APF.L Regulatory News (APF)

August 25, 2016

Anglo Pacific Group PLC

Interim results for the six months ended June 30, 2016

Anglo Pacific Group PLC ("Anglo Pacific", the "Company", the "Group") (LSE: APF) (TSX: APY) is pleased to announce interim results for the six months ended June 30, 2016 which are available on both the Group's website at www.anglopacificgroup.com and on SEDAR at www.SEDAR.com.

Headlines:

Results for the half year

Outlook

Julian Treger, Chief Executive Officer, commented:

"Anglo Pacific performed strongly in the first six months of 2016, reporting higher royalty income, a doubling in free cash flow and a 50% increase in adjusted earnings. We expect this to continue for the remainder of 2016 as, similar to 2015, the majority of our income should be generated in the second half of the year, due to increased mining in our private royalty lands at Kestrel.

The immediate impact of Brexit was the weakening of the pound and this should be positive for the Group as our assets and income are in dollar denominated currencies. The price of both coking coal and thermal coal ended the second quarter strongly, mainly on the back of supply cuts in China. Both of these tailwinds combined should facilitate a stronger second half of the year for the Group.

There have been a number of positive developments in our royalty portfolio during the period: increased permitting at Narrabri; record production levels at Maracás Menchen; first royalty revenue from Four Mile; and significant progress by Berkeley Energia Limited at Salamanca. We were also pleased to see Berkeley announce a further royalty during the year which would imply that our existing royalty over the project is now worth three times the balance sheet value.

Our encouraging start to the year, coupled with the near-term improved outlook for commodity prices and a weaker pound, should now accelerate dividend cover. We continue to work hard to acquire accretive acquisitions but remain disciplined to only invest in those opportunities which will, over time, enable us to grow the dividend and create shareholder value."

1 Refer to pages 7 and 8

2 Refer to page 8 and note 5 to the financial statements

3 Refer to page 8 and note 11 to the financial statements

Analyst conference call:

There will be an analyst presentation via webcast at 09:30 (BST) on August 25, 2016 at www.anglopacificgroup.com. The presentation will be hosted by Julian Treger (CEO), Kevin Flynn (CFO) and Juan Alvarez (Head of Investments). Dial in details for the call are shown below and a replay of the webcast will also be available at www.anglopacificgroup.com.

For further information:

Notes to editors:

About Anglo Pacific

Anglo Pacific is a global natural resources royalty company. The Group's strategy is to develop a leading international diversified royalty company with a portfolio centred on base metals and bulk materials, focusing on accelerating income growth through acquiring royalties on projects that are currently cash flow generating or are expected to be within the next 24 months. It is a continuing policy of the Company to pay a substantial portion of these royalties to shareholders as dividends.

Royalties explained

A mining royalty is a non-operating interest in a mining project that provides the royalty holder with a right to a proportion of revenue, profit or production. A royalty holder is not generally obligated to contribute towards operating or capital costs, nor environment or reclamation liabilities; a key benefit of owning a royalty.

Most of Anglo Pacific's royalties endure for the life of the resource and are paid on a regular basis. Historically there have been different terms for royalties including Gross Revenue or Net Smelter Return ("GRR" or "NSR") royalties, which are both based on the sales value of the actual mineral. The Group's model is based around GRR or NSR royalties as it believes they provide the best and clearest returns.

Acquiring existing royalties

In this case, the Group buys existing royalty agreements, such as those owned by exploration companies who may have retained a residual royalty in a mine they helped discover. Royalty companies rarely sell their royalties, once acquired.

Creating new royalties

The Group's new royalty agreements tend to come from providing financing for mining operations, usually to help progress a mine into production.

Anglo Pacific enjoyed a solid start to 2016 with an increase in both royalty income and net assets in the period. The outlook for the remainder of the year, and for 2017, is encouraging following a noticeable improvement in coal prices recently and the positive impact of a weaker pound when translating the Group's dollar derived revenue. Absent any weakening in commodity prices or a significant strengthening of the pound, royalty income for FY 2016 is expected to be significantly higher than 2015.

