TIDMAPF
RNS Number : 7162O
Anglo Pacific Group PLC
23 August 2017
August 23, 2017
Anglo Pacific Group PLC
Interim results for the six months ended June 30, 2017
Anglo Pacific Group PLC ("Anglo Pacific", the "Company", the
"Group") (LSE: APF) (TSX: APY) is pleased to announce interim
results for the six months ended June 30, 2017 which are available
on both the Group's website at www.anglopacificgroup.com and on
SEDAR at www.SEDAR.com.
Highlights:
Results for the half year
-- Free cash flow* generated in H1 2017 of GBP18.9m, a 300%
increase on the GBP4.7m in H1 2016 and comfortably in excess of
GBP13.4m generated in FY 2016
-- This includes GBP3.3m from the Denison financing arrangement,
of which GBP1.7m relates to FY 2016 - this arrangement has
generated cash returns of C$0.5m per month on average
-- Royalty income in H1 2017 of GBP16.1m, a 295% increase from
GBP4.1m in H1 2016 and at 82% of the GBP19.7m earned for 2016 as a
whole
-- Increase attributable mainly to higher commodity prices,
favourable exchange rate and increased mining within our private
royalty land at Kestrel (88% in H1 2017 and 95% in Q2 2017 vs 38%
in H1 2016)
-- Record royalty income from Maracás Menchen reflecting strong
production and a significant improvement in vanadium prices - H1
2017 average of US$5.46/lbs compared to US$3.15/lbs in H1 2016, and
currently in excess of US$9.50/lbs
-- Increase in overheads to GBP3.0m in H1 2017 from GBP1.8m in
the corresponding period, reflecting higher staff costs, including
share based payments, and increased investment costs associated
with sourcing and appraising royalty transactions
-- Adjusted earnings* of GBP12.9m for the first six months of
2017, a 438% increase on the GBP2.4m equivalent in 2016 translating
into adjusted earnings per share* of 7.44p (H1 2016: 1.43p)
-- Non-cash fair value charges of GBP14.9m, mainly related to
resource depletion and pricing assumptions led to a loss after tax
of GBP2.5m and loss per share of 1.46p (H1 2016: GBP10.2m, GBP5.4m
and 3.18p respectively)
-- Interim dividend of 3p per share, to be paid on November 15,
2017 - which, in line with our recently announced payment policy
change is 85 days ahead of our previous payment timetable
-- Kestrel valuation GBP107.5m at June 2017, down 8% on
GBP116.9m at the beginning of the year - mainly due to resource
depletion and forward pricing assumptions
-- Net debt of GBP0.6m at June 30, 2017 (December 31, 2016:
GBP1.0m) - with all borrowings subsequently repaid following
receipt of the Q2 2017 royalty income and after payment of the 2016
final dividend
-- Net assets of GBP209.6m (December 31, 2016: GBP210.1m)
translating into net assets per share of 116p (December 31, 2016:
124p)
Outlook
-- 2017 expected to continue the recent trend of recording significant growth in royalty income
-- 90% of Kestrel's coal sales over the next twelve months
expected to be subject to the Group's royalty
-- Commodity prices, particularly coking coal and vanadium, have
beaten expectations to date in Q3 2017
-- Royalty revenues continue to benefit from weak Sterling
exchange rate versus the US and Australian dollar
Words with this symbol * are defined as Alternative Performance
Measures. For more information on the APMs used by the Group,
including definitions, please refer to the Alternative Performance
Measures section of the notes to editors on page 3.
Julian Treger, Chief Executive Officer, commented:
"Anglo Pacific has had a very strong start to 2017, which has
seen us add to our portfolio with the Denison financing
arrangement, report significant further increases in royalty
revenue, and become debt free. This gave us the confidence to
implement the payment of our dividend on a quarterly basis, to
match the timing of our quarterly revenue, and also to accelerate
the timing of dividend payments post declaration.
Mining at Kestrel is now firmly back to within the Group's
private royalty land. It is pleasing to see that this increased
volume in mined coal that is subject to the Group's royalty has
coincided with a strong rebound in the coking coal price. This,
along with the contribution from the rest of the portfolio and the
recent Denison financing arrangement, has seen us post a doubling
of income over the last two years and a similar outcome is expected
this year.
We have now repaid all of our borrowings, including the amounts
drawn down as part of the Denison transaction, and have a fully
covered dividend. The Group has ready access to between
US$30.0-US$40.0m of cash and borrowing facilities for further
royalty investments, and this is very much the focus for the second
half of the year."
Analyst presentation
There will be an analyst presentation www.anglopacificgroup.com
today at the offices of Redleaf Communications, First Floor, 4
London Wall Buildings, Blomfield Street, London, EC2M 5NT. The
presentation will be hosted by Julian Treger (CEO), Kevin Flynn
(CFO) and Juan Alvarez (Head of Investments). If you would like to
attend please email anlgopacific@redleafpr.com.
For further information:
Anglo Pacific Group PLC
Julian Treger - Chief Executive
Officer
Kevin Flynn - Chief Financial +44 (0) 20 3435
Officer and Company Secretary 7400
Website: www.anglopacificgroup.com
+44 (0) 20 7664
BMO Capital Markets Limited 8020
Jeffrey Couch/Neil Haycock/Tom
Rider
Macquarie Capital (Europe) Limited
Raj Khatri/Nicholas Harland/Ariel +44 (0) 20 3037
Tepperman 2000
+44 (0) 20 7418
Peel Hunt LLP 8900
Matthew Armitt/Ross Allister
+44 (0) 20 7382
Redleaf Communications 4769
Charlie Geller/Elisabeth Cowell/Elise
Palmer
Notes to editors:
About Anglo Pacific
Anglo Pacific Group PLC is a global natural resources royalty
company. The Company's strategy is to develop a leading
international diversified royalty and streaming company with a
portfolio centred on base metals and bulk materials, focusing on
accelerating income growth through acquiring royalties on projects
that are currently cash flow generating or are expected to be
within the next 24 months, as well as investment in earlier stage
royalties. It is a continuing policy of the Company to pay a
substantial portion of these royalties to shareholders as
dividends.
Alternative Performance Measures
Throughout this report a number of financial measures are used
to assess the Group's performance. The measures are defined as
follows:
Operating profit/(loss)
Operating profit/(loss) represents the Group's underlying
operating performance from its royalty interests. Operating
profit/(loss) is royalty income, less amortisation of royalties and
operating expenses, and excludes impairments, revaluations and
gain/(loss) on disposals. Operating profit/(loss) reconciles to
'operating profit/(loss) before impairments, revaluations and
gain/(losses) on disposals' on the income statement.
Adjusted earnings and adjusted earnings per share
Due to the growing number of valuation and other non-cash
movements being recognised in the income statement, the Group
presents adjusted earnings, which the directors consider to be a
useful additional measure of the Group's performance.
Adjusted earnings represents the Group's underlying operating
performance from core activities. Adjusted earnings is the
profit/(loss) attributable to equity holders less all valuation
movements, and non-cash impairments, amortisation charges,
share-based payments, finance costs, any associated deferred tax
and any profit or loss on non-core asset disposals as these are not
expected to be ongoing.
Adjusted earnings divided by the weighted average number of
shares in issue gives adjusted earnings per share. Refer to note 5
to the financial statements for a reconciliation of adjusted
earnings to the profit/(loss) attributable to equity holders and
adjusted earnings per share.
Free cash flow and free cash flow per share
The structure of a number of the Group's royalty financing
arrangements, such as the Denison transaction completed in February
2017, result in a significant amount of cash flow being reported as
principal repayments, which are not included in the income
statement. As the Group also considers dividend cover based on the
free cash flow generated by its assets, management have determined
that free cash flow per share is a key performance indicator.
Free cash flow is the net cash generated from operating
activities, plus proceeds from the disposal of non-core assets,
less finance costs.
Free cash flow divided by the weighted average number of shares
in issue gives free cash flow per share. Refer to note 19 to the
financial statements for a reconciliation of free cash flow to net
cash generated from operating activities and free cash flow per
share.
Dividend cover
As it is a continuing policy of the Company to pay a substantial
portion of its royalties to shareholders as dividends, the
directors consider the affordability of the dividend, conveyed by
dividend cover, to be a useful additional measure of the Group's
performance. Dividend cover is calculated as the number of times
adjusted earnings per share exceeds the dividend per share. Refer
to note 6 to the financial statements for dividend cover.
BUSINESS REVIEW
The first half of the year has been another period of
significant progress for Anglo Pacific. We have built on the
considerable growth in 2016, reporting further increases in royalty
income which have translated to a 410% increase in adjusted
earnings, driven in particular by a very strong performance from
our Kestrel royalty, with 95% of sales falling within our land in
Q2 2017, combined with higher realised prices.
A highlight in the period was the entering into of the Denison
financing and streaming arrangement in February, which has resulted
in the receipt of GBP3.3m to the end of June. This cash flow,
combined with the strong level of cash generated from the portfolio
has resulted in free cash flow of GBP18.9m in the first six months,
well in advance of the comparable period last year and already
ahead of the GBP13.4m generated in 2016 as a whole. This allowed
the Group to repay its borrowings in full at the beginning of
August.
The strong level of cash generated, combined with a smoother
revenue profile expected for the foreseeable future allowed us to
alter our dividend payment profile, with a transition to quarterly
dividend payments and an acceleration of the payment schedule. The
outlook for the remainder of the year remains very healthy, with
the commodity prices from which the Group's revenue is derived
performing well to date. This, along with a fully undrawn borrowing
facility and a fully covered dividend, means the Group is in strong
financial health to pursue further royalty acquisitions.
Royalty income
Royalty income for the first six months of 2017 was GBP16.1m, a
295% increase on the equivalent period last year, and ahead of the
GBP15.6m earned in the second half of 2016. This was driven by the
combination of higher sales volumes at Kestrel, more of those sales
being from coal mined within the Group's private royalty area, and
higher average realised coal prices which, in turn, resulted in a
higher average royalty rate. Our reported royalty income is already
82% of that reported for 2016 as a whole, suggesting the Company
should report a meaningful increase on the GBP19.7m in 2016, which
was in itself a considerable increase on the GBP8.7m generated in
2015.
Furthermore, the Group has accumulated tax losses available to
it which should be utilised in the current year, meaning minimal
corporation tax on our expected income in 2017.
Portfolio Highlights
We have continued to diversify our portfolio in the first six
months of the year with the addition of the Denison financing and
streaming arrangement, which derives its income from the processing
of uranium. This transaction is slightly different from our usual
royalty investments in that it represents an exposure to mining
infrastructure rather than an underlying commodity, and is
accounted for differently from our main sources of income, as
discussed in the finance review on page 4.
In addition to the strong performance at Kestrel noted above, we
have been particularly pleased with the contribution in the first
half from our Maracás Menchen vanadium royalty, where production
levels have been at record levels and the price of vanadium has
recovered to over US$9.50/lbs - a noticeable increase from the
average of US$3.15/lbs in H1 16 and US$5.02/lbs at the beginning of
the year. We are optimistic about the prospects for vanadium,
especially in light of its use in storage batteries as part of the
evolution towards main stream electric vehicles.
We have recorded declines in the fair value of our royalty
financial instruments and Kestrel of GBP14.9m in the first six
months, reversing the gains made in the second half of 2016. This
is mainly due to resource depletion at Kestrel associated with high
sales volumes so far this year and forward coal pricing
assumptions. Elsewhere, other than movements relating to revisions
to commodity price adjustments, we have fully impaired our Indo
Mines Limited ("Indo Mines") convertible debenture to GBPnil,
following their recent announcement of limited progress or
prospects of raising finance for their Indonesian iron sands
projects, although we reserve our rights in full. Excessive
deductions continue, in our view, to be claimed in the calculation
of our royalty by Quasar Resources, the operator of Four Mile. We
are challenging this claim and have appointed external legal and
technical advisors to assist us in resolving this matter in a
timely manner.
