THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in any doubt as to what action you should take, you are recommended to seek immediately your own financial advice from your stockbroker, bank manager, solicitor, accountant or other appropriate independent financial adviser duly authorised under the Financial Services and Markets Act 2000 (as amended) (FSMA) who specialises in advising upon investment in shares and other securities if you are resident in the United Kingdom or, if not, another appropriately authorised independent financial adviser in your own jurisdiction.

If you sell or have sold or otherwise transferred all of your Existing Ordinary Shares prior to the date the shares are traded "ex" the entitlement to the Open Offer, you should send this document and, for qualifying non-CREST Shareholders, the accompanying Application Form and the enclosed Form of Proxy (and reply-paid envelope) at once to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for delivery to the purchaser or transferee. If you have sold or transferred any part of your registered holding of Existing Ordinary Shares in the Company, please contact your stockbroker, bank or other agent through whom the sale or transfer was effected immediately and refer to the instructions regarding split applications set out in the Application Form, if relevant. However, no Application Form should be forwarded to or transmitted in or into the Excluded Territories where doing so may constitute a violation of local securities laws. Please refer to paragraph 4 of Part 8 (Terms and Conditions of the Open Offer) of this document if you propose to send this document and/or the Application Form outside the United Kingdom.

The distribution of this document and the accompanying documents, and/or the transfer of the Open Offer Entitlements through CREST into jurisdictions other than the United Kingdom, may be restricted by law. Therefore, persons into whose possession this document and any accompanying documents come should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, such documents should not be distributed, forwarded to, or transmitted in or into any Excluded Territory.

Subject to certain exceptions, neither this document, the Open Offer Entitlements nor the Application Form constitutes, or will constitute, or forms, or will form, part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or acquire New Ordinary Shares to any person with a registered address, or who is located or resident, in the United States, or to any person with a registered address, or who is located or resident, in any of the other Excluded Territories. The New Ordinary Shares have not been and will not be registered under the US Securities Act of 1933, as amended (the Securities Act) and are being offered and sold: (a) in the United States only to persons who are reasonably believed to be "qualified institutional buyers" (QIBs) as defined in Rule 144A under the Securities Act (Rule 144A); and (b) outside the United States in compliance with Regulation S under the Securities Act (Regulation 8). Prospective purchasers that are QIBs are hereby notified that sellers of the New Ordinary Shares may be relying on an exemption from the registration requirements of Section 5 of the Securities Act provided by Rule 144A. For a description of these and certain further restrictions on offers, sales and transfers of the New Ordinary Shares, see Part 8 (Terms and Conditions of the Open Offer) of this document.

This document, which comprises (i) a circular prepared in accordance with the Listing Rules, and (ii) a prospectus relating to the Company prepared in accordance with the Prospectus Rules, has been approved as such by the Financial Conduct Authority. A copy of this document has been filed with the Financial Conduct Authority in accordance with paragraph 3.2.1 of the Prospectus Rules. This document has been made available to the public in accordance with paragraph 3.2.1 of the Prospectus Rules by the same being made available, free of charge, at the Company's registered office, details of which are set out on page 48 of this document.

ANGLO PACIFIC GROUP PLC

(incorporated in England and Wales under the Companies Act 1948 with registered number 00897608)

Firm Placing of 26,750,000 New Ordinary Shares at 80 pence per share, Placing and Open Offer of 22,625,000 New Ordinary Shares at 80 pence per share

Proposed Acquisition of the Narrabri Royalty and issue of 4,135,238 Ordinary Shares

Proposed admission of

49,375,000 New Ordinary Shares and 4,135,238 Acquisition Shares to listing on the Official List and to trading on the London Stock Exchange and to listing on the Toronto Stock Exchange

Notice of General Meeting

and

Information relating to the prior issue of 5,544,371 Ordinary Shares

BMO Capital Markets

Sponsor and Joint Bookrunner

Macquarie Capital

Joint Bookrunner

Shard Capital

Co-Manager

The Existing Ordinary Shares are listed on the premium segment of the Official List and traded on the London Stock Exchange's main market for Listed Securities and the Toronto Stock Exchange. Applications will be made to the Financial Conduct Authority for the New Ordinary Shares to be admitted to the premium segment of the Official List and to be admitted to trading on the London Stock Exchange's main market for listed securities and application has been made to the Toronto Stock Exchange to list the New Ordinary Shares. Subject to, amongst other things, the Resolutions being passed, it is expected that Admission will become effective and that dealings in the New Ordinary Shares will commence at 8.00 a.m. on 27 February 2015 on the London Stock Exchange's main market for Listed Securities and at market open on 27 February 2015 on the Toronto Stock Exchange.

See "Risk Factors" on pages 18 to 37 (inclusive) of this document for a discussion of certain factors that should be considered by Shareholders and investors when considering whether or not to make an application pursuant to the Open Offer or to invest in the New Ordinary Shares. Your attention is also drawn to the letter from the Chairman set out in Part 1 (Letter from the Chairman of Anglo Pacific Group PLC) of this document. In making an investment decision, each investor must rely on their own examination, analysis and enquiry of the Company and the terms of the Proposals including the merits and risks involved. NOTWITHSTANDING THIS, YOU SHOULD READ THE ENTIRE DOCUMENT AND ANY DOCUMENTS INCORPORATED BY REFERENCE.

The Open Offer closes at 11.00 a.m. on 25 February 2015 and payment is required in full by this time. If you are a Qualifying non-CREST Shareholder and wish to apply or subscribe for Open Offer Shares under the Open Offer, you should complete the accompanying Application Form and return it with your remittance in accordance with the instructions set out in paragraph 4(a) of Part 8 (Terms and Conditions of the Open Offer) of this document and in the Application Form. If you are a Qualifying CREST Shareholder, the relevant CREST instructions must have settled, as explained in this document, by no later than 11.00 a.m. on 25 February 2015. The Application Form is personal to Qualifying non-CREST Shareholders and cannot be transferred, sold or assigned except to satisfy bona fide market claims. Applications under the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim.

Share capital immediately following Admission

Issued and fully paid

Amount

£3,398,840.68

Number

169,942,034

Notice of the General Meeting of the Company, to be held at 10.30 a.m. on 26 February 2015 at The Royal Institution of Great Britain, 21 Albemarle Street, London W1S 4BS, is set out at the end of this document. A Form of Proxy is enclosed for use by Shareholders in connection with the meeting. To be valid, Forms of Proxy, completed, or submitted electronically, in accordance with the instructions printed thereon, must be received by the Company’s registrars, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, as soon as possible but in any event by no later than 10.30 a.m. on 24 February 2015. Completion and return of the Form of Proxy will not preclude Qualifying Non-CREST Shareholders from attending and voting at the General Meeting or any adjournment should they so wish.

If you hold Shares in CREST, you may appoint a proxy by completing and transmitting a CREST Proxy Instruction to the Registrar (CREST participant ID RA19), so that it is received by no later than 10.30 a.m. on 24 February 2015. The completion and return of a CREST Proxy Instruction will not preclude Qualifying CREST Shareholders from attending and voting in person at the General Meeting or any adjournment thereof should they so wish.

BMO Capital Markets Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, has been appointed as sponsor and joint bookrunner. Macquarie Capital (Europe) Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, has been appointed as joint bookrunner. Shard Capital Partners LLP, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, has been appointed as co-manager. The Banks are acting exclusively for the Company, and no one else, in relation to the Proposals and Admission and will not regard any other person (whether or not a recipient of this document) as their respective clients in relation to the Proposals and Admission and will not be responsible to anyone other than the Company for providing the protections afforded to their clients or for providing advice in relation to the Proposals and Admission or any other transaction or arrangement referred to in this document.

Apart from the responsibilities and liabilities, if any, which may be imposed on the Banks by FSMA or the regulatory regime established thereunder or the regulatory regime of any other jurisdiction, the Banks accept no responsibility whatsoever and make no representation or warranty, express or implied, for or in respect of the contents of this document, including its accuracy, completeness or verification or regarding the legality of an investment in the New Ordinary Shares by a subscriber thereof under the laws applicable to such subscriber or for any other statement made or purported to be made by them or any of them, or on their behalf, in connection with the Company, the New Ordinary Shares or the Firm Placing and Placing and Open Offer, and nothing in this document is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. The Banks accordingly disclaim to the fullest extent permitted by applicable law all and any responsibility and liability whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this document or any such statement.

The Banks may, in accordance with applicable legal and regulatory provisions, engage in transactions in relation to the New Ordinary Shares and/or related instruments for their own respective accounts for the purpose of hedging their respective underwriting exposure or otherwise. Except as required by applicable law or regulation, the Banks do not propose to make any public disclosure in relation to such transactions.

The New Ordinary Shares have not been and will not be registered under the Securities Act or under any securities laws of any state or other jurisdiction of the United States and may not be offered, sold, resold, transferred or delivered, directly or indirectly, within the United States except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with the securities laws of any State or other jurisdiction of the United States. There will be no public offer of the New Ordinary Shares in the United States. In addition, the Company has not been and will not be registered under the US Investment Company Act of 1940, as amended (the Investment Company Act) and investors will not be entitled to the benefits of the Investment Company Act.

The New Ordinary Shares have not been approved or disapproved by the US Securities and Exchange Commission (the SEC), any state securities commission in the United States or any US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the New Ordinary Shares or the accuracy or adequacy of this document. Any representation to the contrary is a criminal offence in the United States.

The New Ordinary Shares are being offered and sold (i) outside the United States in offshore transactions as such terms are defined in, and in reliance on, Regulation S; and (ii) in the United States only to investors reasonably believed to be QIBs who have delivered to the Company and the Banks a duly executed investor letter, pursuant to exemptions from registration under the Securities Act and the Investment Company Act.

In addition, until 40 days after the commencement of the Firm Placing and Placing and Open Offer, an offer, sale or transfer of New Ordinary Shares within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act.

NOTICE TO NEW HAMPSHIRE RESIDENTS: NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTE A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN

APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities in any circumstances or in any jurisdiction in which such offer or solicitation is unlawful.

Except as expressly set out herein, this document does not constitute an offer or solicitation to subscribe for or otherwise acquire or dispose of any securities in Canada. This document is being sent to Shareholders resident or otherwise subject to the laws of Canada for information and voting purposes only and does not constitute an offer or invitation to such Shareholders to apply for New Ordinary Shares. Shareholders in Canada are not Qualifying Shareholders, as such, Shareholders resident in Canada are not permitted to participate in the Open Offer. The New Ordinary Shares forming part of the Firm Placing and the Placing will not be qualified by a prospectus in Canada and, therefore, New Ordinary Shares will not generally be distributed in Canada except to accredited investors or otherwise pursuant to an exemption from the Canadian prospectus requirements. See "Important Information – Notice to Persons In Canada" starting on page 42.

The Company has not been approved by the Swiss Financial Market Supervisory Authority (FINMA) as a foreign collective investment scheme pursuant to Article 120 of the Swiss Collective Investment Schemes Act of 23 June, 2006 (CISA). The shares of the Company will exclusively be distributed in, into or from Switzerland to regulated qualified investors as defined in Article 10(3)(a) and (b) of the CISA. The shares of the Company will not be listed on the SIX Swiss Exchange (SIX) or on any other stock exchange or regulated trading facility in Switzerland. This prospectus has been prepared without regard to the disclosure standards for issuance prospectuses under the CISA, Article 652a or 1156 of the Swiss Code of Obligations (CO) or the listing rules of SIX or any other exchange or regulated trading facility in Switzerland and therefore does not constitute a prospectus within the meaning of the CISA, Article 652a or 1156 CO or the listing rules of SIX or any other exchange or regulated trading facility in Switzerland. The shares of the Company may not be publicly offered (as such term is defined in the CO) in, into or from Switzerland and may only be distributed in, into or from Switzerland to regulated qualified investors as defined in Article 10(3)(a) and (b) of the CISA. Neither this prospectus nor any other offering or marketing material relating to the Company or shares of the Company may be distributed to unregulated qualified investors or non-qualified investors within the meaning of the CISA, its implementing ordinance and guidelines in or from Switzerland or made available in Switzerland in any manner which would constitute a public offering within the meaning of the CO and all other applicable laws and regulations in Switzerland. Neither this prospectus nor any other offering or marketing material relating to the Company or the shares of the Company have been or will be filed with, or approved by, any Swiss regulatory authority. The investor protection afforded to investors of interests in collective investment schemes under the CISA does not extend to acquirers of the shares of the Company.

The New Ordinary Shares have not been and will not be registered under the relevant laws of any Excluded Territory or any state, province or territory thereof and may not be taken up, offered, sold, resold, delivered or distributed, directly or indirectly, within, into or from any other Excluded Territory or to, or for the account or benefit of, any person with a registered address in, or who is resident or ordinarily resident in, or a citizen of, any other Excluded Territory except pursuant to an applicable exemption. There will be no public offer in any Excluded Territory.

All Overseas Shareholders, and any person (including, without limitation, a nominee, custodian or trustee) who has a contractual or other legal obligation to forward this document or any Application Form, if and when received, or other document to a jurisdiction outside the UK, should read paragraph 6 of Part 8 (Terms and Conditions of the Open Offer) of this document.

The document may only be used by those persons to whom it has been distributed in connection with the Firm Placing and Placing and Open Offer described herein and may neither directly nor indirectly be distributed or made available to other persons without the express consent of the Company.

iii

Clause	Page
SUMMARY INFORMATION	1
RISK FACTORS	18
IMPORTANT INFORMATION	38
DIRECTORS, SECRETARY AND ADVISERS	48
EXPECTED TIMETABLE OF PRINCIPAL EVENTS	50
FIRM PLACING AND PLACING AND OPEN OFFER STATISTICS	51
Part 1 LETTER FROM CHAIRMAN OF ANGLO PACIFIC GROUP PLC	52
Part 2 INFORMATION ON THE NARRABRI ROYALTY	64
Part 3 TERMS AND CONDITIONS OF THE ACQUISITION	79
Part 4 QUESTIONS AND ANSWERS ABOUT THE FIRM PLACING AND PLACING AND OPEN OFFER	80
Part 5 INFORMATION ON THE GROUP	87
Part 6 SELECTED FINANCIAL INFORMATION	115
Part 7 OPERATING AND FINANCIAL REVIEW	119
Part 8 TERMS AND CONDITIONS OF THE OPEN OFFER	141
Part 9 FINANCIAL INFORMATION RELATING TO ANGLO PACIFIC GROUP PLC	162
Part 10 KESTREL QUALIFIED PERSON'S REPORT	211
Part 11 NARRABRI QUALIFIED PERSON'S REPORT	302
Part 12 UNAUDITED PRO FORMA FINANCIAL INFORMATION	424
Part 13 ADDITIONAL INFORMATION	429
CHECKLIST OF DOCUMENTATION INCORPORATED BY REFERENCE	462
DEFINITIONS	463
NOTICE OF GENERAL MEETING OF ANGLO PACIFIC GROUP PLC	472

SUMMARY INFORMATION

Summaries are made up of disclosure requirements known as "Elements". These Elements are numbered in Sections A - E (A.1 - E.7).

This summary contains all the Elements required to be included in a summary for this type of issuer and its securities. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements.

Even though an Element may be required to be inserted in the summary because of the type of securities and issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in this summary together with an appropriate "Not applicable" statement.

Section A – Introduction and warnings
Element	Disclosure Requirement	Disclosure
A.1	Introduction and warnings	This summary should be read as an introduction to the Prospectus. Any decision to invest in the New Ordinary Shares should be based on consideration of the Prospectus as a whole by the investor. Where a claim relating to the information contained in this document is brought before a court, the claimant investor might, under the national legislation of the member states, have to bear the costs of translating the Prospectus before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities.
A.2	Consent for intermediaries	Not applicable; no consent has been given by the Company or any person responsible for drawing up the Prospectus to the use of this document for subsequent resale or final placement of securities by financial intermediaries.
Section B – Issuer
---	---	---
Element	Disclosure Requirement	Disclosure
B.1	Legal and commercial name	Anglo Pacific Group PLC
B.2	Domicile, legal form, legislation, country of incorporation	The Company is a public company limited by shares and was incorporated with limited liability in England and Wales under the Companies Act 1948 on 7 February 1967. Its registered number is 00897608. The principal legislation under which the Company operates is the Companies Act 2006.
B.3	Current operations/principal activities and markets	Anglo Pacific is a global natural resources royalty company. It is the only company listed on the London Stock Exchange that is focused solely on natural resources royalties. Anglo Pacific’s aim is to develop as a leading international diversified royalty company with a portfolio centred on base metals and bulk materials. The Directors will also consider acquiring royalties

		in other commodities, such as energy, as opportunities arise. The Directors believe that the royalty industry's historical focus on precious metals, particularly gold and silver, has disproportionately channelled investment into only a small part of the mining industry and that the universe of opportunities should be significantly larger in these markets than for precious metals. The Group's strategy is to build a diversified royalty portfolio, focusing on accelerating income growth through acquisitions of royalty interests in cash or near-term cash producing assets. It is an objective of the Group to pay a substantial portion of these royalty revenues to shareholders as dividends. The Group's royalty portfolio includes assets covering a range of commodities and includes properties at various stages of development, including early stage exploration and production assets. The Group currently has a core royalty portfolio over 10 mining assets, spread across five continents in commodities including coal, iron ore, gold, vanadium, uranium and chromite, all of which are revenue or production based royalties. Historically, the majority of revenues have been generated from the Group's cornerstone asset, a royalty in respect of part of Kestrel, which is operated by Kestrel Coal Pty Ltd, a subsidiary of Rio Tinto, on behalf of the joint venture partners, Queensland Coal Pty Limited (a Rio Tinto subsidiary) (as to 80%) and Mitsui Kestrel Coal Investment Pty Ltd (as to 20%). This royalty is currently producing lower-than-historic royalty payments whilst Rio Tinto mines outside the area that is the subject of the Group's royalty interest. However, the Group expects substantial royalty growth from this asset during 2015. A number of factors have led to a de-rating of mining equities and raising capital through conventional sources has become increasingly difficult. Consequently, demand has grown for alternative forms of financing, including royalty financing. For the financial year ended 31 December 2013, the Group generated royalty related income of £14.7 million, basic loss per share of 39.0 pence, adjusted earnings per share of 8.4 pence and dividend cover of 0.8x and invested £6.4 million in royalty assets, compared to £15.2 million, earnings per share of 10.7 pence, 8.7 pence, 0.9x and £6.9 million, respectively, for the financial year ended 31 December 2012. In the six months ended 30 June 2014, the Group generated royalty related income of £2.6 million, basic loss per share of 20.8 pence and adjusted earnings per share of (0.80) pence and invested £16.3 million in royalty assets, compared to £8.3 million, 25.3 pence, 5.6 pence and £6.4 million, respectively, in the six months ended 30 June 2013.
B.4a	Description of most significant recent trends	Over the past few years, the mining industry has faced increased funding challenges. Many mining projects have suffered from high cost inflation and budget overruns. The Directors believe that M&A activity at the peak of the last economic cycle also resulted in a substantial increase in leverage across global miners, which in a falling commodity

		price environment has resulted in substantial declines in earnings and reduced balance sheet flexibility. This is reflected in the net debt to EBITDA multiple for the Bloomberg World Mining Index, which has increased from 0.8x in 2010 to 1.4x in 2013. The Directors believe that this has had an impact on share price performance. As two of the most capital intensive sectors within the mining industry, the Directors believe that base metals and bulk materials producers have been under additional pressure.Falling commodity prices have put junior miners under increasing financial strain with limited access to capital. This is further compounded by the operations of junior miners typically being carried out at a higher cost of capital than major mining companies.During 2013, the sell-off in the mining sector had a significant impact on the mining equity markets. Global mining equity issuance in 2013 amounted to US$16.4bn, representing a decrease of 17% and 59% from 2012 and 2011 respectively.Lending to the global mining industry has also been impacted. For example, there has been a notable decrease in high yield debt issuance to the mining industry over the past two years, down 41% from US$14.6bn in 2011 to US$8.6bn as of the end of 2013.Accordingly, given the funding challenges facing the mining industry, demand has increased for alternative forms of financing, including royalty financing. The financing provided by the royalty and streaming industry has grown considerably in recent years, with upfront payments totalling more than US$2bn in each of 2012 and 2013.
B.5	Group description	The Company is the parent company of the Group. The following table contains a list of the principal subsidiaries of the Company (which are owned, directly or indirectly, by the Company) as at the date of this document:NameProportion of share capital heldAnglo Pacific Finance Ltd100%Balbany River Royalty Corporation100%BPGAus No 1 Pty Ltd100%BAPGAus No 2 Pty Ltd100%BAPGAus No 3 Pty Ltd100%BAPGAus No 5 Pty Ltd100%BAPGAus No 6 Pty Ltd100%BAPGAus No 7 Pty Ltd100%Bordon Resources Pty Limited100%Bindian Ocean Resources Pty Ltd100%BPanorama Coal Corporation100%Bstarmont Holdings Pty Limited100%Btrefi Coal Corporation100%
B.6	Major shareholders	As at 5 February 2015 (being the latest practicable date prior to the publication of this document) insofar as is known to the Company, the following persons were, directly or indirectly, interested in 3 per cent or more of the existing issued ordinary

		share capital of the Company (such an interest being notifiable under the Company's national law):
		Company	Ordinary Shares of 2p each	Representing (%)
		Liontrust Investment Partners LLP	16,392,716	14.07%
		Ransome's Dock Limited	7,489,360	6.43%
		Aberforth Partners LLP	6,549,032	5.62%
		Schroders PLC	5,501,515	4.73%
B.7	Selected historical key financial information	AXA Investment Managers UK (Framlington)	5,494,332	4.72%
		Save as disclosed above, the Directors are not aware of any person who as at 5 February 2015 (being the latest practicable date prior to the publication of this document), directly or indirectly, has an interest in Existing Ordinary Shares which represents 3 per cent or more of the Company's issued ordinary share capital.The Company is not aware, as at 5 February 2015 (being the latest practicable date prior to the publication of this document): (1) of any persons who, directly or indirectly, jointly or severally, exercise, or could exercise, control over the Company, or (2) of any arrangements or measures, the operation of which may, at a subsequent time, result in a change of control of the Company.
B.7	Selected historical key financial information	Income statement data
		For the Six Months Ended 30 June 2014 (unaudited) (£'000)	For the Year Ended 31 December 2013 (audited) (£'000)	2011
	Royalty related income	2,581	8,342	14,731	15,157
	Amortisation of royalties	(380)	(455)	(854)	(1,018)
	Operating expenses	(1,928)	(1,459)	(3,275)	(3,633)
	Operating profit before impairments, revaluations and gains/losses on disposals	273	6,428	10,602	10,506
	(Loss)/Gain on sale of mining and exploration interests	2,073	(4,888)	(6,398)	7,347
	Impairment of mining and exploration interests	(759)	(20,812)	(26,321)	(11,401)
	Impairment of royalty intangible assets	(4,500)	-	(8,313)	-
	Impairment of royalty financial instruments	-	-	-	-
	Revaluation of coal royalties (Kestrel)	(18,055)	(11,322)	(13,568)	9,512
	Revaluation of royalty financial instruments	-	(2,505)	(8,735)	(767)
	Finance income	183	349	789	676
	Finance costs	(1,151)	(854)	(2,964)	(958)
	Other income/(losses)	1,017	761	2,012	3,122
	(Loss)/Profit before tax	(20,919)	(32,843)	(52,896)	18,037
	Current income tax expense	(838)	(859)	(715)	(7,750)
	Deferred income tax credit/ (expense)	(1,291)	6,219	11,114	(1,293)
	(Loss)/Profit attributable to equity holders	(23,048)	(27,483)	(42,497)	11,580
	Total and continuing earnings per share
	Basic (loss)/earnings per share	(20.84p)	(25.29p)	(39.01p)	10.67p
	Diluted (loss)/earnings per share	(20.84p)	(25.29p)	(39.01p)	10.67p

Key performance indicators

	For the Six Months Ended 30 June		For the Year Ended 31 December
	2014	2013	2013	2012
	(unaudited)
Adjusted earnings/(loss) per share (pence)(1)	(0.8)	5.6	8.4	8.7
Dividend per share (pence)	4.45	4.45	10.2	10.2
Dividend cover(2)	-	-	0.8x	0.9x
Royalty assets acquired (£ millions)(3)	16.3	6.4	6.4	6.9

(1) Adjusted earnings represents the Group's underlying operating performance from core activities. It excludes all valuation movement, non-cash impairment and amortisation charges (which are non-cash IFRS adjustments that arise primarily due to changes in commodity prices), finance costs and any associated deferred tax. It also excludes any profit or loss on non-core asset disposals as these are not expected to be ongoing.
(2) Dividend cover is calculated as the number of times adjusted earnings per share exceeds the dividend per share. Dividend cover is not calculated for interim periods.
(3) This figure shows the Group's investment in royalty related assets.

Statement of financial position data

	As at 30 June		As at 31 December
	2014	2013	2013	2012
	(unaudited)		(audited)
Property, plant and equipment	1,945	2,116	1,989	2,105
Coal royalties (Kestrel)	116,702	149,787	131,434	170,995
Royalty financial instruments	24,643	37,644	27,847	41,945
Royalty and exploration intangible assets	46,088	50,656	37,288	53,495
Mining and exploration interests	14,877	26,014	20,072	55,793
Other receivables	11,874	9,753	8,775	3,141
Deferred tax	3,084	10,647	8,837	5,812
Total non-current assets	219,213	286,617	236,242	333,286
Trade and other receivables	1,699	4,978	5,332	1,958
Cash and cash equivalents	14,413	16,440	15,706	24,036
Total current assets	16,112	21,418	21,038	25,994
Total assets	235,325	308,035	257,280	359,280
Deferred tax	35,116	50,791	39,202	54,344
Total non-current liabilities	35,116	50,791	39,202	54,344
Income tax liabilities	794	-	465	1,801
Trade and other payables liabilities	7,467	6,849	762	2,171
Total current liabilities	8,261	6,849	1,227	3,972
Total liabilities	43,377	57,640	40,429	58,316
Capital and reserves attributable to shareholders:
Share capital	2,329	2,192	2,218	2,192
Share premium	29,328	26,853	29,328	26,853
Other reserves	21,989	33,606	12,509	45,829
Retained earnings	138,302	187,744	172,796	226,090
Total equity	191,948	250,395	216,851	300,964
Total equity and liabilities	235,325	308,035	257,280	359,280

Cash flow data

	For the Six Months Ended 30 June		For the Year Ended 31 December
	2014	2013	2013	2012
	(unaudited)
	(£'000)
Net cash generated from/(used in) operating activities	705	(5,954)	2,407	10,198
Net cash generated from/(used in) investing activities	(6,426)	2,409	(1,948)	6,857
Net cash generated from/(used in) financing activities	4,697	(4,816)	(8,693)	(10,579)
Net increase/(decrease) in cash and cash equivalents	(1,024)	(8,361)	(8,234)	(7,238)
Cash and cash equivalents at end of period	14,413	16,440	15,706	24,036

| | Certain significant changes to the Group’s financial condition and results of operations occurred during the financial years ended 2011, 2012 and 2013 and the six months ended 30 June 2014. These changes are set out below.

• Royalty related income decreased from £35.1 million for the year ended 31 December 2011 to £14.7 million for the year ended 31 December 2013 and to £2.6 million in the six months ended 30 June 2014.

• (Loss)/Profit attributable to equity holders moved from a profit of £10.9 million for the year ended 31 December 2011 to a loss of £42.5 million for the year ended 31 December 2013 and to a loss of £23.0 million for the six months ended 30 June 2014.

• Adjusted earnings/(loss) per share have decreased from adjusted earnings per share of 20.7p for the year ended 31 December 2011 to 8.4p for the year ended 31 December 2013 to an adjusted loss per share of 0.8p for the six months ended 30 June 2014.

The following items of significance have occurred since 30 June 2014:

• Royalty related income in the three months ended 30 September 2014 of £0.5 million (the three months ended 30 September 2013: £3.2 million).

• Total royalty income for 2014 expected to be in the region of £3.2 – £3.6 million (31 December 2013: £14.7 million).

• Non-core mining and exploration realisations of £1.8 million in the third quarter, with a remaining £14.1 million of value in non-core mining and exploration interests and receivables as at 30 September 2014.

• Cash and cash equivalents of £9.2 million as at 30 September 2014 (£14.4 million at 30 June 2014) and approximately £8.8 million at 31 December 2014 (£15.7 million at 31 December 2013).

• First production and sales achieved at Maracás which is expected to contribute to royalty income during 2015.

• First production achieved at Four Mile, with 2015 production expected to be 2.6Mlbs of uranium ore concentrate, but royalty income deferred until 2016.

• Continued sales of non-core mining and exploration interests to realise cash, along with the sale of Anglo Pacific’s Panorama coal properties in British Columbia, Canada to Atrum Coal Limited for US$0.5 million of cash, a US$2.0 million promissory loan note, 1.0 million Atrum Coal Limited shares and a retention of a royalty.

• An impairment charge of £15.4 million for the Isua royalty, an early stage iron ore project owned by London Mining PLC due to London Mining PLC entering into administration. |
| --- | --- |

		Other than as described above there has been no significant change to the Company’s financial condition and operating results since 30 June 2014, being the date to which the Company’s latest unaudited consolidated financial information was published.
B.8	Key pro forma financial information	Pro forma financial information
The unaudited pro forma balance sheet and unaudited pro forma income statement of the Enlarged Group set out below has been prepared on the basis discussed below, and in accordance with the requirements of item 20.2 of Annex I and items 1 to 6 of Annex II of the Prospectus Directive, to illustrate the effect of the acquisition of the Narrabri Royalty on the Group’s net assets and the issuance of 53,510,238 ordinary shares at 80 pence per share (the “Transactions”). The unaudited pro forma balance sheet has been presented assuming that the Transactions had occurred as at 30 June 2014. The unaudited pro forma income statement has been presented assuming that the Transactions had occurred on 1 January 2013.

The unaudited pro forma financial information has not been prepared, or shall not be construed as having been prepared, in accordance with the Regulation S-X under the Securities Act. In particular a pro forma income statement is not presented for the six months ended 30 June 2014. In addition, the unaudited pro forma financial information has been prepared for illustrative purposes only and, because of its nature, addresses a hypothetical situation and therefore does not represent the Group’s actual financial position or results as at such date. Future results of operations may differ materially from those presented below due to various factors.

Basis of preparation
The pro forma balance sheet is based on the balance sheet of the Group as at 30 June 2014, which have been extracted without material adjustment from Anglo Pacific’s published interim financial statements as at 30 June 2014. The pro forma income statement is based on the income statement of the Group for the year ended 31 December 2013, which has been extracted without material adjustment from the Group’s 2013 historical financial information included in this Prospectus. The nature of the transaction is such that there is no historical financial information on the Narrabri Royalty. The other adjustments are discussed in the notes below. The accounting policies used in the preparation of the unaudited pro forma information are consistent with those used by Anglo Pacific in the historical financial information included in this Prospectus. |

	Pro forma balance sheet of the Enlarged Group
	Adjustments
	Anglo Pacific Net assets at 30 June 2014	Proceeds	Acquisition and consid-eration	Enlarged Group Pro forma 30 June 2014
	GBP £'000	GBP £'000	GBP £'000	GBP £'000
	Notes	1	2	3
ASSETS
Non-current assets
Property, plant and equipment	1,945			1,945
Coal royalties (Kestrel)	116,702			116,702
Royalty financial instruments	24,643			24,643
Royalty and exploration intangible assets	46,088		44,028	90,116
Mining and exploration interests	14,877			14,877
Other receivables	11,874			11,874
Deferred tax	3,084			3,084
	219,213		44,028	263,241
Current assets
Trade and other receivables	1,699			1,699
Cash and cash equivalents	14,413	35,789	(36,093)	14,109
	16,112	35,789	(36,093)	15,808
Total assets	235,325	35,789	7,935	279,049
LIABILITIES
Non-current liabilities
Borrowings			5,000	5,000
Deferred tax	35,116			35,116
	35,116		5,000	40,116
Current liabilities
Income tax liabilities	794			794
Trade and other payables	7,467			7,467
	8,261	-	-	8,261
Total liabilities	43,377	-	5,000	48,377
Capital and reserves attributable to shareholders
Share capital	2,329	987	82	3,398
Share premium	29,328		3,207	32,535
Other reserves				0
Merger reserve	9,479	36,671		46,150
Warrant reserve	143			143
Investment revaluation reserve	1,815			1,815
Share based payment reserve	171			171
Foreign currency translation reserve	12,350			12,350
Special reserve	632			632
Investment in own shares	(2,601)			(2,601)
Retained earnings	138,302	(1,869)	(354)	136,079
Total equity	191,948	35,789	2,935	230,672
Total equity and liabilities	235,325	35,789	7,935	279,049
Notes:
(1) The balance sheet of the Group as at 30 June 2014 has been extracted without material adjustment from the published unaudited interim financial statements of the Group for the six months ended 30 June 2014.
(2) This adjustment represents the effect of the receipt by the Company of the net proceeds of the New Issue of £35.8m. This is reflected as an increase in cash and cash equivalents with a corresponding increase in share capital and merger reserve net of costs directly attributable to the issue of shares, with other transaction costs recognised in the income statement.
(3) This adjustment represents the effect of the Acquisition. Under the Group's accounting policies and IFRS, the acquisition of a royalty arrangement represents the purchase of a royalty intangible asset which is recognised at cost and amortised to the income statement on a systematic basic. The corresponding royalties received are recognised as income as they accrue.
This adjustment reflects the recognition of the royalty intangible asset at its cost of £44.0m. The acquisition is to be funded from cash and cash equivalents of £36.1m, the drawdown of borrowings net of costs of £4.6m and the issue of shares valued at £3.3m to the Seller.

		(4) No adjustment has been made to the unaudited pro forma balance sheet to reflect the trading results of Anglo Pacific or any amortisation or income in respect of the royalty intangible asset since the balance sheet date shown. Unaudited pro forma income statement
Anglo Pacific audited consolidated income statement for the year ended 31 December 2013 GBP'000	Adjustments	Enlarged Group Pro forma income statement for the year ended 31 December 2013 GBP'000
Revenue from the Narrabri royalty GBP'000	Amortisation of the Narrabri royalty GBP'000
Notes	1	2
Royalty related income	14,731	1,792
Amortisation of royalties	(854)	-
Operating expenses	(3,275)	-
Operating profit (Loss)/Gain on sale of mining and exploration interests	10,602	1,792
Impairment of mining and exploration interests	(6,398)	-
Impairment of royalty intangible assets	(26,321)	-
Revaluation of coal royalties (Kestrel)	(8,313)	-
Revaluation of royalty financial instruments	(13,568)	-
Finance income	(8,689)	-
Finance costs	789	-
Other income/(costs)	(2,964)	-
Loss before tax	1,966	-
Notes: (1) The consolidated income statement of Anglo Pacific for the year ended 31 December 2013 has been extracted without material adjustment from the 2013 historical financial information which is included within Part 9, Section B of this document. (2) This represents the royalty related revenue as invoiced to the Seller earned from the Narrabri Royalty in 2013. Assuming production continues, revenue, albeit of an unquantifiable amount at this time, will be recorded on a recurring basis. (3) This represents Anglo Pacific management's calculation of the additional amortisation charge that would have been calculated in 2013 had the Narrabri Royalty been acquired on 1 January 2013 and based on an expected mine life of 22 years. Assuming production continues, amortisation will be recorded on a recurring basis. (4) This adjustment represents the transaction costs of the acquisition of the Narrabri Royalty reflected in the income statement. (5) No adjustment has been made to the unaudited Pro forma income statement to reflect any changes in tax charges that may have arisen as a result of the issuance of 53,510,238 ordinary shares and the acquisition of the Narrabri Royalty.
B.9	Profit forecast/estimate	Not applicable. The Company has not made any profit forecast or estimate.
B.10	Description of the nature of any qualifications in the accountant's report on the historical financial information	Not applicable. There are no qualifications in the accountant's report on the historical financial information contained in the Prospectus.
B.11	Working capital – qualifications	Not applicable. The Company is of the opinion that the working capital available to the Group is sufficient for its present requirements, that is for at least the next 12 months from the date of publication of this document.

Section C – Securities
Element	Disclosure Requirement	Disclosure
C.1	Type and class of the securities	The Company is proposing to issue 49,375,000 Ordinary Shares pursuant to the New Issue and 4,135,238 Ordinary Shares pursuant to the Acquisition.

The ISIN of the New Ordinary Shares and the Acquisition Shares is GB0006449366.

The ISIN of the Open Offer Entitlements is GB00BSPC3T64. |
| C.2 | Currency | The Existing Ordinary Shares are denominated in pounds sterling and the Offer Price is payable in pounds sterling. |
| C.3 | Number of securities in issue and par value | The Company has in issue 116,431,796 fully paid up Ordinary Shares at a nominal value of 2p each. |
| C.4 | Description of the rights attached to the securities | The New Ordinary Shares and the Acquisition Shares will be issued credited as fully paid and will rank equally in all respects with the Existing Ordinary Shares, including the right to receive any dividends or distributions made, paid or declared after the date of the allotment and issue of the New Ordinary Shares. |
| C.5 | Restrictions on the free transferability of the securities | The Directors may (for certificated shares) refuse to register any transfer of shares which is not fully paid. The Directors may likewise refuse to recognise any instrument of transfer of shares in certificated form unless it is in respect of only one class of share, it is lodged at the registered office of the Company (or other place that the Board may determine from time to time) accompanied by the relevant share certificate and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer. The Directors may also refuse to register an allotment or transfer of shares (whether fully-paid or not) in favour of more than four persons jointly. New Ordinary Shares issued into Canada as part of the Firm Placing and Placing cannot, unless permitted under applicable Canadian securities legislation, be traded in Canada for a period of four months and a day from the date of issuance.

Subject to the passing of the Special Resolution at the General Meeting, the Articles will be amended to include a provision which will allow the Board to also refuse to register a transfer of any Ordinary Shares if the transfer is in favour of any person, as determined by the Board, to whom a sale or transfer of shares, or whose direct, indirect or beneficial ownership of shares, would or might (i) result in any shares being owned, directly or indirectly, by Benefit Plan Investors or Controlling Persons other than shareholders that acquire shares with the written consent of the Company; (ii) cause the assets of the Company to be considered “plan assets” under the Plan Asset Regulations; (iii) result in Ordinary Shares being owned by a person whose giving, or deemed giving, of the representations as to ERISA and the Internal Revenue Code set forth in the Articles is or is subsequently shown to be false or misleading; or (iv) cause the Company to otherwise be in violation of |

| | | ERISA, the Internal Revenue Code or any applicable federal, state, local, non-US or other laws or regulations that are substantially similar to section 406 of ERISA or section 4975 of the Internal Revenue Code (any such person a Non-Qualified Holder).

In addition, under the proposed amendment to the Articles and subject to the passing of the Special Resolution at the General Meeting, if it comes to the notice of the Company that any shares are owned directly, indirectly or beneficially by any Non-Qualified Holder, the Board may serve a notice upon such Non-Qualified Holder requiring such Non-Qualified Holder to transfer the shares to an eligible transferee within 14 days of such notice; and, if the obligation to transfer is not met, the Company may compulsorily transfer the shares. |
| --- | --- | --- |
| C.6 | Admission | Application will be made to the Financial Conduct Authority for the New Ordinary Shares and the Acquisition Shares to be admitted to the premium segment of the Official List and to be admitted to trading on the London Stock Exchange’s main market for listed securities.

Application has been made to the Toronto Stock Exchange to list the New Ordinary Shares and the Acquisition Shares.

It is expected that Admission will become effective and that dealings in the New Ordinary Shares will commence at 8.00 a.m. on 27 February 2015 on the London Stock Exchange’s main market for listed securities and at market open on 27 February 2015 on the Toronto Stock Exchange. |
| C.7 | Dividend policy | The proposed acquisition of the Narrabri Royalty has provided the Board with an opportunity to further review the dividend policy while recognising that the royalty income from Kestrel in the fourth quarter of 2014 was well below the Company’s previous expectations due to lower than expected mining in the Company’s royalty lands at the Rio Tinto Kestrel mine as previously announced.

The Board’s priorities are to deliver a progressive dividend policy at a level which is affordable and appropriate as well as funding the Company’s royalty investment opportunities and maintaining a strong balance sheet.

The Board is considering the recommendation of a final dividend for the year ended 31 December 2014 of 4p following the completion of the acquisition of the Narrabri Royalty.

In the medium term, the Board is committed to a minimum annual total dividend of 8p subject to, amongst other things, the level of adjusted earnings, proceeds from the disposals of non-core assets and prospective investment opportunities. In the longer term, and subject to the same factors, the Board intends to adopt a dividend policy paying dividends representing a minimum of 65% of adjusted earnings. |

Section D - Risks
Element	Disclosure Requirement	Disclosure
D.1	Key information on key risks specific to the issuer or its industry	Changes in the market price of the commodities that underlie the Group's royalties will affect the revenue generated therefrom and the Group's profitability. Any commodity price decline may result in a material adverse effect on the Group's royalty related income, business, operations and financial condition.The Group's revenues are impacted by the demand for steel. Metallurgical coal, iron ore and vanadium are all important commodities for the Group and are all raw materials for the steel industry. A decrease in the demand for steel and fluctuations in the supply and demand for metallurgical coal, iron ore and vanadium could result in lower royalty payments to the Group and, in turn, lower revenues, which could have a material adverse effect on the Group's business, results of operations and financial condition.It may be difficult or impossible for the Group to ensure that the Royalty Properties are developed or operated in the Group's best interest. The revenue derived from the Group's royalties is based on production by the operators of the underlying Royalty Properties. Although the Group may, in certain circumstances, have a limited ability to participate in the decision-making process, the owners and operators will generally have the power to determine the manner in which the relevant Royalty Properties are exploited, including decisions to expand, continue or reduce production from a Royalty Property, decisions about the marketing of products extracted from the Royalty Property and decisions to advance exploration efforts and conduct development of non-producing Royalty Properties.The royalties the Group holds may not produce anticipated revenues. The success of the Group's royalties is based on the accuracy of assumptions regarding the estimates of Mineral Reserves and Resources and the production estimates of mine operators as well as the Group's ability to make accurate assumptions regarding the valuation, timing and amount of revenues to be derived from its royalties, particularly with respect to royalties on development stage properties.The Group may be unable to successfully acquire additional royalties. The Group's future success largely depends upon its ability to acquire royalties at appropriate valuations, including through royalty and corporate acquisitions and other financing transactions.Several of the Group's royalties are significant to it, particularly the Kestrel royalty, and any adverse development related to these Royalty Properties could adversely affect its revenues. The Group's interest in the Kestrel Royalty Area is the Group's most significant asset, contributing £9.9 million in revenue in fiscal year 2013, which was 67% of the Group's royalty related income for the period.

		There may be disputes in relation to the Group’s royalties. Unknown defects in or disputes relating to the royalties the Group holds may prevent it from realising all of the anticipated benefits from its royalties and could have a material adverse effect on the Group’s royalty related income, business, results of operation and financial condition. The Group has and will continue to have limited access to information, data and disclosure regarding the operation of Royalty Properties, which affects its ability to assess the Royalty Property’s performance. The Group depends on the operators of the Royalty Properties for the accurate calculation of royalty payments and, while certain of the Group’s royalty agreements provide the Group with audit rights, such audits may occur months after the Group’s recognition of the royalty revenue. The Group is dependent on the owners and the operators of the Royalty Properties making payments due under the royalties and any delay in or failure to make such royalty payments will affect the revenues generated by the royalty portfolio. The Group expects to incur additional indebtedness in the future and it may increase the Group’s vulnerability to general adverse economic and industry conditions or require the Group to dedicate a substantial portion of its cash flow from operations and proceeds of any equity issuances to payments on its indebtedness, rather than, for example, on new acquisitions or dividend payments, any of which may place the Group at a competitive disadvantage to its competitors that may have less debt. Although the Narrabri Royalty is operated by an established and experienced operator, there can be no guarantee that the Group will realise any or all of the anticipated benefits of the Acquisition, either in a timely manner or at all. If the Acquisition fails to complete or if the Group fails to realise some or all of the anticipated Acquisition benefits, it could have a material adverse effect on the Group’s business, results of operations and financial condition. The Company intends to apply for a transfer of the Company’s listing category from a “premium listing (commercial company)” on the Official List and into the category of a “standard listing”. The Proposed Transfer is the result of ongoing discussions with the UKLA in relation to the appropriate categorisation of the Company under the Listing Rules with respect to technical considerations related to the Company’s royalty business model. The standard listing regime provides shareholders with a lower level of regulatory protection than that afforded to shareholders in companies with a premium listing on the Official List. Accordingly, investors should be aware that any investment in a company that has a standard listing is likely to carry a higher risk than an investment in a company with a premium listing.

Section E – Offer
Element	Disclosure Requirement	Disclosure
E.1	Net proceeds/estimate of expenses	The Company intends to raise a total of approximately £35.9 million through the New Issue after deduction of estimated expenses of approximately £3.6 million. No expenses will be charged by the Company to Shareholders who acquire New Ordinary Shares.
E.2a	Reasons for the Offer/use of proceeds/estimated net amount of proceeds	The Company's primary strategic objective is to assess royalty-based financing opportunities and/or acquire existing royalties under third party ownership in respect of production or near production stage base metals and bulk materials assets. The Company will also consider acquiring royalties in other commodities as opportunities arise.
The Company currently holds a core portfolio of royalties over five mines that are in production and five royalties over projects that are in development or early stage development. However, the majority of the Group's income has historically been derived from the Kestrel royalty.
The Directors believe that the Acquisition will provide the Group with the following benefits:
• further diversification of the royalty portfolio, both in terms of commodity and operator risk, and reduced dependence on Kestrel as the Group's primary source of earnings;

| | | • additional royalty income that is accretive to the key performance indicators of adjusted earnings per share and dividend cover in 2015;
• exposure to an asset that has scope to materially increase production over the short and medium term, which may, in turn, result in a corresponding increase in royalty income for the Group;
• the addition of a long-life royalty to the portfolio, with an estimated 22 years of mine life remaining at Narrabri North, and the potential to extend production in the future through the development of Narrabri South;
• exposure to a potential recovery in thermal and pulverised coal injection markets, with the price of thermal coal close to a five year low;
• an investment with a consistent historical production track record at the Narrabri mine, in an established mining jurisdiction, with the established operational expertise of Whitehaven in developing and operating coal mines: and
• an attractive position on the global thermal and pulverised coal injection coal producer cost curve.
The Board considers the Firm Placing and Placing and Open Offer to be a suitable fundraising structure as it will allow access to new investors to broaden the Company’s shareholder base, whilst providing existing Shareholders with the opportunity to participate in the fundraising to an extent through the Open Offer.
The Directors expect the net proceeds of the Firm Placing and Placing and Open Offer, approximately £35.9 million, to be used to provide the majority of funding for the acquisition of the Narrabri Royalty. |
| --- | --- | --- |
| E.3 | Terms and conditions of the Offer | The Company intends to raise £39.5 million (gross) or approximately £35.9 million (net of expenses) through the issue of 49,375,000 New Ordinary Shares by way of the Firm Placing and Placing and Open Offer at 80 pence per New Ordinary Share.
Of the 49,375,000 New Ordinary Shares being issued, 26,750,000 of the New Ordinary Shares will be issued through the Firm Placing and 22,625,000 of the New Ordinary Shares will be issued through the Placing and Open Offer. In each case, the New Ordinary Shares have been conditionally placed with institutional and other investors by the Banks subject, in the case of the Conditional Placed Shares, to clawback to satisfy valid application by Qualifying Shareholders under the Open Offer.
Qualifying Shareholders are being offered the right to subscribe for the Open Offer Shares but not to subscribe for the Firm Placed Shares.
The Offer Price represents a discount of approximately 3.9 per cent to the Closing Price of 83.25 pence per Ordinary Share on 3 February 2015 (being the last Business Day before the announcement of the Firm Placing and Placing and Open Offer) and a discount of approximately 3.6 per cent. to the |

| | | Closing Price of 83 pence per Ordinary Share on 5 February 2015 (being the latest practicable date prior to publication of this Prospectus).

Firm Placing
The Firm Placees required the Firm Placing in order to give them certainty as to the size of their shareholding in the Company following the fundraising. The Firm Placing is not subject to clawback in respect of valid applications by Qualifying Shareholders pursuant to the Open Offer and is not part of the Placing and Open Offer.

Placing and Open Offer
22,625,000 of the New Ordinary Shares are being offered to existing Shareholders by way of an Open Offer. The Open Offer provides an opportunity for Qualifying Shareholders to participate in the fundraising by subscribing for their respective Open Offer Entitlements. Qualifying Shareholders are being given the opportunity to subscribe for New Ordinary Shares pro rata to their existing shareholdings at the Offer Price on the basis of approximately 0.1944 New Ordinary Shares for every 1 Existing Ordinary Share.

22,625,000 of the New Ordinary Shares are being allocated to Conditional Placees who have agreed to subscribe for the Conditional Placed Shares pursuant to the Placing. The Conditional Placed Shares are subject to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer.

The latest time and date for receipt of completed Application Forms accompanied by full payment, or the settlement of the relevant CREST instructions is 11.00 a.m. on 25 February 2015.

The Firm Placing and Placing and Open Offer are conditional, inter alia, upon:
(a) the passing of the Resolutions;
(b) Admission becoming effective by not later than 8.00 a.m. on 6 March 2015 (or such later time and/or date as Macquarie Capital, BMO Capital Markets and the Company may agree); and
(c) the Placing Agreement becoming unconditional in all respects.

Accordingly, if any such conditions are not satisfied or, if applicable, waived, the Firm Placing and Placing and Open Offer will not proceed. |
| --- | --- | --- |
| E.4 | Interest material to the issue/conflicting interests | Not applicable. There are no interests, known to the Company, material to the New Issue. |
| E.5 | Selling shareholder | Not applicable. There are no lock-up agreements in relation to the New Issue. |

E.6	Dilution	Following the issue of New Ordinary Shares, Qualifying Shareholders who take up their full entitlements under the Open Offer will suffer a dilution of 18.2% to their interests in the Company by virtue of the issue of New Ordinary Shares pursuant to the Firm Placing and the Acquisition Shares. Qualifying Shareholders who do not take up any of their entitlements under the Open Offer and Shareholders who are not eligible to participate in the Open Offer will suffer a dilution of approximately 31.5% to their interests in the Company by virtue of the issue of New Ordinary Shares pursuant to the Firm Placing and Placing and Open Offer and the Acquisition Shares.
E.7	Estimated expenses charged to the investor	Not applicable. No expenses will be charged to the investors by the Company in relation the New Issue.

RISK FACTORS

An investment in the Ordinary Shares involves significant risks. Prior to investing in the Ordinary Shares, prospective investors should consider carefully the factors and risks associated with any such investment in the Ordinary Shares, the Group's business and the industry in which it operates, together with all other information contained in this Prospectus including, in particular, the risk factors described below. Prospective investors should note that the risks relating to the Group, its industry, its Royalty Properties and the Ordinary Shares summarised in the section of this Prospectus entitled "Summary Information" are the risks that the Directors believe to be the most essential to an assessment by a prospective investor of whether to consider an investment in the Ordinary Shares. However, as the risks which the Group faces relate to events and depend on circumstances that may or may not occur in the future, prospective investors should consider not only the information on the key risks summarised in the section of this Prospectus entitled "Summary Information" but also, among other things, the risks and uncertainties described below.

The following is not an exhaustive list or explanation of all risks that prospective investors may face when making an investment in the Ordinary Shares and should be used as guidance only. These risks and uncertainties are not the only ones facing the Group. The order in which risks are presented is not necessarily an indication of the likelihood of the risks actually materialising, of the potential significance of the risks or of the scope of any potential harm to the Group's business operations, prospects, financial condition and operational results. Additional risks and uncertainties relating to the Group that are not currently known to the Group, or that the Group currently deems immaterial, may individually or cumulatively also have a material adverse effect. If any of the following or other risks occur, the Group's business, prospects, financial conditions and results of operations could be materially adversely impacted. In that case, the trading price of the Ordinary Shares could decline and investors could lose all or part of their investment in the Ordinary Shares. There is no assurance that risk management steps taken will avoid future loss due to the occurrence of the below described or other unforeseen risks.

Risks Relating to the Group

Changes in the market price of the commodities that underlie the Group's royalties will affect the revenue generated therefrom and the Group's profitability

The revenue the Group derives from its royalties will be significantly affected by changes in the market price of the commodities underlying the royalties. The Group's revenue is particularly sensitive to changes in the price of metallurgical coal, gold and iron ore, as the revenue from these commodities represents the majority of the cash flow currently derived from the asset portfolio, and to a lesser extent to thermal coal, uranium and vanadium, as the anticipated revenue from the Royalty Properties that produce these commodities is expected to represent a significant portion of the cash flow derived from the royalty portfolio in the medium term. As at 30 June 2014, based on balance sheet carrying value, the Group's commodity exposure was approximately 59% to coal, 20% to iron ore, 8% to gold and 13% to other commodities pre the Narrabri Royalty and Isua write-down. Commodity prices, including those to which the Group is exposed, fluctuate on a daily basis and are affected by numerous factors beyond the Group's control, including levels of supply and demand, industrial development levels, inflation and the level of interest rates, the strength of the US Dollar and geopolitical events in significant coal- and iron ore-producing and consuming countries. Such external economic factors are, in turn, influenced by changes in international investment patterns, monetary systems and political developments.

Over the course of 2014, an abundant supply of thermal coal on the seaborne market and reduced import demand resulted in a steady decline in thermal coal prices. Coking coal prices have been in decline since 2011 due to reduced import demand from China and oversupply in the seaborne market. China's sustained downturn in the property market has led to reduced demand and production in the steel sector, however, this is expected to moderate as the property market recovers. At current spot prices, a large portion of coking coal producers are unprofitable and this is expected to lead to a market balancing as supply growth normalises. On the demand side, the main drivers of coking coal consumption growth is expected to be China and India, with seaborne coking coal trade forecast to grow at 1 per cent per annum to 2019.

All commodities, by their nature, are subject to wide price fluctuations, in particular based on demand, and future material price declines will result in a decrease in revenue or, in the case of severe declines that cause a suspension or termination of production by relevant operators, a complete cessation of revenue from royalties applicable to one or more relevant commodities. In addition, to the extent the Group enters into any streaming agreements going forward, the Group will not realise any profits if the price of the underlying commodity falls below the price the Group is obligated to pay under the streaming agreement. Moreover, despite the Group's strategy to increase its commodity diversification, the broader commodity market can be cyclical, and a general downturn in overall commodity prices could result in a significant decrease in overall revenue.

The Group currently does not have a policy to hedge against variations in commodity prices. In certain circumstances the Group may desire to hedge commodity price risks by using forward sales contracts or other hedging strategies and, while hedging of commodity prices is possible, there is no guarantee that appropriate hedging will be available at an acceptable cost, that any such commodity hedging programme will be successful in reducing the risk associated with fluctuations in commodity prices, or that a counterparty will purchase under a contract when the contract price exceeds the spot price for the commodity. Hedging may also prevent the Group from benefiting fully from commodity price increases.

Any commodity price decline or unsuccessful hedging in respect of commodity prices may result in a material adverse effect on the Group's royalty related income, business, results of operation, financial condition and ability to pay a dividend.

The Group's revenues are impacted by the demand for steel

Metallurgical coal, iron ore and vanadium are all important commodities for the Group and are all raw materials for the steel industry. The demand for metallurgical coal, iron ore and vanadium is heavily impacted by the raw material requirements of integrated steel producers, coke producers and producers of virgin iron units for feed to electric arc furnaces.

The steel industry is cyclical in nature. Demand for steel is affected by a number of factors such as international economic and financial conditions. In late 2008, the market weakened substantially, with steel producers cutting back on production. In 2010, steel production recovered, particularly in the Asian-Pacific region and Europe. Production flattened in the last half of 2011 and 2012 because of sovereign debt problems in Europe and tightening credit policies in China. Global apparent steel use is forecast to grow at a lower annual rate of 2.6% in 2014, driven by forecasts of Chinese economic growth slowing to 1.0% in 2014 and 0.8% in 2015. Chinese demand is expected to be reined in by a cooling real estate sector, which is reacting to governmental attempts to rebalance the economy. Producers are also experiencing tightening credit conditions and increased environmental regulation. Materials such as aluminum, composites and plastics are substitutes for steel and an increase in their use could adversely affect the demand for steel.

A decrease in the demand for steel and fluctuations in the supply and demand of metallurgical coal, iron ore and vanadium could result in lower royalty payments to the Group and, in turn, lower revenues, which could have a material adverse effect on the Group's business, results of operation, financial condition and ability to pay a dividend.

It may be difficult or impossible for the Group to ensure that the Royalty Properties are developed or operated in the Group's best interest

The revenue derived from the Group's royalties is based on production by the operators of the underlying Royalty Properties. Although the Group may, in certain circumstances, have a limited ability to participate in the decision-making process, the owners and operators will generally have the power to determine the manner in which the relevant Royalty Properties are exploited, including decisions to expand, continue or reduce production from a Royalty Property, decisions about the marketing of products extracted from the Royalty Property and decisions to advance exploration efforts and conduct development of non-producing Royalty Properties. The interests of third party owners and operators and those of the Group in respect of the relevant Royalty Property may not always be aligned. As an example, it will usually be in the interest of the Group to advance development and production on Royalty Properties as rapidly as possible in order to maximise near-term cash flow, while owners and operators may take a more cautious approach to

development, including not proceeding with development if the prevailing commodity price environment makes such development economically unfeasible, as they are at risk on the cost of development and operations. In addition, the owners or operators may take action contrary to the Group's policies or objectives; be unable or unwilling to fulfil their obligations under their agreements with the Group; have difficulty obtaining or be unable to obtain the financing necessary to move projects forward; or experience financial, operational or other difficulties, including insolvency which could limit the owners' or operators' ability to perform its obligations relating to the Royalty Properties. Furthermore, operators of development stage properties must, among other things, obtain and maintain all necessary environmental permits and access to water, power and other raw materials needed to begin and maintain production, and there can be no assurance that operators will be able to do so.

The Group may not be entitled to any material compensation if any of the Royalty Properties shuts down or discontinues operations on a temporary or permanent basis. At any time, any of the operators of the Royalty Properties or their successors may decide to suspend or discontinue operations. The owners or operators of the Royalty Properties may from time to time announce transactions, including the sale or transfer of the Royalty Properties or of the operator itself, over which the Group has little or no control as well as no input into who the Royalty Property is sold to, the price at which it is sold or any discounts that the purchaser may receive. If such transactions are completed it may result in a new operator controlling the Royalty Property, who may or may not operate the project in a similar manner to the current operator which may positively or negatively impact the Group. In the event any such transaction is announced, there is no certainty that such transaction will be completed, or completed as announced, and any consequences of such non-completion on the Group may be difficult or impossible to predict. For example, on 4 January 2013, Zamin Ferrous Ltd (Zamin) announced that it had signed a binding agreement for the purchase of Amapá from Anglo American plc (70%) and Cliffs Natural Resources Inc (30%). This process completed on 4 November 2013 and Zamin is now the owner and operator. In March 2013 shipments were suspended from Amapá due to a serious incident at the Santana port, which impacted key infrastructure at the loading bay. During the course of 2014 there have been small shipments of iron ore from Amapá from which the Group is entitled to receive royalty income. However, Zamin has requested to settle the Group's royalty account in early 2015 and no payment has yet been received.

The inability of the Group to control the operations of the Royalty Properties may have a material adverse effect on the Group's royalty related income, business, results of operation, financial condition and ability to pay a dividend.

The Group's royalties may not produce anticipated revenues

The royalties the Group holds may not produce anticipated revenues. The success of the Group's royalties is based on the accuracy of assumptions regarding the estimates of Mineral Reserves and Resources and the production estimates of mine operators as well as the Group's ability to make accurate assumptions regarding the valuation, timing and amount of revenues to be derived from its royalties, particularly with respect to royalties on development stage properties. Both mine operators and the Group may seek third party valuations and other reports to assist with their assessments.

Until Mineral Reserves or Mineral Resources are actually mined and processed, the quantity of Mineral Resources and Mineral Reserve grades must be considered as estimates only. Any material change in the quantity of Mineral Reserves, Mineral Resources, grade or stripping ratio may affect the economic viability of the Group's Royalty Properties. Fluctuation in base or precious metals or other commodity prices, results of drilling, metallurgical testing and production and the evaluation of mine plans subsequent to the date of any estimate may require revisions of such estimates. The volume and grade of reserves mined and processed and recovery rates may not be the same as currently anticipated. In particular, there is a risk that Inferred Mineral Resources cannot be converted into Mineral Reserves as the ability to assess geological continuity is not sufficient to demonstrate economic viability. Due to the uncertainty which may attach to Inferred Mineral Resources, there is no assurance that Inferred Mineral Resources will be upgraded to resources with sufficient geological continuity to constitute Proven and Probable Mineral Reserves as a result of continued exploration.

Additionally, production estimates made by the operators of the Royalty Properties are subject to change, and actual production may vary materially from such estimates. No assurance can be given that any prepared estimates of future production and future production costs with respect to any of the Royalty Properties will be achieved. Any production estimates are based on, among other things, reserve estimates, assumptions regarding ground conditions and physical characteristics of ores and estimated rates and costs of mining and processing. Actual production may vary from estimates for a variety of reasons, including but not limited to: actual ore mined varying from estimates of grade, tonnage, dilution, metallurgical and other characteristics; short term operating factors relating to the mining and processing of ore reserves; risks and hazards associated with mining; natural phenomena, such as inclement weather conditions, underground floods, earthquakes, pit wall failures and cave-ins; and unexpected labour shortages or strikes. As mines on which the Group has royalties reach the end of their mine life, the Group can expect overall declines in production over the years unless operators are able to replace reserves that are mined through mine expansion or successful new exploration. There can be no assurance that the operators of properties where the Group holds royalties will be able to maintain or increase production by replacing reserves as they are mined. The life-of-mine estimates included in this Prospectus in respect of the Group’s Royalty Properties may not be correct.

If an operator does not bring a property into production and operate in accordance with feasibility studies, technical or reserve reports or other plans due to lack of capital, inexperience, unexpected problems, delays, or otherwise, then the acquired royalty may not yield the expected financial return that was targeted on acquisition. The Salamanca mining project in Spain and the Isua mining project in Greenland are among the Group’s principal development stage Royalty Properties and are not producing, thus exposing the Group to the uncertainties associated with development stage properties. On 16 October 2014, London Mining PLC, the owner of the Isua mine, announced it had appointed administrators. Given the uncertainty around this asset, the Group has decided to make full provision against the value of its Isua royalty, resulting in the recognition of an impairment charge of £15.4 million.

Any material reductions in estimates of mineral reserves and mineral resources, or the ability of the operators of the Group’s Royalty Properties to extract these mineral reserves and to achieve production estimates and anticipated revenues, may have a material adverse effect on the Group’s royalty related income, business, results of operation, financial condition and ability to pay a dividend.

The Group may be unable to successfully acquire additional royalties

The Group’s future success largely depends upon its ability to acquire royalties at appropriate valuations, including through royalty and corporate acquisitions and other financing transactions. Most of the Group’s revenues are derived from its royalties. The reserves subject to the Group’s royalties will decline as the producing Royalty Properties are mined or as payment or production caps on certain of the Group’s current Royalty Properties are met and the Group will need to acquire additional royalties to add additional reserves to its portfolio. There can be no assurance that the Group will be able to identify and complete the acquisition of such royalties or businesses that own desired royalties, at reasonable prices or on favorable terms or, if necessary, that the Group will have, or be able to obtain, sufficient financing on reasonable terms to complete such acquisitions. Continued economic volatility or a credit crisis could adversely affect the Group’s ability to obtain debt or equity financing for acquisitions of additional royalties.

In addition, the Group faces competition in the acquisition of royalties. The mineral exploration and mining businesses are competitive in all phases. Other companies are engaged in the search for and the acquisition of royalties including established companies with substantial financial resources and operational capabilities, and there is a limited supply of desirable royalty opportunities. The Group may be at a competitive disadvantage in acquiring interests in these natural resource properties, whether by way of royalty or other form of investment, as competitors may have greater financial and technical resources and may be able to accept lower returns on their investment. Competition may also lead to an increase in prices for secondary royalties and may result in less favourable terms for the generation of new royalties. In addition, traditional equity and debt markets may allow developers to raise financing on more favourable terms than a competing royalty transaction would allow. There can be no assurance that the Group will be able to compete successfully to acquire new royalties.

Each of these factors could have a material adverse effect on the Group’s royalty related income, business, results of operations, financial condition and ability to pay a dividend.

Several of the Group’s royalties are significant to it, particularly the Kestrel royalty, and any adverse development related to these Royalty Properties could adversely affect its revenues

The Group’s interest in the Kestrel royalty is the Group’s most significant asset, contributing £9.9 million in revenue in fiscal year 2013, which was 67% of the Group’s royalty related income for the period. The Narrabri Royalty, once acquired, should likewise contribute significantly to the Group’s revenues. In addition, in the future the Group may acquire additional royalties and/or other existing royalties may become significant, depending on, amongst other things, the composition and characteristics of the Group’s royalty portfolio and the production at the Group’s Royalty Properties at that time. The Group has limited or no control over operational decisions made by the operators of these projects. Any adverse decision made by the operators, such as changes to mine plans, production schedules or metallurgical processes, may impact the timing and amount of revenue that the Group receives.

Additionally, the Group’s Kestrel royalty is a statutory royalty to which it is entitled pursuant to the Mineral Resources Act 1989 (Queensland). The royalty rate is set by the Queensland government and currently matches the government royalty rate pursuant to the Mineral Resources Regulations 2013 (Queensland). If the Queensland government were to decrease the statutory royalty rate, the Group’s income from its Kestrel royalty would decrease. Any adverse development affecting the operation of or production from these Royalty Properties or the statutory royalty rate applicable to the Kestrel Royalty Area may have a material adverse effect on the Group’s royalty related income, business, results of operations, financial condition and ability to pay a dividend.

There may be disputes in relation to the Group’s royalties

While the Group seeks to confirm the existence, validity, enforceability and geographic extent of the royalties it acquires through due diligence, there can be no assurance that disputes over these and other matters will not arise. Royalties generally are subject to uncertainties and complexities arising from the application of contract and property laws governing private parties and/or local or national governments in the jurisdiction where mining projects are located and therefore confirming royalties is a complex matter. Disputes could arise challenging, among other things, various rights of the operator or third parties in or to the royalty, methods for calculating the payment due under the royalty, production and other thresholds and caps applicable to payments under the royalty, the obligation of an operator to make payments or provide information, and various defects or ambiguities in the agreement governing a royalty.

