Investing in Royalties. September 2013

Transcription

1 Investing in Royalties September 2013

2 Important Notice and Disclaimer Certain statements in this presentation, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect the Company s expectations and views of future events. Forward-looking statements (which include the phrase forward-looking information within the meaning of Canadian securities legislation) are provided for the purposes of assisting the reader in understanding the Company s financial position and results of operations as at and for the periods ended on certain dates, and to present information about management s current expectations and plans relating to the future. Readers are cautioned that such forward-looking statements may not be appropriate for other purposes than outlined in this presentation. These statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, cash flow, requirement for and terms of additional financing, performance, prospects, opportunities, priorities, targets, goals, objectives, strategies, growth and outlook of the Company including the outlook for the markets and economies in which the Company operates, costs and timing of acquiring new royalties, mineral reserve and resources estimates, estimates of future production, production costs and revenue, future demand for and prices of precious and base metals and other commodities, for the current fiscal year and subsequent periods. In addition, statements relating to reserves or resources are forward looking statements, as they involve implied assessment, based on certain estimates and assumptions, that the resources and reserves described can be profitably produced in the future. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as expects, anticipates, plans, believes, estimates, seeks, intends, targets, projects, forecasts, or negative versions thereof and other similar expressions, or future or conditional verbs such as may, will, should, would and could. Forward-looking statements are based upon certain material factors that were applied in drawing a conclusion or making a forecast or projection, including assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances. The material factors and assumptions upon which such forward-looking statements are based include: the general economy is stable; local governments are stable; interest rates are relatively stable; equity and debt markets continue to provide access to capital; the ongoing operations of the properties underlying the Company s portfolio of royalties by the owners or operators of such properties in a manner consistent with past practice; the accuracy of reserve and resource estimates, grades, mine life and cash cost estimates; the accuracy of public statements and disclosures made by the owners or operators of such underlying properties; no material adverse change in the market price of the commodities that underlie the Company s portfolio of royalties and investment interests; no adverse development in respect of any significant property in which the Company holds a royalty or other interest; the successful completion of new development projects; the accuracy of publicly disclosed expectations for the development of underlying properties that are not yet in production; planned expansions or other projects within the timelines anticipated and at anticipated production levels; and title to mineral properties. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions, which could cause actual results to differ materially from those anticipated, estimated or intended in the forward-looking statements. By its nature, this information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate; that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of material factors, many of which are beyond the Company s control, affect the operations, performance and results of the Company, its businesses and investments, and could cause actual results to differ materially from those suggested any forward-looking information. For additional information with respect to such risks and uncertainties, please refer to the Risk Factors section of our most recent Annual Information Form available on and the Group s website If any such risks actually occur, they could materially adversely affect the Company s business, financial condition or results of operations. The reader is cautioned that the list of factors noted in the section herein entitled Risk Factors is not exhaustive of the factors that may affect the Company s forward-looking statements. The reader is also cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements. This presentation also contains forward-looking information contained and derived from publicly available information regarding properties and mining operations owned by third parties. The Company s management relies upon this forward-looking information in its estimates, projections, plans, and analysis. Although the forward-looking statements contained in this presentation are based upon what the Company believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. The forward-looking statements made in this presentation relate only to events or information as of the date on which the statements are made and, except as specifically required by law, the Company 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. This presentation contains reference to past prices of and/or yields on the Company s shares. Readers are reminded that past performance cannot be relied on as a guide to future performance.

3 1. Overview of Anglo Pacific

4 Who we are: Anglo Pacific is the only mining royalty company listed on the LSE Broad commodity exposure including: - Steel raw materials (hard coking coal, iron ore, chromite) - Energy (uranium, thermal coal) - Precious metals (gold, PGM) - Base metals (copper, nickel) Focused on countries with a good legal jurisdiction No gearing or hedging Strong cash flow and earnings on long life projects Progressive dividend policy 3

5 What we offer: An alternative source of finance to mining companies from which our shareholders get: Top line exposure to mining company revenues Reduced exposure to cost inflation and reduced balance sheet risk Opportunity to benefit from ongoing growth in mineral resources Diversification across commodities Security of a portfolio of established mining operations 4