Cash flow
The Group has generated GBP15.8m in net cash from operating
activities in the six months to June 30, 2017 (2016: GBP4.5m). As a
result, we have already generated more operating and free cash flow
than we did in 2016 as a whole. Free cash flow is becoming a key
metric for us as it includes the cash flow received from the recent
Denison financing and streaming arrangement which forms part of our
assessment of dividend cover. Free cash flow in the first six
months of the year was GBP18.9m, compared to GBP4.7m in the first
six months of 2016 and GBP13.4m for 2016 as a whole.
This strong level of cash generation allowed us to repay all of
our borrowings post period end at the beginning of August, a key
milestone for us. This is all the more pleasing considering we
partially funded the Denison financing arrangement through the
drawdown of C$12.8m of borrowings in February 2017, less than six
months ago. We now have an undrawn US$30.0m revolving credit
facility, with the possibility to upsize to US$40.0m through an
accordion option, available for future acquisitions. With a
smoother income profile expected going forward, along with a fully
covered dividend, we have liquidity to finance acquisitions up to
US$40.0m from existing resources.
Dividend
On June 26, 2017, we announced our intention to move towards
quarterly dividend payments along with a reduction in the time
period between announcing the dividend and payment. In that regard,
we announced an interim dividend of 3p per share with the intention
of paying this on November 15, 2017 - some 85 days in advance of
when the 2016 interim dividend was paid previously. We will pay a
third quarter dividend of 1.5p in February 2018, which represents
one quarter of last year's 6p dividend. Our final dividend will be
proposed in our Q4 2017 trading update in February 2018. It is at
this stage, based on the full year results and market conditions
that we will decide on the level of the 2017 dividend as a
whole.
Outlook
We are optimistic about the second half of the year given
current commodity prices. Coking coal, the main driver of our
income and profitability, has experienced particular volatility
over the last twelve months, driven by short-term Chinese policy
decision making and weather events in Australia. Prices rose from
US$82/t on average in H1 2016 to US$240/t in H1 2017. Consensus
suggests that prices will come down to US$145/t in the second half
of the year. At present, however, spot prices are running higher at
US$190/t and the longer prices prevail at these levels, the higher
our overall income for 2017 will be.
Our focus for the second half of the year is on adding further
royalties to the portfolio, continuing the diversification we have
already achieved with the Denison transaction.
PORTFOLIO REVIEW
Kestrel
The Group's performance has strongly benefited from the
contribution from Kestrel in the first six months of the year. As
previously discussed, and evidenced by the mine plan map which we
publish routinely, we expect that mining will be predominantly
within our private royalty land for the foreseeable future.
Ø Royalty income
There were five factors which drove the significant increase in
revenue in the first half of the year compared to the corresponding
period in 2016. Revenue in the first half was also in excess of
that earned in H2 2016.
Firstly our proportion of production at Kestrel that was within
our royalty lands increased significantly in the period. In H1 2017
we earned a royalty on 88% of all sales from Kestrel, and 95% in Q2
2017 alone. This is a significant increase on the 38% equivalent in
H1 2016 and in line with that of H2 2016. The information we have
received from Rio Tinto suggests that we will earn a royalty on 90%
of sales from Kestrel over the next four quarters.
Secondly the price of coking coal increased significantly in Q4
2016, driven by Chinese policy changes and weather events in
Australia. Consequently, the average price achieved from our
Kestrel royalty in the first half of 2017 was double that of H1
2016, and 13% higher than H2 2016. Most commentators are predicting
that coal prices will decline through H2 2017 as these short-term
influences reverse, but we have been encouraged to see coking coal
prices remain well in excess of US$170/t to date in Q3 2017.
The third factor is a direct consequence of price levels. The
Kestrel royalty operates a ratchet system whereby there is a 7%
royalty on the first A$100/t, 12.5% from A$101-A$150/t and 15% on
anything above A$150t. With the headline price of coking coal
averaging A$320/t in H1 2017, there was a much higher portion of
the royalty earning 15%, whereas most of our income in H1 2016 was
only attracting 7%.
The fourth factor, was overall levels of production at Kestrel.
Total production in H1 2017 was 2.585kt, a near 10% increase on H1
2016.
Finally, the results for the first six months of the year
benefited from favourable exchange rates compared to the same
period in 2016 as the full impact of the weakness of the pound post
the EU referendum only came through in the second quarter of the
year. The average GBP:AUD in H1 2017 was 1.67 compared to 1.91 in
H1 2016. This results in the Australian dollar denominated income
being translated into more pounds in the first half of 2017.
Ø Valuation
Another impact of the Kestrel royalty on our results is its fair
value adjustment at the end of each reporting period. At June 30,
2017, the fair value of the Kestrel royalty as reflected on the
Group's balance sheet was A$181.8m (GBP107.5m), a reduction of
A$18.5m (GBP9.4m) on the balance at the beginning of the year.
A large part of this reduction was due to resource depletion
following the high levels of income earned by the Group during the
first half. The other material component of the decrease was a
revision to forward coal prices used in the estimate of future cash
flow. As mentioned above, most commentators are expecting coal
prices to reduce from the current levels and this is reflected in
the latest consensus commodity price forecast, although coal prices
have held at higher levels in the quarter to date than what the
consensus forecast was predicting.
The impact on net assets attracts a tax shield by way of a
corresponding debit to the deferred tax liability meaning that the
net reduction in the period was GBP6.4m.
Narrabri
Income from Narrabri was 17% higher than H1 2016. Underlying
income was in line with the same period in 2016, with lower sales
volumes being offset by an increase in average realised price.
Similar to Kestrel, we benefited from translating this Australian
dollar income to pounds at a more favourable exchange rate.
Whitehaven experienced production disruptions associated with
geotechnical issues encountered in longwall LW06 which caused
longwall retreat rates to be lower than planned at the end of Q4
2016 (impacting our royalty in Q1 2017). Whitehaven stated that
this was localised to one area of LW06 and not expected to have the
same impact going forward. Lower sales volumes are also
attributable to a longer than normal longwall changeover at the end
of February 2017, as this was the change involving the installation
and commissioning of the wider longwall infrastructure.
Thermal coal prices have performed better than most commentators
expected in the first half of 2017, benefitting from weather
related disruption in Australia.
Maracás Menchen
Income from Maracás in the period increased by 219% compared to
the corresponding period in 2016 through a combination of strong
production volumes and a recovery in the vanadium price.
Largo Resources enjoyed strong production in the second half of
2016 and this trend continued into 2017, despite a planned 20-day
plant shutdown in Q1 2017 to carry out some modification and
repairs. Total sales in the period were approximately 28% higher
than in H1 2016, with recoveries in Q1 2017 of 71.8%, a significant
improvement on the 62.6% and 58.9% in the immediately preceding
quarters.
Following the improvements to the plant, Largo now anticipates
monthly output of 840 tonnes of vanadium for the remainder of 2017,
which would equate to over 10Mtpa run-rate.
Not only is this a significant milestone for Largo, but it also
comes at a time when the vanadium price has recovered to recent
highs. Recent spot prices have been in excess of $9.00/lbs compared
to an average spot price of $3.56/lbs in 2016. It is possible that
higher pricing levels could prevail throughout the second half of
the year.
El Valle-Boinás/Carlés ("EVBC")
Income from EVBC in the first half of the year also showed an
upward trend. Orvana Minerals endured a difficult 2016, with lower
levels of output due to a number of localised issues. This prompted
Orvana to invest in a programme of improvements designed to
increase productivity in its FY 2017.
To date, it appears that Orvana has made significant progress in
line with its strategic objectives. In the quarter to June 30,
2017, production of gold and copper at EVBC increased by 15% and
24% respectively compared to the immediately preceding quarter, and
throughput at the mill of 2,284tpd was in excess of their target of
2,000tpd set at the beginning of the period. Orvana has stated that
they are on track to meet their overall fiscal 2017 production
guidance.
Four Mile
We remain highly frustrated by the level of deductions which
Quasar Resources is claiming, incorrectly in our view, against our
royalty income, which resulted in no income in the first half of
the year. We are disputing the level of deductions being claimed by
the operator as we believe that these do not conform to the
definitions within our royalty contract, and have appointed legal
and technical experts to assist us. We have demanded further
evidence from Quasar, in line with our information rights, and will
consider their response carefully before deciding on an appropriate
course of action for the recovery of amounts we believe to be
owing.
Jogjakarta
The Group entered into a US$4m convertible debenture with Indo
Mines in 2008, which was designed to turn into an NSR royalty on
their iron sands project in Indonesia. The debenture is subject to
interest at the rate of 8% per annum and is convertible from
December 31, 2017 at the Group's election.
Progress to date had been significantly hampered by the export
ban which the Indonesian government has imposed on its resource
sector. Indo Mines had been exploring several financing options in
recent months, including off take and co-investment opportunities.
In their update on July 28, 2017 it was commented that these
discussions had yielded little progress. As a result, the Group has
impaired its convertible debenture to GBPnil, resulting in a
GBP3.1m charge to the income statement at June 30, 2017.
To date, the Group has recovered cash of US$2.1m against its
US$4.0m investment through interest payments.
The Group's debenture is secured, and we will be exploring all
avenues to extract value from our instrument.
FINANCE REVIEW
The first six months of 2017 has seen a significant increase in
royalty income, adjusted earnings and free cash flow generation.
This has allowed the Group to become debt free following the
receipt of the Q2 2017 royalty income and post the 2016 final
dividend which was paid in early August.
Denison accounting treatment
The results for the period ended June 30, 2017 includes, for the
first time, the contribution from the Denison financing arrangement
which we entered into in February of this year. This transaction
comprised a C$40.8m 13-year secured loan with a coupon of 10% per
annum paid quarterly in arrears along with a separate stream
component which ensures that we should receive, at a minimum, the
equivalent toll milling revenue received by Denison in conjunction
with their partial ownership of the McClean Lake processing
facility.
The loan element contains certain mandatory principal repayments
when toll revenue earned by Denison in any one period exceeds the
interest charge. In the event that toll revenues are not sufficient
to repay the interest, the balance will be capitalised and carried
forward.
The cash flow from the loan will, therefore, be treated as part
interest and part principal repayment. The interest component will
be calculated on a quarterly basis. Any cash received above this
will be treated as a mandatory principal repayment. As such, only
the interest portion will be included in the income statement and
adjusted earnings. The additional cash flow received which is
treated as principal repayment will not appear in the income
statement. The cash received, whether interest or principal, will
be included in the Group's measurement of free cash flow.
The stream is only applicable to revenue earned by Denison from
toll milling receipts from ore processed other than on the first
215mlbs from July 1, 2016. Our latest estimates suggest that this
will only become payable in 10-15 years' time, depending on the
output from the Cigar Lake uranium project.
Income statement
Adjusted earnings for the six months to June 30, 2017 were
GBP12.9m, or 7.44p per share, a significant increase on the same
period in 2016 and already some 78% of that earned for 2016 as a
whole. Adjusted earnings represent the profit on which the
directors assess the Group's underlying performance and excludes
all non-cash valuation/amortisation adjustments along with the
associated tax.
Allowing for the fair value adjustments to the Kestrel royalty,
and the Group's royalty financial instruments resulted in a loss
after tax for the period of GBP2.5m compared to GBP5.4m at the 2016
half year. The following analysis begins by considering adjusted
earnings and then reconciles to the loss after tax.
Adjusted earnings
Adjusted earnings were GBP12.9m in the first half of 2017,
compared to GBP2.4m in the comparable period in 2016. This
translates into adjusted earnings per share of 7.44p for the half
year, resulting in dividend cover of 2.48x. This is a significant
increase on the same period in 2016 when adjusted earnings were
1.43p.
H1 2017 H1 2016 FY 2016
GBP'000 GBP'000 GBP'000
Royalty income 16,084 4,075 19,705
Operating expenses (2,512) (1,423) (3,327)
Finance income * 848 70 82
Realised foreign exchange 385 1,248 2,265
Finance costs (399) (423) (1,086)
Other 117 63 309
Current tax (1,621) (1,202) (1,454)
Adjusted earnings 12,902 2,408 16,494
=========================== ======== ======== ========
- per share 7.44p 1.43p 9.76p
Dividend 3.00p 3.00p 6.00p
Dividend cover 2.48x 0.48x 1.63x
* does not include the portion of Denison cash flows designated
as principal repayment.
