Anglo Pacific Group PLC Publication of Annual Report 2013 (6582D)

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RNS Number : 6582D

Anglo Pacific Group PLC

31 March 2014

March 31, 2014

Anglo Pacific Group PLC

Publication of Annual Report 2013

Anglo Pacific Group PLC ("Anglo Pacific", the "Company" or the "Group") (LSE: APF, TSX: APY) announces the publication of its Annual Report and Accounts for the year ended December 31, 2013 (the "Annual Report 2013") on the Company's website, www.anglopacificgroup.com.

A hard copy version of the Annual Report 2013 will be sent to those shareholders who have elected to continue to receive paper communications in April 2014. Shareholders who have not elected to continue to receive paper communications will be sent a notification of the availability of this document on the Company's website by post or, where they have elected, by email. The document will also be available through the National Storage Mechanism at www.hemscott.com/nsm.do and through SEDAR at www.sedar.com.

Appendix A to this announcement contains a description of the principal risks and uncertainties affecting the Company and a responsibility statement. This information should be read in conjunction with the Company's preliminary results announcement released on February 20, 2014, which included a condensed set of the Company's financial statements and information on important events that have occurred during the financial year and their impact on the financial statements.

For further information:

Anglo Pacific Group PLC [phone]

Julian Treger - Chief Executive Officer

Kevin Flynn - Chief Financial Officer

Website: www.anglopacificgroup.com

Liberum Capital [phone]

Chris Bowman / Ryan de Franck

BMO Capital Markets Limited [phone]

Jeffrey Couch / Neil Haycock / Tom Rider

Bell Pottinger [phone]

Nick Lambert / Lorna Cobbett

Notes to editors:

About Anglo Pacific

Anglo Pacific is a global mining royalty company. The Company's vision is to create a leading international diversified royalty company with a focus on base metals and bulk materials. The Company's strategy is to build a diversified portfolio of royalties, focusing on accelerating income growth through acquiring royalties in cash or near-term cash producing assets. It is an objective of the Company to pay a substantial portion of these royalties to shareholders as dividends.

Appendix A

The information set out below, which is extracted from the Annual Report 2013, together with the information contained in the preliminary results announcement released on February 20, 2014, constitutes the material required by the Disclosure and Transparency Rules to be communicated to the media in full unedited text through a Regulatory Information Service. This announcement is not a substitute for reading the full Annual Report 2013. Cross references in the text below refer to pages and sections in the Annual Report 2013.

Principal risks and uncertainties

"Whilst limiting a number of the risks associated with traditional mining and commodity investments, royalties remain exposed to a number of risk factors. An optimised selection of royalty investments within a balanced portfolio should nevertheless help to mitigate these. Anglo Pacific also undertakes measures to seek to further mitigate the key risks related to its strategy as much as possible:

 
 Risk description        Mitigation 
----------------------  ---------------------------------------------- 
 Corporate 
 Overweight              The Group's strategy is to diversify 
  exposure to             more broadly within the base metals 
  coking coal,            and bulk materials sector, increasing 
  a key input             exposure to copper, zinc and other 
  in steel production,    metals not directly linked to steel 
  increasing              production, in line with our objective 
  dependence              of specialising in the non-precious 
  on future               metals sector 
  demand for 
  steel 
 Highly dependent        The Group's current strategy is to 
  on a single             accelerate the process of acquiring 
  cash-generative         cash generative royalties to reduce 
  royalty                 the current reliance on Kestrel, 
                          our principal cash-generative royalty. 
 Limited access          Management is looking to improve 
  to information          relationships with the operators 
  from the operators      of the Group's existing royalties 
                          and to try to obtain better information 
                          rights for both existing and new 
                          royalties. 
 Inability               A renewed focus on acquiring income 
  to pay the              generating royalties along with liquidity 
  dividend                in its mining and exploration interests 
                          should allow the Group to seek to 
                          maintain and grow its dividend. In 
                          addition, the Company has considerable 
                          accumulated distributable reserves. 
 Retention               The Group understands the importance 
  of key executives       of and is committed to attracting, 
                          retaining and incentivising key executives. 
                          For more information on the Group's 
                          remuneration policies, please refer 
                          to the Directors' Remuneration Report 
                          on pages 43 to 45. 
 Inability               The Group has an experienced management 
  to acquire              team with an extensive network of 
  royalties               contacts and a strong track record 
  due to                  of investing in the mining industry. 
  pricing or              The new management team bring with 
  competition             them alternative avenues in exploring 
                          for and creating new royalty opportunities. 
                          The Group believes it can lead the 
                          development of royalty financing 
                          in the base metals and bulk materials 
                          sector, given the predominant focus 
                          of its peers on precious metals. 
 Inability               The Group is cash generative and 
  to acquire              has liquidity in its mining and exploration 
  new royalties           portfolio. In addition, the potential 
  due to lack             to access capital markets and the 
  of financing            entering into by the Group of a twelve-month 
                          unsecured revolving credit facility 
                          provide additional resources to acquire 
                          new royalties. 
 Royalty                 The Directors have significant experience 
  acquisitions            of investing in the mining industry 
  may                     and have considerable expertise in 
  not produce             assessing the forward demand for 
  anticipated             commodities. The Group uses consensus 
  revenues                or lower forecasts when valuing all 
                          royalty investments, which reduces 
                          the risk of underperformance and 
                          a site visit is undertaken to assess 
                          the viability of the underlying project. 
 Corporate 
 Dependence              The Group has limited control over 
  on the operator         the operation of the mine it has 
  to deliver              invested in. The Group conducts detailed 
  a commercially          due diligence on all investments, 
  efficient               which will often include a site visit 
  mining operation.       by suitably qualified personnel that 
                          will highlight any economic, operational 
                          or environmental concerns. Further, 
                          newly created royalties can be tailored 
                          to allow for performance milestones 
                          to try to ensure that the operator 
                          performs as intended. 
 Potential                Newly created royalties can be tailored 
  misalignment             to allow for performance milestones 
  of interests             to try to ensure that the operator 
  between the              performs as intended. 
  Group and 
  operators 
 Legal 
 Enforceability          The Group seeks to invest in countries 
  of                      with well established legal jurisdictions 
  royalty rights          which will provide a means of recourse 
                          for breach of contract. In addition, 
                          the Group will seek to register its 
                          royalty interest where possible to 
                          try to ensure the royalty survives 
                          both bankruptcy and change of control. 
 Jurisdiction            (i) The Group seeks to focus its 
  risk                    investments on those countries with 
  (i) Resource            established legal jurisdictions, 
  nationalism             low geopolitical risk and an established 
                          mining industry. Having a diversified 
                          portfolio has allowed the Group to 
  (ii) Labour             de-risk small investments in operations 
  relations               in developing countries. 
 