6 How we do it: Acquire existing royalties from third parties Four Mile Uranium (1% NSR) acquired from IMX Resources in May 2009 Amapà Iron Ore (1% GRR) acquired from Beadell Resources in December 2010 Ring of Fire Chromite (1% NSR) acquired from KWG in August 2011 Establish new royalty agreements with the current operator (for cash) El Valle Copper & Gold (2.5% NSR) agreed with Kinbauri in March 2008 Jogjakarta Iron (2% NSR agreed with Indo Mines in June 2009 Isua Iron Ore (1% GRR) agreed with London Mining in August

7 Geographic and commodity diversity in asset portfolio (19) (3) 6

8 Commodity Exposure at June 30, 2013 Royalty Interests ( 237m) Coking Coal 65% Strategic Mining Interests ( 26m) Copper 3% Coking Coal 73% Coal 63% Gold 28% Gold 32% Iron Ore 13% Gold 6% Nickel 14% Uranium 6% Iron Ore 14% Gold 6% Gold 5% Other Iron Ore 24% 9% Uranium 2% Chromite 5% Iron Ore 18% Other 8% Platinum Group Metals 4% Gold 26% Uranium 18% 2% Iron Ore 23% Coal 100% Uranium 16% Oil & Gas 8% Note Unlisted investments included at cost 7

9 Building the portfolio: We focus on: Long term projects 10 years plus Experienced and reputable mining operators Good legal jurisdictions Diversification of commodities with good pricing visibility Open ended projects with potential blue sky 8

10 Asset valuation analysis m Jun-13 Coal royalties Other royalty investments Cash Mining & exploration interests Other assets Directors' valuation of royalties 9

11 Timetable for growth Tucano Beadell Resources 1% GRR Fe concentrator ready for shipment of 500 ktpa Four Mile Quasar Resources / Alliance Resources 1% NSR ISR Uranium Target 3 to 5 Mlbpa Kestrel Rio Tinto Full benefit expected Target ~5.7 Mtpa Isua London Mining 1% GRR Magnetite concentrate Target 15 Mtpa Araguaia option Horizonte Minerals (Teck 44%) 1.5% NSR Nickel laterite Kestrel South Rio Tinto Start up Jogjakarta Indo Mines 2% NSR First iron sand production in Q Steady state pig iron production by 2016 Dugbe 1 Hummingbird Resources 2% NSR 20 year mine life Salamanca Berkeley Resources 1% NSR Uranium 3.2 Mlb steady state annual production Ring of Fire Cliffs Natural Resources 1% NSR DSO & concentrate Target ~2 Mtpa concentrate and ferrochrome feed Mt Ida Railway Jupiter Mines BHP Billiton 0.75% GRR 1.5% GRR Magnetite DSO iron ore concentrate 10 Mtpa (refer to appendices and end notes for source) 10

12 2. Royalty portfolio progress

13 Producing royalties Kestrel Mine - Rio Tinto Ltd (iv) Longwall changeover completed and coal production started at Kestrel South (Kestrel Mine Extension) Transition of production, peaking at 6 Mtpa, with a LOM average of 5.7 Mtpa Anglo Pacific expects to reap the full benefits by 2016 Amapá Iron Ore System - Anglo American plc (v) Major incident at the Santana port led to the destruction of the shiploader and sampling tower resulting in iron ore shipments being halted Mine production and stockpiling is continuing with exports expected to resume late 2013 El Valle Boinás/Carlés Mine - Orvana Minerals Corp (vi) Strong quarterly production figures announced until a shaft accident in June Annual production guidance remains unchanged at 63,000 oz of gold, 200,000 oz of silver and 6 Mlb of copper 12

14 Development royalties Ring of Fire Chromite - Cliffs Natural Resources Inc (ix) 1% NSR royalty over the Ring of Fire project including the Black Thor and Big Daddy deposits Environmental assessment activities temporarily suspended due to delays related to the environment assessment process, land surface rights, and negotiations with the Province of Ontario Jogjakarta Iron Sands and Pig Iron - Indo Mines Ltd 70% (i) 2% reducing to 1% NSR royalty Company re-affirms staged implementation plan Stage 1: Targeting 500,000 t of Fe conc in Q Stage 2: Increasing to 2Mt by Q Stage 3: Pig iron production in Q Negotiations underway to secure 225 Ha of land required for plant facilities 13