The individual components of adjusted earnings are outlined
below.
Royalty income
http://www.rns-pdf.londonstockexchange.com/rns/7162O_1-2017-8-22.pdf
Royalty income for the first six months of 2017 was 295% higher
than the comparative period and is already 82% of that earned for
the entire year in 2016 - a year which had in its own right shown a
127% increase on the previous year.
Ø Kestrel
The main reasons for the increase in the current year are prices
achieved and a significant increase in the proportion of sales from
coal mined from within the Group's private royalty land. In H1
2017, 88% of total sales by Rio Tinto at Kestrel were subject to
the Group's royalty compared to 38% in H1 2016. In Q2 2017 alone
this number was 95% and we expect this number to be in excess of
90% for the remainder of the year.
In addition to more sales from the Group's private royalty land,
the average price from Kestrel in the first half of the year was
almost double that of the first six months of 2016, and 35% higher
than the average for 2016 as a whole. Not only does this translate
directly into additional royalty income, but it also results in a
greater proportion of sales being subject to the highest royalty
ratchet rate. It is widely anticipated that coking coal prices will
soften in the second half of the 2017, with consensus estimating
headline premium hard coking coal average price of US$145/t in H2
2017 compared to US$240t in the first half, although spot prices
are currently higher than the consensus estimate for Q3 2017 which
bodes well for the Group's revenue in the second half and 2017 as a
whole.
Kestrel is discussed in more detail in the portfolio section on
page 2.
Ø Maracás Menchen
Kestrel is not the only royalty which has reported triple figure
growth in the period. Revenue from the Group's Maracás Menchen
royalty is 219% higher than the comparative period in 2016. Largo
Resources, the operator, achieved several production records in H2
2016 and, despite a planned 20 day plant shutdown in Q1 2017, has
maintained these levels during the first six months of 2017.
Similar to Kestrel, this is only one side of the story, the other
being price. Vanadium has enjoyed a stellar start to 2017, with
spot prices currently in excess of $9.50/lbs, almost double the
price at the beginning of the year. We remain bullish on the
long-term prospects for vanadium given the supply demand outlook
along with the increased potential for it to be a key component of
energy storage technology in the car industry.
Ø Narrabri
Narrabri reported a 17% increase in the period, despite their
overall sales volumes being less than most market commentators were
expecting in Q2 2017. Some of the factors behind this can be
explained by the geotechnical operating issues experienced in LW06
during Q1 2017, and the knock-on effect in the second quarter. We
would expect a slight catch up in Q3 2017.
Ø EVBC
EVBC also contributed a noteworthy increase in revenue of 36%,
as they have gone some way to addressing the issues they
experienced in 2016. This has been a very consistent revenue source
for the Group over the years, and we expect that total volumes for
2017 will be well in advance of those in 2016.
Ø Four Mile
We are disappointed to report GBPnil revenue from our Four Mile
royalty, despite Quasar Resources informing us of underlying
production and sales during the period. The reason for a GBPnil
royalty return has been discussed in some detail in the business
review, and we have engaged experts to assist us in pursuing
amounts which we consider to be due.
Currency
Currency movements can be meaningful for the Group given that
the Group's revenue is earned in dollar denominated currencies, the
Australian dollar in particular. Average GBP:AUD was 1.67 for the
first six months of the year, compared to 1.91 in H1 2016, a 15%
favourable movement in the current period, and responsible for some
GBP2.2m of the GBP12.0m increase in royalty income. The pound
weakened considerably at the end of June 2016 following the outcome
of the EU referendum and, although there have been noticeable
swings in either direction, has maintained its weakness in the
twelve months to June 30, 2017. We have put in place a hedging
programme to protect a portion of our income at these historically
favourable rates and will continue to monitor currency closely in
H2 2017.
Operating expenses
Total operating expenses for the period were GBP3.0m, compared
to GBP1.8m for the first six months of 2016. Operating expenses
includes the non-cash valuation of share based payments. These
charges are excluded from the adjusted earnings measure. Operating
expenses included in adjusted earnings were GBP2.5m compared to
GBP1.4m in the first half of 2016, an increase of 79%. The majority
of this increase is attributable to staff costs, reflecting lower
bonus levels in 2015, including the waiver of any bonus for the CEO
and salary increases (most of which had not been increased in two
years).
As we look to increase our rate of investment, we would expect
an element of cost to be incurred appraising potential investments
which never come to fruition. We also expect some costs associated
with managing our existing portfolio. We remain very disciplined in
our approach to cost and are targeting total costs of around
GBP4.0m for 2017 as a whole.
Finance income and finance costs
Finance costs were in line with the previous period and reflect
the interest charges and commitment fee associated with the Group's
revolving credit facility. They also include those costs allocated
to the income statement associated with the equity raise to part
fund the Denison financing arrangement.
Finance income is also in line with the previous period,
although there are some large items which net off. Finance income
in the six months to June 30, 2017 includes interest income on the
C$40.8m loan advanced to Denison as part of the financing
arrangement entered into in February 2017. The loan attracts fixed
income at the rate of 10% on the outstanding balance at the
beginning of each quarter, and to the end of June amounted to
GBP0.8m.
Also included in finance income is the realised foreign exchange
gains in the period of GBP0.4m. This is considerably lower than the
corresponding GBP1.2m in 2016 which reflected the re-rating of the
pound just before the half year in 2016 following the outcome of
the EU referendum. The pound was much less volatile in the period
to June 30, 2017.
Current tax
Tax in the period reflects withholding tax on royalties and
financing arrangements. Following the sale of the Group's Isua
royalty in December 2016, we do not expect to pay any corporation
tax on our income in 2017. The tax credit associated with the
amortisation charge is grossed up in calculating adjusted
earnings.
Profit after tax
H1 2017 H1 2016 FY 2016
Adjusted earnings 12,902 2,408 16,494
Amortisation of royalties (1,568) (1,339) (2,869)
Share based payments (527) (402) (803)
Gain on sale of mining and exploration interests 28 - 2,449
Kestrel fair value adjustment (11,062) (10,161) 17,900
Fair value adjustments on financial instruments (3,866) - (6,977)
Other (losses)/gains (555) 179 664
Deferred tax 1,646 3,595 (1,356)
Other tax 470 339 860
(Loss)/Profit after tax (2,532) (5,381) 26,362
================================================== ========= ========= ========
- basic (loss)/earnings per share (1.46p) (3.18p) 15.60p
-------------------------------------------------- --------- --------- --------
The fair value adjustment in relation to Kestrel is considered
in more detail in the balance sheet section. Other fair value
adjustments reflect the full impairment of the Indo Mines
convertible debenture following delays in their various financing
initiatives. The remaining fair value adjustments reflect revisions
to commodity prices associated with those assets held at fair
value.
Included within other losses and gains is the mark to market
gains and losses on the Group's forward rate currency hedges. These
unwind through the realised foreign exchange gains/losses which are
included in adjusted earnings.
Amortisation reflects a depreciation charge against those assets
which are included as intangible assets and which are not
remeasured at each reporting date.
Over all, the fair value adjustment for Kestrel has resulted in
the adjusted profit for the period moving to a loss after tax of
GBP2.5m for the six months ended June 30, 2017 compared to a loss
after tax of GBP5.4m in the previous year. This translates into a
loss per share of 1.46p (H1 2016: 3.18p).
Balance Sheet
Net assets per share decreased from 124p per share at the
beginning of the year to 116p at June 30, 2017. The main reason for
the decrease is resource depletion at Kestrel along with fair value
adjustments reflecting lower consensus commodity price forecasts
than those at the beginning of the year.
Net asset as at January 1, 2017 210,138 124p
Kestrel:
Resource depletion (8,363)
Coal price assumptions (5,643)
Other 2,738
Foreign exchange on translation 1,858
Deferred tax on revaluation 3,036 (6,374)
============================================= ========
Denison Financing Arrangement (50% equity) 12,974
Amortisation of royalty intangibles (1,568)
Fair value of royalty financial instruments (2,909)
Mark to market of equity holdings (2,454)
Adjusted earnings 12,902
Dividends (10,470)
Other (2,684)
============================================= ======== =========
Net assets as at June 30, 2017 209,555 116p
There was a decline of GBP11.1m, net of deferred tax, in the
Group's assets carried at fair value, during the first six months
of the year. Some of this reduction reflects the strong underlying
performance at Kestrel and associated resource depletion during the
six months to June 30, 2017. This accounted for GBP5.9m (net of
tax) of the overall reduction.
At the end of June, forward consensus prices, including coking
coal, were running lower than at the beginning of 2017, which
impacted on the carrying value of those royalty assets held at fair
value. Elsewhere, the Group's Jogjakarta debenture instrument was
impaired to GBPnil following the announcement by Indo Mines that
their financing initiatives were running behind schedule. The
Group's debenture is convertible on December 31, 2017, and we
continue to explore ways of extracting value from our security.
Included in the above table is the 2016 interim dividend along
with the accrual of the 2016 final dividend which was paid in
August. The latter is included as a liability at June 30, 2017 as
it was approved by shareholders at the AGM in May 2017.
Although the net assets decreased slightly in value at the end
of June it is worth remembering that almost GBP80m of the remainder
of the portfolio is carried on the books at cost less accumulated
amortisation and impairment losses. These assets are assessed for
impairment at the end of each reporting period and where the net
present value of expected future cashflow is lower than the
carrying value the asset is impaired. However, whenever the net
present value is higher, the excess is not reflected on the balance
sheet. As such, in any period where there is no impairment charge
it is logical to assume that there is greater inherent value
compared to the carrying value. As such, the net asset value per
share of 116p does not, in our view, reflect the true net asset
value, but a more conservative 'lower of' valuation.
Cash flow and debt
The Group continued to generate strong cash flow in the first
half of 2017. Free cash flow is defined as the residual cash flow
available for investment, distribution or debt reduction. This
metric is not directly comparable to adjusted earnings as there is
a one month time gap between accruing the Group's royalty income
and this being received in cash i.e. the revenue accrued at June
30, 2017 was only received at the end of July 2017.
http://www.rns-pdf.londonstockexchange.com/rns/7162O_-2017-8-22.pdf
The Group generated GBP15.8m in net cash from operating
activities in the in the first six months of the year, resulting in
total free cash flows of GBP18.9m. This compares favourably to the
GBP4.5m in net cash from operating activities and GBP4.7m in free
cash flows generated in the equivalent period in 2016 and is
already in excess of the GBP10.3m and GBP13.4m generated
respectively in 2016 as a whole.
Free cash flow includes the payments received from Denison which
is categorised as loan principal repayment. This amounted to
GBP2.5m to June 30, 2017 and when combined with the GBP0.8m
included as interest payments in the Income Statement, translates
to cash generated from the Denison financing arrangement of GBP3.3m
since we entered into this transaction in February 2017 - GBP1.8m
of this relates to H2 2016.
We are very pleased with the level of cash flow from the Denison
financing, which is currently generating C$0.5 per month. The loan
is repayable initially from the cash flow which Denison receive
from their part ownership of the McClean Lake mill, which entitles
it to a toll from ore processed from Cigar Lake. Our financing
arrangement has provisions which requires a mandatory repayment of
principal when toll receipts exceed the interest coupon, as has
been the case thus far in 2017.
As the Q2 2017 royalty income was not received until the end of
July, the Group ended the period with net debt of GBP0.6m compared
to GBP1.0m at the beginning of the year. Upon the receipt of the Q2
2017 royalty income the Group repaid all outstanding borrowings.
This includes repaying the C$12.8m drawn to part fund the Denison
financing arrangement in February 2017, less than six months after
drawdown.