Another highlight in the year to date has been the share price performance. This has benefitted from a general recovery in the commodity and mining sectors in the year to date along with the decision by the UK to leave the EU, which has prompted investors to give a higher rating to companies less exposed to sterling. On a micro level, the market reacted favourably to the publication of the Kestrel mine plan by Rio Tinto which contained, for the first time, the private royalty boundaries. This enabled all stakeholders to see first-hand the direction of mining at Kestrel towards the Group's private royalty land, explaining why income from Kestrel over the last number of years has decreased and, in turn, providing greater confidence in the Group's future income growth. The recent decision by the Bank of England to cut interest rates to a historically low level should also make the Group's dividend attractive to those searching for yield.

It is pleasing to see the gap between the Company's share price and balance sheet net asset per share narrow during the period. It is the Group's view that there is additional value in its royalty portfolio which is not reflected in the balance sheet valuation which could provide further upside over the coming years, as discussed in the finance review below.

Operational performance

Anglo Pacific expects 2016 to show a similar trend to 2015 with royalty income heavily weighted to the second half of the year as mining from Kestrel was largely outside of the Group's private royalty land during the first half of both 2015 and 2016. This should be the last time that the Group reports such seasonality in its Kestrel royalty income, as it expects mining to be mainly within its private royalty land going forward. The diagram below shows the location of mining at Kestrel compared to the Group's royalty area, which clearly illustrates the reasons for the discrepancies between H1 and H2 of 2015 and 2016 and the reason for the Group's confidence going into the H2 2016 and beyond.

http://www.rns-pdf.londonstockexchange.com/rns/0782I_-2016-8-24.pdf

The Narrabri North mine ("Narrabri") continued to perform strongly in H1 2016 and should benefit from the rally in thermal coal prices at the beginning of the third quarter. The main positive for the Group at Narrabri continues to be production upside associated with both their recently announced permitting increase and the widening of their long wall infrastructure. As a result, production should continue to exceed the level which the Group anticipated at the time of acquiring the royalty and this should, over time, more than compensate for short-term commodity price volatility.

The Group has three other producing royalties in Maracás Menchen ("Maracás"), Four Mile and EVBC. Although income from Maracás has been impacted by the current vanadium price weakness, it is very encouraging to see Largo Resources Limited ("Largo"), the operator, announce recent record production numbers, which clearly demonstrates that the operation is now heading towards intended nameplate capacity. Four Mile has begun contributing to the Group's income, albeit at low initial levels, and should increase as long-term supply contracts are negotiated. EVBC continues to be consistent, and should benefit from the higher gold price seen to date in H2 2016.

Commodity prices

In addition to the positive underlying operational performance, the outlook for commodity prices, namely coking and thermal coal, which underlie the Group's royalty income, has improved noticeably.

The Q3 2016 benchmark coking coal price settled at US$92/t which is a 14% increase on the Q1 2016 price of US$81/t, and the recent spot price reached as high as US$110/t which represents a 15% and 29% increase on the Q3 2016 and Q1 2016 contract prices respectively. The price has benefitted from Chinese supply cuts, which have resulted in higher levels of imports in Q2 2016.

Thermal coal has also benefitted from recent Chinese supply cuts, which has seen seaborne prices rise sharply since the half year. The spot price has recently moved back into the mid US$60/t range from the low to mid US$50/t levels on average in the first six months.

Foreign exchange and Brexit

In considering the performance of the Group's royalty portfolio in the first six months of the year it is worth noting that the Group's income is largely priced in US dollars. The average exchange rate (GBP:USD) for the first six months was 1.43, which only included one week of the weaker pound following the EU referendum vote on June 23, 2016. The closing rate at June 30, 2016 was 1.34, some 6% lower than the average rate, and this has weakened further during the third quarter of 2016.

A weaker pound should benefit the Group's reported income in the second half of 2016, especially if the pound continues to trade around the current level, which is reasonably likely in the short-term following the increase in interest rates in the US and the recent reduction of interest rates in the UK. As the Group is effectively a dollar denominated business, the impact of Brexit should have a dual benefit to the Company in the near-term in that a weaker pound will result in higher levels of reported profits and assets and, following the recent further cut in interest rates as a result of Brexit, the Group's dividend should be even more attractive in light of a longer period of lower returns on cash. It remains to be seen what the longer-term impact of Brexit will have on both the UK and the Company.

Balance sheet, cash resources and net asset value

The balance sheet at June 30, 2016 benefitted from foreign exchange as the majority of the Group's assets are dollar denominated.