Royalties in many jurisdictions are contractual in nature, rather than interests in land, and are therefore subject to disputes arising out of contractual defects as well as to change of control, bankruptcy or insolvency of operators and non-performance, any of which could defeat the Group’s claim to a royalty or result in a reduction of the revenue from the royalty received by the Group. For example, the Group held a royalty over two gold mining projects in Canada. When the operator of these mining projects entered bankruptcy in 2011, following litigation it was determined that the Group’s royalty was not attached to the property and therefore the Group’s royalty did not survive the disposal of the mining projects pursuant to the bankruptcy process. Even if the Group retains its royalty in respect of a Royalty Property after any change of control, bankruptcy or insolvency of the operator, the project may end up under the control of a new operator, who may or may not operate the project in a similar manner to the current operator, which may positively or negatively impact the Group. The Group often does not have the protection of security interests over property and title or similar insurance for royalties is generally not available. The Group is not aware of any current or potential disputes in relation to its royalties.

Unknown defects in or disputes relating to the royalties the Group holds or the Royalty Properties may prevent it from realising all of the anticipated benefits from its royalties and could have a material adverse effect on the Group’s royalty related income, business, results of operations, financial condition and ability to pay a dividend.

The Group has and will continue to have limited access to information, data and disclosure regarding the operation of Royalty Properties, which affects its ability to assess the Royalty Property's performance

Applicable securities laws, including National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101) of the Canadian Securities Administrators, require the Group to make certain disclosures regarding mineral projects on Royalty Properties material to it. As a royalty holder, the Group generally has limited, if any, access to non-public data regarding the operations or to the actual properties themselves. This could affect the Group’s ability to assess or enhance the royalty’s performance. The Group typically does not have the ability to independently verify such information or provide assurance that such third party information is complete or accurate. Additionally, where the Royalty Property is operated by a private company, rather than a public company, public disclosure may be more limited. Where possible, the Group always tries to improve its access to information regarding its Royalty Properties. However, such negotiations are not always successful, particularly in relation to secondary royalties.

In respect of technical reports required to be filed by the Group, including those described in this document, the Group has relied on an exemption from completing certain items under Form 43-101F1 of NI 43-101, available under Part 9 of NI 43-101 in cases where the Group has requested but has not received access to the necessary data from the owner or operator of the Royalty Property. In addition, some royalties may be subject to confidentiality arrangements which govern the disclosure of information with regard to royalties and, as such, the Group may not be in a position to publicly disclose non-public information with respect to certain royalties or Royalty Properties.

The receipt, timing and content of updates or disclosure on the Royalty Properties can be unpredictable. Where such disclosure contains new and unfavourable material information regarding the Royalty Properties, this may have a material adverse effect on the Group and its Ordinary Shares. The Group does not necessarily receive a copy of such disclosure before it is made public or have an opportunity to review the data or information on which such disclosure will be based. The limited access to data and disclosure regarding the operations of the Royalty Properties may restrict the Group’s ability to enhance its performance which may have a material adverse effect on the Group’s business, results of operation, financial condition and ability to pay a dividend.

The Group depends on the operators of the Royalty Properties for the accurate calculation of royalty payments and, while certain of the Group’s royalty agreements provide the Group with audit rights, such audits may occur months after the Group’s recognition of the royalty revenue

The Group’s royalty payments are calculated by the operators of the Royalty Properties based on the reported production. Each operator’s calculation of the Group’s royalty payments is subject to and dependent upon the adequacy and accuracy of the production and accounting functions of each operator, and errors may occur from time to time in the calculations made. Certain royalty agreements require the operators to provide the Group with production and operating information that may, depending on the completeness and accuracy of such information, enable the Group to detect errors in the calculation of royalty payments that it receives. While the Group has the contractual right to receive a royalty statement for most of its Royalty Properties, it does not have full information rights or audit rights in respect of all of its royalties. As a result, the Group’s ability to detect royalty payment calculation errors or fraud through its royalty monitoring programme and its associated internal controls and procedures is limited, and the possibility exists that the Group will need to make retroactive royalty revenue adjustments. Some of the Group’s royalties provide it the right to audit the operational calculations and production data for the associated royalty payments; however, such audits may occur many months following the Group’s recognition of the royalty revenue and may require the Group to adjust its revenue in later periods. For example, in 2012 an audit conducted by the Queensland Office of State Revenue identified a misallocation of royalty revenue attributable to the Group under its Kestrel royalty. As a result, the Group received £4.6 million (A$7.1 million) more than it was entitled to over a six year period ended 31 December 2011. An associated interest charge of £1.4 million (A$2.2 million) was also incurred on the overpayments. The Group then restated its 2011 results to reflect what the position would have been, taking into account this information. Therefore, although the Group has implemented procedures, systems and controls to ensure that revenue earned from its royalty assets is properly accounted for, any inaccuracies in the calculation of royalty payments could require the Group to restate its financial statements

and could have a material adverse effect on the market price of the Ordinary Shares and the Group’s royalty related income, business, results of operation, financial condition and ability to pay a dividend.

The Group is dependent on the owners and the operators of the Royalty Properties making payments due under the royalties and any delay in or failure to make such royalty payments will affect the revenues generated by the royalty portfolio

The Group is dependent to a large extent upon the financial viability and operational effectiveness of owners and operators of the relevant Royalty Properties. Where payments from production flow through the operator, there is a risk of delay and additional expense in receiving such payments. Additionally, under certain royalties, the Group only receives payment when the operator is paid by the purchaser of the commodity. Royalty payments may be delayed by, among other things, restrictions imposed by lenders, delays in the sale or delivery of, and payment for, products, blowouts or other accidents, recovery by the operators of expenses incurred in the operation of the Royalty Properties, the establishment by the operators of reserves for such expenses or the insolvency of the operator. The Group’s rights to payment under the royalties must, in some cases, be enforced by contract without the protection of a security interest over the Royalty Property that the Group could readily enforce. This restricts the Group’s ability, unless it has a properly perfected security interest, to collect outstanding royalties upon a default. Where the Group does not have a properly perfected security interest over a Royalty Property, in the event of the bankruptcy of the operator or owner of such property, the Group may be treated as an unsecured creditor and, therefore, have a limited prospect for full recovery of royalty payment. Following the appointment of administrators on 16 October 2014 by London Mining plc, the Group has recognised a £15.4 million impairment charge in relation to its Isua royalty. Failure to receive any royalty payments from the owners and operators of the relevant Royalty Property, or the failure to receive repayment of consideration for a primary royalty where no production has occurred, would have a material adverse effect on the Group’s business, results of operation, financial condition and ability to pay a dividend.

Operators of the Royalty Properties may not honour the Group’s royalties

Royalty and other interests in natural resource properties are largely contractual in nature. Parties to contracts do not always honour contractual terms and contracts themselves may be subject to interpretation or technical defects. Such parties may not have sufficient cash flow at a particular payment date to honour the contractual terms or they may enter bankruptcy. Additionally, the operators may not comply with their obligations to provide information or to allow the Group to exercise its audit rights. To the extent grantors of royalty and other interests do not abide by their contractual obligations, the Group would be required to take legal action to enforce its contractual rights. Such litigation may be time consuming and costly and there is no guarantee of success. If operators of the Royalty Properties do not honour their contractual obligations, either by choice or due to financial difficulties or bankruptcy, or if the Group is unable to enforce its contractual rights, it may have a material adverse effect on the Group’s royalty related income, business, results of operations, financial condition and ability to pay a dividend.

The Group is subject to risks related to acquisitions, disposals or other material transactions

In the ordinary course of business, the Group engages in a continual review of opportunities to acquire existing royalties, to create new royalties through the financing of mining projects or to acquire companies that hold royalties or to dispose of royalties or other investments that are no longer consistent with the Group’s strategy. The Group currently, and generally at any time, has acquisition opportunities in various stages of active review, including, for example, its engagement of consultants and advisors to analyse particular opportunities, technical, financial and other confidential information, submission of indications of interest and participation in discussions or negotiations for acquisitions. The Group also often considers obtaining or providing debt commitments for acquisition financing. Any such acquisition could be material to the Group. The Group could issue Ordinary Shares or incur additional indebtedness to fund its acquisitions. Issuances of Ordinary Shares may dilute the holders of the Company’s Ordinary Shares and reduce some or all of the Group’s financial measures on a per share basis. The Company will be issuing shares as part of the consideration for the acquisition of the Narrabri Royalty. In addition, any such acquisition or other transaction may have other transaction specific risks associated with it, including risks related to the completion of the transaction, the project, its operators, or the jurisdictions in which the project

is located. If production does not occur in connection with a royalty that the Group acquires, this could have a material adverse effect on the Group’s royalty related income, profit and ability to pay a dividend.

The Group may not always be able to conduct due diligence in as thorough a manner as it would prefer on potential acquisitions, particularly where it is acquiring a secondary royalty and the underlying mine operator has no obligation to provide information. The Group may therefore have to rely solely on publicly available information and there can be no assurance that a due diligence examination based on public information will reveal all of the risks associated with the potential acquisition, or the full extent of such risks.

In addition, the Group may consider opportunities to restructure its royalties where it believes such restructuring would provide a long-term benefit to the Group, though such restructuring may reduce near-term revenues or result in the incurrence of transaction-related costs. The Group could enter into one or more acquisition or restructuring transactions at any time.

The Group also reviews its mining and exploration interests and may acquire or dispose of such investments at any time. The Group has disposed of a number of such interests in recent years, many of which were disposed of at a loss. Going forward, the Group may dispose of further mining and exploration interests and may acquire other mining and exploration interests and there is no assurance that the Group will recognise gains or receive dividends on such interests.

Development and operation of mines is very capital intensive and any inability of the operators of Royalty Properties to meet liquidity needs, obtain financing or operate profitably could have material adverse effects on the value of and revenue from the Group’s royalties

The development and operation of mines is very capital intensive, and if operators of Royalty Properties do not have the financial strength or sufficient credit or other financing capability to cover the costs of developing or operating a mine, the operator may curtail, delay or cease development or operations at a mine site. Operators’ ability to raise and service sufficient capital may be affected by, among other things, macroeconomic conditions, future commodity prices of metals to be mined, or further economic volatility in the global financial markets, as has been experienced in recent years. In addition, continued economic volatility or a credit crisis could adversely affect the ability of operators to obtain debt or equity financing for the exploration, development and operation of their Royalty Properties. If any of the operators of the Royalty Properties suffer these material adverse effects, then the Group’s royalties and the value of and revenue from its royalties may be negatively impacted which could have a material adverse effect on the Group’s business, results of operation, financial condition and ability to pay a dividend.

The Group expects to incur additional indebtedness in the future

The Group currently has no outstanding indebtedness under its existing credit facility. However, the Group expects to draw down on this facility or otherwise incur additional indebtedness in connection with financing acquisitions, strategic transactions or for other purposes. If the Group were to incur such indebtedness, it may increase the Group’s vulnerability to general adverse economic and industry conditions or require the Group to dedicate a substantial portion of its cash flow from operations and proceeds of any equity issuances to payments on its indebtedness, rather than, for example, on new acquisitions or dividend payments, any of which may place the Group at a competitive disadvantage to its competitors that may have less debt. In addition, the Group may find it difficult or costly to refinance indebtedness as it matures, and if interest rates are higher when the indebtedness is refinanced, the Company’s costs would increase. Each of these factors could have a material adverse effect on the Group’s business, results of operations, financial condition and ability to pay a dividend.

Reputational risk in connection with the Group’s operations may materially adversely affect the Group

The Group is dependent upon its reputation to complete acquisitions and achieve its strategy. In particular, litigation, allegations of misconduct by employees or Directors, operational failures or any other negative publicity, could harm the reputation of the Group. If the Group is associated with a current or future Royalty Property which is the subject of litigation or negative publicity, including regarding its environmental impact, the Group’s reputation could be damaged. The Group also may experience negative reactions from the

financial markets or operators of properties on which the Group seeks royalties if it is unable to successfully complete acquisitions of royalties or businesses that own desired royalties. If investors do not have confidence in the Group, do not agree with its strategy, or have a negative view of acquisitions which the Group makes, or if the Group's reputation is harmed due to the other factors discussed, this could have a material adverse effect on the Group's share price, business, results of operations, financial condition and ability to pay a dividend.

The success of the Group depends on the services of its Chief Executive Officer, Chief Investment Officer and other key employees

The Group believes that its future success will depend on the performance of its executive management personnel. Julian Treger has served as the Group's Chief Executive Officer and as a Director since 21 October 2013. Mr. Treger's extensive special situations and distressed investing experience focused on coal and iron ore across Canada, the US and Africa. Furthermore, the Group's Director and Chief Investment Officer, Mark Potter, has extensive knowledge of special situations investing, private equity and natural resources investments. The Directors believe Mr. Treger's and Mr. Potter's extensive network of contacts and financial skills are important to its future success. The loss of Mr. Treger's or Mr. Potter's services, or of other key members of the Group's management or other key employees could jeopardise the Group's ability to maintain its competitive position in the industry. The Group maintains key person life insurance for Mr. Treger and Mr. Potter.

From time to time, the Group may also need to identify and retain additional skilled management and specialised technical personnel to efficiently operate its business. The number of persons skilled in the acquisition and enforcement of royalties is limited and there is competition for such persons. Recruiting and retaining qualified personnel is critical to the Group's success and there can be no assurance of such success. If the Group is not successful in attracting and retaining qualified personnel, its ability to execute its business model and growth strategy could be negatively affected, which could have a material adverse effect on its business, results of operations, financial condition and ability to pay a dividend.

Current global financial conditions continue to present challenges

In recent years, global financial conditions and market events have increased volatility and resulted in tightening of credit that has reduced available liquidity and overall economic activity. There can be no assurance that debt or equity financing will be available on acceptable terms or at all without prejudice to the working capital statement. The inability to access sufficient capital on acceptable terms could have a material adverse effect on the Group's or its Royalty Properties' businesses, prospects, dividend paying capability and financial condition and further enhancement opportunities or acquisitions.

The market price for the Group's Ordinary Shares may be volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond the Group's control. Economic conditions may adversely affect the Group or its Royalty Properties, including fluctuations in foreign exchange, inflation and interest rates, as well as monetary policies, business investment and the health of global capital markets. In recent years, financial markets have experienced significant price and volume fluctuations that have often been unrelated to the operating performance, underlying asset values or prospects of such companies. Additionally, these factors, as well as other related factors, may cause decreases in asset values, which may result in impairment losses resulting in the deferral or ultimately the loss of future income. Although economic conditions in the jurisdictions in which the Group operates have improved recently, uncertainty remains in relation to the pace and scale of the recovery, and conditions could deteriorate. Any prolonged delay in further economic recovery, a return to a recessionary economic environment, and the resulting increased levels of volatility and related market turmoil, could have a material adverse effect on the Group's royalty related income, business, operations, financial condition, share price and ability to pay a dividend. In addition, continued economic uncertainty and future recessionary periods may exacerbate some or all of the risks relating to the Group's business set out in this "Risk Factors" section.

The exploration, development and operation of mining and resource properties is inherently dangerous and subject to risks beyond the Group's control

The exploration, development and operation of mineral deposits involve significant risks which even a combination of careful evaluation, experience and knowledge may not eliminate. Any adverse development affecting the operation of, production from or recoverability of reserves from any Royalty Property from time to time, including, but not limited to, unusual and unexpected geologic formations, seismic activity, rock bursts, cave-ins, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage, difficulty hiring suitable personnel and engineering contractors or securing supply agreements on commercially suitable terms, may have a material adverse effect on the Group's business, financial condition, results of operations and ability to pay a dividend.

Potential litigation affecting the Royalty Properties could have an adverse effect on the Group

Potential litigation may arise on a Royalty Property (for example, litigation between joint venture partners or between operators and original property owners or neighbouring property owners or indigenous populations). In addition, the Group's Royalty Properties may be subject to prior unregistered agreements, transfers or claims, third party claims to the Royalty Property and other disputes and title may be affected by, among other things, undetected defects. There may be valid challenges to the title of the Group's Royalty Properties, which, if successful, could impair development and/or operations or limit the Group's or its Royalty Properties' ability, as applicable, to enforce their respective rights with respect to the Royalty Properties. As the holder of a royalty, the Group will not generally have any influence on the litigation and will not generally have access to non-public information concerning such litigation. Any such litigation that results in the cessation or reduction of production from a Royalty Property (whether temporary or permanent) could have a material adverse effect on the Group's royalty related income, business, results of operations, financial condition and ability to pay a dividend.

The Group's and its Royalty Properties' insurance cover may not be adequate

The business of the Group's Royalty Properties is subject to a number of risks and hazards generally, including adverse environmental conditions, industrial accidents, labour disputes, unusual or unexpected geological conditions, ground or slope failures, cave-ins, changes in the regulatory environment and natural phenomena such as inclement weather conditions, floods and earthquakes. Such occurrences could result in damage to the Royalty Properties, production facilities or infrastructure, personal injury or death, environmental damage to the Royalty Properties or the properties of others, delays in development or mining, monetary losses and possible legal liability.

The Group does not, and cannot always require the operators of the Royalty Properties to, maintain insurance to protect against such risks. Further, it is likely that any such insurance would not, in any event, cover all the potential risks associated with the relevant operations. Furthermore, such insurance may not be available at economically feasible premiums. Insurance coverage may not continue to be available or may not be adequate to cover any resulting liability. Moreover, insurance against risks such as environmental pollution or other hazards as a result of exploration and production is not generally available to the Group or to other companies in the mining industry on acceptable terms. The Group's Royalty Properties might also become subject to liability for pollution or other hazards which may not be insured against or which the Group's Royalty Properties may elect not to insure against because of premium costs or other reasons. Losses from these events may cause the Group's Royalty Properties to incur significant costs that could impact their ability to make royalty payments which could have a material adverse effect on the Group's royalty related income, business, results of operations, financial condition and ability to pay a dividend.

The Group's mining and exploration interests are speculative

The Group's mining and exploration interests, which mostly consist of equity interests in junior mining companies, are held for the purposes of generating additional royalties and are considered strategic investments. This strategy is unaffected by recent significant fluctuations in prices for mining and exploration equities. However, changes in market conditions may affect the liquidity, value and recoverability of the amounts invested. While the Group reviews this risk, no assurance can be given that the

Group will not be affected by continued volatility or future changes in market conditions. The Group's mining and exploration interests are subject to significant cost pressures, including costs of labour, equipment, electricity, environmental compliance, commodity prices and numerous other capital and operating and production inputs. Such costs will fluctuate in ways that are unpredictable and are beyond the control of the Group. Any increase in the costs incurred by the operators on the applicable properties could result in a decline in the value of the Group's interests. The payment of dividends by certain of these mining and exploration interests to the Group is also subject to restrictions set forth in securities, corporate and other laws and regulations which require that solvency and capital standards be maintained by such companies, among other requirements. The failure to manage successfully the Group's mining and exploration interests may result in a material adverse effect on the Group's business, results of operations, financial condition and ability to pay a dividend.

The Group is exposed to risks associated with the fluctuation of exchange rates

The Group has assets and interests in a number of jurisdictions. Each of the Group's entities prepares its financial information in the currency of the primary economic environment in which it operates. As the Group presents its consolidated financial information in pounds sterling, this creates currency exchange gains and losses on consolidation. The Group's income is mainly in Australian Dollars, while its expenditures are mainly in pounds sterling, and it makes investments in US Dollars. When the Group makes a material commitment, the risk in relation to currency fluctuations is assessed by management and regularly reviewed. Foreign currency transactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailing at the dates of the transactions or subsequent valuations. The Group does not currently hedge its exchange rate risk. The Group's results are therefore exposed to changes in currencies, particularly the Australian Dollar due to the Group's core asset being the Kestrel royalty in Australia. Exchange rate fluctuations may increase the Group's expenses or decrease its revenues which could have a material adverse effect on the Group's business, results of operations, financial condition and ability to pay a dividend.

Certain of the Group's directors and officers serve in similar positions with other companies which may result in a conflict of interest

Certain of the directors and officers of the Group also serve as directors, officers or principals of other companies and enterprises involved in natural resource exploration, development, exploitation and/or financing and, consequently, there exists the possibility for such directors and officers to be in a position of conflict with the best interests of the Group and its shareholders.

The Group may acquire a royalty subject to rights in favour of the operator or third parties that could adversely affect the revenues generated from the asset portfolio

Royalties may be subject to: (i) buy-down right provisions pursuant to which an operator may buy-back all or a portion of the royalty; (ii) pre-emptive rights pursuant to which parties to operating and pre-existing royalty agreements have the right of first refusal or first offer with respect to a proposed sale or assignment of a royalty to the Group; or (iii) claw back rights pursuant to which the seller of a royalty to the Group has the right to re-acquire the royalty. Although most of the Group's royalties do not have any such provisions, it may acquire additional royalties in the future which are subject to these types of provisions, as they are not uncommon particularly in connection with the acquisition of secondary royalties. Holders of these rights may exercise them such that certain royalties might not be available to the Group which may have a material adverse effect on the Group's business, results of operation, financial condition and ability to pay a dividend.

The Group's accounting policies and their interpretation and application may change

The application of accounting standards requires management to make judgements, estimates and assumptions regarding the classification, revaluation and impairment of its royalties and equity investments. The Group currently accounts for its royalties based on the substance of the underlying commercial terms of each royalty and therefore different accounting standards are applied to different types of royalties. The Group's application of accounting standards has previously been reviewed by the Financial Reporting Council (FRC), with respect to both the relevant standard to be applied and the interpretation, assumptions and judgements made thereunder. This review resulted in changes to the application of the Group's

accounting policies and a restatement of the Group's financial statements for prior periods. If the Group changes its accounting policies or their interpretation and application going forward, whether due to changes in IFRS, another review by the FRC or otherwise, the Group may need to restate its financial statements or change the way in which it classifies its royalties and equity investments. Any such restatements or reclassifications could result in changes to, amongst other items, the Group's royalty related income, revaluations and impairments of royalties and equity investments or tax charge and could have a material adverse effect on the Group's business, results of operation, financial condition and ability to pay a dividend.

The Group's tax structure may be challenged by relevant tax authorities

The Group takes tax advice in relation to asset acquisition and disposals and other matters in relation to its global tax arrangements. Key judgements are exercised in relation to revenue recognition and relevant tax exemptions based on the contractual nature of the Group's royalties. Although every care is taken to ensure the highest standards of compliance, there is no certainty that a review by any individual tax authority would concur with all judgements and positions taken by the Group. Any incorrect tax filings could have a material adverse effect on the Group's business, results of operations, financial condition and ability to pay a dividend.

Changes in the local tax regimes governing the jurisdictions where the Group's revenues are deemed to be sourced may be implemented

The Group's permanent establishments in relation to tax domicile are generally in developed countries with sophisticated and transparent tax regimes. Changes to taxation laws in the UK and in countries in which the Group's Royalty Properties are located, including Australia, Spain, Brazil and Canada, or any of the countries in which the Group has or may establish subsidiaries to enter into royalty or streaming arrangements could result in some or all of the Group's profits being subject to increased levels of income tax. Additionally, whilst the Group does not have a permanent establishment in less developed jurisdictions it is still exposed to risks relating to local tax regimes in such jurisdictions. Significant increases in local tax rates, either income tax, sales taxes, thin capitalisation or transfer pricing rules or changes to statutory royalty rates can have a material adverse effect on the economic viability of the projects which the Group has invested in. This could jeopardise the receipt of royalties which could have a material adverse effect on the Group's business, results of operations, financial condition and ability to pay a dividend.

The Group is also exposed to withholding tax on royalty income where the recipient entity is domiciled in a country different to where the income is sourced. Developing countries tend not to have double taxation treaties in place with more developed countries. In this case, the Group is exposed to changes in the withholding tax rates levied by the local government on payments to non-resident persons. Significant changes to withholding tax rates could result in significantly less income being received by the Group which could result in a material adverse effect on the Group's business, results of operations, financial position and ability to pay a dividend.

Standard listing

The Company intends to apply for a transfer of the Company's listing category from a "premium listing (commercial company)" on the Official List and into the category of a "standard listing" (the Proposed Transfer). The Proposed Transfer is the result of ongoing discussions with the UKLA in relation to the appropriate categorization of the Company under the Listing Rules with respect to technical considerations related to the Company's royalty business model. The Proposed Transfer is subject to the UKLA confirming that it meets the eligibility requirements for such a listing and shareholder approval by special resolution or, in the event that those are not obtained, to consider appropriate alternatives. The standard listing regime provides shareholders with a lower level of regulatory protection than that afforded to shareholders in companies with a premium listing on the Official List. Accordingly, investors should be aware that any investment in a company that has a standard listing is likely to carry a higher risk than an investment in a company with a premium listing. Companies with a standard listing are also not eligible for inclusion in the UK series of the FTSE indices.

Risks Related to the Acquisition

In addition to all of the foregoing risks, the Group’s acquisition of the Narrabri Royalty is subject to the following risks:

The Group may be unable to realise the benefits that it believes will result from the Acquisition

Although Narrabri is operated by an established and experienced operator, there can be no guarantee that the Group will realise any or all of the anticipated benefits of the Acquisition, either in a timely manner or at all. The Narrabri Royalty and Narrabri are subject to all of the risks set forth in this “Risk Factors” section which may impact the Group’s ability to realise the benefits it believes will result from the Acquisition. Additionally, as this is a secondary royalty acquisition the Group has only had access to public information and very limited information from the operator. There may, therefore, be unidentified liabilities or defects in relation to Narrabri or the Narrabri Royalty. Additionally, completion of the Acquisition is subject, among other things, to the approval of the Acquisition by Shareholders at the General Meeting, and confirmation by the Treasurer of the Commonwealth of Australia that there is no objection under the Foreign Acquisitions and Takeover Act 1975 (Cth) or Australian foreign investment policy (as appropriate) to the Acquisition. Therefore, there is a risk that completion of the Acquisition may not occur. If the Acquisition fails to complete or if the Group fails to realise some or all of the anticipated Acquisition benefits, it could have a material adverse effect on the Group’s business, results of operations, financial condition and ability to pay a dividend.

The Group will not have full recourse to the seller against all potential liabilities in connection with the Acquisition, whether identified or unidentified

Under the terms of the Acquisition Agreement, the seller will provide the Group with certain indemnities, representations and warranties in relation to the Narrabri Royalty. However, these indemnities, representations and warranties may not cover all potential liabilities associated with the royalty, whether identified or unidentified, and they are in certain circumstances limited in their scope, duration and/or amount. Accordingly, the Group may not have full recourse against, or otherwise recover in full from, the seller in respect of all losses which it may suffer in respect of a breach of those representations or warranties, or in respect of the subject matter of any of the indemnities, or otherwise in respect of the Acquisition. In addition, the Group will be dependent on the ongoing solvency of the seller to the extent it seeks to recover amounts in respect of claims brought under such indemnities, representation and warranties. The Group may put in place an insurance policy to provide some protection in this regard, but this would not provide for full recovery of all losses. To the extent the Group suffers any losses and is unable to recover such losses from the seller, or any applicable insurance policy, it could have a material adverse effect on the Group’s business, results of operation, financial condition and ability to pay a dividend.

Risks Relating to Mining Operations

The Group is subject to many of the same risks as the operators of its Royalty Properties

To the extent that they relate to the production of minerals from, or the continued operation of, the Royalty Properties, the Group will be subject to many of the risks applicable to the operators of such Royalty Properties. These risks include, amongst others, commodity price risk, development risk, production risk and counterparty risk. Narrabri and Kestrel are underground longwall mining operations and may be subject to additional operational risks inherent with these mining methods. Additionally, there is no guarantee that the Group will not become subject to liability, including for injuries or environmental issues, as a party with an interest in a Royalty Property. The likelihood that shareholders of the Group will receive dividends will be dependent, in part, upon the operating performance, profitability, financial position and creditworthiness of the Group’s Royalty Properties and on their ability to pay royalty payments to the Group.

The Group’s Royalty Properties are exposed to risks of changes in government regulation and changing political attitudes and stability in the countries in which they are situated

The Group’s Royalty Properties’ mining, processing, sales, exploration and future development activities are subject to various laws governing prospecting, mining, development, production, royalties and taxes, export licences, import tariffs, labour standards and occupational health, mine safety, toxic substances, land use, water use, land claims of local people and other matters. The Group also has and may, in the future, own

royalties in a number of jurisdictions where the government may seek to be a significant owner of the Royalty Property.

Amendments to current laws and regulations governing operations at the Royalty Properties or more stringent implementation thereof could have a substantial adverse impact on the Group's Royalty Properties and cause increases in exploration expenses, capital expenditures, production costs, tariffs or taxes or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties. For example, countries may change their standards for the import or use of coal, as China did in September 2013 when it announced the Air Pollution Prevention and Control Action Plan banning the sale and the burning of low-grade coal beginning in 2015. In October 2014 China also imposed new coal import tariffs, including a tariff of 3% for anthracite, 3% for coking coal, 6% for bituminous coal and 5% for other coal types. Additionally, certain of the Group's royalties are statutory rather than contractual and to the extent the statutes applicable to such royalties are amended, this could impact the level of royalty payments received from the relevant Royalty Property.

Failure to comply with applicable laws, regulations, agreements and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations or in the exploration or development of mineral properties may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

Although the Directors believe that the Group's activities are currently carried out in accordance with all applicable rules and regulations, the Group generally has limited, if any, access to non-public data regarding the Royalty Properties and the activities of its Royalty Properties. No assurance can be given that its Royalty Properties' activities are currently carried out in accordance with all applicable rules and regulations, or that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail production or development of the Royalty Properties which could have a material adverse effect on the Group's royalty related income, business, results of operations, financial condition and ability to pay a dividend.

The Group's Royalty Properties' operations require various government approvals, licences and permits, and delays or a failure to obtain, maintain or comply with the terms of any such property rights, permits and licences, could result in interruption or closure of operations, exploration or development on the properties

Many of the mineral rights, interests and agreements of the Group and its Royalty Properties are subject to government approvals, licences and permits. The Directors believe that the Group holds all necessary licences and permits under applicable laws and regulations to conduct its activities and believes that it is presently complying in all material respects with the terms of such licences and permits. However, such licences and permits are subject to change in various circumstances. In addition, the granting, renewal and continued effectiveness of such approvals, licences and permits are, as a practical matter, subject to the discretion of the applicable governments or governmental officials. Moreover, the Group generally has limited, if any, access to non-public data regarding the activities of its Royalty Properties and their compliance with the terms of such approvals, licences and permits. No assurance can be given that the Group and its Royalty Properties will be successful in maintaining any or all of the various approvals, agreements, licences and permits in full force and effect without modification or revocation. To the extent such approvals are required and not obtained, the Group's Royalty Properties may be curtailed or prohibited from continuing or proceeding with planned exploration or development of mineral properties, which could have a material adverse effect on the Group's royalty related income, business, results of operations, financial condition and ability to pay a dividend.

The Group's Royalty Properties rely on studies conducted by third party expert consultants which rely on assumptions that may not be accurate

The Group's Royalty Properties rely on consultants who prepare engineering studies and technical reports. The Group's Royalty Properties expected operating costs and expenditures, production schedules, economic

returns and other projections from its or its Royalty Properties' mining projects, which are contained in this Prospectus and in any technical reports, scoping studies, pre-feasibility studies and feasibility studies prepared for or by, or relied on by, the Group's Royalty Properties, are determined and, if applicable, valued based on assumed or estimated future commodity prices, cut-off grades, operating costs, capital costs, expenditures and other factors that may prove to be inaccurate. For example, significant declines in market prices for base or precious metals or other commodities or extended periods of inflation would have an adverse effect on the economic projections set forth in a feasibility study. In addition, material reductions in estimates of mineralisation or increases in capital costs and expenditures, or in the Group's Royalty Properties' ability to maintain a projected budget or renew a particular mining permit, could also have a material adverse effect on projected production schedules and economic returns, and consequently on the Group's business, results of operations, financial condition and ability to pay a dividend.

The Group's Royalty Properties are exposed to risks related to their permitting, construction, development and/or expansion

Many of the Group's Royalty Properties are in the permitting, construction, development and/or expansion stage and such projects are subject to numerous risks including, but not limited to, delays in obtaining equipment, materials and services essential to the construction and development of such projects in a timely manner, delays or inability to obtain required permits, changes in environmental or other regulations, currency exchange rates, labour shortages, cost escalations and fluctuations in metal prices. There can be no assurance that the operators of such Royalty Properties will have the financial, technical and operational resources to complete permitting, construction, development and/or expansion of such Royalty Properties in accordance with current expectations or at all which could result in a delay or reduction in production and consequently could have a material adverse effect on the Group's royalty related income, business, results of operation, financial condition and ability to pay a dividend.

Adequate infrastructure may not be available to develop the Royalty Properties

Mining, processing, development and exploration activities depend, to one degree or another, on adequate infrastructure. Reliable roads, bridges, ports, railways, power sources and water supply are important determinants, which affect capital and operating costs. Unusual or infrequent weather phenomena, sabotage, or government or other interference in the maintenance or provision of such infrastructure could adversely affect the operations in the Royalty Properties and consequently royalty income, which could have a material adverse effect on the Group's business, results of operations, financial condition and ability to pay a dividend.

Production is dependent on operators' employees

Production from the Royalty Properties depends on the efforts of operators' employees. There is intense competition for geologists and persons with mining expertise. The ability of the owners and operators of such properties to hire and retain geologists and persons with mining expertise is key to those operations. Further, relations with employees may be affected by changes in the scheme of labour relations that may be introduced by the relevant governmental authorities in the jurisdictions in which those operations are conducted. Changes in such legislation or otherwise in the relationships of the owners and operators of such Royalty Properties with their employees may result in strikes, lockouts or other work stoppages, any of which could have a material adverse effect on such operations, and consequently the Group's results of operations and financial condition. Some of the Group's Royalty Properties are or in the future may be in countries that have underdeveloped health care systems, with most of the population having only limited access to those, and a range of infectious diseases, which can impact on the availability of employees. If any of these factors cause the owners and operators of such properties to decide to cease production at one or more of the Royalty Properties, such decision could have a material adverse effect on the Group's royalty related income, business, results of operations, financial condition and ability to pay a dividend.

The Royalty Properties are subject to environmental laws and regulations that may increase the costs of doing business and may restrict the operations

All phases of the Group’s Royalty Properties’ operations are subject to environmental laws and regulations in various jurisdictions in which they operate, including laws regulating the removal of natural resources from the ground and the discharge of materials into the environment. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste. For example, production at the Royalty Properties may involve the use of various chemicals, including those which are designated as hazardous substances. The Group’s Royalty Properties may need to address contamination at their properties in the future, either for existing environmental conditions, or for leaks or discharges that may arise from its ongoing operations or other contingencies. Contamination from hazardous substances, either at the Royalty Properties, or other locations for which the Group’s Royalty Properties may be responsible may subject the operator and others to liability for the investigation and remediation of contamination, as well as for claims seeking to recover for related property damage, personal injury or damage to natural resources. Non-compliance with any environmental laws or regulations could result in the loss of permits or licences necessary for the operation of the Royalty Properties.

The Group currently has two reclamation bonds in place in connection with its royalty on the Trefi Royalty Property. The actual costs of reclamation are uncertain and planned expenditures may differ from the actual expenditures required. It is not possible to determine the exact amount that will be required to complete reclamation activities, and the amount that the Group’s Royalty Properties are required to spend could be materially different than current estimates. Reclamation bonds or other forms of financial assurance represent only a portion of the total amount of money that will be spent on reclamation over the life of a mine’s operation. Although the Group’s Royalty Properties typically include estimated reclamation costs in their operational plans, it may in certain circumstances be necessary to revise the planned expenditures and the operating plan for certain projects, in order to fund required reclamation activities. Any additional amounts required to be spent on reclamation may have a material adverse effect on the Group’s business, financial condition, results of operations and ability to pay a dividend.

Environmental legislation is evolving to mandate stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the Group’s and its Royalty Properties’ operations. There is no guarantee that the Group will not become subject to liability for environmental issues as a party with an interest in a Royalty Property. Environmental hazards, which are unknown at the present time and which have been caused by previous or existing owners or operators of properties, may exist on Royalty Properties or the properties on which the Group’s Royalty Properties hold interests, and such hazards may cause the Group’s Royalty Properties’ to incur significant costs that could have a material adverse effect upon the Group’s royalty related income, business, results of operations, financial performance and ability to pay a dividend.

The Group’s Royalty Properties are subject to evolving regulations related to climate change

A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to the potential impacts of climate change. The December 1997 Kyoto Protocol, which expired at the end of 2012, established a set of greenhouse gas emission targets for countries that ratified the Protocol. In 2009, representatives from approximately 170 countries met in Copenhagen, Denmark to attempt to negotiate a successor to the Kyoto Protocol, which resulted in the Copenhagen Accord, a non-binding political consensus rather than a binding international treaty such as the Kyoto Protocol. In 2012, the Doha Amendment to the Kyoto Protocol was adopted to establish the second commitment period under the Kyoto Protocol commencing on 1 January 2013 through to 2020, which has been ratified by 18 countries to date. It requires ratification by 144 countries before it will come into force. None of the US, the UK, Australia, Canada, Spain or Brazil have ratified the Doha Amendment, however it has been ratified by China. Additionally, governments in the jurisdictions in which the Group owns royalties continue to consider and implement legislation in relation to climate change, both in connection with and independently of these international efforts.

Legislation and increased regulation regarding climate change could impose significant costs on the operators of the Group's Royalty Properties, including increased energy, capital equipment, environmental monitoring and reporting and other costs to comply with such regulations. If an operator of a Royalty Property is forced to incur significant costs to comply with climate change regulation or becomes subject to environmental restrictions that limit its ability to continue or expand operations, the Group's revenues from that property could be reduced, delayed or eliminated. Such a reduction, delay or elimination of royalty revenues may result in a material adverse effect on the Company's business, results of operations, financial condition and ability to pay a dividend.

Certain of the Royalty Properties may be subject to the rights of indigenous peoples

Various international and national laws, codes, resolutions, conventions, guidelines, and other materials relate to the rights of indigenous peoples. Certain of the Royalty Properties are located in some areas presently or previously inhabited or used by indigenous peoples. Many of these materials impose obligations on government to respect the rights of indigenous people. Some mandate that government consult with indigenous people regarding government actions which may affect indigenous people, including actions to approve or grant mining rights or permits. The obligations of government and private parties under the various international and national materials pertaining to indigenous people continue to evolve and be defined. The Royalty Properties' current and future operations are subject to a risk that one or more groups of indigenous people may oppose continued operation, further development, or new development of those or other Royalty Properties. Such opposition may be directed through legal or administrative proceedings or protests, roadblocks or other forms of public expression against the Royalty Properties or the operators' activities. Opposition by indigenous people to such activities may require modification of or preclude operation or development of projects or may require the entering into of agreements with indigenous people. Claims and protests of indigenous peoples may disrupt or delay activities of the operators of the Royalty Properties and consequently could have a material adverse effect on the Group's royalty related income, business, results of operation, financial condition and ability to pay a dividend.

Operations in foreign jurisdictions are subject to many risks, which could decrease the Group's revenues

The Group is focused mainly on projects in areas with low political risk, with a strategic investment portfolio which includes projects in stable developed countries such as Spain, Canada and Australia that have defined resources and near-term production. Nonetheless, in certain countries in which the Group or its Royalty Properties have assets and operations, such assets and operations are subject to certain uncertainties, including, among other things, licences, permits, approvals and contracts, changes in royalty regimes and taxation policies, foreign exchange, international monetary fluctuations, currency controls and foreign governmental regulations that favour or require the awarding of contracts to local contractors or require foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. Such legislation could have a material adverse effect on the feasibility of new mine development and the profitability of existing mining operations. In addition, in the event of a dispute arising from foreign operations, the Group or its Royalty Properties may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts in the UK or Canada.

The Group's Royalty Properties are exposed to changes in the taxation laws of multiple jurisdictions

Legislation could be adopted in the jurisdictions in which the Royalty Properties operate that could impose new or larger tax obligations on the Group's existing or future Royalty Properties or their operators. To the extent the obligations are on the operators, such obligations could impact the economic feasibility of the Royalty Property. No assurance can be given that new taxation rules will not be enacted or that existing rules will not be applied in a manner which could result in the Royalty Properties' profits being subject to increased levels of tax, either directly or through withholding tax, which could consequently have a material adverse effect on the Group's business, results of operations, financial condition and ability to pay a dividend.

Risks Related to the Company's Ordinary Shares

The Company's Shareholders will suffer a dilution to their interests in the Company

Following the issue of New Ordinary Shares and the Acquisition Shares, Qualifying Shareholders who take up their full entitlements under the Open Offer will suffer a dilution of 18.2% to their interests in the Company by virtue of the issue of New Ordinary Shares pursuant to the Firm Placing and the Acquisition Shares. Qualifying Shareholders who do not take up any of their entitlements under the Open Offer and Shareholders who are not eligible to participate in the Open Offer will suffer a dilution of approximately 31.5% to their interests in the Company by virtue of the issue of New Ordinary Shares pursuant to the Firm Placing, the Placing and the Open Offer.

The Company may not be able to pay dividends in the future

Payment of dividends on the Ordinary Shares is within the discretion of the Board and will depend upon the Company's future earnings, its cash flows, its acquisition capital requirements, its financial condition and other relevant factors. Additionally, the Company's ability to pay dividends in the future is affected by the generation of distributable profits within its Group and the receipt of sufficient dividends from its subsidiaries. Under English law, a company can only pay cash dividends to the extent that it has distributable reserves and cash available for this purpose. In addition, the Company may not pay dividends if the Directors believe this would cause the Company to be inadequately capitalised or if, for any other reason, the Directors conclude it would not be in the best interests of the Company. Although the Company intends to pay a regular dividend, there can be no assurance that the Company will be in a position to declare dividends due to the occurrence of one or more of the risks described herein.

The Company's Ordinary Shares are subject to price volatility

Securities markets have a high level of price and volume volatility, and the market price of securities of many companies have experienced wide fluctuations in price in recent years which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. Factors unrelated to the Company's financial performance or prospects include macroeconomic developments in Australia, North America and globally, and market perceptions of the attractiveness of particular industries. As a result of any of these factors, the market price of the Company's Ordinary Shares at any given time may not accurately reflect the long term value of the Company.

In the past, following periods of volatility in the market price of a company's securities, shareholders have instituted class action securities litigation against them. Such litigation, if instituted, could result in substantial cost and diversion of management attention and resources, which could significantly harm the Company's profitability, reputation and ability to pay a dividend.

There may be limitations on enforcement of civil judgments against the Company and/or the experts chosen by the Company

Certain of the experts named elsewhere in this Prospectus are residents of countries other than the UK, Canada or the United States. As a result, it may be difficult for investors in the Company's Ordinary Shares to commence legal proceedings in the UK, Canada or the United States against these experts. A substantial portion of the Company's assets are located outside of the UK, Canada and the United States and all of the Company's Directors are residents of countries other than the United States. In addition, it may not be possible for investors in the Company's Ordinary Shares to enforce or recover on judgments against the Company or these experts obtained in courts in the UK, Canada or the United States predicated on the civil liability provisions of securities legislation of the UK, certain of the provinces and territories of Canada or the United States. It may also be difficult for investors in the Company's Ordinary Shares to succeed in a lawsuit in the United States, based solely on violations of Canadian or UK securities laws.

Additional issuance of Ordinary Shares by the Company may dilute the holders of the Company's Ordinary Shares, reduce some or all of the Company's financial measures on a per share basis, reduce the trading price of the Ordinary Shares or impede the Company's ability to raise future capital

The Company may issue additional Ordinary Shares in the future in connection with acquisitions, strategic transactions, financings or for other purposes. To the extent additional Ordinary Shares are issued, the

holders of the Company's Ordinary Shares could be diluted and some or all of the Company's financial measures could be reduced on a per share basis. Additionally, the Company's Ordinary Shares issued in connection with a transaction may not be subject to resale restrictions and, as such, the market price of the Company's Ordinary Shares may decline if certain large holders of the Company's Ordinary Shares or recipients of the Company's Ordinary Shares in connection with an acquisition, sell all or a significant portion of such Ordinary Shares or are perceived by the market as intending to sell Ordinary Shares. In addition, such issuances of Ordinary Shares may impede the Company's ability to raise capital through the sale of additional Ordinary Shares in the future.

Canadian investors may be required to pay United Kingdom stamp taxes on transfer of shares to CDS

Persons wishing to transfer Ordinary Shares held outside CDS into CDS will be required to meet the UK stamp duty (or SDRT if there is an agreement but no instrument) payable by CDS on the transfer and to provide evidence to the UK registrar that such stamp duty or SDRT has been paid in order for the transfer to be registered. Accordingly, until such time as sufficient Ordinary Shares have been transferred to CDS to allow shareholders resident in North America to transfer shares between each other within CDS, a person resident in North America who wishes to acquire a number of Ordinary Shares in excess of the Ordinary Shares available to acquire within CDS will have to acquire such further shares outside of CDS and should then transfer such shares to CDS. Such persons will be required to meet the UK stamp duty (or SDRT if there is an agreement but no instrument) payable by CDS (at 1.5% of the consideration payable for such shares) on the transfer and to provide evidence to the UK registrar that such stamp duty or SDRT has been paid in order for the transfer to be registered. If an existing holder of Ordinary Shares wishes to transfer his Ordinary Shares onto the Canadian register, he will be required to transfer the Ordinary Shares to CDS and pay UK stamp duty (or SDRT if there is an agreement but no instrument) at 1.5% of the open market value of the Ordinary Shares as at the date of transfer. See "Capital Structure – Stamp Duty/Stamp Duty Reserve Tax".

The Ordinary Shares are subject to transfer restrictions and forced transfer provisions in respect of Non-Qualified Holders

The Ordinary Shares are subject to transfer restrictions and forced transfer provisions that are intended to prevent, among other things, the assets of the Company from being deemed to be "plan assets" under the Plan Asset Regulation. In particular, the Board may refuse to register a transfer of Ordinary Shares if the transfer is in favour of any person determined by the Board to be a Non-Qualified Holder. In addition, if any Shareholder is determined by the Company to be a Non-Qualified Holder such Shareholder may be required by the Company to transfer its Ordinary Shares to an eligible transferee within 14 days of receiving notice from the Board; and, if the obligation to transfer is not met, the Company may compulsorily transfer the Ordinary Shares, at a price to be agreed between the Company (exercising its sole discretion) and an eligible purchaser at the time of sale, subject to the restrictions set forth in the Articles.

Investment in the Company by Benefit Plan Investors may be, or result in, a violation of the fiduciary requirements of ERISA and/or the prohibited transaction provisions of ERISA and the Internal Revenue Code

Fiduciaries of Benefit Plan Investors should consider whether the purchase of Ordinary Shares will constitute a violation of their fiduciary obligations under ERISA or a prohibited transaction under ERISA or the Internal Revenue Code. In addition, potential Investors should consider whether the assets of the Company may be or become treated as "plan assets" that are subject to ERISA fiduciary requirements and/or the prohibited transaction rules of ERISA and the Internal Revenue Code. Under the current Plan Asset Regulations, if investments in the Company held by Benefit Plan Investors are deemed to be 'significant' (broadly, if Benefit Plan Investors hold 25 per cent or greater of any class of equity interest in the Company) then the assets of the Company may be deemed to be 'plan assets' of the Benefit Plan Investors for purposes of the fiduciary and prohibited transaction provisions of ERISA and the Internal Revenue Code. While the Company intends to limit the purchase of Ordinary Shares in the New Issue, the Company will be unable to monitor transfers of Ordinary Shares following the New Issue. Accordingly, there can be no assurance that Benefit Plan Investors will never acquire Ordinary Shares after the Issue or, if they do, that the ownership of Ordinary Shares by Benefit Plan Investors will at all times remain below the 25 per cent threshold. If the Company's assets were deemed to constitute "plan assets" within the meaning of the Plan Asset Regulations,

then, among other things, certain transactions that the Company might enter into in the ordinary course of business and operation might constitute non-exempt prohibited transactions, resulting in the imposition of excise taxes and penalties. In addition, any fiduciary of a governmental, church, or non-US plan which is subject to Similar Law that is responsible for such plan's investment in the Ordinary Shares could be liable for any violations of such Similar Law relating to the Company. Potential investors should consult their own counsel regarding the potential implications of ERISA, the prohibited transaction provisions of the Internal Revenue Code and Similar Law in the contexts of an investment in the Company and the investment of the Company's assets. See paragraph 19 of Part 13 (Additional Information – Certain ERISA Considerations).

The Company expects to be treated as a passive foreign investment company

The Company expects to be classified as a passive foreign investment company (a PFIC) for United States federal income tax purposes, which could result in adverse United States federal income tax consequences to US Holders (as defined in paragraph 18 of Part 13 (Additional Information – Certain United States Federal Income Tax Considerations)) of the Ordinary Shares. US Holders may mitigate the adverse United States federal income tax consequences of holding stock in a PFIC by making a mark-to-market election as described in paragraph 18.1 of Part 13 (Additional Information – Certain United States Federal Income Tax Considerations – PFIC Considerations). US Holders should be aware that a qualified electing fund (QEF) election will not be available to mitigate the adverse United States federal income tax consequences of holding stock in a PFIC. Prospective investors should review paragraph 18 of Part 13 (Additional Information – Certain United States Federal Income Tax Considerations) for additional considerations with respect to holding stock of a PFIC.

Holders of Ordinary Shares may be subject to risks associated with taxation, including United States Tax Withholding and Reporting under the Foreign Account Tax Compliance Act ("FATCA")

The United States has enacted rules, commonly referred to as "FATCA," that generally impose a new reporting and withholding regime with respect to certain United States source payments (including dividends and interest), gross proceeds from the disposition of property that can produce United States source interest and dividends and certain payments made by, and accounts maintained with, entities that are classified as financial institutions under FATCA. As currently drafted, the Company does not expect that withholding under FATCA will apply to payments on the Ordinary Shares. However, significant aspects of whether or how FATCA will apply to non-United States issuers like the Company remain unclear, and no assurance can be given that withholding under FATCA will not become relevant with respect to payments on the Ordinary Shares in the future. Even if FATCA were to become relevant to payments on the Ordinary Shares, it would not be applicable earlier than 1 January 2017. Shareholders and prospective investors should consult their own tax advisors regarding the potential impact of FATCA to an investment in the New Ordinary Shares.

Pre-emption rights for US, Canadian and other Overseas Shareholders may be unavailable

In the case of certain increases in the Company's issued share capital, existing holders of Ordinary Shares are generally entitled to pre-emption rights to subscribe for such shares, unless shareholders waive such rights by a resolution at a shareholders' meeting. However, US, Canadian and certain other overseas Shareholders of Ordinary Shares in UK companies are customarily excluded from exercising any such pre-emption rights they may have, unless, in the case of US Holders, a registration statement under the Securities Act is effective with respect to those rights, or an exemption from the registration requirements thereunder is available. The Company does not intend to file any such registration statement, and the Company cannot assure prospective US investors that any exemption from the registration requirements of the Securities Act or applicable non-US securities laws would be available to enable US or Canadian holders of Ordinary Shares or other Shareholders outside the United Kingdom to exercise such pre-emption rights or, if available, that the Company will utilise any such exemption.

IMPORTANT INFORMATION

Presentation of financial information

The Company publishes its financial statements in pounds sterling (£ or sterling). The abbreviation “£m” represents millions of pounds sterling, and references to “pence” and “p” represent pence in the UK.

The financial information presented in a number of tables in this document has been rounded to the nearest whole number or the nearest decimal place. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column. In addition, certain percentages presented in the tables in this document reflect calculations based upon the underlying information prior to rounding, and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers.

International Financial Reporting Standards

As required by the Companies Act and Article 4 of the European Union IAS Regulation and the requirements of the Prospectus Directive and the UK Listing Rules, the historical financial information of the Group is prepared in accordance with IFRS issued by the IASB and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB as adopted by the European Union.

Forward-looking statements

This document contains certain forward-looking statements which may include reference to one or more of the following: the Group’s financial condition, results of operations, cash flows, dividends, financing plans, business strategies, operating efficiencies, budgets, capital and other expenditures, competitive positions, growth opportunities, plans and objectives of management and other matters. 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 reserves and resources described can be profitably produced in the future. Statements in this document that are not historical facts are identified as “forward-looking statements”. Such forward-looking statements, including, without limitation, those relating to future business prospects, revenue, interest costs and income of the Group’s 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 Group including the outlook for the markets and economies in which the Group operates, costs and timing of acquiring new royalties, Mineral Reserve and Resource estimates, estimates of 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, wherever they occur in this document, are necessarily based on assumptions reflecting the views of the Group and involve a number of known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements. Such forward-looking statements should, therefore, be considered in the light of various important factors. A variety of material factors, many of which are beyond the Group’s control, affect the operations, performance and results of the Group, its businesses and investments, and could cause actual results to differ materially from those suggested in any forward-looking statements.

These statements are further qualified by the risk factors disclosed in this document that could cause actual results to differ materially from those in the forward-looking statements. See the section of this document entitled “Risk Factors” for further details. Investors should consider these and other factors, uncertainties and potential events carefully and not put undue reliance on forward-looking statements.

These forward-looking statements speak only as at the date of this document. Nothing in this paragraph is intended to qualify the working capital statement at paragraph 16 of Part 13 (Additional Information) of this document. Except as required by the Listing Rules, the Disclosure and Transparency Rules, the Prospectus Rules, the FCA, the London Stock Exchange, the FSMA or applicable law, the Company does not have any obligation to update or publicly revise any forward-looking statement, whether as a result of new information, further events or otherwise. Except as required by the Listing Rules, the Disclosure and

Transparency Rules, the Prospectus Rules, the FCA, the London Stock Exchange, the FSMA or applicable law, the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur.

Furthermore, this document contains information and statements that are based on certain estimates and forecasts that have been provided to the Group by Kestrel Coal Pty Ltd, the accuracy of which (i) Kestrel Coal Pty Ltd does not warrant and (ii) is beyond the Group's control.

Market, Economic and Industry Data

This Prospectus includes certain market, economic and industry data, which were obtained by the Group from industry publications, data and reports compiled by professional organisations and analysts, data from other external sources and internal surveys conducted by or on behalf of the Directors. The market, economic and industry data sourced from third parties used to prepare the disclosures in this Prospectus have been accurately reproduced and, as far as the Company and the Directors are aware and are able to ascertain from the information provided to them by third parties, no facts have been omitted which would render the reproduced information inaccurate or misleading.

Disclosure of technical information relating to mineral projects

Note to Canadian investors

The scientific and technical information disclosed in this Prospectus relating to the Kestrel coal mine and Narrabri is reliant on certain information that could be obtained from sources in the public domain. Accordingly, the Group is relying on an exemption under part 9, section 9.2 "Exemptions for Royalty or Similar Interests" of NI 43-101 for the purposes of the Kestrel Qualified Person's Report and the Narrabri Qualified Person's Report.

NI 43-101 contains certain requirements relating to the use of Mineral Resource and Mineral Reserve categories of an "acceptable foreign code" (as defined in NI 43-101) in "disclosure" (as defined in NI 43-101) made by the Company with respect to a "Mineral Project" (as defined in NI 43-101), 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 CIM Standards in respect of a Mineral Project. Pursuant to the Exemption Order, the information contained herein with respect to the Four Mile uranium mine, the Ring of Fire project, the Tucano project, the Kestrel mine, the Narrabri mine, the Salamanca uranium project, and the Pilbara project 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 43-101) 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 43-101). 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 (except as otherwise provided herein) no Form 43-101F1 technical report will be filed to support the disclosure based upon such exemption. Alliance Resources Limited, Beadell Resources Limited, Berkeley Resources Limited, Rio Tinto Limited and Whitehaven Coal Limited are all listed on the Australian Securities Exchange and report in accordance with the JORC Code. Cliffs Natural Resources Inc. is listed on the New York Stock Exchange and reports in accordance with SEC Industry Guide 7.

The scientific and technical information disclosed in this Prospectus relating to Dugbe 1 has been reported in accordance with the JORC Code (2012 edition). NI 43-101 requires that, in connection with disclosure of information about a Mineral Resource or Mineral Reserve, Anglo Pacific use (i) only the applicable Mineral Resource and Mineral Reserve categories ascribed to the terms Mineral Resource (and the sub categories Measured, Indicated and Inferred) and Mineral Reserves (and the sub categories Proven and Probable) by

the CIM Standards or (ii) the Mineral Resource and Mineral Reserve categories of an acceptable foreign code if it provides a reconciliation of any material differences between the Mineral Resource and Mineral Reserve categories used and the categories established by the CIM Standards. As there are no material differences between the JORC Code (2012 edition) definitions and the CIM Standards definitions of Mineral Resources (and the sub categories) and Mineral Reserves (and the sub categories), Anglo Pacific is permitted to disclose information about a Mineral Resource or Mineral Reserve using the JORC Code without a reconciliation.

Note to US investors

The technical disclosure in this Prospectus has been prepared in accordance with the requirements of Canadian securities laws, including NI 43-101, in certain cases as modified by the Exemption Order, and the requirements of the Listing Rules and the Prospectus Rules, which differ significantly from the requirements of US securities laws and mineral resource information contained herein is not comparable to similar information regarding mineral reserves disclosed in accordance with the requirements of the SEC. In particular, this Prospectus uses the terms "Measured Resources", "Indicated Resources" and "Inferred Resources". These requirements differ in several significant respects from SEC Industry Guide 7, which governs disclosures of mineral reserves in registration statements and reports filed with the SEC. In particular, Industry Guide 7 does not recognise classifications other than Proven and Probable reserves, and the SEC does not permit mining companies to disclose mineral resources in SEC filings. Under Industry Guide 7, mineralisation may not be classified as a "Reserve" unless the determination has been made that the mineralisation could be economically and legally produced or extracted at the time the reserve determination is made. "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. US investors are cautioned not to assume that all or any part of Measured Resources or Indicated Resources will ever be converted into reserves. US investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable.

General

Certain information in Part 1 (Letter from Chairman of Anglo Pacific Group PLC), Part 2 (Information on the Narrabri Royalty) and Part 5 (Information on the Group) is derived from the Kestrel Qualified Person's Report and the Narrabri Qualified Person's Report which are included in their entirety as Part 10 (Kestrel Qualified Person's Report) and Part 11 (Narrabri Qualified Person's Report) of this Prospectus. While the information in Part 1, Part 2 and Part 5 provides a summary of certain aspects of those reports, such reports include further details, as well as various assumptions and qualifications and should therefore be read in their entirety. The scientific and technical information on which the Kestrel Qualified Person's Report and the Narrabri Qualified Person's Report are based has been reported in accordance with the JORC Code.

The Kestrel Qualified Person's Report and the Narrabri Qualified Person's Report make reference to Inferred Mineral Resources which are preliminary in nature. Inferred resources are considered too geologically speculative to have mining and economic considerations applied to them and to be categorised as Mineral Reserves, and there is no certainty that the reserves, development, production and economic forecasts specified in the Kestrel Qualified Person's Report and the Narrabri Qualified Person's Report will be realised.

For the JORC and CIM Codes resources, Mineral Resources are based on mineral occurrences quantified on the basis of geological data and an assumed cut-off grade, and are divided into Measured, Indicated and Inferred categories reflecting decreasing confidence in geological and/or grade continuity. No allowances are included for dilution and losses during mining, but the reporting of resource estimates carries the implication that there are reasonable prospects for eventual economic exploitation. Resources may therefore be viewed as the estimation stage prior to the application of more stringent economic criteria for reserve definition, such as a rigorously defined cut-off grade and mine design outlines, along with allowances for dilution and losses during mining. Ore Reserves as defined by the JORC and CIM Codes are designated as Proved and Probable and are derived from the corresponding Measured and Indicated resource estimates by including allowances for dilution and losses during mining. The Measured and Indicated Mineral Resources can be reported as either being inclusive of those Mineral Resources modified to produce the Ore Reserves or additional to the

Ore Reserves. The JORC and CIM Codes resource estimates provided in this Prospectus comply with the resource definitions in the JORC and CIM Codes.

The terms “Ore Reserve”, “Proved Ore Reserve”, “Probable Ore Reserve”, “Mineral Resource”, “Measured Mineral Resource”, “Indicated Mineral Resource” and “Inferred Mineral Resource” used in this document are defined in the JORC Code, in accordance with which the estimated mineral resources the subject of the Company’s royalties in the Kestrel coal mine and Narrabri are reported. Prospective investors are cautioned that, except for that portion of Mineral Resources classified as Mineral Reserves, Mineral Resources do not have demonstrated economic value. Inferred Mineral Resources have a high degree of uncertainty as to their existence and as to whether they can be economically or legally mined. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Therefore, prospective investors are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be economically or legally mined, or that it will ever be upgraded to a higher category. Likewise, prospective investors are cautioned not to assume that all or any part of indicated mineral resources will ever be upgraded into ore reserves

Royalties

As a royalty holder, the Company generally has limited, if any, access to properties (or to non-public information relating to such properties) on which the Company holds royalties. Instead, the Company must usually rely principally on publicly available information regarding such properties and mining operations and may not have legal rights to access the properties or to review the data which was used to substantiate the technical or other information which has been publicly disclosed with respect to the property. Therefore, the Company generally is dependent on publicly available information to prepare required disclosures pertaining to properties and mining operations on the properties on which the Company holds royalties and generally has no ability to independently verify such information. Except as otherwise stated herein, the disclosure in this document regarding properties and mining operations on which the Company holds royalties is based solely on information publicly disclosed by the owners or operators of such properties as of the date thereof.

Notice to persons in the United States

The New Ordinary Shares offered by this document have not been and will not be registered under the Securities Act, or under the applicable securities laws of any state in the United States, and the Company has not registered, and does not intend to register as an investment company under the Investment Company Act. Accordingly, the New Ordinary Shares may not be offered, sold, pledged or otherwise transferred directly or indirectly in or into the United States, except that the New Ordinary Shares may be offered and sold (a) in the United States to QIBs within the meaning of Rule 144A, in reliance on the exemption from registration provided by Rule 144A and (b) outside the United States only in “offshore transactions” as defined in, and in reliance on, Regulation S. Shareholders and beneficial owners in the United States will not be able to participate in the Offer unless they meet the legal requirements needed to establish their eligibility to participate in the Offer to the satisfaction of the Company, including making appropriate representations to that effect.

Prospective purchasers are hereby notified that sales of the New Ordinary Shares may be made in reliance upon the exemption from the registration requirements of the Securities Act provided by Rule 144A. Please note that by receiving this document, purchasers shall be deemed by the Company and the Banks to have made, and may further be required to make, certain representations, acknowledgements and agreements set forth herein. Until 40 days after the commencement of the Firm Placing and Placing and Open Offer, an offer, sale or transfer of the New Ordinary Shares by a dealer (whether or not participating in the Firm Placing and Placing and Open Offer) may violate the registration requirements of the Securities Act if such offer, sale or transfer is made otherwise than in accordance with Rule 144A.

Subject to certain exceptions, neither this Prospectus nor the Application Form constitute, or will constitute, or forms part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or acquire, the New Ordinary Shares, to any Shareholder with a registered address in, or who is resident or located in (as applicable), the United States or any Excluded Territory. Notwithstanding the foregoing, the Company

and the Banks reserve the right to offer the New Ordinary Shares in the United States in transactions exempt from, or not subject to, the registration requirements under the Securities Act. The New Ordinary Shares offered outside the United States are being offered in reliance on Regulation S under the Securities Act.

The New Ordinary Shares have not been approved or disapproved by the SEC, any state securities commission in the United States or any other US regulatory authority, nor has any of the foregoing authorities passed upon or endorsed the merits of the offering of the New Ordinary Shares or the accuracy or the adequacy of this Prospectus. Any representation to the contrary is a criminal offence in the United States.

This Prospectus is being furnished by the Company in connection with an offering exempt from the registration requirements of the Securities Act, and is being furnished on a confidential basis only to persons in the United States reasonably believed to be “qualified institutional buyers” under Rule 144A. The information in this Prospectus is confidential and proprietary to the Company and is being submitted to prospective investors in the Company solely for such investors’ confidential use with the express understanding that, without the prior express written permission of the Company, such persons will not release this Prospectus or discuss the information contained herein or make reproductions of or use this prospectus for any purpose other than evaluating a potential investment in the New Ordinary Shares. Any reproduction or distribution of this prospectus in the United States, in whole or in part, and any disclosure of its contents or use of any information herein in the United States for any purpose other than considering an investment in the New Ordinary Shares offered hereby or, for Shareholders, voting on the Resolutions is prohibited, except to the extent such information is otherwise publicly available. Each prospective investor, by accepting delivery of this Prospectus, agrees to the foregoing and further agrees promptly to return to the Company this Prospectus and any other information furnished if the prospective investor elects not to purchase the New Ordinary Shares offered hereby.

Not all Shareholders will be Qualifying Shareholders. Shareholders in the United States or who have registered addresses in, or who are resident or ordinarily resident in, or citizens of, any Excluded Territory may not qualify to participate in the Open Offer and will not be sent an Application Form. For the avoidance of doubt, Overseas Shareholders who receive this document and a Form of Proxy may vote on the Resolutions set out in the Notice of General Meeting, attached at the end of this document, despite being unable to participate in the Firm Placing or the Placing and Open Offer. The attention of Overseas Shareholders is drawn to paragraph 6 of Part 8 (Terms and Conditions of the Open Offer) of this document.

The Company is not required to file periodic reports under Section 13 or 15(d) of the US Securities Exchange Act of 1934, as amended (the Exchange Act). For so long as the Company is not a reporting company under Section 13 or 15(d) of the Exchange Act, or exempt from reporting pursuant to Rule 12g3-2(b) thereunder, the Company will, upon request, furnish to each holder or beneficial owner of New Ordinary Shares that are “restricted securities” (within the meaning of Rule 144(a)(3) under the Securities Act) and to each prospective purchaser thereof designated by such holder or beneficial owner upon request of such holder, beneficial owner or prospective purchaser, in connection with a transfer or proposed transfer of any such New Ordinary Shares pursuant to Rule 144A under the Securities Act or otherwise, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

Each purchaser of New Ordinary Shares offered by this Prospectus, in receiving this Prospectus and making its purchase, will be deemed by the Company and the Banks to have made, and may further be required to make, the representations, acknowledgments and agreements as described under the section “Terms and Conditions of Application under the Offer” in this Prospectus. Any purchaser of New Ordinary Shares in the United States or who is a US Person will be required to execute and return to the Company a US investor letter (a US Investor Letter) in order to effect their purchase of New Ordinary Shares.

Notice to persons in Canada

Shareholders in Canada are not Qualifying Shareholders and as such, Shareholders resident in Canada are not permitted to participate in the Open Offer. The New Ordinary Shares forming part of the Firm Placing and the Placing will not be qualified by a prospectus in Canada and, therefore, New Ordinary Shares will not

generally be distributed in Canada except to accredited investors or otherwise pursuant to an exemption from the Canadian prospectus requirements.