Following the GBP5.4m dividend payment at the beginning of
August 2017, the Group is now debt free. As such, we have full
access to our US$30.0m revolving credit facility. We now expect our
quarterly income to cover the now quarterly dividend payment such
that the debt facility can be used for corporate purposes and
royalty acquisitions. This facility also has the potential to be
upsized to US$40.0m depending on the acquisition. Consequently, the
Group has potentially US$40.0m of liquidity available to it to
pursue further royalty acquisitions.
DIVID
The Board declared an interim dividend for 2017 of 3.00p per
share, maintaining the level of the 2016 final dividend per share.
The dividend will be paid on November 15, 2017 to shareholders on
the register at the close of business on October 6, 2017. The
shares will be quoted ex-dividend in London on October 4, 2017 and
in Canada on October 5, 2017.
A payment of GBP5.1m, equivalent to 3.00p per share, is included
in the cash flow statement to June 30, 2017, representing the 2016
interim dividend recognised and paid in February 2017. This,
together with the 3.00p per share 2016 final dividend approved at
the AGM in May and paid in August 2017, means total dividend
payments in relation to 2016 were 6.00p per share.
Following the payment of the 2017 interim dividend, the Company
will commence paying its annual dividend on a quarterly basis, in
line with the receipt of its royalty income as follows:
Indicative next twelve months
payment schedule
----------------------------------------------
2016 Final
Final H1 17 Q3 17 17 *
================== ========== ========== ========== ==========
Ex-dividend date
(TSX) 28-Jun-17 04-Oct-17 03-Jan-18 04-Apr-18
Ex-dividend date
(LSE) 29-Jun-17 05-Oct-17 04-Jan-18 05-Apr-18
Record date 30-Jun-17 06-Oct-17 05-Jan-18 06-Apr-18
Payment date 09-Aug-17 15-Nov-17 15-Feb-18 15-May-18
Amount 3.00p 3.00p 1.50p 1.50p
9.00p
----------------------------------------------
Previous date 08-Feb-18 09-Aug-18
Days forward 85 86
* actual level of the final dividend will be
reassessed once the full year's results are
known and will be subject to shareholder approval
at the 2018 AGM
PRINCIPAL RISKS AND UNCERTAINTIES
The Group is exposed to a variety of risks and uncertainties
which may have a financial, operational or reputational impact on
the Group. The principal risks and uncertainties facing the Group
at the year-end were set out in detail in the strategic report
section of the 2016 Annual Report and Accounts and have not changed
significantly since. The principal risks relate to the
following:
-- Commodity prices
-- Political and regulatory
-- Production
The Group is exposed to changes in the economic environment, as
with any other business. Details of any key risks and uncertainties
specific to the period are covered in the Investment Review and
Finance Review sections.
The 2016 Annual Report and Accounts is available on the Group's
website www.anglopacificgroup.com
Responsibility statement
The Directors confirm that to the best of their knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting';
-- the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
-- the interim management report includes a true and fair review
of the information required by DTR 4.2.8R (disclosure of related
parties' transactions and changes therein).
The Directors are listed in the Annual Report of December 31,
2016 and a list of the current Directors is maintained on the Anglo
Pacific website: www.anglopacificgroup.com. The maintenance and
integrity of this website is the responsibility of the
Directors.
On behalf of the Board
J.A. Treger
Chief Executive Officer
August 22, 2017
Anglo Pacific Group PLC
Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
FOR THE SIX MONTHSED JUNE 30, 2017
Six months ended
June 30, 2017 June 30, 2016
Notes GBP'000 GBP'000
Royalty income 16 16,084 4,075
Amortisation of royalties 9 (1,568) (1,339)
Operating expenses (3,039) (1,825)
-------------- --------------
Operating profit before impairments, revaluations and gain/(losses) on
disposals 11,477 911
Gain on sale of mining and exploration interests 10 28 -
Revaluation and impairment of royalty financial instruments 8 (3,866) -
Revaluation of coal royalties (Kestrel) 7 (11,062) (10,161)
Finance income 2 1,233 1,318
Finance costs 3 (399) (423)
Other (losses)/gains 4 (438) 179
-------------- --------------
Loss before tax (3,027) (8,176)
Current income tax charge (1,151) (800)
Deferred income tax credit 1,646 3,595
-------------- --------------
Loss attributable to equity holders (2,532) (5,381)
============== ==============
Total and continuing loss per share
Basic and diluted loss per share 5 (1.46p) (3.18p)
Anglo Pacific Group PLC
Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
FOR THE SIX MONTHSED JUNE 30, 2017
Six months ended
June 30, 2017 June 30, 2016
Notes GBP'000 GBP'000
Loss attributable to equity holders (2,532) (5,381)
Items that will not be reclassified to profit or loss - -
Items that have been or may be subsequently reclassified to profit or
loss
Available-for-sale investments
Revaluation of available-for-sale investments 8, 10 (3,033) 4,229
Reclassification to income statement on disposal of
available-for-sale investments (28) -
Deferred tax relating to items that have been or may be reclassified 13 541 18
Net exchange gain on translation of foreign operations 1,501 15,407
-------------- --------------
Other comprehensive (expense)/income for the period, net of tax (1,019) 19,654
Total comprehensive (expense)/income attributable to equity holders for
the period (3,551) 14,273
============== ==============
Anglo Pacific Group PLC
Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS AT JUNE 30, 2017
Audited
June 30, June 30, December 31,
2017 2016 2016
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 61 95 77
Coal royalties (Kestrel) 7 107,480 82,107 116,885
Royalty financial instruments 8 10,647 16,613 13,556
Royalty and exploration intangible assets 9 79,386 79,791 80,047
Mining and exploration interests 10 14,608 15,506 17,062
Deferred costs 1,492 1,120 1,370
Other receivables 11 21,768 - -
Deferred tax 13 6,514 3,446 9,126
--------- --------- -------------
241,956 198,678 238,123
Current assets
Trade and other receivables 9,066 3,132 12,090
Derivative financial instruments 169 - 711
Cash and cash equivalents 5,627 4,059 5,331
--------- --------- -------------
14,862 7,191 18,132
Total assets 256,818 205,869 256,255
--------- --------- -------------
Non-current liabilities
Borrowings 12 6,090 8,900 6,167
Other payables 338 1,348 1,491
Deferred tax 13 32,503 23,970 36,637
--------- --------- -------------
38,931 34,218 44,295
Current liabilities
Income tax liabilities 465 465 465
Trade and other payables 7,867 6,407 1,357
--------- --------- -------------
8,332 6,872 1,822
Total liabilities 47,263 41,090 46,117
--------- --------- -------------
Net assets 209,555 164,779 210,138
========= ========= =============
Capital and reserves attributable to shareholders
Share capital 14 3,618 3,399 3,399
Share premium 14 61,966 49,211 49,211
Other reserves 63,045 49,984 63,600
Retained earnings 15 80,926 62,185 93,928
--------- --------- -------------
Total equity 209,555 164,779 210,138
========= ========= =============
Anglo Pacific Group PLC
Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(UNAUDITED) FOR THE SIX MONTHSED JUNE 30, 2016
Other reserves
Foreign
Share
Investment based currency
Investment
Share Share Merger Warrant revaluation payment translation Special in Retained Total
capital premium reserve reserve reserve reserve reserve reserve own shares earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- -------- -------- -------- -------- ------------ --------- ------------ -------- ----------- --------- ---------
Balance at January
1, 2016 3,399 49,211 29,134 143 3,917 1,308 (2,557) 632 (2,601 ) 79,397 161,983
Loss for the period - - - - - - - - - (5,381) (5,381)
Other comprehensive
income:
Available-for-sale
investments
Valuation
movement taken
to equity - - - - 4,229 - 43 - - - 4,272
Transferred to
income
statement on
disposal - - - - - - - - - - -
Transferred to
income
statement on
impairment - - - - - - - - - - -
Deferred tax - - - - 18 - - - - - 18
Foreign currency
translation - - - - - - 15,364 - - - 15,364
Total comprehensive
income - - - - 4,247 - 15,407 - - (5,381) 14,273
-------- -------- -------- -------- ------------ --------- ------------ -------- ----------- --------- ---------
Dividends - - - - - - - - - (11,831) (11,831)
Share-based payments - - - - - 354 - - - - 354
Total transactions
with owners of the
company - - - - - 354 - - - (11,831) (11,477)
-------- -------- -------- -------- ------------ --------- ------------ -------- ----------- --------- ---------
Balance at June 30,
2016 3,399 49,211 29,134 143 8,164 1,662 12,850 632 (2,601) 62,185 164,779
======== ======== ======== ======== ============ ========= ============ ======== =========== ========= =========
Anglo Pacific Group PLC
Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(UNAUDITED) FOR THE SIX MONTHSED DECEMBER 31, 2016
Other reserves
Foreign
Share
Investment based currency
Investment
Share Share Merger Warrant revaluation payment translation Special in Retained Total
capital premium reserve reserve reserve reserve reserve reserve own shares earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- -------- -------- -------- -------- ------------ --------- ------------ -------- ----------- --------- --------
Balance at June 30,
2016 3,399 49,211 29,134 143 8,164 1,662 12,850 632 (2,601) 62,185 164,779
Loss for the year - - - - - - - - - 31,743 31,743
Other comprehensive
income:
Available-for-sale
investments
Valuation
movement taken
to equity - - - - 4,955 - 14 - - - 4,969
Transferred to
income
statement on
disposal - - - - (2,449) - - - - - (2,449)
Transferred to
income
statement on
impairment - - - - 29 - - - - - 29
Deferred tax - - - - 9 - 1 - - - 10
Foreign currency
translation - - - - - - 10,703 - - - 10,703
------------
Total comprehensive
income - - - - 2,544 - 10,718 - - 31,743 45,005
-------- -------- -------- -------- ------------ --------- ------------ -------- ----------- --------- --------
Dividends - - - - - - - - - - -
Share-based payments - - - - - 354 - - - - 354
Total transactions
with owners of the
company - - - - - 354 - - - - 354
-------- -------- -------- -------- ------------ --------- ------------ -------- ----------- --------- --------
Balance at December
31, 2016 3,399 49,211 29,134 143 10,708 2,016 23,568 632 (2,601) 93,928 210,138
======== ======== ======== ======== ============ ========= ============ ======== =========== ========= ========
Anglo Pacific Group PLC
Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(UNAUDITED) FOR THE SIX MONTHSED JUNE 30, 2017
Other reserves
Foreign
Share
Investment based currency
Investment
Share Share Merger Warrant revaluation payment translation Special in Retained Total
capital premium reserve reserve reserve reserve reserve reserve own shares earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- -------- -------- -------- -------- ------------ --------- ------------ -------- ----------- --------- ---------
Balance at January
1, 2017 3,399 49,211 29,134 143 10,708 2,016 23,568 632 (2,601) 93,928 210,138
Loss for the year - - - - - - - - - (2,532) (2,532)
Other comprehensive
income:
Available-for-sale
investments
Valuation
movement taken
to equity (note
8, 10) - - - - (3,033) - 28 - - - (3,005)
Transferred to
income
statement on
disposal - - - - (28) - - - - - (28)
Deferred tax - - - - 541 - - - - - 541
Foreign currency
translation - - - - - - 1,473 - - - 1,473
------------
Total comprehensive
loss - - - - (2,520) - 1,501 - - (2,532) (3,551)
-------- -------- -------- -------- ------------ --------- ------------ -------- ----------- --------- ---------
Dividends - - - - - - - - - (10,470) (10,470)
Issue of ordinary
shares (note 14) 219 12,755 - - - - - - - - 12,974
Share-based payments - - - - - 464 - - - - 464
Total transactions
with owners of the
company 219 12,755 - - - 464 - - - (10,470) 2,968
-------- -------- -------- -------- ------------ --------- ------------ -------- ----------- --------- ---------
Balance at June 30,
2017 3,618 61,966 29,134 143 8,188 2,480 25,069 632 (2,601) 80,926 209,555
======== ======== ======== ======== ============ ========= ============ ======== =========== ========= =========
Anglo Pacific Group PLC
Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
FOR THE SIX MONTHSED JUNE 30, 2017
June 30, 2017 June 30, 2016
Notes GBP'000 GBP'000
Cash flows from operating activities
Loss before taxation (3,027) (8,176)
Adjustments for:
Finance income - excluding foreign exchange gains/losses 2 (848) (70)
Finance costs 3 399 423
Other income 4 438 (179)
Gain on disposal of mining and exploration interests 10 (28) -
Revaluation of royalty financial instruments 8 3,866 -
Revaluation of coal royalties (Kestrel) 7 11,062 10,161
Depreciation of property, plant and equipment 17 17
Amortisation of royalty intangible assets 9 1,568 1,339
Share-based payments and associated national insurance 527 402
-------------- --------------
13,974 3,917
Decrease in trade and other receivables 3,039 635
Increase/(Decrease) in trade and other payables (44) 120
-------------- --------------
Cash generated from operations 16,969 4,672
Income taxes paid (1,129) (172)
Net cash generated from operating activities 15,840 4,500
-------------- --------------
Cash flows from investing activities
Proceeds on disposal of mining and exploration interests 10 36 -
Proceeds from royalty financial instruments 4 117 116
Advances under commodity related financing agreements 8, 11 (26,644) 392
Repayments under commodity related financing agreements 11 2,465 -
Prepaid acquisition costs (139) -
Sundry income - 63
Finance income - excluding foreign exchange gains/losses 2 848 70
Net cash (used in)/from investing activities (23,317) 641
-------------- --------------
Cash flows from financing activities
Drawdown of revolving credit facility 12 7,501 4,400
Repayment of revolving credit facility 12 (7,320) (2,827)
Proceeds from issue of share capital 14 13,700 -
Transaction costs of share issue (726) -
Dividends paid 6 (5,071) (6,762)
Finance costs 3 (399) (423)
Net cash from/(used in) financing activities 7,685 (5,612)
-------------- --------------
Net increase/(decrease) in cash and cash equivalents 208 (471)
Cash and cash equivalents at beginning of period 5,331 5,708
-------------- --------------
Unrealised foreign currency gain/(loss) 88 (1,178)
Cash and cash equivalents at end of period 5,627 4,059
============== ==============
Anglo Pacific Group PLC
Condensed Consolidated Financial Statements
NOTES TO THE ACCOUNTS
1. Basis of preparation
These condensed consolidated interim financial statements of
Anglo Pacific Group PLC are for the six months ended June 30, 2017.