The other noticeable increase at the end of June was the market value of the Group's equity portfolio, which increased in value by £4.6m. This increase is mainly attributable to the Group's 15% holding in Berkeley Energia Limited ("Berkeley") which had increased in value by 57% in the first six months of the year and a further ~15% since. This is largely due to the positive updates by Berkeley in advancing its Salamanca uranium project towards production, including the announcement of additional reserves at Zona 7, the publication of a Definitive Feasibility Study and the successful raising of a US$10.0m financing package.

Net debt at June 30, 2016 was £5.0m, a £3.2m increase from the year end following the payment of the dividend in February 2016. Total debt increased by a further £3.6m in August 2016 following the payment of the Group's 2015 final dividend. Subject to commodity prices, exchange rates and business growth requirements, the total level of borrowings should now gradually begin to reduce as free cash flow increases.

Overall, net assets increased to £164.8m at June 30, 2016 from £162.0m at the beginning of the year. This equates to a net asset value per share of 97p.

Outlook

The general market environment for the mining sector has seen marked improvement in the year to date. From a persistent mood of gloom surrounding commodities and mining companies' prospects at the beginning of the year, reflected in historically low equity prices, markets have seen a strong rebound in equity prices accompanied by much improved commodity prices on the whole. Whilst markets will no doubt continue to experience volatility, a greater degree of confidence will see a more dynamic deal environment. The Group is seeing more opportunities to invest in attractive propositions, as balance sheet pressure and financing needs continue, and is optimistic that it will be able to conclude value accretive transactions in the months to come.

As regards the Group's existing portfolio, the combination of a weaker pound, increased production from Kestrel and Narrabri and a more favourable outlook for coking and thermal coal should result in the Group reporting a noticeable increase in revenue for 2016 as a whole.

Producing royalties

· Kestrel, Queensland, Australia - Coking Coal

Royalty income from the Kestrel mine during the first six months of 2016 totalled £1.4m (H1 2015: £1.0m). On July 19, 2016, Rio Tinto released its Second Quarter Operations Review which reported production of 1.99Mt of coal (1.7Mt of hard coking coal and 0.3Mt of thermal coal) in H1 2016 compared to 2.25Mt (1.96Mt of hard coking coal and 0.3Mt of thermal coal) for the corresponding period in 2015. Approximately 37% of coal sales were mined from within the Group's private royalty land during the period compared to 22% during 2015. The drop in tonnes comes in spite of the continued longwall ramp up at the operations and is primarily due to the timing of the longwall changeout from LW403 to LW404.

The Group's guidance on the proportion of tonnes mined within its private royalty land remains unchanged at 85% to 90% for H2 2016, 60-65% for the full year 2016, and over 90% by the end of 2017.

For further information, please see www.riotinto.com.

Narrabri North, New South Wales, Australia - Thermal and PCI Coal

Royalty income in the first six months of 2016 from the Narrabri mine was £1.6m (H1 2015: £1.8m). Saleable coal production from Narrabri during the period was 3.5Mt (2015: 4.1Mt) and coal sales were 3.8Mt (2015: 3.9Mt). The drop in saleable coal production was expected by Whitehaven Coal Limited ("Whitehaven") as there were two longwall changeouts during the period, both completed on time and on budget, and full longwall production has now resumed.

On February 5, 2016, Whitehaven announced its intention to extend the Narrabri North longwall panels into the Narrabri South area, and that work to integrate Narrabri South into existing operations at Narrabri North had commenced. Drilling to convert Narrabri South Mineral Resources to Mineral Reserves is scheduled to occur during Whitehaven's fiscal year ending June 30, 2017.

The project to widen the longwall face to 400 metres (from 300 metres), leading to increased ROM coal production rates, appears to be on schedule and on budget with first production from the first 400 metre wide panel (LW07) expected to commence in the second half of FY2017.

For further information, please see http://www.whitehavencoal.com.au.

Maracás Menchen, Brazil - Vanadium

Royalty income in the first six months of 2016 from the Maracás mine was £0.2m (H1 2015: £0.4m). To date, Largo has announced production up to June 2016 of 3,480 tonnes of V2O5 from Maracás, including a new record monthly production record of 801 tonnes in June. Largo has issued production guidance for 2016 in the range of 7,639 tonnes and 8,639 tonnes of V2O5. This has been offset by a weaker vanadium price in H1 2016 compared to the same period in H1 2015.

On May 26, 2016, Largo announced an update to the mine plan and Mineral Reserves of the project. The Proven and Probable Mineral Reserves for the Campbell Pit at Maracás have increased by 40% to 18.4 million tonnes from the 13.1 million tonnes established previously although Largo now expect the mine life to be reduced slightly to 15 years at a production rate of 9,600 tonnes V2O5 per annum.