15 Development royalties (cont.) Four Mile Uranium - Alliance Resources Ltd & Quasar Resources Pty Ltd (ii) 1% NSR royalty Permitting advancing - PEPR* approved - Licence for mining and mineral processing approved Isua Iron Ore - London Mining plc (xiii) 1% NSR royalty On January 24, 2013 London Mining announced they had completed the Department of Minerals and Petroleum s permitting submissions and public hearing requirements for the proposed 15 Mtpa Isua iron ore project Dugbe 1 Gold Project - Hummingbird Resources plc (xii) NI compliant PEA** announced on Dugbe 1 in April 20 year mine life Capex estimated at US$212m *(PEPR) Program for Environment Protection and Rehabilitation ** The PEA is preliminary in nature and is based on inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty that the PEA will be realised. 14

16 Development royalties (cont.) Tucano Gold/Iron Ore Mine - Beadell Resources Ltd (vii) 1% GRR royalty First production of iron ore concentrate achieved in May Target for 500,000 tpa ~ 65% Fe concentrate Araguaia Nickel - Horizonte Minerals plc (x) On August 22, 2012 Horizonte announced its PEA showed strong economics and recommended moving to a PFS Sliding scale 1.1% - 1.5% NSR royalty to be exercised for US$12.5m, at the earliest of completion of a PFS or January 10, 2017 Metallurgical test work confirmed that the Araguaia ore is suitable for treatment via high temperature Rotary Kiln-Electric Furnace ( RKEF ) technology Horizonte raised ~ 3m, leaving it with net cash of 7.3m in June,

17 3. Financial Overview

18 Corporate overview London (LSE) Listings Toronto (TSX) APF APY Capital Structure Common 109,605,376 Options 77,681 Fully diluted 109,605,376 3 Share price 199p 2 Market capitalisation ~ 218m 2 Cash 16.4m FY Earnings per share 9.27p Top Shareholders 1 Directors 14.14% AXA Investment Management 7.36% Liontrust Investment Partners 6.81% Schroder Investment Management 5.55% Aberforth Partners 4.47% BlackRock 4.38% Total number of shareholders: ~2, FY Dividend per share 10.20p Adjusted net asset value per share 299p 1 1) As at June 30, ) As at August 22, ) Common shares include shares held by Anglo Pacific Group Employee Benefit Trust which have waived the right to dividends 17

19 Income statement overview Figures in 000 H H FY 2012 Royalty income 6,319 6,871 13,267 Operating expenses (1,564) (1,601) (3,633) Operating profit 4,753 5,120 9,292 Realised losses/gains (4,888) 2,039 7,347 Impairment charge * (34,266) - (4,013) (Loss)/Profit before tax (34,493) 7,938 14,220 (Loss)/Profit after tax (29,966) 5,149 10,057 (Loss)/Earnings per share (Basic) (27.57)p 4.75p 9.27p Dividend per share 4.45p 4.45p 10.20p * Of this amount, 26.7m was reflected on the balance sheet at December 31,

20 Balance sheet overview Figures in 000 H Restated FY 2012 Non-current assets 282, ,890 Cash and cash equivalents 16,440 24,036 Trade and other receivables 2,071 1,958 Total assets 304, ,884 Total liabilities (mostly deferred tax) (55,448) (58,920) Total shareholder equity 248, ,964 19

21 Asset summary Figures in 000 H Restated FY 2012 Coal royalties (Kestrel) (1) 149, ,995 Royalty instruments (2) 20,867 24,032 Intangibles royalties (3) 66,436 70,477 Non current receivables (royalty financing arrangements) (4) 9,753 3,141 Total royalty assets 246, ,645 Mining and exploration interests 26,014 55,793 Cash 16,440 24,036 Other intangibles (deferred exploration costs) Deferred tax 6,794 6,416 Other 7,094 4,063 Total assets 304, ,884 (1) As the Group owns the physical land beneath the surface containing coking coal, its royalty entitlement is treated as a tangible fixed asset and carried at fair value as calculated by an independent consultant. (2) Royalty instruments represent the Group s royalties which are structured as debentures. As these are financial assets they are carried at their fair value on the balance sheet. (3) Intangibles royalties are carried at amortised cost. Though the expected future cash flows from these royalties may enhance significantly post investment, accounting rules prevent the Group from reflecting this on the balance sheet. The Directors valuation represents the future cash flows on a discounted basis which the Group expects to achieve should all of its royalties come into production. This represents the value in use to the Group of its Intangibles - royalties. (4) Receivables relate to the advances made to Hummingbird Resources and Laramide Resources. The Hummingbird advance should become a royalty in H upon obtaining a MDA. The Laramide advance has an option to acquire the Churchrock royalty. 20