Subject to certain exceptions, Application Forms are not being sent to, and Open Offer Entitlements are not being credited to a stock account in CREST of, any Shareholder with a registered address in Canada. This document is being sent to such Shareholders for information and voting purposes only and does not constitute an offer or invitation to such Shareholders to apply for New Ordinary Shares. The Company reserves the right to treat as invalid any Application Form that appears to the Company or its agents to have been executed in or despatched from Canada, or that provides an address in Canada for the acceptance of New Ordinary Shares, or which does not make the warranty set out in the Application Form to the effect that the person accepting New Ordinary Shares does not have a registered address and is not otherwise located in Canada and is not acquiring New Ordinary Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such New Ordinary Shares in Canada or where the Company believes the offer, sale, resale, transfer, delivery or distribution of such New Ordinary Shares may infringe applicable legal or regulatory requirements. Subject to certain exceptions, the Company will not be bound to allot or issue any New Ordinary Shares to any person with an address in, or who is otherwise located in, Canada in whose favour New Ordinary Shares may be transferred. In addition, the Group reserves the right to reject any MTM instruction sent by or on behalf of any CREST member with a registered address in Canada in respect of the New Ordinary Shares. Any payment made in respect of an Application Form under any of these circumstances will be returned without interest.

Notice to European Economic Area investors

In relation to each member state of the European Economic Area which has implemented the Prospectus Directive (each, a relevant member state) (except for the UK), with effect from and including the date on which the Prospectus Directive was implemented in that relevant member state (the relevant implementation date), no New Ordinary Shares have been offered or will be offered pursuant to the Firm Placing and Placing and Open Offer to the public in that relevant member state prior to the publication of a prospectus in relation to the New Ordinary Shares which has been approved by the competent authority in the relevant member state or, where appropriate, approved in another relevant member state and notified to the competent authority in the relevant member state all in accordance with the Prospectus Directive, except that, with effect from and including the relevant implementation date, offers of New Ordinary Shares may be made to the public in that relevant member state at any time:

(a) to any legal entity which is a qualified investor as defined under the Prospectus Directive;
(b) to fewer than 100 or, if the relevant member state has implemented the relevant provision of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive); or
(c) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of New Ordinary Shares shall result in a requirement for the publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression "an offer of shares to the public" in relation to any New Ordinary Shares in any relevant member state means the communication in any form and by any means of sufficient information on the terms of the Firm Placing and Placing and Open Offer and the New Ordinary Shares to be offered so as to enable an investor to decide to purchase or subscribe for the New Ordinary Shares, as the same may be varied in that member state by any measure implementing the Prospectus Directive in that member state. The expression "Prospectus Directive" means Directive 2003/71/EC (and any amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the relevant member state) and includes any relevant implementing measure in each relevant member state, and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.

In the case of any New Ordinary Shares being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, such financial intermediary will also be deemed to have represented, acknowledged and agreed that the New Ordinary Shares acquired by it in the Firm Placing and Placing and Open Offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired

with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any New Ordinary Shares to the public other than their offer or resale in a relevant member state to qualified investors as so defined or in circumstances in which the prior consent of the Company has been obtained to each such proposed offer or resale.

Notice to Swiss investors

The Company has not been approved by FINMA as a foreign collective investment scheme pursuant to Article 120 of the CISA. The shares of the Company will exclusively be distributed in, into or from Switzerland to regulated qualified investors as defined in Article 10(3)(a) and (b) of the CISA. The shares of the Company will not be listed on SIX or on any other stock exchange or regulated trading facility in Switzerland. This prospectus has been prepared without regard to the disclosure standards for issuance prospectuses under the CISA, Article 652a or 1156 of the CO or the listing rules of SIX or any other exchange or regulated trading facility in Switzerland and therefore does not constitute a prospectus within the meaning of the CISA, Article 652a or 1156 CO or the listing rules of SIX or any other exchange or regulated trading facility in Switzerland. The shares of the Company may not be publicly offered (as such term is defined in the CO) in, into or from Switzerland and may only be distributed in, into or from Switzerland to regulated qualified investors as defined in Article 10(3)(a) and (b) of the CISA. Neither this prospectus nor any other offering or marketing material relating to the Company or shares of the Company may be distributed to unregulated qualified investors or non-qualified investors within the meaning of the CISA, its implementing ordinance and guidelines in or from Switzerland or made available in Switzerland in any manner which would constitute a public offering within the meaning of the CO and all other applicable laws and regulations in Switzerland. Neither this prospectus nor any other offering or marketing material relating to the Company or the shares of the Company have been or will be filed with, or approved by, any Swiss regulatory authority. The investor protection afforded to investors of interests in collective investment schemes under the CISA does not extend to acquirers of the shares of the Company.

Notice to Australian investors

This document is not a prospectus, product disclosure document or other type of disclosure document required to be lodged with the Australian Securities and Investments Commission (ASIC) under Chapter 6D or Chapter 7 of the Australian Corporations Act 2001 (Cth) (Corporations Act) and it has not been, and will not be, lodged with ASIC. Accordingly, this document does not contain the information which would be contained in a prospectus, product disclosure document or other type of disclosure document prepared under the Corporations Act, and does not purport to contain all of the information that may be necessary or desirable to enable a potential investor to properly evaluate and consider an investment in the New Ordinary Shares.

The offer of New Ordinary Shares under this document to investors in Australia will only be made to the extent that such offers of New Ordinary Shares for issue do not need disclosure to investors under Part 6D.2 or Chapter 7 of the Corporations Act. In particular, any person who receives an offer of New Ordinary Shares under this document in Australia represents and warrants to the Company and the Banks that they are a person who falls within an exemption from disclosure to investors in Australia under the Corporations Act, including a "sophisticated investor" within the meaning of section 708(8) of the Corporations Act or a "professional investor" within the meaning of section 708(11) of the Corporations Act, or a "wholesale client" within the meaning of section 761G of the Corporations Act. Any offer of New Ordinary Shares received in Australia is void to the extent that it needs disclosure to investors under the Corporations Act.

Any person to whom New Ordinary Shares are issued pursuant to an exemption from the disclosure requirements provided by the Corporations Act must not, within 12 months after the issue, offer those New Ordinary Shares for sale in Australia unless that offer is itself made pursuant to a disclosure document under Part 6D.2 or Chapter 7 of the Corporations Act or is itself made in reliance on an exemption from the disclosure requirements provided by the Corporations Act.

Enforcement of civil liabilities

The ability of an Overseas Shareholder to bring an action against the Company may be limited under law. The Company is a public limited company incorporated in England. The rights of holders of Ordinary Shares are governed by English law and by the Articles of Association. These rights differ from the rights of shareholders in typical US corporations and some other non-UK corporations.

An Overseas Shareholder may not be able to enforce a judgment against some or all of the Directors and executive officers. All of the Directors and executive officers are residents of the UK. Consequently, it may not be possible for an Overseas Shareholder to effect service of process upon the Directors and executive officers within the Overseas Shareholder's country of residence or to enforce against the Directors and executive officers judgments of courts of the Overseas Shareholder's country of residence based on civil liabilities under that country's securities laws. There can be no assurance that an Overseas Shareholder will be able to enforce any judgments in civil and commercial matters or any judgments under the securities laws of countries other than the UK against the Directors or executive officers who are residents of the UK or countries other than those in which judgment is made. In addition, English or other courts may not impose civil liability on the Directors or executive officers in any original action based solely on the foreign securities laws brought against the Company or the Directors in a court of competent jurisdiction in England or other countries.

Notice to all investors

Any person exercising their entitlement under the Open Offer will be required to represent and warrant to the Company that, except where proof has been provided to the Company's satisfaction that such person's use of the Application Form or such person's acceptance will not result in the contravention of any applicable legal requirement in any jurisdiction and such person is not: (a) acquiring New Ordinary Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such New Ordinary Shares into the United States, any Excluded Territory or any other jurisdiction in which it is unlawful to make or accept an offer to acquire the New Ordinary Shares; (b) resident or located (as applicable) within any of the Excluded Territories; (c) located in any jurisdiction in which it is unlawful to make or accept an offer to acquire the New Ordinary Shares; (d) located within the United States (subject to certain exceptions); (e) subject to certain exceptions, applying for the account of a person who is located in the United States, unless (i) the instruction to apply was received from a person outside the United States and (ii) the person giving such instruction has confirmed that it has the authority to give such instruction and either (A) has investment discretion over such account or (B) is an investment manager or investment company that is applying for the New Ordinary Shares in an "offshore transaction" within the meaning of Regulation S under the Securities Act or (f) resident or otherwise located in Canada and is not acquiring New Ordinary Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such New Ordinary Shares in Canada.

Notwithstanding (a) to (f) above, the Company reserves the right to permit any Qualifying Shareholder to take up his rights on the terms and conditions and subject to the requirements set out in paragraph 2 of Part 8 (Terms and Conditions of the Open Offer) of this document if the Company, in its sole and absolute discretion, is satisfied that the transaction in question will not result in the contravention of any applicable regulatory or legal requirements in any jurisdiction.

The New Ordinary Shares have not been and will not be registered under the relevant laws of any Excluded Territory and may not be offered, sold, taken up, exercised, resold, transferred or delivered, directly or indirectly, within the Excluded Territories, except pursuant to an applicable exemption from registration contained in, and in compliance with, any applicable securities laws.

Any reproduction or distribution of this document, in whole or in part, and any disclosure of its contents or use of any information contained in this document for any purpose other than considering or voting on an investment in Ordinary Shares is prohibited. By accepting delivery of this document, each offeree of the New Ordinary Shares agrees to the foregoing.

Investors should be aware that they may be required to bear the financial risks of this investment for an indefinite period of time.

The distribution of this document and/or the Application Form and/or the transfer of the New Ordinary Shares into jurisdictions other than the UK may be restricted by law. Persons into whose possession these documents come are required to inform themselves about and observe any such restrictions including those set out in the preceding paragraphs. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, subject to certain exceptions, such documents should not be distributed, forwarded to or transmitted in or into the United States or the Excluded Territories or into any other jurisdiction where the extension or availability of the Firm Placing and Placing and Open Offer would breach any applicable law.

All Overseas Shareholders and any person (including, without limitation, a nominee or trustee) who has a contractual or legal obligation to forward this document or any Application Forms, if and when received, or other document to a jurisdiction outside the United Kingdom should read paragraph 6 of Part 8 (Terms and Conditions of the Open Offer) of this document.

The New Ordinary Shares are transferable, except in accordance with, and subject to the restrictions relating to Overseas Shareholders set out in paragraph 6 of Part 8 (Terms and Conditions of the Open Offer) of this document. Subject to certain exceptions, no action has been taken by the Company that would permit an offer of the New Ordinary Shares or possession or distribution of this document or any other offering or publicity material in any jurisdiction where action for that purpose is required, other than in the UK.

No person has been authorised to give any information or make any representations other than those contained in this document and, if given or made, such information or representations must not be relied upon as having been authorised by the Company. Neither the delivery of this document nor any acquisition or sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this document or that the information in this document is correct as at any time subsequent to its date.

In making an investment decision, each investor must rely on his or her own examination, analysis and enquiry of the Company and the terms of the Firm Placing and Placing and Open Offer, including the merits and risks involved.

Each investor also acknowledges that: (i) it has not relied on the Banks or any person affiliated with the Banks in connection with any investigation of the accuracy of any information contained in this document or its investment decision; and (ii) it has relied only on the information contained in this document, and that no person has been authorised to give any information or to make any representation concerning the Company or its subsidiaries or the Ordinary Shares (other than as contained in this document) and, if given or made, any such other information or representation should not be relied upon as having been authorised by the Company or the Banks.

The contents of the websites of the Group do not form part of this document.

Capitalised terms have the meanings ascribed to them in the Definitions section of this document.

Certain information in relation to the Group is incorporated by reference into this document as set out at the end of this document.

Prior issue of 5,544,371 Ordinary Shares

This Prospectus relates not only to the issue of the New Ordinary Shares and the Acquisition Shares but also sets out information in relation to the prior issue of 5,544,371 Ordinary Shares which took place on 5 June 2014 (the Prior Issue). The gross proceeds of the Prior Issue were approximately £10 million and the net proceeds were approximately £9,619,727.47 and the relevant Ordinary Shares were issued as part of a placing of shares to institutional and other investors which was announced on 2 June 2014, at a price of 180 pence per Ordinary Share. The net proceeds were used to fund a portion of the cash consideration payable for the acquisition of the Maracás royalty, further details of which are set out in Part 5 (Information on the Group) of this document.

General Notice

Neither the Company nor the Banks, nor any of their respective representatives, is making any representation to any offeree or purchaser of the New Ordinary Shares regarding the legality of an investment in the Ordinary Shares by such offeree or purchaser under the laws applicable to such offeree or purchaser. Each investor should consult with his or her own advisers as to the legal, tax, business, financial and related aspects of a purchase of the New Ordinary Shares.

Nothing contained in this document is intended to constitute investment, legal, tax, accounting or other professional advice. This document is for your information only and nothing in this document is intended to endorse or recommend a particular course of action. You should consult with an appropriate professional for specific advice rendered on the basis of your situation.

WHERE TO FIND HELP

Part 4 (Questions and Answers about the Firm Placing and Placing and Open Offer) of this document answers some of the questions most often asked by shareholders about open offers. If you have further questions, please telephone the Shareholder Helpline on the numbers set out below. This helpline is available from 8.30 a.m. to 5.30 p.m. on any London Business Day.

Shareholder Helpline

0871 384 2673 (from inside the UK)

+44 (0)121 415 0870 (from outside the UK)

Calls to the Shareholder Helpline number from the UK are charged at 8 pence per minute (excluding VAT) or 10 pence per minute (including VAT) plus network extras. Other service providers' costs may vary. Calls to the Shareholder Helpline number from outside the UK are charged at applicable international rates. Different charges may apply to calls made from mobile telephones and calls may be recorded and monitored randomly for security and training purposes. For legal reasons, the Shareholder Helpline will be unable to give advice on the merits of the Open Offer or to provide financial, tax or investment advice.

DIRECTORS, SECRETARY AND ADVISERS

Directors

Mike Blyth Non-executive Chairman
Julian Treger Chief Executive Officer
Mark Potter Chief Investment Officer
Rachel Rhodes Non-executive Director
Robert Stan Non-executive Director
David Archer Senior Independent Director
Anthony Yadgaroff Non-executive Director

Company Secretary and Registered Office

Peter Mason
1 Savile Row
London
W1S 3JR

Sole Sponsor and Joint Bookrunner

BMO Capital Markets Limited
95 Queen Victoria Street
London
EC4V 4HG

Joint Bookrunner

Macquarie Capital (Europe) Limited
Ropemaker Place
28 Ropemaker Street
London
EC2Y 9HD

Co-Manager

Shard Capital Partners LLP
1 Tudor Street
London
EC4Y 0AH

Legal adviser to the Company as to English, US and Canadian law

Norton Rose Fulbright LLP
3 More London Riverside
London
SE1 2AQ

Norton Rose Fulbright Canada LLP
Royal Bank Plaza
South Tower
Suite 3800
200 Bay Street
P.O. Box 84
Toronto
ON MSJ 274

Auditors and Reporting Accountants

Deloitte LLP
2 New Street Square
London
EC4A 3BZ

Kestrel Qualified Person

Golder Associates (UK) Limited
Attenborough House
Browns Lane Business Park
Stanton-on-the-Wolds
Nottingham
NG12 5BL

Narrabri Qualified Person
Palaris Australia Pty Ltd
PO Box 1225
1/384 Hunter St
Newcastle NSW 2300
Australia

Legal adviser to the Sponsor, Joint Bookrunners and Co-Manager as to English and US law
Linklaters LLP
One Silk Street
London
EC2Y 8HQ

Registrars and Receiving Agent for the Open Offer
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA

Canadian Registrar/Transfer Agent
Equity Financial Trust Company(1)
200 University Avenue
Suite 300
Toronto
ON M5H 4H1

(1) TMX Equity Transfer Services Inc. is operating the transfer agency and corporate trust business in the name of Equity Financial Trust Company for a transitional period.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Record Date for entitlements under the Open Offer	6.00 p.m. on 4 February 2015
Announcement of the Firm Placing and Placing and Open Offer	4 February 2015
Publication of Prospectus, Application Forms (for Qualifying non-CREST Shareholders only) and Forms of Proxy	6 February 2015
Ex-entitlement date for the Open Offer	9 February 2015
Open Offer Entitlements credited to stock accounts in CREST of Qualifying CREST Shareholders	9 February 2015
Latest recommended time and date for requesting withdrawal of Open Offer Entitlements from CREST	4.30 p.m. on 19 February 2015
Latest recommended time and date for depositing Open Offer Entitlements into CREST	3.00 p.m. on 20 February 2015
Latest time and date for splitting Application Forms (to satisfy bona fide market claims)	3.00 p.m. on 23 February 2015
Latest time and date for receipt of Forms of Proxy or submission of proxy votes electronically	10.30 a.m. on 24 February 2015
Latest time and date for receipt of completed Application Forms and payment in full under the Open Offer or settlement of relevant CREST instructions (as appropriate)	11.00 a.m. on 25 February 2015
General Meeting	10.30 a.m. on 26 February 2015
Results of the Firm Placing and Placing and Open Offer announced through an RIS	26 February 2015
Admission and commencement of dealings in the New Ordinary Shares	8.00 a.m. on 27 February 2015
CREST stock accounts expected to be credited for the New Ordinary Shares in uncertificated form	8.00 a.m. on 27 February 2015
Expected date of completion of the Acquisition and issue of the Acquisition Shares	5 March 2015
Share certificates for New Ordinary Shares expected to be despatched	Within 6 Business Days of Admission

Notes:

Each of the times and dates in the above timetable, and mentioned elsewhere in this document, is subject to change, in which event details of the new times and/or dates will be notified to the FCA and the London Stock Exchange and, where appropriate, Qualifying Shareholders. Please note that any Existing Ordinary Shares sold prior to close of business on 8 February 2015, the last date on which the Existing Ordinary Shares trade with entitlement, will be sold to the purchaser with the right to receive Open Offer Entitlements.

If you have any queries on the procedure for application and payment under the Open Offer, you should contact Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA. If you have any questions relating to the procedure for acceptance, please telephone 0871 384 2673 between 8.30 a.m. and 5.30 p.m. (London time) Monday to Friday (except UK public holidays) from within the UK or +44 (0)121 415 0870 if calling from outside the UK. Calls to the 0871 384 2673 number are charged at 8 pence per minute (excluding VAT) or 10 pence per minute (including VAT) plus network extras. Other network providers' costs may vary. Calls to the helpline from outside the UK will be charged at applicable international rates.

Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the Firm Placing, Placing and Open Offer or give any financial, legal or tax advice.

All references to time in this document relate to London time.

FIRM PLACING AND PLACING AND OPEN OFFER STATISTICS

Offer Price
80 pence

Open Offer Entitlement
approximately 0.1944 New Ordinary Shares
for every 1 Existing Ordinary Share

Number of Existing Ordinary Shares in issue as at 5 February 2015
(being the latest practicable date prior to the publication of this document)
116,431,796

Number of New Ordinary Shares to be issued pursuant to the Firm Placing
26,750,000

Number of New Ordinary Shares to be issued pursuant to the
Placing and Open Offer
22,625,000

Total number of New Ordinary Shares
49,375,000

Number of Acquisition Shares
4,135,238

Enlarged Share Capital upon completion of the Firm Placing and Placing
and Open Offer and the Acquisition
169,942,034

New Ordinary Shares as a percentage of the Enlarged Share Capital
29.1 per cent

Gross proceeds of the Firm Placing and Placing and Open Offer
£39.5m

Estimated net proceeds of the Firm Placing and Placing and Open Offer
to be retained by the Company
£35.9m

Estimated expenses of the Firm Placing and Placing and Open Offer
£3.6m

Note: This assumes no further exercise of options under the Share Schemes.

PART 1

LETTER FROM CHAIRMAN OF ANGLO PACIFIC GROUP PLC

(Anglo Pacific Group PLC, incorporated in England and Wales with registered no 00897608)

Registered Office
1 Savile Row
London
W1S 3JR
6 February 2015

Dear Shareholder,

PROPOSED FIRM PLACING OF 26,750,000 NEW ORDINARY SHARES AND PLACING AND OPEN OFFER OF 22,625,000 NEW ORDINARY SHARES AT A PRICE OF 80 PENCE PER SHARE, PROPOSED ACQUISITION OF THE NARRABRI ROYALTY AND NOTICE OF GENERAL MEETING

1 Introduction

On 4 February 2015, the Company announced a proposed share issue, by way of a Firm Placing and Placing and Open Offer, to raise gross proceeds of £39.5 million (approximately £35.9 million, net of expenses) by the issue of 49,375,000 New Ordinary Shares in aggregate at 80 pence per New Ordinary Share. Of the 49,375,000 New Ordinary Shares being issued, 26,750,000 of the New Ordinary Shares will be issued through the Firm Placing and 22,625,000 of the New Ordinary Shares will be issued through the Placing and Open Offer. In each case, the New Ordinary Shares have been conditionally placed with institutional and other investors by the Banks subject, in the case of the Conditional Placed Shares, to clawback to satisfy valid application by Qualifying Shareholders under the Open Offer.

The Offer Price represents a discount of approximately 3.9 per cent to the Closing Price of 83.25 pence per Ordinary Share on 3 February 2015 (being the last Business Day before the announcement of the Firm Placing and Placing and Open Offer) and a discount of approximately 3.6 per cent. to the Closing Price of 83 pence per Ordinary Share on 5 February 2015 (being the latest practicable date prior to publication of this Prospectus).

The Firm Placing and Placing and Open Offer is conditional upon, amongst other things, the passing by Shareholders of the Resolutions at the General Meeting, which is being convened for 10.30 a.m. on 26 February 2015. A summary of the principal conditions is set out in paragraph 3 of Part 8 (Terms and Conditions of the Open Offer) of this document.

Further, on 4 February 2015, the Company announced that it had agreed the terms of the acquisition of the Narrabri Royalty by the Company. The consideration payable under the Acquisition will be partially funded by the proceeds of the Firm Placing and Placing and Open Offer. The New Issue is not conditional on completion of the Acquisition.

The Acquisition constitutes a Class 1 transaction (as defined in Chapter 10 of the Listing Rules) for the Company and requires the approval of Shareholders pursuant to the Listing Rules.

The Acquisition is also conditional on the Resolutions being passed.

The purpose of this document is:

(a) to set out the terms of the Proposals;
(b) to provide you with the background to and reasons for the Proposals; and

(c) to explain why the Board consider that the Proposals and the Resolutions are in the best interests of the Company and the Shareholders as a whole and unanimously recommends that the Shareholders vote in favour of the Resolutions, as they intend to do in respect of their own beneficial holdings.

The terms and conditions of the Placing and Open Offer are set out in full in Part 8 (Terms and Conditions of the Open Offer) of this document.

A special resolution to amend the Articles of Association is also proposed in order to assist the Company with its compliance with US securities and tax laws. See paragraph 13 of this Part 1 for further information.

You are recommended to read the whole of this document and not rely on only part of it. In particular, you are advised to consult the section entitled "Risk Factors" on pages 18 to 37.

2 Background to and reasons for the Acquisition and the New Issue

The Company's primary strategic objective is to assess royalty-based financing opportunities and/or acquire existing royalties under third party ownership in respect of production or near production stage base metals and bulk materials assets.

The Company currently holds a core portfolio of royalties over five mines that are in production and five royalties over projects that are in development or early stage development. However, the majority of the Group's income has historically been derived from the Kestrel royalty.

The Directors believe that the Acquisition will provide the Group with the following benefits:

further diversification of the royalty portfolio, both in terms of commodity and operator risk, and reduced dependence on Kestrel as the Group's primary source of earnings;
additional royalty income that is accretive to the key performance indicators of adjusted earnings per share and dividend cover in 2015;
exposure to an asset that has scope to materially increase production over the short and medium term, which may, in turn, result in a corresponding increase in royalty income for the Group;
the addition of a long-life royalty to the portfolio, with an estimated 22 years of mine life remaining at Narrabri North, and the potential to extend production in the future through the development of Narrabri South;
exposure to a potential recovery in thermal and pulverised coal injection markets, with the price of thermal coal close to a five year low;
an investment with a consistent historical production track record at the Narrabri mine, in an established mining jurisdiction, with the established operational expertise of Whitehaven in developing and operating coal mines; and
an attractive position on the global thermal and pulverised coal injection coal producer cost curve.

The Board considers the Firm Placing and Placing and Open Offer to be a suitable fundraising structure as it will allow access to new investors to broaden the Company's shareholder base, whilst providing existing Shareholders with the opportunity to participate in the fundraising to an extent through the Open Offer.

3 Overview of the Company

Anglo Pacific is a global natural resources royalty company. It is the only company listed on the London Stock Exchange that is focused solely on natural resources royalties. Anglo Pacific's aim is to develop as a leading international diversified royalty company with a portfolio centred on base metals and bulk materials. The Directors will also consider acquiring royalties in other commodities, such as energy, as opportunities arise. The Directors believe that the royalty industry's historical focus on precious metals, particularly gold and silver, has disproportionately channelled investment into only a small part of the mining industry and that the universe of opportunities should be significantly larger in these markets than for precious metals.

The Group’s strategy is to build a diversified royalty portfolio, focusing on accelerating income growth through acquisitions of royalties in cash or near-term cash producing assets. It is an objective of the Group to pay a substantial portion of these royalty revenues to shareholders as dividends.

The Group’s royalty portfolio includes assets covering a range of commodities and includes properties at various stages of development, including early stage exploration and production assets. The Group currently has a core royalty portfolio over 10 mining assets, spread across five continents in commodities including coal, iron ore, gold, vanadium, uranium and chromite, all of which are revenue or production based royalties.

Historically, the majority of revenues have been generated from the Group’s cornerstone asset, a royalty in respect of part of Kestrel, which is operated by Kestrel Coal Pty Ltd, a subsidiary of Rio Tinto, on behalf of the joint venture partners, Queensland Coal Pty Limited (a Rio Tinto subsidiary) (as to 80%) and Mitsui Kestrel Coal Investment Pty Ltd (as to 20%). This royalty is currently producing lower-than-historic royalty payments whilst Rio Tinto mines outside the area that is the subject of the Group’s royalty interest. However, the Group expects substantial royalty growth from this asset during 2015.

A number of factors have led to a de-rating of mining equities and raising capital through conventional sources has become increasingly difficult. Consequently, demand has grown for alternative forms of financing, including royalty financing.

For the financial year ended 31 December 2013, the Group generated royalty related income of £14.7 million, basic loss per share of 39.0 pence, adjusted earnings per share of 8.4 pence and dividend cover of 0.8x and invested £6.4 million in royalty assets, compared to £15.2 million, earnings per share of 10.7 pence, 8.7 pence, 0.9x and £6.9 million, respectively, for the financial year ended 31 December 2012. In the six months ended 30 June 2014, the Group generated royalty related income of £2.6 million, basic loss per share of 20.8 pence and adjusted earnings per share of (0.80) pence and invested £16.3 million in royalty assets, compared to £8.3 million, 25.3 pence, 5.6 pence and £6.4 million, respectively, in the six months ended 30 June 2013.

4 Information on the Narrabri Royalty

The Narrabri Royalty covers the entire Narrabri North underground longwall mine and the adjacent Narrabri South project area held under an exploration title. The Royalty entitles the holder to royalty payments equal to 1% of the FOB price (1) net of GST (goods and services tax) of coal sold for export, or 1% of the FOR price (1) net of GST of coal sold domestically, in respect of all coal mined from any part of the land underlying the royalty area. As of 1 October 2014, Narrabri North had JORC coal Proved Reserves of 57 Mt and JORC coal Probable Reserves of 83 Mt, and the Narrabri coal project area had a JORC Measured Resource of 180 Mt, a JORC Indicated Resource of 380 Mt and a JORC Inferred Resource of 180 Mt (in each case, inclusive of reserves).

Narrabri is located in the Gunnedah Basin of New South Wales, Australia, and is majority owned and operated by Whitehaven. Narrabri is a low cost operation, competitively positioned on the cost curve, with potential to further reduce operating costs as production is increased.

Mining activities commenced at Narrabri North in late June 2010. Underground installation of the longwall was completed in the quarter ended 30 June 2012 with the first longwall coal being cut on 12 June 2012. Narrabri is currently producing high energy export thermal coal and low ash, low sulphur, low phosphorus, mid volatile pulverised coal injection (PCI) coal. In the longer term, Whitehaven is targeting a coal mix of up to 20% PCI and 80% export thermal coal. Given the high quality of Narrabri coal, sales from the mine are not expected to be impacted by the recently announced China’s National Development and Reform Commission guidelines restricting coal imports into China.

(1) FOB and FOR have the meaning prescribed to them in “The International Rules of Interpretation of Trade Terms” as published by the International Chamber of Commerce, Paris, France, latest edition and subsequent updates, or if that is no longer published an equivalent publication. For the avoidance of doubt:

(i) “Free on Board” (FOB) means that the seller delivers when the goods pass the ship’s rail at the named port of shipment.

(ii) “Free on Rail” (FOR) means that the seller delivers when the goods are put onto a railroad car at the named loading point.

Narrabri ROM production and royalty income net of GST in the twelve month period ending 30 June 2014 totalled 5.7 Mt and £2.8 million, respectively(2). Going forwards, Whitehaven is targeting Narrabri ROM production of 6.5 Mt of ROM in FY2015 and FY2016 and 7.0 Mt in FY2017. In December 2014, Whitehaven stated that FY2015 production is expected to exceed previous guidance of 6.5 Mtpa ROM. Narrabri currently has approval to produce up to 8.0 Mtpa of ROM coal.

Whitehaven is actively exploring opportunities to expand production, as well as extend the mine life beyond the estimated reserve based mine life of 22 years. Mine life extension is possible via resources conversion, as well as the potential development of Narrabri South where there are an additional 94 Mt of JORC Reserves, which would provide a mine life extension of approximately 14 years at a production rate of 6.5 Mtpa of ROM coal. Alternatively, in the future Narrabri South may be developed as a parallel operation to Narrabri North.

Part 2 (Information on the Narrabri Royalty) contains more detailed information on the Narrabri Royalty.

The information contained in this section and in Part 2 (Information on the Narrabri Royalty) is principally derived from the Narrabri Qualified Person's Report which is included in its entirety as Part 11 (Narrabri Qualified Person's Report) of this Prospectus.

5 Principal terms of the Acquisition

The purchaser of the Narrabri Royalty will be APG Aus No 7 Pty Ltd, a wholly-owned subsidiary of the Company (the Purchaser), and the seller of the Narrabri Royalty is the Ross Family Trust, a private Australian trust which has held the rights to the Narrabri Royalty since 2008 (the Seller). The consideration for the Acquisition is an up-front payment of US$60 million and the issue of the Acquisition Shares (which, at the Offer Price, have a value equivalent to approximately US$5 million). The Acquisition Shares are subject to lock-in arrangements which, subject to customary exceptions, prohibits their disposal for a period of six months from completion of the Acquisition. The Seller will be entitled to retain any royalty payments made in respect of coal sold and delivered prior to 1 January 2015. Further details of the terms of the Acquisition are set out in Part 3 (Terms and Conditions of the Acquisition) of this Prospectus.

6 Current trading and prospects

The following items of significance have occurred since 30 June 2014:

Royalty related income in the three months ended 30 September 2014 of £0.5 million (the three months ended 30 September 2013: £3.2 million).
Total royalty income for 2014 expected to be in the region of £3.2 – £3.6 million (31 December 2013: £14.7 million).
Non-core mining and exploration realisations of £1.8 million in the third quarter, with a remaining £14.1 million of value in non-core mining and exploration interests and receivables as at 30 September 2014.
Cash and cash equivalents of £9.2 million as at 30 September 2014 (£14.4 million at 30 June 2014) and approximately £8.8 million at 31 December 2014 (£15.7 million at 31 December 2013).
First production and sales achieved at Maracás which is expected to contribute to royalty income during 2015.
First production achieved at Four Mile, with 2015 production expected to be 2.6Mlbs of uranium ore concentrate, but royalty income deferred until 2016.
Continued sales of non-core mining and exploration interests to realise cash, along with the sale of Anglo Pacific’s Panorama coal properties in British Columbia, Canada to Atrum Coal Limited for US$0.5 million of cash, a US$2.0 million promissory loan note, 1.0 million Atrum Coal Limited shares and a retention of a royalty.

(2) 9 months’ 2014 average pounds sterling: Australian Dollar 1.8178.

An impairment charge of £15.4 million for the Isua royalty, an early stage iron ore project owned by London Mining PLC due to London Mining PLC entering into administration.

7 Use of proceeds

The Directors expect the net proceeds of the Firm Placing and Placing and Open Offer, approximately £35.9 million, to be used to provide the majority of funding for the acquisition of the Narrabri Royalty.

8 Dividend policy

The proposed acquisition of the Narrabri Royalty has provided the Board with an opportunity to further review the dividend policy while recognising that the royalty income from Kestrel in the fourth quarter of 2014 was well below the Company’s previous expectations due to lower than expected mining in the Company’s royalty lands at the Rio Tinto Kestrel mine as previously announced.

The Board is considering the recommendation of a final dividend for the year ended 31 December 2014 of 4p following the completion of the acquisition of the Narrabri Royalty.

9 Standard listing

As announced by the Company on 22 December 2014, the Company intends to apply for a transfer of the Company’s listing category from a “premium listing (commercial company)” on the Official List and into the category of a “standard listing” (the Proposed Transfer). The Proposed Transfer is the result of ongoing discussions with the UKLA in relation to the appropriate categorisation of the Company under the Listing Rules with respect to technical considerations related to the Company’s royalty business model. The Proposed Transfer is subject to the UKLA confirming that the Company meets the eligibility requirements for such a listing and shareholder approval by special resolution.

A standard listing fully complies with the relevant European Directives setting common listing standards across all European Union member states. Accordingly, the Company would remain subject to the relevant UK Listing Rules, the UK Disclosure and Transparency Rules and the UK Prospectus Rules. However, it will not be required to comply with the super-equivalent provisions of the Listing Rules which apply to companies with a premium listing. The Company intends to continue to maintain the high standard of corporate governance that is familiar to its long term investors and, where appropriate, will consider compliance on a voluntary basis with certain of the governance practices that go further than the standard listing requirements. Further details will be included in a circular to be sent to Shareholders in due course.

(3) Adjusted earnings represents the Group’s underlying operating performance from core activities. It excludes all valuation movement, non-cash impairment and amortisation charges (which are non-cash IFRS adjustments that arise primarily due to changes in commodity prices), finance costs and any associated deferred tax. It also excludes any profit or loss on non-core asset disposals as these are not expected to be ongoing.

Principal terms of the Firm Placing and Placing and Open Offer

The Company intends to raise £39.5 million (gross) or approximately £35.9 million (net of expenses) through the issue of 49,375,000 New Ordinary Shares by way of a Firm Placing and Placing and Open Offer at 80 pence per New Ordinary Share. Of the 49,375,000 New Ordinary Shares being issued, 26,750,000 of the New Ordinary Shares will be issued through the Firm Placing and 22,625,000 of the New Ordinary Shares will be issued through the Placing and Open Offer. In each case, the New Ordinary Shares have been conditionally placed with institutional and other investors by the Banks subject, in the case of the Conditional Placed Shares, to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer.

Qualifying Shareholders are being offered the right to subscribe for Open Offer Shares in accordance with the terms of the Open Offer. Qualifying Shareholders are not being offered the right to subscribe for the Firm Placed Shares.

The Offer Price was set having regard to the prevailing market conditions and the size of the New Issue. The Offer Price represents a discount of approximately 3.9 per cent to the Closing Price of 83.25 pence per Ordinary Share on 3 February 2015 (being the last business day before the announcement of the Firm Placing and Placing and Open Offer) and a discount of approximately 3.6 per cent. to the Closing Price of 83 pence per Ordinary Share on 5 February 2015 (being the latest practicable date prior to publication of this Prospectus).

The New Issue is expected to result in 49,375,000 New Ordinary Shares being issued (representing, following the issue of the New Ordinary Shares and the Acquisition Shares, approximately 29.1 per cent of the Enlarged Share Capital).

Some questions and answers in relation to the Open Offer, together with details of further terms and conditions of the Open Offer, including the procedure for applications and payment and the procedure in respect of entitlements not taken up, are set out in Part 4 (Questions and Answers about the Firm Placing and Placing and Open Offer) and Part 8 (Terms and Conditions of the Open Offer) of this document and, where relevant, the Application Form.

Firm Placing

The Firm Placees required the Firm Placing in order to give them certainty as to the size of their shareholding in the Company following the fundraising. The Company intends to raise £21.4 million (gross) through a Firm Placing at the Offer Price of 26,750,000 New Ordinary Shares to Firm Placees (representing, following the issue of the New Ordinary Shares and the Acquisition Shares, approximately 15.7 per cent of the Enlarged Share Capital). The Firm Placing is not subject to clawback in respect of valid applications by Qualifying Shareholders pursuant to the Open Offer and is not part of the Placing and Open Offer.

Placing and Open Offer

The Directors recognise the importance of pre-emption rights to Shareholders and consequently 22,625,000 of the New Ordinary Shares are being offered to existing Qualifying Shareholders by way of an Open Offer. The Open Offer provides an opportunity for Qualifying Shareholders to participate in the fundraising by subscribing for their respective Open Offer Entitlements.

The Company intends to raise approximately £18.1 million (gross) through the Placing and Open Offer of 22,625,000 New Ordinary Shares at the Offer Price (representing, following the issue of the New Ordinary Shares and the Acquisition Shares, approximately 13.3 per cent of the Enlarged Share Capital).

As part of the Placing and Open Offer, 22,625,000 of the New Ordinary Shares are being allocated to Conditional Placees who have agreed to subscribe for the Conditional Placed Shares pursuant to the Placing. The Conditional Placed Shares are subject to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer.

Subject to the fulfilment of the conditions set out below and in Part 8 (Terms and Conditions of the Open Offer) of this document, Qualifying Shareholders are being given the opportunity to subscribe for New Ordinary Shares pro rata to their existing shareholdings at the Offer Price on the basis of approximately:

0.1944 New Ordinary Shares for every 1 Existing Ordinary Share

held by Qualifying Shareholders and registered in their name at the close of business on the Record Date. Shareholders holding fewer than 6 Existing Ordinary Shares will have no entitlement to subscribe under the Open Offer.

Fractions of Ordinary Shares will not be allotted and each Qualifying Shareholder's entitlement under the Open Offer will be rounded down to the nearest whole number. Fractional entitlements will be aggregated and will be placed pursuant to the Placing for the benefit of the Company. Accordingly, Qualifying Shareholders with fewer than 6 Existing Ordinary Shares will not have the opportunity to participate in the Open Offer. The aggregate number of Open Offer Shares available for subscription pursuant to the Open Offer will not exceed 22,625,000 of the New Ordinary Shares.

If you have sold or otherwise transferred all of your Existing Ordinary Shares before the ex-entitlement date, you are not entitled to participate in the Open Offer.

Qualifying Shareholders may apply for any whole number of New Ordinary Shares up to their maximum entitlement which, in the case of Qualifying non-CREST Shareholders, is equal to the number of Open Offer Entitlements as shown on their Application Form or, in the case of Qualifying CREST Shareholders, is equal to the number of Open Offer Entitlements standing to the credit of their stock account in CREST. Qualifying Shareholders with holdings of Existing Ordinary Shares in both certificated and uncertificated form will be treated as having separate holdings for the purpose of calculating their Open Offer Entitlements.

No application in excess of a Qualifying Shareholder's Open Offer Entitlement will be met, and any Qualifying Shareholder so applying will be deemed to have applied for his Open Offer Entitlement only.

Application will be made for the New Ordinary Shares to be admitted to the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities and to be listed on the Toronto Stock Exchange. It is expected that Admission will become effective on 27 February 2015 on the London Stock Exchange's main market for Listed Securities and at market open on 27 February 2015 on the Toronto Stock Exchange.

Application has been made for the Open Offer Entitlements to be admitted to CREST. It is expected that the Open Offer Entitlements will be admitted to CREST at 8.00 a.m. on 9 February 2015. The Open Offer Entitlements will also be enabled for settlement in CREST at 8.00 a.m. on 9 February 2015. Applications through the means of the CREST system may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim.

The New Ordinary Shares are not being made available in whole or in part to the public except under the terms of the Open Offer. The Open Offer is not being made to Shareholders in Excluded Territories. Accordingly, Application Forms are not (subject to certain exceptions) being sent to and Open Offer Entitlements are not being credited to Overseas Shareholders.

Shareholders should note that the Open Offer is not a rights issue. Qualifying CREST Shareholders should note that, although the Open Offer Entitlements will be admitted to CREST and be enabled for settlement, applications in respect of entitlements under the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim raised by Euroclear's Claims Processing Unit. Qualifying non-CREST Shareholders should note that the Application Form is not a negotiable document and cannot be traded. Qualifying Shareholders should be aware that in the Open Offer, unlike in a rights issue, any Open Offer Shares not applied for will not be sold in the market or placed for the benefit of Qualifying Shareholders who do not apply under the Open Offer, but will be placed with Conditional Placees pursuant to the Placing Agreement, and the net proceeds will be retained, for the benefit of the Company.

Further information on the Firm Placing and Placing Open Offer and the terms and conditions on which they are made, including the procedure for application and payment, are set out in Part 8 (Terms and Conditions of the Open Offer) of this document and, where relevant, in the Application Form.

For Qualifying non-CREST Shareholders, completed Application Forms, accompanied by full payment in accordance with the instructions in paragraph 4(a) of Part 8 (Terms and Conditions of the Open Offer) of this document, should be returned in the reply-paid envelope, or by post or by hand (during normal business hours only) to Corporate Actions, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom so as to arrive as soon as possible and in any event so as to be received no later than 11.00 a.m. on 25 February 2015. For Qualifying CREST Shareholders, the relevant CREST instructions must have settled as explained in this document by no later than 11.00 a.m. on 25 February 2015.

The Firm Placing and Placing and Open Offer are conditional, inter alia, upon:

(a) the passing of the Resolutions;
(b) Admission becoming effective by not later than 8.00 a.m. on 6 March 2015 (or such later time and/or date as Macquarie Capital, BMO Capital Markets and the Company may agree; and
(c) the Placing Agreement becoming unconditional in all respects.

Accordingly, if any such conditions are not satisfied or, if applicable, waived, the Firm Placing and Placing and Open Offer will not proceed, any Open Offer Entitlements admitted to CREST will thereafter be disabled and application monies under the Open Offer will be refunded to the applicants, by cheque (at the applicant's risk) in the case of Qualifying Non-CREST Shareholders and by way of a CREST payment in the case of Qualifying CREST Shareholders, without interest, as soon as practicable thereafter.

The New Ordinary Shares to be issued pursuant to the Firm Placing and Placing and Open Offer will, following Admission, rank pari passu in all respects with the Existing Ordinary Shares and will carry the right to receive all dividends and distributions declared, made or paid on or in respect of the Ordinary Shares after Admission.

11 Structure of the Firm Placing and Placing and Open Offer

For technical reasons, at the conclusion of the Firm Placing and Placing and Open Offer, the Company will issue the New Ordinary Shares in consideration for the transfer to it by BMO Capital Markets of the issued ordinary shares of Newco held by BMO Capital Markets and the entire issued redeemable preference share capital of Newco, which will result in the Company owning the entire issued share capital of Newco the only assets of which will be its cash resources. These resources will represent the net proceeds of the Firm Placing and Placing and Open Offer. The Company will be able to utilise this amount by redeeming the redeemable preference shares it will then hold in Newco and, during any interim period prior to redemption, by procuring that Newco lends the amount to the Company or another member of the Group.

The structure of the Firm Placing and Placing and Open Offer is expected to have the effect of creating distributable reserves equal to the net proceeds of the Firm Placing and Placing and Open Offer less the par value of the New Ordinary Shares. It should be possible for the Company to declare dividends from the aggregate distributable reserves created by the New Issue (together with any other distributable reserves of the Company) provided that the Company has sufficient cash resources to fund such dividends, the distributable reserves have not otherwise been reduced and the Directors consider it appropriate to declare such dividends.

12 Effect of the Firm Placing and Placing and Open Offer

Upon Admission and following issue of the Acquisition Shares and assuming no further exercise of options under the Share Schemes, the Enlarged Share Capital is expected to be 169,942,034 Ordinary Shares. On this basis, the New Ordinary Shares will represent approximately 29.1 per cent of the Enlarged Share Capital. New Ordinary Shares issued pursuant to the Firm Placing will represent 15.7 per cent of the Company's Enlarged Share Capital and New Ordinary Shares issued pursuant to the Placing and Open Offer will represent 13.3 per cent of the Enlarged Share Capital.

Following the issue of the New Ordinary Shares to be allotted pursuant to the Firm Placing and Placing and Open Offer and the Acquisition Shares, Qualifying Shareholders who take up their full entitlements under the Open Offer will suffer a dilution of approximately 18.2 per cent to their interests in the Company. Qualifying Shareholders who do not take up any of their entitlements under the Open Offer or are not eligible to participate in the Open Offer will suffer a dilution of approximately 31.5 per cent to their interests in the Company.

A pro forma statement of net assets of the Company illustrating the effect of the New Issue on the Company's unaudited net assets as at 30 June 2014, as if it had been undertaken at that date, is set out in Part 12 (Unaudited Pro Forma Financial Information) of this document. This information is unaudited and has been prepared for illustrative purposes only.

13 General Meeting

You will find set out at the end of this document a notice convening the General Meeting to be held at 10.30 a.m. on 26 February 2015 at The Royal Institution of Great Britain, 21 Albemarle Street, London W1S 4BS where the following Resolutions will be proposed:

Resolution 1

An ordinary resolution to authorise the Directors to allot relevant securities as required by section 551 of the Companies Act, provided that such power be limited to the allotment of the New Ordinary Shares pursuant to the Firm Placing and Placing and Open Offer and Acquisition Shares pursuant to the Acquisition up to a total aggregate nominal amount of £1,070,205. This authority will (unless previously revoked or varied by the Company in general meeting) expire on the earlier of the Company's next annual general meeting or the date which is 6 months after the date on which the resolution is passed and is in addition to any like authority previously conferred on the Directors.

Resolution 2

An ordinary resolution to approve the Acquisition and to authorise the Directors to take all necessary steps to give effect to it.

Resolution 3

A special resolution to approve an amendment to the Articles. The purpose of the proposed amendment is to provide the Board with the ability to refuse to register a transfer of any Ordinary Shares if the transfer is in favour of any person, as determined by the Board, to whom a sale or transfer of shares, or whose direct, indirect or beneficial ownership of shares, would or might (i) result in any shares being owned, directly or indirectly, by Benefit Plan Investors or Controlling Persons other than shareholders that acquire shares with the written consent of the Company; (ii) cause the assets of the Company to be considered "plan assets" under the Plan Asset Regulations; (iii) result in Ordinary Shares being owned by a person whose giving, or deemed giving, of the representations as to ERISA and the Internal Revenue Code set forth in the Articles is or is subsequently shown to be false or misleading; or (iv) cause the Company to otherwise be in violation of ERISA, the Internal Revenue Code or any applicable federal, state, local, non-US or other laws or regulations that are substantially similar to section 406 of ERISA or section 4975 of the Internal Revenue Code (any such person a Non-Qualified Holder). In addition, if it comes to the notice of the Company that any shares are owned directly, indirectly or beneficially by any Non-Qualified Holder, the Board may serve a notice upon such Non-Qualified Holder requiring such Non-Qualified Holder to transfer the shares to an eligible transferee within 14 days of such notice; and, if the obligation to transfer is not met, the Company may compulsorily transfer the shares.

The amendment may impact potential Shareholders in the United States. For example, if a Benefit Plan Investor or Controlling Person were to acquire a significant holding of Ordinary Shares without the written consent of the Company, then such Benefit Plan Investor or Controlling Person would be a Non-Qualified Holder under (i) and (ii) above.

Ordinary Resolutions 1 and 2 will require a simple majority of those voting in person or by proxy in favour of the Ordinary Resolutions. Resolution 3 is a special resolution and requires at least 75 per cent. of the votes cast by Shareholders voting in person or by proxy to be in favour in order for it to be passed.

14 Actions to be taken

In respect of the General Meeting

A Form of Proxy for use at the General Meeting is enclosed with this document. Whether or not you intend to be present at the meeting, the Form of Proxy should be completed in accordance with the instructions printed thereon and returned to Equiniti, using the accompanying pre-paid envelope (for use in the UK only) as soon as possible, but in any event so as to be received by no later than 10.30 a.m. on 24 February 2015. The completion and return of a Form of Proxy will not preclude you from attending and voting in person at the General Meeting or any adjournment thereof, if you so wish and are so entitled. If you hold shares in CREST, you may appoint a proxy by completing and transmitting a CREST Proxy Instruction to the Registrar (CREST participant ID RA19), so that it is received by no later than 10.30 a.m. on 24 February 2015. The completion and return of a CREST Proxy Instruction will not preclude you from attending and voting in person at the General Meeting or any adjournment thereof, if you so wish and are so entitled.

If the Form of Proxy is not returned or the CREST Proxy Instruction not submitted by 10.30 a.m. on 24 February 2015, your vote will not count.

In respect of the Open Offer

If you are a Qualifying non-CREST Shareholder (that is, you have a share certificate) with a registered address in a jurisdiction other than an Excluded Territory, you will have received an Application Form together with this document which gives details of your maximum entitlement under the Open Offer (as shown by the number of Open Offer Entitlements allocated to you). If you wish to apply for Open Offer Shares, you should complete the enclosed Application Form in accordance with the procedure for application set out in paragraph 4(a) of Part 8 (Terms and Conditions of the Open Offer) of this document and on the Application Form itself. If you do not wish to apply for any Open Offer Shares, you should not complete or return the Application Form. Shareholders are nevertheless requested to complete and return or submit electronically the Form of Proxy.

If you are a Qualifying CREST Shareholder, you will not have received an Application Form and you will instead receive a credit to your appropriate stock account in CREST in respect of the Open Offer Entitlements representing your maximum entitlement under the Open Offer. You should refer to the procedure for application set out in paragraph 4 of Part 8 (Terms and Conditions of the Open Offer) of this document.

The latest time for applications under the Open Offer to be received is 11.00 a.m. on 25 February 2015. The procedure for application and payment depends on whether, at the time at which application and payment is made, you have an Application Form in respect of your entitlement under the Open Offer or have Open Offer Entitlements credited to your stock account in CREST in respect of such entitlement. The procedures for application and payment are set out in Part 8 (Terms and Conditions of the Open Offer) of this document. Further details also appear in the Application Forms which have been sent to Qualifying non-CREST Shareholders.

Qualifying CREST Shareholders who are CREST-sponsored members should refer to their CREST sponsors regarding the action to be taken in connection with this document and the Open Offer.

If you are in any doubt as to the action you should take, you should immediately seek your own personal financial advice from an appropriately qualified independent professional adviser.

15 Overseas Shareholders

Shareholders who have registered addresses outside the United Kingdom, who are citizens or residents of countries other than the United Kingdom, or who are holding Ordinary Shares for the benefit of such persons (including, without limitation, nominees, custodians and trustees) or have a contractual or legal obligation to

forward this document, the Form of Proxy or the Application Form to such persons, should refer to paragraph 6 of Part 8 (Terms and Conditions of the Open Offer) of this document, which sets out the restrictions applicable to such persons. If you are an Overseas Shareholder, it is important that you read that part of this document. For the avoidance of doubt, Overseas Shareholders who receive this document and a Form of Proxy may vote on the Resolutions set out in the Notice of General Meeting, attached at the end of this document, by returning the Form of Proxy to the Registrars or submitting a proxy vote electronically, by no later than 10.30 a.m. on 24 February 2015, despite being generally unable to participate in the Firm Placing and Placing and Open Offer in accordance with the terms of paragraph 6 of Part 8 (Terms and Conditions of the Open Offer) of this document.

16 Admission to trading and dealing arrangements

An application will be made to the UKLA for the New Ordinary Shares to be admitted to the premium segment of the Official List and to the London Stock Exchange for such shares to be admitted to trading on the main market for listed securities. An application has also been made to the Toronto Stock Exchange for the New Ordinary Shares to be listed. It is expected that Admission will become effective and that dealings in the New Ordinary Shares will commence at 8.00 a.m. on 27 February 2015 on the London Stock Exchange and at market open on 27 February 2015 on the Toronto Stock Exchange.

No application is currently intended to be made for the Existing Ordinary Shares or the New Ordinary Shares to be admitted to listing or dealt in on any other exchange.

Subject to the satisfaction of the conditions of the Firm Placing and Placing and Open Offer, the New Ordinary Shares to be issued under the Firm Placing and Placing and Open Offer will be registered in the names of the person to whom they are issued, either:

in certificated form, with the relevant share certificate expected to be despatched by post, at the applicant's risk, by 9 March 2015; or
in CREST, with delivery (to the designated CREST account) of the New Ordinary Shares applied for expected to take place on 27 February 2015 unless the Company exercises its right to issue New Ordinary Shares in certificated form.

New Ordinary Shares issued into Canada as part of the Firm Placing and Placing cannot, unless permitted under applicable Canadian securities legislation, be traded in Canada for a period of four months and a day from the date of issuance.

The results of the Open Offer will be announced on a Regulatory Information Service.

17 Director participation and Related Party Transaction

The Directors' participation in the Firm Placing and Placing and Open Offer is as follows:

	Number of New Ordinary Shares pursuant to the Firm Placing	Number of New Ordinary Shares pursuant to the Placing
Directors
Julian Treger^{1}	2,933,080	2,429,519
Robert Stan	54,200	45,800
Mike Blyth^{2}	27,100	22,900
Mark Potter	14,905	12,595

This subscription will be made by Kings Chapel International Limited, in which Mr Treger has a beneficial interest.
This subscription will be made by Mike Blyth's spouse.

Of the above, the issue of 5,362,599 New Ordinary Shares to Julian Treger and his connected entities for a consideration of £4,290,079 pursuant to the Firm Placing and the Placing constitutes a smaller related party transaction as defined in Listing Rule 11.1.10.

For the purposes of Listing Rule 13.6.1(8), the following transactions have been entered into between the Company and Julian Treger or any of his associates (for the purposes of the Listing Rules) in the 12 months prior to the date of this document. Payments of £9,605.57 were made to Audley Capital Advisors LLP, a company which Mr Treger is both a director and shareholder, for the reimbursement of travel related expenditure. During the same period, the Group received £48,201.60 from Audley Capital Advisors LLP for the reimbursement of office relocation expenditure. During October 2014, a sub lease was entered into with Audley Capital Advisors LLP whereby the latter agreed to sub let a portion of the Group's new office on arm's length terms. Under the terms of the sub lease, Audley Capital Advisors LLP will be required to pay an amount of £9,875 a quarter in advance to the Company from 23 June 2015.

18 Additional information

You are recommended to read all the information contained in this document and not just rely on the key or summarised information.

19 Risk factors

Shareholders and investors should consider fully the risk factors associated with the business of the Group, the Acquisition and the Company's securities. Your attention is drawn to the section entitled "Risk Factors" set out in pages 18 to 37 (inclusive) of this document.

20 Taxation

Information about United Kingdom taxation is set out in paragraph 17 of Part 13 (Additional Information) of this document. This information is a general guide only. If you are in any doubt as to your tax position, or you are subject to tax in a jurisdiction other than the United Kingdom, you should consult your own independent professional adviser without delay.

21 Recommendations

The Board considers the Proposals and the Resolutions to be in the best interests of the Company and its Shareholders as a whole. The Board unanimously recommends that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting.

The Directors intend to vote in favour of the Resolutions in respect of their own beneficial holdings amounting (as at 5 February 2015, being the latest practicable date prior to the publication of this document) to an aggregate of 1,500,490 Existing Ordinary Shares representing approximately 1.3 per cent of the Existing Ordinary Shares. Each of the Directors is supportive of the fundraising and, as indicated in paragraph 17 above, certain Directors will be participating in the Firm Placing, Placing and Open Offer in respect of, in aggregate, 5,540,099 New Ordinary Shares.

Yours faithfully

Mike Blyth

Chairman

Anglo Pacific Group PLC

PART 2

INFORMATION ON THE NARRABRI ROYALTY

The information contained in this section is principally derived from the Narrabri Qualified Person's Report, which is included in its entirety as Part 11 (Narrabri Qualified Person's Report) of this Prospectus.

Overview of the Narrabri Royalty

The proceeds of the New Issue will be used to partially fund the acquisition of a 1% Gross Revenue Royalty at the Narrabri coal project (the Narrabri Royalty), which is currently operated by Whitehaven Coal Limited (Whitehaven) and its subsidiaries.

The Narrabri Royalty entitles the holder to royalty payments equal to 1% of the:

FOB price¹ net of GST of coal sold for export; or

FOR price² net of GST of coal sold domestically, in respect of all coal mined from any part of the land underlying Exploration Licence 6243 as initially granted.

As shown on page 66, this area includes the area where current underground mining operations take place at Narrabri and no mining operations are expected to occur in the area outside the royalty area.

The Narrabri Royalty is governed by a number of contracts, which are governed by the laws of Queensland and New South Wales (the Narrabri Royalty Contracts). The Narrabri Royalty Contracts provide that a statement indicating the amount of royalty to be paid is to be sent to the royalty holder within 14 days of the end of each quarter, following receipt of which the royalty holder is then to provide an invoice for the relevant amount within 15 days. Payment is then due within 15 days of receipt of that invoice. The Narrabri Royalty Contracts also require the royalty payor to maintain sufficient records to ensure that the royalty can be accurately calculated and entitle the royalty holder or its representatives to inspect such records. In addition, the royalty holder has an annual audit right. The Narrabri Royalty Contracts require each of the Narrabri joint venture partners, as detailed in paragraph 2.1 below, to pay the royalty to the extent of their respective interests in the project. The obligations to pay are several, other than those of the subsidiaries of Korea Resources Corporation and Daewoo International Corporation, whose obligations to pay are joint and several to the extent of their combined percentage.

The Narrabri Royalty is currently owned by a private Australian trust (the Seller), who has held the rights to the Narrabri Royalty since 2008. The figure below shows the historic royalty revenue received by the Seller since underground longwall operations commenced at Narrabri in June 2012. Revenue from the Narrabri Royalty is payable each quarter.

FOB and FOR have the meaning prescribed to them in “The International Rules of Interpretation of Trade Terms” as published by the International Chamber of Commerce, Paris, France, latest edition and subsequent updates, or if that is no longer published an equivalent publication. For the avoidance of doubt:

(i) “Free on Board” (FOB) means that the seller delivers when the goods pass the ship’s rail at the named port of shipment.

(ii) “Free on Rail” (FOR) means that the seller delivers when the goods are put onto a railroad car at the named loading point.

See note 1 above.

Historical Narrabri Royalty Receipts (A$m)

Note:
Royalty receipts are presented excluding GST gross-up. The royalty payor applies a GST gross-up to royalty payments, therefore net royalty receipts to the royalty owner are equal to figures as presented.

2. Narrabri Overview

2.1 Overview

The Narrabri coal project consists of the Narrabri North underground longwall mine and the adjacent Narrabri South project area held under an exploration title (Narrabri or the Project). Narrabri is located in the Gunnedah Basin of New South Wales, Australia, approximately 25 kilometres (km) south to south-east of the town of Narrabri and $10\mathrm{km}$ north to north-west of the village of Baan Baa. Narrabri is owned by a joint venture between Whitehaven $(70\%)$ , J-Power $(7.5\%)$ , EDF Trading $(7.5\%)$ , Yudean Group $(7.5\%)$ and a consortium comprising subsidiaries of Daewoo International Corporation and Korea Resources Corporation $(7.5\%)$ . Whitehaven manages and operates the mine on behalf of the joint venture.

Narrabri coal is sold into premium Asian markets, including Japan and Korea. Whitehaven's joint venture partners at Narrabri have life-of-mine offtake contracts that account for most of the mine output, with these contracts being for an agreed annual tonnage sold at the Newcastle benchmark thermal coal price.

2.2 Narrabri location

Source: Palaris.

The primary lease of the Narrabri operation is ML 1609, which covers an area of 5,298 ha and forms part of the land covered by EL 6243. ML 1609 was issued in January 2008 and site works on the pit top area commenced in April 2008. The Project subsequently received approval in July 2010 to permit the development of a longwall mining operation and associated infrastructure at the Narrabri mine to an approval level of production of 8 Mtpa.

Mining activities commenced at Narrabri North in late June 2010. Underground installation of the longwall was completed in the quarter ended 30 June 2012 with the first longwall coal being cut on 12 June 2012. Narrabri is currently producing high energy export thermal coal and low ash, low sulphur, low phosphorus, mid volatile PCI coal. In the longer term the coal mix is planned to be up to $20\%$ PCI and $80\%$ export thermal coal with expected production from Narrabri North during FY2014 indicating $15.5\%$ PCI and $84.5\%$ thermal coal.

As seen above, site infrastructure supporting mining operations at Narrabri North has been constructed in an area of ML 1609 over which the Narrabri Royalty does not cover. Site infrastructure constructed in the area outside of the Narrabri Royalty area includes the rail loop. No mining operations are expected to occur in the area of ML 1609 outside of the Narrabri Royalty area, and as seen above, the Narrabri North mine plan is within the Narrabri Royalty area in its entirety.

2.3 Geology

The Narrabri North mine and Narrabri South project are located in the Gunnedah Basin, which forms part of the Early Permian to Late Triassic Sydney-Gunnedah-Bowen Basin system that runs for $1,800\mathrm{km}$ in a north-south direction along the east coast of Australia.

The Narrabri mine exploits coal from the Hoskissons seam within the Gunnedah Basin which consists mainly of dull coal, comprising a lower ash basal section and a higher ash upper section. The full seam thickness within ML1609 and EL6243 is in the range 0 to $11.8\mathrm{m}$ . The seam is overlapped in the eastern part of the tenements by the conglomerate at the base of the Digby Formation. Over the area where the seam is being mined, and is planned to be mined, the full seam thickness is generally of the range $5 - 9\mathrm{m}$ . The basal $4.2\mathrm{m}$ section of the coal seam is defined as the working section for underground development within ML1609.

The Hoskissons seam is developed over an approximate area of 7,200 ha and occurs at depths ranging from $140\mathrm{m}$ in the east to $360\mathrm{m}$ in the west. The contained strike length of the coal seam is approximately $16\mathrm{km}$ whereas the down-dip width of the coal seam within the tenements is $4.5\mathrm{km}$ .

No igneous intrusions within the coal seam have been identified to date. Igneous bodies are known to intrude the coal seam in other parts of the basin; such as the "Benelabri" area, some $35\mathrm{km}$ to the southeast.

Narrabri Geology

Source: Pratt (1998)

2.4 Resources and Reserves

Whitehaven reports its Reserves and Resources in accordance with the JORC Code (2012 edition). Resources are reported inclusive of Reserves. Reserves and Resources for Narrabri are shown in the tables below.

2.4.1 Resources

Narrabri Total	Mt
Measured	180
Indicated	380
Inferred	180

Source: Whitehaven Reserves and Resource statement, October 2014.

The coal Resources reported assume the following:

a maximum raw ash content of 35% (ad) for the basal working section;
a minimum mineable seam thickness of 1.8 m; and
no maximum ash was applied to limit resources in the upper section of coal that may be amenable to longwall top coal caving.

No grade parameters for this Resource were published by Whitehaven in their 2014 statement of Coal Resources and Reserves, although this is an implicit requirement of the JORC Code (2012 Edition).

2.4.2 Recoverable Reserves

Narrabri North	Mt
Proved	57
Probable	83

Source: Whitehaven Reserves and Resource statement, October 2014.

Narrabri South	Mt
Proved	–
Probable	94

Source: Whitehaven Reserves and Resource statement, October 2014

No average product yield is stated in the Reserves statement however the average yield from the recoverable coal reserves to realise the marketable coal reserves is 95.0% for Narrabri North and 79.8% for Narrabri South.

2.5 Coal quality

Narrabri produces low ash, low sulphur, low phosphor, high energy export thermal coal as well as a mid volatile PCI coal. In the longer term the coal mix is targeted to be up to 20% PCI and 80% export thermal coal. The table below shows the indicative specifications for coal being produced at Narrabri, as per the New South Wales coal industry profile.

In the last year, coal produced at Narrabri has met or exceeded Newcastle benchmark specifications.

Indicative coal quality

Moisture % (ad)	5.0
Moisture % (ar)	11.0
Ash % (ad)	12.0
Volatile matter % (ad)	28.5
Sulphur % (ad)	0.5
Specific energy (kcal/kg) (gross air dried)	6850

Given the high quality of Narrabri coal, sales from the mine are not expected to be impacted by the recently announced restrictions on the import of coal into China. China's National Development and Reform Commission released new guidelines for coal quality on 15 September 2014, which took effect from 1 January 2015 and extended existing coal quality requirements of maximum 16% ash and 1% sulphur to the Pearl and Yangzte River Deltas (the previous version released in December 2013 applied only to coal sold in Beijing, Tianjin and Hebei). Narrabri's thermal product is well below these restrictions, and therefore sales from the mine are not expected to be impacted by the new guidelines.

From 15 October 2014 China will levy import tariffs on coal set at 3% for anthracite and coking coal (such as PCI), 6% for non-coking coal (such as Newcastle benchmark thermal coal) and 5% for briquettes and other coal-based fuels. Indonesia, the second-biggest exporter of coal, will be exempt from the tariffs due to a free trade agreement between China and the Association of South-eastern Asian Nations. The impact on Whitehaven sales and prices is expected to be limited, with approximately 7% of total Whitehaven FY2014 sales traded with China. On 17 November 2014, Australia and China signed an MOU for the Australia-China Free Trade Agreement which included a provision to eliminate Chinese metallurgical coal import tariffs immediately and remove import tariffs on thermal coal within two years.

2.6 Mining and Processing

Narrabri North and Narrabri South Reserves assume the use of retreat longwall mining. In retreat longwall mining, two parallel sets of roadways (gateroads) are driven from main headings to block out an initial longwall panel. Panel widths can range from 100 to 440 m, and lengths can reach 4 to 5 km. Once the gateroads reach the extent of the longwall panel, a connecting roadway is driven, then the longwall face equipment is installed in this. As the longwall face retreats back to the main headings, the roof of the mined area behind the longwall collapses (goaf). Subsequent longwall blocks are formed up by driving more gateroads.

Narrabri North's original longwall panel width is 305 m (295 m actual face plus development roadways). Longwall panel lengths reach approximately 4 km. While recent studies into widening the face are being pursued, the current mine plans appear to be based on the 305 m face width. Standard development roadways are 3.5 m in height and 5.4 m wide. The longwall face equipment has been designed with a 4.2 m mining height and will only extract the lower section of the Hoskissons Seam which ranges from 4.6 to 10 m in thickness. The longwall and development dimensions are typical of other Australian longwall operations, and a modern longwall, and, in the view of the Narrabri Qualified Person, appear adequate to support projected annual production.