For further information, please see www.largoresources.com.

· El Valle-Boinás/Carlés, Spain - Gold/Copper/Silver

During the six months to June 30, 2016, the Group received royalty receipts of £0.6m (H1 2015: £0.6m) from the El Valle-Boinás/Carlés Mine ("EVBC"). During the first six months of 2016, EVBC produced 21,581 ounces of gold, 1.80Mlbs of copper and 64,757 ounces of silver compared with 26,371 ounces of gold, 2.91Mlbs of copper and 82,227 ounces of silver during the same period in 2015. Despite this, the gold price has, on average, been higher during H1 2016 compared to H1 2015.

In July 2016, Orvana Minerals Corp ("Orvana") announced a USD$12.5m Prepayment Facility with Samsung C&T. The proceeds are expected to be invested with a view to deliver increased production and lower unit costs at the El Valle/Boinás mine, and possibly support the restart of mining activities at the Carlés mine which was put into care and maintenance in February 2015.

For further information, please see www.orvana.com.

· Four Mile, South Australia, Australia - Uranium

The Four Mile Uranium Mine ("Four Mile") commenced sales of uranium ore concentrate ("UOC") in late 2015 and during the six months to June 30, 2016, the Group received maiden royalty receipts of £0.2m from Quasar Resources Pty Ltd ("Quasar"). Despite the recent weakness in the spot price during the ramp-up at Four Mile, down from US$36.00/lbs in December 2015 to US$28.25/lbs in June 2016, the outlook on the long term contract price remains relatively stable.

Development royalties

· Salamanca, Spain - Uranium

On July 14, 2016, Berkeley announced the results of a Definitive Feasibility Study ("DFS") on its Salamanca project. The DFS reports that the project is capable of producing an average of 4.4Mlbs of saleable uranium per annum over ten years of steady state production, or an average of 3.5Mlbs of uranium per year over a 14-year mine life. This is significantly higher than the rate of production assumed when the Company acquired the royalty in 2009 due to the considerable increase in resource discovered by Berkeley over the past 12 months. First production, and hence first generation of royalty income for the Company, is expected in 2018.

For further information on the project please see www.berkeleyenergia.com.

· Groundhog, British Columbia, Canada - Anthracite

In April 2016, the Group settled the outstanding amount due under its promissory note receivable from Atrum Coal NL ("Atrum") by way of US$0.6m in cash along with the issue of a new royalty on the Groundhog anthracite project as follows:

· 0.5% GRR covering all production within Atrum's Groundhog Anthracite Project ("Groundhog") tenements from first production until ten years from the date that Atrum declares commercial production on the project; and subsequently

· 0.1% GRR from production within the Groundhog North Mining Complex project area.

In addition, the Group retained a royalty on certain Groundhog tenements following its disposal of the related mining licenses in 2014 to Atrum. The royalty entitles the Group to the higher of 1% of gross revenue on a mine gate basis or US$1/t from coal sales based on production within these licenses.

On June 9, 2016, Atrum announced a revised PFS which outlined an underground project capable of producing 880ktpa of ultra-high grade anthracite over a mine life of 28 years.

Anglo Pacific reported a 6% increase in royalty income in H1 2016 compared to the same period in 2015. The Group's income benefitted from stronger operational performance at Kestrel, which also contributed to a doubling in free cash flow generated by the Group. The balance sheet benefitted from a weaker pound at the reporting date following the EU referendum result which significantly increased the value of the Group's dollar denominated assets.

Income Statement

Royalty income increased by £247k in the period to £4,075k, an increase of 6%. This is largely as a result of additional mining within the Group's private royalty land at Kestrel which increased to 37% in H1 2016 from 22% in H1 2015. Similar to 2015, the majority of the Group's royalty income for 2016 is expected to be received in the second half of the year. Importantly, this should be the last reporting period where there is a significant discrepancy between the public and private royalty area, as mining is expected to be mainly within the Group's private royalty land from this point onwards. This should drive significant revenue growth in the years ahead. This should also be assisted by a recovery in the price of coking coal, which has increased by ~14% in the year to date. The recent spot price is currently trading well above the Q3 2016 contract price, driven by supply side cuts by China which is having a positive impact on the price of seaborne coal. This should translate into a higher Q4 2016 contract price in due course.