22 Dividend Yield FY14 (%) Strength in dividend policy Anglo Pacific High dividend yield compared to the FTSE mid cap mining sector 5% 4% Progressive dividend policy Petropavlovsk Targeting growth in dividend Driven by royalty revenues 3% 2% Aquarius Platinum African Barrick Gold Ferrexpo Kazakhmys 1% 0% Gem Diamonds Centamin Bumi Petra Kenmare Resources Hochschild Mining Market Cap, Current (GBP billion) Lonmin Note: Information as at 5 September 2013, based on analyst consensus

23 Summary: Royalties are a smart way of investing in natural resources Exposure to revenue, limiting exposure to cost inflation No ongoing development costs Low overheads leading to strong cash flow and dividend Outlook for natural resources remains positive as the drive for urbanisation of the developing world continues Anglo Pacific delivering on its promises to build and diversify its royalty portfolio 22

24 Outlook We see a generally better immediate outlook for the mining sector and continue to see opportunities for potential investment We expect future benefits from Kestrel and start up of new royalties from within our portfolio Developed world economies are starting to recover and we see China maintaining a more sustainable growth rate Longer term we expect continuing growth in metals usage, in line with ongoing demands of urbanisation and modern infrastructure 23

25 01/09/ /11/ /01/ /03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ /07/2013 Rebased to 1 Performance charts 2.5 APF v international market indices - 5 years AIM Basic Resources Index ASX Metals and Mining 300 APF TSX Ventures Exchange 24

26 01/09/ /11/ /01/ /03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ /07/ /09/2013 Rebased to 100 FTSE 350 Mining Index vs FTSE 250 vs Anglo Pacific Group - 5 years FTSE 350 Mining Anglo Pacific Group FTSE

27 Rebased to FTSE 350 Mining Index vs FTSE 250 vs Anglo Pacific Group - 3 years /09/ /01/ /05/ /09/ /01/ /05/ /09/ /01/ /05/ /09/201 FTSE 350 Mining Anglo Pacific Group FTSE

28 Rebased to 100 FTSE 350 Mining Index vs FTSE 250 vs Anglo Pacific Group - 1 year /09/ /11/ /01/ /03/ /05/ /07/ /09/2013 FTSE 350 Mining Anglo Pacific Group FTSE

29 Appendices 28

30 Producing royalties

31 Producing Royalty Kestrel (Coking Coal) Kestrel Mine Royalty Status Producing since % up to A$100 per tonne, 12.5% between A$100 per tonne and A$150 per tonne and 15% over A$150 per tonne of gross sales value of coal exported from private ground (royalty rate set by the Queensland Government commencing October 2012). Anglo Pacific has an effective 50% ownership of this royalty. Operator Rio Tinto Limited Ownership 80% Rio Tinto Ltd / 20% Mitsui M Kestrel Royalty Receipts Location Production (H1 2013) (iv) Royalty Valuation (iv) Queensland, Australia Mt of hard coking and thermal coal 149.8m (independent valuation) Note: All information based on public disclosure

32 Producing Royalty Amapá (Iron Ore) Amapá Iron Ore System Royalty Status Producing since 2008 Operator 1.0% GRR iron ore royalty over Amapá Iron Ore System concessions. Acquisition cost A$31.3m which included a royalty over Beadell Resources Ltd s Tucano concessions. Anglo American plc Ownership Anglo American plc 70% / Cliffs Natural Resources Inc 30% Location Production (H1 2013) (v) Resources (v) Amapá region of northern Brazil (15 km from the town of Pedra Branca do Ampari, 200 km rail link to port at Santana) Mt iron ore pellet feed, sinter feed and spiral concentrates Measured % Fe Indicated % Fe Inferred % Fe Royalty Receipts 0.74m (H1 2013) Note: All information based on public disclosure 31