ROM coal is transported from the mining faces via panel conveyors and main trunk conveyors, then to the surface by a drift conveyor which discharges the coal to a ROM stockpile. The ROM stockpile footprint as of October 2013 was approximately 2.5 ha. The stockpile area is to be increased to 4.2 ha according to the Mining Operations Plan, which will result in a claimed stockpile capacity of 400,000 t. This will provide an increased capacity to cater for longwall relocations and coal handling and preparation plant shutdowns.

The drift conveyor capacity is shown as 3,500 tph capacity on a coal flow chart extracted from the Mining Operations Plan. The Narrabri Qualified Person believes it is not unreasonable to expect that the capacity could be increased – depending upon the details of the installation, that may be achieved through a combination of some or all of conveyor drive power, belt speeds, belt strength, belt widths and troughing angles.

The Mining Operations Plan states that ROM coal is recovered from the ROM stockpiles, and passed through a rotary breaker to reduce sizing. Material less than $20\mathrm{mm}$ goes directly to the product coal stockpile, while the remainder goes to the coal preparation plant.

Fine and ultra-fine reject from the coal preparation plant will be dewatered to produce a filter cake which will be disposed of in combination with the coarse coal reject. The washed coal is transferred to the product coal stockpile area (300,000 t capacity) from where it is loaded into train wagons for transport from site. Reject material is trucked to a reject disposal area.

Commissioning of the Narrabri coal handling and preparation plant commenced in August 2011. It was originally operated by a contractor Whitehaven took over operation in February 2014, hoping to reduce costs and operate more efficiently.

According to Whitehaven's JORC Reserves statement, the Narrabri North process generates a PCI coal product from a low cut point that will produce a $7 - 8\%$ ash product and a thermal product of around $12\%$ ash is produced from the screening undersize and the dense media cyclone middlings. It is envisaged that the Narrabri South product range would be restricted to a thermal product of $8 - 15\%$ ash, which would then be blended as required with other Whitehaven products at the port.

An $11\%$ moisture is assumed for the PCI product, and the thermal product moisture will vary, depending upon the proportion of $13\%$ moisture middlings that is added back to the bypass split.

2.7 Historical and forecast production

First longwall coal was cut in June 2012, and since then Narrabri has produced a total of approximately $8.7\mathrm{Mt}$ of saleable coal during FY2013 (c.3.5 Mt) and FY2014 (c.5.2 Mt). The chart below shows annual ROM and saleable production at Narrabri for FY2011 - FY2017F.

Narrabri annual ROM production

Source: Whitehaven quarterly activities reports.

Narrabri annual saleable production

Source: Whitehaven quarterly activities reports.
Note: FY2016 and FY2017 expected saleable production is based on ROM target and the product yield implied from Whitehaven's FY2015 target of 6.5 Mt ROM and 6.2 Mt saleable production.

Production in the second half of FY2014 was impacted by a longwall changeout between panel 2 and panel 3 in February 2014, which took approximately 6 weeks, as well as an issue with the longwall horizon control in April 2014. The horizon control issue was resolved within 3 weeks, and was followed by consecutive monthly production records in May and June, including a record week of 257 Kt ROM production in June.

Whitehaven has publicly stated that it is targeting 6.5 Mt of ROM production in FY2015 and FY2016, and 7.0 Mt in FY2017. In December 2014, Whitehaven stated that it expects FY2015 production to exceed previous guidance of 6.5 Mtpa ROM. Narrabri currently has approval to produce up to 8.0 Mtpa of ROM coal, and Whitehaven is actively exploring opportunities to expand production (see Expansion Potential section below).

During Q1 of FY2015, ROM output was 2.08 Mt and saleable coal was 1.82 Mt, compared to 1.36 Mt ROM production and 1.14 Mt of saleable coal in Q1 FY2014. Annualising the Q1 FY2015 production rate (allowing for a 6 week longwall relocation each year) demonstrates potential current capacity of 7.4 Mtpa.

In Q2 of FY2015, Whitehaven completed the third longwall changeout at Narrabri ahead of schedule and on budget. Mining of longwall 04 commenced on 30 November, and Whitehaven has stated that longwall 04 mining operations are progressing according to plan. Both ROM and saleable coal production during Q2 of FY2015 were lower than the previous corresponding quarter as a result of the six week longwall change during which no ROM coal was produced. During Q2 FY15, ROM production was 0.8 Mt, and saleable coal production was 1.2 Mt. High saleable coal production was due to washing coal stocks build up prior to the longwall changeout.

Narrabri North currently has an estimated mine life of 22 years, assuming that a 6.5 Mtpa ROM production rate is sustained into the future. The Narrabri Qualified Person estimates that should a production rate of 7.15 Mtpa be sustained, the remaining mine life for Narrabri North reduces to 20 years with Narrabri South potentially providing a further 13 years of mine life.

2.8 Position on Global Cost Curve

Narrabri is a low cost operation targeting operating costs of A$59 – 62/t FOB (Whitehaven does not disclose whether this includes government and private royalties) in FY2015 and there is cost reduction potential from future increased production.

On a global benchmark comparison, operations at Narrabri are well positioned on the thermal and PCI cost curve as estimated by the CRU Group. The CRU Group forecasts Narrabri to be located at the mid to low end of the second quartile of the global seaborne thermal coal business costs 2015E cost curve$^{(1)}$, and at the low end of the first quartile of the global seaborne PCI coal business costs 2015E cost curve$^{(1)}$.

Forecast Global Seaborne Thermal Coal Cost Curve Position$^{(1)}$

(Business costs 2015E, US$/tonne)

(1) CRU as of November 2014. Business costs defined as FOB port, including all costs associated with mining and processing, transportation to port, mineral royalties, sustaining capital and interest on working capital adjusted for any realised quality premiums or discounts.

Forecast Global Seaborne PCI Coal Cost Curve Position $^{(1)}$

(Business costs 2015E, US$/tonne)

2.9 Mine Infrastructure

All key infrastructure is currently in place and operational.

The Narrabri project was developed in two major stages, in order to obtain an improved understanding of the geology of the structure and actual mine water inflows before committing fully to a longwall operation.

Stage 1 was the construction and operation of an underground coal mine extracting up to 2.5 Mtpa of ROM coal for export, and construction and operation of mine surface facilities. Site works on the pit top area for the Narrabri North mine commenced on 7 April 2008, and Stage 1 was completed towards the end of 2010. Stage 2 covered progression from underground mining by continuous miner to longwall mining with an annual production rate of up to 8 Mtpa.

Current mine site infrastructure consists of:

site access road
main office, workshop and stores buildings;
electrical sub-station and associated electricity infrastructure
equipment laydown area
rail loop
sewage treatment plant
box cut and mine portals
drift construction to pit bottom
drift and skyline conveyors
coal crushing station
train loadout bin and train loader
water storages and lined evaporation ponds
explosives magazine
coal handling and preparation plant
mine ventilation and gas drainage infrastructure
mine dewatering facilities

As seen below, site infrastructure supporting mining operations at Narrabri North has been constructed in an area of ML1609 over which the Narrabri Royalty does not cover. Site infrastructure constructed in the area outside of the Narrabri Royalty area includes the rail loop. No mining operations are expected to occur in the area of ML1609 outside of the Narrabri Royalty area, and as seen below, the Narrabri North mine plan is within the Narrabri Royalty area in its entirety.

3. Rail and Port Infrastructure

Narrabri is located in a well-established coal mining region with existing rail and port infrastructure providing a path to export markets.

3.1 Rail

Whitehaven has two rail haulage contracts in place extending out to 2026, one with Pacific National, and a second one with Aurizon for rail transport on the Narrabri-Werris Creek-Newcastle Ports line (Gunnedah Basin line), an element of the Hunter Valley Rail Corridor.

The rail track has been upgraded to allow 72 wagon (5,400 t) trains to be utilised, and provide an annual capacity of 11-12 Mtpa to be shared between Whitehaven and neighbouring Idemitsu mines. Average train capacities are forecast to reach 7,634 t in 2015. There are plans to further increase Gunnedah Basin rail line capacity to $\sim 16$ Mtpa.

The current operating contract with Pacific National for 9.5 Mtpa was renegotiated and extended to 2026. The second haulage contract with Aurizon is for an amount of up to 16.0 Mtpa commencing with the start-up of Whitehaven's Maules Creek project. Aurizon has already begun hauling coal from existing operations under a short term spot contract which has assisted Whitehaven in establishing operations in the region ready for the commencement of Maules Creek operations.

3.2 Port

Whitehaven has access to port capacity through both coal terminals at the Port of Newcastle, through an $11\%$ holding in Newcastle Coal Infrastructure Group and long-term capacity allocations through Port Waratah Coal Services. Whitehaven's capacity at Newcastle Coal Infrastructure Group is 6.0 Mtpa, through Whitehaven's equity share of the coal terminal, and its capacity at the Port Waratah

Coal Services terminal is 5.3 Mtpa until FY2015. It is likely that additional capacity will be available if required in the future given both coal terminals are currently being underutilised, with a number of coal miners having long-term allocations in excess of their requirements that necessitate payments for unused capacity under “take or pay” contracts.

There is the potential for further additional available port capacity through the development of a new terminal (T4) at Port Waratah Coal Services, if there is sufficient demand to justify the construction of this infrastructure.

4. Expansion Potential

There are a number of expansion opportunities at Narrabri that have the potential to extend mine life and/or increase the rate of production from the mine. Some of these are already being pursued by Whitehaven, as illustrated by their targets of increasing ROM production from approximately 5.7 Mt in FY2014 to in excess of 6.5 Mt in FY2015 and 7.0 Mt in FY2017.

The extent to which these opportunities can be pursued will depend on a number of factors out of the control of Anglo Pacific, including geo-technical characteristics of the mine as well as the decision of Whitehaven and other joint venture partners at Narrabri on whether to pursue and provide funding to implement these opportunities. In addition, a number of the expansion opportunities below have the potential to increase ROM production beyond the approved 8.0 Mtpa under ML 1609; approval for an amendment of the mining lease would be required in such circumstances.

The sections below outline these potential expansion opportunities.

4.1 Optimised longwall changeout methods

Productivity at Narrabri is expected to improve as the panel lengths increase from approximately 3.5 Mt blocks (panel 3) to 5.0 Mt (panel 4) and eventually to approximately 7.0 Mt (panel 9 onwards), reducing the frequency of longwall changeouts.

4.2 Optimised longwall changeout methods

Since first longwall coal was cut at Narrabri in June 2012, Whitehaven has successfully conducted 3 longwall changeouts, with a changeout time of approximately 6 weeks achieved for the change between LW02 and LW03 in February 2014 and production from the fourth longwall panel (LW04) began on 30 November 2014. Whitehaven is exploring ways in which to reduce longwall changeout times through the optimisation of longwall changeout methods.

4.3 Extension of the longwall face

Whitehaven has conducted studies comparing the merits of implementing top-coal caving technology at Narrabri versus the extension of future longwall panels beyond the current 305 m width (295 m actual face plus 10 m development roadway). The studies indicate that extending the longwall face to approximately 400 m is a lower risk option compared to top-coal caving, and longwall face expansion could potentially increase productivity at Narrabri through a reduction in the number of longwall changeouts and in the total development drivage requirement. No timeframe has been set on the implementation of wider longwall faces at Narrabri, although a decision is expected during H2 FY2015.

Whitehaven expects that increasing the longwall face width to 400 m will enable an increase in annual ROM production of up to 0.8 Mtpa.

4.4 Development of Narrabri South

The tenement area to the south of the existing mining lease (Narrabri South) is considered to contain a similar coal resource to that which lies within the existing mining lease. Subject to sufficient infrastructure capacity, a parallel mine could be developed in this area or the mine life of operations extended by transferring longwall operations to Narrabri South once all coal at Narrabri North has

been mined. The development of Narrabri South has the potential to provide a reserve based mine life extension of approximately 14 years at a production rate of 6.5 Mtpa ROM.

5. Community Support, Health and Safety, and Environmental Responsibility

As part of Whitehaven’s community development commitment, Whitehaven aims to employ a large portion of its workforce from local communities. Currently Whitehaven employs over 655 people, with wages to the 74% that reside locally contributing over A$80 million to the region. Whitehaven also has apprenticeships, traineeships, scholarships and cadetships programmes in place for the benefit of residents in local communities.

Whitehaven provides direct financial support to the communities in which it operates. In FY2014 Whitehaven made donations and provided sponsorships worth over A$150,000 to local community groups, with current initiatives including provision of support to the Westpac Rescue Helicopter as well as to a variety of educational and health orientated projects throughout North Western New South Wales. In addition to donations to local community groups, Whitehaven also makes contributions to infrastructure through planning agreements with local Government authorities. Whitehaven currently has in place Voluntary Planning Agreements with local Councils worth over A$25.5 million to provide for infrastructure and community projects.

Whitehaven is committed to widening the diversity of its workforce through the hiring of women and aboriginal employees, and as part of this has developed an Aboriginal Engagement Strategy to build on and enhance relationships with the Aboriginal community in which it operates. At the Maules Creek project the company worked with more than 190 Registered Aboriginal Parties during FY2014 and facilitated contractor employment of 9 Aboriginal people to work on construction of the project. Whitehaven set a target for 10% of the 400-strong Maules Creek workforce to come from the local aboriginal community within five years and achieved 10% in the first round of recruitment. Whitehaven’s investment in cultural heritage preservation during the year was A$5.4 million, covering activities such as salvage work, Walk-on-Country and archaeological-related cultural heritage work.

In fiscal year 2014, Whitehaven’s total recordable injury frequency rate was 14.06, below the New South Wales Coal Industry average rate of 15.35. A key driver of this improved safety performance came from Whitehaven’s open cut operations, which achieved a total recordable injury free period of four months in FY2014. In addition, with an average of 430 people engaged on site construction activity at Maules Creek, as at 30 June 2014 more than 400,000 hours had been worked with no lost time incidents recorded.

Whitehaven is committed to carrying out rehabilitation activities in a manner that will lead to the development of a post mining landscape that meets the objectives of being safe, stable and non-polluting and exhibits biodiversity values that are generally consistent or better than pre-mining levels. In order to achieve this Whitehaven’s mine sites undertake rehabilitation as soon as possible after disturbance. In total, Whitehaven currently has over 400 hectares under rehabilitation and over 18,000 hectares of biodiversity offsets.

FY2014 saw a continued improvement by Whitehaven in relation to management of surface water, and in particular, wet weather discharge events. Implementation of improved water management practices in FY2013 assisted Whitehaven in FY2014, as evidenced by no non-compliant wet weather discharges for the year.

Narrabri Coal maintains a current and live environmental management strategy consisting of a series of environmental management plans that dictate management and monitoring requirements for the project. Environmental management plans provide the framework for management of environmental risks across the mine. An integral part of the environmental management plans is a programme to effectively monitor and check the environmental performance of the mine. Environmental monitoring currently being undertaken in accordance with the North Narrabri Mine project approval and environmental protection licence includes noise and air quality, ground and surface water, flora and fauna, and subsidence.

6. Whitehaven overview

Whitehaven is a Sydney, Australia based coal producer and developer focused on the emerging Gunnedah Basin, located in the north-west of New South Wales. The Company has been listed on the Australian

Securities Exchange since June 2007, and as at 5 February 2015, had a market capitalisation in excess of approximately A$1.5 billion.

In FY2014, Whitehaven’s managed saleable production was approximately 10.3 Mt.

Whitehaven asset location – Gunnedah Basin

Source: Whitehaven 2014 Annual General Meeting presentation.

Apart from the Narrabri mine, Whitehaven owns three operating open cut mines and the Maules Creek mine, which is currently under construction. First coal from the Maules Creek project was railed in December 2014. Maules Creek will produce metallurgical and thermal coal.

Whitehaven’s three open pit mines are Werris Creek, Tarrawonga, and Roclen. In FY2014, total managed saleable production at these three operations was 5.1 Mt, and Whitehaven achieved record production at Werris Creek and Tarrawonga with managed saleable production of 2.3 Mt and 1.9 Mt respectively.

7. Thermal Coal Market Outlook$^{(3),(4),(5),(6),(7)}$

Global primary energy consumption has been growing steadily over the past 10 years at a compound annual growth rate (CAGR) of 2.5% from 2003 to 2013. China and India have been the largest contributors to global energy consumption growth with a combined CAGR of 8.2% over the same period.

Thermal coal consumption demonstrated strong growth from 2003 to 2013 as China and India, which account for the majority of global thermal coal consumption (59% in 2013), installed significant amounts of new electricity generating capacity. From 2003 to 2013, coal consumption grew by a CAGR of 3.9%, with India and China growing at 8.2%. Japan and South Korea, which together accounted for 84% of Whitehaven’s thermal coal sales in FY 2014, also grew by 2.6% CAGR over the same period.

Over the course of 2014, an abundant supply of thermal coal on the seaborne market and reduced import demand resulted in a steady decline in thermal coal prices. Large Chinese producers, in a bid to compete with new supplies of seaborne thermal coal, repeatedly reduced their offer price to domestic utilities.

Given the currently low spot prices, several higher-cost thermal coal producers have become unprofitable, which is expected to encourage cost-cutting measures and signals the likelihood of further mine closures or

production curtailments over the medium term. This trend is expected to rein in the oversupply of thermal coal seen in the market in recent years.

Despite a recent fall in import demand, thermal coal is expected to remain a key energy source over the medium term due to its relative affordability and reliability. Although demand growth from developed nations is expected to lag, growth in emerging economies should continue robustly. Energy consumption is expected to grow across the board; however thermal coal's relative abundance, low cost and reliability should ensure that it remains an important energy source. Thermal coal is expected to rise by $2\%$ per annum on average until 2019.

Longer term, global thermal coal consumption is forecast to rise by $1.1\%$ on average until 2035. Consumption in OECD countries is expected to fall by $0.9\%$ on average over the same period, but this will be more than offset by growth from non-OECD countries (1.6% on average), led primarily by growth in China and India which will contribute $87\%$ of growth to 2035.

India's consumption of thermal coal is expected to grow significantly in order to support robust economic growth levels. According to the Indian Planning Commission, coal imports will rise from 54 million tons of oil equivalent ("mtoe") in 2011-12 to 150 mtoe in 2021-2022. By 2017, the Indian Planning Commission anticipates an additional 88,537 MW of energy generating capacity is required to support the estimated $9\%$ GDP growth in India. Significant further investment in power generation and transmission capacity will be required to support this, with certain sources even suggesting that India may eventually overtake the United States as the world's second largest consumer of thermal coal. Japan has also announced its commitment to the thermal coal power generation industry. In April 2014, a government energy report designated coal as an important long-term electricity source and gave it equal strategic importance to nuclear energy. India's large power demands, coupled with the Chinese government's desire to protect economic growth and Japan's commitment to thermal coal power generation, are likely to sustain growth in global thermal coal consumption.

Following the implementation of a mandatory cap on coal usage in power generation, the Chinese thermal coal market is currently expected to transition from a period of strong growth to a period of more moderate growth. Given China's position as the world's leading thermal coal consumer, this is likely to curb the high consumption growth rates seen over the past few years. However, the coal usage cap will likely be pegged to expected economic growth and energy demand in the country, protecting consumption levels from falling sharply.

Forecast Electricity Generation by Fuel(7) (in TWh)

Forecast Major Thermal Coal Importers(7) (in million tonnes)

Sources:

BP Statistical Review of World Energy, June 2014
BP Energy Outlook 2035 (January 2014)
Government of India Twelfth Five Year Plan
2014 Annual Report on Energy (Japan's Energy White Paper 2014)
BREE Resources and Energy Quarterly (September 2014)

8. Metallurgical Coal Market Outlook $^{(8),(9)}$

Growth in metallurgical coal production over the last ten years has been propelled by expanding steel consumption in China and India. Metallurgical coal is used in the production of approximately 70% of steel output and as such its outlook is dependent on the health of the steel industry.

The steel market has grown rapidly over the last decade with growth concentrated in China. Global crude steel production grew by a CAGR of 5.2% from 2003 to 2013, with China growing at 13.4% annually to account for 49% of production in 2013. This compares to a CAGR of 0.9% in the rest of the world. However, global apparent steel use is forecast to grow at a lower annual rate of 2.0% in 2014, driven by forecasts of Chinese apparent steel use annual growth rates slowing to 1.0% in 2014 and 0.8% in 2015. Chinese demand is expected to be reined in by a cooling real estate sector, which is reacting to governmental attempts to rebalance the economy.

In addition, the metallurgical coal price has also been under pressure from oversupply, although it is notable that the metallurgical coal market is comparatively less oversupplied than the steel market. Lower prices and high operating costs have removed the incentive for producers to invest in developing new capacity. As such, it is anticipated that there will be limited growth in metallurgical coal supply over the medium term, with several producers being forced to close unprofitable mines and curtail production.

From 2016, the market balance is expected to tighten as China's real estate sector recovers and production curtailments come into effect. Chinese imports of metallurgical coal are projected to increase at 2.7% per annum to 103 million tonnes in 2019, underpinned by an increase in steel production capacity. Despite China being the world's largest producer of metallurgical coal, domestic output is typically lower quality and higher cost, and therefore increased steel production capacity will need to be met through renewed import demand. India is also expanding its steel production capacity in order to support a growing infrastructure sector. India's low domestic supply of metallurgical coal means that it will primarily rely on imported coal to support its growth. The market for PCI coal is also expected to grow as steel producers continue to focus on reducing their operating costs by addressing their usage levels of higher cost metallurgical coal versus lower cost PCI. Steel mills can optimise the use of PCI coal in order to reduce overall cost.

Global seaborne metallurgical coal demand is forecast to grow by 5% in 2014 with China continuing to account for the majority of growth despite a weakened real estate sector. Following that, growth is expected to be 1% per annum on average until 2019 in line with more moderate growth in steel.

Peak Steel Intensity Since 1970$^{(8)}$

(Steel Consumption and GDP per Capita)

Forecast Major Metallurgical Coal Importers$^{(8)}$

(in million tonnes)

Sources:

BREE Resources and Energy Quarterly (September 2014)
World Steel Association (worldsteel)

PART 3 TERMS AND CONDITIONS OF THE ACQUISITION

1. The Acquisition Agreement

The Company, APG Aus No 7 Pty Ltd (the Purchaser), an Australian incorporated, wholly-owned subsidiary of the Company, and the Ross Family Trust, a private Australian family trust (the Seller), have entered into the Acquisition Agreement. Pursuant to the Acquisition Agreement, and subject to the satisfaction (or waiver) of certain conditions (including, amongst other things, the Resolutions being passed), the Purchaser will acquire the Narrabri Royalty from the Seller.

As consideration for the Acquisition, the Purchaser will: (i) make a payment in cash of US$60 million to the Seller and (ii) issue the Acquisition Shares, which at the Offer Price had, on the date of the Acquisition Agreement, an aggregate value of approximately US$5 million to the Seller. The Ordinary Shares are subject to lock-in arrangements that, subject to customary exceptions, prohibits their disposal for a period of six months following completion of the Acquisition.

The Seller has given warranties and undertakings to the Purchaser including, amongst other things, warranties in relation to the Narrabri Royalty and the existing associated royalty documents (the Royalty Documents). The Seller's liability under the warranties is limited to claims that are notified to the Seller prior to 31 January 2016 and to an amount equivalent to the lesser of (i) US$65 million and (ii) an amount equal to the sum of US$60 million, the market value of the Acquisition Shares calculated on a 30-day volume weighted average price on the date that is six months and one day after Completion and the value of any dividends accrued or received on the Acquisition Shares until that date. The Buyer must also put in place an insurance policy to cover the Seller's liability in the event of a warranty claim, which (other than in the event of fraudulent conduct) will be the Buyer's sole recourse in respect of a warranty claim following completion.

As part of the Acquisition, the Royalty Documents will be assigned to the Purchaser. Following completion, the Purchaser will only be entitled to royalty income in respect of coal that has been sold and delivered from and including 1 January 2015 and, to the extent that it receives royalty income in respect of coal sold and delivered prior to 1 January 2015, it is required to pay such amounts to the Seller.

The Company has agreed to guarantee the due and punctual performance of the obligations of the Buyer under the Acquisition Agreement. The Acquisition is also conditional on the Group being able to drawdown on the Revolving Credit Facility (for more information on which please see paragraph 14 of Part 13 (Additional Information)).

PART 4 QUESTIONS AND ANSWERS ABOUT THE FIRM PLACING AND PLACING AND OPEN OFFER

The questions and answers set out in this Part 4 (Questions and Answers about the Firm Placing and Placing and Open Offer) are intended to be in general terms only and, as such, you should read Part 8 (Terms and Conditions of the Open Offer) of this document for full details of what action you should take. If you are in any doubt as to what action you should take, you are recommended to seek immediately your own financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser, duly authorised under the FSMA, if you are resident in the UK or, if not, from another appropriately authorised independent financial adviser.

This Part 4 (Questions and Answers about the Firm Placing and Placing and Open Offer) deals with general questions relating to the Firm Placing and Placing and Open Offer and more specific questions relating to Ordinary Shares held by persons resident in the UK who hold their Ordinary Shares in certificated form only. If you are an Overseas Shareholder, you should read paragraph 6 of Part 8 (Terms and Conditions of the Open Offer) of this document and you should take professional advice as to whether you are eligible and/or you need to observe any formalities to enable you to take up any entitlements. If you hold your Ordinary Shares in uncertificated form (that is, through CREST), you should read Part 8 (Terms and Conditions of the Open Offer) of this document for full details of what action you should take. If you are a CREST sponsored member, you should also consult your CREST sponsor. If you do not know whether your Ordinary Shares are in certificated or uncertificated form, please call the Shareholder Helpline between 8.30 a.m. and 5.30 p.m. on any London Business Day on 0871 384 2673 (from inside the UK) or +44 (0)121 415 0870 (from outside the UK). Calls to the Shareholder Helpline number from the UK are charged at 8 pence per minute (excluding VAT) or 10 pence per minute (including VAT) plus network extras. Other service providers' costs may vary. Calls to the Shareholder Helpline number from outside the UK are charged at applicable international rates. Different charges may apply to calls made from mobile telephones and calls may be recorded and monitored randomly for security and training purposes. For legal reasons, the Shareholder Helpline will be unable to give advice on the merits of the Firm Placing, Placing and Open Offer or to provide financial, tax or investment advice.

Timetable dates in this Part 4 (Questions and Answers about the Firm Placing and Placing and Open Offer) have been included on the basis of the expected timetable set out on page 50.

1 What is an open offer?

An open offer is a way for companies to raise money. Companies usually do this by giving their existing shareholders a right to acquire further shares at a fixed price in proportion to their existing shareholdings (the open offer) and providing for an underwriter to acquire any shares not bought by the Company's existing shareholders.

The Open Offer is an invitation by the Company to Qualifying Shareholders to apply to acquire approximately 0.1944 Open Offer Shares for every 1 Existing Ordinary Share at a price of 80 pence per Open Offer Share. In this document, this is referred to as your "Open Offer Entitlement". If you hold Ordinary Shares on the Record Date or have a bona fide market claim, other than, subject to certain exceptions, where you are a Shareholder either located, or with a registered address, in an Excluded Territory, you will be entitled to buy Open Offer Shares under the Open Offer.

The Open Offer is being made on the basis of approximately 0.1944 Open Offer Shares for every 1 Existing Ordinary Share held by Qualifying Shareholders on the Record Date. If your Open Offer Entitlement is not a whole number, you will not be entitled to buy an Open Offer Share in respect of any fraction of an Open Offer Share and your entitlement will be rounded down to the nearest whole number. If you hold fewer than 6 Existing Ordinary Shares, you will not receive an Open Offer Entitlement.

Applications by Qualifying Shareholders will be satisfied in full up to the amount of their Open Offer Entitlement.

Qualifying Shareholders should be aware that the Open Offer is not a rights issue. Qualifying Non-CREST Shareholders should also note that their Application Forms are not negotiable documents and cannot be traded. Qualifying CREST Shareholders should note that, although the Open Offer Entitlements will be credited to CREST and be enabled for settlement, applications in respect of Open Offer Entitlements may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim raised by Euroclear’s Claims Processing Unit. Open Offer Shares not applied for under the Open Offer will not be sold in the market for the benefit of those who do not apply to take up their Open Offer Entitlements. Qualifying Shareholders who do not apply to take up Open Offer Shares will have no rights under the Open Offer.

2 What is a firm placing or a placing? Am I eligible to participate in the Firm Placing or the Placing?

A firm placing or placing is where specific investors procured by a company’s advisers agree to subscribe for placed shares. The Firm Placed Shares do not form part of the Open Offer. Unless you are a Placee, you may not participate in the Firm Placing or the Placing.

3 I hold my Existing Ordinary Shares in certificated form. How do I know whether I am eligible to participate in the Open Offer?

If you receive an Application Form and, subject to certain exceptions, are not a shareholder either located, or with a registered address, in an Excluded Territory, then you should be eligible to participate in the Open Offer as long as you have not sold all of your Existing Ordinary Shares before 8.00 a.m. on 9 February 2015 (the time when the Existing Ordinary Shares were marked “ex-entitlement” by the London Stock Exchange).

4 I hold my Existing Ordinary Shares in certificated form. How do I know how many Open Offer Shares I am entitled to take up?

If you hold your Existing Ordinary Shares in certificated form and, subject to certain exceptions, do not have a registered address and are not located in any Excluded Territory, you will be sent an Application Form that shows:

how many Existing Ordinary Shares you held at the close of business on the Record Date;
how many Open Offer Shares are comprised in your Open Offer Entitlement; and
how much you need to pay if you want to take up your right to buy the maximum number of Open Offer Shares under your Open Offer Entitlement.

If you would like to apply for any of or all of the Open Offer Shares comprised in your Open Offer Entitlement, you should complete the Application Form in accordance with the instructions printed on it and the information provided in this document. Completed Application Forms should be posted, along with a cheque or banker’s draft drawn in the appropriate form, in the accompanying reply-paid envelope or returned by post or by hand (during normal office hours only), to Corporate Actions, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom (who will act as Receiving Agent in relation to the Open Offer) so as to be received by no later than 11.00 a.m. on 25 February 2015, after which time Application Forms will not be valid.

5 I hold my Existing Ordinary Shares in certificated form and am eligible to receive an Application Form. What are my choices in relation to the Open Offer?

(a) If you do not want to take up your Open Offer Entitlement

If you do not want to take up your Open Offer Entitlement, you do not need to do anything. In these circumstances, you will not receive any Open Offer Shares. You will also not receive any money when the Open Offer Shares you could have taken up are sold, as would happen under a rights issue. You cannot sell your Application Form or your Open Offer Entitlement to anyone else.

If you do not take up your Open Offer Entitlement then following the issue of the New Ordinary Shares pursuant to the Firm Placing and Placing and Open Offer and the Acquisition Shares, your interest in the Company will be diluted by approximately 31.5 per cent.

(b) If you want to take up some but not all of the Open Offer Shares under your Open Offer Entitlement

If you want to take up some but not all of the Open Offer Shares under your Open Offer Entitlement, you should write the number of Open Offer Shares you want to take up in Box 4 of your Application Form; for example, if you are entitled to take up 50 shares but you only want to take up 25 shares, then you should write “25” in Box 4. To work out how much you need to pay for the Open Offer Shares, you need to multiply the number of Open Offer Shares you want (in this example, “25”) by £0.80, which is the price in pounds sterling of each Open Offer Share (giving you an amount of £20 in this example). You should write this total sum in Box 5, rounding down to the nearest whole pence and this should be the amount your cheque or banker’s draft is made out for. You should then return the completed Application Form, together with a cheque or banker’s draft for that amount, in the accompanying reply-paid envelope or return by post or by hand (during normal office hours only), to Corporate Actions, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom (who will act as Receiving Agent in relation to the Open Offer) so as to be received by no later than 11.00 a.m. on 25 February 2015, after which time Application Forms will not be valid.

All payments must be in pounds sterling and made by cheque or banker’s draft made payable to “Equiniti Limited re: Anglo Pacific Group PLC Open Offer” and crossed “A/C Payee Only”. Cheques or banker’s drafts must be drawn on a bank or building society or branch of a bank or building society in the United Kingdom or Channel Islands which is either a settlement member of the Cheque and Credit Clearing Company Limited or the CHAPS Clearing Company Limited or which has arranged for its cheques and banker’s drafts to be cleared through the facilities provided by any of those companies or committees and must bear the appropriate sort code in the top right-hand corner and must be for the full amount payable on application. Third-party cheques may not be accepted with the exception of building society cheques or banker’s drafts where the building society or bank has confirmed the name of the account holder and the number of an account held in the applicant name at the building society or bank by stamping or endorsing the cheque or draft. The account name should be the same as that shown on the application. Post-dated cheques will not be accepted.

Cheques or banker’s drafts will be presented for payment upon receipt. The Company reserves the right to instruct Equiniti to seek special clearance of cheques and banker’s drafts to allow the Company to obtain value for remittances at the earliest opportunity. No interest will be paid on payments made before they are due. It is a term of the Open Offer that cheques shall be honoured on first presentation and the Company may elect to treat as invalid acceptances in respect of which cheques are not so honoured. All documents, cheques and banker’s drafts sent through the post will be sent at the risk of the sender. Payments via CHAPS, BACS or electronic transfer will not be accepted.

A definitive share certificate will then be sent to you for the Open Offer Shares that you take up. Your definitive share certificate for Open Offer Shares is expected to be despatched to you at your own risk, by no later than 9 March 2015.

If you want to take up all of the Open Offer Shares under your Open Offer Entitlement you need to send the Application Form, together with your cheque or banker’s draft for the full amount (as indicated in Box 3 of your Application Form), payable to “Equiniti Limited re: Anglo Pacific Group PLC Open Offer” and crossed “A/C payee only”, in the accompanying reply-paid envelope or return by post or by hand (during normal office hours only), to Corporate Actions, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom (who will act as Receiving Agent in relation to the Open Offer) so as to be received by the Registrar by no later than

11.00 a.m. on 25 February 2015, after which time Application Forms will not be valid. If you post your Application Form by first-class post, you should allow at least four Business Days for delivery.

All payments must be in pounds sterling and made by cheque or banker’s draft made payable to “Equiniti Limited re: Anglo Pacific Group PLC Open Offer” and crossed “A/C Payee Only”. Cheques or banker’s drafts must be drawn on a bank or building society or branch of a bank or building society in the United Kingdom or Channel Islands which is either a settlement member of the Cheque and Credit Clearing Company Limited or the CHAPS Clearing Company Limited or which has arranged for its cheques and banker’s drafts to be cleared through the facilities provided by any of those companies or committees and must bear the appropriate sort code in the top right-hand corner. Third-party cheques may not be accepted with the exception of building society cheques or banker’s drafts where the building society or bank has confirmed the name of the account holder and the number of an account held in the applicant name at the building society or bank by stamping or endorsing the cheque or draft. The account name should be the same as that shown on the application. Post-dated cheques will not be accepted.

6 I hold my Existing Ordinary Shares in uncertificated form in CREST. What do I need to do in relation to the Open Offer?

CREST members should follow the instructions set out in Part 8 (Terms and Conditions of the Open Offer) of this document. Persons who hold Existing Ordinary Shares through a CREST member should be informed by the CREST member through which they hold their Existing Ordinary Shares of the number of Open Offer Shares that they are entitled to acquire under the Open Offer and should contact them should they not receive this information.

7 I acquired my Existing Ordinary Shares prior to the Record Date and hold my Existing Ordinary Shares in certificated form. What if I do not receive an Application Form or I have lost my Application Form?

If you do not receive an Application Form, this probably means that you are not eligible to participate in the Open Offer. Some Non-CREST Shareholders, however, will not receive an Application Form but may still be eligible to participate in the Open Offer, namely:

Qualifying CREST Shareholders who held their existing Shares in uncertificated form on 4 February 2015 and who have converted them to certificated form;
Qualifying Non-CREST Shareholders who bought existing Shares before 6.00 p.m. on 4 February 2015 but were not registered as the holders of those shares at the close of business on 4 February 2015; and
certain Overseas Shareholders.

If you do not receive an Application Form but think that you should have received one or you have lost your Application Form, please contact the Shareholder Helpline operated by the Registrar on 0871 384 2673 (from inside the United Kingdom) (calls to this number are charged at 8 pence per minute (excluding VAT)

or 10 pence per minute (including VAT) plus network extras, other telephone provider's costs may vary) or +44 (0)121 415 0870 (from outside the United Kingdom) between 8.30 a.m. and 5.30 p.m. on any Business Day. For legal reasons, the Shareholder Helpline will only be able to provide information contained in this document and information relating to the Company's register of members and will be unable to give advice on the merits of the Firm Placing, Placing and Open Offer or to provide financial, tax or investment advice.

8 I am a Qualifying Shareholder, do I have to apply for all the Open Offer Shares I am entitled to apply for? Can I apply for more?

You can take up any number of the Open Offer Shares allocated to you under your Open Offer Entitlement. Your maximum Open Offer Entitlement is shown on your Application Form. Any applications by a Qualifying Shareholder for a number of Open Offer Shares which is equal to or less than that person's Open Offer Entitlement will be satisfied, subject to the Open Offer becoming unconditional. If you decide not to take up all of the Open Offer Shares comprised in your Open Offer Entitlement, then your proportion of the ownership and voting interest in the Company will be diluted (and thereby reduced). You may not apply for more than your maximum Open Offer Entitlement.

9 What if I change my mind?

If you are a Qualifying Shareholder, once you have sent your Application Form and payment to Equiniti, you cannot withdraw your application or change the number of Open Offer Shares for which you have applied, except in very limited circumstances.

10 What if the number of Open Offer Shares to which I am entitled is not a whole number: am I entitled to fractions of Open Offer Shares?

If the number is not a whole number, you will not receive a fraction of an Open Offer Share and your entitlement will be rounded down to the nearest whole number.

11 I hold my Existing Ordinary Shares in certificated form. What should I do if I want to spend less than the amount set out in Box 2 of the Application Form?

If you want to spend less than the amount set out in Box 2, you should divide the amount you want to spend by £0.80 (being the price, in pounds sterling, of each Open Offer Share under the Open Offer). This will give you the number of Open Offer Shares you should apply for. You can only apply for a whole number of Open Offer Shares. For example, if you want to spend £100, you should divide £100 by £0.80. You should round that down to the nearest whole number, to give you the number of shares you want to take up. Write that number (in this example, 125) in Box 4. To then get an accurate amount to put on your cheque or banker's draft, you should multiply the whole number of Open Offer Shares you want to apply for (in this example, 125) by £0.80 and then fill in that amount rounded down to the nearest whole pence (in this example, being, rounded down to the nearest whole pence, £100) in Box 5 and on your cheque or banker's draft accordingly.

12 What if I hold options and awards under the Share Schemes?

In accordance with the rules of each plan and if applicable, the number or exercise prices of options and awards under the Share Schemes may be adjusted to take account of the Open Offer. If this is the case, participants will be contacted separately.

13 I hold my Existing Ordinary Shares in certificated form. What should I do if I have sold some or all of my Existing Ordinary Shares?

If you hold shares in the Company directly and you have sold some or all of your Existing Ordinary Shares before 9 February 2015, you should contact the buyer or the person/company through whom you sell your shares. The buyer may be entitled to apply for Open Offer Shares under the Open Offer. If you sell any of your existing Shares on or after 9 February 2015, you may still take up and apply for the Open Offer Shares as set out on your Application Form.

14 I hold my Existing Shares in certificated form. How do I pay?

Completed Application Forms should be returned with a cheque or banker’s draft drawn in the appropriate form. All payments must be in pounds sterling and made by cheque or banker’s draft made payable to “Equiniti Limited re: Anglo Pacific Group PLC Open Offer” and crossed “A/C Payee Only”. Cheques or banker’s drafts must be drawn on a bank or building society or branch of a bank or building society in the United Kingdom or Channel Islands which is either a settlement member of the Cheque and Credit Clearing Company Limited or the CHAPS Clearing Company Limited or which has arranged for its cheques and banker’s drafts to be cleared through the facilities provided by any of those companies or committees and must bear the appropriate sort code in the top right-hand corner. Third-party cheques may not be accepted with the exception of building society cheques or banker’s drafts where the building society or bank has confirmed the name of the account holder and the number of an account held in the applicant name at the building society or bank by stamping or endorsing the cheque or draft. The account name should be the same as that shown on the application. Post-dated cheques will not be accepted.

15 Will the Existing Ordinary Shares that I hold now be affected by the Open Offer?

Your proportionate ownership and voting interest in the Company will be reduced as a result of the Firm Placing. If you decide not to apply for any Open Offer Shares under your Open Offer Entitlement, or only apply for a proportion of the Open Offer Shares under your Open Offer Entitlement, your proportionate ownership and voting interest in the Company will be reduced further.

16 I hold my Existing Ordinary Shares in certificated form. Where do I send my Application Form?

You should send your completed Application Form in the accompanying reply-paid envelope or returned by post or by hand (during normal office hours only), together with the monies in the appropriate form, to Corporate Actions, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom (who will act as Receiving Agent in relation to the Open Offer). If you post your Application Form by first-class post, you should allow at least four Business Days for delivery.

If you do not want to take up or apply for any Open Offer Shares, then you need take no further action.

17 I hold my Existing Ordinary Shares in certificated form. When do I have to decide if I want to apply for Open Offer Shares?

The Registrars must receive the Application Form by no later than 11.00 a.m. on 25 February 2015, after which time Application Forms will not be valid. If an Application Form is being sent by first-class post in the UK, Qualifying Shareholders are recommended to allow at least four Business Days for delivery.

18 I hold my Existing Ordinary Shares in certificated form. When will I receive my new share certificate?

It is expected that Equiniti Limited will post all new share certificates by 9 March 2015.

19 What should I do if I live outside the United Kingdom?

Your ability to apply to acquire Open Offer Shares may be affected by the laws of the country in which you live and you should take professional advice as to whether you require any governmental or other consents or need to observe any other formalities to enable you to take up Open Offer Shares under your Open Offer Entitlement. You should read paragraph 6 of Part 8 (Terms and Conditions of the Open Offer) for further information.

20 Further assistance

Should you require further assistance, please call the Shareholder Helpline on 0871 384 2673 (from inside the United Kingdom) (calls to this number are charged at 8 pence per minute (excluding VAT) or 10 pence per minute (including VAT) plus network extras, other telephone provider’s costs may vary) or +44 (0)121 415 0870 (from outside the United Kingdom), which is available between the hours of 8.30 a.m. and

5.30 p.m. on any London Business Day. Please note that, for legal reasons, the Shareholder Helpline is only able to provide information contained in this document and information relating to the Company’s register of members and is unable to give advice on the merits of the Firm Placing, Placing and Open Offer or to provide legal, business, accounting, tax, investment or other professional advice.

PART 5

INFORMATION ON THE GROUP

1 Overview of the Group

Anglo Pacific is a global natural resources royalty company. It is the only company listed on the London Stock Exchange that is focused solely on natural resources royalties. Anglo Pacific’s aim is to develop as a leading international diversified royalty company with a portfolio centred on base metals and bulk materials. The Directors will also consider acquiring royalties in other commodities, such as energy, as opportunities arise. The Directors believe that the royalty industry’s historical focus on precious metals, particularly gold and silver, has disproportionately channelled investment into only a small part of the mining industry and that the universe of opportunities should be significantly larger in these markets than for precious metals.

2 Overview of royalties and streams

Royalties

A mining royalty is a non-operating interest in a mining project that provides the royalty holder with the right to a proportion of revenue, profit or production. Historically, royalties originated as a result of the sale of a mineral property, allowing the seller to retain some ongoing economic participation in the property. However, an increasing number of royalties are now created directly by operators and developers as a source of finance. A royalty holder is not generally obligated to contribute towards operating or capital costs, nor environmental or reclamation liabilities. Typically, royalties are established through a direct agreement between the royalty holder and the property owner. However, the entitlement to some royalties is derived from statute rather than contract, with the terms of the royalty set out in applicable legislation. Some jurisdictions permit the holder to register or otherwise record evidence of a royalty interest in applicable mineral title or land registries.

Revenue royalties

The Group’s royalties are mostly revenue or production-based royalties. Typically, these royalties are either Gross Revenue royalties or Net Smelter Return royalties, each of which can be described as follows:

Gross Revenue royalty (GRR): A GRR entitles the royalty holder to a fixed portion of the gross revenues generated from the sales of mineral production from a property. In calculating a GRR payment, deductions, if any, applied by the property owner to reduce the royalty payment are usually minimal, and GRRs are therefore the simplest form of royalty to account for and implement.
Net Smelter Return royalty (NSR): An NSR entitles the royalty holder to a fixed portion of the net revenues received from a smelter or refinery from the sales of mineral production from a property, after the deduction of certain offsite realisation costs. Typical realisation costs include those related to transportation, insurance, smelting and refining. These deductions are generally higher in base metals mines due to the semi-finished product, such as concentrate, often being produced at the mine site, when compared to precious metals mines, which produce a nearly-finished product on site.

Royalty companies may also hold profit-based royalties such as a Net Profit Interest royalty (or NPI), entitling the royalty holder to a fixed portion of profits generated by a property, or other interests such as working interests, a form of investment commonly found in the oil and gas industry representing an ownership stake in the property. Although less common, royalty investments can also be made by advancing funds to a property owner in return for the property owner issuing the royalty holder a debt instrument, the repayment of which is secured against certain project-related assets. Repayment is made pursuant to a royalty-based payment stream with the payment stream tending to continue notwithstanding the repayment of the principal amount of the debt instrument and any interest accrued thereon. These debt instruments also often have conversion features, such that the royalty holder has the option of converting the outstanding principal amount of the debt instrument into equity of the issuer of the debt instrument at a prescribed price.

There are numerous additional types of royalties, including the Overriding Royalty, the Freehold Royalty, the Minimum Royalty, the Advance Minimum Royalty and the Capped Royalty, but these variations are less common than those detailed above, and Anglo Pacific does not hold any royalties of this nature.

Primary and secondary royalties

Primary royalties are entered into between a royalty company and the property owner directly, where the property owner grants a royalty to the royalty company in return for one or more up-front cash payments from the royalty company. In contrast, secondary royalties are existing royalties that are acquired from a third party by a royalty company, with no payment made to the owner of the underlying property.

Streams

Whilst Anglo Pacific’s current portfolio consists solely of royalties, it also considers streaming transactions. In a commodity streaming agreement, the streamer makes an upfront payment to the project owner in return for the right to purchase a fixed portion of mineral production from the mine. As the contracted mineral is delivered, the streamer typically makes an additional payment to the property owner. This production payment is generally fixed over the term of the contract, with only minor adjustments made for inflation. In most situations, the production payment for the specified mineral is set at a significant discount to the mineral’s spot price at the time the contract is agreed.

3 Market opportunity

Current market opportunity for royalty and streaming companies

Over the past few years, the mining industry has faced increased funding challenges. Many mining projects have suffered from high cost inflation and budget overruns. The Directors believe that M&A activity at the peak of the last economic cycle resulted in a substantial increase in leverage across global miners, which in a falling commodity price environment has resulted in substantial declines in earnings and reduced balance sheet flexibility. This is reflected in the net debt to EBITDA multiple for the Bloomberg World Mining Index, which has increased from 0.8x in 2010 to 1.4x in 2013. The Directors believe that this has had an impact on

share price performance. As two of the most capital intensive sectors within the mining industry, the Directors believe that base metals and bulk materials producers have been under additional pressure.

Falling commodity prices have put junior miners under increasing financial strain with limited access to capital. This is further compounded by the operations of junior miners typically being carried out at a higher cost of capital than major mining companies.

During 2013, the sell-off in the mining sector had a significant impact on the mining equity markets. Global mining equity issuance in 2013 amounted to US$16.4bn, representing a decrease of 17% and 59% from 2012 and 2011 respectively.(1)

Lending to the global mining industry has also been impacted. For example, there has been a notable decrease in high yield debt issuance by the mining industry over the past two years, down 41% from US$14.6bn in 2011 to US$8.9bn as of the end of 2013.

Accordingly, given the funding challenges facing the mining industry, demand has increased for alternative forms of financing, including royalty financing. The financing provided by the royalty and streaming industry has grown considerably in recent years, with upfront payments totalling more than US$2bn in each of 2012 and 2013.

Source:

(1) Global mining equity issuance: Dealogic
(2) Global mining high yield debt issuance: Company filings, Bloomberg, LCD News
(3) Royalty and stream payments in 2012 and 2013: Company filings of Silver Wheaton Corp, Sandstorm Gold Ltd, Franco-Nevada Corp, Anglo Pacific Group PLC, Royal Gold, Inc.

Non-precious royalties and Anglo Pacific's competitive landscape

As mentioned above, the financing provided by the royalty and streaming industry has grown considerably in recent years. Nevertheless, the industry's historical focus on precious metals is disproportionately channelling investment into only a small part of the mining industry. The aggregate market capitalisation of the top listed precious metals royalty companies in 2013 was approximately US$20bn yet gold and silver producers constituted only approximately 11% of global mining production by value(5). Anglo Pacific intends to focus on those non-gold and silver producers that comprise approximately 89% of global mining production by value and which the Directors believe are not well serviced by the royalty and streaming industry. The Directors believe that the universe of opportunities should be significantly larger in these markets than that for precious metals.

Coal Iron Ore Gold Copper Other

Source:

(4) Aggregate market cap of the top listed precious metals royalty companies in 2013: Silver Wheaton Corp, Franco-Nevada Corp, Royal Gold Inc, Factset (21 March 2014)
(5) Source: Global mining production by value: Global Mining Perspective, Arctic Cluster of Raw Materials Conference, IntierraRMG report (26 September 2013), BMO Global Commodities Research (10 November 2013)

The non-precious royalty space does not benefit from dedicated gold-denominated funds and so companies operating in the sector typically seek capital backing from investors with more alternatives as to where they are able to invest. Furthermore, there is much less competition for non-gold and silver royalties and Anglo Pacific believes there will continue to be a favourable supply/demand imbalance, particularly in relation to secondary royalties. The lower competition that results from the imbalance should lead to better pricing for the buyer. In contrast, there is a relatively large universe of companies focused on the silver and gold sector and they compete vigorously for the limited supply of new royalties coming onto the market, driving down the yields which the royalties produce. The Directors believe that this may result in non-precious royalties generally transacting at higher yields than precious royalties.

Benefits of the royalty model

The Directors believe that the royalty model can benefit from the following factors:

Lower risk through top-line, revenue participation in mining companies

Revenue-based royalties limit the Group's direct exposure to the operating or capital cost inflation of the underlying mine operations, as there is no ongoing requirement for the Group to contribute to capital, exploration, environmental or other operating costs at mine sites.

Lower volatility through diversification

Investing in royalties across a wide spectrum of commodities, jurisdictions and operators reduces the dependency on any one asset, location or counterparty and any corresponding cyclicality or seasonality. A fully diversified portfolio can help to reduce the level of income volatility, thereby stabilising cash flows which contribute towards growth and dividend payments.

Exposure to increases in mineral reserves and production

Royalty holders generally benefit from improvements made to the scale of a mining operation. Exploration success, or lower cut-off grades resulting from rising commodity prices, can serve to increase economic reserves and resources. Increased reserves can extend a mine's life or facilitate an expansion of the existing operations. Any subsequent increases in production will generally result in higher royalty payments, without requiring the royalty holder to contribute to the cost of expanding or optimising the operation.

Exposure to commodity price upside

Royalties provide exposure to underlying commodity prices. Whilst commodity prices are subject to price fluctuations and any material price declines would result in a decrease in revenue for the Group, the Group expects to benefit from a long-term rising commodity price environment, with the upside feeding through to increased royalty receipts.

In addition to the direct benefit to a royalty holder of rising commodity prices, higher commodity prices can also make lower cut-off grades economically viable. This enables production from areas previously deemed economically unfeasible, potentially resulting in higher revenues.

Benefits to mining partners

Primary royalties can be structured flexibly to suit the mine operator. Royalties can provide a proportion of the upfront capital required to reduce further requirements for upfront capital and fund the development of a project. Royalties are generally structured as asset (or even by-product) specific, often leaving the remaining assets of the developer unencumbered for raising additional finance. The creation of a new royalty can generate positive media coverage for the developer and provide validation of the project's economic viability. The Directors believe that these together can help developers secure additional funds from more traditional sources.

An appeal of royalties is that they are often less dilutive to the equity of the selling shareholders, when compared to the issuance of new equity. Unlike the issuance of new equity, royalties do not necessarily depend on the prevailing state of the capital markets, but are rather the result of negotiations between the Group and stakeholders. Further, as royalties are asset specific, the reduction in the upside for existing shareholders can be limited to a certain mine or product. This is particularly relevant for companies with a portfolio of assets, for which the issue of new shares can give away upside over all assets or future assets in the company. Finally, there can be significant costs associated with issuing equity, being either direct (in the form of underwriting fees) or indirect (via the pricing of an issue at a discount to market).

In contrast to conventional debt arrangements, royalties do not typically levy interest, nor do they typically require principal repayments or have a maturity date. More importantly, unlike such debt arrangements where interest payments tend to start immediately or are capitalised until cash payments can be made from a project's cash flow, primary royalties can have more flexible payment terms, which often only begin when a project commences production and is generating sales. In addition, many forms of debt, such as project finance, require commodity price hedges to be put in place, which are costly to implement and can also limit the miner's exposure to upside in the prices of their core commodities. Further, debt financing arrangements can also be more onerous in terms of financial covenants and security packages, in relation to which Anglo Pacific has the ability to be more flexible.

Anglo Pacific can also have significant appeal to sellers of secondary royalties, primarily because there are limited alternative sources of capital seeking non-gold and silver royalties. The Directors believe that the Group's ability to monetise a comparatively illiquid asset could be attractive to both private individuals and corporate royalty holders.

4 Strategy

Following the appointment of a new management team in October 2013, Anglo Pacific has refocused its strategy. As noted above in paragraph 1 of this Part 5 (Information on the Group), the Group is concentrating on the underserved base metals and bulk materials sectors, which stand in contrast to the well-supplied gold and silver royalty space. The Directors will also consider acquiring royalties in other commodities, such as energy, platinum group metals and precious stones, as opportunities arise. Anglo Pacific is seeking to build a diversified portfolio of royalties across a variety of different commodities and geographic locations and focused on cash or near-term cash producing assets.

Anglo Pacific is committed to paying out a significant portion of its royalty revenue to its shareholders in the form of dividends. Anglo Pacific has a twelve year track record of dividend payments. Based on dividends declared in the last 12 months and the share price as at 5 February 2015, the Group currently provides a

12.3% dividend yield to shareholders. The Board's priorities for the Group's free cash flow are to fund the Group's royalty investment opportunities, maintain a strong balance sheet and deliver a progressive dividend policy at a level which is affordable and appropriate.

Accordingly, when evaluating potential royalty acquisitions, the Group seeks to identify royalties with the following characteristics:

Established natural resources jurisdictions

Anglo Pacific continues to review potential business opportunities globally and in order to manage its risk profile, the Group intends to focus predominantly on mines in established, relatively low-risk mining jurisdictions, primarily those in North America, South America, Europe and Australia. As at 30 June 2014, 85% of the Group's existing assets were based in such jurisdictions. However, the Directors believe that there could be a "first mover" advantage in emerging mining jurisdictions and may selectively pursue opportunities in other jurisdictions as they arise.

Long-life assets

Long mine life assets can provide long-term revenue, which in turn can contribute to ensuring that acquisitions to replace depleted royalties and maintain cash flow are not required on a regular basis. Three of the mines in Anglo Pacific's existing portfolio have life of mine plans of 20 years or more.

High quality and low cost assets

Anglo Pacific is also focused on ensuring that new royalties are over high quality and low cost operations. This helps ensure longevity of cash flows by reducing the risk of mining operations ceasing to be economically viable. Within its existing portfolio, Anglo Pacific has exposure to low cash cost assets in the Kestrel and Maracás mines. Kestrel's costs are expected to fall further in 2015 in light of significant investment in infrastructure and equipment and various cost reduction measures. The recently acquired Maracás royalty demonstrates management's stated aim to focus on low cost operations, as the mine's forecast cash cost is lower than historical vanadium prices since 2007.

Near-term producing assets

Building on the critical mass and revenue stream derived from its existing portfolio of royalties, Anglo Pacific is seeking to grow its portfolio by investing in producing or near-term producing assets.

Production and exploration upside potential

Anglo Pacific seeks to acquire royalties where it may benefit from improvements made to the scale of mining operations. Any increases in production can result in higher royalty payments, without requiring the Group to contribute to the cost of expanding or optimising the operation. Royalties can also benefit from exploration successes that lead to enlarged economic reserves. Increased reserves can extend a mine's life or facilitate an expansion of the existing operations, potentially providing higher revenue over a longer period.

Strong operational management teams

Strong operational management teams are integral to delivering a successful project and to optimising the value of a mine and, therefore, a royalty. Anglo Pacific's current royalty portfolio includes mines operated by highly experienced management teams, including those of Rio Tinto and BHP Billiton Limited.

Diversification of royalty portfolio

Anglo Pacific seeks to rebalance the commodity spread of the Group's royalty assets, recognising that Kestrel, its cornerstone producing asset, accounted for 60% of the Group's revenue at 30 June 2014. This, in turn, has meant that the Group's royalty portfolio bears an overweight position in coking coal. Anglo Pacific is seeking to build a diversified portfolio of royalties across a variety of different commodities and geographic locations.

The Group's target portfolio would result in an increased exposure across various base metals and bulk materials, including thermal coal. The Group will also selectively pursue royalties in energy commodities, such as uranium and oil and gas, as well as other commodities, such as platinum group metals and precious stones. The Group has also been reviewing its existing non-core royalty assets and mining and exploration interests that no longer fit with the Group's strategic approach, and has been disposing of these on a selective basis.

5 Business strengths

The Directors believe that Anglo Pacific enjoys the following key strengths:

Strong management team with extensive structuring and capital markets experience

Julian Treger and Mark Potter were instated as the Group's management team in October 2013. They have over 35 years of collective experience in natural resources/value investing, with a strong track record of working with mining companies to realise their full potential and maximise shareholder value. Mr Treger and Mr Potter joined the Group from Audley Capital Advisors LLP, an investment advisory firm managing value-orientated, special situations investment strategies through hedge fund and co-investment vehicles.

In 2005, Mr Treger co-founded Audley Capital Advisors LLP and launched the Audley European Opportunities Fund (the Fund). He was joined by Mr Potter at inception. Since launch, the Fund has gained widespread recognition for its ability to drive differentiated returns, having won Best Event-Driven Manager in the Hedgeweek 2011 awards and having been ranked the top performing event-driven hedge fund in Europe for 2006-2007 and 2010 according to EuroHedge. Mr Treger co-led the Fund's mining investments with Mr Potter. Together, they generated over US$600m of profit on US$300m worth of actively structured mining investments, including the high profile US$3.3bn sale of Western Coal to Walter Energy in late 2010 to create a large pure play metallurgical coal producer.

The new management has developed strong relationships with major metals and mining companies. Management expects to be able to benefit from these relationships through access to investment opportunities and new royalty transactions. Further, they bring a level of financial expertise that the Directors believe will be of substantial benefit to Anglo Pacific's current royalty holdings and to future activity.

The new management is aligned with the interests of shareholders via a new, five-year value creation scheme, which provides management with the potential to receive performance payments if demanding hurdles, based on shareholder return, are met.

Limited competition

Anglo Pacific's primary focus is in acquiring royalties in the base metals and bulk metals sectors, and it therefore benefits from a more limited universe of competitors. There is significantly less competition for non-gold and silver royalties and Anglo Pacific believes there will continue to be a favourable supply/demand imbalance, particularly in relation to secondary royalties.

Low costs

The Group seeks to operate with low central costs and to scale the business such that annual costs decline as a percentage of net assets. As at 5 February 2015, the Group had 13 employees, two of whom were executive directors. The Directors believe that the current team has the capacity to manage a portfolio many times larger than the current asset base. Should this expansion occur, the ratio of central costs to net assets should decline further over time. The Group's low cost base is also accentuated by the Group's limited exposure to operating and capital costs relating to the mines on which it has royalties.

International reach

Having its head office in London and employees experienced in managing transactions involving many different jurisdictions, the Group is well placed to pursue opportunities around the globe.

Royalty acquisition pipeline

The management team has prioritised the Group’s search for new royalty opportunities. Given the focus on producing or near producing royalties and the desire for transactions to be adjusted earnings per share and cash-flow per share accretive, the Group has been highly selective and a large number of potential royalties have been rejected on risk and return grounds. Anglo Pacific is now exploring a number of potential transactions of varying size, with respect to both primary and secondary royalties, although some of these opportunities may only come to maturity in the medium term (if at all).

Growth potential of existing assets

The Group has a significant portfolio of existing assets, which has the potential to grow royalty revenues for the Group over time. The most important of these is the Kestrel royalty, where payments are expected to increase significantly during 2015. This provides the Group with a strong position from which to expand its asset base. Details of Anglo Pacific’s individual assets are set out in paragraph 7 of Part 5 (Information on the Group) of this document.

6 History

The Company was originally established to invest in oil and gas opportunities. In 1984, the Ordinary Shares were floated on London’s Unlisted Securities Market. In 1987, the Company was restructured in a transaction involving Apex Securities Limited. As part of this restructuring, the Company looked to broaden its interests in gold production in Australia through the acquisition of Indian Ocean Resources Limited. This acquisition included the company now known as Gordon Resources Pty Ltd (Gordon Resources), which owns a 50% interest in a number of sub-stratum lands in Queensland, Australia. It is through these interests that the Group is entitled to royalty receipts from Kestrel.

The Company’s Ordinary Shares were listed on the Australian Securities Exchange (ASX) in 1988 and were admitted to the Official List of the UK Listing Authority and admitted to trading on the London Stock Exchange in 1996. The Company continued to retain interests in oil and gas projects and in industrial minerals projects, although these interests have now mostly been divested. In 2007, the Group embarked on its new strategy of focusing on mineral royalties. The following is a summary of key developments since then:

EVBC royalty acquisition
Four Mile royalty acquisition
Amapá and Railway royalty acquisitions

Company de-lists from the ASX and subsequently lists on the TSX

Ring of Fire and Isua royalty acquisitions
EVBC commences production
Dugbe 1 royalty acquisition
Appointment of Julian Treger and Mark Potter as Chief Executive Officer and Chief Investment Officer, respectively
Maracás royalty acquisition and commencement of new strategy
Appointment of Mike Blyth as Non-executive Chairman
Further strengthening of the Board with the appointments of Robert Stan, Rachel Rhodes and David Archer as Non-executive Directors

7 Royalty portfolio

The Group owns a diverse portfolio of royalties derived from the extraction and processing of natural resources. These royalties cover a range of commodities including coking coal, base metals and precious metals, and span several continents including Australia, Europe, North America, South America and Africa. The table below provides a more detailed breakdown based on the balance sheet carrying value as at 30 June 2014 and as adjusted for the book value of the Narrabri Royalty and the Isua writedown.

| | As at
30 June
2014 (%)^{(1)} | As at
30 June
2014
Adjusted (%)^{(2)} |
| --- | --- | --- |
| Commodity Exposure | | |
| Coal (Kestrel) | 59% | 52% |
| Coal (Narrabri) | -% | 19% |
| Iron Ore | 20% | 11% |
| Gold^{(3)} | 8% | 7% |
| Other | 13% | 11% |
| Geographic Exposure | | |
| Australia | 66% | 77% |
| South America | 11% | 10% |
| North America | 12% | 4% |
| Europe | 5% | 4% |
| Africa | 5% | 4% |
| South East Asia | 1% | 1% |
| Exposure by Stage of Development | | |
| Producing | 75% | 85% |
| Early Stage | 16% | 14% |
| Development | 9% | 1% |

Notes:
1. Based on balance sheet carrying value as at 30 June 2014.
2. Adjusted for £42.7m book value of the Narrabri Royalty acquisition and the £15.4m Isua writedown announced in Anglo Pacific’s Q3 2014 interim management statement.
3. Gold commodity exposure includes the EVBC royalty, which includes copper and silver by-products.

The Mineral Reserves and Mineral Resources set out below reflect the most recent publicly disclosed figures by the operators of the assets in which the Group has interests. All Measured and Indicated Mineral Resources figures are calculated inclusive of Mineral Reserves.