Although the price of thermal coal rallied since the end of the second quarter, the lower thermal coal prices during the first half of the year impacted royalty income from Narrabri, however, this was partially offset by a slight increase in tonnage sold. More importantly for the Group is the production upside associated with the royalty. Whitehaven have increased the permitting at the mine from 8Mtpa to 11Mtpa which, when aided by the upsized modification to the longwall infrastructure, should result in higher levels of production than assumed by the Group at the time the royalty was acquired. This acceleration of production should result in higher royalty revenues in the years ahead.

Royalty income from EVBC in the first half of the year was consistent with the same period in 2015. The gold price has increased considerably in the year to date and should continue to benefit the Group in the second half of the year.

Royalty income from Maracás contributed £246k in the period compared to £375k in H1 2015. The vanadium price continues to trade at much lower levels compared to the price when the royalty was acquired. Despite this, there have been a number of positive developments in relation to this royalty during the period. Largo has made considerable progress in ramping up production, and reported a record month of production in June, which was running close to nameplate capacity. This should benefit the Group in the second half of the year.

The Group received its first royalty receipts from Four Mile during the period of £191k. The Group expects that this income will gradually ramp up over time as the operator secures longer-term supply contracts.

The Group continued its focus on costs during the first half of the year. Overheads were consistent with the previous year and this will continue to be an ongoing area of focus going forward. The other noticeable item in the income statement in the period is the £1.2m foreign exchange credit reflecting the weakening of the pound, particularly in the last week in June following the outcome of the EU referendum.

Adjusted earnings in the period were £2.4m (after current tax of £0.8m) resulting in adjusted earnings per share of 1.43p. This is ahead of the £1.6m and 1.04p respectively in H1 2015. Taking into account the amortisation charge, non-cash share based payments, the Kestrel revaluation and associated deferred tax resulted in an overall loss after tax for the period of £5.4m compared to a loss of £8.8m in the first half of 2016 equating to a basic loss per share of 3.18p (H1 2015: 5.81p).

Balance sheet

Net assets increased to £164.8m at the end of June from £162.0m at the beginning of 2016. There were two main reasons for this increase: the impact of the closing GBP:AUD exchange rate post the outcome of the EU referendum; and the significant increase in Berkeley's share price in the first six months of the year.

As can be seen in the table above, the weakening of the pound against the dollar denominated currencies has benefitted the Group at the end of June. Although revisions to the longer-term coking coal price reduced the underlying value of the Kestrel royalty by £10.1m during the period, as recognised in the income statement, this deficit was virtually reversed in full on the balance sheet, through the unrealised foreign exchange gain on retranslation from Australian dollars to pounds at the period end.

The majority of the Group's other royalties are denominated in Australian dollars, which also benefitted from retranslation gains of £9.0m at June 30, 2016. The dividend of £11.8m reflects the payment of the 2015 interim dividend in February 2016 of 4.00p per share (£6.8m) and the final dividend for 2015 of 3.00p per share (£5.0m) which was accrued at June 30, 2016, but not at December 31, 2015, following its approval at the AGM in May 2016.

The other noticeable increase in the period was the £4.6m increase in value of the Group's non-core equity portfolio. The vast majority of this is in relation to the Group's 15% holding in Berkeley, which has increased in value significantly in the period following previously announced progress at their Salamanca project, which the Group also has a royalty over. At June 30, 2016 the value of the Group's equity stake in Berkeley was £11.3m. This has increased in value further since the half year and currently valued at £13.5m.

The Group ended the period with net assets per share of 97p, a slight increase from the 95p reported at the year end. The Directors consider there to be further inherent value in Anglo Pacific's business as certain of its royalties have, in their view, increased in value since the Group acquired them and this value is not reflected on the balance sheet. One readily observable instance of this is the royalty which Berkeley sold on its Salamanca project in June 2016 which, on an equivalent basis, would value the Group's royalty at some $10m (or approximately three times) higher than the Group's balance sheet value. Other examples include the planned volume increases at Narrabri, which has the impact of accelerating production therefore increasing value, and income commencing at Four Mile which, in addition to the natural unwinding of the discount rate, brings forward the cash flow on a DCF basis. Both acceleration of production and additional reserves naturally increases the value in use to the Group of owning the royalty.

Cash flow and net debt

The Group generated free cash flow of £3.6m in the first six months of 2016, more than double the £1.7m generated in the first six months of 2015.