33 Producing Royalty EVBC (Gold and Copper) El Valle - Boinás/Carlés Mine ( EVBC ) Royalty 2.5% NSR royalty which increases to 3% above US$1,100 per ounce gold price acquisition cost C$7.5m. Status Production commenced July 2011 Operator Orvana Minerals Corp Location Northern Spain Production (H1 2013) (vi) Mine Life (vi) To 2022 Resources (vi) Reserves (vi) Royalty Receipts 1.14m (H1 2013) 34,152 ounces of gold, 3.43 mlbs of copper and 100,704 ounces of silver. Measured 2.7 Mt at 3.99 g/t Au & 0.75% Cu, Indicated 5.6 Mt at 5.26 g/t Au & 0.60% Cu, Inferred 8.4 Mt at 4.88 g/t Au and 0.39% Cu. Proved g/t Au & 0.65% Cu Probable g/t Au & 0.47% Cu Note: All information based on public disclosure 32

34 Development royalties

35 Development Royalties Steel Raw Materials Tucano Iron Ore Brazil Royalty Status Operator Location Resources (vii) Acquisition Cost 1.0% GRR iron ore royalty Operating gold mine and iron ore exploration Beadell Resources Limited Amapá region of northern Brazil adjacent to Anglo American plc s Amapá iron ore mine. Measured % Fe Indicated % Fe Inferred % Fe A$31.3m including the royalty over Anglo American plc s Amapá Iron Ore System concessions. Railway Iron Ore Australia Royalty 1.5% GRR acquisition cost A$23m Status The Railway deposit is adjacent to BHP s Area C operation and is expected to form part of its expansion in the Pilbara. Operator BHP Billiton Limited Resources (viii) Indicated % Fe Inferred 57 59% Fe Note: All information based on public disclosure Acquisition Cost A$23.0m 34

36 Development Royalties Steel Raw Materials Isua Iron Ore Greenland Royalty Operator 1% GRR acquisition cost US$30m In the event that an exploitation licence is not achieved by December 31, 2013, Anglo Pacific has the option to demand repayment of the US$30m consideration. London Mining plc Jogjakarta Iron Sands Indonesia Note: All information based on public disclosure Royalty Operator Production Target (i) Resources (i) Reserves (i) 2% NSR acquisition cost A$5.0m. 2% NSR reducing to 1% NSR after repayment of principal. Remains 2% NSR if pig iron price is less than $700 per tonne. Indo Mines Ltd JORC compliant feasibility study completed in Targeting 2 Mtpa concentrate production by latter 2014 and pig iron project production by Measured % Fe Indicated % Fe Inferred % Fe Probable % Fe Surface Sand Unit (above the assumed water table). 35

37 Development Royalties Steel Raw Materials Ring of Fire Chromite Canada NEW PHOTO Royalty Operator Production Target (ix) Mine Life (ix) 1% NSR acquisition cost US$18m Cliffs Natural Resources Inc 1 Mtpa of export chromite with a further 600 ktpa of ferrochrome to start production in Advance to feasibility stage approved in May to 35 years Resources (ix) Black Thor: Inferred % Cr 2 O 3 Big Daddy : Indicated % Cr 2 O 3 Inferred 16.3 Cr 2 O 3 Bulqiza Chromite Albania NEW PHOTO Royalty Operator 3% NSR acquisition cost C$3.1m Columbus Copper Corporation Note: All information based on public disclosure 36

38 Development Royalties Steel Raw Materials Araguaia Nickel Brazil Royalty Operator Production Target (x) Resources (x) 1.5% NSR royalty option acquisition cost US$0.5m Exercise price US$12.5m Horizonte Minerals plc PEA outlines life of mine average Ni production of 23.7 ktpa using RKEF processing plant option. Indicated % Ni Inferred % Ni Mount Ida Iron Ore Australia Royalty Production Target (iii) Operator Resources (iii) 0.75% GRR option acquisition cost US$14m in staged payments, US$6m paid followed by US$4m on decision to mine and initial financing, with final US$4m payment on commercial production. Scoping study outlines a 10 Mtpa magnetite concentrate production Jupiter Mines (vendor Red Rock Resources) Indicated resource % Fe Inferred resource % Fe Note: All information based on public disclosure 37

39 Development Royalties Energy Four Mile - Uranium Australia Royalty 1% NSR royalty - acquisition cost A$6.0m Operator (ii) Quasar Resources Pty Limited (75%), Alliance Resources Limited (25%) Production Target 3 to 5 Mlb pa U 3 O 8 Resources (ii) Indicated % U 3 O 8 Inferred % U 3 O 8 Salamanca Uranium Spain Royalty Operator Website 1% NSR royalty acquisition cost A$4.0m Berkeley Resources Limited Note: All information based on public disclosure 38