They have been prepared in accordance with IAS 34 'Interim
Financial Reporting', as adopted by the European Union. They do not
include all of the information required for full annual financial
statements, and should be read in conjunction with the consolidated
financial statements of the Group for the year ended December 31,
2016.
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,
2016, which were prepared in accordance with IFRS, as adopted by
the European Union.
This condensed consolidated 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, 2016 were approved on March 29, 2017. Those 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.
1.2 Going concern
The financial position of the Group and its cash flows are set
out on pages 12 to 18. As at June 30, 2017, the Group had cash and
cash equivalents of GBP5.6m and GBP6.3m (US$4.8m) in borrowings
(note 12) following the partial draw down on its revolving credit
facility (December 31, 2016: GBP6.3m) with access to a further
GBP19.2m (US$25.2m) in undrawn funds under the same facility.
The Group repaid its borrowings in full under this facility in
August 2017, and remains debt free following the payment of the
GBP5.4m dividend. As a result the Group has full access to its
US$30.0m revolving credit facility which has the potential to be
upsized to US40.0m acquisition dependent.
After making enquiries and reviewing the Group's forecasts and
projections, the Directors have a reasonable expectation that the
Group has adequate resources to continue to operate within the
level of its current facilities for the foreseeable future. The
Group therefore continues to adopt the going concern basis in
preparing its consolidated financial statements.
1.3 Changes in accounting policies
The accounting policies applied in these condensed interim
financial statements are consistent with those of the Group's
consolidated financial statements for the year ended December 31,
2016, as described in those annual financial statements, with the
exception of standards, amendments and interpretations effective of
January 1, 2017. The Group has not early adopted other standards,
amendments to standards or interpretations that have been issued
but not yet effective. The nature and effect of these changes are
disclosed next in sections (a) and (b).
(a) Standards, amendments and interpretations effective or adopted in 2017
From January 1, 2017, the following standards and amendments are
effective in the Group's consolidated financial statements, subject
to European Union endorsement. Since they are all expected to be
endorsed in 2017, they have been applied to these condensed interim
financial statements. Their first time adoption does not have a
material impact on the Group's consolidated financial
statements.
-- Amendment to IAS 7: 'Statement of cash flow' related to disclosure initiative;
-- Amendment to IAS 12: 'Income taxes'; and
-- 'Annual Improvement Project 2014-2016'.
(b) Standards and amendments that are issued but not yet applied by the Group
The Group has not yet applied the following standards and
limited amendment to standards:
-- IFRS 9: 'Financial instrument' - effective from January 1, 2018;
-- IFRS 15: 'Revenue from contracts with customers' - effective from January 1, 2018;
-- IFRS 16: 'Leases' - effective from January 1, 2019, subject to European Union endorsement;
-- IFRIC interpretation 22: 'Foreign currency transactions and
advance consideration' - effective January 1, 2018, subject to
European Union endorsement;
-- IFRIC interpretation 23: 'Uncertainty over income tax
treatments' - effective January 1, 2019, subject to European Union
endorsement;
-- Amendment to IFRS 2: 'Classification and measurement of
share-based payment transactions' - effective January 1, 2018,
subject to European Union endorsement; and
-- Clarifications to IFRS 15: 'Revenue from contracts with
customers' - effective January 1, 2018, subject to European Union
endorsement.
Management do not anticipate that the application of IFRIC 22,
IFRIC 23, the amendment to IFRS 2 and the clarification to IFRS 15
will have a material impact on the Group's consolidated financial
statements.
Disclosure of the Group's initial assessment of the impact of
implementing IFRS 9 was provided in note 3.1.2(b) of the Group's
consolidated financial statements for the year ended December 31,
2016. No changes to that assessment have arisen as at June 30,
2017. The Group is currently compiling information to enable
restatements and additional disclosures to be prepared in relation
to 2017, and further disclosure of the financial impacts will be
provided in the Group's consolidated financial statements for the
year ended December 31, 2017.
IFRS 16: 'Leases' was issued in 2016 and is likely to have an
impact on the presentation, recognition and disclosure of the
Group's operating leases. The Group is continuing to review the
impact of the implementation of this standard and at this stage is
has not been practicable to quantify the full effect that this
standard will have on the Group's consolidated financial
statements.
2 Finance income
Six months ended
June 30, 2017 June 30, 2016
GBP'000 GBP'000
Group
Interest on bank deposits 6 45
Interest on long-term receivables 842 25
Net foreign exchange gain 385 1,248
-------------- --------------
1,233 1,318
============== ==============
Interest on long-term receivables for the six months ended June
30, 2017 of GBP842,000 relates to the Group's 13 year amortising
loan of C$40.8m with an interest rate of 10 per cent per annum, to
Denison Mines Inc ("Denison"), which is classified as non-current
other receivables (note 11).
3 Finance costs
Six months ended
June 30, 2017 June 30, 2016
GBP'000 GBP'000
Group
Professional fees (166) (229)
Revolving credit facility fees (74) (63)
Revolving credit facility interest (159) (131)
-------------- --------------
(399) (423)
============== ==============
4 Other income
Six months ended
June 30, 2017 June 30, 2016
GBP'000 GBP'000
Group
Effective interest income on royalty financial instruments 117 116
Revaluation of foreign currency financial instruments (555) -
Sundry income - 63
-------------- --------------
(438) 179
============== ==============
5 Loss per share
Loss per ordinary share is calculated on the Group's loss after
tax of GBP2.5m for the six months ended June 30, 2017 (June 30,
2016: loss GBP5.4m) and the weighted average number of shares in
issue during the period of 173,370,074 (2016: 169,016,101).
June 30, 2017 June 30, 2016
GBP'000 GBP'000
Net profit attributable to shareholders
Earnings - basic (2,532) (5,381)
Earnings - diluted (2,532) (5,381)
============== ==============
June 30, 2017 June 30, 2016
Weighted average number of shares in issue
Basic number of shares outstanding 173,370,074 169,016,101
Dilutive effect of Employee Share Option Scheme - -
-------------- --------------
Diluted number of shares outstanding 173,370,074 169,016,101
============== ==============
Loss per share - basic and diluted (1.46p) (3.18p)
The weighted average number of shares in issue excludes the
issue of shares under the Group's Joint Share Ownership Plan, as
the Employee Benefit Trust has waived its right to receive
dividends on the 925,933 ordinary 2p shares it holds as at June 30,
2017 (June 30, 2016: 925,933).
As the Group is loss making in 2017 and 2016, the Group's
employee share option schemes are considered anti-dilutive because
including them in the diluted number of shares outstanding would
decrease the loss per share. Consequently basic and diluted loss
per share is the same.
Due to the growing number of valuation and other non-cash
movements being recognised in the income statement, the Group
presents an adjusted earnings per share metric, which the directors
consider to be a useful additional measure of the Group's
performance. In calculating the adjusted earnings per share, the
weighted average number of shares in issue remains consistent with
those used in the earnings per share calculation.
Diluted
Earnings earnings
Earnings per share per share
GBP'000 p p
Net profit attributable to shareholders
Loss - basic and diluted for the six month ended June 30, 2017 (2,532) (1.46p) (1.46p)
Adjustment for:
Amortisation of royalty intangible assets 1,568
Gain on sale of mining and exploration interests (28)
Revaluation and impairment of royalty financial instruments 3,866
Revaluation of coal royalties (Kestrel) 11,062
Revaluation of foreign currency instruments 555
Share-based payments and associated national insurance 527
Tax effect of the adjustments above (2,116)
---------
Adjusted earnings - basic and diluted for the six months ended June 30, 2017 12,902 7.44p 7.44p
========= ========== ==========
Diluted
Earnings earnings
Earnings per share per share
GBP'000 p p
Net profit attributable to shareholders
Loss - basic and diluted for the six month ended June 30, 2016 (5,381) (3.18p) (3.18p)
Adjustment for:
Amortisation of royalty intangible assets 1,339
Revaluation of coal royalties (Kestrel) 10,161
Effective interest income on royalty financial instruments (116)
Share-based payments and associated national insurance 402
Tax effect of the adjustments above (3,997)
---------
Adjusted earnings - basic and diluted for the six months ended June 30, 2016 2,408 1.43p 1.43p
========= ========== ==========
6 Dividends and dividend cover
An interim dividend of 3.00p per share has been declared for
year ending December 31, 2017, and will be paid on November 15,
2017.
On August 9, 2017 a final dividend in respect of the year ended
December 31, 2016 of 3.00p per share was paid to shareholders
(GBP5.4m). As the final dividend was approved by shareholders at
the AGM on May 10, 2017 it has been included as a current liability
in 'Trade and other payables' as at June 30, 2016.
On February 8, 2017 an interim dividend of 3.00p per share was
paid to shareholders (GBP5.1m) in respect of the year ended
December 31, 2016.
Dividend cover
Dividend cover is calculated as the number of time adjusted
earnings per share exceeds the dividend per share. The Group's
adjusted earnings per share for the six months ended June 30, 2017,
is 7.44p per share (note 5) with an interim dividend totalling
3.00p, resulting in dividend cover of 2.48x (June 30, 2016:
adjusted earnings per share 1.43p, dividend cover of 0.48x).
7 Coal royalties (Kestrel)
GBP'000
At January 1, 2016 82,649
Foreign currency translation 9,619
Loss on revaluation of
coal royalties (10,161)
---------
At June 30, 2016 82,107
Foreign currency translation 6,717
Loss on revaluation of
coal royalties 28,061
---------
At December 31, 2016 116,885
Foreign currency translation 1,657
Loss on revaluation of
coal royalties (11,062)
---------
At June 30, 2017 107,480
=========
The coal royalty was valued during June 2017 at GBP107.5m
(A$181.8m) by an independent coal industry adviser, on a net
present value of the pre-tax cash flow discounted at a nominal rate
of 7.5% (June 30, 2016: 7% and December 31, 2016: 7.5%). The key
assumptions in the independent valuation relate to price and
discount rate.