Free cash flow in 2015 was skewed towards the second half of the year due to the production profile associated with Kestrel. This trend is expected to repeat in H2 2016, following which the Group expects half yearly fluctuations in its income profile to level off as Kestrel moves largely within the Group's private royalty land.

The Group received £0.6m in the period in relation to tax owing to it following the overpayment of tax on account in previous periods.

The Group ended the period with net debt of £5.0m, which is up £3.2m from the beginning of the year. The increase is largely attributable to the payment of the 2015 interim dividend in February 2016. The Group drew a further £3.6m in August with the payment of the 2015 final dividend leaving net debt outstanding of ~£7.5m at present.

Although mindful of not declaring an inflection point, borrowings should begin to decrease from this point onwards, subject to the continuing operations of the business remaining unchanged and no material decrease in commodity prices or exchange rates. With approximately US$13.0m undrawn under the current revolving credit facility, along with further liquidity through the Group's non-core listed equity portfolio, the Directors believe the Group has sufficient cash resources to maintain the dividend at current levels for the foreseeable future.

The Board has declared an interim dividend for 2016 of 3.00p per share, maintaining the level of the 2015 final dividend per share. The dividend will be paid on February 8, 2017 to shareholders on the register at the close of business on December 30, 2016. The shares will be quoted ex-dividend in London on December 29, 2016 and in Canada on December 28, 2016.

A payment of £6.8m, equivalent to 4.00p per share, is included in the cash flow statement to June 30, 2016, representing the 2015 interim dividend recognised and paid in February 2016. This, together with the 3.00p per share 2015 final dividend approved at the AGM in May and paid in August 2016, means total dividend payments in relation to 2015 were 7.00p per share. As previously communicated, it is the Group's intention to maintain bi-annual payments of 3.00p per share until such time that the equivalent of 65% of adjusted earnings per share is higher, at which point the dividend level will be reviewed.

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 Annual Report 2015 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 Annual Report 2015 is available on the Group's website www.anglopacificgroup.com

Throughout this report a number of financial measures are used to assess the Group's performance. The measures are defined as follows:

Adjusted earnings/(loss)

Adjusted earnings/(loss) represents the Group's underlying operating performance from core activities. Adjusted earnings/(loss) is the profit/(loss) attributable to equity holders less all valuation movements, non-cash impairments and amortisation charges (which are non-cash IFRS adjustments that arise primarily due to changes in commodity prices), finance costs, any associated deferred tax and any profit or loss on non-core asset disposals as these are not expected to be ongoing. See note 5 to the financial statements for adjusted earnings/(loss).

Operating profit/(loss)

Operating profit/(loss) represents the Group's underlying operating performance from its royalty interests. Operating profit/(loss) is royalty related income, less amortisation of royalties and operating expenses, and excludes impairments, revaluations and gain/(loss) on disposals. Operating profit/(loss) reconciles to 'operating profit/(loss) before impairments, revaluations and gain/(losses) on disposals' on the income statement.

Free cash flow

Free cash flow represents the net cash generated in the period before dividends, royalty acquisitions, equity issuances and changes in the level of borrowings. It includes cash flow generated from the disposal of non-core asset disposals. The Group's free cash flow is reconciled on page 7.

Net debt

Net debt represents the Group's utilisation of its revolving credit facility, excluding deferred borrowing costs, less cash and cash equivalents. See note 11 to the financial statements for the Group's net debt position as at June 30, 2016.

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, 2015 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 24, 2016

CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 2016

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 2016

CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)

AS AT JUNE 30, 2016

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2015

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) FOR THE SIX MONTHS ENDED DECEMBER 31, 2015

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2016

CONDENSED CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 2016

NOTES TO THE ACCOUNTS

1. Basis of preparation

These condensed consolidated interim financial statements of Anglo Pacific Group PLC are for the six months ended June 30, 2016. They have been prepared in accordance with IAS 34 'Interim Financial Reporting', as adopted by the European Union. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended December 31, 2015.

The condensed consolidated interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to December 31, 2015, which were prepared in accordance with IFRS, as adopted by the European Union.

This condensed consolidated financial information does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended December 31, 2015 were approved on March 22, 2016. Those accounts, which contained an unqualified audit report under Section 495 of the Companies Act 2006 and which did not make any statements under Section 498 of the Companies Act 2006, have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.