40 Development Royalties Precious Metals Dugbe 1 - Gold Liberia Royalty Operator Production Target (xii) Website 2.0% to 2.5% NSR royalty variable - acquisition cost $15.0m Hummingbird Resources plc PEA* released on 8 April Please refer to company website for production targets. Note: All information based on public disclosure *The PEA is preliminary in nature and is based on inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty that the PEA will be realised. 39

41 Targeting Royalties from Controlling Investments Anglo Pacific Strategy Long term objective to take the Canadian projects to scoping study level and then bring in joint venture partners and retain a carried interest and royalty entitlement Total investment to date: 2.2m Trefi Project Map Trefi Coal Project, BC Canada 15 coal exploration licenses and 3 applications (7,377 hectares) NI Measured coal resource of Mt and Indicated coal resource of 25.1Mt suitable for both thermal and PCI coal markets (xi) NI Inferred resource of Mt (xi) Potential 3% GRR Chetwynd Panorama Coal Project, BC Canada 20 coal exploration licenses (9,099 hectares) NI Indicated coal resource of 13.7 Mt suitable for both thermal and PCI coal markets (xi) NI Inferred resource of 24.1 Mt (xi) Potential 3% GRR 40

42 Other information

43 Royalties explained A royalty is an entitlement to an agreed percentage of a project s sales revenue normally without direct liability for operating costs or capital expenditure Net Smelter Return (NSR) A royalty based on the gross metal production from the property, less deduction of certain limited costs including smelting, refining, transportation and insurance Gross Revenue Royalty (GRR) Generally more suitable for bulk commodities such as coal or iron ore where the royalty may be a simple percentage of the value of the ore shipped from the mine before subsequent treatment charges May be based on mine gate, invoiced or free-on-board price 42

44 Benefits from owning royalties Low operational risk No balance sheet liability A direct link to revenue, not profits Limited exposure to operating cost inflation No exposure to capital cost Revenue upside due to: Expansion of mineral resources Commodity price increases Limited overheads needed to generate new opportunities and administer the business 43

45 Experienced Management Brian Wides Acting Chairman and Director of International Business Development Joined the board in June 1997 and was appointed Finance Director in September In July 2006 he was appointed Chief Executive Officer and on October 6, 2010 was appointed Director of International Business Development after standing down as CEO. He has a Bachelor of Commerce from the University of Witwatersrand and is a Chartered Accountant (South Africa). His specialist experience includes corporate finance, management consultancy and creating shareholder value for a large spectrum of private and public companies in the UK, Australia and Canada. John Theobald Director and Chief Executive Officer Joined the Group as Chief Operating Officer in April 2008, joined the board in June 2009 and was appointed Chief Executive Officer on October 6, He is a Chartered Engineer with a BSc Honours in Geology from the University of Nottingham. He is a Fellow of the Geological Society and Member of the Institute of Materials, Minerals and Mining and a Member of the Institute of Directors. Prior to joining the Group he held senior operational and new business positions with the major industrial minerals group SCR-Sibelco, he has also worked in the junior resource sector and for major companies such as Anglo American, Phelps Dodge and Iscor covering a wide range of metals, coal and industrial minerals. He has been a director of several public companies quoted in Canada. Peter Boycott Director Appointed to the board in May 1997 and Chairman in June He has a MA in Mechanical Sciences from the University of Cambridge and is a Chartered Accountant. During his career he has been involved as Finance Director and substantial shareholder in a number of private investment and property groups including engineering and manufacturing companies supplying thermal processing systems to major mining groups. He has been a director of several public companies quoted in Australia and Canada. He is currently taking a leave of absence from his role as Chairman for health reasons. Chris Orchard Director and Chief Investment Officer Joined the Group as Chief Investment Officer in December 2007 and was appointed to the Board in June He has a BSc Honours in Mining from the University of Leeds and is a Member of the Chartered Institute of Securities Investment. After graduating he worked in the South African mining industry and on returning to the UK spent twenty years as an investment banker in the City specializing in the resources sector. He was Managing Director of Hambros Equity UK, a Director of RBC Dominion Securities and prior to joining the Group managed the investment operations of a private wealth management firm. He has been a director of several public companies quoted in Canada and Australia. 44

