, plant
and equipment 6 5 16 14
Amortisation of Intangibles -
royalties 254 - 763 -
(Gain) on disposal of mining and
exploration interests (11,326) (1,808) (18,790) (19,179)
Loss on revaluation of assets
held as fair value through
profit or loss - - - 810
Loss on write down of assets - - 147 -
Share of associates (profit) - (529) - (791)
Share based payments 49 - 124 12
---------- ---------- ---------- ----------
6,681 6,823 23,298 21,174
(Increase) / Decrease in trade
and other receivables (3,233) 4,254 (1,677) (2,343)
Increase / (Decrease) in trade
and other payables 100 315 (353) 345
Receipt from royalty instruments 120 156 467 654
---------- ---------- ---------- ----------
Cash generated from operations 3,668 11,548 21,735 19,830
Income taxes paid (4,978) (15) (12,052) (4,754)
---------- ---------- ---------- ----------
Net cash (used) / from operating
activities (1,310) 11,533 9,683 15,076
---------- ---------- ---------- ----------
Cash flows from investing
activities
Proceeds on disposal of mining
and exploration interests 24,060 6,990 47,988 36,280
Purchase of mining and
exploration interests (2,991) (5,288) (26,189) (18,813)
Purchases of royalty interests (27,599) (726) (27,599) (13,727)
Purchases of property, plant and
equipment - (9) (48) (344)
Exploration and evaluation
expenditure (8) 14 (26) 190
Interest received 176 196 443 766
Acquisition of associates - - - (109)
Return of capital from
associates - - - 949
---------- ---------- ---------------------
Net cash (used) / generated in
investing activities (6,362) 1,177 (5,431) 5,192
---------- ---------- ---------- ----------
Cash flows from financing
activities
Proceeds from issue of share
capital - - - 30
Dividends paid (5,521) (3,788) (8,977) (6,725)
Net financing of related
entities - - - -
---------- ---------- ---------- ----------
Net cash used in financing
activities (5,521) (3,788) (8,977) (6,695)
---------- ---------- ---------- ----------
Net (decrease) / increase in
cash and cash equivalents (13,193) 8,922 (4,725) 13,573
Cash and cash equivalents at
beginning of period 36,726 18,846 28,258 14,195
---------- ---------- ---------- ----------
Cash and cash equivalents at end
of period 23,533 27,768 23,533 27,768
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
The results for the three and nine months ended September 30, 2011 and 2010
have neither been audited nor reviewed by the Group's auditors.
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, 2011. 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, 2010 and the condensed consolidated interim financial statements for the period ended September 30,
2011.
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, 2010, 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, 2010 were
approved on March 8, 2011. 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.
The results for the three and nine months ended September 30, 2011 and 2010 have neither been audited nor reviewed by
the Group's auditors.
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, 2011, based on a net present value of the
pre-tax cash flow discounted at a rate of 7%, which produced a valuation of A$301.3 million (GBP 191.4 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 2.4 million (A$3.7 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 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, 2010, 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 GRR and NSR royalties acquired on the Four Mile Project in South Australia,
the Salamanca Uranium Project in Spain, the Railway Deposit in Western Australia, the Amapa Iron Ore System in Brazil,
the Isua Project in Greenland and the Ring of Fire Deposits in Canada.
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.
Following the acquisition of the subsidiary which holds the royalties related to the Ring of Fire Deposits in Canada,
the Group recognised the excess of the acquisition cost over the fair value of the identifiable net assets of this
company as goodwill. This excess resulted in a charge to goodwill of GBP 8.9 million (December 31, 2010: GBP nil).
Goodwill is carried at cost less accumulated impairment losses. The Group conducts an impairment review of goodwill
biannually.
Also included within intangibles are the deferred exploration costs of GBP 722,000 (December 31, 2010: GBP 696,000)
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 2010 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Anglo Pacific Group PLC
Peter Boycott, Chairman
John Theobald, Chief Executive Officer
+44 (0) 20 3435 7400
www.anglopacificgroup.com
OR
Liberum Capital
Chris Bowman
Christopher Kololian
+44 (0) 20 3100 2000
OR
Pelham Bell Pottinger
Lorna Spears
James Macfarlane
+44 (0) 20 7861 3232
Anglo Pacific Group Plc
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