The price assumptions used in the June 30, 2017 valuation
decrease from US$130/t in the short term to a long-term flat
nominal price of US$115/t. If the price were to increase or
decrease 10 per cent over the life of the mine the valuation effect
would be:
-- a 10% reduction in the coal price would have resulted in the
coal royalties being valued at A$154.3m (GBP91.2m) and a reduction
in the revaluation uplift in the income statement of GBP16.5m;
and
-- a 10% increase in the coal price would have resulted in the
coal royalties being valued at A$210.9m (GBP124.7m) and an increase
in the revaluation uplift in the income statement of GBP17.1m.
The pre-tax nominal discount rate used for the asset is 7.50%,
if the discount rate used were to increase or decrease by 1% the
valuation effect would be:
-- a 1% reduction in the nominal discount rate would have
resulted in the coal royalties being valued at A$189.1m (GBP111.8m)
and an increase in the revaluation uplift in the income statement
of GBP4.4m; and
-- a 1% increase in the nominal discount rate would have
resulted in the coal royalties being valued at A$175.0m (GBP103.4m)
and a reduction in the revaluation uplift in the income statement
of GBP4.1m.
The net royalty income from this investment is currently taxed
in Australia at a rate of 30%. The revaluation of the underlying
Australian dollar asset is recognised in the Income Statement with
the retranslation to the Group's sterling presentation currency
recognised in the foreign currency translation reserve.
Were the coal royalty to be realised at the revalued amount,
there are GBP5.4m (A$9.2m) of capital losses potentially available
to offset against taxable gains. As the Directors do not presently
have any intention to dispose of the coal royalty, these losses
have not been included in the deferred tax calculation (note 13).
Were the coal royalty to be carried at cost the carrying value
would be GBP0.2m (2016: GBP0.2m).
Refer to note 17 for additional fair value disclosures relating
to Kestrel.
The shares over the entity which is the beneficial owner of the
Kestrel royalty have been guaranteed as security in connection with
the Group's borrowing facility (note 12).
8 Royalty financial instruments
The Group's royalty instruments are represented by three royalty
agreements which entitle the Group to either the repayment of
principal and a net smelter return ("NSR") royalty for the life of
the mine or a gross revenue royalty ("GRR") where the project
commences commercial production or the repayment of principal where
it does not. Details of the Group's royalty financial instruments,
which are held at fair value are summarised below:
Royalty
Valuation
Original 30 June
Cost Royalty 2017
Project Commodity '000 Rate Escalation Classification GBP'000
Gold,
Silver, 3% gold Available-for-sale
EVBC Copper C$7,500 2.50% >US$1,100/oz equity 2,852
Available-for-sale
Jogjakarta Iron Sands U$4,000 2.00% - debt -
2.5% gold
>U$1,800/oz &
production Available-for-sale
Dugbe 1 Gold U$15,000 2.00% <50,000oz/qrt debt 6,141
22.5% of
tolling
milling
proceeds
on all
throughput Available-for-sale
McClean Lake Uranium C$2,700 >215Mlbs - debt 1,654
10,647
============
The Group's entitlements to cash by way of the repayment of the
principal and the NSR royalty or the GRR have been classified as
available-for-sale financial assets in accordance with IAS 39 and
are carried at fair value in accordance with the Group's
classification of royalty arrangements criteria adopted in the last
annual financial statements for the year to December 31, 2016.
GBP'000
Fair value
At January 1, 2016 6,534
Additions 10,133
Revaluation recognised in profit or loss -
Revaluation recognised in other comprehensive income (339)
Foreign currency translation 285
At June 30, 2016 16,613
Revaluation recognised in profit or loss (4,939)
Revaluation recognised in other comprehensive income (11)
Foreign currency translation 1,893
--------
At December 31, 2016 13,556
Addition 1,654
Impairment of royalty financial instruments (3,866)
Revaluation recognised in other comprehensive income (631)
Foreign currency translation (66)
--------
At June 30, 2017 10,647
========
In the period effective interest of GBP0.1m (2016: GBP0.1m) was
recognised in other income (see note 4). This was directly offset
by cash received in the period of the same amount.
On February 13, 2017, the Group completed a C$43.5m (GBP26.6m)
financing and streaming agreement with Denison. The financing
agreement is structured as a 13 year amortising loan of C$40.8m
(GBP24.9m) with an interest rate of 10 per cent per annum payable
to the Group and is classified as non-current other receivables
(note 11). The streaming agreement, which entitles the Group to
receive Denison's portion of toll milling proceeds from the McClean
Lake Mill after the first 215Mlbs of throughput from July 1, 2016,
was acquired for C$2.7m (GBP1.7m) and is classified as
available-for-sale debt.
As at June 30, 2017, the Group's convertible debenture with Indo
Mines, including a gross revenue royalty over the Jogjakarta
project was impaired to GBPnil as a result of inherent uncertainty
of this project reaching commercial production due to the limited
progress made to date by the operator in securing long-term
strategic investment which has been compounded by the Indonesian
export ban that would be applicable to iron sands. The impairment
at June 30, 2017 has resulted in a GBP3.1m charge to the income
statement.
9 Royalty and exploration intangibles assets
Exploration and Royalty
Evaluation Costs Interests Total
Group GBP'000 GBP'000 GBP'000
Gross carrying amount
At January 1, 2017 697 115,017 115,714
Foreign currency translation - 1,109 1,109
----------------- ---------- ---------
At June 30, 2017 697 116,126 116,823
Amortisation and impairment
At January 1, 2017 (697) (34,970) (35,667)
Amortisation charge - (1,568) (1,568)
Foreign currency translation - (202) (202)
At June 30, 2017 (697) (36,740) (37,437)
----------------- ---------- ---------
Carrying amount June 30, 2017 - 79,386 79,386
================= ========== =========
Exploration and Royalty
Evaluation Costs Interests Total
Group GBP'000 GBP'000 GBP'000
Gross carrying amount
At January 1, 2016 697 96,845 97,542
Foreign currency translation - 12,927 12,927
----------------- ---------- ---------
At June 30, 2016 697 109,772 110,469
Amortisation and impairment
At January 1, 2016 (697) (25,354) (26,051)
Amortisation charge - (1,339) (1,339)
Foreign currency translation - (3,288) (3,288)
----------------- ---------- ---------
At June 30, 2016 (697) (29,981) (30,678)
----------------- ---------- ---------
Carrying amount June 30, 2016 - 79,791 79,791
================= ========== =========
Exploration and Royalty
Evaluation Costs Interests Total
Group GBP'000 GBP'000 GBP'000
Gross carrying amount
At January 1, 2016 697 96,845 97,542
Additions - 650 650
Foreign currency translation - 17,522 17,522
----------------- ---------- ---------
At December 31, 2016 697 115,017 115,714
Amortisation and impairment
At January 1, 2016 (697) (25,354) (26,051)
Amortisation charge - (2,869) (2,869)
Impairment charge - (2,009) (2,009)
Foreign currency translation - (4,738) (4,738)
----------------- ---------- ---------
At December 31, 2016 (697) (34,970) (35,667)
----------------- ---------- ---------
Carrying amount December 31, 2016 - 80,047 80,047
================= ========== =========
Exploration and evaluation costs
The exploration and evaluation costs comprise expenditure that
is directly attributable to the Trefi project in British Columbia,
Canada which was fully impaired during 2014.
Royalty interests
The amortisation charge for the period, of GBP1.6m (June 30,
2016: GBP1.3m) relates to the Group's producing royalties,
Narrabri, Maracás Menchen and Four Mile. Amortisation of the
remaining interests will commence once they begin commercial
production.
All intangible assets are assessed for indicators of impairment
at each reporting date. As at June 30, 2017 no further impairment
charges were recognised (December 31, 2016: GBP2.9m). The Group's
intangible assets will be assessed for indicators of impairment
again at December 31, 2017.
The shares of the entity which is the beneficial owner of the
Narrabri royalty have been guaranteed as security in connection
with the Group's borrowing facility (note 12). No other intangible
assets have been pledged as security for liabilities.
10 Mining and exploration interests
GBP'000
Fair value
At January 1, 2016 10,898
Mining and exploration interests
received in lieu of payment 47
Revaluation adjustment 4,569
Foreign currency translation (8)
--------
At June 30, 2016 15,506
Disposals (3,431)
Revaluation adjustment 4,965
Foreign currency translation 22
--------
At December 31, 2016 17,062
Disposals (36)
Revaluation adjustment (2,401)
Foreign currency translation (17)
At June 30, 2017 14,608
========
The fair values of listed securities are based on quoted market
prices. Unquoted investments and royalty options are initially
recognised using cost where fair value cannot be reliably
determined. In the absence of an active market for these
securities, the Group considers each unquoted security to ensure
there has been no material change in the fair value since initial
recognition.
An impairment charge (representing the recognition of losses
previously deferred to equity) is recognised in the income
statement when the absolute decline in value below cost of any
individual investment is considered 'significant' or 'prolonged' in
accordance with the Group's impairment policy.
Total mining and exploration interests are represented by:
June 30, 2017 June 30, 2016 December 31, 2016
GBP'000 GBP'000 GBP'000
Quoted investments 11,335 12,742 14,070
Unquoted investments 3,273 2,764 2,992
-------------- -------------- ------------------
14,608 15,506 17,062
============== ============== ==================
Number of investments 10 10 10
11 Non-current other receivables
GBP'000
At January 1, 2016, and June 30, 2016 and December 31, 2016 -
Advances under commodity related financing agreements 24,990
Interest earned in the period 842
Repayments of interest and principal under commodity related financing agreements (3,307)
Foreign currency translation (757)
At June 30, 2017 21,768
========
On February 13, 2017, the Group completed a C$43.5m (GBP26.6m)
financing and streaming agreement with Denison. The streaming
agreement is classified as an available-for-sale debt royalty
financial instrument (note 8).
The financing agreement is structured as a 13 year secured
amortising loan of C$40.8m (GBP24.9m) with an interest rate of 10
per cent per annum payable to the Group. The loan contains
mandatory repayment provisions in any period where the equivalent
toll revenues exceed the interest liability. Conversely, in any
period when toll revenues are less than the interest payment, the
shortfall is capitalised and carried forward to the next period.
The loan principal, along with any capitalised interest is
repayable in full at maturity.
Subsequent to entering the financing agreement, the Group has
earned GBP0.8m in interest revenue (2016: nil) and received
principal repayments of GBP2.5m, of which GBP1.7m relates to toll
revenue earned by Denison in H2 2016.
12 Borrowings
June 30, 2017 June 30, 2016 December 31, 2016
GBP'000 GBP'000 GBP'000
Secured borrowing at amortised cost
Revolving credit facility 6,259 9,100 6,300
Deferred borrowing costs (169) (200) (133)
6,090 8,900 6,167
============== ============== ==================
Amount due for settlement within 12 months - - -
============== ============== ==================
Amount due for settlement after 12 months 6,259 9,100 6,300
============== ============== ==================
The Group's borrowings relates to the partial draw-down of the
Group's revolving credit facility.
On February 8, 2017, the Group refinanced its existing US$30.0m
revolving credit facility with Barclays Bank PLC, and entered into
a new three year secured US$30.0m revolving credit facility and
US$10.0m accordion with an equal syndicate of Barclays Bank PLC and
Investec Bank PLC.
Borrowings under facility attract interest of LIBOR plus 300bps
when the leverage ratio is <1x. The margin ratchets up depending
on the leverage ratio with a maximum of 400bps at 2x.
Deferred borrowing costs relate to the establishment fees
associated with the facility and will be amortised over its term.
The deferred borrowing costs under the previous revolving credit
facility were amortised in full upon the amendment and restatement
of the facility.
As at June 30, 2017, the Group had utilised GBP6.3m (US$4.8m) of
its facility and access to a further GBP19.2m (US$25.2m) in undrawn
funds under the same facility.