46 Royalty classifications Valuation of Royalties Coking coal royalties recorded at independent valuation Royalty instruments recorded at fair value using director valuations Royalty intangibles recorded at cost under IFRS Royalty options recorded at cost Coal Royalties '000 Royalty Instruments '000 Royalty Intangibles '000 Royalty Options '000 Total '000 December 31, 2012 Number Amortised cost ,493 70, ,863 Valuation 149,787 20, , ,897 Note: This table does not include the Hummingbird Royalty Financing agreement. This transaction was announced in 2012, and does not become a royalty until such stage as a MDA is obtained. 45

47 Corporate history Company foundation Originally floated on London s Unlisted Securities Market as North Sea and General Oil Investments ( NSG ) in 1984, to invest in oil and gas opportunities In April 1989, the Company was restructured in a transaction involving Apex Securities Limited and Oceanic Equity Limited to acquire Australian oil, gas and mining assets NSG listed on the ASX in 1988 and changed its name to Anglo Pacific Resources in 1989 Anglovaal control South African mining house Anglovaal purchased a 29.9% interest, gaining quasi-control in 1989 The Company acquired industrial mineral assets and operations in the UK and Northern Ireland Anglo Pacific Resources moved to the Official List in London in 1996 Anglovaal sold its interest in 1997 New management Following Anglovaal s withdrawal in 1997 new management including Peter Boycott and Brian Wides took over rationalising the assets ( ) The Company changed its name to Anglo Pacific Group in 1997 The current strategy focusing on mineral royalties and strategic investments was put in place from 2001 onwards 46