Production	Royalty Name	Operator	Location	Royalty Type and %	2013 Royalty Revenue (GBPm)	2012 Royalty Revenue (GBPm)	Principal Royalty Product	2013 Production	Proven Reserves	Probable Reserves	Measured Resources	Indicated Resources	Inferred Resources
	Kestrel	Rio Tinto	Australia	7 – 15% GRR1	9.9m	10.9m	Coking Coal	3,016kt3	34Mt4k3	79Mt4k3	34Mt4	185Mt4	36Mt4
	Amapá & Tucano6	Zamin Ferrous	Brazil	1% GRR	0.7m	2.2m	Iron Ore	n/a7	-	-	44.0Mt at 39.7% Fe4	163.4Mt at 41.0% Fe4	36.6Mt at 40.8% Fe4
	El Valle-Boinás/Carlés	Orvana Minerals	Spain	2.5 -3.0% NSR8	2.0m	1.9m	Gold and Copper	66.0koz Au 197.8koz Ag 6.7Mlbs Cu34	0.47Mt at 3.36g/t Au, 20.33g/t Ag 0.96% Cu34	1.7Mt at 4.54g/t Au, 11.54g/t Ag 0.59% Cu34	1.3Mt at 3.61g/t Au, 20.27g/t Ag 0.63% Cu34	4.7Mt at 3.61g/t Au, 12.18g/t Ag 0.63% Cu34	6.0Mt at 5.06g/t Au, 6.80g/t Ag 0.45% Cu34
	Four Mile	Quasar Resources/ Alliance Resources	Australia	1% NSR	-	-	Uranium	-	-	-	-	4.1Mt at 0.34% U42a18	5.6Mt at 0.31% U42a18
	Maracás	Largo Resources	Brazil	2% NSR13	-	-	Vanadium Pentoxide	-	7.34 Mt at 1.28% V3O218	5.74 Mt at 1.42% V3O218	8.87 Mt at 1.37% V3O218	15.77 Mt at 0.96% V3O218	30.43 Mt at 0.83% V3O218
	Salamanca	Berkeley Resources	Spain	1% NSR	-	-	Uranium	-	-	-	-	34.4Mt at 0.04% U42a36	50.3 Mt at 0.05% U42a36
	Pilbara	BHP Billiton	Australia	1.5% GRR	-	-	Iron Ore	-	-	-	-	100.7Mt at 60.3% Fe13	57.4Mt at 54.0% Fe13
	Ring of Fire	Cliffs Natural Resources	Canada	1% NSR	-	-	Chromite	-	-	-	-	172.2Mt at 31.3% Cr3O238	-
	Dugbe 1	Hunningbird Resources	Liberia	2.0 – 2.5% NSR14	-	-	Gold	-	-	-	-	37.4Mt at 1.56g/t Au20	47.97Mt at 1.31g/t Au20
Panorama “Discovery Area”	Atrum Resources	Canada	1% GRR or US$1/tonne21	-	-	Anthracite Coal	-	-	-	-	13.6 Mt22	237.4 Mt22

The Group owns $50\%$ of the royalty, which is payable pursuant to the Queensland Mineral Resources Act, which provides for a three-tiered system with the effective royalty rate for a period staggered, depending on the average price per tonne of coal for the period and calculated separately for domestic and non-domestic sales. The first tier is a GRR of $7\%$ where the average coking coal price is up to and including A$100 per tonne. Tier two is a $12.5\%$ GRR when the average price per tonne is over A$100 and up to and including A$150, with an additional third tier of $15\%$ where the average price is more than A$150 per tonne. The $50\%$ ownership of the subsurface land entitles the Group to $50\%$ of the royalty receipts relating to the sale of the coal mined from such land.
Hard coking and thermal coal production for 2013 and 2014 are on a $100\%$ basis and are taken from Rio Tinto's 2013 and 2014 Q4 operational reports. Note that the coal quality statistics for coking and thermal coal at Kestrel have been stated in the Department of Natural Resources and Mines publication "Queensland Coals Physical and Chemical Properties, Colliery and Company Information, 14th Edition, 2003" (green book) and are shown later in this section.
Kestrel's Mineral Reserves and Resources are taken from Rio Tinto's 2013 Annual Report and shown on a $100\%$ basis. Mineral Resources and Reserves for Rio Tinto managed operations are reported in accordance with the JORC Code.
Showing marketable reserves only. Marketable coal is determined by yield factors applied to reflect the impact of further processing, where necessary, to provide marketable coal.
The Group also has a $1\%$ GRR on all iron ore and other non-precious metals apart from copper produced from the Tucano project owned by Beadell Resources Limited, which is located adjacent to Amapá.
2013 production figures for Amapá are not available as Zamin is a private company.
Amapá's Mineral Resources are taken from Anglo American's 2012 Annual Report. Mineral Resources for Amapá are reported in accordance with the JORC Code (2004) and used a cut-off grade of $25\%$ Fe. Tonnages are reported on a wet basis with an average moisture content of $11\mathrm{wt}\%$ for Canga, $10\mathrm{wt}\%$ for Colluvium and $9\mathrm{wt}\%$ for Friable Itabirite and Hematite ore.
Anglo Pacific owns a $2.5\%$ NSR (in the form of a debenture), escalating to $3\%$ for gold prices in excess of US$1,100 per ounce.
FY2013 production as per Orvana announcement dated 15 October 2013. FY2014 production and FY2015 production guidance as per Orvana FY2014 results announcement dated 27 October 2014.
El Valle-Boinás/Carlés' Mineral Reserves and Resources announced by Orvana on 13 August 2014. Mineral Reserves and Resources for El Valle-Boinás/Carlés are reported in accordance with the standards of the Canadian Institute of Mining, Metallurgy, and Petroleum and NI 43-101 and used a cut-off grade by zone, consisting of $3.8\mathrm{g / t}$ AuEq for Boinas Oxides, $2.5\mathrm{g / t}$ AuEq for Boinas Skarns, and $2.3\mathrm{g / t}$ AuEq for Carles. Gold equivalent cut-offs were calculated using recent operating results for recoveries, off-site concentrate costs, and on-site operating costs. Mineral Resources are estimated using average long-term metal prices of US$1,300 per ounce gold, US$3.10 per pound copper, and US$23 per ounce silver. An exchange rate of €1.00=US$1.33 was used. Mineral Reserves are estimated using gold equivalent cut-off grades by zone, consisting of $4.5\mathrm{g / t}$ AuEq for Boinas Oxides, $2.9\mathrm{g / t}$ AuEq for Boinas Skarns, and $2.8\mathrm{g / t}$ AuEq for Carles. Gold equivalent cut-offs were calculated using recent operating results for recoveries, off-site concentrate costs, and on-site operating costs. Mineral Reserves are

estimated using average long-term metal prices of US$1,100 per ounce gold, US$2.75 per pound copper, and US$20 per ounce silver. An exchange rate of €1.00=US$1.33 was used.

Four Mile's Mineral Resources are taken from Alliance Resources' corporate announcement dated 20 December 2013. Mineral Resources for Four Mile are reported in accordance with the JORC Code (2012) and used a GT cut-off grade of 0.10%.
Details of the NSR royalty are taken from Largo's corporate announcement dated 24 October 2006.
The Maracás project Mineral Reserves are taken from the Maracás Feasibility Study dated May 2009. Mineral Reserves are reported in accordance with the standards of the CIM Code and NI 43-101. The feasibility study used a price for contained vanadium in ferrovanadium of US$23.08 per kg.
The Maracás project Mineral Resources are taken from the Maracás Feasibility Study dated 4 March 2013 (effective date 4 March 2013). Mineral Resources are reported in accordance with the standards of the CIM Code and NI 43-101. Mineral Resources were estimated within a Whittle pit shell using US$34.20 per tonne all in operating costs and using a 0.45% V²O³ cut-off grade.
Salamanca's Mineral Resources are taken from Berkeley's corporate presentation dated 1 December 2014. Mineral Resources for Salamanca are reported in accordance with the JORC Code (2004) and used a cut-off grade of 200 ppm U³O⁴.
Pilbara Mineral Resources are taken from United Minerals Corporation NL's corporate announcement dated 21 September 2009. Mineral Resources for Pilbara are reported in accordance with the JORC Code (2004) and used an indicated bedded ore cut-off grade of 54% Fe.
Cliffs 'Mineralised Material' statement comes from the 2013 Annual Report. Cliffs does not distinguish between measured and indicated resources for its 'Mineralised Material' disclosure for its chromite projects. "Mineralised Material" is defined as a concentration or occurrence of natural, solid, inorganic or fossilised organic material in or on the Earth's crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. Mineralised Material has been delineated by appropriate sampling to establish continuity and support an estimate of tonnage with an average grade of the selected metals, minerals or quality. Cut-off grade is 20% Cr²O³ for all deposits.
The royalty is 2% except where both the average gold price is above US$1,800 and sales of gold are less than 50,000 ounces, in which case it increases to 2.5% in respect of that quarter.
Tuzon's Mineral Resources are taken from Hummingbird's corporate announcement dated 12 March 2014 and are reported within a US$1,500 pit shell at a cut-off grade of 0.5g/t. These resources have been classified in accordance with the CIM Code. Dugbe F's Mineral Resources are taken from Hummingbird 2013 Annual Report. Mineral Resources for Dugbe, as a whole, are reported in accordance with the JORC Code (2004) and used a cut-off grade of 0.5g/t Au.
Details of the royalty were announced by Anglo Pacific on 28 August 2014.
"Discovery Area" Mineral Resources are taken from Atrum Coal Limited's announcement dated 6 November 2014.

Producing Royalties

(a) Kestrel

Information in this section is primarily derived from the Kestrel Qualified Person's Report, which is included in its entirety as Part 10 (Kestrel Qualified Person's Report) of this Prospectus.

Anglo Pacific's core asset is its 50% ownership, through its wholly-owned subsidiary Gordon Resources, of certain sub-stratum lands which entitles it to coal royalty receipts from the Kestrel coal mine. The land that is the subject of the royalty was acquired by the Group in 1987 when the Company acquired the company now known as Gordon Resources Pty Ltd as part of a wider transaction to broaden the Company's interests at that time into gold production in Australia.

Kestrel is an underground coal mine located in the Bowen Basin, Queensland, Australia. It is operated by Kestrel Coal Pty Limited, a subsidiary of Rio Tinto Coal Australia Pty Limited on behalf of the joint venture partners, Queensland Coal Pty Limited (QCPL) (a Rio Tinto subsidiary) (as to 80%) and Mitsui Kestrel Coal Investment Pty Limited (Mitsui) (as to 20%).

The primary lease of the Kestrel operation is mining lease (ML) 1978 with site infrastructure located across the northern portion of this tenement area. This mining lease was granted on 12 April 1990 to QCPL and is due to expire on 30 April 2041. QCPL also holds three mining lease extensions to the west and south west of ML 1978, namely ML 70301, 70302 and 70330.

QCPL and Mitsui lease these sub-stratum lands from Gordon Resources. As the registered owner in fee simple (freehold) of a one half share of these lands (pursuant to a deed of grant made before 1 March 1910 that did not contain any reservations to the Crown of the property in the coal) (the

Kestrel Royalty Area), Gordon Resources owns a one half share in the coal in the land and is entitled to receive the relevant royalty for that coal, if mined, under the Mineral Resources Act 1989 (Queensland).

As shown in the map on page 66, the Kestrel Royalty Area comprises approximately 49% of the total surface title at Kestrel and, consequently, there are areas from which Gordon Resources will not be entitled to a royalty. There are also small areas dedicated as roads in the land owned by Gordon Resources, in relation to which the royalty is payable to the Crown, rather than to Gordon Resources.

Royalty rates are prescribed by the Queensland Government Minerals Resources Act 1989 Regulations. The royalty payable is determined on an ad valorem (value) basis, calculated as a percentage of the value of the coal mined and then sold (irrespective of the product type). No consideration of mining costs is required in the determination of the royalty. The royalty rates applicable to Kestrel are as follows:

Average price per tonne for period	Rate
Up to and including A$100	7%
Over A$100 and up to and including A$150	First $100: 7%
	Balance: 12.5%
	First $100: 7%
More than A$150	Next $50: 12.5%
	Balance: 15%

The Location: 8-101-CeleahQuaker+4702-001-Pregnancy-And2014702-001-401-A-RevB-F00-Aeane Royalty And

Based on the annual operating results from 1999 to 2014, Kestrel has produced a total of $54.6\mathrm{Mt}$ of product coal. This comprises of $41.1\mathrm{Mt}$ of coking coal and $13.5\mathrm{Mt}$ of thermal coal. The chart below shows the annual production tonnes from 1999 to 2014. Other than for years 1999, 2012, 2013 and 2014, the total annual production tonnes have exceeded three million tonnes per annum. The reduced tonnes reported in 1999 and 2012/2013 were due to the re-commissioning of the mine in 1999 and a major plant shutdown in 2012/2013 as part of the expansion project. Historical royalty revenue generated from the Kestrel Royalty Area totalled A$255 million between 2000 and 2014.

The ratio of coking coal to thermal product has varied over the historical life of mine production with a general decrease in the proportion of thermal coal being produced. The average proportion of coking coal to thermal coal is approximately 3:1 for the sum total reported annual production tonnes. Increased production in coking products is evident since 2009 which would be reflective of higher coking prices in the market.

The Kestrel mine extension (known as Kestrel South) was announced in 2007 and was designed to allow a new series of underground panels to be mined to the south of the existing operation. Construction commenced in 2008. Rio Tinto has reported spending approximately US$2.0 billion developing the extension, including building infrastructure such as two new access declines, an 8.9 km overland conveyor and upgrades to the existing coal handling and processing plant. The new longwall mining system is designed to operate with panels up to 400 metres wide with the shearer having a nameplate capacity of 5000 t/hr.

Kestrel is a low cost operation. On a global benchmark comparison, operations at Kestrel are well positioned on the hard coking coal cost curve as estimated by the CRU Group. The CRU Group forecasts Kestrel to be located at the low end of the first quartile of the global seaborne hard coking coal business costs 2015E cost curve (below).

100

Forecast Global Seaborne Hard Coking Coal Cost Curve Position

(Business costs 2015E, US$/tonne)

CRU as of November 2014. Business costs defined as FOB port, including all costs associated with mining and processing, transportation to port, mineral royalties, sustaining capital and interest on working capital adjusted for any realised quality premiums or discounts.

Rio Tinto reports its Reserves and Resources in accordance with the guiding principles, terms and definitions given in the 2012 edition of the JORC Code and these are shown in the table below.

The resource statement issued a total coal Resource (exclusive of Reserves) comprising 106 Mt of Indicated and 36 Mt of Inferred resources. The resource is divided into operational area and product type. Neither average in-situ coal qualities nor ranges are disclosed by Rio Tinto Limited in the publication of their coal resources. Resources are based on the latest statement dated 31 December 2013 and will be affected during 2014 by subsequent:

mine depletion and/or,
resource update if completed and/or,
conversion to reserves that are reported separately.

Total coal Reserves (in-situ) comprise 40 Mt of Proved and 95 Mt of Probable coal reserve categories. No information is available in the public domain which allows the proportion of reported reserves contained within specified royalty areas to be determined. Furthermore, no detail is provided as to the relative proportion of thermal to metallurgical grade coals.

The average product yield from washing is 83% which when applied to the coal Reserves of 135 Mt established marketable coal Reserves of 112 Mt with an average product quality of 31.6 MJ/kg calorific value (CV) and 0.59% sulphur.

Resources and Reserves23, 24

JORC Classification		Resource Tonnes (Mt)	In-situ Reserves (Mt)	Marketable Reserves (Mt)	Marketable Calorific value (MJ/kg)	Quality Sulphur (%)
Resource	Measured	-		-
	Indicated	106
	Inferred	36
Reserve	Proved		40	34	31.6	0.59
Probable			95	79	31.6	0.59

Please see notes 4 and 5 above.
Please see note 4 above.

The figure below shows the historic royalty revenue received by Anglo Pacific from Kestrel coal production versus the average annual coal prices for Australia (FOB). The revenue received from royalties is strongly linked to the coal prices as production has been relatively consistent over recent years.

Rio Tinto completed the transition into its new Kestrel South mine in H2 2013. Rio Tinto reported a ramp up in Kestrel hard coking coal production during 2013 from 402kt in Q1 to 908kt in Q4, an increase of $126\%$ . Total hard coking and thermal coal production for 2014 was 2,163kt and 564kt respectively (2013: 2,553kt and 463kt, respectively) (please see note 3 above).

In 2013, coking coal royalty receipts for Anglo Pacific amounted to A$16.1m (£9.9m) (2012: A$16.7m (£10.9m)). The decrease in income during 2013 was due to both the weakening of the Australian Dollar throughout 2013 and production disruptions associated with the extension to the new Kestrel South mine.

Royalty income from Kestrel for 2014 is expected to be approximately £1.7m. Rio Tinto only mined approximately $5\%$ of production within the Company's royalty lands during H2 2014, as a result of slower than expected production ramp up and a panel changeout during Q4 2014. However Anglo Pacific was encouraged by Rio Tinto's announcement on 16 July 2014, which reported strong coal production figures from Kestrel following the completion of the extension project which should benefit Anglo Pacific when coal is mined within the land the subject of its private royalty. Kestrel production for 2014 was 2.7 Mt of coal (2.16 Mt of hard coking coal and 0.56 Mt of thermal coal) compared to 3.016 Mt (2.553 Mt of hard coking coal and 0.463 Mt of thermal coal) for the corresponding period in 2013.

Rio Tinto expects that production will ramp up to 5.7 Mtpa over the next 12 to 18 months, after some commissioning issues were encountered with the new longwall. The Kestrel Qualified Person is of the opinion that such problems are not unexpected when using new technology and that it would be reasonable that the forecast ROM production of 5.7 Mt per year will be achieved as production ramps up. Assuming a yield of around $83\%$ , believed by the Kestrel Qualified Person to be achievable, annual saleable coal production could be in the order of 4.73 Mt. The Kestrel Qualified Person believes a product mix of $85\%$ coking coal (4.02 Mt) and $15\%$ thermal coal (0.71 Mt) would be reasonable to expect based upon recent production statistics.

Royalty forecasts can only be based accurately with an understanding of the proposed mine schedule and its relationship to land title. As forward looking mine schedule information has not been made available to the Kestrel Qualified Person comment cannot be made on expected future revenues to the Company in the form of royalty payments with any accuracy.

On 18 August 2014, Anglo Pacific announced that it had entered into an agreement with Kestrel Coal Pty Ltd, a subsidiary of Rio Tinto, and its Kestrel joint venture partners, Queensland Coal Pty Ltd and Mitsui Kestrel Coal Investment Pty Ltd, for the provision of certain information in respect of Kestrel.

The information to which Anglo Pacific is entitled under the agreement includes, on a quarterly basis: (i) the invoiced payable tonnes (including product splits); (ii) the royalty payable; (iii) the split between the public and private royalty payable; (iv) the estimated private royalty payable for the next quarter; and (v) the forecast production tonnages, split on a public and private royalty basis, for the next four quarters. The forecast information provides Anglo Pacific and its investors with more visibility on expected growth in royalty income from this key asset.

Anglo Pacific expects production within the Kestrel Royalty Area to be in the range of 20 to 25% for H1 2015 and 70 to 75% for H2 2015 based on Rio Tinto guidance. The Company anticipates that this trend of increasing production within its royalty lands is to continue throughout 2015 and 2016, and based on management estimates, we expect Rio Tinto to mine over 90% of coal within our royalty lands by 2017.

(b) Maracás

Anglo Pacific has a 2% NSR royalty (please see note 14 above) on all mineral products sold from the area of the Maracás project to which the royalty interest relates. The project is located 250 km south west of the city of Salvador, the capital of Bahia State, Brazil and is 99.97% owned and operated by TSX Venture Exchange listed Largo Resources Limited (Largo). Anglo Pacific acquired the royalty in June 2014.

The royalty documentation is governed by the laws of the Province of Ontario, Canada and contains customary provisions on information and audit rights. Anglo Pacific also has the right to an annual site visit. The royalty is payable within 30 days of the end of each calendar quarter.

The Maracás project has completed commissioning (Largo announced commissioning was complete on 16 May 2014) and achieved first production of vanadium pentoxide (V₂O₅) on 2 August 2014 (Largo announced first production on 5 August 2014). Largo has a target to reach a production capacity of 21.1 Mlbs (9,600 t) of V₂O₅ equivalent within 12 months and average annual production of approximately 25.1 Mlbs (11,400 t) V₂O₅ equivalent over a 29 year mine life (production guidance and mine life for the Maracás project are extracted from NI 43-101 Technical Report dated 4 March 2013 (effective date 4 March 2013), reported in accordance with the CIM Standards and NI 43-101). Largo has also entered into an off-take agreement with Glencore International AG for all vanadium products produced at the Maracás project for the first six years of commercial production (Glencore off-take agreement as disclosed in Largo's 14 May 2008 press release). On 3 September 2014, Largo announced it had made its first shipment of V₂O₅ from the project.

After achieving first production in August 2014, the Maracás project continues to successfully ramp up production to name plate capacity. Most recently, Largo announced that production output is currently running between 11 and 18 tonnes of V₂O₅ per day which represents 45% to 65% of production capacity. Commercial shipments of vanadium are expected to continue on a weekly basis. To 3 December 2014, a total of 1.6 million pounds of V₂O₅ has been shipped from the Maracás project since shipments commenced. Largo appears to be in line with expectations to achieve the previously announced target of Phase 1 nameplate production capacity of 9,600 tonnes of vanadium pentoxide per annum within 12 months of first production.

On 9 December 2014, Largo announced it had commenced a pre-feasibility study on the potential to produce saleable platinum concentrates at Maracás. This was based on preliminary investigations conducted by Largo which indicated that it may be possible to produce platinum in addition to vanadium pentoxide from the non-magnetic material separated during the beneficiation process. Platinum production represents a source of potential upside for our royalty which was not taken into account at the time of the acquisition.

The Group expects to receive the first royalty payments in relation to Maracás during H1 2015.

103

Reserves25

	Mt	V2O5(%)	Contained V2O5(kt)
Proven	7.341	1.28%	93.96
Probable	5.738	1.42%	81.48
Total	13.08	1.34%	175.44

25 Please see note 14 above.

Resources26

		Mt	V2O5(%)	Contained V2O5(kt)
Gulçari A	Measured	8.87	1.37%	121.50
	Indicated	15.77	0.96%	151.40
	Inferred	2.61	0.76%	19.80
Gulçari A Norte	Inferred	9.73	0.84%	81.39
Gulçari B	Inferred	2.91	0.70%	20.31
Novo Amparo	Inferred	1.56	0.72%	11.26
Novo Amparo Norte	Inferred	9.72	0.87%	84.45
Sao Jose	Inferred	3.90	0.89%	34.71
Total	Measured	8.87	1.37%	121.50
	Indicated	15.77	0.96%	151.40
	Inferred	30.43	0.83%	251.91

26 Please see note 15 above.

Anglo Pacific has a 1% life of mine NSR on the Four Mile uranium mine located 550km north of Anglo Pacific in South Australia, which is operated by Quasar Resources Pty Ltd (Quasar) on behalf of its joint venture partners, being Quasar (as to 75%) and ASX-listed Alliance Resources Limited (Alliance) (as to 25%). Anglo Pacific acquired the royalty in May 2009.

The royalty is governed by a number of contracts, which are governed by the laws of South Australia and Western Australia and provide for customary information rights and an annual audit right. The royalty is payable within 45 days after the end of each calendar quarter.

Production commenced on 14 April 2014 and on 6 October 2014, Alliance announced that the first shipment of 300,000 lbs of uranium ore concentrate had occurred in September. Total production from commencement of mining to 31 December 2014 was 1.66 Mlbs of uranium ore concentrate. Alliance announced on 7 November 2014 that Quasar intends to produce 2.6Mlbs of uranium ore concentrate in 2015, and intends to stockpile all 2014 and 2015 production. As a result, the Group does not anticipate receiving any royalty payments until this inventory is sold in 2016.

Resources27

		Mt	Grade U3O8(%)
Four Mile West	Indicated	4.1	0.34%
	Inferred	1.5	0.31%
Four Mile East	Indicated	-	-
	Inferred	4.1	0.31%
Total	Indicated	4.1	0.34%
	Inferred	5.6	0.31%

27 Please see note 12 above.

(d) El Valle-Boinás/Carlés (EVBC)

Anglo Pacific has a 2.5% life of mine NSR on the El Valle-Boinás/Carlés gold, copper and silver mine owned by TSX-listed Orvana Minerals Corp (Orvana). EVBC is located in the Rio Narcea Gold Belt of northern Spain and was previously mined from 1997 to 2006 by Rio Narcea Gold Mines. The

royalty rate increases to $3\%$ for each quarter where the London Bullion Brokers P.M. Gold Fixing spot price (or an alternative reputable spot price) averages or exceeds US$1,100 per ounce. Anglo Pacific acquired the royalty in May 2008.

The EVBC royalty was originally structured as a non-interest bearing, convertible debenture, but following an amendment in 2012, the convertible element has been removed. The royalty is secured by way of Spanish law "censos" on the mining concessions and there is an intercreditor arrangement in place with Credit Suisse AG, which has provided finance to Orvana. The royalty contract contains customary information and audit rights, such as the right to receive a royalty statement showing how the royalty has been calculated, the right to inspect the records and the right to appoint an auditor to verify the royalty payments. Anglo Pacific also has the right to visit and inspect the mine. The royalty is payable within 45 days after the end of each calendar quarter. The royalty contract and the intercreditor arrangements are governed by the laws of the Province of Ontario, Canada.

In 2013, the Group received royalty related payments of C$3.2m (2012: C$3.0m) which translated into £2.0m (2012: £1.9m). Anglo Pacific also received an additional payment of £2.0m in 2013 representing repayment of the original debenture instrument.

Orvana announced on 27 October 2014 for the 12 month period ending 30 September 2014, EVBC production of 62,957 ounces of gold, 156,977 ounces of silver and 5.6 Mlbs of copper, as well as its production guidance for EVBC for the 12 month period ending 30 September 2015 of 63,000 to 72,000 ounces of gold, 150,000 to 180,000 ounces of silver and 6.0Mlb to 7.0Mlb of copper.

On 13 August 2014, Orvana released updated Mineral Resources and Reserves estimates for EVBC, showing a $66\%$ decrease in gold ounces and a $59\%$ decrease in copper tonnes in the Reserves, and a decrease in gold ounces and copper tonnes of $32\%$ and $22\%$ respectively of Measured and Indicated resources. On the same day, Orvana announced an updated life-of-mine plan which reduced the expected mine life to approximately four years, compared with the nine years previously disclosed. Orvana further announced its plan to place the Carles Mine on care and maintenance by the end of 2014 pending an improved economic mining plan or higher metal prices.

Reserves28

		Mt	Grade Au (g/t)	Grade Ag (g/t)	Grade Cu (%)
Boinas Oxide	Proven	-	-	-	-
	Probable	0.598	6.83	7.31	0.41%
Boinas Skarn	Proven	0.47	3.36	20.33	0.96%
	Probable	1.029	3.39	14.39	0.72%
Carles Skarn	Proven	-	-	-	-
	Probable	0.095	2.63	7.30	0.37%
Total	Proven	0.47	3.36	20.33	0.96%
	Probable	1.7	4.54	11.54	0.59%
	P+P	2.2	4.29	13.41	0.67%

28 Please see note 11 above.

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Resources²⁹

		Mt	Grade Au (g/t)	Grade Ag (g/t)	Grade Cu (%)
Boinas Oxide	Measured	0.6	4.42	25.01	1.05%
	Indicated	1.8	6.76	13.47	0.80%
	Inferred	2.5	7.16	3.63	0.46%
	Measured	0.7	2.79	16.58	0.78%
Boinas Skarn	Indicated	1.8	3.16	14.40	0.58%
	Inferred	2.1	3.35	12.27	0.45%
	Measured	0.04	4.55	5.26	0.68%
Carles Skarn	Indicated	1.1	3.40	6.22	0.41%
	Inferred	1.4	3.90	4.12	0.43%
	Measured	1.3	3.61	20.27	0.91%
Total	Indicated	4.7	4.63	12.18	0.63%
	M+I	6.0	4.40	13.98	0.69%
	Inferred	6.0	5.06	6.80	0.45%

²⁹ Please see note 11 above.

The continued and expected performance of EVBC under the new mine plan announced on 13 August 2014 provides the Group with confidence in the ability of this mine to generate royalty income during its remaining mine life.

On 9 December 2014, Orvana announced that the focus on improved execution and grade optimisation contributed to stronger EVBC operating results in recent months, with gold production of 33,529 ounces in the second half of fiscal 2014 compared with 29,428 ounces produced in the first half of fiscal 2014, an increase of 14%. On 16 January 2015, Orvana announced its FY2015 first quarter production results for EVBC. The mine produced 13,988,000 ounces of gold, 1.26 Mlb of copper and 33,838 ounces of silver.

Orvana also announced that it plans to make further investments in the growth of its business, which includes an increase of its EVBC reserves and resource estimates through the potential to upgrade Inferred Mineral Resources to Mineral Reserves and the potential to identify new resources at EVBC and surrounding areas.

(e) Amapá and Tucano

Anglo Pacific has a 1% life of mine GRR on all iron ore and other non-precious minerals produced from the Amapá Iron Ore System (Amapá) in northern Brazil. Amapá consists of the mine in Pedra Branca do Amapári and the port in Santana, which are linked by a railway. Amapá’s recorded revenue in 2012 was US$327m (2011: US$481m), based upon production volumes of 6.1Mt (2011: 4.8Mt) (revenue and production figures are taken from Anglo American plc’s 2012 Annual Report). The mine produces a mix of sinter feed, pellet feed and spiral concentrates. Anglo Pacific acquired the royalty in December 2010.

On 4 January 2013, Zamin announced that it had signed a binding agreement for the purchase of Amapá from Anglo American plc (70%) and Cliffs Natural Resources Inc (30%). This process completed on 4 November 2013 and Zamin is now the owner and operator.

The royalty is governed by a number of contracts, which are governed by Brazilian law and provide for basic information rights, such as a royalty statement showing how the royalty has been calculated, and a right to access the relevant data and sales and accounting information relating to the project. Payment is due within fourteen days of the end of each calendar month.

Shipments of iron ore from Amapá were suspended in March 2013 due to a serious incident at the Santana port, which impacted key infrastructure at the loading bay. This resulted in reported 2013 income from Amapá of £0.7m (2012: £2.2m). The Santana port is currently being rebuilt. During the course of 2014 there have been small shipments of iron ore from Amapá from which Anglo Pacific is entitled to receive royalty income. However, Zamin has requested to settle the Group’s royalty account in early 2015 and no payment has yet been received.

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Resources³⁰

		Mt	Grade Fe (%)
Canga	Measured	–	–
	Indicated	8.0	48.7%
	Inferred	6.3	46.1%
Colluvium	Measured	10.0	39.2%
	Indicated	51.6	38.7%
	Inferred	14.2	35.1%
Friable Itabirite and Hematite	Measured	34.0	39.8%
	Indicated	103.8	41.5%
	Inferred	16.1	43.7%
Total	Measured	44.0	39.7%
	Indicated	163.4	41.0%
	Inferred	36.6	40.8%

30 Please see note 8 above.

Anglo Pacific also has a 1% life of mine GRR on all iron ore and other non-precious metals apart from copper produced from the Tucano project owned by ASX-listed Beadell Resources Limited (Beadell), which is located adjacent to the Amapá Iron Ore System in northern Brazil. Anglo Pacific acquired the royalty at the same time as the Amapá royalty in December 2010.

Beadell is focused on gold mining, with first gold being poured in 2012; however, it also produces an iron ore concentrate from the tailings created by its gold processing plant. The iron ore is sold to Zamin pursuant to an off-take agreement for 500ktpa of ~65% Fe concentrate.

As with the Amapá royalty, the Tucano royalty is governed by a number of contracts, which are governed by Brazilian law. The contracts require Beadell to maintain sufficient records as are necessary to ensure that the royalty can be accurately calculated and provide Anglo Pacific with a right to inspect the information and to appoint an auditor to verify the calculations. Payment is due within ten business days of the end of each calendar month.

The Group is also entitled to royalties over a number of concessions governed by a joint exploration arrangement between Zamin and Beadell.

On 24 April 2014, Beadell announced in its March 2014 Quarterly Report that it has continued to build up its stockpiles of magnetite concentrate at its magnetic separation plant (please see note 9 above).

Development royalties

(f) Salamanca

Anglo Pacific has a 1% life of mine NSR on the Salamanca uranium project located in Spain and operated by ASX-listed Berkeley Resources Ltd (Berkeley). The project includes the Retortillo, Alameda, Zona 7 and Gambuta deposits and is located in Salamanca Province, Spain, approximately 250km west of Madrid. Anglo Pacific acquired the royalty in December 2009.

The royalty contract is governed by the laws of Western Australia and contains customary provisions on such matters as information and audit rights. Anglo Pacific also has the right to visit and inspect the mine. The royalty is payable within 45 days of the end of each calendar quarter.

On 26 September 2013, Berkeley announced the results of its JORC-compliant pre-feasibility study (PFS), which estimated an average production of 2.7Mlbs U₃O₈ per annum over an 11-year mine life and capital costs of approximately US$169m to reach steady state operation. The PFS considers an open pit mine, heap leaching operation using on-off leach pads, a centralised process plant at Retortillo, and a remote ion exchange operation at Alameda, with loaded resin trucked to the centralised plant for final extraction and purification.

On 24 April 2014, Berkeley announced that it had been granted the mining licence for the Retortillo deposit. This is a major milestone in advancing the project towards first production. In addition, on 26 November 2014, Berkeley announced an updated Mineral Resource estimate for Zona 7. The Inferred Resource increased by 90% to 56.1 Mlbs U₃O₈ as per the Zona 7 mineral resource update. Indicated resources were constant at 32.0 Mlbs U₃O₈. The Inferred Resource increase is primarily a result of a substantial increase to the mineral resource estimate for the Zona 7 uranium deposit, the largest of the Retortillo satellite deposits of the Salamanca Project in Spain. This Inferred Mineral Resource has been estimated at 23.2 million tonnes averaging 589 ppm U₃O₈ for a contained 30.1 million pounds of U₃O₈ at a cut-off grade of 200 ppm U₃O₈.

Given the significant scale, high grade and shallow depth of the Zona 7 deposit, Berkeley is advancing its evaluation to the scoping study stage which is due for completion in 2015.

This demonstrates the excellent potential upside associated with this project.

Resources³¹

		Mt	Grade U₃O₈ (%)
Retortillo	Indicated	14.4	0.04%
	Inferred	1.8	0.04%
Alameda	Indicated	20.0	0.05%
	Inferred	0.7	0.07%
Zona 7	Inferred	23.2	0.06%
Gambuta	Indicated	-	-
	Inferred	12.7	0.04%
Satellites	Indicated	-	-
	Inferred	11.9	0.05%
Total	Indicated	34.4	0.04%
	Inferred	50.3	0.05%

³¹ Please see note 16 above.

Early stage

(g) Pilbara

Anglo Pacific has a 1.5% life of mine GRR over three exploration tenements in the central Pilbara region of Western Australia owned by a wholly owned subsidiary of BHP Billiton Limited (BHP Billiton), which is dual-listed on the LSE and ASX. Anglo Pacific acquired the royalty in June 2010.

The royalty documentation is governed by the laws of Western Australia and provides for an annual audit right. The royalty is payable six weeks after the end of each calendar quarter for the first two years of production and within 14 days of the end of each calendar quarter after such time.

The tenements, covering 263km², host a number of known iron occurrences, including the Railway deposit. The tenements are supported by extensive rail infrastructure including the rail lines from Rio Tinto's West Angelas and Yandicoogina mines and BHP Billiton's rail line serving its current operations at Mining Area C, which lie immediately to the east of the Railway deposit.

United Minerals Corporation NL, which was acquired by BHP Billiton in 2010, explored the tenements during the period from 2007 to 2009 and announced the most current mineral resources for the tenements in the public domain on 21 September 2009. Since the acquisition by BHP Billiton, no further public disclosures have been made.

Resources³²

	Mt	Grade Fe (%)
Indicated	100.7	60.3%
Inferred	57.4	54.0%

³² Please see note 17 above.

(h) Ring of Fire

Anglo Pacific has a 1% life of mine NSR over a number of claims on the Black Thor, Black Label and Big Daddy chromite deposits, operated by NYSE-listed Cliffs Natural Resources Inc. (Cliffs), in the Ring of Fire region of Northern Ontario, Canada. Anglo Pacific acquired the royalty in August 2011.

The royalty is governed by a number of contracts, which are governed by the laws of the Province of Ontario, Canada, and provide for customary information and audit rights. The royalty is payable on the fifteenth day of each month that is the second month following the last day of the calendar month in which the royalty accrued.

Cliffs announced on 20 November 2013 that it had decided to halt development of its chromite project for the foreseeable future. Cliffs referenced the risks associated with the development of infrastructure required to advance the project as a reason for its decision. As a result of this announcement, Anglo Pacific decided to take a partial impairment charge of £4.2 million in respect of this royalty. Cliffs has announced that it will continue to work with stakeholders to explore for potential solutions to the current impasse.

Mineralised Material³³

	Mt	Grade Cr²O³ (%)
Black Thor	137.7	31.5%
Black Label	5.4	25.3%
Big Daddy	29.1	31.7%
Total	172.2	31.3%

³³ Please see note 18 above.

(i) Dugbe 1 (please see note 22 above)

Anglo Pacific entered into a royalty financing agreement with the AIM-listed Hummingbird Resources PLC (Hummingbird) in December 2012 in relation to Hummingbird’s Dugbe 1 gold project in Liberia. In exchange for US$15m, Anglo Pacific is entitled to a 2% life of mine NSR from any sales of gold mined within a 20km radius of a specified point in the Dugbe F Resource.

The royalty is payable on the last day of the month following each calendar quarter. Further, after an initial grace period of six months following the commencement of commercial production, in the event that quarterly sales of gold produced are less than 50,000 ounces, additional quarterly payments will be required until such time as the cumulative royalty paid is US$15m (the maximum total payment in any such quarter is equivalent to the royalty that would have arisen on sales of 50,000 ounces of gold). Following repayment of an amount of US$15m, the royalty rate increases to 2.5% for each quarter where both the average gold price is above US$1,800 and sales of gold are less than 50,000 ounces.

The acquisition consideration was payable in three equal tranches, all of which have been paid. It is envisaged that the advances will convert into the 2% NSR following the successful execution of a mineral development agreement for the project with the Liberian Government. The advances and royalty are secured over relevant assets of the Hummingbird group.

The royalty documentation also contains customary provisions for information and audit rights. Anglo Pacific also has the right to visit and inspect the mine. The documentation also provides Hummingbird with a right of first refusal on any proposed disposal of the royalty. The royalty documentation and one of the security agreements are governed by the laws of England and Wales, with the remainder of the security agreements being governed by Liberian law.

Hummingbird is currently compiling a feasibility study for the project.

109

110

Resources³⁴

		Mt	Grade Au (g/t)
Dugbe F	Indicated	–	–
	Inferred	43.0	1.28
Tuzon	Indicated	37.4	1.56
	Inferred	4.97	1.55
Total	Indicated	37.4	1.56
	Inferred	47.97	1.31

³⁴ Please see note 20 above.

(j) Panorama (Groundhog Project)

Anglo Pacific announced on 28 August 2014 that it had disposed of its Panorama coal interests in British Columbia, Canada to Atrum Coal Limited. Atrum Coal Limited has renamed this area as the “Discovery Area”. Disposal proceeds were US$0.5m of cash payable on completion, a US$2.0m promissory note repayable within 12 months, and one million Atrum Coal Limited shares and the retention of a royalty of the higher of 1% of gross revenues on a “mine gate” basis or US$1/tonne over any coal mined and sold from the properties part of the sales process. The royalty is payable quarterly on the day that is 45 days following the end of the relevant quarter. The royalty documentation is governed by the laws of the Province of British Columbia, Canada and contains customary provisions for information and audit rights. Anglo Pacific also has the right to visit and inspect the mine. Anglo Pacific released a NI 43-101 technical report on the project on 28 September 2010.

On 20 October 2014 Atrum Coal Limited announced an updated mine plan for Groundhog North which also includes the Group’s royalty areas (please see note 21).

(k) Other

Anglo Pacific has a number of other smaller royalties and options over a variety of projects and claims, including in relation to the Crinum mine in Queensland, Australia, the Mount Ida magnetite iron ore project in Western Australia, the Engenho gold mine in Brazil, the Jogjakarta mine in Indonesia, the Bulqiza deposit in Albania, the Isua iron ore mine in Greenland, tenements in the Athabasca Basin in Saskatchewan, Canada and uranium properties owned by Uranium Resources Inc. in New Mexico, USA.

On 16 October 2014, London Mining PLC, the owner of the Isua mine, announced it had appointed administrators. As a result, the Company made a full provision against the value of its Isua royalty, resulting in the recognition of an impairment charge of £15.4 million. On 8 January 2015, the Government of Greenland announced that it had approved the transfer of all shares of London Mining Greenland (Jersey) (1) Ltd (London Mining Greenland) to General Nice Development Limited (General Nice). The Isua project licence is owned by London Mining Greenland A/S, a wholly-owned subsidiary of London Mining Greenland. On 26 January 2015, Anglo Pacific received official confirmation of this transfer from PricewaterhouseCoopers LLP, the administrator of London Mining PLC. Anglo Pacific intends to waive its rights to the repayment of the US$30m advanced to London Mining PLC in 2011 under the change of control provisions of the royalty financing agreement due to the inability of London Mining PLC to make this repayment. The indirect transfer of the licence means that the company structure of London Mining Greenland A/S remains the same and therefore the royalty will continue to apply to the project. With the Isua project under the ownership of General Nice, there is scope for recovery of value from this royalty in the future.

Other assets

Anglo Pacific owns a portfolio of listed equity investments, which are primarily in companies that operate the assets where it either holds a royalty interest or has in the past considered acquiring one. These investments are held at market value. As at 31 December 2014, Anglo Pacific’s total portfolio value of listed equity investments was approximately £8.8 million, and its top two largest listed

holdings are specified in the table below. The value of Anglo Pacific's top two largest listed holdings represents 75% of its total portfolio value of listed equity investments.

| Company | No. of Shares | Top 2 largest listed holdings
Value (as at 31 December 2014) | Exchange |
| --- | --- | --- | --- |
| Berkeley Resources Ltd | 30.3m | £4.5m | ASX/AIM |
| Royalco Resources Ltd | 15.4m | £2.2m | ASX |

Equity interests in mining companies were historically acquired where a royalty or streaming interest was sought as part of an overall financing package proposed to mining companies. The Directors anticipated that equity investments will not form a significant part of the overall value of the Anglo Pacific portfolio going forward.

Flowstream

In October 2013, Anglo Pacific became a minority founding shareholder in FlowStream Commodities Ltd and simultaneously entered into a Strategic Co-Investment Agreement with the company. FlowStream Commodities Ltd is a privately owned streaming and royalty company focused on the oil and gas sector. Anglo Pacific is entitled to co-invest up to a 10% interest in a defined number of streaming and royalty projects in the oil and gas sector that FlowStream Commodities Ltd invests in from 25 October 2013.

Trefi

The Group owns several coal exploration licences over thermal coal in British Columbia, Canada, through its wholly-owned subsidiary, Trefi Coal Corp. Trefi Coal Corp owns the Trefi property, comprised of 15 coal licences covering 7,337ha. On 9 July 2010, Anglo Pacific released NI 43-101 compliant Resources of weak coking coal saleable into either the thermal or PCI markets. The NI 43-101 report is dated 18 March 2010.

The coal Resource estimate is based on drilling and exploration undertaken by Gulf Canada between 1980 and 1982 and by Anglo Pacific in 2008 and 2009. The Resource estimate was prepared by Moose Mountain Technical Services, an independent consultancy based in Canada. The Resource is reported in accordance with the Australian JORC Code and Canadian National Instrument 43-101.

8 Executive management

Julian A. Treger joined the Group as Chief Executive Officer and an Executive Director on 21 October 2013. He has an MBA from Harvard Business School and a BA from Harvard University. He began his career working for Lord Rothschild as an in-house corporate financier, managing a portfolio of public and private equity investments before co-founding Active Value Advisors Ltd. to invest in undervalued, predominantly UK-listed companies, where he advised on more than US$900m of funds over a 12-year period. Most recently, he has served as one of the principals of Audley Capital Advisors LLP, an investment advisory firm, which he co-founded in 2005, managing value-orientated, special situations investment strategies through hedge fund and co-investment vehicles, with a principal focus on the natural resources sector.

Mark R. Potter joined the Group as Chief Investment Officer and an Executive Director on 21 October 2013. He has a BA (Hons) and an MA degree in Engineering and Management Studies from Trinity College, University of Cambridge. After graduating, he became a Senior Analyst in the Investment Banking division of Schroder Salomon Smith Barney (Citigroup). From 2003 to 2005, he was an Associate at Dawnay Day advising on M&A, private equity and initial public offerings for UK-listed companies. Most recently, he has served as one of the principals of Audley Capital Advisors LLP, an investment advisory firm, which he joined at inception in 2005, where he has been primarily responsible for covering all natural resources investments held by the firm's flagship Audley European Opportunities Fund.

Kevin Flynn, Chief Financial Officer, joined the Group in January 2012. A Chartered Accountant, having qualified with Deloitte, he has overall responsibility for corporate reporting, treasury and taxation. Prior to

joining the Group, he spent several years in finance roles in the London commercial real estate sector, with both FTSE 100 and FTSE 250 companies.

Peter T.J. Mason, General Counsel and Company Secretary, joined the Group in October 2010 and was appointed Company Secretary in July 2011. He has a BA in history from the University of Warwick and is a qualified solicitor. He began his career in private practice with Freshfields Bruckhaus Deringer LLP, working in London and Tokyo with a focus on mergers and acquisitions. Prior to joining the Group, he worked for PETRONAS, advising on its European production and gas storage businesses.

9 Directors

Executive:

J.A. Treger (Chief Executive Officer)

M.R. Potter (Chief Investment Officer)

Non-executive:

W.M. Blyth (Non-executive Chairman and chair of the Nomination Committee)

D.S. Archer (Non-Executive Director, chair of the Remuneration Committee and Senior Independent Director)

R.C. Rhodes (Non-Executive Director and chair of the Audit Committee)

R.H. Stan (Non-Executive Director)

A.H. Yadgaroff (Non-Executive Director)

W. Mike Blyth was appointed director in March 2013 and became Non-executive Chairman on 1 April 2014. He has a BSc from St Andrews University and is a Chartered Accountant. He was, until his retirement in 2011, a partner for 30 years in Baker Tilly, specialising in providing audit and related services to AIM and full list clients. During his career he held a number of senior management positions with the firm, including a period on its National Executive Committee.

David S. Archer was appointed director in October 2014 and currently chairs the Group's Remuneration Committee. He is also the Group's Senior Independent Director. He has over 34 years' international resources industry experience in the Americas, Asia, Australia and the Middle East. He is the Chief Executive Officer of AIM-listed Savannah Resources PLC, which owns majority stakes in a mineral sands project in Mozambique and a copper project in Oman, and was previously the Managing Director of ASX-listed company, Hillgrove Resources Limited, where he was responsible for growing the company into a significant, dividend paying, mineral explorer and copper producer with assets in Australia and Indonesia. Mr. Archer was the founder and Deputy Chairman of Savage Resources Limited, a coal, copper and zinc producer, and the founder and Executive Chairman of PowerTel Limited. He is also a barrister (non-practicing) of the Supreme Court of New South Wales.

Rachel C. Rhodes was appointed director in May 2014 and currently chairs the Group's Audit Committee. She has an MA in Economics from the University of Cambridge and is a member of the Institute of Chartered Accountants in England and Wales, having qualified with Coopers and Lybrand in London in 1997. She has over fifteen years of experience in the mining industry, including with Anglo American plc (until August 2008) and London Mining PLC (until November 2013). Ms. Rhodes has played a leading role in listing companies on LSE, AIM and JSE, in raising significant project and corporate finance and in negotiating mining licences and fiscal platforms.

Robert H. Stan was appointed director in February 2014. He has over 34 years of experience in the mining industry. He has held several senior positions with Fording Coal Limited, Westar Mining Ltd, and TECK Corporation before becoming a founding shareholder and director of publicly quoted Grande Cache Coal Corporation (GCC), an Alberta-based metallurgical coal mining company, in 2000. At GCC, he served as President, CEO and Director from 2001 to 2012, when the company was sold for US$1bn to Winsway Coking Coal and Marubeni Corp, an Asian-backed strategic investor consortium. He has served as Chairman of the Coal Association of Canada Board of Directors and has acted as a board member of the International Energy Agency's Coal Industry Advisory Board. He currently serves on the board of several private

112

companies, including Quantex Resources Limited and Spruce Bluff Resources Limited, and of publicly listed Whetstone Minerals Limited.

Anthony H. Yadgaroff was appointed director in March 2003 and previously chaired the Group's Remuneration Committee. He is a Member of the Chartered Institute for Securities and Investment, and has specialised in investment research and management consultancy during a forty year City career. Allenbridge Group, which he founded in 1984 to provide advisory services to private and institutional investors, was acquired by Close Brothers in February 2011. He is Chairman of Allenbridge Investment Solutions LLP (AIS), and is a member of the partnership alongside Moody's, the global rating agency. AIS is a leading UK investment advisory business, consulting to pension funds and charity clients which control some £42 billion of assets.

10 Employees

As at 5 February 2015, the Group had 13 employees, two of whom were executive directors.

11 Corporate responsibility

Anglo Pacific is committed to acting responsibly in the way in which it does business. The most material impact that the Group has is through the mines that it invests in, and therefore pays particular attention to these issues when considering any investment. Anglo Pacific also monitors the corporate social responsibility performance of the mines that it holds a royalty interest in over the life of the investment. During 2014, Anglo Pacific acted to strengthen its processes in this area.

The Group also has an impact through its small core headquarters based in London. During 2014, the Group reviewed and renewed its processes to ensure the effective coverage of anti-bribery and corruption, community impact, environmental impact, employee health and safety, human rights (with particular reference to labour rights), plans for mine closure at the end of extraction, supply chain policies, taxes and transparency of payments. In conducting this review, the Group took into consideration the Extractive Industries Transparency Initiative, International Council on Metals and Mining's Sustainable Development Framework, United Nations' Guiding Principles on Human Rights and the Voluntary Principles on Security and Human Rights.

12 Integrity

Anglo Pacific is committed to maintaining its reputation for fair dealing. The Group and its directors, officers and employees do not offer, give or receive bribes or inducements whether directly or through a third party.

The Group has policies and procedures in place which seek to ensure that all of its directors, officers, employees, consultants, advisers, business partners, and anyone else who may be acting on its behalf, are aware of their responsibilities in this area. It actively promotes a transparent approach to all of its business dealings and expects its employees to adopt a zero tolerance attitude to corruption. The Group encourages its employees to report any potential or apparent misconduct in accordance with its internal whistle blowing policy and any employee that refuses to pay bribes, or raises any issues honestly, and in good faith, will be supported by the Group.

The Group chooses its business partners and counterparties carefully, based on merit, and only works with persons that are believed to be of known integrity, who Anglo Pacific believes will act consistently with its own standards. The Group does not make facilitation payments. Where it does business in countries with laws that are less restrictive than its own policies and procedures, it will seek to follow its own policies and procedures and promote its standard of integrity wherever possible.

13 Environment

Anglo Pacific is committed to an environmental policy of collaborating fully with statutory authorities, local communities and other interested parties in order to limit any potential adverse impacts of its activities on the natural and human environments associated with its operations. The nature of its royalty investments is such that it does not operate any of the properties underlying its royalty portfolio and consequently, it does

not always have the ability to influence the manner in which the operations are carried out. Nevertheless, a responsible approach to a project’s environmental impact and its sustainability management is essential to the success of the project over its life. As part of its investment decision process, the Group gives careful consideration to the environmental aspects of any potential asset purchase during the due diligence phase. In particular, the Group typically engages with consultants who have the requisite expertise to ensure that it can consider and, if necessary, mitigate any risks in this regard to a properly maintainable level. Where the Group does engage in exploration efforts as part of advancing a property, it seeks to do so in accordance with the highest industry standards. The Group expects its employees to address environmental and sustainability responsibilities within the framework of normal operating procedures and to look to minimise waste as much as economically practicable. The Audit Committee is responsible for periodically reviewing the Group’s environmental practices and for monitoring their effectiveness.

14 Social and community issues

Anglo Pacific acknowledges that, whilst its activities have little direct contact with communities, it can positively influence the social practices and policies of companies it conducts business with. Positive social and community relationships are essential to profitable and successful mining activities and the Group endeavours to ensure that companies it works with have appropriate procedures in place to facilitate this. More specifically, the Group’s investment decision process for potential asset purchases routinely involves a due diligence process on the environmental, social, and health and safety aspects of the project. The Group standardises its due diligence process with regards to CSR aspects by including these in its due diligence checklists. Where the Directors believe that the Group’s own operational activities may have an impact on local community groups, it consults with these groups and provides them with the opportunity to engage at the planning stage. The Audit Committee is responsible for periodically reviewing the Group’s social and community practices and for monitoring their effectiveness.

15 Diversity

Anglo Pacific believes that its people are instrumental to its success and respects and values the individuality and diversity that every employee brings to the business. As at 5 February 2015, the Group had 13 employees, six of whom were female. Of the total workforce, four are senior managers (all male). In terms of the Company’s Board of Directors, there are seven Directors, one of whom is female. Prior to any appointment to the Board, the Nomination Committee gives due regard to diversity and gender with a view to appointing the best placed individual for the role. The Group recognises that it can do more to encourage and support gender diversity and hopes to be able to identify and develop talent at all levels in the organisation as the Group continues to grow.

16 Health and safety

The health and safety of the Group’s employees is a fundamental responsibility. The small size of the Group’s organisation allows the day-to-day responsibility to remain at the Board level, being monitored by the Chief Executive Officer. Furthermore, a commitment to health and safety is a fundamental component of a successful mining project, and, as part of its investment decision process, the Group has access to consultants with the requisite expertise to ensure that it can consider and, if necessary, mitigate any such risks.

17 Donations

Anglo Pacific’s philosophy on charity has historically been that this is a decision best made by shareholders with their own resources. The Group is currently evaluating its donations policy and considers supporting select charities at the discretion of the Directors.

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PART 6

SELECTED FINANCIAL INFORMATION

The selected financial information set out below has been extracted without material amendment from Part 9 (Financial Information relating to Anglo Pacific Group PLC) of this Prospectus, where it is shown with important notes describing some of the line items.

Income statement data

	For the Six Months Ended 30 June		For the Year Ended 31 December
	2014	2013	2013	2012	2011
	(unaudited)		(Audited)
Royalty related income	2,581	8,342	14,731	15,157	35,063
Amortisation of royalties	(380)	(455)	(854)	(1,018)	(1,018)
Operating expenses	(1,928)	(1,459)	(3,275)	(3,633)	(3,391)
Operating profit before impairments, revaluations and gains/losses on disposals	273	6,428	10,602	10,506	30,654
(Loss)/Gain on sale of mining and exploration interests	2,073	(4,888)	(6,398)	7,347	20,302
Impairment of mining and exploration interests	(759)	(20,812)	(26,321)	(11,401)	(29,182)
Impairment of royalty intangible assets	(4,500)	-	(8,313)	-	(1,088)
Impairment of royalty financial instruments	-	-	-	-	(1,563)
Revaluation of coal royalties (Kestrel)	(18,055)	(11,322)	(13,568)	9,512	(4,048)
Revaluation of royalty financial instruments	-	(2,505)	(8,735)	(767)	2,843
Finance income	183	349	789	676	798
Finance costs	(1,151)	(854)	(2,964)	(958)	(859)
Other income/(costs)	1,017	761	2,012	3,122	1,358
(Loss)/Profit before tax	(20,919)	(32,843)	(52,896)	18,037	19,215
Current income tax expense	(838)	(859)	(715)	(7,750)	(12,171)
Deferred income tax credit/(expense)	(1,291)	6,219	11,114	1,293	3,888
(Loss)/Profit attributable to equity holders	(23,048)	(27,483)	(42,497)	11,580	10,932
Total and continuing earning per share
Basic (loss)/earnings per share	(20.84p)	(25.29p)	(39.01p)	10.67p	10.10p
Diluted (loss)/earnings per share	(20.84p)	(25.29p)	(39.01p)	10.67p	10.10p

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Key performance indicators

	For the Six Months Ended
	30 June		For the Year Ended 31 December
	2014	2013	2013	2012	2011
	(unaudited)
Adjusted earnings/(loss) per share (pence)(1)	(0.8)	5.6	8.4	8.7	20.7
Dividend per share (pence)	4.45	4.45	10.2	10.2	9.75
Dividend cover(2)	-	-	0.8x	0.9x	2.1x
Royalty assets acquired (£ millions)(3)	16.3	6.4	6.4	6.9	28.4

Notes:

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Statement of financial position data

	As at 30 June		As at 31 December
	2014	2013	2013	2012	2011
	(unaudited)		(Audited)
			(£'000)
Property, plant and equipment	1,945	2,116	1,989	2,105	2,152
Coal royalties (Kestrel)	116,702	149,787	131,434	170,995	165,967
Royalty financial instruments	24,643	37,644	27,847	41,945	43,127
Royalty and exploration intangible assets	46,088	50,656	37,288	53,495	50,748
Mining and exploration interests	14,877	26,014	20,072	55,793	64,551
Other receivables	11,874	9,753	8,775	3,141	-
Deferred tax	3,084	10,647	8,837	5,812	302
Total non-current assets	219,213	286,617	236,242	333,286	326,847
Trade and other receivables	1,699	4,978	5,332	1,958	12,297
Cash and cash equivalents	14,413	16,440	15,706	24,036	32,197
Total current assets	16,112	21,418	21,038	25,994	44,494
Total assets	235,325	308,035	257,280	359,280	371,341
Deferred tax	35,116	50,791	39,202	54,344	56,375
Total non-current liabilities	35,116	50,791	39,202	54,344	56,375
Income tax liabilities	794	-	465	1,801	1,898
Trade and other payables liabilities	7,467	6,849	762	2,171	6,896
Total current liabilities	8,261	6,849	1,227	3,972	8,794
Total liabilities	43,377	57,640	40,429	58,316	65,169
Capital and reserves attributable to shareholders:
Share capital	2,329	2,192	2,218	2,192	2,184
Share premium	29,328	26,853	29,328	26,853	25,539
Other reserves	21,989	33,606	12,509	45,829	53,365
Retained earnings	138,302	187,744	172,796	226,090	225,084
Total equity	191,948	250,395	216,851	300,964	306,172
Total equity and liabilities	235,325	308,035	257,280	359,280	371,341

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Cash flow data

	For the Six Months Ended 30 June		For the Year Ended 31 December
	2014	2013	2013	2012	2011
	(unaudited)		(Audited)
Net cash generated from/ (used in) operating activities	705	(5,954)	2,407	10,198	14,821
Net cash generated from/ (used in) investing activities	(6,426)	2,409	(1,948)	(6,857)	(3,711)
Net cash generated from/ (used in) financing activities	4,697	(4,816)	(8,693)	(10,579)	(8,978)
Net increase/(decrease) in cash and cash equivalents	(1,024)	(8,361)	(8,234)	(7,238)	2,132
Cash and cash equivalents at end of period	14,413	16,440	15,706	24,036	32,197

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119

PART 7

OPERATING AND FINANCIAL REVIEW

The following operating and financial review is intended to convey the Directors' perspective on the operating performance and financial condition of the Group as measured in accordance with IFRS as adopted by the EU. The discussion should be read in conjunction with Part 9 (Financial Information relating to Anglo Pacific Group PLC) and the audited financial statements (including the accompanying notes) of the Company as at and for the years ended 31 December 2013, 2012 and 2011 and the unaudited financial statements as at and for the six months ended 30 June 2014 and 2013. The Company is required to comply with IFRS as adopted by the EU and its accounting policies have been established accordingly. The following discussion contains forward-looking statements that have been based on the current projections and expectations about future events of the Group. Actual results may differ materially from those anticipated in these forward-looking statements as a result of many important factors, including those set forth under "Risk Factors", and elsewhere in this Prospectus. Please refer to "Forward-Looking Statements" on page 38.

1. Overview of Business

Anglo Pacific is a global natural resources royalty company. It is the only company listed on the London Stock Exchange that is focused solely on natural resources royalties. Anglo Pacific's aim is to develop as a leading international diversified royalty company with a portfolio centred on base metals and bulk materials. The Directors will also consider acquiring royalties in other commodities, such as energy. The Directors believe that the royalty industry's historical focus on precious metals, particularly gold and silver, has disproportionately channelled investment into only a small part of the mining industry and that the universe of opportunities should be significantly larger in these markets than for precious metals.

The Group's strategy is to build a diversified royalty portfolio, focusing on accelerating income growth through acquisitions of royalties in cash or near-term cash producing assets. It is an objective of the Group to pay a substantial portion of these royalty revenues to shareholders as dividends.

The Group's royalty portfolio includes assets covering a range of commodities and includes properties at various stages of development, including early stage exploration and production assets. The Group currently has a core royalty portfolio over 10 mining assets, spread across five continents in commodities including coal, iron ore, gold, vanadium, uranium and chromite, all of which are revenue or production based royalties.

Historically, the majority of revenues have been generated from the Group's cornerstone asset, a royalty in respect of part of Kestrel, which is operated by Kestrel Coal Pty Ltd, a subsidiary of Rio Tinto, on behalf of the joint venture partners, Queensland Coal Pty Limited (a Rio Tinto subsidiary) (as to 80%) and Mitsui Kestrel Coal Investment Pty Ltd (as to 20%). This royalty is currently producing lower-than-historic royalty payments whilst Rio Tinto mines outside the area that is the subject of the Group's royalty interest. However, the Group expects substantial royalty growth from this asset during 2015.

Principal Factors Affecting Results of Operations

The principal factors that have had, and are likely to continue to have, a material effect on the Group’s results of operations and financial condition include the following:

the volume of production and sales at the Group’s Royalty Properties, in particular at the Kestrel Royalty Area;
the price of commodities underlying the Group’s royalties, in particular coking coal;
the Group’s expansion of its royalty base;
the stage and pace of development of the Royalty Properties;
movements in currencies;
the operation of the Group’s Royalty Properties; and
revaluations and impairments of assets.

2.1 The volume of production and sales at the Group’s Royalty Properties, in particular at the Kestrel Royalty Area

The Group’s royalty related income is dependent on the production and sales levels at the Group’s Royalty Properties, as the Group’s royalties are based on a percentage of gross or net revenues from sales of commodity production. On acquiring a royalty, the Group will have information or assumptions regarding the estimates of reserves and resources attributable to the underlying project. Production may differ from the original assumptions of reserves and resources, resulting in higher or lower than anticipated production amounts and therefore higher or lower royalty income. Actual production may vary from estimates for a variety of reasons, including actual ore mined varying from estimates of grade, tonnage and other characteristics; short-term operating factors relating to the ore reserves, such as the need for sequential development of ore bodies and the processing of new or different ore grades; risks and hazards associated with mining; natural phenomena such as inclement weather conditions, underground floods, earthquakes, pit wall failures and cave-ins; and unexpected labour shortages or strikes. Resources will also naturally decline over the life of a mine as commodities are extracted. If the owner or operator of a Royalty Property determines that such property is no longer economically feasible, including due to factors such as falling commodity price or changes in local regulation, production and, consequently, royalty income may cease entirely.

Over the periods under review, the majority of the Group’s royalty related income has come from a single cash-generative royalty, the Kestrel royalty, which constitutes a 50% ownership interest in certain sub-stratum lands in Queensland, Australia. The Kestrel Royalty Area encompasses approximately 49% of the entire Kestrel mine site and therefore when production occurs in a part of the mine that is not within the Kestrel Royalty Area, the Group does not receive royalties from such production. In the six months to 30 June 2013, royalty income received from Kestrel amounted to approximately 53% of the Group’s royalty related income and in the year ended 31 December 2013 it amounted to approximately 67%. The Group does not have control over where the location or the levels of production, as the mine is operated by a third party, Rio Tinto. Unless and until the Group achieves further diversification, operations and production at the Kestrel mine will continue to have a significant impact on the Group’s results of operations and financial condition. The following table sets forth the royalty income received from the Kestrel royalty for the periods under review in both Australian Dollars and pounds sterling:

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	For the Six Months Ended
	30 June		For the Year Ended 31 December
	2014	2013	2013	2012	2011
	(unaudited)		(audited)
	(millions)
Royalty income from Kestrel in A$	A$2.8	A$6.8	A$16.1	A$16.7	A$40.5
Royalty income from Kestrel in £	£1.6	£4.4	£9.9	£10.9	£26.1

Additionally, sales of the commodity produced may decline due to a number of circumstances including, but not limited to, fall in demand or shipping disruptions. For example, the Amapá Royalty Property had to suspend shipments of iron ore in March 2013 due to a serious incident at the Santana port which impacted key infrastructure at the loading bay. The operator therefore could not complete sales, despite continuing production, and the Group's royalty income was consequentially reduced.

2.2 The price of commodities underlying the Group's royalties, in particular coking coal

The revenue the Group derives from its royalties is ultimately determined by the market price of the commodities underlying the royalties. The Group's royalty interests and coal royalties are economically similar to holding a direct interest in the underlying mineral asset in that they expose the Group to the same existence of minerals, production, timing and price risks that the owner of the underlying mineral asset is exposed to. Income therefore varies depending on the spot prices prevailing at the time of sale of the relevant commodity or, in relation to certain of its royalties including the Kestrel royalty, at the time the operator of the relevant Royalty Property agrees a price for a set period with the relevant purchaser.

In particular, the Group is sensitive to changes in the price of coking coal produced at the Kestrel mine, and to a lesser extent gold and iron ore. The following table sets forth the price of coking coal, gold and iron ore for the periods indicated:

	For the Six Months Ended 30 June				For the Year Ended 31 December
	2014		2013		2013		2012		2011
	(High)	(Low)	(High)	(Low)	(High)	(Low)	(High)	(Low)	(High)	(Low)
Coking coal (US$/t)	134.05	111.65	173.50	133.50	173.50	131.20	227.00	143.50	N/A	N/A
Iron ore (US$/t)	134.72	85.80	158.00	112.20	158.00	112.20	148.40	86.60	191.90	116.90
Gold (US$/oz)	1,378	1,206	1,695	1,224	1,695	1,196	1,792	1,543	1,900	1,322

Source: Bloomberg, IHS McCloskey Daily Coal Prices (Australian Prime Hard Coking Coal FOB basis).

Commodity prices fluctuate on a daily basis and are affected by numerous factors including levels of supply and demand, industrial development levels, inflation and the level of interest rates, the strength of the US Dollar and geopolitical events in significant coal and iron ore producing and consuming countries. However, demand for a commodity remains the key driver of commodity prices. For example, China accounts for the majority of the seaborne iron ore market and therefore as demand in China for seaborne iron ore increases or decreases, the spot price of seaborne iron ore may likewise fluctuate. Demand for coking coal is also impacted by demand for steel, as coking coal is a key component for steel production. Steel production flattened in the last half of 2011 and throughout 2012 because of sovereign debt problems in Europe and tightening credit policies in China. Over capacity and lack of demand in China is currently putting pressure on Chinese steel prices. Producers are also facing difficulties from tightening credit conditions and increased environmental regulation. However, the Directors believe that the fall in steel prices should be tempered by low inventories at steel distributors and the recent decline in iron ore prices, which has lowered raw material costs for steel production. Furthermore, recent production cuts, idling of facilities and some bankruptcies amongst steel producers globally add support for more normalised pricing in the medium term.

In addition to impacting royalty related income directly, changes in commodity prices may impact expected future cash flows from mines which are taken into account at each reporting date in revaluations of the Group's assets. To the extent commodity prices fall, this can result in decreasing

valuations, requiring impairments of assets and revaluation losses. Gains and losses on revaluation and impairments are reflected in both the Group's income statement and its balance sheet, and therefore changes in commodity prices can have a significant impact on the Group's results of operations and financial performance. For example, the Group's revaluation of its coal royalties held at fair value in the six months ended 30 June 2014 and the year ended 31 December 2013 were a loss of £18.1 million and a loss of £13.6 million, respectively, due to changes in assumptions made regarding the price of coking coal which reflected the recent decline coking coal prices. Finally, falling commodity prices could result in it no longer being economically feasible for a Royalty Property to continue producing, which could result in the Royalty Property ceasing operations. See paragraph 2.7 "Revaluations and impairments of assets" below.

The prices at which the Group will be able to obtain new royalties will also depend on commodity prices, as the price of a royalty will increase or decrease in line with the price of the underlying commodity.

2.3 The Group's expansion of its royalty base

The Group engages in a continual review of opportunities to acquire existing royalties, to create new royalties through the financing of mining projects or to acquire companies that hold royalties. The Group seeks to expand its royalty portfolio in order to increase current royalty related income, to diversify its portfolio and to ensure that it will be able to replace revenues from its current Royalty Properties as they reach the end of their mine lives. For example, the Group acquired the Maracás royalty in 2014 and the Dugbe 1 royalty in 2012, while the Crinum mine reached the end of its mine life in 2011. The size and underlying commodity of any acquired royalty will impact the Group's exposure to the relevant commodity as well as the income to be received from the acquired royalty. If the Group continues to rely on a small number of significant royalties for its royalty related income, this will increase the impact of the factors discussed in paragraphs 2.1 and 2.2 above than if it had a larger and more diversified royalty base.