The Group repaid its borrowings in full under this facility in
August 2017, and remains debt free following the payment of the
GBP5.4m dividend. As a result the Group has full access to its
US$30.0m revolving credit facility which has the potential to be
upsized to US40.0m acquisition dependent.
The Group's revolving credit facility is secured by way of a
floating charge over the Group's assets and is subject to a number
of financial covenants, all of which have been met during the
period ended June 30, 2017.
The Group's net cash position after offsetting interest bearing
liabilities against cash and cash equivalents is as follows:
June 30, 2017 June 30, 2016 December 31, 2016
GBP'000 GBP'000 GBP'000
Revolving credit facility (6,259) (9,100) (6,300)
Cash and cash equivalents 5,627 4,059 5,331
Net debt (632) (5,041) (969)
============== ============== ==================
13 Deferred tax
Deferred tax assets and liabilities are offset where the Group
has a legally enforceable right to do so. The following is the
analysis of the deferred tax balances (after offset) for financial
reporting purposes:
June 30, 2017 June 30, 2016 December 31, 2016
GBP'000 GBP'000 GBP'000
Deferred tax liabilities 32,503 23,970 36,637
Deferred tax assets (6,514) (3,446) (9,126)
25,989 20,524 27,511
============== ============== ==================
The following are the major deferred tax liabilities/(assets)
recognised by the Group and the movements thereon during the
period:
Coal royalties Available-for sale-investments
Revaluation Effects Revaluation Revaluation Accrual of Other
of coal of Tax of royalty of mining royalty tax
royalty losses instruments interests receivable losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At January 1, 2016 24,279 (1,356) 767 107 567 (2,912) 21,452
Charge/(credit) to
profit or loss (3,004) - - (23) (270) (298) (3,595)
Charge/(credit) to
other comprehensive
income - - (68) 50 - - (18)
Exchange differences 2,843 (172) - - 49 (35) 2,685
Effect of change in
tax rate:
- income
statement - - - - - - -
- equity - - - - - - -
------------ -------- ---------------- --------------- ----------- -------- --------
At June 30, 2016 24,118 (1,528) 699 134 346 (3,245) 20,524
Charge/(credit) to
profit or loss 8,514 - (1,583) 4 2,144 (4,128) 4,951
Charge/(credit) to
other comprehensive
income - - 2 42 - - 44
Exchange differences 1,911 (77) - (16) 177 35 2,030
Effect of change in
tax rate:
- income
statement - - - - - - -
- equity - - (38) - - - (38)
------------ -------- ---------------- --------------- ----------- -------- --------
At December 31, 2016 34,543 (1,605) (920) 164 2,667 (7,338) 27,511
============ ======== ================ =============== =========== ======== ========
Coal royalties Available-for sale-investments
Revaluation Effects Revaluation Revaluation Accrual of Other
of coal of Tax of royalty of mining royalty tax
royalty losses instruments interests receivable losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At January 1, 2017 34,543 (1,605) (920) 164 2,667 (7,338) 27,511
Charge/(credit) to
profit or loss (3,326) 1,648 336 - (602) 2,380 436
Charge/(credit) to
other comprehensive
income - - (107) (364) - - (471)
Exchange differences 514 (43) (20) 218 42 (46) 665
Effect of change in
tax rate:
- income
statement (1,818) - (264) - - - (2,082)
- equity - - (70) - - - (70)
--------
At June 30, 2017 29,913 - (1,045) 18 2,107 (5,004) 25,989
============ ======== ================ =============== =========== ======== ========
14 Share capital, share premium and merger reserve
Share Share Merger
Number of capital premium reserve Total
shares GBP'000 GBP'000 GBP'000 GBP'000
Group and Company
Ordinary shares of 2p each at January 1, 2016, and June
30, 2016 and December 31, 2016 169,942,034 3,399 49,211 29,134 81,744
Issue of share capital under placing and placing and
open offer 10,960,000 219 12,755 - 12,974
Ordinary shares of 2p each at June 30, 2017 180,902,034 3,618 61,966 29,134 94,718
============ ======== ======== ======== ========
On February 6, 2017, the Group issued 10,960,000 new ordinary
shares of 2p each to part fund the Denison transaction (refer to
notes 8 and 11). The shares were placed at 125p per share raising
gross proceeds of GBP13.7m (C$22.4m), and net proceeds of
GBP13.0m.
15 Retained earnings
GBP'000
Balance at January 1,
2016 79,397
Dividends paid (11,831)
Loss for the period (5,381)
---------
Balance at June 30, 2016 62,185
Profit for the period 31,743
Balance at December 31,
2016 93,928
Dividends paid (10,470)
Loss for the period (2,532)
---------
Balance at June 30, 2017 80,926
=========
16 Segment information
The Group's chief operating decision maker is considered to be
the Executive Committee. The Executive Committee evaluates the
financial performance of the Group based on a portfolio view of its
individual royalty arrangements. Royalty related income and its
associated impact on operating profit is the key focus of the
Executive Committee. The income from royalties is presented based
on the jurisdiction in which the income is deemed to be sourced as
follows:
Australia: Kestrel, Narrabri, Four Mile, Pilbara, Mount Ida
Americas: McLean Lake, Maracás, Amapá and Tucano, Ring of Fire, Groundhog
Europe: EVBC, Salamanca, Isua, Bulqiza
Other: Jogjakarta, Dugbe 1, and includes the Group's mining and exploration interests
The following is an analysis of the Group's results by
reportable segment. The key segment results presented to the
Executive Committee for making strategic decision and allocation of
resources is operating profit as analysed below.
The segment information provided to the Executive Committee for
the reportable segments for the six months ended June 30, 2017 is
as follows (noting that total segment operating profit corresponds
to operating profit before impairments, revaluations and
gains/losses on disposals which is reconciled to Loss before tax on
the face of the consolidated income statement):
Australian Americas European All other
Royalties Royalties Royalties segments Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Royalty related income 14,484 785 815 - 16,084
Amortisation of royalties (1,321) (247) - - (1,568)
Operating expenses (1,383) - - (1,656) (3,039)
Total segment operating profit/(loss) 11,780 538 815 (1,656) 11,477
----------- ---------- ---------- ---------- --------
Total segment assets 175,079 42,189 5,342 34,516 257,126
----------- ---------- ---------- ---------- --------
Total assets include:
Additions to non-current assets (other than
financial instruments and deferred tax assets) - - - - -
Total segment liabilities 33,923 1,154 542 13,520 49,139
----------- ---------- ---------- ---------- --------
The segment information for the six months ended June 30, 2016
is as follows:
Australian Americas European All other
Royalties Royalties Royalties segments Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Royalty related income 3,231 246 598 - 4,075
Amortisation of royalties (1,128) (211) - - (1,339)
Operating expenses (872) - - (952) (1,824)
Total segment operating profit/(loss) 1,231 35 598 (952) 912
----------- ---------- ---------- ---------- --------
Total segment assets 142,581 20,183 5,931 37,174 205,869
----------- ---------- ---------- ---------- --------
Total assets include:
Additions to non-current assets (other than
financial instruments and deferred tax assets) - - - - -
Total segment liabilities 23,008 1,120 699 16,263 41,090
----------- ---------- ---------- ---------- --------
The segment information for the twelve months ended December 31,
2016 is as follows:
Australia Americas Europe All other
Royalty Royalty Royalty segments Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Royalty related income 17,691 791 1,223 - 19,705
Amortisation of royalties (2,416) (453) - - (2,869)
Operating expenses (1,652) - - (2,478) (4,130)
Total segment operating profit/(loss) 13,623 338 1,223 (2,478) 12,706
---------- --------- -------- ---------- --------
Total segment assets 187,879 19,106 12,314 36,956 256,255
---------- --------- -------- ---------- --------
Total assets include:
Additions to non-current assets (other than financial
instruments and deferred tax assets - - - - -
Total segment liabilities 35,799 1,215 662 8,441 46,117
---------- --------- -------- ---------- --------
The amounts provided to the Executive Committee with respect to
total segment assets are measured in a manner consistent with that
of the financial statements. These assets are allocated based on
the operations of the segment and the physical location of the
asset.
The amounts provided to the Executive Committee with respect to
total segment liabilities are measured in a manner consistent with
that of the financial statements. These liabilities are allocated
based on the operations of the segment.
The royalty related income in Australia of GBP14.5m (2016:
GBP3.2m) is substantially derived from the Kestrel and Narrabri
royalties, which generated GBP12.6m and GBP1.9m respectively for
the six months ended June 30, 2017 (2016: GBP1.4m and GBP1.6m).
Both royalties represent greater than 10% of the Group's revenue in
2016 and 2017. In addition, royalty related income in Europe of
GBP0.8m (2016: GBP0.6m) is derived from a single gold, copper and
silver royalty and represented greater than 10% of the Group's
revenue in 2016.
17 Financial risk management
The Group's principal treasury objective is to provide
sufficient liquidity to meet operational cash flow and dividend
requirements and to allow the Group to take advantage of new growth
opportunities whilst maximising shareholder value. The Group's
activities expose it to a variety of financial risks including
liquidity risk, credit risk, foreign exchange risk and price risk.
The Group operates controlled treasury policies which are monitored
by management to ensure that the needs of the Group are met while
minimising potential adverse effects of unpredictability of
financial markets on the Group's financial performance.
Financial instruments
The Group held the following investments in financial
instruments (this includes investment properties):
June 30, 2017 June 30, 2016 December 31, 2016
GBP'000 GBP'000 GBP'000
Investment property (held at fair value)
Coal royalties (Kestrel) 107,480 82,107 116,885
Available-for-sale
Royalty financial instruments 10,647 16,613 13,556
Mining and exploration interests 14,608 15,506 17,062
Fair value through profit or loss
Foreign currency financial instruments 168 - 711
June 30, 2017 June 30, 2016 December 31, 2016
GBP'000 GBP'000 GBP'000
Loans and receivables
Trade and other receivables 8,667 2,539 11,616
Cash at bank and in hand 5,627 4,059 5,331
Non-current other receivables 21,768 - -
Financial liabilities
Trade and other payables 981 1,093 932
Borrowings 6,090 9,100 6,330
Other payables 1,154 1,120 1,215
Cash and cash equivalents comprise cash and short-term deposits
held by the Group treasury function. The carrying amount of these
assets approximates their fair value.
The Directors consider that the carrying amount of trade and
other receivables and trade and other payables approximates their
fair value.
Liquidity and funding risk
The objective of the Group in managing funding risk is to ensure
that it can meet its financial obligations as and when they fall
due. As at June 30, 2017, the Group had utilised GBP6.3m (US$4.8m)
of its facility (December 31, 2016: GBP6.3m) and access to a
further GBP19.2m (US$25.2m) in undrawn funds (December 31, 2016:
GBP18.0m) under the same facility.
The Group repaid its borrowings in full under this facility in
August 2017, and remains debt free following the payment of the
GBP5.4m dividend. As a result the Group has full access to its
US$30.0m revolving credit facility which has the potential to be
upsized to US40.0m acquisition dependent, adding further
flexibility and liquidity to the Group's cash balances.
Credit risk
The Group's principal financial assets are bank balances and
cash, trade and other receivables and investments, which represent
the Group's maximum exposure to credit risk in relation to
financial assets. The Group undertakes detailed analysis of factors
which mitigate the risk of default to the Group.
Foreign exchange risk
The Group's transactional foreign exchange exposure arises from
income, expenditure and purchase and sale of assets denominated in
foreign currencies. As each material commitment is made, the risk
in relation to currency fluctuations is assessed by the Board and
regularly reviewed. The Group does not consider it necessary to
have a hedging programme in place at this time.
Other price risk
The Group is exposed to other price risk in respect of its
mining and exploration interests which include listed and unlisted
equity securities and any convertible instruments. Interests are
continually monitored for indicators that may suggest problems for
these companies raising capital or continuing their day-to-day
business activities to ensure remedial action can be taken if
necessary. No specific hedging activities are undertaken in
relation to these interests and the voting rights arising from
these equity instruments are utilised in the Group's favour.