48 Endnotes Standards of disclosure for mineral projects National Instrument Standards of Disclosure for Mineral Projects ( NI ) contains certain requirements relating to the use of mineral resource and mineral reserve categories of an acceptable foreign code (as defined in NI ) in disclosure (as defined in NI ) made by Anglo Pacific Group plc with respect to a mineral project (as defined in NI ), including the requirement to include a reconciliation of any material differences between the mineral resource and mineral reserve categories used under an acceptable foreign code and the standards developed by the Canadian Institute of Mining, Metallurgy and Petroleum, as the CIM Definition Standards on Mineral Resources and Mineral Reserves adopted by CIM Council, as amended (the CIM Standards ) in respect of a mineral project. Pursuant to an exemption order granted to Anglo Pacific Group plc by the Ontario Securities Commission (the Exemption Order ), the information contained herein with respect to the projects referenced in notes i, ii, iii, v, vi, viii, ix, and x below has been extracted from information publicly disclosed, disseminated, filed, furnished or similarly communicated to the public by an issuer whose securities trade on a specified exchange (as defined under NI ) that discloses mineral reserves and mineral resources under one of the JORC Code, the PERC Code, the SAMREC Code, SEC Industry Guide 7 or the Certification Code (each as defined in NI ). As the definitions and standards of the JORC Code, the PERC Code, the SAMREC Code, SEC Industry Guide 7 and the Certification Code are substantially similar to the CIM Standards, a reconciliation of any material differences between the mineral resource and mineral reserve categories reported under the JORC Code, the PERC Code, the SAMREC Code, SEC Industry Guide 7 and the Certification Code, as applicable, to categories under the CIM Standards is not included and no Form F1 technical report will be filed to support the disclosure based upon such exemption. Cautionary note to U.S. investors concerning estimates of measured, indicated and inferred resources: Certain technical disclosure in this presentation has been prepared in accordance with the requirements of Canadian securities laws, including NI , in certain cases as modified by the Exemption Order referred to above, which differ from the requirements of U.S. securities laws. This press release uses the terms measured resources, indicated resources and inferred resources. U.S. investors are advised that while such terms are recognised and required by Canadian Securities laws, the Securities and Exchange Commission does not recognise them. Inferred resources have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred resource will be upgraded to a higher category. Under Canadian Securities laws, estimates of inferred resources may not form the basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that all or any part of measured resources or indicated resources will ever be converted into reserves. U.S. investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable. i. Indo Mines Limited is listed on the Australian Securities Exchange and reports in accordance with the JORC Code. Resource from Indo Mines Limited 2006 Annual Report. Reserve from ASX filing dated August 29, Production targets announced 30 April The feasibility study released 29 August 2011 is not reported in accordance with NI standards. ii. Alliance Resources Limited is listed on the Australian Securities Exchange and reports in accordance with the JORC Code. Four Mile resource from Alliance Resources Limited announcement dated January 27, Production target announced in 18 April Decision on recommencement of development announced on October 24, Approval of PEPR announced on 16 August iii. Jupiter Mines Limited is listed on the Australian Securities Exchange and reports in accordance with the JORC Code. Mount Ida information extracted from Jupiter Mines Limited filings on ASX with resource announced September 4, 2012 and January Production target from the scoping study on March, iv. Rio Tinto Limited reports ore reserves and mineral resources in accordance with the JORC Code as required by the Australian Securities Exchange. Production data and expansion plan information from Rio Tinto Limited public disclosures. Independent valuation report prepared for Anglo Pacific Group plc by Resource Management International Pty Ltd. v. Anglo American plc is listed on the London Stock Exchange, the JSE Securities Exchange South Africa, the SWX Swiss Exchange, the Botswana Stock Exchange and the Namibian Stock Exchange. The Amapá resources were disclosed in the Anglo American plc 2011 Annual Report and were compiled in accordance with the JORC Code. Production data are from Anglo American plc production report announced 26 July vi. El Valle Boinas/Carles reserves, resources and mine life extracted from Orvana Minerals Corp. s NI Technical Report dated March 8, 2012 (effective date: November 10, 2011). Production data for H from press release dated 9 August Shaft incident announced 28 March vii. Beadell Resources Limited is listed on the Australian Securities Exchange and reports in accordance with the JORC Code. The Tucano iron ore resource was announced by Beadell Resources Limited on August 29, Commencement of iron ore concentrate production announced 5 June Fe tonnage rate announced within presentation released 7 August viii. Railway resources from ASX filing by United Minerals Corp dated September 21, United Minerals Corp was listed on the Australian Securities Exchange and reported in accordance with the JORC Code. United Minerals Corp was bought by BHP Billiton in ix. Cliffs Natural Resources Inc is listed on the NYSE and reports in accordance with SEC Industry Guide 7. Production targets and expected mine life from Cliffs Natural Resources corporate presentation dated 20 March 2013, page 26. Black Thor Resource extracted from Cliffs Natural Resources press release dated 3 Feb Big Daddy resource extracted from KWG Resources NI technical report on April 12, Suspension of environmental assessment activities announced 12 June x. Araguaia resource extracted from Horizonte Minerals plc s ( Horizonte s ) NI Technical Report dated February 23, Production targets from PEA announced August Metallurgical test work results announced 22 May Fund raising announced 11 June xi. Scientific and technical information in this presentation relating to Trefi Coal Project is summarised or extracted from Resource Estimate for the Trefi Coal Property dated 18 March 2010, prepared by Robert J. Morris, Principal Geologist of Moose Mountain Technical Services, and Robert F. Engler, Principal of Moose Mountain Technical Services, each of whom is a Qualified Person in accordance with NI and is independent of Anglo Pacific. Scientific and technical information in this presentation relating to Panorama Coal Project is summarised or extracted from Resource Estimate for the Discovery and Panorama Coal Property dated 18 March 2010, prepared by Robert J. Morris, Principal Geologist of Moose Mountain Technical Services, and Robert F. Engler, Principal of Moose Mountain Technical Services, each of whom is a Qualified Person in accordance with NI and is independent of Anglo Pacific. Readers are cautioned not to rely solely on the summaries of such scientific and technical information contained in this presentation, but should read the above-noted technical reports which are posted on the Company s website ( and filed on SEDAR ( and any future amendments to such reports. Readers are also directed to the cautionary notices and xii. xiii. xiv. disclaimers contained in such technical reports. Hummingbird Resources plc is listed on the AIM submarket of the London Stock Exchange. Resource information is prepared in compliance with NI and is as reported by Hummingbird on 8 April The information on the NI compliant PEA is as reported by Hummingbird on 8 April The PEA is preliminary in nature and is based on inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty that the PEA will be realised. London Mining is listed on the AIM submarket of the London Stock Exchange and reports mineral resources in accordance with the JORC Code. Update to permitting process announced 24 January Production target announced 27 March Berkeley Resources Limited is listed on the Australian Securities Exchange and reports in accordance with the JORC Code. Production targets announced 29 November

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