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 £3.3m 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 £18.9m in the first six months, well in advance of the comparable period last year and already ahead of the £13.4m 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 £16.1m, a 295% increase on the equivalent period last year, and ahead of the £15.6m 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 £19.7m in 2016, which was in itself a considerable increase on the £8.7m 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 £14.9m 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 £nil, 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 £15.8m in net cash from operating activities in the six months to June 30, 2017 (2016: £4.5m).  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 £18.9m, compared to £4.7m in the first six months of 2016 and £13.4m 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 (£107.5m), a reduction of A$18.5m (£9.4m) 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 £6.4m.

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 £nil, resulting in a £3.1m 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 £12.9m, 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 £2.5m compared to £5.4m 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 £12.9m in the first half of 2017, compared to £2.4m 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.

* does not include the portion of Denison cash flows designated as principal repayment.

The individual components of adjusted earnings are outlined below.

Royalty income

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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 £nil revenue from our Four Mile royalty, despite Quasar Resources informing us of underlying production and sales during the period. The reason for a £nil 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 £2.2m of the £12.0m 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 £3.0m, compared to £1.8m 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 £2.5m compared to £1.4m 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 £4.0m 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 £0.8m.

Also included in finance income is the realised foreign exchange gains in the period of £0.4m. This is considerably lower than the corresponding £1.2m 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

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 £2.5m for the six months ended June 30, 2017 compared to a loss after tax of £5.4m 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.

There was a decline of £11.1m, 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 £5.9m (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 £nil 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 £80m 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.

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The Group generated £15.8m in net cash from operating activities in the in the first six months of the year, resulting in total free cash flows of £18.9m. This compares favourably to the £4.5m in net cash from operating activities and £4.7m in free cash flows generated in the equivalent period in 2016 and is already in excess of the £10.3m and £13.4m 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 £2.5m to June 30, 2017 and when combined with the £0.8m included as interest payments in the Income Statement, translates to cash generated from the Denison financing arrangement of £3.3m since we entered into this transaction in February 2017 - £1.8m 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 £0.6m compared to £1.0m 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 £5.4m 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.

DIVIDEND

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 £5.1m, 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:

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