1.2 Going concern

The financial position of the Group and its cash flows are set out on pages 10 to 16. As at June 30, 2016, the Group had £9.1m in borrowings (note 11) following the partial draw down on its revolving credit facility (December 31, 2015: £7.5m) and access to a further £13.3m in undrawn funds under the same facility.

After making enquiries and reviewing the Group's forecasts and projections, the Directors have a reasonable expectation that the Group has adequate resources to continue to operate within the level of its current facilities for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its consolidated financial statements.

1.3 Changes in accounting policies

The accounting policies used by the Group in these condensed financial statements are consistent with those applied by the Group in its financial statements for the year ended December 31, 2015. A number of new accounting pronouncements, principally minor amendments to existing standards, became effective on January 1, 2016, and have been adopted by the Group. The adoptions of these new accounting pronouncements has not had a significant impact on the accounting policies, methods of computation or presentation applied by the Group.

The Group has not early adopted any amendment, standard or interpretation that has been issued but is not yet effective. It is expected that where applicable, these standards and amendments will be adopted on each respective effective date.

2 Finance income

3 Finance costs

4 Other income

5 Loss per share

Loss per ordinary share is calculated on the Group's loss after tax of £5.4m for the six months ended June 30, 2016 (June 30, 2015: loss £8.8m) and the weighted average number of shares in issue during the period of 169,016,101 (2015: 151,867,805).

The weighted average number of shares in issue excludes the issue of shares under the Group's Joint Share Ownership Plan, as the Employee Benefit Trust has waived its right to receive dividends on the 925,933 ordinary 2p shares it holds as at June 30, 2016 (June 30, 2015: 925,933).

As the Group is loss making in 2016 and 2015, the Employee Share Option Scheme is considered anti-dilutive because including it in the diluted number of shares outstanding would decrease the loss per share. Consequently basic and diluted loss per share is the same.

Due to the growing number of valuation and other non-cash movements being recognised in the income statement, the Group presents an adjusted earnings per share metric, which the directors consider to be a useful additional measure of the Group's performance. In calculating the adjusted earnings per share, the weighted average number of shares in issue remains consistent with those used in the earnings per share calculation.

6 Dividends

An interim dividend of 3.00p per share has been declared for year ending December 31, 2016, and will be paid on February 8, 2017.

On August 5, 2016 a final dividend in respect of the year ended December 31, 2015 of 3.00p per share was paid to shareholders (£5.1m). As the final dividend was approved by shareholders at the AGM on May 10, 2016 it has been included as a current liability in 'Trade and other payables' as at June 30, 2016.

On February 4, 2016 an interim dividend of 4.00p per share was paid to shareholders (£6.8m) in respect of the year ended December 31, 2015.

7 Coal royalties (Kestrel)

The coal royalty was valued during June 2016 at £82.1m (A$147.8m) by Geos Mining, independent coal industry advisors, on a net present value of the pre-tax cash flow discounted at a nominal rate of 7.5% (June 30, 2015: 7.0%). The net royalty income from this investment is currently taxed in Australia at a rate of 30.0%. The revaluation of the underlying Australian dollar asset is recognised in the Income Statement with the retranslation of the Group's sterling presentation currency recognised in the foreign currency translation reserve. Were the coal royalty to be carried at cost the carrying value would be £0.2 million (2015: £0.2 million).

The shares over the entity which is the beneficial owner of the Kestrel royalty have been guaranteed as security in connection with the three-year secured revolving credit facility.

8 Royalty financial instruments

In the period effective interest of £0.1m (2015: £0.1m) was recognised in other income (see note 4). This was directly offset by cash received in the period of the same amount.

On February 23, 2016 the Group was notified by Hummingbird Resources PLC that a Mineral Development Agreement had been signed by the Liberian government, satisfying the conditions precedent to extinguish the Group's non-interest bearing advance of US$15.0m, previously held as non-current other receivables, in return for a 2.0-2.5% NSR royalty over the Dugbe 1 project.

The Group's royalty financial instruments are represented by five royalty agreements (2015: four) which entitle the Group to either the repayment of principal and a NSR royalty for the life of the mine or a GRR royalty where the project commences commercial production or the repayment of principal where it does not. Details of the Group's royalty financial instruments are summarised below:

1 Engenho royalty instrument was fully provided for as at December 31, 2011.

2 Isua royalty instrument was fully provided for as at December 31, 2014.

9 Royalty and exploration intangibles assets