2.4 The stage and pace of development of the Royalty Properties

The Group invests in Royalty Properties in different stages of development, including properties which are not yet producing. For example, the Group's Salamanca Royalty Property is currently in the development stage and is not producing. The Group only begins to receive royalty income when the Royalty Property commences production and generates revenues from such production, unless it has entered into a royalty instrument which includes some form of fixed payment or interest rate not dependent on production in order to mitigate the development risk of projects which are not yet producing, which the Group has done and may continue to do. Therefore, the Group may not receive income from a royalty immediately following acquisition if it invests in Royalty Properties that are in the development stage.

When acquiring a royalty, the Group will make judgments regarding the expected pace of development of the Royalty Property. The development of the Royalty Property may be delayed or may cease altogether, due to a number of factors, including a lack of financing, operational difficulties or strategic decisions by the mine owners or operators, in which case the Group may not receive any royalty income. For example, the Ring of Fire Royalty Property was put on indefinite care and maintenance in 2013 due to ongoing delays related to various aspects of the project which led to a decision by the operator not to continue to allocate capital to the project. Even if the Group holds a royalty instrument which guarantees payment despite a lack of production, the relevant owner or operator of the Royalty Property may be unwilling or unable to complete repayment on time or at all, due to bankruptcy or other circumstances.

2.5 Movements in currencies

The Group has assets and interests in a number of jurisdictions. Each of the Group's entities prepares its financial information in the currency of the primary jurisdiction in which it operates. As the Group presents its consolidated financial information in pounds sterling, this creates currency exchange differences on consolidation.

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The Group's income is mainly received in Australian Dollars attributable to its Kestrel royalty, while its dividend is entirely paid in and its overheads are mainly in pounds sterling, and it makes investments in US Dollars. When the Group makes a material commitment, the currency risk is assessed by management and regularly reviewed. The Group does not currently hedge its foreign exchange exposure due to the uncertainty of the Group's income which limits the Group's ability to commit to a hedging arrangement. Kestrel also exposes the Group an additional level of currency exchange fluctuation as Rio Tinto receives payments for the sale of coking coal in US Dollars which it then converts to Australian Dollars, the currency in which it pays the Group. Foreign currency transactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailing at the dates of the transactions or subsequent valuations.

The following table sets forth the average exchange rates for the currencies and periods indicated:

	For the Six Months Ended
	30 June		For the Year Ended 31 December
	2014	2013	2013	2012	2011
US$ per £	1.6690	1.5438	1.5644	1.5851	1.6030
A$ per £	1.8251	1.5230	1.6226	1.5302	1.5544
C$ per £	1.8306	1.5683	1.6120	1.5839	1.5862
US$ per A$	0.9155	1.0152	0.9683	1.0359	1.0332

Sources: Bank of England, US Federal Reserve.

2.6 The operation of the Group's Royalty Properties

The owners and/or operators of the Group's Royalty Properties determine how the Royalty Property operates, including its development and levels and location of production, and are responsible for the construction and maintenance of the infrastructure that is necessary for the operation of the Royalty Property. Therefore, the Group is dependent on the ability of the owners and/or operators of the Royalty Properties to both formulate and execute an appropriate business plan in order to generate expected returns. If an owner and/or operator does not develop a Royalty Property to plan, if it does not maintain a Royalty Property or the related infrastructure, or if it encounters difficulties, including an inability to obtain financing, the Group may receive less income from its royalty, or may receive no income at all. Additionally, if a Royalty Property owner and/or operator determines that a Royalty Property is no longer economically feasible, it can choose to cease operations without consulting the Group and unless the Group holds a royalty instrument which includes some form of fixed payment or interest rate not dependent on production, the Group will not be entitled to any payment if production ceases. If a Royalty Property owner and/or operator enters bankruptcy, the Group may be unable to recover any or all of its initial investment and may lose its right to the royalty if the bankruptcy results in a change in the owner and/or operator of the Royalty Property. On 16 October 2014, London Mining PLC, the owner of the Isua mine, announced it had appointed administrators. Given the uncertainty around this asset, the Group has decided to make full provision against the value of its Isua royalty, resulting in the recognition of an impairment charge of £15.4 million. The Group will usually not be able to exercise any control over who may be the new owner and/or operator of a Royalty Property, whether the Royalty Property is transferred due to bankruptcy or due to a decision by the owner and/or operator to exit from the Royalty Property. See paragraph 2.1 "The volume of production and sales at the Group's Royalty Properties, in particular Kestrel" above for additional factors which can affect the operation of the Royalty Properties.

2.7 Revaluations and impairments of assets

For each reporting period, the Group performs a valuation of its royalties and mining and exploration interests. Gains and losses on revaluation, other than in respect of equity IAS 39 assets, and impairments are reflected in both the Group’s income statement and its balance sheet, and therefore can have a significant impact on the Group’s results of operations and financial performance. These impairments and revaluations are driven by the factors discussed above; in particular changes in commodity prices which can impact expected future cash flows. The following table sets forth the revaluation and impairment gains and losses for the periods indicated:

	For the Six Months Ended 30 June		For the Year Ended 31 December
	2014	2013	2013	2012	2011
	(unaudited)		(audited)
			(£’000)
Impairment of mining and exploration interests	(759)	(20,812)	(26,321)	(11,401)	(29,182)
Impairment of royalty intangible assets	(4,500)	–	(8,313)	–	(1,088)
Impairment of royalty financial instruments	–	–	–	–	(1,563)
Revaluation of coal royalties (Kestrel)	(18,055)	(11,322)	(13,568)	9,512	(4,048)
Revaluation of royalty financial instruments	–	(2,505)	(8,735)	(767)	2,843

Key Performance Indicators

Management considers a variety of metrics to analyse the business. The Directors believe that each of these measures provides useful information with respect to the Group’s business and operations. These non-IFRS measures and key operating metrics are not meant to be considered in isolation or as a substitute for measures of financial performance reported in accordance with IFRS. Moreover, these measures may be defined or calculated differently by other companies, and as a result the key performance indicators of the Group may not be comparable to similar measures calculated by its peers.

The table below shows certain of the Group’s key performance indicators for the periods indicated.

	For the Six Months Ended
	30 June		For the Year Ended 31 December
	2014	2013	2013	2012	2011
	(unaudited)		(audited)
Adjusted earnings/(loss) per share (pence)(1)	(0.8)	5.6	8.4	8.7	20.6
Dividend (pence)	4.45	4.45	10.2	10.2	9.75
Dividend cover(2)	–	–	0.8x	0.9x	2.1x
Royalty assets acquired (£ millions)(3)	16.3	6.4	6.4	6.9	28.4

Notes:
(1) The Group’s calculation of adjusted earnings/(loss) per share is discussed below.
(2) Dividend cover is calculated as the number of times adjusted earnings per share exceeds the dividend per share. Dividend cover is not calculated for interim periods.
(3) This figure shows the Group’s investment in royalty related assets.

Adjusted earnings represents the Group’s underlying operating performance from core activities. It excludes all valuation movement, non-cash impairment and amortisation charges (which are non-cash IFRS adjustments that arise primarily due to changes in commodity prices), finance costs and any associated deferred tax. It also excludes any profit or loss on non-core asset disposals as these are not expected to be

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ongoing. The following table sets out the Group's calculation of adjusted earnings per share for the periods indicted.

	For the Six Months Ended 30 June		For the Year Ended 31 December
	2014	2013	2013	2012	2011
	(unaudited)		(Audited)
(Loss)/profit after tax	(23,048)	(27,483)	(42,497)	11,580	10,932
Amortisation of royalty intangible assets	380	455	854	1,018	1,018
Loss/(profit) on sale of mining and exploration interests	(2,073)	4,888	6,398	(7,347)	(20,302)
Impairment of mining and exploration interests	759	20,812	26,321	11,401	29,182
Impairment of royalty intangible assets	4,500	-	8,313	-	1,088
Impairment of royalty financial instruments	-	-	-	-	1,563
Revaluation of coal royalties (Kestrel)	18,055	11,322	13,568	(9.512)	4,048
Revaluation of royalty financial instruments	-	2,505	8,735	767	(2,843)
Effective interest income on royalty financial assets	(95)	(104)	(1,140)	(570)	(724)
Tax effect of the adjustments above	1,178	(6,356)	(11,370)	2,095	(1,593)
Adjusted earnings	(846)	6,039	9,181	9,432	22,369
Weighted average number of shares ('000)	110,605	108,679	108,932	108,545	108,274
Adjusted earnings/(loss) per share	(0.8p)	5.6p	8.43p	8.69p	20.66p

4. Current trading

The following items of significance have occurred since the release of the Group's 2014 Interim Report:

Royalty related income in the three months ended 30 September 2014 of £0.5 million (the three months ended 30 September 2013: £3.2 million).
Total royalty income for 2014 expected to be in the region of £3.2 – £3.6 million (31 December 2013: £14.7 million).
Non-core mining and exploration realisations of £1.8 million in the third quarter, with a remaining £14.1 million of value in non-core mining and exploration interests and receivables as at 30 September 2014.
Cash and cash equivalents of £9.2 million as at 30 September 2014 (£14.4 million at 30 June 2014) and approximately £8.8 million at 31 December 2014 (£15.7 million at 31 December 2013).
First production and sales achieved at Maracás which is expected to contribute to royalty income during 2015.
First production achieved at Four Mile, with 2015 production expected to be 2.6Mlbs of uranium ore concentrate, but royalty income deferred until 2016.
Continued sales of non-core mining and exploration interests to realise cash, along with the sale of Anglo Pacific's Panorama coal properties in British Columbia, Canada to Atrum Coal Limited for US$0.5 million of cash, a US$2.0 million promissory loan note, 1.0 million Atrum Coal Limited shares and a retention of a royalty.
An impairment charge of £15.4 million for the Isua royalty, an early stage iron ore project owned by London Mining PLC due to London Mining PLC entering into administration.

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5. Classification of royalties

The Group applies different accounting classifications to its royalties reflecting the substance of the underlying commercial terms of each royalty arrangement. The accounting classification, and the relevant accounting standard, determines how each royalty is carried on the Group's balance sheet. For purposes of the discussion in paragraph 6 "Operating results" below, the accounting classifications also determine how amortisation, impairments and revaluations are reflected in the Group's income statement. See note 2 to the Group's consolidated financial statements included in Part 9 of this Prospectus. The three classifications of royalties are as described below.

5.1 Royalty interests (accounted for as intangible assets)

Royalty interests are royalties in their simplest form and are accounted for as intangible assets for the purposes of the Group's financial statements. The Group's royalty interests primarily include the NSR royalties on the Maracás, Four Mile, Salamanca and Ring of Fire projects and the GRR royalties on the Amapá and Tucano projects. The Group considers the substance of a royalty interest to be economically similar to holding a direct interest in the underlying mineral asset. Existence, production, timing and price risk are all risks which the Group participates in on a similar basis to an owner of the underlying mineral licence. In a royalty interest, there is only a right to receive cash to the extent there is production and there are no interest payments, minimum payment obligations or means to enforce production or guarantee repayment.

5.2 Royalty instruments (accounted for as financial instruments in accordance with IAS 539)

In certain circumstances where the royalty interest risk is too high, but the Group still fundamentally believes in the quality of the underlying resource, the Group will look to introduce additional protective measures. This has typically taken the form of performance milestone penalties, minimum payment terms and interest provisions or mechanisms to convert the initial outlay into equity of the operator in the event of project deferral. Once an operation is in production, these mechanisms generally fall away such that the royalty will display identical characteristics and risk profile to a royalty interest; however it is the contractual right to enforce the receipt of cash through to production which results in these royalties being accounted for as financial assets for purposes of the Group's financial statements. The Group's royalty instruments are related to the Royalty Properties Engenho, EVBC, Isua and Jogjakarta.

5.3 Coal royalties (accounted for as investment properties)

Royalties which are derived from the ownership of sub-stratum land are accounted for as investment properties for the purposes of the Group's financial statements, even though the substance of their commercial terms is identical to royalty interests. Currently, the Group's only royalty income obtained in this manner is from the coal royalties from the Kestrel Royalty Area. The Group also has a coal royalty in relation to its ownership of certain lands at the Crinum Royalty Property from which it last received income in 2011.

6. Operating results

6.1 Description of key income statement items

Royalty related income

The Group's royalty related income encompasses all Group income relating directly to the royalty payments received from mining operations.

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Amortisation of royalties

Royalty interests are amortised when the underlying mine has commenced commercial production.

Operating expenses

Operating expenses consist of professional fees, employee wages and salaries, other employee benefit expenses, listing fees, operating lease payments and other expenses.

(Loss)/gain on sale of mining and exploration interests

(Loss)/gain on sale of mining and exploration interests is the difference in the sale price of the interest above or below its accounting cost base, which may have been previously impaired.

Impairment of mining and exploration interests

The Group’s mining and exploration interests are deemed impaired when the absolute unrealised loss on the interest is considered ‘significant’ or ‘prolonged’.

Impairment of royalty intangible assets

Impairment of royalty intangibles reflects an impairment loss which is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell or value-in-use.

Revaluation of coal royalties (Kestrel)

Revaluation of coal royalties reflects the movement in the valuation of the Group’s coal royalties. The coal royalties are valued at fair value by an independent external consultant based on future discounted royalty cash flows receivable.

Revaluation of royalty financial instruments

Revaluation of royalty instruments reflects the movement in the valuation of the Group’s royalty instruments, which are carried at fair value.

Finance income

The Group’s finance income consists of interest on bank deposits, interest on royalty instruments and interest on long-term receivables.

Finance costs

Finance costs primarily consist of arrangement fees, non-utilisation fees, interest on Group borrowings, professional fees in relation to finance arrangements and net foreign exchange losses.

Other income/(costs)

Other income/(costs) primarily consists of dividends received from mining and exploration interests, fixed income from mining and exploration interests, effective interest income on royalty instruments, impairment of royalty instruments, recovery of impaired royalty instruments, realised exchange differences from foreign operations and other income.

6.2 Results of operations

The following summary profit and loss data has been extracted without material adjustment from the Group's historical financial information for the periods indicated. This information should be read in conjunction with the Group's historical financial information and the notes thereto included in Part 9 of this Prospectus.

	For the Six Months Ended
	30 June		For the Year Ended 31 December
	2014	2013	2013	2012	2011
	(unaudited)		(Audited)
Royalty related income	2,581	8,342	14,731	15,157	35,063
Amortisation of royalties	(380)	(455)	(854)	(1,018)	(1,018)
Operating expenses	(1,928)	(1,459)	(3,275)	(3,633)	(3,391)
Operating profit before impairments, revaluations and gains/losses on disposals	273	6,428	10,602	10,506	30,654
(Loss)/Gain on sale of mining and exploration interests	2,073	(4,888)	(6,398)	7,347	20,302
Impairment of mining and exploration interests	(759)	(20,812)	(26,321)	(11,401)	(29,182)
Impairment of royalty intangible assets	(4,500)	-	(8,313)	-	(1,088)
Impairment of royalty financial instruments	-	-	-	-	(1,563)
Revaluation of coal royalties (Kestrel)	(18,055)	(11,322)	(13,568)	9,512	(4,048)
Revaluation of royalty financial instruments	-	(2,505)	(8,735)	(767)	2,843
Finance income	183	349	789	676	798
Finance costs	(1,151)	(854)	(2,964)	(958)	(859)
Other income	1,017	761	2,012	3,122	1,358
(Loss)/Profit before tax	(20,919)	(32,843)	(52,896)	18,037	19,215
Current income tax expense	(838)	(859)	(715)	(7,750)	(12,171)
Deferred income tax credit/(expense)	(1,291)	6,219	11,114	1,293	3,888
(Loss)/Profit attributable to equity holders	(23,048)	(27,483)	(42,497)	11,580	10,932
Total and continuing earnings per share
Basic (loss)/earnings per share	(20.84p)	(25.29p)	(39.01p)	10.67p	10.10p
Diluted (loss)/earnings per share	(20.84p)	(25.29p)	(39.01p)	10.67p	10.10p

6.3 Comparison of the six months ended 30 June 2014 to the six months ended 30 June 2013

Royalty related income

Royalty related income for the six months ended 30 June 2014 decreased by 69.1% to £2.6 million from £8.3 million for the six months ended 30 June 2013. This decrease was primarily attributable to Rio Tinto mining largely outside of the Group's Kestrel Royalty Area and a decrease in commodity prices, particularly coking coal and gold prices. The six months ended 30 June 2013 also included a one-off receipt of a payment of £2.0 million from EVBC in settlement of the principal advanced under the terms of the original royalty instrument.

Amortisation of royalties

Amortisation of royalties for the six months ended 30 June 2014 decreased by 16.5% to £0.4 million from £0.5 million for the six months ended 30 June 2013. This decrease was primarily attributable to decreased amortisation of the Amapá royalty interest due to foreign exchange translation into the Group's presentational currency, as amortisation of Amapá is denominated in Australian Dollars and then converted to pounds sterling. Amapá is currently the only producing royalty interest and therefore the only royalty interest that is amortised.

Operating expenses

Operating expenses for the six months ended 30 June 2014 increased by 32.1% to £1.9 million from £1.5 million for the six months ended 30 June 2013. This increase was primarily attributable to a number of one-off costs in the six months ended 30 June 2014 associated with an increase in staff costs due to an increase in headcount and the management transition, the creation of a long term incentive plan for management and directors and recruitment consultancy costs, as well as an increase in investor relation costs and associated travel.

Operating profit before impairments, revaluations and gains/losses on disposals

Reflecting the above, operating profit for the six months ended 30 June 2014 decreased by 95.8% to £0.3 million from £6.4 million for the six months ended 30 June 2013.

Gain on sale of mining and exploration interests

Gain on sale of mining and exploration interests for the six months ended 30 June 2014 was £2.1 million compared to a loss of £4.9 million for the six months ended 30 June 2013. This change primarily reflects a recovery in equity prices in the period.

Impairment of mining and exploration interests

Impairment of mining and exploration interests for the six months ended 30 June 2014 decreased by 96.4% to £0.8 million from £20.8 million for the six months ended 30 June 2013. This decrease primarily reflects that most of the impairment charges were raised in prior periods thereby reducing the absolute value of further impairments in relation to the same equity investments.

Impairment of royalty intangible assets

Impairment of royalty intangibles for the six months ended 30 June 2014 increased to £4.5 million from nil for the six months ended 30 June 2013. The impairment charge of £4.5 million recognised in relation to the Group's Amapá royalty interest was due to the recent fall in iron ore prices, coupled with revisions to the long-term shipping cost forecasts resulting in an expected discounted future cash flow no longer exceeding amortised cost.

Revaluation of coal royalties (Kestrel)

The revaluation of coal royalties for the six months ended 30 June 2014 resulted in a loss of £18.1 million compared to a loss of £11.3 million for the six months ended 30 June 2013, reflecting the continued decline in coking coal prices since June 2013.

Revaluation of royalty financial instruments

Revaluation of royalty instruments for the six months ended 30 June 2014 was nil compared to a loss of £2.5 million for the six months ended 30 June 2013. This change was primarily attributable to changes to the expected future cash flows in June 2013 in relation to the Group's Jogjakarta royalty instrument, triggered by an enforced export ban in Indonesia along with a decline in commodity price outlook which combined to reduce the valuation of the asset. The project is now valued on the basis of an iron sands project as opposed to a full scale pig iron producing operation.

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Finance income

Finance income for the six months ended 30 June 2014 decreased by 47.6% to £0.2 million from £0.3 million for the six months ended 30 June 2013. This decrease was primarily attributable to a decrease in interest on royalty financial instruments and interest on long-term receivables, offset by an increase in interest on bank deposits.

Finance costs

Finance costs for the six months ended 30 June 2014 increased by 34.8% to £1.2 million from £0.9 million for the six months ended 30 June 2013. This increase was primarily attributable to costs related to the Group’s arrangement fee on entering into its US$15 million revolving credit facility in February 2014 and the costs associated with an equity fundraising in June 2014.

Other income/(costs)

Other income for the six months ended 30 June 2014 increased by 33.6% to £1 million from £0.8 million for the six months ended 30 June 2013. This increase was primarily attributable to the recovery of £0.5 in relation to the Minera Gold royalty instrument which had previously been provided for in full. Additionally, there was an increase in fixed income from mining and exploration interests. However, these were offset by a decrease in dividends received from mining and exploration interests.

Current income tax expense

Current income tax expense for the six months ended 30 June 2014 decreased by 2.4% to £0.8 from £0.9 for the six months ended 30 June 2013. This decrease was primarily attributable to the reduction in royalty related income and a consequential reduction in the amount of tax charge.

Deferred income tax credit/(expense)

Deferred income tax for the six months ended 30 June 2014 changed to an expense of £1.3 million from a credit of £6.2 million for the six months ended 30 June 2013. This decrease was primarily attributable to the reversal of a previously recognised deferred tax asset mainly in relation to unrealised losses associated with the Group’s mining and exploration interests (largely equity investments), many of which were divested during the six months ended 30 June 2014. Due to uncertainty as to future assessable profits from similar asset sales, it was no longer expected that the deferred losses would be utilised in full in the foreseeable future and have therefore been derecognised.

(Loss)/profit attributable to equity holders

Reflecting the above, loss attributable to equity holders for the six months ended 30 June 2014 decreased by 16.1% to £23.0 million from £27.5 million for the six months ended 30 June 2013.

6.4 Comparison of the 2013 and 2012 financial years

Royalty related income

Royalty related income for the year ended 31 December 2013 decreased by 2.8% to £14.7 million from £15.2 million for the year ended 31 December 2012. This decrease was primarily attributable to the suspension of shipments of iron ore from Amapá in March 2013 due to a serious incident at the Santana port which impacted key infrastructure at the loading bay. Additionally, the weakening of the Australian Dollar throughout 2013 and the production disruptions associated with the extension of the Kestrel mine contributed to a decrease in the royalty income received from the Kestrel royalty. These decreases were partially offset by a one-off receipt of a payment in 2013 of £2.0 million from EVBC in settlement of the principal advanced under the terms of the original royalty instrument.

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Amortisation of royalties

Amortisation of royalties for the year ended 31 December 2013 decreased by 16.1% to £0.9 million from £1.0 million for the year ended 31 December 2012. This decrease was attributable to foreign exchange differences in the amortisation of the Amapá royalty interest.

Operating expenses

Operating expenses for the year ended 31 December 2013 decreased by 9.9% to £3.3 million from £3.6 million for the year ended 31 December 2012. This decrease was primarily attributable to a decrease in professional fees in the period as fewer tax and legal projects were undertaken. This was partially offset by an increase in staff costs associated with the management transition.

Operating profit before impairments, revaluations and gains/losses on disposals

Reflecting the above, operating profit for the year ended 31 December 2013 increased by 0.9% to £10.6 million from £10.5 million for the year ended 31 December 2012.

Loss on sale of mining and exploration interests

Loss on sale of mining and exploration interests for the year ended 31 December 2013 was £6.4 million compared to a gain of £7.3 million for the year ended 31 December 2012. This increase was primarily attributable to a decrease in the market value of the Group's mining and exploration interests at a time when the Group chose to divest of assets resulting in a loss in 2013 as compared to a gain in 2012.

Impairment of mining and exploration interests

Impairment of mining and exploration interests for the year ended 31 December 2013 increased by 130.9% to £26.3 million from £11.4 million for the year ended 31 December 2012. This increase was primarily attributable to the continued decline in the junior mining sector equity markets throughout 2013 which led to further unrealised losses within the Group's mining and exploration interests which are held at fair value at each reporting date and are primarily equity interests in the junior mining sector. The absolute value of this loss in relation to its rebased cost was considered 'significant', resulting in a further impairment charge in the period.

Impairment of royalty intangible assets

Impairment of royalty intangibles for the year ended 31 December 2013 increased to £8.3 million from nil for the year ended 31 December 2012. This increase was attributable to the Ring of Fire, Mount Ida and Bulqiza royalties. Declining commodity prices and certain news releases from the operators of those Royalty Properties cast sufficient doubt as to if and when these projects would come into production, altering the expected discounted future cash flows. As this amount was less than the carrying value, an impairment charge was raised in the period.

Revaluation of coal royalties (Kestrel)

Revaluation of coal royalties for the year ended 31 December 2013 was a loss of £13.6 million compared to a gain of £9.5 million for the year ended 31 December 2012. This change was primarily attributable to a downward revision to the forward price outlook for coking coal.

Revaluation of royalty financial instruments

Revaluation of royalty instruments for the year ended 31 December 2013 was a loss of £8.7 million compared to a loss of £0.8 million for the year ended 31 December 2012. The decline in 2013 was primarily caused by changes in expected future cash flows in relation to the Group's Jogjakarta Royalty Property due to a decline in the commodity price and indications that the regional government would enforce an export ban on all processed natural resources. The project is now valued on the basis of an iron sands project as opposed to a full scale pig iron producing operation.

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Finance income

Finance income for the year ended 31 December 2013 increased by 16.7% to £0.8 million from £0.7 million for the year ended 31 December 2012. This increase was primarily attributable to increases in interest on royalty instruments and long-term receivables, offset by a decrease in interest on bank deposits due to a decrease in cash and cash equivalents.

Finance costs

Finance costs for the year ended 31 December 2013 increased by 209.4% to £3.0 million from £1.0 million for the year ended 31 December 2012. This increase was primarily attributable to an increase in the net foreign exchange loss, due to the weakening of the Australian Dollar during 2013.

Other income/(costs)

Other income for the year ended 31 December 2013 decreased by 37.0% to £2.0 million from £3.1 million for the year ended 31 December 2012. This decrease was primarily attributable to a decrease in fixed income from mining and exploration interests, offset by an increase in effective interest income on royalty instruments.

Current income tax expense

Current income tax expense for the year ended 31 December 2013 decreased by 90.8% to £0.7 million from £7.8 million for the year ended 31 December 2012. This decrease was primarily attributable to the Group incurring a loss before tax in 2013 as compared to a profit before tax in 2012.

Deferred income tax credit

Deferred income tax credit for the year ended 31 December 2013 increased to £11.1 million from £1.3 million for the year ended 31 December 2012. This change was primarily attributable to valuation losses in 2013 associated with the Kestrel royalty and the impairment charge in relation to the Group’s mining and exploration interests.

(Loss)/profit attributable to equity holders

Reflecting the above, loss attributable to equity holders for the year ended 31 December 2013 changed to £42.5 million from a profit of £11.6 million for the year ended 31 December 2012.

6.5 Comparison of the 2012 and 2011 financial years

Royalty related income

Royalty related income for the year ended 31 December 2012 decreased by 56.8% to £15.2 million from £35.1 million for the year ended 31 December 2011. This decrease was primarily attributable to production disruptions in the period at the Kestrel Royalty Area and the cessation of mining from within the Group’s private royalty land at Crinum. The latter was somewhat offset by the continued ramp up of production at EVBC.

Amortisation of royalties

Amortisation of royalties remained constant at £1.0 million for each of the years ended 31 December 2012 and 2011, reflecting the amortisation of the Amapá royalty interest.

Operating expenses

Operating expenses for the year ended 31 December 2012 increased by 7.1% to £3.6 million from £3.4 million for the year ended 31 December 2011. This increase was primarily attributable to an increase in professional fees associated with managing the Group’s royalty portfolio.

Operating profit before impairments, revaluations and gains/losses on disposals

Reflecting the above, operating profit for the year ended 31 December 2012 decreased by 65.7% to £10.5 million from £30.7 million for the year ended 31 December 2011.

Gain on sale of mining and exploration interests

Gain on sale of mining and exploration interests for the year ended 31 December 2012 decreased by 63.8% to £7.3 million from £20.3 million for the year ended 31 December 2011. This decrease was primarily attributable to one substantial gain made in 2011 as a result of the sale of the Group's interest in First Coal Corporation pursuant to a takeover by Xstrata.

Impairment of mining and exploration interests

Impairment of mining and exploration interests for the year ended 31 December 2012 decreased by 60.9% to £11.4 million from £29.2 million for the year ended 31 December 2011. This increase was primarily attributable to a significant decline in the junior mining markets throughout 2012 resulting in unrealised mark-to-market losses which were considered to be, in absolute terms, ‘significant’ requiring the Group to recognise impairments.

Impairment of royalty intangible assets

Impairment of royalty intangible assets for the year ended 31 December 2012 were nil compared to a loss of £1.1 million for the year ended 31 December 2011. This change was primarily attributable to the impairment in 2011 of net smelter royalties on the exploration licenses in the Athabasca Basin region of Canada as there was uncertainty as to whether the licences would enter commercial production.

Impairment of royalty financial instruments

Impairment of royalty financial instruments for the year ended 31 December 2012 were nil compared to a loss of £1.6 million for the year ended 31 December 2011. The impairment in 2011 was due to the operator of the Engenho project announcing it would place the mine on care and maintenance and that its Brazilian subsidiary which held the mining licences relating to the project was seeking protection from its creditors under Brazilian bankruptcy proceedings. Given the inherent uncertainty over the Group's ability to retain its royalty through the bankruptcy process, an impairment charge was recognised, reducing the carrying value of the Engenho royalty to nil.

Revaluation of coal royalties (Kestrel)

Revaluation of coal royalties for the year ended 31 December 2012 was a gain of £9.5 million compared to a loss of £4.0 million for the year ended 31 December 2011, reflecting upward revisions to the expected royalty rate in 2012.

Revaluation of royalty financial instruments

Revaluation of royalty instruments for the year ended 31 December 2012 was a loss of £0.8 million compared to a gain of £2.8 million for the year ended 31 December 2011. This change was primarily attributable to changes to the expected future cash flows from the Group's Jogjakarta Royalty Property in line with a downward revision to the iron ore price outlook.

Finance income

Finance income for the year ended 31 December 2012 decreased by 15.3% to £0.7 million from £0.8 million for the year ended 31 December 2011. This decrease was primarily attributable to reduced income from one of the Group's royalty instruments due to the counterparty experiencing financial difficulty.

Finance costs

Finance costs for the year ended 31 December 2012 increased by 11.5% to £1.0 million from £0.9 million for the year ended 31 December 2011. This increase was attributable to an increase in the net foreign exchange loss.

Other income

Other income for the year ended 31 December 2012 increased by 129.9% to £3.1 million compared from £1.4 million for the year ended 31 December 2011. This increase was primarily attributable to the Group's investment of surplus cash in a high yield corporate bond in 2012.

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Current income tax expense

Current income tax expense for the year ended 31 December 2012 decreased by 36.3% to £7.8 million from £12.2 million for the year ended 31 December 2011. This decrease was primarily attributable to a similar reduction in assessable profits.

Deferred income tax credit

Deferred income tax credit for the year ended 31 December 2012 decreased by 66.7% to £1.3 million from £3.9 million for the year ended 31 December 2011. This change was primarily attributable to a valuation loss in 2011 associated with the Kestrel royalty compared to a valuation gain in 2012.

Profit attributable to equity holders

Reflecting the above, profit attributable to equity holders for the year ended 31 December 2012 increased by 5.9% to £11.6 million from £10.9 million for the year ended 31 December 2011.

Liquidity and Capital Resources

7.1 Overview

The Group’s principal sources of liquidity are its royalty related income, realisations from its mining and exploration interests portfolio and its revolving credit facility. As at 30 June 2014, the Group had cash and cash equivalents of £14.4 million and had US$15.0 million of undrawn committed borrowing under its revolving credit facility (subject to covenant compliance). As at 30 September 2014, the Group had cash and cash equivalents of approximately £9.2 million and had US$15.0 million of undrawn committed borrowing under its revolving credit facility (subject to covenant compliance). The Group’s financing arrangements are described below under “External financing arrangements.”

The Group’s main use of funds are funding the Group’s dividend payment, the acquisition of new royalties and operating expenses.

7.2 Treasury policies

The Group’s principal treasury objective is to provide sufficient liquidity to meet operational cash flow and dividend requirements and to allow the Group to take advantage of new growth opportunities whilst maximising shareholder value. The Group operates controlled treasury policies which are monitored by management to ensure that the needs of the Group are met while minimising potential adverse effects of unpredictability of financial markets on the Group’s financial performance. The Group only deposits its cash in banks which it considers to be well-regarded institutions.

7.3 Historical cash flow data

	For the Six Months Ended 30 June		For the Year Ended 31 December
	2014	2013	2013	2012	2011
	(unaudited)		(£'000)
Net cash generated from/(used in) operating activities	705	(5,954)	2,407	10,198	14,821
Net cash generated from/(used in) investing activities	(6,426)	2,409	(1,948)	6,857	(3,711)
Net cash generated from/(used in) financing activities	4,697	(4,816)	(8,693)	(10,579)	(8,978)
Net increase/(decrease) in cash and cash equivalents	(1,024)	(8,361)	(8,234)	(7,238)	2,132
Cash and cash equivalents at end of period	14,413	16,440	15,706	24,036	32,197

7.4 Net cash generated from/(used in) operating activities

The Group’s net cash generated from operating activities was £0.7 million for the six months ended 30 June 2014 compared to net cash used in operating activities in the amount of £6 million for the

six months ended 30 June 2013. This movement was principally due to higher tax payments in 2013 on equity gains realised in 2012. This was offset somewhat in 2013 by the receipt of £2.0 million from EVBC in settlement of the principal advanced under the terms of the original royalty instrument.

Net cash generated from operating activities was £2.4 million in 2013 compared to net cash generated from operating activities in the amount of £10.2 million in 2012. This movement was principally due to the decrease in income from the Kestrel royalty from £10.9 million in 2012 to £9.9 million in 2013.

Net cash generated from operating activities was £10.2 million in 2012 compared to net cash generated from operating activities in the amount of £14.8 million in 2011. This movement was due to a reduction in royalty related income mainly related to the Kestrel royalty.

7.5 Net cash generated from/(used in) investing activities

The Group’s net cash used in investing activities was £6.4 million for the six months ended 30 June 2014 compared to net cash generated from investing activities in the amount of £2.4 million for the six months ended 30 June 2013. This movement was due to the acquisition of the Maracás royalty interest in June 2014 for a cash consideration of US$22 million (£13.1 million) along with advances totalling £3.3 million to Hummingbird Resources PLC in accordance with the royalty financing agreement, currently accounted for as a receivable, which was offset by an increase of £4.0 million in the proceeds from sales of mining and exploration interests.

Net cash used in investing activities was £1.9 million in 2013 compared to net cash generated from investing activities in the amount of £6.9 million in 2012. This movement was due to a decrease in the proceeds on disposal of mining and exploration interests in 2013 as compared to 2012, offset by a decrease in purchases of mining and exploration interests in 2013 as compared to 2012. In addition, advances to Hummingbird Resources PLC totalled £6.6 million in 2013 compared to £3.1 million advanced to Laramide Resources in 2012.

Net cash generated from investing activities was £6.9 million in 2012 compared to net cash used in investing activities in the amount of £3.7 million in 2011. This was due to higher proceeds received in 2011 upon sale of mining and exploration interests offset by higher purchases of royalty interests and royalty financial instruments.

7.6 Net cash generated from/(used in) financing activities

The Group’s net cash generated from financing activities was £4.7 million for the six months ended 30 June 2014 compared to net cash used in financing activities in the amount of £4.8 million for the six months ended 30 June 2013. This movement was due to the proceeds raised from the issue of share capital in June 2014 associated with the Maracás acquisition.

Net cash used in financing activities was £8.7 million in 2013 compared to net cash used in financing activities in the amount of £10.6 million in 2012. This movement was due to the proceeds raised from the issue of shares to new management in November 2013.

Net cash used in financing activities was £10.6 million in 2012 compared to net cash used in financing activities in the amount of £9.0 million in 2011. This increase in net cash used in financing activities was due to an increase in the Group’s dividend in 2012.

7.7 External financing arrangements

In February 2014, the Group entered into a US$15.0 million unsecured twelve-month revolving credit facility which remains undrawn. It subsequently extended the facility to 31 July 2015. On 4 February 2015, the Group entered into a US$30.0 million three year secured revolving credit facility which as at 5 February 2015 (being the latest practicable date prior to the publication of this document) remained undrawn. See paragraph 14.1(d) in Part 13 of this Prospectus for further information.

7.8 Off-balance sheet arrangements

The Group does not have any off-balance sheet arrangements.

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Contractual commitments

The acquisition agreement for the Maracás royalty contains certain provisions for deferred consideration of US$3 million to be payable upon the achievement of certain milestones. These milestones have not yet been achieved.

Quantitative and qualitative disclosure in respect of risk

In the normal course of business, the Group’s financial position is routinely subject to a variety of risks, including liquidity and funding risk, credit risk, foreign exchange risk, interest rate risk and other price risk.

9.1 Liquidity and funding risk

The objective of the Company in managing funding risk is to ensure that it can meet its financial obligations as and when they fall due. At 30 June 2014 there was no debt outstanding.

9.2 Credit risk

The Group’s principal financial assets are bank balances, royalty instruments held as financial assets, trade and other receivables and investments. These represent the Group’s maximum exposure to credit risk in relation to financial assets.

The Group’s credit risk is primarily attributable to its other receivables, including royalty receivables. It is the policy of the Group to present the amounts in the balance sheet net of allowances for doubtful receivables, estimated by the Group’s management based on prior experience and the current economic environment. In certain cases the Group has the right to audit the reported royalty income.

The Group’s credit risk on royalty instruments held as financial instruments, has been reviewed and the estimated current exposure is as disclosed in note 15 to the Group’s historical financial information, included in Part 9 of this prospectus, where the future contractual right to cash flow from these instruments is reflected in their fair value.

The credit risk on bank deposits is mitigated by banking with reputable financial institutions. The Group has no significant concentration of credit risk, with exposure spread over a large number of currencies and counterparties.

9.3 Foreign exchange risk

The Group’s transactional foreign exchange exposure arises from income, expenditure and purchase and sale of assets denominated in foreign currencies. As each material commitment is made, the risk in relation to currency fluctuations is assessed by the Executive Committee and regularly reviewed. The Group does not consider it necessary to have a hedging programme in place at this time. For further quantitative disclosure regarding the Group’s exposure and sensitivity to currency fluctuations, see note 27 of the Group’s consolidated financial statements included in Part 9 of this Prospectus.

9.4 Share price risk

The Group is exposed to share price risk in respect of its mining and exploration interests which include listed and unlisted equity securities and any convertible instruments.

A 10% increase or decrease in listed equity prices (or fair value for the unlisted interests) would increase/decrease the mining and exploration interests balance (and Investment revaluation reserve in equity) by £2.0m at 31 December 2013 (£5.6m at 31 December 2012 and £6.5m at 31 December 2011). We note that if a 10% decrease were to occur then a further assessment would be required to determine whether the decrease was considered to be “significant” with any resulting impairment recognised in the income statement.

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commodity price forecasts, the generation of which takes into account fluctuations in prices, no detailed analysis of the impact of fluctuations on the valuations of the royalties has been undertaken.

The Group's mining and exploration interests are held for the purposes of generating additional royalties and are considered long-term, strategic investments. This strategy is unaffected by recent fluctuations in prices for mining and exploration equities; however, interests are continually monitored for indicators that may suggest problems for these companies raising capital or continuing their day-to-day business activities to ensure remedial action can be taken if necessary. This is expected to be a less significant part of the Group's strategy going forward.

No specific hedging activities are undertaken in relation to these interests.

10. Critical accounting policies and estimates and forthcoming changes

10.1 Critical accounting judgments and key sources of estimation uncertainty

In the application of the Group's accounting policies, and outlined further in note 2 to the Group's consolidated financial statements in Part 9 of this Prospectus, the Directors are required to make judgements and estimates that can have a significant impact on the financial statements. Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The most critical accounting judgement relates to the classification of royalty arrangements and the key sources of estimation uncertainty relate to the calculation of certain royalty arrangement's fair value and the key assumption used when assessing impairment of property, plant and equipment and intangible assets. The use of inaccurate assumptions in assessments made for any of these estimates could result in a significant impact on financial results.

Critical accounting judgements

Classification of royalty arrangements: initial recognition and subsequent management

The Directors must decide whether the Group's royalty arrangements should be classified as:

Intangible Assets in accordance with IAS 38 'Intangible assets';
Financial Assets in accordance with IAS 32 'Financial Instruments: Presentation' and IAS 39 'Financial Instruments: Recognition and Measurement'; or
Investment properties in accordance with IAS 40 'Investment Property'.

Key sources of estimation uncertainty

Assessment of fair value of royalty arrangements held at fair value

A number of the Groups' royalty arrangements are held at fair value. Fair value is determined based on discounted cash flow models (and other valuation techniques) using assumptions considered to be reasonable and consistent with those that would be applied by a market participant. The determination of assumptions used in assessing fair values is subjective and the use of different valuation assumptions could have a significant impact on financial results.

In particular, expected future cash flows, which are used in discounted cash flows models are inherently uncertain and could materially change over time. They are significantly affected by a number of factors including reserves and resources and timing/likelihood of mines entering production together with economic factors such as commodity prices, discount rates and exchange rates.

Impairment review of property, plant and equipment and intangible assets

Property, plant and equipment and intangible assets are assessed for indicators of impairment at each reporting date with the assessment considering variables such as the production profiles, production commissioning dates where applicable, forecast commodity prices and guidance from the mine operators.

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Where indicators are identified, the starting point for the impairment review will be to measure the expected future cash flows expected from the royalty arrangement should the project continue/come into production. A pre-tax real discount rate of between 7% and 10% is applied to the future cash flows. This discount rate is driven from the discount rate of 7% which is used by the independent consultant in their valuation of Kestrel, which should be the lowest discount rate applied to any of the Group's assets. The Directors use considerable judgement to assign a discount rate, with rates varying according to mineral quality, jurisdiction, commodity, stage of production and counterparty credentials.

The outcome of this net present value calculation is then risk weighted to reflect management's current assessment of the overall likelihood and timing of each project coming into production and royalty income arising. This assessment is impacted by news flow relating to the underlying operation in the period, in conjunction with management's assessment of the economic viability of the project based on commodity price projections.

10.2 Changes in accounting policies and disclosures

(a) New and amended standards adopted by the Group

The following standards have been adopted by the Group for the first time for the financial year beginning on or after 1 January 2011:

Amendment to IAS 1, 'Financial statement presentation' regarding other comprehensive income

The amendments to IAS1 introduced the grouping of items presented in other comprehensive income. Items that may be reclassified (or re-cycled) to the income statement at a future point in time are now presented separately from items that will not be reclassified. The amendment affected presentation only and had no impact on the Group's financial position or performance.

IFRS 13, 'Fair Value Measurement'

IFRS13 establishes a single framework for measuring fair value when such measurements are required to or permitted by other standards. The application of IFRS13 has not materially affected the fair value measurements carried out by the Group. IFRS 13 also requires specific disclosures on fair values, some of which replace existing disclosure requirements in other standards, including IFRS 7 'Financial Instruments: Disclosure'. The additional disclosure requirements are reflected within the relevant notes to the Group financial statements.

IFRS 10 'Consolidated Financial Statements' and IAS 27 'Separate Financial Statements'

IFRS 10 replaces the parts the previously existing IAS27 that dealt with consolidated financial statements. The new standard changes the definition of control such that an investor controls an investee it is exposed, or has rights to variable returns from its involvement with the investee and has the ability to control those returns through its power over the investee. The adoption of IFRS 10 has had no impact on the consolidation of investments held by the Group.

There are no other IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 January 2011 that would be expected to have a material impact on the Group.

(b) New standards and interpretations not yet adopted

A number of new standards and amendments to standards and interpretations have not yet been adopted and have not been applied in preparing these consolidated financial statements. None of these are expected to have a significant effect on the consolidated financial statements of the Group, except the following set out below:

IFRS 9 'Financial Instruments' – (Not yet endorsed by the European Union)

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measurement categories: those measured as at fair value and those measured at amortised cost. Where assets are measured at fair value, gains and losses are either recognised entirely in profit or loss (fair value through profit or loss, FVTPL), or recognised in other comprehensive income (fair value through other comprehensive income, FVTOCI). The determination is made at initial recognition. The classification depends on the entity's business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity's own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. The Group is currently assessing the impact the application of IFRS9 will have on its financial statements, particularly in respect of the Group's financial assets.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

11. Capitalisation and indebtedness

The following table sets out the capitalisation of the Group as at 30 June 2014 and has been extracted from the Group's unaudited Half-Yearly Report for the six months ended 30 June 2014, incorporated by reference in Part 9 (Financial Information relating to Anglo Pacific Group PLC) of this document.

| | £m
(Unaudited) |
| --- | --- |
| Capitalisation(1) | |
| Issued capital | 2.3 |
| Share premium | 29.3 |
| Other reserves | 22.0 |
| Total capitalisation | 53.6 |

Note:

(1) Capitalisation does not include the profit and loss reserve.

There has been no material change to the capitalisation of Anglo Pacific since 30 June 2014.

The following tables, sourced from the Company's internal accounting records, show the Company's unaudited indebtedness (distinguishing between guaranteed and unguaranteed, secured and unsecured indebtedness) as at the close of business on 30 September 2014.

Indebtedness as at 30 September 2014

| | £m
(Unaudited) |
| --- | --- |
| Total current debt | |
| Unguaranteed/unsecured | - |
| Total non-current debt | |
| Unguaranteed/unsecured | - |
| Total indebtedness | - |

Net Indebtedness as at 30 September 2014

| | £m
(Unaudited) |
| --- | --- |
| Cash at bank and cash in hand | 9.2 |
| Liquidity | |
| Current bank debt | - |
| Current financial debt | - |
| Net current financial indebtedness | - |
| Non-current bank loans | - |
| Non current financial indebtedness | - |
| Net financial indebtedness | - |

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PART 8

TERMS AND CONDITIONS OF THE OPEN OFFER

Introduction

As explained in Part 1 (Letter from the Chairman of Anglo Pacific Group PLC) of this document, the Company proposes to raise approximately £39.5 million (gross) or £35.9 million (net of expenses) subject to the passing by Shareholders of the Resolutions at the General Meeting, by the issue of the New Ordinary Shares at 80 pence per share. Of the New Ordinary Shares being issued, 26,750,000 of the New Ordinary Shares will be issued through the Firm Placing and 22,625,000 of the New Ordinary Shares will be issued through the Placing and Open Offer. In each case, the New Ordinary Shares have been conditionally placed with institutional and other investors by the Banks (subject, in the case of Conditional Placed Shares, to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer). Qualifying Shareholders are being offered the right to subscribe for Open Offer Shares in accordance with the terms of the Open Offer. Qualifying Shareholders are not being offered the right to subscribe for Firm Placed Shares.

The Firm Placing and Placing and Open Offer is conditional on the Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms. If the conditions to the Placing Agreement are not satisfied, the Firm Placing and Placing and Open Offer will not proceed and application monies in relation to the Open Offer will be returned to applicants (without interest) as soon as possible thereafter. A summary of the principal terms of the Placing Agreement is set out in paragraph 14 of Part 13 (Additional Information) of this document.

A Qualifying non-CREST Shareholder who has sold or transferred all or part of his holding of Existing Ordinary Shares prior to 9 February 2015, being the last date upon which the Existing Ordinary Shares were marked "ex" the entitlement to the Open Offer by the London Stock Exchange, should consult his broker or other professional adviser as soon as possible, as the invitation to acquire New Ordinary Shares under the Open Offer may be a benefit which may be claimed by the transferee from his counterparty pursuant to the rules of the London Stock Exchange.

A summary of the arrangements relating to the Open Offer is set out below. This document and, for Qualifying non-CREST Shareholders only, the accompanying Application Form contain the formal terms and conditions of the Open Offer.

The Open Offer

Subject to the terms and conditions set out below and, in the case of Qualifying non-CREST Shareholders, in the Application Form, the Company hereby invites Qualifying Shareholders to apply for Open Offer Shares at the Offer Price, payable in full on application, free of all expenses, up to a pro-rata entitlement, which shall be calculated on the basis of approximately:

0.1944 New Ordinary Shares for every 1 existing Ordinary Share(1)

held by them and registered in their names at 6.00 p.m. on the Record Date and so in proportion for any other number of Existing Ordinary Shares then held. Fractions of New Ordinary Shares will not be allocated to Qualifying Shareholders and entitlements to apply for New Ordinary Shares will be rounded down to the nearest whole number of New Ordinary Shares. The fractional entitlements will be aggregated and sold for the benefit of the Company under the Placing. Accordingly, Qualifying Shareholders holding fewer than 6 Existing Ordinary Shares will have no entitlement to subscribe under the Open Offer. The aggregate number of New Ordinary Shares available for subscription pursuant to the Open Offer is 22,625,000 New Ordinary Shares.

(1) The full ratio is 0.1943197716 New Ordinary Shares for every 1 Existing Ordinary Share.

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Holdings of Existing Ordinary Shares in certificated and uncertificated form will be treated as separate holdings for the purpose of calculating Qualifying Shareholders' entitlements under the Open Offer, as will holdings under different designations and in different accounts.

Qualifying Shareholders may apply for any whole number of Open Offer Shares up to and including their maximum entitlement which, in the case of Qualifying non-CREST Shareholders, is equal to the number of Open Offer Entitlements as shown on their Application Form or, in the case of Qualifying CREST Shareholders, is equal to the number of Open Offer Entitlements standing to the credit of their stock account in CREST. No application in excess of a Qualifying Shareholder's maximum entitlement will be accepted and any Qualifying Shareholder so applying will be deemed to have applied only for his maximum entitlement, provided that the application is valid and complete in all other respects. Any monies paid in excess of such entitlement will be returned to the applicant (at the applicant's risk) without interest within 14 days by way of cheque or CREST payment, as appropriate. If a Qualifying Shareholder does not take up any of his entitlement under the Open Offer, his shareholding will be diluted by up to 31.5 per cent by the issue of the New Ordinary Shares and the Acquisition Shares. If a Qualifying Shareholder takes up his full entitlement under the Open Offer, his shareholding will be diluted by up to 18.2 per cent by the issue of the New Ordinary Shares relating to the Firm Placing and the Acquisition Shares.

The attention of Qualifying Shareholders and any person (including, without limitation, custodians, nominees, trustees and agents) who has a contractual or other legal obligation to forward this document and/or the Application Form into a jurisdiction other than the UK is drawn to paragraph 6 of this Part 8 (Terms and Conditions of the Open Offer). In particular, subject to the provisions of paragraph 6 of this Part 8 (Terms and Conditions of the Open Offer), Qualifying Shareholders with registered addresses in the United States or any of the Excluded Territories will not be sent Application Forms and will not have their CREST stock accounts credited with Open Offer Entitlements.

The Open Offer Shares have been conditionally placed by the Banks with institutional and other investors at the Offer Price but are subject to clawback to satisfy valid applications made by Qualifying Shareholders under the Open Offer.

The action to be taken in relation to the Open Offer depends on whether, at the time at which application and payment is made, a Qualifying Shareholder has an Application Form in respect of his entitlement under the Open Offer or has Open Offer Entitlements credited to his stock account in CREST in respect of such entitlement:

A Qualifying Shareholder who has received an Application Form with this document should refer to paragraph 4(a) of this Part 8 (Terms and Conditions of the Open Offer).
A Qualifying Shareholder who holds his Existing Ordinary Shares in CREST and has received a credit of Open Offer Entitlements to his CREST stock account should refer to paragraph 4(b) of this Part 8 (Terms and Conditions of the Open Offer) and also to the CREST Manual for further information on the CREST procedures referred to below.

Qualifying Shareholders should be aware that the Open Offer is not a rights issue. Qualifying CREST Shareholders should note that, although the Open Offer Entitlements will be admitted to CREST and be enabled for settlement, applications in respect of entitlements under the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim raised by Euroclear's Claims Processing Unit. Qualifying non-CREST Shareholders should note that the Application Form is not a negotiable document and cannot be traded. Qualifying Shareholders should be aware that in the Open Offer, unlike in a rights issue, any Open Offer Shares not applied for will not be sold in the market or placed for the benefit of Qualifying Shareholders who do not apply under the Open Offer, and Qualifying Shareholders who do not apply to take up Open Offer Shares will have no rights under the Open Offer. Instead, any Open Offer Shares not taken up by Qualifying Shareholders will be sold for the benefit of the Company under the Placing.

Before making any decision to acquire Open Offer Shares, a Qualifying Shareholder should read and carefully consider all the information in this document, including, in particular, the important information

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set out in Part 1 (Letter from the Chairman of Anglo Pacific Group PLC) of this document, as well as this paragraph 2 of Part 8 (Terms and Conditions of the Open Offer) and the risk factors set out on pages 18 to 37 (inclusive) of this document. Shareholders who do not participate in the Open Offer will experience dilution of their shareholdings. The material terms of the Firm Placing and Placing and Open Offer are contained in this document.

The Existing Ordinary Shares are listed on the premium segment of the Official List and traded on the London Stock Exchange’s main market for listed securities and the Toronto Stock Exchange. Application will be made to the FCA and to the London Stock Exchange for the New Ordinary Shares to be issued in the Firm Placing and Placing and Open Offer to be admitted to the premium segment of the Official List and to trading on the London Stock Exchange’s main market for listed securities and has been made for the New Ordinary Shares to be listed on the Toronto Stock Exchange. It is expected that Admission will become effective on 27 February 2015 and that dealings for normal settlement in the New Ordinary Shares will commence on the same day at 8.00 a.m. on the London Stock Exchange and market open on the Toronto Stock Exchange. The New Ordinary Shares and the Existing Ordinary Shares are in registered form and can be held in certificated and uncertificated form.

The Existing Ordinary Shares are already admitted to CREST. No further application for admission to CREST is accordingly required for the New Ordinary Shares; all such shares, when issued and fully paid, may be held and transferred by means of CREST.

Application has been made for the Open Offer Entitlements to be admitted to CREST. The conditions for such admission have already been met and the Open Offer Entitlements are expected to be admitted to CREST with effect from 9 February 2015.

The Open Offer Shares will, when issued and fully paid, be identical to and rank in full for all dividends or other distributions declared, made or paid after Admission and in all other respects will rank pari passu with the Existing Ordinary Shares in issue. No temporary documents of title will be issued. Further details of the rights attaching to the New Ordinary Shares are set out in paragraph 4 of Part 13 (Additional Information) of this document.

The ISIN for the New Ordinary Shares will be the same as that of the Existing Ordinary Shares being GB0006449366.

If, for any reason, it becomes necessary to adjust the expected timetable as set out in this document, the Company will make an appropriate announcement to a Regulatory Information Service giving details of the revised dates.

3. Conditions of the Firm Placing and Placing and Open Offer

The Firm Placing and Placing and Open Offer is conditional upon the Placing Agreement becoming unconditional in all respects by 8.00 a.m. on 6 March 2015 (or such later time and/or date as the Joint Bookrunners and the Company, respectively, may agree) and the Placing Agreement not being terminated in accordance with its terms. The Placing Agreement is conditional inter alia upon:

the passing of the Resolutions set out in the Notice of General Meeting; and
Admission becoming effective by not later than 8.00 a.m. on 6 March 2015 (or such later time and/or date as the Joint Bookrunners and the Company, respectively, may agree).

It is expected that all these conditions will be satisfied by 8.00 a.m. on 27 February 2015, that Admission will become effective at 8.00 a.m. on 27 February 2015, and that dealings in the New Ordinary Shares will commence at 8.00 a.m. on 27 February 2015. Definitive certificates in respect of New Ordinary Shares will be prepared and are expected to be posted to those allottees who have validly elected to hold their shares in certificated form by 9 March 2015. In respect of those allottees who have validly elected to hold their shares in uncertificated form, the New Ordinary Shares are expected to be credited to their accounts maintained in the CREST system as soon as practicable after 8.00 a.m. on 27 February 2015. No temporary documents of title will be issued in respect of New Ordinary Shares held in uncertificated form.

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Further details of the Placing Agreement are set out in paragraph 14 of Part 13 (Additional Information) of this document. If the Placing Agreement is not declared or does not become unconditional in all respects by 8.00 a.m. on 6 March 2015 (or such later date as the Company may agree with the Joint Bookrunners), or the Placing Agreement is terminated in accordance with its terms, the Open Offer will be revoked and will not proceed. In such event, no New Ordinary Shares will be issued, and all monies received by Equiniti in connection with the Open Offer will be returned to applicants without interest and at their risk as soon as practicable and any Open Offer Entitlements admitted to CREST will thereafter be disabled.

4. Procedure for application and payment

The action to be taken by Qualifying Shareholders in respect of the Open Offer depends on whether, at the relevant time, the Qualifying Shareholder is a Qualifying non-CREST Shareholder who has an Application Form in respect of his entitlement under the Open Offer or, in the case of a Qualifying CREST Shareholder, if he has Open Offer Entitlements credited to his CREST stock account in respect of such entitlement.

Subject to the provisions of paragraph 4(a) of this Part 8 (Terms and Conditions of the Open Offer), Qualifying Shareholders who hold their Existing Ordinary Shares in certificated form will be allotted New Ordinary Shares in certificated form to the extent that their entitlement to the New Ordinary Shares arises as a result of holding Existing Ordinary Shares in certificated form. Qualifying Shareholders who hold their Existing Ordinary Shares in uncertificated form will be allotted New Ordinary Shares in uncertificated form to the extent that their entitlement to the New Ordinary Shares arises as a result of holding Existing Ordinary Shares in uncertificated form. However, it will be possible to deposit Open Offer Entitlements into, and withdraw them from, CREST. Further information on deposit and withdrawal is set out in paragraph 4(b) of this Part 8 (Terms and Conditions of the Open Offer).

CREST-sponsored members should refer to their CREST sponsor, as only their CREST sponsor will be able to take the necessary action specified below to apply under the Open Offer in respect of the Open Offer Entitlements of such members held in CREST. CREST members who wish to apply under the Open Offer in respect of their Open Offer Entitlements in CREST should refer to the CREST Manual for further information on the CREST procedures referred to below.

If a Qualifying Shareholder does not wish to apply to acquire New Ordinary Shares, he should not complete or return the Application Form or submit a USE instruction (as applicable). Qualifying Shareholders are, however, encouraged to vote at the General Meeting by attending in person or by completing and returning the Form of Proxy or the CREST Proxy Instruction.

(a) If a Qualifying Shareholder has an Application Form in respect of his entitlement under the Open Offer

(i) General

Subject as provided in paragraph 6 of this Part 8 (Terms and Conditions of the Open Offer) in relation to certain Overseas Shareholders, Qualifying non-CREST Shareholders will have received an Application Form enclosed with this document. The Application Form shows the number of Existing Ordinary Shares registered in the name of the corresponding Qualifying Shareholder at 5.30 p.m. on the Record Date. It also shows the maximum number of New Ordinary Shares for which such Qualifying Shareholder is entitled to apply in respect of such Qualifying Shareholder's Open Offer Entitlements on the basis set out in paragraph 2 of this Part 8 (Terms and Conditions of the Open Offer), as shown by the total number of Open Offer Entitlements allocated therein. Fractions of New Ordinary Shares will not be allocated to Qualifying Shareholders and entitlements to apply for New Ordinary Shares will be rounded down to the nearest whole number of New Ordinary Shares. The fractional entitlements will be aggregated and sold for the benefit of the Company under the Placing. Accordingly, Qualifying Shareholders holding fewer than 6 Existing Ordinary Shares will have no entitlement to subscribe under the Open Offer. The aggregate number of New Ordinary Shares available for subscription pursuant to the Open Offer is 22,625,000 New Ordinary Shares. A Qualifying Shareholder may apply for less, but not more, than his full Open Offer Entitlement should he

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wish to do so. A Qualifying Shareholder may also hold such an Application Form by virtue of a bona fide market claim.

The instructions and other terms set out in the Application Form form part of the terms of the Open Offer.

Subject to certain exceptions, the Application Form has not been, and will not be, sent to Overseas Shareholders in, or with registered addresses in, the United States or Canada or any of the Excluded Territories and brokers, banks and other agents may not send an Application Form to, or submit Application Forms on behalf of, Overseas Shareholders in, or with addresses in any of these countries or a person (including, without limitation, stockbrokers, banks or other agents) who has a contractual or other legal obligation to forward this document into a jurisdiction other than the United Kingdom.

(ii) Market claims

Applications to acquire Open Offer Shares may only be made on the Application Form and may only be made by the Qualifying non-CREST Shareholder named in it or by a person entitled by virtue of a bona fide market claim in relation to a purchase of Existing Ordinary Shares through the market prior to the date upon which the Existing Ordinary Shares were marked "ex" the entitlement to the Open Offer by the London Stock Exchange, being 9 February 2015. Application Forms may be split up to 3.00 p.m. on 23 February 2015. A person who has sold or transferred all or part of his holding of Existing Ordinary Shares prior to 9 February 2015, being the last date upon which the Existing Ordinary Shares were marked "ex" the entitlement to the Open Offer by the London Stock Exchange, should consult his broker or other professional adviser as soon as possible, as the invitation to acquire New Ordinary Shares under the Open Offer may be a benefit which may be claimed by the transferee from his counterparty pursuant to the rules of the London Stock Exchange. Qualifying non-CREST Shareholders who have sold all or part of their registered holdings should, if the market claim is to be settled outside CREST, complete Box 6 on the Application Form and immediately send it to the stockbroker, bank or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. The Application Form should not, however, be forwarded to or transmitted in or into the United States (subject to certain exceptions) or any of the Excluded Territories.

If the market claim is to be settled outside CREST, the beneficiary of the claim should follow the procedures set out in the accompanying Application Form. If the market claim is to be settled in CREST, the beneficiary of the claim should follow the procedures set out in paragraph 4(b) of this Part 8 (Terms and Conditions of the Open Offer).

(iii) Application procedures

If a Qualifying non-CREST Shareholder wishes to apply for all or some of his entitlement to New Ordinary Shares under the Open Offer he should complete and sign the Application Form in accordance with the instructions printed on it and send it, together with the appropriate remittance and in accordance with the instructions in paragraph 4(a) of this Part 8 (Terms and Conditions of the Open Offer) by post or by hand (during normal business hours only) to Corporate Actions, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom so as to be received no later than 11.00 a.m. on 25 February 2015. A reply-paid envelope is enclosed for use by Qualifying non-CREST Shareholders in connection with the Open Offer.

Qualifying non-CREST Shareholders should note that Equiniti cannot provide financial advice on the merits of the Open Offer or as to whether or not a Qualifying non-CREST Shareholder should take up his entitlement to New Ordinary Shares under the Open Offer. If any Application Form is sent by first-class post within the United Kingdom, Qualifying non-CREST Shareholders are recommended to allow at least four Business Days for delivery.

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(iv) Payments

All payments must be in pounds sterling and cheques or banker’s drafts should be made payable to “Equiniti Limited Re: Anglo Pacific Group PLC Open Offer” and crossed “A/C payee only”. Cheques or banker’s drafts must be drawn on an account at a branch of a bank or building society in the United Kingdom, the Channel Islands or the Isle of Man which is either a settlement member of the Cheque and Credit Clearing Company Limited or the CHAPS Clearing Company Limited or which is a member of either of the Committees of Scottish or Belfast clearing houses or which has arranged for its cheques and banker’s drafts to be cleared through the facilities provided by any of those companies or committees. Such cheques or banker’s drafts must bear the appropriate sort code in the top right-hand corner and must be for the full amount payable on application.

Cheques must be drawn on the personal account of the individual investor where they have sole or joint title to the funds. Third-party cheques may not be accepted with the exception of building society cheques or banker’s drafts where the building society or bank has confirmed the name of the account holder by stamping or endorsing the building society cheque or banker’s draft. The account name should be the same as that shown on the application.

Cheques or banker’s drafts will be presented for payment upon receipt. Post-dated cheques will not be accepted. The Company reserves the right to instruct Equiniti to seek special clearance of cheques and banker’s drafts to allow the Company to obtain value for remittances at the earliest opportunity. No interest will be allowed on payments made before they are due and any interest earned on such payments will accrue for the benefit of the Company. It is a term of the Open Offer that cheques shall be honoured on first presentation, and the Company may elect, in its absolute discretion, to treat as invalid acceptances in respect of which cheques are not so honoured. All documents, cheques and banker’s drafts sent through the post will be sent at the risk of the sender. Payments via CHAPS, BACS or electronic transfer will not be accepted.

Application monies will be paid into a separate bank account pending the Open Offer becoming unconditional. In the event that it does not become unconditional by 8.00 a.m. on 6 March 2015 or such later time and date as the Joint Bookrunners and the Company shall agree, the Firm Placing and Placing and Open Offer will lapse and application monies will be returned by post to applicants, at the applicants’ risk and without interest, to the address set out on the Application Form, within 14 days thereafter. Any interest earned on monies held in the separate bank account will be retained for the benefit of the Company.

(v) Effect of application

All documents and remittances sent by post by or to an applicant (or as the applicant may direct) will be sent at the applicant’s own risk. By completing and delivering an Application Form, the applicant:

(A) represents and warrants that he has the right, power and authority, and has taken all action necessary, to make the application under the Open Offer and to execute, deliver and exercise his rights, and perform his obligations, under any contracts resulting therefrom and that he is not a person otherwise prevented by legal or regulatory restrictions from applying for Open Offer Shares or acting on behalf of any such person on a non-discretionary basis;

(B) agrees that all applications, and contracts resulting therefrom under the Open Offer and any non-contractual obligations related thereto shall be governed by, and construed in accordance with, the laws of England and Wales;

(C) confirms that in making the application he is not relying on any information or representation in relation to the Group other than that contained in this document, and he accordingly agrees that no person responsible solely or jointly for this document or any part thereof, or involved in the preparation thereof, shall have any liability for any

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such information or representation not so contained and further agrees that, having had the opportunity to read this document, he will be deemed to have had notice of all information contained in this document (including information incorporated by reference);

(D) represents and warrants that he is the Qualifying Shareholder originally entitled to the Open Offer Entitlement or, if he has received any Open Offer Entitlements from a person other than the Company, he is entitled to apply under the Open Offer in relation to such Open Offer Entitlements by virtue of a bona fide market claim;

(E) requests that the New Ordinary Shares to which he will become entitled be issued to him on the terms set out in this document and the Application Form and subject to the Articles;

(F) represents and warrants that he is not a person, and is not applying on behalf of any such person, who by virtue of being resident in or a citizen of any country outside the United Kingdom, or a corporation, partnership or other entity created or organised outside the United Kingdom is prevented by the law of any relevant jurisdiction from lawfully applying for New Ordinary Shares;

(G) unless otherwise agreed by the Company in its sole discretion, represents and warrants to the Company, the Banks and the Registrar that such person (a) is not located in the United States or any other Excluded Territory; (b) is not in any jurisdiction in which it is unlawful to make or accept an offer to acquire the New Ordinary Shares; (c) is not acting for the account of any person who is located in the United States, unless (1) the instruction to apply was received from a person outside the United States and (2) the person giving such instruction has confirmed that (x) it has the authority to give such instruction and (y) either (A) it has investment discretion over such account or (B) it is an investment manager or investment company that is acquiring the New Ordinary Shares in an "offshore transaction" within the meaning of Regulation S; and (d) it is not acquiring the New Ordinary Shares with a view to offer, sale, resale, transfer, delivery or distribution, directly or indirectly, or any such New Ordinary Shares into the United States, any of the Excluded Territories or any other jurisdiction referred to in (b) above;

(H) represents and warrants that he does not have a registered address and is not otherwise located in Canada and is not acquiring New Ordinary Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such New Ordinary Shares in Canada;

(I) represents and warrants that he is not, and nor is he applying as nominee or agent for, a person who is or may be liable to notify and account for tax under the Stamp Duty Reserve Tax Regulations 1986 at any of the increased rates referred to in Section 93 (depository receipts) or Section 96 (clearance services) of the Finance Act 1986; and

(J) confirms that in making the application he is not relying and has not relied on any of the Banks or any parties affiliated with them in connection with any investigation of the accuracy of any information contained in this document or his investment decision.

