Q4 2015 Trading Update

Anglo Pacific Group PLC (“Anglo Pacific”, the “Company” or the “Group”) (LSE: APF, TSX: APY), the London and Toronto listed royalty company, announces the following trading update for the period October 1, 2015 to December 31, 2015, ahead of the release of its full year results on March 23, 2016. Unless otherwise stated, all unaudited financial information is for the quarter ended December 31, 2015.

Highlights

  • Royalty income for Q4 2015 in the range of £2.7 – £3.0m (Q4 2014: £0.4m)
  • Royalty income for 2015 in the region of £8.5 – £8.8m (2014: £3.5m)
  • H2 2015 and full year Kestrel coal production within Anglo Pacific’s royalty area of 84% (above guidance of 70-75%) and 49% respectively
  • Updated tonnage sales forecasts from Rio Tinto, in accordance with Anglo Pacific’s Kestrel information rights, confirm previous guidance of 60-65% of Kestrel coal production will be within the Group’s royalty area during 2016 (H1 2016: 30-35% and H2 2016: 85-90%)
  • The Narrabri mine’s production continues to outperform the Group’s expectations, setting an annual production record of 8.3 Mt run-of-mine coal for the calendar year 2015, well in excess of the original design capacity of 6 Mtpa
  • Laramide Resources C$5m loan receivable repaid to Anglo Pacific on December 31, 2015 upon maturity
  • Unaudited cash and cash equivalents of £5.7m as at December 31, 2015 (September 30, 2015: £3.6m)
  • Unaudited net debt at December 31, 2015 of £1.8m (September 30, 2015: £5.2m)
  • Coking coal price weakness likely to result in a Q4 2015 pre-tax reduction in the carrying value of the Group’s Kestrel royalty in the range of A$28 – A$33m, with a corresponding reduction in the associated deferred tax liability
  • Operating costs, excluding share based payments, will be less than £4.0m, a significant reduction on the £4.9m equivalent in 2014
  • Final dividend for 2015 to be reduced to 3p, from the previous level of 4p per half year, bringing the total dividend for the year ended December 31, 2015 to 7p per share
  • The Company’s revised dividend reflects lower income expectations due to an approximate decline in coking and thermal coal prices during 2015 of between 15% and 25%
  • It is a continuing policy of the Company to pay a substantial proportion of its royalties to shareholders as dividends, with a long term target dividend of 65% of adjusted earnings

Julian Treger, Chief Executive Officer of the Company, commented:

“We are very pleased with the underlying performance of the Group’s royalties and expect further income growth from our royalties in 2016.

Like everyone in the sector, we have been affected by the commodity environment and weakening coal prices have reduced our revenue. This decline, combined with a lower commodity price outlook, has led the Board to reconsider our dividend policy. Despite this, we remain committed to paying attractive dividends and maximising shareholder value.

We continue to believe these challenging times for the mining sector will provide opportunities for Anglo Pacific to identify attractive new royalties that will enhance the lifespan and diversity of our portfolio.”

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