  (iii) Tax               (ii) The Group does not operate the 
                          mines which it invests in and bears 
                          no liability for any adverse event 
                          or disaster at site level. 
 
                          (iii) As part of the due diligence 
                          process the Group considers applicable 
                          withholding taxes and any existing 
                          state royalties. A material alteration 
                          of a tax regime could impact the 
                          economic viability of a project, 
                          and ultimately royalty income. As 
                          the royalty rate for the Kestrel 
                          royalty is set by the state, a change 
                          in the tax regime could have a direct 
                          effect on royalty income. The Group's 
                          assets are generally located in developed 
                          economies which encourage mining 
                          activity through a fair and consistent 
                          tax system. 
 Financial 
  (including 
  financial 
  instruments) 
 Commodity               The Group's strategy is to diversify 
  price                   away from its dependence on coking 
                          coal through acquiring royalties 
                          in the base metals and bulk materials 
                          sector. The Group uses consensus 
                          or lower forecasts when valuing all 
                          royalty investments which reduce 
                          the risk of overpayment. A fall in 
                          commodity price is mitigated by virtue 
                          of the relatively low fixed cost 
                          base of the Group as it is not an 
                          operator nor has it any hedging contracts 
                          to fulfil. 
 Liquidity               The Group seeks to ensure that it 
                          can meet all of its obligations as 
                          they fall due by preparing regular 
                          cash flow projections, highlighting 
                          any currency requirements well in 
                          advance of settlement. The Group 
                          has a strong balance sheet, an undrawn 
                          US$15mtwelve-month revolving credit 
                          facility and potential access to 
                          the capital markets to provide additional 
                          funding to meet its obligations as 
                          well as its investment objectives. 
 Credit                  The Group operates controlled treasury 
                          policies which spreads the concentration 
                          of the Group's cash balances amongst 
                          separate financial institutions with 
                          high credit ratings. The Group's 
                          credit risk on monies advanced to 
                          explorers and operators is taken 
                          into account when assessing the fair 
                          value of these assets at each reporting 
                          date. For receivables, the Group 
                          presents these on the balance sheet 
                          net of any amount for doubtful debt. 
                          As these primarily relate to the 
                          Kestrel royalty, the credit risk 
                          is minimal due to the world class 
                          nature of the operator. 
 Foreign exchange        The Group's exposure to foreign currency 
                          arises from different currencies 
                          associated with income (mainly Australian 
                          dollars), expenditure including dividend 
                          (mainly in pounds sterling) and investment 
                          (usually in US dollars). As there 
                          are so few transactions, the risk 
                          is managed by the Board using detailed 
                          cash flow projections prepared regularly. 
                          At present the Board has determined 
                          that a hedging policy is unnecessary. 
 Interest rates          The Group has limited exposure to 
                          interest rate risk, and its twelve-month 
                          revolving credit facility is unhedged. 
 Other pricing           The value of the Group's royalties 
                          is underpinned by commodity prices 
                          which may affect the future expected 
                          cash flows. This is taken into account 
                          at each reporting date in assessing 
                          for impairment. The Group has a portfolio 
                          of junior mining equity investments 
                          which fluctuate in value based on 
                          the active quoted share price. The 
                          reduction in value of the portfolio 
                          over the last few years has resulted 
                          in a full impairment of unrealised 
                          losses such that any further pricing 
                          risk should be much less material 
                          to the Group." 
 

Directors' responsibility statement

"Each of the Directors, whose names and functions are listed in the management section of the Directors' Report confirm that, to the best of each person's knowledge and belief:

-- the financial statements, prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group and Company; and

-- the Directors' Report contained in the Annual Report includes a fair review of the development and performance of the business and the position of the Company and Group, together with a description of the principal risks and uncertainties that they face.

By order of the Board

B.M. Wides

Acting Chairman

March 31, 2014"

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