Further representations and warranties are included in the Application Form. The Company reserves the right to reject any Application Form if it has reason to believe such representations and warranties cannot be given.

If a Qualifying non-CREST Shareholder is in doubt as to whether or not he should apply for any of the New Ordinary Shares under the Open Offer, he should consult his independent financial adviser immediately. All enquiries in relation to the procedure for application for Qualifying non-CREST Shareholders under the Open Offer should be addressed to Corporate Actions, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom or by telephone on 0871 384 2673 or, if telephoning from outside the UK, on

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+44 (0)121 415 0870. Calls to the Equiniti 0871 384 2673 number are charged at 8 pence per minute (excluding VAT) or 10 pence per minute (including VAT) plus network extras. Other network providers' costs may vary. Calls to the Equiniti +44 (0)121 415 0870 number from outside the UK are charged at applicable international rates. Different charges may apply to calls made from mobile telephones, and calls may be recorded and monitored randomly for security and training purposes. Equiniti cannot provide advice on the merits of the Firm Placing, Placing and Open Offer or give any financial, legal or tax advice.

If a Qualifying non-CREST Shareholder does not wish to apply for any of the New Ordinary Shares to which he is entitled under the Open Offer, he should not complete or return the Application Form but is encouraged, in any case, to vote at the General Meeting by attending in person or by completing and returning the Form of Proxy enclosed with this document.

(b) If a Qualifying Shareholder has Open Offer Entitlements credited to his stock account in CREST in respect of his entitlement under the Open Offer

(i) General

Subject as provided in paragraph 6 of this Part 8 (Terms and Conditions of the Open Offer) in relation to certain Overseas Shareholders, each Qualifying CREST Shareholder will receive a credit to his stock account in CREST of his Open Offer Entitlements. Open Offer Entitlements to the Open Offer Shares will be rounded down to the nearest whole number. Any fractional entitlement to New Ordinary Shares arising will be aggregated and sold for the benefit of the Company under the Placing.

The CREST stock account to be credited will be an account under the Participant ID and Member Account ID that apply to the Existing Ordinary Shares held on the Record Date by the Qualifying CREST Shareholder in respect of which the Open Offer Entitlements have been allocated.

If, for any reason, the Open Offer Entitlements cannot be admitted to CREST by, or the stock accounts of Qualifying CREST Shareholders cannot be credited by, 8.00 a.m. on 9 February 2015 or such later time as the Company may decide, an Application Form will be sent out to each Qualifying CREST Shareholder in substitution for the Open Offer Entitlements which should have been credited to his stock account in CREST. In these circumstances the expected timetable as set out in this document will be adjusted as appropriate and the provisions of this document applicable to Qualifying non-CREST Shareholders with Application Forms will apply to Qualifying CREST Shareholders who receive Application Forms.

CREST members who wish to apply for some or all of their entitlements to Open Offer Shares should refer to the CREST Manual for further information on the CREST procedures referred to below. Should a Qualifying CREST Shareholder need advice with regard to these procedures, he should contact Corporate Actions, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom or telephone Equiniti on 0871 384 2673 or, if telephoning from outside the UK, on +44 (0)121 415 0870. Calls to the Equiniti number are charged at 8 pence per minute (excluding VAT) or 10 pence per minute (including VAT) plus network extras. Other network providers' costs may vary. Calls to the Equiniti +44 (0)121 415 0870 number from outside the UK are charged at applicable international rates. Different charges may apply to calls made from mobile telephones, and calls may be recorded and monitored randomly for security and training purposes. Equiniti cannot provide advice on the merits of the Open Offer or give any financial, legal or tax advice. If a Qualifying CREST Shareholder is a CREST-sponsored member he should consult his CREST sponsor if he wishes to apply for New Ordinary Shares as only that CREST sponsor will be able to take the necessary action to make this application in CREST.

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(ii) Market claims

The Open Offer Entitlements will constitute a separate security for the purposes of CREST. Although Open Offer Entitlements will be admitted to CREST and be enabled for settlement, applications in respect of Open Offer Entitlements may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim transaction. Transactions identified by the CREST Claims Processing Unit as “cum” the Open Offer Entitlements will generate an appropriate market claim transaction and the relevant Open Offer Entitlement(s) will thereafter be transferred accordingly.

(iii) USE instructions

CREST members who wish to apply for New Ordinary Shares in respect of all or some of their Open Offer Entitlements in CREST must send (or, if they are a CREST-sponsored member, procure that their CREST sponsor sends) an USE instruction to Euroclear which, on its settlement, will have the following effect:

(A) the crediting of a stock account of Equiniti under the Participant ID and Member Account ID specified below, with a number of Open Offer Entitlements corresponding to the number of New Ordinary Shares applied for; and

(B) the creation of a CREST payment, in accordance with the CREST payment arrangements, in favour of the payment bank of Equiniti in respect of the amount specified in the USE instruction which must be the full amount payable on application for the number of New Ordinary Shares referred to in sub-paragraph (A) above.

(iv) Content of USE instructions in respect of Open Offer Entitlements

The USE instruction must be properly authenticated in accordance with Euroclear’s specifications and must contain, in addition to the other information that is required for settlement in CREST, the following details:

(A) the number of Open Offer Shares for which application is being made (and hence the number of the Open Offer Entitlement(s) being delivered to Equiniti);

(B) the ISIN of the Open Offer Entitlements. This is GB00BSPC3T64;

(D) the Participant ID of the accepting CREST Member;

(E) the Participant ID of Equiniti, in its capacity as a CREST receiving agent. This is 2RA28;

(F) the Member Account ID of Equiniti, in its capacity as a CREST receiving agent. This is RA188001;

(G) the amount payable by means of a CREST payment on settlement of the USE instruction. This must be the full amount payable on application for the number of Open Offer Shares referred to in sub-paragraph (A) above;

(H) the intended settlement date. This must be on or before 11.00 a.m. on 25 February 2015; and

(I) the Corporate Action Number for the Open Offer. This will be available by viewing the relevant corporate action details in CREST.

In order for an application under the Open Offer to be valid, the USE instruction must comply with the requirements as to authentication and contents set out above and must settle on or before 11.00 a.m. on 25 February 2015.

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In order to assist prompt settlement of the USE instruction, CREST members (or their sponsors, where applicable) may consider adding the following non-mandatory fields to the USE instruction:

(a) a contact name and telephone number (in the free-format shared note field); and
(b) a priority of at least 80.

CREST members and, in the case of CREST-sponsored members, their CREST sponsors should note that the last time at which a USE instruction may settle on 25 February 2015 in order to be valid is 11.00 a.m. on that day.

In the event that the Firm Placing and Placing and Open Offer does not become unconditional by 8.00 a.m. on 6 March 2015 or such later time and date as the Joint Bookrunners and the Company shall agree, the Firm Placing and Placing and Open Offer will lapse, the Open Offer Entitlements admitted to CREST will be disabled and Equiniti will refund the amount paid by a Qualifying CREST Shareholder by way of a CREST payment, without interest, within 14 days thereafter. Any interest earned on such monies will be retained for the benefit of the Company.

(v) Deposit of Open Offer Entitlements into, and withdrawal from, CREST

A Qualifying non-CREST Shareholder’s entitlement under the Open Offer as shown by the number of Open Offer Entitlements set out in his Application Form may be deposited into CREST (either into the account of the Qualifying Shareholder named in the Application Form or into the name of a person entitled by virtue of a bona fide market claim). Similarly, Open Offer Entitlements held in CREST may be withdrawn from CREST so that the entitlement under the Open Offer is reflected in an Application Form. Normal CREST procedures (including timings) apply in relation to any such deposit or withdrawal, subject (in the case of a deposit into CREST) as set out in the Application Form.

A holder of an Application Form who is proposing to deposit the entitlement set out in such form is recommended to ensure that the deposit procedures are implemented in sufficient time to enable the person holding or acquiring the Open Offer Entitlements following their deposit into CREST to take all necessary steps in connection with taking up the entitlement prior to 11.00 a.m. on 25 February 2015.

In particular, having regard to normal processing times in CREST and on the part of Equiniti, the recommended latest time for depositing an Application Form with the CREST Courier and Sorting Service, where the person entitled wishes to hold the entitlement under the Open Offer set out in such Application Form as Open Offer Entitlements in CREST, is 3.00 p.m. on 20 February 2015, and the recommended latest time for receipt by Euroclear of a dematerialised instruction requesting withdrawal of Open Offer Entitlements from CREST is 4.30 p.m. on 19 February 2015, in either case, so as to enable the person acquiring or (as appropriate) holding the Open Offer Entitlements following the deposit or withdrawal (whether as shown in an Application Form or held in CREST) to take all necessary steps in connection with applying in respect of the Open Offer Entitlements prior to 11.00 a.m. on 25 February 2015.

Delivery of an Application Form with the CREST Deposit Form duly completed, whether in respect of a deposit into the account of the Qualifying Shareholder named in the Application Form or into the name of another person, shall constitute a representation and warranty to the Company, the Banks and Equiniti by the relevant CREST member(s) that, subject to certain exceptions, (a) he is not located in the United States or any other Excluded Territory; (b) is not in any jurisdiction in which it is unlawful to make or accept an offer to acquire the New Ordinary Shares; (c) is not acting for the account of any person who is located in the United States, unless (1) the instruction to apply was received from a person outside the United States and (2) the person giving such instruction has confirmed that (x) it has the authority to give

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such instruction and (y) either (A) it has investment discretion over such account or (B) it is an investment manager or investment company that is acquiring the New Ordinary Shares in an "offshore transaction" within the meaning of Regulation S; and (d) it is not acquiring the New Ordinary Shares with a view to offer, sale, resale, transfer, delivery or distribution, directly or indirectly, or any such New Ordinary Shares into the United States, any of the Excluded Territories or any other jurisdiction referred to in (b) above.

(vi) Validity of application

A USE instruction complying with the requirements as to authentication and contents set out above which settles by no later than 11.00 a.m. on 25 February 2015 will constitute a valid application under the Open Offer.

(vii) CREST procedures and timings

CREST members and (where applicable) their CREST sponsors should note that Euroclear does not make available special procedures in CREST for any particular corporate action. Normal system timings and limitations will therefore apply in relation to the input of a USE instruction and its settlement in connection with the Open Offer. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST-sponsored member, to procure that his CREST sponsor takes) such action as shall be necessary to ensure that a valid application is made as stated above by 11.00 a.m. on 25 February 2015. In this connection, CREST members and (where applicable) their CREST sponsors are referred in particular to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

(viii) Incorrect or incomplete applications

If a USE instruction includes a CREST payment for an incorrect sum, the Company through Equiniti reserves the right:

(A) to reject the application in full and refund the payment to the CREST member in question;

(B) in the case that an insufficient sum is paid, to treat the application as a valid application for such lesser whole number of Open Offer Shares as would be able to be applied for with that payment at the Offer Price, refunding any unutilised sum to the CREST member in question; or

(C) in the case that an excess sum is paid, to treat the application as a valid application for all the Open Offer Shares referred to in the USE instruction refunding any unutilised sum to the CREST member in question.

(ix) Effect of valid application

A CREST member who makes or is treated as making a valid application in accordance with the above procedures thereby:

(B) agrees to pay the amount payable on application in accordance with the above procedures by means of a CREST payment in accordance with the CREST payment arrangements (it being acknowledged that the payment to Equiniti's payment bank in accordance with the CREST payment arrangements shall, to the extent of the payment,

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discharge in full the obligation of the CREST member to pay to the Company the amount payable on application);

(C) requests that the New Ordinary Shares to which he will become entitled be issued to him on the terms set out in this document and subject to the Articles;

(D) agrees that all applications and contracts resulting therefrom under the Open Offer and any non-contractual obligations related thereto shall be governed by, and construed in accordance with, the laws of England and Wales;

(E) represents and warrants that he is not a person, and is not applying on behalf of any such person, who by virtue of being resident in or a citizen of any country outside the United Kingdom, or a corporation, partnership or other entity created or organised outside the United Kingdom is prevented by the law of any relevant jurisdiction from lawfully applying for New Ordinary Shares;

(F) unless otherwise agreed by the Company in its sole discretion, represents and warrants to the Company, the Banks and the Registrar that such person (a) is not located in the United States or any other Excluded Territory; (b) is not in any jurisdiction in which it is unlawful to make or accept an offer to acquire the New Ordinary Shares; (c) is not applying for the account of any person who is located in the United States, unless (1) the instruction to apply was received from a person outside the United States and (2) the person giving such instruction has confirmed that (x) it has the authority to give such instruction and (y) either (A) it has investment discretion over such account or (B) it is an investment manager or investment company that is acquiring the New Ordinary Shares in an “offshore transaction” within the meaning of Regulation S; and (d) it is not acquiring the New Ordinary Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such New Ordinary Shares into the United States, any of the Excluded Territories or any other jurisdiction referred to in (b) above;

(G) represents and warrants that he does not have a registered address and is not otherwise located in Canada and is not acquiring New Ordinary Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such New Ordinary Shares in Canada;

(H) represent and warrant that he is not, and nor is he applying as nominee or agent for, a person who is or may be liable to notify and account for tax under the Stamp Duty Reserve Tax Regulations 1986 at any of the increased rates referred to in section 93 (Depository receipts) or section 96 (Clearance services) of the Finance Act 1986;

(I) confirms that in making the application he is not relying and has not relied on any of the Banks or any parties affiliated with them in connection with any investigation of the accuracy of any information contained in this document or his investment decision;

(J) confirms that, in making such application, he is not relying on any information or representation in relation to the Company other than that contained in this document and he accordingly agrees that no person responsible solely or jointly for this document or any part thereof or involved in the preparation thereof shall have any liability for any such information or representation not so contained and further agrees that, having had the opportunity to read this document, he will be deemed to have had notice of all the information contained in this document (including information incorporated by reference); and

(K) represents and warrants that he is the Qualifying Shareholder originally entitled to the Open Offer Entitlements or that he has received such Open Offer Entitlements by virtue of a bona fide market claim.

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The Company reserves the right to reject any Application Form or USE Instruction if it has reason to believe such representations and warranties cannot be given.

(x) The Company's discretion as to rejection and validity of applications

The Company may, in its sole discretion:

(A) treat as valid (and binding on the CREST member concerned) an application which does not comply in all respects with the requirements as to validity set out or referred to in this Part 8 (Terms and Conditions of the Open Offer);

(B) accept an alternative properly authenticated dematerialised instruction from a CREST member or (where applicable) a CREST sponsor as constituting a valid application in substitution for or in addition to a USE instruction and subject to such further terms and conditions as the Company may determine;

(C) treat a properly authenticated dematerialised instruction (in this sub-paragraph, the "first instruction") as not constituting a valid application if, at the time at which Equiniti receives a properly authenticated dematerialised instruction giving details of the first instruction or thereafter, either the Company or Equiniti has received actual notice from Euroclear of any of the matters specified in Regulation 35(5)(a) of the CREST Regulations in relation to the first instruction. These matters include notice that any information contained in the first instruction was incorrect or notice of lack of authority to send the first instruction; and

(D) accept an alternative instruction or notification from a CREST member or CREST-sponsored member or (where applicable) a CREST sponsor, or extend the time for settlement of a USE instruction or any alternative instruction or notification, in the event that, for reasons or due to circumstances outside the control of any CREST member or CREST-sponsored member or (where applicable) CREST sponsor, the CREST member or CREST-sponsored member is unable validly to apply for New Ordinary Shares by means of the above procedures. In normal circumstances, this discretion is only likely to be exercised in the event of any interruption, failure or breakdown of CREST (or any part of CREST) or on the part of the facilities and/or systems operated by Equiniti in connection with CREST.

Money Laundering Regulations

(a) Holders of Application Forms

It is a term of the Open Offer that, to ensure compliance with the Money Laundering Regulations 2007 (as amended and supplemented), Equiniti may require, in its absolute discretion, verification of the identity of the person by whom or on whose behalf an Application Form is lodged with payment (which requirements are referred to below as the "verification of identity requirements").

The person(s) (the applicant) who, by lodging an Application Form with payment, and in accordance with the other terms as described above, accept(s) the Open Offer in respect of the New Ordinary Shares (the relevant shares) comprised in such Application Form shall thereby be deemed to agree to provide Equiniti with such information and other evidence as it may require to satisfy the verification of identity requirements.

Equiniti may therefore undertake electronic searches for the purposes of verifying identity. To do so, Equiniti may verify the details against the applicant's identity, but also may request further proof of identity. A record of the search will be retained.

If Equiniti determines that the verification of identity requirements apply to any applicant or application, the relevant shares (notwithstanding any other term of the Open Offer) will not be issued to the applicant unless and until the verification of identity requirements have been satisfied in respect of that application. Equiniti is entitled, in its absolute discretion, to determine whether the verification

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of identity requirements apply to any applicant or application and whether such requirements have been satisfied, and neither Equiniti nor the Company will be liable to any person for any loss or damage suffered or incurred (or alleged), directly or indirectly, as a result of the exercise of such discretion.

If the verification of identity requirements apply, failure to provide the necessary evidence of identity within a reasonable time may result in delays in the despatch of share certificates or in crediting CREST accounts. If, within a reasonable period of time and in any event by not later than 25 February 2015, following a request for verification of identity, Equiniti has not received evidence satisfactory to it as aforesaid, the Company may, in its absolute discretion, terminate the contract of allotment in which event the monies payable on acceptance of the Open Offer will be returned at the applicant's risk and without interest to the account of the bank from which such monies were originally debited (without prejudice to the right of the Company to take proceedings to recover the amount by which the net proceeds of sale of the relevant New Ordinary Shares fall short of the amount payable thereon).

Submission of an Application Form with the appropriate remittance will constitute a warranty from the applicant that the Money Laundering Regulations will not be breached by application of such remittance.

The verification of identity requirements will not usually apply:

(i) if the applicant is an organisation required to comply with the Money Laundering Directive (the Council Directive on the prevention of the use of the financial system for the purpose of money laundering (no. 91/308/EEQ)); or
(ii) if the applicant is a regulated United Kingdom broker or intermediary acting as agent and is itself subject to the Money Laundering Regulations; or
(iii) if the applicant (not being an applicant who delivers his application in person) makes payment by way of a cheque drawn on an account in the name of such applicant; or
(iv) if the aggregate subscription price for the relevant shares is less than the sterling equivalent of €15,000.

In other cases, the verification of identity requirements may apply. The following guidance is provided in order to assist in satisfying the verification of identity requirements and to reduce the likelihood of difficulties or delays and potential rejection of an application (but does not limit the right of Equiniti to require verification of identity as stated above). Satisfaction of the verification of identity requirements may be facilitated in the following ways:

(A) if payment is made by building society cheque (not being a cheque drawn on an account of the applicant) or banker's draft, by the building society or bank endorsing on the cheque or draft the applicant's name and the number of an account held in the applicant's name at such building society or bank, such endorsement being validated by a stamp and an authorised signature by the building society or bank on the reverse of the cheque or banker's draft; or
(B) if the Application Form is lodged with payment by an agent which is an organisation of the kind referred to above or which is subject to anti-money laundering regulation in a country which is a member of the Financial Action Task Force (the current non-European Union members of which are Argentina, Australia, Brazil, Canada, Hong Kong, Iceland, India, Japan, Mexico, New Zealand, Norway, People's Republic of China, Republic of Korea, Russian Federation, Singapore, South Africa, Switzerland, Turkey, the United States and, by virtue of their membership of the Gulf Co-operation Council, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates), the agent should provide written confirmation that it has that status with the Application Form and written assurance that it has obtained and recorded evidence of the identity of the persons for whom it acts and that it will, on demand, make such evidence available to Equiniti or the relevant authority.

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In order to confirm the acceptability of any written assurance referred to in sub-paragraph (B) above or any other case, the applicant should contact Equiniti; or

(C) if (an) Application Form(s) is/are in respect of relevant shares with an aggregate subscription price of the sterling equivalent of €15,000 or more and is/are lodged by hand by the applicant in person, he should ensure that he has with him evidence of identity bearing his photograph (for example, his passport) and evidence of his address.

Third-party cheques will not be accepted with the exception of building society cheques or banker's drafts where the building society or bank has confirmed the name of the account holder by stamping or endorsing the building society cheque or banker's draft to such effect. The account name should be the same as that shown on the application.

If, within a reasonable period of time following a request for verification of identity, and in any case by no later than 11.00 a.m. on 25 February 2015, Equiniti has not received evidence satisfactory to it as aforesaid, Equiniti may, at its discretion, as agent of the Company, reject the relevant application, in which event the monies submitted in respect of that application will be returned without interest to the account at the drawee bank from which such monies were originally debited (without prejudice to the rights of the Company to undertake proceedings to receive monies in respect of the loss suffered by it as a result of the failure to produce satisfactory evidence as aforesaid).

(b) Open Offer Entitlements in CREST

If a Qualifying Shareholder holds his Open Offer Entitlements in CREST and applies for Open Offer Shares in respect of all or some of his Open Offer Entitlements as agent for one or more persons and he is not a UK or EU regulated person or institution (for example, a UK financial institution), irrespective of the value of the application, Equiniti is obliged to take reasonable measures to establish the identity of the person or persons on whose behalf the application is being made. Such Qualifying Shareholder must therefore contact Equiniti before sending any USE instruction or other instruction so that appropriate measures may be taken.

Submission of a USE instruction which, on its settlement, constitutes a valid application as described above constitutes a warranty and undertaking by the applicant to provide promptly to Equiniti such information as may be specified by Equiniti as being required for the purposes of the Money Laundering Regulations. Pending the provision of evidence satisfactory to Equiniti as to identity, Equiniti may, in its absolute discretion, take, or omit to take, such action as it may determine to prevent or delay issue of the Open Offer Shares concerned. If satisfactory evidence of identity has not been provided within a reasonable time, then the application for the Open Offer Shares represented by the USE instruction will not be valid. This is without prejudice to the right of the Company to take proceedings to recover any loss suffered by it as a result of failure to provide satisfactory evidence.

Overseas Shareholders

(a) General

The making of the Open Offer to Overseas Shareholders may be affected by the laws or regulatory requirements of the relevant jurisdiction. Overseas Shareholders who are in any doubt in this respect should consult their professional advisers without delay.

Whilst Qualifying Shareholders who have registered addresses outside the United Kingdom, or who are resident in, or citizens of, countries other than the United Kingdom are entitled to participate in the Open Offer, the ability of those persons to take up their allocations may be affected by the laws of the relevant jurisdiction. Those persons should consult their professional advisers as to all legal, tax, regulatory or other formalities required to enable them to take up their allocations, including whether they require any governmental or other consents or need to observe any other formalities in such territory including paying any issue, transfer or other taxes. The comments set out in paragraph 6 of this Part 8 (Terms and Conditions of the Open

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Offer) are intended as a general guide only and any Overseas Shareholder should seek professional advice without delay.

No action has been or will be taken by the Company or any other person to permit a public offering or distribution of this document or the Application Form in any jurisdiction where action for that purpose may be required, other than in the UK.

No person receiving a copy of this document and/or an Application Form and/or receiving a credit of Open Offer Entitlements to a stock account in CREST in any territory other than the United Kingdom may treat the same as constituting an invitation or offer to him, nor should he in any event use such Application Form or credit of Open Offer Entitlements to a stock account in CREST, unless, in the relevant territory, such an invitation or offer could lawfully be made to him or such Application Form or credit of Open Offer Entitlements to a stock account in CREST could lawfully be used without contravention of any legislation or other local regulatory requirements. Receipt of this document and/or an Application Form or the crediting of Open Offer Entitlements to a stock account in CREST does not constitute an invitation or offer to Overseas Shareholders in the territories in which it would be unlawful to make an invitation or offer and, in such circumstances, this document and/or any Application Forms are sent for information only. It is the responsibility of any Shareholder receiving a copy of this document and/or an Application Form and/or receiving a credit of Open Offer Entitlements to a stock account in CREST outside the United Kingdom and wishing to make an application for any New Ordinary Shares to satisfy himself as to the full observance of the laws and regulatory requirements of the relevant territory in connection therewith, including obtaining any governmental or other consents which may be required or observing any other formalities required to be observed in such territory and paying any issue, transfer or other taxes due in such other territory.

Due to restrictions under the securities laws of the Excluded Territories and certain commercial considerations, Application Forms will not be sent to, and Open Offer Entitlements will not be credited to stock accounts in CREST of, Shareholders in Excluded Territories or their agents or intermediaries, except where the Company is satisfied, at its sole and absolute discretion, that such action would not result in the contravention of any registration or other legal requirement in the relevant jurisdiction.

Persons (including, without limitation, stockbrokers, banks and other agents) receiving an Application Form and/or receiving a credit of Open Offer Entitlements to a stock account in CREST should not, in connection with the Open Offer, distribute or send the Application Form or transfer the Open Offer Entitlements into any jurisdiction where to do so would or might contravene local securities laws or regulations.

If an Application Form or a credit of Open Offer Entitlements to a stock account in CREST is received by any person in any such jurisdiction or by the stockbrokers, banks and other agents or nominees of such person, he must not seek to take up the Open Offer Shares except pursuant to an express agreement with the Company. Any person who does forward an Application Form or transfer the Open Offer Entitlements into any such jurisdiction, whether pursuant to a contractual or legal obligation or otherwise, should draw the attention of the recipient to the contents of this paragraph. The Company reserves the right to reject an Application Form or transfer of Open Offer Entitlements from or in favour of Shareholders in any such jurisdiction or persons who are acquiring New Ordinary Shares for resale in any such jurisdiction.

The Company reserves the right, in its absolute discretion, to treat as invalid any application for New Ordinary Shares under the Open Offer, and the Company will not be bound to allot or issue any New Ordinary Shares in respect of any acceptance or purported acceptance of the offer of New Ordinary Shares, if it appears to the Company or its agents that such application or acceptance thereof may involve a breach of the laws or regulations of any jurisdiction or if in respect of such application the Company has not been given the relevant warranty concerning overseas jurisdictions set out in the Application Form or in this document, as appropriate. All payments under the Open Offer must be made in pounds sterling.

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The Company is not making any representation to any offeree or purchaser of Open Offer Shares regarding the legality of an investment in the Open Offer shares by such offeree or purchaser under the laws applicable to such offeree or purchaser.

(b) United States and Excluded Territories

(i) United States

None of the New Ordinary Shares (whether Firm Placed Shares, Conditional Placed Shares, Open Offer Shares or otherwise) or the Open Offer Entitlements have been, or will be, registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and, accordingly, may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within the United States except in reliance on an exemption from the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. There will be no public offer of the New Ordinary Shares or the Open Offer Entitlements in the United States.

The Company has not been, and will not be, registered under the US Investment Company Act and Investors will not be entitled to the benefits of that Act.

The New Ordinary Shares made available under the Firm Placing and Placing and Open Offer are being offered and sold (i) pursuant to the Firm Placing and Placing only, in the United States only to persons reasonably believed to be QIBs who have duly executed a US Investor Letter in the form provided by the Company or the Banks and delivered the same to the Company and the Banks in reliance on Rule 144A or pursuant to another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act; and (ii) outside the United States in offshore transactions in reliance on Regulation S.

Prospective purchasers are hereby notified that sellers of the New Ordinary Shares may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A.

Accordingly, the Company is not extending the Open Offer into the United States none of this Prospectus, the Application Form nor the crediting of Open Offer Entitlements to a stock account in CREST constitutes or will constitute an offer or an invitation to apply for or an offer or an invitation to acquire any New Ordinary Shares in the United States. Neither this Prospectus (subject to certain limited exceptions) nor the Application Form will be sent to, and neither Open Offer Entitlements nor New Ordinary Shares will be credited to a stock account in CREST of, any Qualifying Shareholder with a registered address in the United States. Application Forms sent from or postmarked in the United State, or including a United States registered address, will be deemed to be invalid and all persons acquiring Open Offer Shares and wishing to hold such Open Offer Shares in registered form must provide an address outside the United States for registration of the Open Offer Shares.

The Company reserves the right to treat as invalid any Application Form that appears to the Company or its agents to have been executed in, or despatched from, the United States, or that provides an address in the United States for the receipt of New Ordinary Shares, or which does not make the warranties set out in the Application Form or where the Company believes acceptance of such Application Form may infringe applicable legal or regulatory requirements. In addition, any person exercising Open Offer Entitlements must make the representations and warranties set out in paragraph 4 of this Part 8 (Terms and Conditions of the Open Offer), as appropriate. Accordingly, the Company reserves the right to treat as invalid (i) any Application Form which does not make the representations and warranties set out in paragraph 4 of this Part 8 (Terms and Conditions of the Open Offer) and (ii) any USE Instruction which does not make the representations and warranties set out in paragraph 4 of this Part 8 (Terms and Conditions of the Open Offer). The attention of persons holding for the account of persons located in the United States or located or resident in any of the Excluded Territories is directed

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to such paragraphs. In addition, the Company and/or Joint Bookrunners reserve the right to reject any USE instruction sent by or on behalf of any CREST member with a registered address in the United States or appears to the Company to have been despatched from the United States or any other Excluded Territory, in a manner which may involve a breach of the laws of any jurisdiction or they or their agents believe may violate any applicable legal or regulatory requirement, or which does not make the representations and warranties set out in paragraph 4 of this Part 8 (Terms and Conditions of the Open Offer).

Any person in the United States who obtains a copy of an Application Form is required to disregard it. This Prospectus is being sent to Shareholders in the United States for information only in connection with the Shareholder vote in respect of the Resolutions and the General Meeting and, in that context, no part of this document constitutes, or will constitute, or forms part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for the New Ordinary Shares or the Open Offer Entitlements by any Shareholder.

No representation has been, or will be, made by the Company or any of the Banks as to the availability of Rule 144 under the US Securities Act or any other exemption under the US Securities Act or any state securities laws for the reoffer, pledge or transfer of the New Ordinary Shares.

(ii) Other Excluded Territories

Due to the restrictions under the securities laws of the Excluded Territories, Shareholders who have registered addresses in or who are resident or ordinarily resident in, or citizens of, any Excluded Territories will not, subject to certain exceptions, qualify to participate in the Open Offer and will not be sent an Application Form and no Open Offer Entitlements will be credited to their CREST stock accounts.

The New Ordinary Shares have not been and will not be registered under the relevant laws of any of the Excluded Territories or any state, province or territory thereof and may not be offered, sold, resold, delivered or distributed, directly or indirectly, in or into any of the Excluded Territories or to, or for the account or benefit of, any person with a registered address in, or who is resident or ordinarily resident in, or a citizen of, any Excluded Territories except pursuant to an applicable exemption.

(i) Qualifying Non-CREST Shareholders

Any person completing and returning an Application Form or requesting registration of the Open Offer Shares comprised therein represents and warrants to the Company and the Registrar that, except where proof has been provided to the Company's satisfaction that such person's use of the Application Form will not result in the contravention of any applicable legal requirements in any jurisdiction: (A) such person is not requesting registration of the relevant New Ordinary Shares from within any Excluded Territory; (B) such person is not in any territory in which it is unlawful to make or accept an offer to acquire New Ordinary Shares or to use the Application Form in any manner in which such person has used or will use it; (C) such person is not acting on a non-discretionary basis for a person located within any Excluded Territory or any territory referred to in (B) above at the time the instruction to accept was given; and (D) such person is not acquiring New Ordinary Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such New Ordinary Shares into any of the above territories. The Company and/or the Registrar may treat as invalid any acceptance or purported acceptance of the allotment of New Ordinary Shares comprised in an Application Form if it: (I) appears to the Company or its agents to have been executed, effected or dispatched from an Excluded Territory or in a manner that may involve a breach of the laws or regulations of any jurisdiction or if the Company or its agents believe that the same may violate applicable legal or regulatory requirements; (II) provides an address in an Excluded Territory for delivery of the share certificates of New Ordinary Shares (or any other

158

jurisdiction outside the UK in which it would be unlawful to deliver such share certificates); or (III) purports to exclude the representation and warranty required by this sub-paragraph (i).

(ii) Qualifying CREST Shareholders

A CREST member or CREST-sponsored member who makes a valid acceptance in accordance with the procedures set out in this Part 8 (Terms and conditions of the Open Offer) represents and warrants to the Company that, except where proof has been provided to the Company's satisfaction that such person's acceptance will not result in the contravention of any applicable legal requirement in any jurisdiction: (A) neither it nor its client is within any Excluded Territory; (B) neither it nor its client is in any territory in which it is unlawful to make or accept an offer to acquire New Ordinary Shares; (C) it is not accepting on a non-discretionary basis for a person located within any Excluded Territory or any territory referred to in (B) above at the time the instruction to accept was given; and (D) neither it nor its client is acquiring any New Ordinary Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such New Ordinary Shares into any of the above territories. A CREST member or CREST-sponsored member who makes a valid acceptance in accordance with the procedures set out in this Part 8 (Terms and Conditions of the Open Offer) also represents and warrants that it is making an application for New Ordinary Shares for its own long-term investment and will not sell, dispose of or transfer the New Ordinary Shares allocated to it as part of the Open Offer within a period of six months from the date of allotment of such New Ordinary Shares.

(d) Waiver

The provisions of paragraph 6 of this Part 8 (Terms and Conditions of the Open Offer) and of any other terms of the Open Offer relating to Overseas Shareholders may be waived, varied or modified as regards specific Shareholders or on a general basis by the Company, in its absolute discretion. Subject to this, the provisions of paragraph 6 of this Part 8 (Terms and Conditions of the Open Offer) supersede any terms of the Open Offer inconsistent herewith. References in paragraph 6 of this Part 8 (Terms and Conditions of the Open Offer) to Shareholders shall include references to the person or persons executing an Application Form and, in the event of more than one person executing an Application Form, the provisions of paragraph 6 of this Part 8 (Terms and Conditions of the Open Offer) shall apply to them jointly and to each of them.

Withdrawal rights

Qualifying Shareholders wishing to exercise statutory withdrawal rights under Section 87Q(4) of FSMA after publication by the Company of a prospectus supplementing this document must do so by lodging a written notice of withdrawal which must include the full name and address of the person wishing to exercise statutory withdrawal rights and, if such person is a CREST member, the Participant ID and the Member Account ID of such CREST member, with Corporate Actions, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom, so as to be received by no later than two Business Days after the date on which the supplementary prospectus is published, withdrawal being effective as at posting of the written notice of withdrawal. Notice of withdrawal given by any other means or which is deposited with or received by Equiniti after expiry of such period will not constitute a valid withdrawal, provided that the Company will not permit the exercise of withdrawal rights after payment by the relevant Qualifying Shareholder of its subscription in full and the allotment of New Ordinary Shares to such Qualifying Shareholder becoming unconditional, save to the extent required by statute. In such event, Shareholders are advised to seek independent legal advice.

Taxation

Information regarding United Kingdom in respect of the New Ordinary Shares and the Open Offer is set out in paragraph 17 of Part 13 (Additional Information) of this document. If a Qualifying Shareholder is in any doubt about his tax position or is subject to tax in a jurisdiction other than the United Kingdom, he should consult his professional advisers without delay.

159

Listing, settlement, dealings and publication

Applications will be made to the Financial Conduct Authority for the New Ordinary Shares to be admitted to the premium segment of the Official List and to the London Stock Exchange for them to be admitted to trading on its main market for listed securities, subject to the fulfilment of the conditions of the Open Offer. Application has been made to the Toronto Stock Exchange to list the New Ordinary Shares. Subject to the Firm Placing and Placing and Open Offer becoming unconditional in all respects (save only as to Admission), it is expected that admission of the New Ordinary Shares to the premium segment of the Official List and to trading on the London Stock Exchange will become effective and that dealings therein for normal settlement will commence at 8.00 a.m. on 27 February 2015 and market open on 27 February 2015 on the Toronto Stock Exchange.

Open Offer Entitlements held in CREST are expected to be disabled in all respects after 11.00 a.m. on 25 February 2015 (the latest date for applications under the Open Offer). If the conditions to the Open Offer described above are satisfied, New Ordinary Shares will be issued in uncertificated form to those persons who submitted a valid application for New Ordinary Shares by utilising the CREST application procedures and whose applications have been accepted by the Company on the day on which such conditions are satisfied (expected to be 27 February 2015). On this day, Equiniti will instruct Euroclear to credit the appropriate stock accounts of such persons with such persons’ entitlement to New Ordinary Shares with effect from Admission (expected to be 27 February 2015). The stock accounts to be credited will be the accounts under the same Participant IDs and Member Account IDs in respect of which the USE instruction was given.

Notwithstanding any other provision of this document, the Company reserves the right to send Qualifying CREST Shareholders an Application Form instead of crediting the relevant stock account with Open Offer Entitlements, and to allot and/or issue any New Ordinary Shares in certificated form. In normal circumstances, this right is only likely to be exercised in the event of any interruption, failure or breakdown of CREST (or of any part of CREST), or on the part of the facilities and/or systems operated by Equiniti in connection with CREST.

For Qualifying non-CREST Shareholders who have applied by using an Application Form, definitive share certificates in respect of the New Ordinary Shares validly applied for are expected to be despatched by post on approximately 9 March 2015. No temporary documents of title will be issued and, pending the issue of definitive certificates, transfers of the New Ordinary Shares by Qualifying non-CREST Shareholders will be certified against the share register. All documents or remittances sent by or to applicants, or as they may direct, will be sent through the post at their own risk. For more information as to the procedure for application, Qualifying non-CREST Shareholders are referred to the Application Form.

Qualifying CREST Shareholders should note that they will be sent no confirmation of the credit of the New Ordinary Shares to their CREST stock account or any other written communication by the Company in respect of the issue of the New Ordinary Shares.

The completion and results of the Firm Placing and Placing and Open Offer will be announced and made public through an announcement on a Regulatory Information Service as soon as possible after the results are known on 26 February 2015.

Structure of the Firm Placing and Placing and Open Offer

Shares. Accordingly, by applying for New Ordinary Shares in the Open Offer and submitting a valid payment in respect thereof, a Qualifying Shareholder instructs the Receiving Agent to (i) hold such payments on the Applicant's behalf until Admission and, if Admission does not take place, to return such payment, without interest, to the Applicant, (ii) following Admission and to the extent of a successful application under the Open Offer, to apply such payment (after deduction of certain agreed fees, costs and expenses) on behalf of BMO Capital Markets solely for the purposes of acquiring preference shares in Newco and (iii) to the extent of an unsuccessful application under the Open Offer, to return the relevant payment without interest to the Applicant.

11. Times and dates

The Company shall be entitled to amend the dates on which Application Forms are despatched or amend or extend the latest date for acceptance under the Open Offer and all related dates set out in this document and in such circumstances shall notify the FCA, and make an announcement on a Regulatory Information Service and, if appropriate, to Shareholders, but Qualifying Shareholders may not receive any further written communication.

If a supplementary prospectus is published by the Company two or fewer Business Days prior to the latest time and date for acceptance and payment in full under the Open Offer specified in this document, the latest date for acceptance under the Open Offer shall be extended to the date that is at least three Business Days after the date of publication of the supplementary prospectus (and the dates and times of principal events due to take place following such date shall be extended accordingly).

12. Governing law and jurisdiction

The terms and conditions of the Open Offer as set out in this document, the Application Form and any non-contractual obligations related thereto shall be governed by, and construed in accordance with, the laws of England and Wales. The courts of England and Wales are to have exclusive jurisdiction to settle any dispute which may arise out of or in connection with the Firm Placing and Placing and Open Offer, this document or the Application Form including, without limitation, disputes relating to any non-contractual obligations arising out of or in connection with the Firm Placing and Placing and Open Offer, this document or the Application Form. By taking up Open Offer Shares under the Open Offer in accordance with the instructions set out in this document and, where applicable, the Application Form, Qualifying Shareholders irrevocably submit to the jurisdiction of the courts of England and Wales and waive any objection to proceedings in any such court on the ground of venue or on the ground that proceedings have been brought in an inconvenient forum.

13. Other information

Your attention is drawn to the further information set out in this document and also, in the case of Qualifying Shareholders to whom the Company has sent Application Forms, to the terms, conditions and other information printed on the accompanying Application Form.

161

162

PART 9 FINANCIAL INFORMATION RELATING TO ANGLO PACIFIC GROUP PLC

Section A

The document specified below, which has been filed with the National Storage Mechanism or announced through a Regulatory Information Service, is incorporated by reference into this Prospectus. The following list is intended to enable investors to easily identify specific items of information which have been incorporated by reference into this Prospectus.

Unaudited financial statements for the Group for the six months ended 30 June 2014

The page numbers below refer to the relevant pages of the unaudited financial statements of the Group for the six months ended 30 June 2014:

Consolidated income statement 8
Consolidated statement of comprehensive income 9
Consolidated balance sheet 10
Consolidated statement of changes in equity 11-13
Consolidated cash flow statement 14
Notes to the accounts 15-35

The Company will provide without charge to each person to whom a copy of this Prospectus has been delivered, upon the written or oral request of such person, a copy of any documents incorporated by reference in this Prospectus, except that exhibits to such documents will not be provided unless they are specifically incorporated by reference into this Prospectus. Requests for copies of any such documents should be directed to:

1 Savile Row
London
W1S 3JR

Att: Peter Mason
Company Secretary

Telephone: +44 (0) 203 435 7400

Section B

Deloitte.

Anglo Pacific Group PLC

Historic Financial Information 2011 – 2013

ACCOUNTANTS’ REPORT ON CONSOLIDATED HISTORICAL FINANCIAL INFORMATION

Athene Place
66 Shoe Lane
London
EC4A 3BQ

The Board of Directors
on behalf of Anglo Pacific Group PLC
1 Savile Row
London
W1S 3JR

BMO Capital Markets Limited
1st Floor
95 Queen Victoria Street
London EC4V 4HG

6 February 2015

Dear Sirs

Anglo Pacific Group PLC

We report on the financial information for the three years ended 31 December 2013 set out in Part 9 of the prospectus and Class 1 circular relating to the acquisition of the Narrabri Royalty by Anglo Pacific Group PLC (the “Company” and, together with its subsidiaries, the “Group”) (the “Prospectus”). This financial information has been prepared for inclusion in the Prospectus on the basis of the accounting policies set out in note 3.1 to the financial information. This report is required by Annex I item 20.1 of Commission Regulation (EC) No 809/2004 (the “Prospectus Directive Regulation) and Listing Rule 13.5.21R and is given for the purpose of complying with that requirement and for no other purpose.

Responsibilities

The Directors of the Company are responsible for preparing the financial information in accordance with International Financial Reporting Standards as adopted by the European Union.

It is our responsibility to form an opinion on the financial information and to report our opinion to you.

Save for any responsibility arising under Prospectus Rule 5.5.3R(2)(f) to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with Annex I item 23.1 of the Prospectus Directive Regulation, consenting to its inclusion in the Prospectus.

Basis of opinion

We conducted our work in accordance with Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and disclosures in the financial information. It also included an assessment of significant estimates and judgments made by those responsible for the preparation of the financial information and whether the

accounting policies are appropriate to the entity's circumstances, consistently applied and adequately disclosed.

We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial information is free from material misstatement whether caused by fraud or other irregularity or error.

Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in jurisdictions outside the United Kingdom, including the United States of America, and accordingly should not be relied upon as if it had been carried out in accordance with those standards and practices.

Opinion on financial information

In our opinion, the financial information gives, for the purposes of the Prospectus, a true and fair view of the state of affairs of the Group as at 31 December 2011, 31 December 2012 and 31 December 2013 and of its profits, cash flows and changes in equity for the three years ended 31 December 2013 in accordance with IFRS and has been prepared in a form that is consistent with the accounting policies adopted in the Company's latest annual accounts.

Declaration

For the purposes of Prospectus Rule 5.5.3R(2)(f), we are responsible for this report as part of the Prospectus Document and declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the Prospectus Document in compliance with Annex I item 1.2 of the Prospectus Directive Regulation.

Yours faithfully

Deloitte LLP

Chartered Accountants

Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom. Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited ("DTTL"), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

164

165

CONSOLIDATED INCOME STATEMENT

FOR THE THREE YEARS ENDED 31 DECEMBER 2013

| | Notes | 2013
£'000 | 2012
£'000 | 2011
£'000 |
| --- | --- | --- | --- | --- |
| Royalty related income | | 14,731 | 15,157 | 35,063 |
| Amortisation of royalties | 16 | (854) | (1,018) | (1,018) |
| Operating expenses | 5 | (3,275) | (3,633) | (3,391) |
| Operating profit before impairments, revaluations and gains/losses on disposals | | 10,602 | 10,506 | 30,654 |
| (Loss)/Gain on sale of mining and exploration interests | 17 | (6,398) | 7,347 | 20,302 |
| Impairment of mining and exploration interests | 17 | (26,321) | (11,401) | (29,182) |
| Impairment of royalty intangible assets | 16 | (8,313) | – | (1,088) |
| Impairment of royalty financial instruments | 15 | – | – | (1,563) |
| Revaluation of coal royalties (Kestrel) | 14 | (13,568) | 9,512 | (4,048) |
| Revaluation of royalty financial instruments | 15 | (8,735) | (767) | 2,843 |
| Finance income | 7 | 789 | 676 | 798 |
| Finance costs | 8 | (2,964) | (958) | (859) |
| Other income | 9 | 2,012 | 3,122 | 1,358 |
| (Loss)/Profit before tax | | (52,896) | 18,037 | 19,215 |
| Current income tax expense | 10 | (715) | (7,750) | (12,171) |
| Deferred income tax credit | 10 | 11,114 | 1,293 | 3,888 |
| (Loss)/Profit attributable to equity holders | | (42,497) | 11,580 | 10,932 |
| Total and continuing (loss)/earnings per share | | | | |
| Basic and diluted (loss)/earnings per share | 11 | (39.01p) | 10.67p | 10.10p |

The notes on pages 172 to 210 are an integral part of these consolidated financial statements.

166

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE THREE YEARS ENDED 31 DECEMBER 2013

	Notes	2013	2012	2011
		£'000	£'000	£'000
(Loss)/Profit attributable to equity holders		(42,497)	11,580	10,932
Items that will not be reclassified to profit or loss		-	-	-
Items that have been or may be subsequently reclassified to profit or loss
Available-for-sale investments
Revaluation of available-for-sale investments		(36,749)	(12,348)	(45,585)
Reclassification to income statement on disposal of available-for-sale investments		6,398	(7,347)	(20,302)
Reclassification to income statement on impairment		26,321	11,401	29,182
Deferred tax relating to items that have been or may be reclassified	20	(171)	3,965	2,237
Net exchange (loss)/gain on translation of foreign operations		(28,923)	(3,384)	1,858
Other comprehensive loss for the year, net of tax		(33,124)	(7,713)	(32,610)
Total comprehensive (loss)/profit for the year		(75,621)	3,867	(21,678)

The notes on pages 172 to 210 are an integral part of these consolidated financial statements.

CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER

| | Notes | 2013
£'000 | 2012
£'000 | 2011
£'000 |
| --- | --- | --- | --- | --- |
| Non-current assets | | | | |
| Property, plant and equipment | 13 | 1,989 | 2,105 | 2,152 |
| Coal royalties (Kestrel) | 14 | 131,434 | 170,995 | 165,967 |
| Royalty financial instruments | 15 | 27,847 | 41,945 | 43,127 |
| Royalty and exploration intangible assets | 16 | 37,288 | 53,495 | 50,748 |
| Mining and exploration interests | 17 | 20,072 | 55,793 | 64,551 |
| Other receivables | 18 | 8,775 | 3,141 | - |
| Deferred tax | 20 | 8,837 | 5,812 | 302 |
| | | 236,242 | 333,286 | 326,847 |
| Current assets | | | | |
| Trade and other receivables | 18 | 5,332 | 1,958 | 12,297 |
| Cash and cash equivalents | 19 | 15,706 | 24,036 | 32,197 |
| | | 21,038 | 25,994 | 44,494 |
| Total assets | | 257,280 | 359,280 | 371,341 |
| Non-current liabilities | | | | |
| Deferred tax | 20 | 39,202 | 54,344 | 56,375 |
| | | 39,202 | 54,344 | 56,375 |
| Current liabilities | | | | |
| Income tax liabilities | | 465 | 1,801 | 1,898 |
| Trade and other payables | 21 | 762 | 2,171 | 6,896 |
| | | 1,227 | 3,972 | 8,794 |
| Total liabilities | | 40,429 | 58,316 | 65,169 |
| Capital and reserves attributable to shareholders | | | | |
| Share capital | 22 | 2,218 | 2,192 | 2,184 |
| Share premium | 22 | 29,328 | 26,853 | 25,539 |
| Other reserves | | 12,509 | 45,829 | 53,365 |
| Retained earnings | | 172,796 | 226,090 | 225,084 |
| Total equity | | 216,851 | 300,964 | 306,172 |
| Total equity and liabilities | | 257,280 | 359,280 | 371,341 |

The notes on pages 172 to 210 are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE THREE YEARS ENDED 31 DECEMBER 2013

	Other reserves
	Share capital£'000	Share premium£'000	Investment revaluation reserve£'000	Share based payment reserve£'000	Foreign currency translation reserve£'000	Special reserve£'000	Investment in own shares£'000	Retained earnings£'000	Total equity£'000
Balance at 1 January 2011	2,175	24,207	48,568	66	39,199	632	(1,260)	223,111	336,698
Profit for the year	-	-	-	-	-	-	-	10,932	10,932
Other comprehensive income:
Available-for-sale investments
Valuation movement taken to equity	-	-	(45,585)	-	(296)	-	-	-	(45,881)
Transferred to income statement on disposal	-	-	(20,302)	-	-	-	-	-	(20,302)
Transferred to income statement on impairment	-	-	29,182	-	-	-	-	-	29,182
Deferred tax	-	-	2,237	-	13	-	-	-	2,250
Foreign currency translation	-	-	-	-	2,141	-	-	-	2,141
Total comprehensive loss	-	-	(34,468)	-	1,858	-	-	10,932	(21,678)
Dividends	-	-	-	-	-	-	-	(8,978)	(8,978)
Issue of ordinary shares (note 22)	9	1,332	-	-	-	-	(1,341)	-	-
Value of employee services	-	-	-	111	-	-	-	19	130
Total transactions with owners of the company	9	1,332	-	111	-	-	(1,341)	(8,959)	(8,848)
Balance at 31 December 2011	2,184	25,539	14,100	177	41,057	632	(2,601)	225,084	306,172

The notes on pages 172 to 210 are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE THREE YEARS ENDED 31 DECEMBER 2013

	Other reserves
	Share capital£'000	Share premium£'000	Investment revaluation reserve£'000	Share based payment reserve£'000	Foreign currency translation reserve£'000	Special reserve£'000	Investment in own shares£'000	Retained earnings£'000	Total equity£'000
Balance at 1 January 2012	2,184	25,539	14,100	177	41,057	632	(2,601)	225,084	306,172
Profit for the year	-	-	-	-	-	-	-	11,580	11,580
Other comprehensive income:
Available-for-sale investments
Valuation movement taken to equity	-	-	(12,348)	-	(497)	-	-	-	(12,845)
Transferred to income statement on disposal	-	-	(7,347)	-	-	-	-	-	(7,347)
Transferred to income statement on impairment	-	-	11,401	-	-	-	-	-	11,401
Deferred tax	-	-	3,965	-	(60)	-	-	-	3,905
Foreign currency translation	-	-	-	-	(2,827)	-	-	-	(2,827)
Total comprehensive income	-	-	(4,329)	-	(3,384)	-	-	11,580	3,867
Dividends	-	-	-	-	-	-	-	(10,579)	(10,579)
Issue of ordinary shares (note 22)	8	1,314	-	-	-	-	-	-	1,322
Value of employee services	-	-	-	177	-	-	-	5	182
Total transactions with owners of the company	8	1,314	-	177	-	-	-	(10,574)	(9,075)
Balance at 31 December 2012	2,192	26,853	9,771	354	37,673	632	(2,601)	226,090	300,964

The notes on pages 172 to 210 are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE THREE YEARS ENDED 31 DECEMBER 2013

	Other reserves
	Share capital£'000	Share premium£'000	Investment revaluation reserve£'000	Share based payment reserve£'000	Foreign currency translation reserve£'000	Special reserve£'000	Investment in own shares£'000	Retained earnings£'000	Total equity£'000
Balance at 1 January 2013	2,192	26,853	9,771	354	37,673	632	(2,601)	226,090	300,964
Loss for the year	-	-	-	-	-	-	-	(42,497)	(42,497)
Other comprehensive income:
Available-for-sale investments
Valuation movement taken to equity	-	-	(36,749)	-	(542)	-	-	-	(37,291)
Transferred to income statement on disposal	-	-	6,398	-	-	-	-	-	6,398
Transferred to income statement on impairment	-	-	26,321	-	-	-	-	-	26,321
Deferred tax	-	-	(171)	-	45	-	-	-	(126)
Foreign currency translation	-	-	-	-	(28,426)	-	-	-	(28,426)
Total comprehensive loss	-	-	(4,201)	-	(28,923)	-	-	(42,497)	(75,621)
Dividends	-	-	-	-	-	-	-	(11,065)	(11,065)
Issue of ordinary shares (note 22)	26	2,475	-	-	-	-	-	-	2,501
Value of employee services	-	-	-	(196)	-	-	-	268	72
Total transactions with owners of the company	26	2,475	-	(196)	-	-	-	(10,797)	(8,492)
Balance at 31 December 2013	2,218	29,328	5,570	158	8,750	632	(2,601)	172,796	216,851

The notes on pages 172 to 210 are an integral part of these consolidated financial statements.

FOR THE THREE YEARS ENDED 31 DECEMBER 2013

CONSOLIDATED STATEMENT OF CASH FLOWS

	Notes	2013	Group 2012	2011
		£'000	£'000	£'000
Cash flows from operating activities
(Loss)/Profit before taxation		(52,896)	18,037	19,215
Adjustments for:
Finance income	8	(789)	(676)	(798)
Dividends received from mining and exploration interests	9	(441)	(678)	(615)
Fixed income from mining and exploration interests	9	(267)	(1,047)	-
Sundry income	9	(164)	(827)	(19)
Arrangement fees	8	129	-	-
Depreciation of property, plant and equipment	13	22	21	21
Amortisation of royalty intangible assets	16	854	1,018	1,018
Loss/(Gain) on disposal of mining and exploration interests		6,398	(7,347)	(20,302)
Impairment of royalty intangible assets	16	8,313	-	1,088
Impairment of mining and exploration interests	17	26,321	11,401	29,182
Impairment of royalty financial instruments	15	-	-	1,563
Revaluation of coal royalties (Kestrel)	14	13,568	(9,512)	4,048
Revaluation of royalty financial instruments	15	8,735	767	(2,843)
Effective interest on royalty financial instruments	9	(1,140)	(570)	(724)
Share based payment	6a	72	182	130
		8,715	10,769	30,964
(Increase)/Decrease in trade and other receivables		(1,082)	10,340	(3,483)
(Decrease)/Increase in trade and other payables		(1,409)	(4,725)	423
Cash generated from operations		6,224	16,384	27,904
Income taxes paid		(3,817)	(6,186)	(13,083)
Net cash (used in)/generated from operating activities		2,407	10,198	14,821
Cash flows from investing activities
Proceeds on disposal of mining and exploration interests	17	5,258	19,280	51,491
Purchases of mining and exploration interests	17	(3,118)	(23,781)	(28,101)
Purchases of royalty interests and royalty financial instruments	15, 16	-	(2,316)	(28,396)
Other royalty related advances	18	(5,634)	(3,141)	-
Purchases of property, plant and equipment	13	(14)	-	(29)
Exploration and evaluation expenditure	16	(101)	(127)	(108)
Dividends received from mining and exploration interests	9	441	678	615
Fixed income received from mining and exploration interests	9	267	1,047	-
Sundry income	9	164	827	19
Finance income	7	789	676	798
Net cash generated from/(used in) investing activities		(1,948)	(6,857)	(3,711)
Cash flows from financing activities
Proceeds from issue of share capital	22	2,501	-	-
Dividends paid		(11,065)	(10,579)	(8,978)
Arrangement fees		(129)	-	-
Net cash used in financing activities		(8,693)	(10,579)	(8,978)
Net (decrease)/increase in cash and cash equivalents		(8,234)	(7,238)	2,132
Cash and cash equivalents at beginning of period		24,036	32,197	28,258
Unrealised foreign currency (loss)/gain		(96)	(923)	1,807
Cash and cash equivalents at end of period		15,706	24,036	32,197

The notes on pages 172 to 210 are an integral part of these consolidated financial statements.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2013

1. General information

Anglo Pacific Group PLC (the ‘Company’) and its subsidiaries (together, the ‘Group’) secure natural resources royalties by acquisition and through investment in mining and exploration interests. The Group has royalties and investments in mining and exploration interests primarily in Australia, North and South America and Africa, with a diversified exposure to commodities that is strongly represented by coal, iron ore, gold and uranium.

The Company is a public limited company, which is listed on the London Stock Exchange and Toronto Stock Exchange and incorporated and domiciled in the United Kingdom. The address of its registered office is 1 Saville Row, London W1S 3JR, United Kingdom (registered number: 897608).

2. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group’s accounting policies, the Directors are required to make judgements and estimates that can have a significant impact on the financial statements. Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The most critical accounting judgement relates to the classification of royalty arrangements and the key sources of estimation uncertainty relate to the calculation of certain royalty arrangement’s fair value and the key assumption used when assessing impairment of property, plant and equipment and intangible assets. The use of inaccurate assumptions in assessments made for any of these estimates could result in a significant impact on financial results.

Critical accounting judgements

Classification of royalty arrangements: initial recognition and subsequent management

The Directors must decide whether the Group’s royalty arrangements should be classified as:

Intangible Assets in accordance with IAS 38 ‘Intangible assets’;
Financial Assets in accordance with IAS 32 ‘Financial Instruments: Presentation’ and IAS 39 ‘Financial Instruments: Recognition and Measurement’; or
Investment properties in accordance with IAS 40 ‘Investment Property’.

The Directors use the following selection criteria to identify the characteristics which determine which accounting standard to apply to each royalty arrangement:

Type 1 – Intangible assets (“vanilla” royalties): Royalties, in their simplest form, are classified as intangible assets by the Group. The Group considers the substance of a simple vanilla royalty to be economically similar to holding a direct interest in the underlying mineral asset. Existence risk (the commodity physically existing in the quantity demonstrated), production risk (that the operator can achieve production and operate a commercially viable project), timing risk (commencement and quantity produced, determined by the operator) and price risk (returns vary depending on the future commodity price, driven by future supply and demand) are all risks which the Group participates in on a similar basis to an owner of the underlying mineral licence. Furthermore, in a vanilla royalty, there is only a right to receive cash to the extent there is production and there are no interest payments, minimum payment obligations or means to enforce production or guarantee repayment. These are accounted for as intangible assets under IAS 38.

Type 2 – Financial assets (royalties with additional financial protection): In certain circumstances where the ‘vanilla’ risk is considered too high, but the Group still fundamentally believes in the quality of the underlying resource, the Group will look to introduce additional protective measures. This has typically taken the form of performance milestone penalties (usually resulting in the receipt of cash or cash equivalent), minimum payment terms and interest provisions or mechanisms to convert the initial outlay into the equity instruments of the operator in the event of project deferral. Once an operation is in production,

these mechanisms generally fall away such that the royalty will display identical characteristics and risk profile to the vanilla royalties; however, it is the contractual right to enforce the receipt of cash through to production which results in these royalties necessarily being treated as financial assets in accordance with IAS 32 and IAS 39.

Type 3 – Investment property: Royalties which are derived from the ownership of sub-stratum land are accounted for as investment properties under IAS 40, even though the substance of their commercial terms is identical to vanilla royalties. The Group does not expect to obtain royalties in this manner going forward, as it is unusual for sub-stratum minerals not to be the property of the state.

A summary of the Group’s accounting approach is set out below:

Accounting classification	Substance of contractual terms	Accounting treatment
Intangible assets	• Simple royalty with no right to receive cash other than through a royalty related to production	• Investment is carried at cost less accumulated amortisation and impairment as an intangible asset on the balance sheet
• Royalty income is recognised as revenue in the income statement
• Intangible asset is amortised on a systematic basis
• Intangible asset is assessed for indicators of impairment at each period end	• Amapá
• Tucano
• Four Mile
• Salamanca
• Pilbara
• Ring of Fire
• Bulqiza
• Mount Ida
• Maracás
Available for sale debt financial asset	• Royalty arrangement with a contractual right to receive cash (e.g. through a mandated interest rate or milestones which, if not met, trigger repayment)	• Financial asset is recognised at fair value on the balance sheet
• Changes in fair value due to changes in expected future cash flows are recognised within the income statement with other valuation changes taken to reserves
• Fixed effective interest income recognised in the income statement
• Royalty receipts reduce the asset’s carrying value	• Isua
• Jogjakarta
Available-for-sale equity financial asset	• Similar in contractual terms to an intangible asset
• However, includes a right to convert into equity (noting that for EVBC this right was subsequently extinguished)	• Financial asset is carried at fair value with fair value movements recognised in reserves
• Royalty income is recognised as revenue in the income statement
• Asset is assessed for impairment at each reporting period end (see section below)	EVBC

Accounting classification	Substance of contractual terms	Accounting treatment	Examples
Investment property	• Direct ownership of sub-stratum land	• Land is carried at fair value on the balance sheet	Kestrel Crinum
	• Returns based on royalty related production	• Movements in fair value recognised in income statement
		• Royalty income is recognised as revenue in the income statement

The Group considers that the application of the above accounting standards, and the resulting accounting classification and financial impact of each in the financial statements, most appropriately reflects the substance of the underlying commercial terms of each royalty arrangement. The application of each standard to the underlying royalty arrangement, rather than electing to apply IAS 32 and IAS 39 to all royalties is consistent currently with the Group's international peer group and as such enables its stakeholders to make informed investment decisions.

Key sources of estimation uncertainty

Assessment of fair value of royalty arrangements held at fair value

Impairment review of property, plant and equipment and intangible assets

Where indicators are identified, the starting point for the impairment review will be to measure the expected future cash flows expected from the royalty arrangement should the project continue/come into production. A pre-tax real discount rate of between $7\%$ and $10\%$ is applied to the future cash flows. This discount rate is driven from the discount rate of $7\%$ which is used by the independent consultant in their valuation of Kestrel, which should be the lowest discount rate applied to any of the Group's assets. The Directors use considerable judgement to assign a discount rate, with rates varying according to mineral quality, jurisdiction, commodity, stage of production and counterparty credentials.

3. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented and will be applied to the Group's 2014 Annual Report and Accounts as there are no new standards applicable from 1 January 2014 which are expected to have a significant impact on the consolidated financial statements.

3.1 Basis of preparation

The consolidated financial statements of Anglo Pacific Group PLC have been prepared in accordance with the requirements of the Prospective Directive regulation and the UK Listing Rules and in accordance with this basis of preparation. The basis of preparation describes how the consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRIC) interpretations as adopted by the European Union that are effective for financial years beginning on or after 1 January 2011. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of coal royalties (investment property) and certain financial instruments.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 2.

3.1.1 Going concern

As discussed in Note 28, the Group has announced a firm placing and placing and open offer. Firm commitments have been received, which total £39.5 million. The Group has also entered into a new US$30 million three-year secured revolving credit facility, which will be available subject to certain conditions precedent being met. The facility is subject to a number of financial covenants, all of which are forecast to be met. The combined financing package will be used to finance the acquisition of a US$65 million royalty along with providing additional working capital to the Group.

At 5 February 2015, the Group has underwritten or committed proceeds (net of expenses) of £35.9 million in respect of its issue or ordinary shares under the firm placing and placing and open offer.

The directors have considered the Group's cash flow forecasts for the next twelve month period from the date of signing of these financial statements for the three year period ended 31 December 2013. The Board is satisfied that the Group's forecasts and projections, taking into account reasonably possible changes in trading performance and other uncertainties, the underwritten or committed proceeds from the new share issue and the committed facilities, show that the Group will be able to operate within the level of its current facilities for the foreseeable future.

For this reason the Group continues to adopt the going concern basis in preparing its financial statements.

3.1.2 Changes in accounting policies and disclosures

(a) New and amended standards adopted by the Group

The following standards have been adopted by the Group for the first time for the financial year beginning on or after 1 January 2011:

Amendment to IAS 1, 'Financial statement presentation' regarding other comprehensive income

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IFRS 13, ‘Fair Value Measurement’

IFRS13 establishes a single framework for measuring fair value when such measurements are required to or permitted by other standards. The application of IFRS13 has not materially affected the fair value measurements carried out by the Group. IFRS 13 also requires specific disclosures on fair values, some of which replace existing disclosure requirements in other standards, including IFRS 7 ‘Financial Instruments: Disclosure’. The additional disclosure requirements are reflected within the relevant notes to the Group financial statements.

IFRS 10, ‘Consolidated Financial Statements’ and IAS 27 ‘Separate Financial Statements’

(b) New standards and interpretations not yet adopted

IFRS 9 ‘Financial Instruments’ – (Not yet endorsed by the European Union)

IFRS 9 addresses the classification, measurement and recognition of financial assets and financial liabilities. It replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those measured as at fair value and those measured at amortised cost. Where assets are measured at fair value, gains and losses are either recognised entirely in profit or loss (fair value through profit or loss, FVTPL), or recognised in other comprehensive income (fair value through other comprehensive income, FVTOCI). The determination is made at initial recognition. The classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument.

For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch.

The Group is currently assessing the impact the application of IFRS 9 will have on its financial statements, particularly in respect of the Group’s financial assets.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

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3.2 Consolidation

Subsidiaries

The financial statements incorporate a consolidation of the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved when the Company has the power over the investee, is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Investments in subsidiaries are accounted for in the parent company at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated on consolidation. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

3.3 Foreign currencies

(a) Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in pounds sterling, which is the Company's functional and the Group's presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Non-monetary assets and liabilities measured at historical cost are translated using the exchange rates at the date of the transaction (not retranslated). Non-monetary assets and liabilities measured at fair value are translated using the exchange rates at the date when fair value was determined.