Fair value hierarchy
The following table presents financial assets and liabilities
measured at fair value in the statement of financial position in
accordance with the fair value hierarchy. This hierarchy groups
financial assets and liabilities into three levels based on the
significance of inputs used in measuring the fair value of the
financial assets and liabilities. The fair value hierarchy has the
following levels:
-- Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices);
and
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
The level within which the financial asset or liability is
classified is determined based on the lowest level of significant
input to the fair value measurement.
The following tables present the Group's assets and liabilities
that are measured at fair value at June 30, 2017:
June 30, 2017
Level 1 Level 2 Level 3 Total
Group Note GBP'000 GBP'000 GBP'000 GBP'000
Assets
Coal royalties (Kestrel) (a) - - 107,480 107,480
Royalty financial instruments (b) - - 10,647 10,647
Mining and exploration interests - quoted (c) 11,335 - - 11,335
Mining and exploration interests - unquoted (d) - 3,273 - 3,273
Foreign currency financial instruments (e) - 168 - 168
Net fair value 11,335 3,441 118,127 132,903
======== ======== ======== ========
The following tables present the Group's assets and liabilities
that are measured at fair value at June 30, 2016:
June 30, 2016
Level 1 Level 2 Level 3 Total
Note GBP'000 GBP'000 GBP'000 GBP'000
Assets
Coal royalties (Kestrel) (a) - - 82,107 82,107
Royalty financial instruments (b) - - 16,613 16,613
Mining and exploration interests - quoted (c) 12,742 - - 12,742
Mining and exploration interests - unquoted (d) - 2,764 - 2,764
Net fair value 12,742 2,764 98,720 114,226
======== ======== ======== ========
The following tables present the Group's assets and liabilities
that are measured at fair value at December 31, 2016:
December 31, 2016
Level 1 Level 2 Level 3 Total
Group Note GBP'000 GBP'000 GBP'000 GBP'000
Assets
Coal royalties (Kestrel) (a) - - 116,885 116,885
Royalty financial instruments (b) - - 13,556 13,556
Mining and exploration interests - quoted (c) 14,070 - - 14,070
Mining and exploration interests - unquoted (d) - 2,992 - 2,992
Foreign currency financial instruments (e) - 711 - 711
Net fair value 14,070 3,703 130,441 148,214
======== ======== ======== ========
There have been no significant transfers between Levels 1 and 2
in the reporting period.
The methods and valuation techniques used for the purposes of
measuring fair value of royalty financial instruments gives more
prominence to the probability of production by applying a risk
weighting to the discounted net present value outcome in order to
fully reflect the risk that the operation never comes into
production, rather than factoring this risk into the discount rate
applied to the future cash flow.
(a) Coal royalties (investment property)
The Group's coal royalties derive from its ownership of certain
sub-stratum land in Queensland, Australia. In accordance with IAS
40, this land is revalued at each reporting date on the basis of
future expected income discounted at 7.5% (June 30, 2016: 7.0% and
December 31, 2016: 7.5%) by an independent valuation consultant.
See note 7 for further details. All unobservable inputs are
obtained from third parties.
(b) Royalty financial instruments
At the reporting date, the royalty financial instruments are
valued based on the net present value of pre-tax cash flows
discounted at a rate between 7% and 13.50%. The discount rate of
each royalty arrangement is derived using a capital asset pricing
model specific to the underlying project, making reference to the
risk free rate of return expected on an investment with the same
time horizon as the expected mine life, together with the country
risk associated with the location of the operation.
For those royalty financial instrument not in production, the
outcome of this net present value calculation is then risk weighted
to reflect management's current assessment of the overall
likelihood and timing of each project coming into production and
royalty income arising. This assessment is impacted by news flow
relating to the underlying operation in the period, in conjunction
with management's assessment of the economic viability of the
project based on commodity price projections.
The table below outlines the discount rate and risk weighting
applied in the valuation of the Group's royalty financial
instruments:
June 30, 2017 June 30, 2016 and December 31, 2016
Classification Discount Rate Risk Weighting Discount Rate Risk Weighting
EVBC Available-for-sale equity 7% 100% 6% 100%
Jogjakarta Available-for-sale debt 13% Nil% 8% 100%
Dugbe 1 Available-for-sale debt 13.50% 75% 13% 75%
McLean Lake Available-for-sale debt 10% 100% N/A N/A
The Group has reviewed the impact on the carrying value of its
royalty financial instruments, and does not consider a +/- 1%
change in the discount rate or a +/- 10% change in the underlying
commodity prices to have a material impact.
(c) Mining and exploration interests - quoted
All the quoted mining and exploration interests have been issued
by publicly traded companies in well established security markets.
Fair values for these securities have been determined by reference
to their quoted bid prices at the reporting date.
(d) Mining and exploration interests - unquoted
All the unquoted mining and exploration interests are initially
recognised using cost as the best approximation of fair value. The
Group notes any trading activity in the unquoted instruments and
will value its holding accordingly. At present, the Group holds
these investments with a view to generating future royalties and
there is no present intention to sell. The vast majority of these
are investments which the Group anticipates a realistic possibility
of a future listing.
(e) Foreign currency financial instruments
The foreign currency financial instruments consist of the
foreign exchange forward contracts entered into to hedge the
Group's Australian dollar denominated royalty income. At the
reporting date the foreign exchange forward contracts are valued
based on the net present value of the discounted future cash flows
estimated based on forward exchange rates and contract forward
rates, discounted at a rate that reflect the credit risk of various
counterparties.
Fair value measurements in Level 3
The Group's financial assets classified in Level 3 uses
valuation techniques based on significant inputs that are not based
on observable market data.
The following table presents the changes in Level 3 instruments
for the six months ended June 30, 2017.
Royalty financial instruments Coal royalties (Kestrel) Total
GBP'000 GBP'000 GBP'000
At January 1, 2017 13,556 116,885 130,441
Additions 1,654 - 1,654
Revaluation gains or losses
recognised in:
Other comprehensive income (631) - (631)
Income statement (3,866) (11,062) (14,928)
Foreign currency translation (66) 1,657 1,591
At June 30, 2017 10,647 107,480 118,127
============================== ========================= =========
The following table presents the changes in Level 3 instruments
for the six months ended June 30, 2016.
Royalty financial instruments Coal royalties (Kestrel) Total
GBP'000 GBP'000 GBP'000
At January 1, 2016 6,534 82,649 89,183
Additions 10,133 - 10,133
Revaluation gains or losses
recognised in:
Other comprehensive income (339) - (339)
Income statement - (10,161) (10,161)
Foreign currency translation 285 9,619 9,904
At June 30, 2016 16,613 82,107 98,720
============================== ========================= =========
The following table presents the changes in Level 3 instruments
for the year ended December 31, 2016.
Royalty financial instruments Coal royalties (Kestrel) Total
GBP'000 GBP'000 GBP'000
At January 1, 2016 6,534 82,649 89,183
Additions 10,133 - 10,133
Revaluation gains or losses recognised
in:
Other comprehensive income (350) - (350)
Income statement (4,939) 17,900 12,961
Foreign currency translation 2,178 16,336 18,514
At December 31, 2016 13,556 116,885 130,441
============================== ========================= ========
There have been no transfers into or out of Level 3 in any of
the reporting periods.
The Group measures its entitlement to the royalty income and any
optionality embedded within the royalty instruments using
discounted cash flow models. In determining the discount rate to be
applied, management considers the country and sovereign risk
associated with the projects, together with the time horizon to the
commencement of production and the success or failure of projects
of a similar nature.
18 Related party transactions
The Group received GBP19,839 from Audley Capital Advisors LLP, a
company of which Mr J.A. Treger, Chief Executive Officer, is both a
director and shareholder, for the subletting of office space during
the period ended June 30, 2017 (2016: GBP19,839). As at June 30,
2016, Audley Capital Advisors LLP, owe the Group a further
GBP21,077 for the subletting of office space (2016: GBP20,024).
During the six months ended June 30, 2017, the Group has made
payments of GBP7,943 to Audley Capital Advisors LLP, for the
reimbursement of IT recharges, no such payments were made six
months ended June 30, 2016.
19 Free cash flow
The structure of a number of the Group's royalty financing
arrangement, such as the Denison transaction completed in February
2017, result in a significant amount of cash flow being reported as
principal repayments, which are not included in the income
statement. As the Group considers dividend cover based on the free
cash flow generated by its assets, management have determined that
free cash flow per share is a key performance indicator, going
forward.
Free cash flow per share is calculated by dividing net cash
generated from operating activities, proceeds from the disposal of
non-core assets, less finance costs divided by the weighted average
number of shares in issue.
Free cash flow
per share
GBP'000 p
Net cash generated from operating activities
Net cash generated from operating activities for the six months ended June 30, 2017 15,840
Adjustment for:
Proceeds on disposal of mining and exploration interests 36
Finance income - excluding foreign exchange gains/losses 848
Finance costs (399)
Proceeds from royalty financial instruments 117
Repayments under commodity related financing agreements 2,465
--------
Free cash flow for the six months ended June 30, 2017 18,907 10.91p
======== ===============
Free cash flow
per share
GBP'000 p
Net cash generated from operating activities
Net cash generated from operating activities for the six months ended June 30, 2016 4,500
Adjustment for:
Finance income - excluding foreign exchange gains/losses 70
Finance costs (414)
Proceeds from royalty financial instruments 116
Other royalty related repayments/(advances) 392
Sundry income 63
--------
Free cash flow for the six months ended June 30, 2016 4,727 2.80p
======== ===============
The weighted average number of shares in issue for the purpose
of calculating the free cash flow per share is as follows:
June 30, 2017 June 30, 2016
Weighted average number of shares in issue 173,370,074 169,016,101
============== ==============
20 Events occurring after period end
There are no events occurring after the period end, which
require disclosure.
21 Availability of financial statements
This statement will be sent to shareholders and will be
available at the Group's registered office at 1 Savile Row, London
W1S 3JR.
Anglo Pacific Group PLC
INDEPENT REVIEW REPORT TO ANGLO PACIFIC GROUP PLC
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended June 30, 2017, which comprises the condensed
consolidated income statement, condensed consolidated statement of
comprehensive income, condensed consolidated balance sheet, the
condensed consolidated statement of changes in equity, condensed
consolidated cash flow statement and related notes 1 to 21. We have
read the other information contained in the half-yearly financial
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended June
30, 2017, is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants
London, UK
August 22, 2017
Anglo Pacific Group PLC
Cautionary statement on forward-looking statements and related
information
Certain information contained in this announcement, 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. Furthermore, this announcement contains
information and statements that are based on certain estimates and
forecasts that have been provided to the Group by Kestrel Coal Pty
Ltd ("KCPL"), the accuracy of which KCPL does not warrant and on
which readers may not rely. The material assumptions and risks
relevant to the forward-looking statements in this announcement
include, but are not limited to: stability of the global economy;
stability of local government and legislative background;
continuing of ongoing operations at 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 and operators
of such underlying properties; accuracy of the information provided
to the Group by the owners and operators of such underlying
properties; no material adverse change in the price of the
commodities produced from the properties underlying the Group's
portfolio of royalties and investments; no material adverse change
in foreign exchange exposure; no adverse development in respect of
any 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 "Principal Risks and
Uncertainties" section of our most recent Annual Report 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 announcement are made as of the date
of this announcement 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.
Third party information
As a royalty holder, the Group often has limited, if any, access
to non-public scientific and technical information in respect of
the properties underlying its portfolio of royalties, or such
information is subject to confidentiality provisions. As such, in
preparing this announcement, the Group has largely relied upon the
public disclosures of the owners and operators of the properties
underlying its portfolio of royalties, as available at the date of
this announcement.
Rio Tinto Limited, Whitehaven Coal Limited, Berkeley Energia
Limited and Atrum Coal NL are all listed on the Australian Stock
Exchange and report in accordance with the JORC Code. Orvana
Minerals Corporation and Largo Resources Limited are listed on the
Toronto Stock Exchange and report in accordance with NI 43-101.
Zamin is an independent mining group. Hummingbird Resources PLC is
listed on AIM.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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