(c) Group companies

The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

i. assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

ii. income and expenses for each income statement are translated at average exchange rates; and

iii. all resulting exchange differences are charged/credited to other comprehensive income and recognised in the currency translation reserve in equity.

Exchange differences on foreign currency balances with foreign operations for which settlement is neither planned nor likely to occur in the foreseeable future, and therefore form part of the Group's net investment in these foreign operations are recognised in other

comprehensive income and accumulated in the foreign currency translation reserve in equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are reclassified in the income statement as part of the gain or loss on sale.

3.4 Property, plant and equipment

Property, plant and equipment is stated at cost, less accumulated depreciation and accumulated impairment losses. The cost of property, plant and equipment comprises its purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Once a mining project has been established as commercially viable, expenditure other than that on land, buildings, plant and equipment is capitalised as a producing asset within ‘Other Assets’ together with any amount transferred from ‘Exploration and Evaluation Costs’ (note 3.6(b)).

Property, plant and equipment is depreciated over its useful life, or where applicable over the remaining life of the mine if shorter once it is operating in the manner intended by management. The major categories of property, plant and equipment are depreciated on a units of production and/or straight line basis as follows:

Other Assets

Producing assets	Units of production (over reserves)
Coal tenures	Units of production (over reserves)
Fixtures and Equipment	4 to 10 years

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

3.5 Coal royalties (investment property)

Royalty arrangements which are derived from the ownership of sub-stratum lands are accounted for as investment properties in accordance with IAS 40. Investment property is held to earn a return in the form of royalty entitlements arising from mining activity and is initially measured at cost including any transaction costs. Investment property is subsequently measured at fair value at each reporting date with any valuation movements recognised in the income statement. Fair value is determined by a suitably qualified independent external consultant based on the discounted future royalty income expected to accrue to the Group.

3.6 Intangible assets

(a) Royalty arrangements

Royalty arrangements which are identified and classified as intangible assets are initially measured at cost, including any transaction costs.

Upon commencement of production at the underlying mining operation intangible assets are amortised on a straight line basis over the life of the mine. Amortisation rates are adjusted on a prospective basis for all changes to estimates of the life of mine.

(b) Exploration and evaluation costs

Exploration expenditure relates to the initial search for deposits with economic potential. Evaluation expenditure arises from a detailed assessment of deposits or other projects that have been identified as having economic potential.

Expenditure on exploration and evaluation activities is capitalised when there is a high degree of confidence in the project’s viability and hence it is probable that future economic benefits will flow to the Group. Amortisation of capitalised exploration and evaluation costs does not commence until the underlying project commences commercial production.

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3.7 Impairment of property, plant and equipment and intangible assets

At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets to determine whether there is any indication that those assets are impaired. If such an indication is identified, the recoverable amount of the asset is estimated in order to determine the extent of any impairment.

The recoverable amount is the higher of fair value (less costs of disposal) and value in use. In assessing value in use, the estimated cash flows are discounted to their present value using a pre-tax discount rate that has been adjusted to reflect the risks specific to that asset. If the recoverable amount of the asset is estimated to be less than its carrying value, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is also recognised in the income statement.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment been recognised. A reversal of an impairment loss is also recognised in the income statement.

3.8 Financial instruments

Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group has become a party to the contractual provisions of the instrument.

(a) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. On initial recognition loans and receivables are stated at their fair value. After initial recognition these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Group’s trade and other receivables fall into this category of financial instruments.

Mining and exploration interests are recognised and derecognised on a trade date where a purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, including transaction costs.

Mining and exploration interests are classified upon initial recognition as available-for-sale financial assets.

Interests classified as available-for-sale are measured at subsequent reporting dates at their fair value. For available-for-sale investments, gains and losses arising from changes in fair value are recognised directly in other comprehensive income and accumulated in the investment revaluation reserve, until the security is either disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in other comprehensive income is included in profit or loss for the period. Unquoted investments are measured at cost where fair value cannot be reliably determined. When a market price can be established these investments are revalued to fair value accordingly.

(d) Royalty instruments

Royalty instruments are recognised or derecognised on completion date where a purchase or sale of the royalty is under a contract, and are initially measured at fair value, including transaction costs.

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Royalty instruments are classified as either debt or equity instruments depending on the nature of the individual agreement.

Debt
Assets classified as debt instruments are carried on the balance sheet at fair value. Upon initial recognition an effective interest rate is computed based on the estimated future cash flows. Expected future cash flows are determined based on non-observable market data such as commodity price forecasts and estimated production schedules. Valuation movements caused by changes in expected future cash flows, which could be caused by changes in resource estimates or commodity price assumptions, are recognised in the income statement along with the effective interest, if material with other valuation changes taken to other comprehensive income. Amounts are required to be recognised whether received in cash or not.
Equity
Similar to debt instruments, equity instruments are carried at fair value at each reporting date, based on the estimated future cash flows from the underlying operation. All valuation movements are recognised in other comprehensive income, except to the extent where valuation is below cost and is considered ‘significant’ or ‘prolonged’ in accordance with IAS 39 and the policy outlined in Note 3.9. In this case, the valuation difference is recycled through the Income Statement.

(e) Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

(f) Embedded derivatives
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at “fair value through profit and loss”.

An embedded derivative is presented as a non-current asset or non-current liability if the remaining maturity of the hybrid instrument to which the embedded derivative relates is more than 12 months and is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.

(g) Trade payables
Trade payables are not interest bearing and are stated at their fair value on initial recognition. After initial recognition these are measured at amortised cost using the effective interest method.

(h) Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

3.9 Impairment of financial assets (including receivables)
A financial asset not measured at fair value through profit or loss is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimate cash flows discounted at the asset’s original effective interest rate. Losses are recognised in the income statement. When a

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subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through the income statement.

Impairment losses relating to available for sale equity investments are recognised when the decline in fair value is considered significant or prolonged which are defined as follows:

Prolonged: a period of greater than 18 months that the interest's fair value is below cost; or
Significant: a decline in fair value of greater than 25% relative to an individual asset's original acquisition cost.

These impairment losses are recognised by transferring the cumulative loss that has been recognised in the statement of comprehensive income to the income statement. The loss recognised in the income statement is the difference between the acquisition cost and the current fair value. Once the Group has recognised an impairment loss on an available for sale equity investment, it cannot recognise a reversal through the income statement.

Impairment losses on debt instruments classified as available for sale are reversed only if in a subsequent period, the fair value of that debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised. The amount of such reversal is recognised through the income statement.

3.10 Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated by using tax rates and laws that have been enacted or substantively enacted by the reporting date.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

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Deferred tax is calculated at the tax rates that are expected to apply to the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the balance sheet date.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current ax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax for the year

Current and deferred tax are recognised in profit or loss, except when they related to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

3.11 Share-based payments

The Group operates a number of equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for equity instruments (options and jointly-owned shares) of the Company. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted:

including any market performance conditions;
excluding the impact of any service and non-market performance vesting conditions; and
including the impact of any non-vesting conditions.

Non-market vesting conditions are included in assumptions about the number of options and jointly-owned shares that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options and jointly-owned shares that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

When options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital and share premium when the options are exercised.

3.12 Reserves

Equity comprises the following:

‘Share capital’ represents the nominal value of equity shares in issue.
‘Share premium’ represents the excess over nominal value of the fair value of consideration received for equity shares, net of issuance costs.

Other reserves:

‘Investment revaluation reserve’ represents gains and losses due to the revaluation of the investments in mining and exploration interests and royalty instruments from the opening carrying values, including the effects of deferred tax and foreign currency changes.

182

'Share-based payment reserve' represents equity-settled share-based employee remuneration until such share options are exercised.
'Foreign currency reserve' represents the differences arising from translation of investments in overseas subsidiaries.
'Special reserve' represents the level of profit attributable to the Group for the period ended 30 June, 2002 which was created as part of a capital reduction performed in 2002.
'Investment in own shares' represents the shares held by the Anglo Pacific Group Employee Benefit Trust for awards made under the Joint Share Ownership Plan ('JSOP') (note 23).
'Retained earnings' represents retained profits.

Of these reserves £172,796,000 are considered distributable as at 31 December 2013 (31 December 2012: £226,090,000; 31 December 2011: £225,084,000).

3.13 Revenue recognition

The revenue of the Group comprises mainly royalty related income. It is measured at the fair value of the consideration received or receivable after deducting discounts, value added tax and other sales tax. The royalty income becomes receivable on extraction and sale of the relevant minerals, at which point the revenue is recognised.

Interest income is accrued on a time basis, by reference to the carrying value and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

Dividend income from investments is recognised when the shareholders' rights to receive payment have been established.

3.14 Leases

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight line basis over the lease, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

3.15 Dividend distribution

Dividend distribution to the Company's shareholders is recognised as a liability in the Group's financial statements in the period in which the dividends are approved by the Company's shareholders or in the case of the interim dividend when it is paid to the shareholders.

4. Segment information

The Group's chief operating decision maker is considered to be the Executive Committee. The Executive Committee evaluates the financial performance of the Group based on a portfolio view of its individual royalty arrangements. Royalty related income and its associated impact on operating profit is the key focus of the Executive Committee. The income from royalties is presented based on the jurisdiction in which the income is deemed to be sourced as follows:

Australia: Kestrel, Four Mile, Pilbara, Mount Ida

Americas: Amapá and Tucano, Maracas, Churchrock, Ring of Fire

Europe: EVBC, Salamanca, Bulqiza

Other: Jogjakarta, Isua, Dugbe I, and includes the Group's mining and exploration interests.

183

The following is an analysis of the Group's results by reportable segment. The key segment result presented to the Executive Committee for making strategic decisions and allocation of resources is operating profit as analysed below.

The segment information for the year ended 31 December 2013 is as follows (noting that total segment operating profit corresponds to operating profit before impairments, revaluations and gains/losses on disposals which is reconciled to (Loss)/Profit before tax on the face of the consolidated income statement):

	Australia royalties £'000	Americas royalties £'000	Europe royalties £'000	All other segments £'000	Total £'000
Royalty related income	9,941	749	4,041	-	14,731
Amortisation of royalties	-	(854)	-	-	(854)
Operating expenses	(2,454)	-	-	(821)	(3,275)
Total segment operating profit/(loss)	7,487	(105)	4,041	(821)	10,602
Total segment assets	147,577	22,827	28,692	58,183	257,280
Total assets include:
Additions to non-current assets (other than financial instruments and deferred tax assets)	-	-	-	115	115
Total segment liabilities	35,676	-	2,244	2,509	40,429

The segment information for the year ended 31 December 2012 is as follows:

	Australia royalties £'000	Americas royalties £'000	Europe royalties £'000	All other segments £'000	Total £'000
Royalty related income	11,038	2,229	1,890	-	15,157
Amortisation of royalties	-	(1,018)	-	-	(1,018)
Operating expenses	(2,374)	-	-	(1,259)	(3,633)
Total segment operating profit/(loss)	8,664	1,211	1,890	(1,259)	10,506
Total segment assets	191,410	30,100	35,993	101,777	359,280
Total assets include:
Additions to non-current assets (other than financial instruments and deferred tax assets)	3,720	-	-	127	3,847
Total segment liabilities	50,395	-	2,745	5,176	58,316

The segment information for the year ended 31 December 2011 is as follows:

	Australia royalties £'000	Americas royalties £'000	Europe royalties £'000	All other segments £'000	Total £'000
Royalty related income	31,984	2,694	385	–	35,063
Amortisation of royalties	–	(1,018)	–	–	(1,018)
Operating expenses	(2,641)	–	–	(750)	(3,391)
Total segment income/operating profit	29,343	1,676	385	(750)	30,654
Total segment assets	181,951	29,964	36,708	122,718	371,341
Total assets include:
Additions to non-current assets (other than financial instruments and deferred tax assets)	–	10,715	18,391	137	29,243
Total segment liabilities	59,055	–	–	6,114	65,169

The amounts provided to the Executive Committee with respect to total segment assets are measured in a manner consistent with that of the financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset.

The amounts provided to the Executive Committee with respect to total segment liabilities are measured in a manner consistent with that of the financial statements. These liabilities are allocated based on the operations of the segment.

The royalty related income in Australia of £9,941,000 (2012: £11,038,000 and 2011: £31,984,000) is derived from a single coal royalty and represents greater than 10% of the Group’s revenue in 2011, 2012 and 2013.

Expense by nature

	2013	2012	2011
	£'000	£'000	£'000
Employee benefit expense (note 6a)	2,044	1,783	2,008
Listing fees	153	178	243
Operating lease payments	167	163	164
Other expenses	911	1,509	976
	3,275	3,633	3,391

6a. Employee benefits expense

	2013	2012	2011
	£'000	£'000	£'000
Wages and salaries	1,763	1,405	1,639
Share-based awards to directors and employees	72	182	130
Social security costs	174	155	181
Other pension costs	35	41	58
	2,044	1,783	2,008

6b. Retirement benefits plans

The Group operates a money purchase group personal pension scheme. Under this scheme the Group makes contributions to personal pension plans of individual Directors and employees. The pension cost charge represents contributions payable by the Group to these plans in respect of the year.

The total cost charged to income of £35,000 (2012: £41,000 and 2011: £58,000) represents contributions payable to these schemes by the Group at rates specified in the rules of the schemes. As at 31 December 2013, contributions of £5,000 (2012: £5,000 and 2011: £12,000) due in respect of the current reporting period had not been paid over to the schemes.

6c. Average number of people employed

	2013	2012	2011
Number of employees	13	11	11
	2013	2012	2011
Average number of people (including executive directors) employed:
Executive directors	4	4	5
Administration	9	7	6
	13	11	11

7. Finance income

	2013	2012	2011
	£'000	£'000	£'000
Interest on bank deposits	95	388	536
Interest on royalty financial instruments	473	203	262
Interest on long-term receivables	221	85	-
	789	676	798

8. Finance costs

	2013	2012	2011
	£'000	£'000	£'000
Arrangement fees	(129)	-	-
Net foreign exchange loss	(2,835)	(958)	(859)
	(2,964)	(958)	(859)

9. Other income

	2013	2012	2011
	£'000	£'000	£'000
Dividends received from mining and exploration interests	441	678	615
Fixed income from mining and exploration interests	267	1,047	-
Effective interest income on royalty financial instruments	1,140	570	724
Sundry income	164	827	19
	2,012	3,122	1,358

187

10. Income tax (credit)/expense

| | 2013
£'000 | 2012
£'000 | 2011
£'000 |
| --- | --- | --- | --- |
| Analysis of charge for the year | | | |
| United Kingdom corporation tax | 306 | 1,838 | 1,914 |
| Overseas tax | 1,017 | 5,561 | 10,674 |
| Adjustments in respect of prior years | (608) | 351 | (417) |
| Current tax | 715 | 7,750 | 12,171 |
| Deferred tax (note 20) | (11,114) | (1,293) | (3,888) |
| Income tax (credit)/expense | (10,399) | 6,457 | 8,283 |
| Factors affecting tax charge for the year: | | | |
| Profit/(loss) before tax | (52,896) | 18,037 | 19,215 |
| Tax on profit/(loss) calculated at United Kingdom corporation tax rate of 23.5% (2012: 24.5% 2011: 26.5%) | (12,431) | 4,419 | 5,092 |
| Tax effects of items non-taxable/deductible for tax purposes: | | | |
| Non-deductible expenses | 3,186 | 1,660 | 4,466 |
| Non-taxable income | (4,196) | (739) | (3,203) |
| Temporary difference adjustments | | | |
| Utilisation of losses not previously recognised | – | (8) | – |
| Current year losses not recognised | 2,689 | – | – |
| Adjustment in deferred tax due to change in tax rate | 136 | (64) | (95) |
| Other adjustments | | | |
| Withholding taxes | 819 | 306 | 1,918 |
| Effect of differences between local and United Kingdom tax rates | (747) | 64 | 522 |
| Prior year adjustments to current tax | (608) | 351 | (417) |
| Other adjustments | 753 | 468 | – |
| Income tax (credit)/expense | (10,399) | 6,457 | 8,283 |

Refer to note 20 for information regarding the Group’s deferred tax assets and liabilities.

11. (Loss)/Earnings per share

(Loss)/Earnings per ordinary share is calculated on the Group’s loss after tax of £42,497,000 (2012: profit £11,580,000 and 2011: £10,932,000) and the weighted average number of shares in issue during the year of 108,932,340 (2012: 108,540,723 and 2011: 108,263,282).

(Loss)/Earnings per ordinary share excludes the issue of shares under the Group's JSOP, as the Employee Benefit Trust has waived its right to receive dividends on the 925,933 ordinary 2p shares it holds as at 31 December 2013 (31 December 2012 and 2011: 925,933).

| | 2013
£'000 | 2012
£'000 | 2011
£'000 |
| --- | --- | --- | --- |
| Net profit attributable to shareholders | | | |
| Earnings – basic | (42,497) | 11,580 | 10,932 |
| Earnings – diluted | (42,497) | 11,580 | 10,932 |
| | 2013 | 2012 | 2011 |
| Weighted average number of shares in issue | | | |
| Basic number of shares outstanding | 108,932,340 | 108,540,723 | 108,263,282 |
| Dilutive effect of Employee Share Option Scheme | - | 4,160 | 11,121 |
| Diluted number of shares outstanding | 108,932,340 | 108,544,883 | 108,274,403 |

In 2013, the Group is loss making, the Employee Share Option Scheme is considered anti-dilutive as including them in the diluted number of shares outstanding would decrease the loss per share.

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 to better reflect the underlying performance of the Group during the year. 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.

| | Earnings
£'000 | Earnings
per share
p | Diluted
earnings
per share
p |
| --- | --- | --- | --- |
| Net profit attributable to shareholders | | | |
| Loss – basic and diluted for the year ended
31 December 2013 | (42,497) | (39.01p) | (39.01p) |
| Adjustment for: | | | |
| Amortisation of royalty intangible assets | 854 | | |
| Loss on sale of mining and exploration interests | 6,398 | | |
| Impairment of mining and exploration interests | 26,321 | | |
| Impairment of royalty intangible assets | 8,313 | | |
| Revaluation of coal royalties (Kestrel) | 13,568 | | |
| Revaluation of royalty financial instruments | 8,735 | | |
| Effective interest income on royalty financial instruments
(note 9) | (1,140) | | |
| Tax effect of the adjustments above | (11,371) | | |
| Adjusted earnings – basic and diluted for the
year ended 31 December 2013 | 9,181 | 8.43p | 8.43p |

	Earnings£'000	Earningsper sharep	Dilutedearningsper sharep
Net profit attributable to shareholders
Earnings – basic and diluted for the year ended31 December 2012	11,580	10.67p	10.67p
Adjustment for:
Amortisation of royalty intangible assets	1,018
Profit on sale of mining and exploration interests	(7,347)
Impairment of mining and exploration interests	11,401
Revaluation of coal royalties (Kestrel)	(9,512)
Revaluation of royalty financial instruments	767
Effective interest income on royalty financial instruments(note 9)	(570)
Tax effect of the adjustments above	2,095
Adjusted earnings – basic and diluted for theyear ended 31 December 2012	9,432	8.69p	8.69p
	Earnings£'000	Earningsper sharep	Dilutedearningsper sharep
Net profit attributable to shareholders
Earnings – basic and diluted for the year ended31 December 2011	10,932	10.10p	10.10p
Adjustment for:
Amortisation of royalty intangible assets	1,018
Gain on sale of mining and exploration interests	(20,302)
Impairment of mining and exploration interests	29,182
Impairment of royalty intangible assets	1,088
Impairment of royalty financial instruments	1,563
Revaluation of coal royalties (Kestrel)	4,048
Revaluation of royalty financial instruments	(2,843)
Effective interest income on royalty financial instruments(note 9)	(724)
Tax effect of the adjustments above	(1,593)
Adjusted earnings – basic and diluted for the year ended31 December 2011	22,369	20.66p	20.66p

190

12. Dividends

On 11 January 2011 an interim dividend of 3.95 pence per share was paid to shareholders in respect of the year ended 31 December 2010. On 6 July 2011 a final dividend of 5.10 pence per share was paid to shareholders to make a total dividend for the year of 9.05 pence per share. Total dividends, excluding scrip, paid during 2011 were £8.98m.

On 11 January 2012 an interim dividend of 4.25 pence per share was paid to shareholders in respect of the year ended 31 December 2011. On 4 July 2012 a final dividend of 5.50 pence per share was paid to shareholders to make a total dividend for the year of 9.75 pence per share. Total dividends paid during 2012 were £10.58m.

On 5 February 2013 an interim dividend of 4.45p per share was paid to shareholders in respect of the year ended 31 December 2012. On 7 August 2013 a final dividend of 5.75p per share was paid to shareholders to make a total dividend for the year of 10.2p per share. Total dividends, paid during 2013 were £11.07m.

On 4 February 2014 an interim dividend of 4.45p per share was paid to shareholders in respect of the year ended 31 December 2013. This dividend has not been included as a liability in these financial statements. The Directors proposed that a final dividend of 5.75p per share be paid to shareholders on 7 August 2014, to make a total dividend for the year of 10.2p per share. This dividend was subject to approval by shareholders at the AGM and was not included as a liability in these financial statements.

13. Property, plant and equipment

Group	Other Assets £'000	Equipment and Fixtures £'000	Total £'000
Gross carrying amount
At 1 January 2013	2,072	175	2,247
Additions	–	14	14
Disposals	–	(60)	(60)
Foreign currency translation	(108)	–	(108)
At 31 December 2013	1,964	129	2,093
Depreciation and impairment
At 1 January 2013	(2)	(140)	(142)
Disposals	–	60	60
Depreciation	(2)	(20)	(22)
At 31 December 2013	(4)	(100)	(104)
Carrying amount 31 December 2013	1,960	29	1,989

191

Group	Other Assets £'000	Equipment and Fixtures £'000	Total £'000
Gross carrying amount
At 1 January 2012	2,098	175	2,273
Foreign currency translation	(26)	–	(26)
At 31 December 2012	2,072	175	2,247
Depreciation and impairment
At 1 January 2012	(2)	(119)	(121)
Depreciation	–	(21)	(21)
At 31 December 2012	(2)	(140)	(142)
Carrying amount 31 December 2012	2,070	35	2,105
		Equipment and Fixtures £'000	Total £'000
Group	Other Assets £'000
Gross carrying amount
At 1 January 2011	2,083	161	2,244
Additions	15	14	29
At 31 December 2011	2,098	175	2,273
Depreciation and impairment
At 1 January 2011	(2)	(98)	(100)
Depreciation	–	(21)	(21)
At 31 December 2011	(2)	(119)	(121)
Carrying amount 31 December 2011	2,096	56	2,152

Other assets relate to:

The Trefi and Panorama coal projects in British Columbia, Canada. As both projects are not yet in production there was no depreciation during the period; and
The Group’s talc deposit on Shetland, Scotland. This is not yet in production so there has been no depreciation during the period.

14. Coal royalties (Kestrel)

	£'000
At 1 January 2011	169,304
Foreign currency translation	711
Revaluation of coal royalties	(4,048)
At 31 December 2011	165,967
Foreign currency translation	(4,484)
Revaluation of coal royalties	9,512
At 31 December 2012	170,995
Foreign currency translation	(25,993)
Revaluation of coal royalties	(13,568)
At 31 December 2013	131,434

The Group's coal royalty entitlements comprise the Kestrel and Crinum coal royalties, and derive from mining activity carried out within the Group's private land area in Queensland, Australia. Rather uniquely to this royalty, the sub-stratum land is the property of the freeholder, including the minerals contained within. The ownership of the land therefore entitles the Group to a royalty, equivalent to what the State receives on areas outside the Group's private land. This royalty is accounted for as Investment Property in accordance with IAS 40.

The coal royalty was valued during December 2013 at £131.4m (A$244.4m) (2012: £171.0m and A$266.6m; 2011: £169.3m and A$252.0m) by Resource Management International Pty Ltd, independent coal industry advisors, on a net present value of the pre-tax cash flow discounted at a rate of 7%. The net royalty income from this investment is currently taxed in Australia at a rate of 30%. This valuation is incorporated in the accounts and the above revaluation adjustment represents the difference between the opening carrying value and the external valuation, excluding the effects of foreign currency changes.

Were the coal royalty to be realised at the revalued amount there are £2.0m (A$3.1m) of capital losses potentially available to offset against taxable gains. These losses have been included in the deferred tax calculation (note 20). Were the coal royalty to be carried at cost the carrying value would be £0.2m (2012 and 2011: £0.2m). The Directors do not presently have any intention to dispose of the coal royalty.

15. Royalty financial instruments

The Group's royalty instruments are represented by four royalty agreements which entitle the Group to either the repayment of principal and a net smelter return ("NSR") royalty for the life of the mine or a gross revenue royalty ("GRR") where the project commences commercial production or the repayment of principal where it does not. Details of the Group's royalty financial instruments, which are held at fair value are summarised below:

Project	Commodity	Original Cost '000	Royalty Rate	Escalation
Engenho^{1}	Gold	A$4,000	2.50%	–
El Valle-Boinas/Carles mines	Gold	C$7,500	2.50%	3% gold >US$1,100/oz
Jogjakarta	Iron Sands	A$5,000	2.00%	–
Isua	Iron Ore	A$28,000	1.00%	–

Note:

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

The Group's entitlements to cash by way of the repayment of the principal and the NSR royalty or the GRR have been classified as available for sale financial assets in accordance with IAS 39 and are carried at fair value. When the financial asset is considered to be an equity instrument, changes in valuation are reflected in the investment revaluation reserve and any income is treated as a return on investment and recognised in the income statement. For financial assets which are considered debt instruments, any initial valuation movement caused as a result of the difference between an effective interest rate and actual interest is reflected in other comprehensive income, when material. Any subsequent valuation adjustment caused by changes in estimated cash flow is reflected in the income statement when considered material. Any effective interest credit is recognised in the income statement. Should the valuation fall beneath cost, an impairment charge will be recognised in the income statement. See note 3.9 for further details.

192

Group
£'000

Fair value

At 1 January 2011 28,061
Additions 18,391
Impairment of royalty financial instruments¹ (1,563)
Revaluation of royalty financial instruments recognised in the income statement 2,843
Revaluation of financial royalty instruments recognised in equity (5,049)
Foreign currency translation 444
At 31 December 2011 43,127
Revaluation of royalty financial instruments recognised in the income statement (767)
Revaluation of royalty financial instruments recognised in equity 540
Foreign currency translation (955)
At 31 December 2012 41,945
Revaluation of royalty financial instruments recognised in the income statement (8,735)
Revaluation of royalty financial instruments recognised in equity (4,191)
Foreign currency translation (1,172)
At 31 December 2013 27,847

Note:
1 On 18 October 2011 Mundo Minerals Limited (“Mundo”) announced the decision to place the Engenho project on care and maintenance by December 2011. Mundo further announced on 16 December 2011, that its Brazilian subsidiary which holds the mining licences relating to the Engenho project was seeking protection from its creditors under a Brazilian Chapter 11 equivalent. Given the inherent uncertainty over the Group’s ability to retain the royalty through the bankruptcy an impairment charge of £1.5m was recognised in the 2011, reducing the carrying value of the Engenho royalty to nil.

Royalty and exploration intangible assets
The Group’s intangibles comprise capitalised exploration and evaluation costs and royalty interests.

| Group | Exploration and evaluation costs
£'000 | Royalty interests
£'000 | Total
£'000 |
| --- | --- | --- | --- |
| Gross carrying amount | | | |
| At 1 January 2013 | 931 | 55,773 | 56,704 |
| Additions | 101 | – | 101 |
| Conversion of royalty option | – | 248 | 248 |
| Foreign currency translation | (81) | (7,308) | (7,389) |
| At 31 December 2013 | 951 | 48,713 | 49,664 |
| Amortisation and impairment | | | |
| At 1 January 2013 | – | (3,209) | (3,209) |
| Amortisation charge | – | (854) | (854) |
| Impairment charge | – | (8,313) | (8,313) |
| At 31 December 2013 | – | (12,376) | (12,376) |
| Carrying amount 31 December 2013 | 951 | 36,337 | 37,288 |

193

Group	Exploration and evaluation costs £'000	Royalty interests £'000	Total £'000
Gross carrying amount
At 1 January 2012	804	52,135	52,939
Additions	127	3,638	3,765
At 31 December 2012	931	55,773	56,704
Amortisation and impairment
At 1 January 2012	–	(2,191)	(2,191)
Amortisation charge	–	(1,018)	(1,018)
At 31 December 2012	–	(3,209)	(3,209)
Carrying amount 31 December 2012	931	52,564	53,495
Group	Exploration and Evaluation Costs £'000	Royalty Interests £'000	Total £'000
---	---	---	---
Gross carrying amount
At 1 January 2011	696	42,130	42,826
Additions	108	10,005	10,113
At 31 December 2011	804	52,135	52,939
Amortisation and impairment
At 1 January 2011	–	(85)	(85)
Impairment charge	–	(1,088)	(1,088)
Amortisation charge	–	(1,018)	(1,018)
At 31 December 2011	–	(2,191)	(2,191)
Carrying amount 31 December 2011	804	49,944	50,748

The exploration and evaluation costs comprise expenditure that is directly attributable to the Trefi and Panorama coal projects in British Columbia, Canada.

The Amapá royalty interest is the only producing royalty interest and therefore, subject to amortisation. Amortisation of the remaining interests will commence once they begin commercial production. No intangible assets have been pledged as security for liabilities.

As described in note 3.6 and 3.7, an annual impairment review is carried out to determine whether the future expected cash flows (calculated on a value-in use basis) exceed cost. This has resulted in the Directors determining that three of the Group's intangible royalties were impaired at 31 December 2013 and one of the Group's intangibles royalties was impaired at 31 December 2011 as outlined below. See note 3.9 for the impairment methodology applied.

Year-ended 31 December 2013

Ring of Fire

The operator, Cliffs Natural Resources Inc, announced the placing of its chromite asset onto care and maintenance. Although the Group believes that this is too important a project to all stakeholders for the project to be deferred indefinitely, in the absence of any other publicly available information, it has deferred the estimated production profile and applied a risk weighted probability measure accordingly. The combination of both has resulted in the estimated future royalty income being less than the acquisition cost of the royalty. Should the impasse resolve and production commence, this impairment would be reversed in the income statement. This has resulted in an impairment charge of £4.2m in the year (calculated using a pretax discount rate of 10%) with the residual carrying value being £5.4m.

195

Bulqiza

The Directors have taken a view that this project is no longer the principal focus of the owner of the licences. In the absence of a sale during the year, the Directors have changed the probability of future production such that the estimated future cash flows is less than the acquisition cost. This was a relatively small investment made by the Group in 2010. This has resulted in an impairment charge of £0.9m in the year (calculated using a pre-tax discount rate of 10%) with the residual carrying value being £0.7m).

Mount Ida

The Group acquired the Mount Ida royalty in 2012 for US$6.0m settled by way of a cash payment of US$3.7m (£2.3m) and the issue of ordinary shares for the US$2.3m (£1.3m) balance – refer to note 22 for the share issue. Due to the significant infrastructure required to bring the project into production, including the construction of port and rail facilities, the owner has placed this project on care and maintenance. Although this is a large, relatively high grade deposit which, with a recovery in iron ore prices could become economic, in the meantime the Directors are of the view that it is unlikely that production will happen in a time frame such that the future cash flows will exceed cost (calculated using a pre-tax discount rate of 10%). This has resulted in the full carrying amount being impaired by £3.2m in the year.

Year-ended 31 December 2011

Athabasca Basin

In 2011, the Group's net smelter royalties on the exploration licences in the Athabasca Basin region of Canada were impaired as a result of the inherent uncertainty of these licences entering commercial production. The impairment charge of £1.1m in the year reduced the carrying value to nil. The Group continues to review the development of these licences on an annual basis.

The remaining royalties were assessed for impairment on the same basis. No further impairment charges were made.

17. Mining and exploration interests

(a) Available for sale

	Group
Fair value	£'000
At 1 January 2011	128,231
Additions	28,101
Disposals	(51,491)
Revaluation adjustment	(40,535)
Foreign currency translation	(3)
At 1 January 2012	64,303
Additions	23,781
Disposals	(19,280)
Revaluation adjustment	(12,887)
Foreign currency translation	(372)
At 31 December 2012	55,545
Additions	3,118
Disposals	(5,258)
Revaluation adjustment	(32,558)
Foreign currency translation	(775)
At 31 December 2013	20,072

The Group's mining and exploration interests are acquired as part of the Group's strategy to acquire new royalties and are not held for the purpose of trading. Gains may be realised where it is deemed appropriate. The fair values of listed securities are based on quoted market prices. Unquoted

investments and royalty options are initially recognised using cost where fair value cannot be reliably determined. In the absence of an active market for these securities, the Group considers each unquoted security to ensure there has been no material change in the fair value since initial recognition. Further guidance on fair value measurement is provided in note 3.

An impairment charge (representing the recognition of losses previously deferred to equity) is recognised in the income statement when the absolute decline in value below cost of any individual investment is considered ‘significant’ or ‘prolonged’ in accordance with the Group’s impairment policy. Following significant declines in mining equity markets, the Group recognised an impairment charge of £26.3m for the year ended 31 December 2013 (31 December 2012: £11.4m and 31 December 2011: £29.2m) as set out in the Statement of Changes in Equity.

In 2013, the Group realised £5.3m in cash (2012: £19.3m; 2011: £51.5m) through its disposal of a number of its mining and exploration interests from which management no longer considered royalty opportunities to exist. These disposals resulted in a loss of £6.4m for the year ended 31 December 2013 (2012: gain of £7.3m; 2011: gain £20.3m).

(b) Fair value through profit and loss

	£'000
At 1 January 2011 and 31 December 2012	248
Conversion to intangible – royalty	(248)
At 31 December 2013	–

A non-repayable convertible instrument was acquired by the Group in 2007. The convertible instrument was designated as fair value through profit or loss. This convertible instrument was created to provide finance to a listed mining development company and is convertible into equity in the company or royalties over the company’s properties at the Group’s option for a period of up to five years. The instrument was initially recognised using cost as fair value could not be reliably determined. Prior to the instrument’s expiration in November 2012, the Group notified the underlying company of its intention to convert the instrument to royalties. The conversion was completed in the first quarter of 2013.

	2013	2012	2011
	£'000	£'000	£'000
Total mining and exploration interests	20,072	55,793	64,551

Total mining and exploration interests at 31 December are represented by:

	2013	2012	2011
	£'000	£'000	£'000
Quoted investments	16,018	51,547	62,389
Unquoted investments	3,896	3,518	1,434
Royalty Options	158	728	728
	20,072	55,793	64,551
Number of investments	29	37	42

197

18. Trade and other receivables

	2013	2012	2011
	£'000	£'000	£'000
Current
Income tax receivable	2,292	–	–
Prepayments and accrued income	100	136	158
Royalty receivables	2,824	1,219	10,111
Other receivables	116	603	2,028
	5,332	1,958	12,297

Trade and other receivables principally comprise amounts relating to royalties receivable for the final quarter in each year.

	2013	2012	2011
	£'000	£'000	£'000
Non-current
Other receivables	8,775	3,141	–
	8,775	3,141	–

On 13 August 2012, the Group provided Laramide Resources Ltd with an interest bearing facility of C$5m, which is repayable in December 2015. In return Laramide Resources Ltd granted Anglo Pacific an option to acquire a 5% gross revenue royalty for an exercise price of US$15m. The facility bears interest at a rate of 7% per annum payable quarterly in arrears. This option had £nil value at 31 December 2012 and 31 December 2013.

On 18 December 2012 the Group entered into a royalty financing agreement with Hummingbird Resources PLC, under which the Group was to provide a non-interesting bearing advance of US$15m in three tranches of US$5m subject to the satisfaction of various conditions precedents. During 2013, the Group advanced two of the three tranches.

The Directors consider that the carrying amount of trade and other receivables is approximately their fair value.

19. Cash and cash equivalents

Cash and cash equivalents include the following for the purposes of the statement of cash flows:

	2013	2012	2011
	£'000	£'000	£'000
Cash at bank and on hand	15,501	23,083	31,116
Trading deposits with brokers	205	953	1,081
Cash and cash equivalents	15,706	24,036	32,197

20. Deferred tax

The following are the major deferred tax liabilities and assets recognised by the Group and the movements thereon during the current and prior reporting periods:

Group	Coal royalties		Available-for sale-investments		Impairment of Intangible royalties	Accrual of royalty receivable	Total
	Revaluation of coal royalty £'000	Effects of Tax losses £'000	Revaluation of royalty instruments £'000	Revaluation of mining interests £'000
At 1 January 2011	50,277	(945)	4,895	4,849	-	2,416	61,492
Charge/(credit) to profit or loss	(1,694)	218	1,015	(3,819)	-	487	(3,793)
Charge/(credit) to other comprehensive income	-	-	(664)	(1,239)	-	-	(1,903)
Exchange differences	696	-	-	(13)	-	23	706
Effect of change in tax rate:
- income statement	-	-	(95)	-	-	-	(95)
- equity	-	-	(255)	(79)	-	-	(334)
At 31 December 2011	49,279	(727)	4,896	(301)	-	2,926	56,073
Charge/(credit) to profit or loss	3,840	103	(860)	(1,618)	-	(2,694)	(1,229)
Charge/(credit) to other comprehensive income	-	-	298	(3,988)	-	-	(3,690)
Exchange differences	(2,334)	17	-	60	-	(26)	(2,283)
Effect of change in tax rate:
- income statement	-	-	(173)	109	-	-	(64)
- equity	-	-	(204)	(71)	-	-	(275)
At 31 December 2012	50,785	(607)	3,957	(5,809)	-	206	48,532
Charge/(credit) to profit or loss	(5,160)	(8)	(1,111)	(3,282)	(2,330)	641	(11,250)
Charge/(credit) to other comprehensive income	-	-	600	(204)	-	-	396
Exchange differences	(7,162)	99	-	(45)	-	(116)	(7,224)
Effect of change in tax rate:
- income statement	-	-	(101)	237	-	-	136
- equity	-	-	(229)	4	-	-	(225)
At 31 December 2013	38,463	(516)	3,116	(9,099)	(2,330)	731	30,365

Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

	2013	2012	2011
	£'000	£'000	£'000
Deferred tax liabilities	39,202	54,344	56,375
Deferred tax assets	8,837	5,812	302
	30,365	48,532	56,073

At the balance sheet date, the Group has unused tax losses of £1.7m (2012: £2.0m; 2011: £2.4m) available for offset against future profits. A deferred tax asset has been recognised in respect of these losses which may be carried forward indefinitely.

The Group has the following balances in respect of which no deferred tax asset has been recognised:

	Tax losses trading £'000	2013 Tax losses capital £'000	Total £'000	Tax losses trading £'000	2012 Tax losses capital £'000	Total £'000	Tax losses trading £'000	2011 Tax losses capital £'000	Total £'000
Expiry date
Within one year	-	-	-	-	-	-	-	-	-
Greater than one year, less than five years	-	-	-	-	-	-	-	-	-
Greater than five years	-	-	-	-	-	-	-	-	-
No expiry date	8,501	2,906	11,407	-	1,209	1,209	-	1,289	1,289
	8,501	2,906	11,407	-	1,209	1,209	-	1,289	1,289

Timing differences associated with investments in subsidiaries, joint ventures and associates are insignificant.

21. Trade and other payables

	2013	2012	2011
	£'000	£'000	£'000
Other taxation and social security payable	147	121	302
Trade payables	43	106	100
Other payables	426	1,724	6,427
Accruals and deferred income	146	220	67
	762	2,171	6,896

The average credit period taken for trade purchases is 26 days (2012: 22 days and 2011: 33 days). The Directors consider that the carrying amount of trade and other payables is approximately their fair value. All amounts are considered short-term and none are past due.

22. Share capital and share premium

Issued share capital

Group and Company	Number of shares	Share capital £'000	Share premium £'000	Total £'000
Ordinary shares of 2p each at 1 January 2011	108,771,332	2,175	24,207	26,382
Issue of share capital to Employee Benefit Trust(a)	417,883	9	1,332	1,341
Ordinary shares of 2p each at 31 December 2011	109,189,215	2,184	25,539	27,723
Issue of share capital as part of the acquisition of Mt Ida(b)	416,161	8	1,314	1,322
Ordinary shares of 2p each at 31 December 2012	109,605,376	2,192	26,853	29,045
Issue of share capital under private placing(c)	1,282,049	26	2,475	2,501
Ordinary shares of 2p each at 31 December 2013	110,887,425	2,218	29,328	31,546

Notes:

(a) On 28 March 2011 the Company issued 356,208 ordinary shares at a price of 326 pence per share to the Anglo Pacific Group Employee Benefit Trust ("EBT"). A further issuance of 61,675 ordinary shares at a price of 291.85 pence per share to the EBT was made on 12 September 2011. Both issues were in accordance with Anglo Pacific Group Joint Share Ownership Plan – refer to note 23.

(b) On 2 May 2012 the Company issued 416,161 ordinary shares at a price of 317.68 pence per share in accordance with the royalty sale and purchase agreement as part settlement of the acquisition of the Mt Ida royalty – refer to note 16.

(c) On 21 October 2013 the Company issued 1,282,049 ordinary shares at a price of 195 pence per share by way of a private placing settled in cash with Mr J.A. Treger and Mr M.R. Potter.

Own shares

Included in the Company's issued share capital are shares held by the EBT in accordance with Group's JSOP as follows:

	2013		2012		2011
	Number of shares	£'000	Number of shares	£'000	Number of shares	£'000
Own shares
Own shares held by the EBT	925,933	(2,601)	925,933	(2,601)	925,933	(2,601)
Total	925,933	(2,601)	925,933	(2,601)	925,933	(2,601)

As the EBT has waived its right to receive dividends, the Company's shares held by the EBT are excluded from the weighted average number of shares in issue for the purposes of calculating earnings per share – refer to note 11.

23. Share based payments

Following the approval at the 2010 AGM, the Group operates two equity-settled share based compensation plans as follows:

The HMRC approved Company Share Ownership Plan (the "CSOP"); and
The JSOP operated through the Anglo Pacific Group Employee Benefit Trust.

(a) Company Share Ownership Plan

Under the CSOP, share options are granted to Directors and to selected employees. The exercise price of the granted options is equal to the average mid market closing price of an ordinary share for the three days before the grant. The options are conditional on the employee completing three years' service (the vesting period). The options are exercisable starting three years from the grant date, subject to the Group achieving its target growth in absolute TSR over the period of 3% per annum (not compounded) in excess of the UK Retail Price Index; the options have a contractual option term of ten years. The Group has no legal or constructive obligation to repurchase or settle the options in cash.

Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:

	2013		2012		2011
	Options	Weighted average exercise price (£)	Options	Weighted average exercise price (£)	Options	Weighted average exercise price (£)
Outstanding at 1 January	76,928	2.7406	67,463	2.6681	60,120	2.4950
Granted during the year	-	-	19,622	2.9446	19,367	3.0981
Forfeited during the year	(24,048)	2.4950	(10,157)	2.9535	(12,024)	2.4950
Outstanding at 31 December	52,880	2.7406	76,928	2.7406	67,463	2.6681

Out of the 52,880 outstanding options (2012: 76,928 and 2011: 67,463), nil options (2012 and 2011: nil) were exercisable.

Share options outstanding at the end of the year have the following expiry date and exercise prices:

Expiry date	Exercise price in		Options
	£ per share	2013	2012	2011
2019	2.4950	24,048	48,096	48,096
2021	3.2570	9,210	9,210	9,210
2021	2.9535	-	-	10,157
2022	3.2860	9,129	9,079	-
2022	2.6675	11,246	10,543	-
		53,633	76,928	67,463
Weighted average remaining contractual life		7.48	8.00	8.57

There were no grants made during 2013. The weighted average fair value of options granted during 2012 determined using the Black-Scholes valuation model was £1.649 per option granted in March 2012 and £1.318 per option granted in September 2012 (March 2011: £1.741 and September 2011: £1.482). The significant inputs into the model were weighted average share price of £3.286 and £2.668 (March 2011: £3.257 and September 2011: £2.953) at the grant date in March and September

200

2012 respectively, exercise price shown above, volatility of 40% (2011: 40%), expected option life of three years (2011: three years) and an annual risk-free interest rate of 1.1% and 0.8% for the options granted in March and September 2012 respectively (March 2011: 2.3% and September 2011: 1.1%). See note 6a for the total expense recognised in the income statement for share options granted to Directors and employees.

In accordance with the rules of the CSOP, Mr. Theobald and Mr. Orchard forfeited all their outstanding options at the time of their resignation on 21 October 2013.

(b) Joint Share Ownership Plan

Under the JSOP, the Remuneration Committee invites selected directors and employees to enter into an agreement with the Anglo Pacific Group Employee Benefit Trust (the 'Co-owner') to acquire a number of ordinary shares in the capital of the Company. The shares are held in the name of the Co-owner, however, the selected Directors and employees maintain a beneficial interest in these shares.

Awards under the JSOP are conditional on the employee completing three years' service (the vesting period) and the Group's absolute total shareholder return growing at an annual rate (not compounded) of 3% in excess of the UK Retail Price Index over the three-year vesting period. In addition the Company's share price must reach a hurdle price during the three year vesting period as determined by the Remuneration Committee at the time of making the award.

Upon satisfying the performance targets and service requirements, the beneficial interest conferred will entitle the Director or employee to receive a proportion of the proceeds of sale of the ordinary shares. Their entitlement will be to receive the equivalent of all sales proceeds in excess of the threshold amount, settled in ordinary shares of the Company. The threshold amount is fixed by the Remuneration Committee and will not be set less than the market value of the ordinary shares of the Company at the time the JSOP award is made.

JSOP awards made during the year were as follows:

	Grant price in £ per share	Hurdle price in £ per share	2013	Shares 2012	2011	Expiry Date
Outstanding at 1 January	2.480	3.150	866,610	678,746	508,050	2014
Awarded in March 2011	3.260	4.225	-	-	356,208	2015
Awarded in September 2011	2.919	4.625	-	-	61,675	2015
Awarded in March 2012	3.320	4.500	-	205,420	-	2016
Awarded in September 2012	2.668	3.692	-	71,227	-	2016
Surrendered during the year			(338,700)	-	-
Forfeited during the year			(250,553)	(88,783)	(247,187)
Outstanding at 31 December			277,357	866,610	678,746
Weighted average remaining contractual life			0.36	3.12	3.62

No shares were awarded under the JSOP during 2013. The weighted average fair value of shares awarded during 2012 determined using the Monte Carlo valuation model was £0.75 per share granted in March 2012 and £0.57 per share granted in September 2012. The significant inputs into the model were weighted average share price of £3.32 and £2.67 at the grant date in March and September 2012 respectively, share price hurdle shown above, volatility of 40%, expected option life of four years and an annual risk-free interest rate of 1.1% and 0.8% for the shares granted in March and September 2012.

201

In accordance with the terms of the JSOP, Mr. Theobald and Mr. Orchard surrendered their awards upon their resignation on 21 October 2013. See note 6a for the total expense recognised in the income statement for share options granted to Directors and employees.

24. Special reserve

As part of the capital reduction in 2002, a special reserve was created, which represents the level of profit attributable to the Group for the period ended 30 June 2002. At 31 December 2013, this reserve remains unavailable for distribution.

£'000

At 1 January 2011, 31 December 2011, 31 December 2012 and 31 December 2013

632

25. Financial commitments

Operating leases

The Group's most significant operating lease commitments relate to premises maintained in both London, England and Shetland, Scotland.

At the balance sheet date, the Group had outstanding commitments under non-cancellable operating leases. The total commitments due under these leases are shown according to the scheduled expiry dates of the leases as follows:

	2013	2012	2011
	£'000	£'000	£'000
Within one year	168	168	168
In the second to fifth years inclusive	100	218	436
After five years	75	171	125
	343	557	729

The annual commitments for leases expiring after five years total £50,000 per annum.

Capital commitments

At the year end the Group had capital commitments of £nil (2012 and 2011: £nil) in respect of purchases of quoted investments.

Subsidiary undertakings have commitments as detailed below:

Shetland Talc Limited

A bond was granted to Shetland Islands Council for £10,000 in respect of the installation of a Talc processing plant at Broonies Taing, Sandwick and the extraction of talc magnesite rock at Catpund, Cunningsburgh.

Related party transactions

Remuneration of key management personnel

The remuneration of the key management personnel including Directors of the Group is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.

	2013	2012	2011
	£'000	£'000	£'000
Short-term employee benefits	1,098	841	1,384
Post-employment benefits	17	22	44
Share-based payment	–	120	104
	1,115	983	1,532

Directors' transactions

During the year, the Group entered into the following related party transactions:

	2013	2012	2011
	£	£	£
Allenbridge Group PLC	–	–	2,489
JW Technologies	–	–	1,130
	–	–	3,619

The payments to Allenbridge Group PLC, a company in which Mr A.H. Yadgaroff, a non-executive director, is both a director and shareholder, were for the provision of office support services.

The payments to JW Technologies, a company in which Dr J.G. Whellock, a non-executive director, is both a director and shareholder, were for the provision of consulting services.

As at 31 December 2013 a total of £nil was owing to both Allenbridge and JW Technologies (2012 and 2011: £nil).

During the year the Directors received dividends as ordinary shareholders of the Company totalling:

	2013	2012	2011
	£	£	£
P.M. Boycott¹	119,792	263,102	246,164
A.C. Orchard²	11,226	10,731	9,105
M.R. Potter³	–	–	–
M.J. Tack⁴	–	–	10,520
J. Theobald⁵	4,117	3,935	3,378
J.A. Treger⁶	–	–	–
B.M. Wides⁷	298,468	285,300	264,817
M.H. Atkinson⁸	757	724	355
D. Archer⁹	–	–	–
W.M. Blyth¹⁰	403	–	–
P.N.R. Cooke¹¹	912,890	–	–
R. Stan¹²	–	–	–
R. Rhodes¹³	–	–	–
J.G. Whellock¹⁴	1,335	1,276	1,184
A.H. Yadgaroff	17,897	16,788	14,875
	1,366,885	581,856	550,398

Notes:
1. Mr P.M. Boycott ceased to be a director on 7 January 2014.

Mr A.C. Orchard resigned as a director on 21 October 2013.
Mr M.R. Potter was appointed as a director on 21 October 2013.
Mr M.J. Tack resigned as a director on 23 September 2011.
Mr J. Theobald resigned as a director on 21 October 2013.
Mr J.A. Treger was appointed as a director on 21 October 2013.
Mr B.M. Wides resigned as a director on 8 May 2014.
Mr M.H. Atkinson resigned as a director on 11 June 2014.
Mr D. Archer was appointed as a director on 15 October 2014.
Mr W.M. Blyth was appointed as a director on 20 March 2013.
Mr P.N.R. Cooke was appointed as a director on 10 December 2012 and resigned as a director on 15 October 2014.
Mr R. Stan was appointed as a director on 19 February 2014.
Ms R. Rhodes was appointed as a director on 8 May 2014.
Dr J.G. Whellock resigned as a director on 11 June 2014.

27 Financial risk management

The Group's principal treasury objective is to provide sufficient liquidity to meet operational cash flow and dividend requirements and to allow the Group to take advantage of new growth opportunities whilst maximising shareholder value. The Group's activities expose it to a variety of financial risks including liquidity risk, credit risk, foreign exchange risk and price risk. The Group operates controlled treasury policies which are monitored by management to ensure that the needs of the Group are met while minimising potential adverse effects of unpredictability of financial markets on the Group's financial performance.

Financial instruments

The Group and Company held the following investments in financial instruments (this includes investment properties):

	2013 £'000	2012 £'000	2011 £'000
Investment property (held at fair value)
Coal royalties (Kestrel)	131,434	170,995	165,967
Available-for-sale (held at fair value)
Royalty financial instruments	27,847	41,945	43,127
Mining and exploration interests	20,072	55,545	64,303
Fair value through profit or loss
Royal instruments	-	-	-
Mining and exploration interests	-	248	248
Loans and receivables
Trade and other receivables^{1}	11,599	4,360	10,111
Cash at bank and in hand	15,706	24,036	32,197
Financial liabilities
Trade and other payables^{2}	189	326	167

Notes:

Trade and other receivables include royalty receivables and other non-current receivables only, as set out in note 18.
Trade and other payables include trade payables and accruals only, as set out in note 21.

Cash and cash equivalents comprise cash and short-term deposits held by the Group treasury function. The carrying amount of these assets approximates their fair value.

Liquidity and funding risk

The objective of the Company in managing funding risk is to ensure that it can meet its financial obligations as and when they fall due. At 31 December 2011, 31 December 2012 and 31 December 2013 there was no

debt outstanding. The addition of a twelve-month U$15m revolving credit facility signed in February 2014 added further flexibility and liquidity to the Group's cash balances.

Credit risk

The Group's principal financial assets are bank balances, royalty instruments held as financial assets, trade and other receivables and investments. These represent the Group's maximum exposure to credit risk in relation to financial assets and total £55.2m at 31 December 2013 (£70.3m at 31 December 2012 and £85.4m at 31 December 2011).

The Group's credit risk is primarily attributable to its other receivables, including royalty receivables. It is the policy of the Group to present the amounts in the balance sheet net of allowances for doubtful receivables, estimated by the Group's management based on prior experience and the current economic environment. In certain cases the Group has the right to audit the reported royalty income.

The Group's credit risk on royalty instruments held as financial instruments, has been reviewed and the estimated current exposure is as disclosed in note 15 where the future contractual right to cash flow from these instruments is reflected in their fair value.

The credit risk on bank deposits is mitigated by banking with household name financial institutions in reputable jurisdictions. The Group has no significant concentration of credit risk, with exposure spread over a large number of currencies and counterparties.

Share price risk

The Group is exposed to share price risk in respect of its mining and exploration interests which include listed and unlisted equity securities and any convertible instruments.

A 10% increase or decrease in the fair value of our mining and exploration interests (listed and unlisted) would increase/decrease the mining and exploration interests balance (and Investment revaluation reserve in equity) by £2.0m at 31 December 2013 (£5.6m at 31 December 2012 and £6.5m at 31 December 2011). We note that if a 10% decrease were to occur then a further assessment would be required to determine whether the decrease was considered to be "significant" with any resulting impairment recognised in the income statement.

The royalty portfolio exposes the Group to other price risk through fluctuations in commodity prices, particularly the prices of coking coal, iron ore, gold and uranium. As the Directors obtain independent commodity price forecasts, the generation of which takes into account fluctuations in prices, no detailed analysis of the impact of fluctuations on the valuations of the royalties has been undertaken.

No specific hedging activities are undertaken in relation to these interests and the voting rights arising from these equity instruments are utilised in the Group's favour.

Foreign exchange risk

The Group's transactional foreign exchange exposure arises from income, expenditure and purchase and sale of assets denominated in foreign currencies. As each material commitment is made, the risk in relation to currency fluctuations is assessed by the Executive Committee and regularly reviewed. The Group does not consider it necessary to have a hedging programme in place at this time.

205

Financial assets and liabilities, are split by currency as follows:

	2013						2012						2011
	GBP £'000	AUD £'000	CAD £'000	USD £'000	NOK £'000	EUR £'000	GBP £'000	AUD £'000	CAD £'000	USD £'000	NOK £'000	EUR £'000	GBP £'000	AUD £'000	CAD £'000	USD £'000	NOK £'000	EUR £'000
Financial assets	22,280	148,187	12,410	22,925	851	5	32,205	200,783	25,137	22,627	16,371	6	36,430	223,947	30,514	21,865	3,191	6
Financial liabilities	175	12	2	-	-	-	316	8	2	-	-	-	149	9	9	-	-	-
Net exposure	22,105	148,175	12,408	22,925	851	5	31,889	200,775	25,135	22,627	16,371	6	36,281	223,938	30,505	21,865	3,191	6

Foreign exchange sensitivities

With the exception of the cash balances, the majority of the financial instruments not denominated in GBP are held in entities with the same functional currency and for the purpose of this sensitivity analysis, the impact of changing exchange rates on the translation of foreign subsidiaries into the Group's presentation currency have been excluded.

In terms of the cash balance, the significant sensitivities are as follows:

A +/- 10% change in the GBP: AUD rate would increase/decrease profit after tax and equity by £104k (2012: £43k; 2011: £153k);
A +/- 10% change in the GBP: CAD rate would increase/decrease profit after tax and equity by £246k (2012: £209k; 2011: £357k);
A +/- 10% change in the AUD: CAD rate would increase/decrease profit after tax and equity by £270k (2012: £964k; 2011: £721k).

Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group's exposure to currency risk.

Capital management and procedures

The Group's capital management objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to realise the full value of its assets and to enhance shareholder value in the company and returns to shareholders by acquiring further royalty assets.

The Directors continue to monitor the capital requirements of the Group by reference to expected future cash flows. Capital for the reporting periods presented is summarised in the consolidated statement of changes in equity.

The optimal capital structure for the Group is to fund its business via equity. In certain circumstances the Director's will tolerate a level of gearing. The targeted debt capacity will be 1.5-2 times free cash flow, although a higher ratio can be tolerated for shorter periods when there is a reasonable expectation of a recovery in free cash flow.

Fair value hierarchy

The following table presents financial assets and liabilities measured at fair value in the balance sheet in accordance with the fair value hierarchy. This hierarchy aggregates financial assets and liabilities into three levels based on the significance of the inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels:

Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.

206

The following tables present the Group's assets and liabilities that are measured at fair value at 31 December 2013:

	Note	2013
		Level 1£'000	Level 2£'000	Level 3£'000	Total£'000
Assets
Coal royalties (Kestrel)	(a)	-	-	131,434	131,434
Royalty financial instruments	(b)	-	-	27,847	27,847
Mining and exploration interests – quoted	(c)	16,018	-	-	16,018
Mining and exploration interests – unquoted	(d)	-	3,896	-	3,896
Mining and exploration interests – royalty options	(e)	-	158	-	158
Net fair value		16,018	4,054	159,281	179,353

The following tables present the Group's assets and liabilities that are measured at fair value at 31 December 2012:

	Note	2012
		Level 1£'000	Level 2£'000	Level 3£'000	Total£'000
Assets
Coal royalties (Kestrel)	(a)	-	-	170,995	170,995
Royalty financial instruments	(b)	-	-	41,945	41,945
Mining and exploration interests – quoted	(c)	51,547	-	-	51,547
Mining and exploration interests – unquoted	(d)	-	3,518	-	3,518
Mining and exploration interests – royalty options	(e)	-	728	-	728
Net fair value		51,547	4,246	212,940	268,733

The following tables present the Group's assets and liabilities that are measured at fair value at 31 December 2011:

	Note	2011
		Level 1£'000	Level 2£'000	Level 3£'000	Total£'000
Group
Assets
Coal royalties (Kestrel)	(a)	-	-	165,967	165,967
Royalty financial instruments	(b)	-	-	43,127	43,127
Mining and exploration interests – quoted	(c)	62,389	-	-	62,389
Mining and exploration interests – unquoted	(d)	-	1,434	-	1,434
Mining and exploration interests – royalty options	(e)	-	728	-	728
Net fair value		62,389	2,162	209,094	273,645

There have been no significant transfers between levels 1 and 2 in the reporting period.

The methods and valuation techniques used for the purposes of measuring fair value of royalty financial instruments gives more prominence to the probability of production by applying a risk weighting to the discounted net present value outcome in order to fully reflect the risk that the operation never comes into production rather than factoring this risk into the discount rate applied to the future cash flow.

(a) Coal royalties (Investment Property)

The Group's coal royalties derive from its ownership of certain sub-stratum land in Queensland, Australia. In accordance with IAS 40, this land is revalued at each reporting date on the basis of future expected income discounted at 7% by an independent valuation consultant. See note 14 for further details. All unobservable inputs are obtained from third parties.

(b) Royalty instruments

At the reporting date the royalty instruments are valued based on the net present value of the pre-tax cash flows discounted at a rate management considers reflects the risk associated with each of the underlying projects. The outcome is then risk weighted to reflect the likelihood of the project achieving production based on any published updates in the year. Note 15 details the discount rates used. This is the only unobservable input determined by management. All other unobservable inputs are obtained from third parties.

All the quoted mining and exploration interests have been issued by publicly traded companies in on well established security markets. Fair values for these securities have been determined by reference to their quoted bid prices at the reporting date.

(d) Mining and exploration interests – unquoted

All the unquoted mining and exploration interests are initially recognised using cost as the best approximation of fair value. The Group notes any trading activity in the unquoted instruments and will value its holding accordingly. At present the Group holds these investments with a view to generating future royalties and there is no present intention to sell. The vast majority of these are in investments which the Group anticipates a realistic possibility of a future listing.

(e) Mining and exploration interests – royalty options

All the royalty options are initially recognised using cost where fair value cannot be reliably determined. The Group considers the progress of the projects related to each of the royalty options to ensure there has been no material change in the fair value since initial recognition.

Fair value measurements in Level 3

The Group's financial assets classified in Level 3 uses valuation techniques based on significant inputs that are not based on observable market data.

The following table presents the changes in Level 3 instruments for the year ended 31 December 2013.

	Royalty financial instruments £'000	Coal royalties (Kestrel) £'000	Total £'000
At 1 January 2013	41,945	170,995	212,940
Revaluation gains or losses recognised in:
Other comprehensive income	(2,458)	-	(2,458)
Income statement	(8,735)	(13,568)	(22,303)
Foreign currency translation	(2,905)	(25,993)	(28,898)
At 31 December 2013	27,847	131,434	159,281

The following table presents the changes in Level 3 instruments for the year ended 31 December 2012.

	Royalty financial instruments £'000	Coal royalties (Kestrel) £'000	Total £'000
At 1 January 2012	43,127	165,967	209,094
Revaluation gains or losses recognised in:
Other comprehensive income	63	-	63
Income statement	(767)	9,512	8,745
Foreign currency translation	(478)	(4,484)	(4,962)
At 31 December 2012	41,945	170,995	212,940

The following table presents the changes in Level 3 instruments for the year ended 31 December 2011.

	Royalty financial instruments £'000	Coal royalties (Kestrel) £'000	Total £'000
At 1 January 2011	28,061	169,304	197,365
Additions	18,391	-	18,391
Revaluation gains or losses recognised in:
Other comprehensive income	(4,605)	-	(4,605)
Income statement	2,843	(4,048)	(1,205)
Impairment	(1,563)	-	(1,563)
Foreign currency translation	-	711	711
At 31 December 2011	43,127	165,967	209,094

There have been no transfers into or out of Level 3 in any of the years.

The Group measures its entitlement to the royalty income and any optionality embedded within the royalty instruments using discounted cash flow models. In determining the discount rate to be applied, management considers the country and sovereign risk associated with the projects, together with the time horizon to the commencement of production and the success or failure of projects of a similar nature.

28. Events occurring after year end

On 13 March 2014, the Group made its final advance of US$5m in relation to the royalty financing agreement, entered into with Hummingbird Resources PLC in December 2012.

On 2 June 2014, the Company completed the placing of 5,544,371 new ordinary shares of 2 pence each at a price of 180 pence per share, raising gross proceeds of £9,590,000. These proceeds were used to part fund the acquisition of the NSR royalty over the Maracás vanadium project.

On 10 June 2014, the Group completed its acquisition of Cancap Investments Limited's royalty interest over the Maracás vanadium project, located in Brazil and operated by TSX Venture Exchange listed Largo Resources Limited. The royalty interest is a 2% NSR royalty on all mineral products sold from the royalty area. The total consideration was US$22.0m in cash together with 500,000 warrants on completion, plus a further US$3.0m cash when the project reaches certain annualised production milestones.

On 2 September 2014, the Group completed its disposal of the Panorama Coal Project to Atrum Coal NL. The Group received US$0.5m in cash, 1,000,000 Atrum Coal NL shares and deferred consideration of US$2.0m in the form of a 12-month promissory note with an interest coupon of 8.0% per annum. In addition, the Company will retain a royalty on coal sales from the assets being sold equivalent to the higher of 1% of gross revenue on a "mine gate" basis or US$1/tonne.

209

On 16 October 2014, London Mining PLC, the operator of the Group's Isua royalty, announced that it had entered administration. Following this announcement, the Group has concluded that it will fully impair its royalty arrangement with London Mining. This royalty arrangement had a carrying value of £15.0m as at 31 December 2013.

On 4 February 2015, the Group announced that it had entered into an agreement to acquire from a private seller a 1% GRR over the Narrabri coal mine in New South Wales, Australia operated by Whitehaven Coal Ltd for a total consideration of US$65m, subject to financing. As part of this transaction, the Group will issue US$5m of Ordinary Shares to the Seller, with the remaining US$60m being settled in cash. The Group has also obtained, subject to the deal completing, a new US$30m three-year secured revolving credit facility from Barclays Bank PLC, which will replace the Group's existing facility. The Group announced simultaneously a firm placing and placing and open offer intended to raise US$60 million, which will be used to part finance the royalty acquisition.

29. Principal subsidiaries

	Country of registration and operation	Principal activity	Proportion of shares held at 31 December 2013	Proportion of shares held at 31 December 2012	Proportion of shares held at 31 December 2011
Starmont Holdings Pty Ltd	Australia	Intermediate holding company	100%	100%	100%
Indian Ocean Resources Ltd	Australia	Investments	100%†	100%†	100%†
Alkormy Pty Ltd	Australia	Investments	100%†	100%†	100%†
Argo Royalties Pty Ltd	Australia	Investments	100%†	100%†	100%†
Starmont Ventures Pty Ltd	Australia	Investments	100%†	100%†	100%†
Gordon Resources Ltd	Australia	Owner of coal royalty	100%†	100%†	100%†
Jandale Holdings Pty Ltd	Australia	Investments	-	-	100%†
APG Aus No 1 Pty Ltd	Australia	Owner of iron ore royalties	100%	100%	-
APG Aus No 2 Pty Ltd	Australia	Owner of iron ore royalties	100%	100%	-
APG Aus No 3 Pty Ltd	Australia	Owner of uranium royalties	100%	100%	-
APG Aus No 4 Pty Ltd	Australia	Owner of iron ore royalties	100%	100%	-
APG Aus No 5 Pty Ltd	Australia	Investments	100%	100%	-
APG Aus No 6 Pty Ltd	Australia	Investments	100%	100%	-
Anglo Pacific Finance Ltd	Ireland	Treasury	100%	100%	100%
Anglo Pacific Group Employee Benefit Trust	Guernsey	Administering Group incentive plans	100%	100%	100%
Centaurus Royalties Ltd	England	Owner of iron ore royalties	100%	100%	100%
Southern Cross Royalties Ltd	England	Owner of iron ore and uranium royalties	100%	100%	100%
Shetland Talc Ltd	Scotland	Mineral exploration	100%	100%	100%
Advance Royalty Corporation	Canada	Owner of uranium royalties	100%†	100%†	100%†
Panorama Coal Corporation	Canada	Owner of coal tenures	100%	100%	100%
Trefi Coal Corporation	Canada	Owner of coal tenures	100%	100%	100%
Polaris Royalty Corporation	Canada	Intermediate holding company	100%†	100%†	100%†
Albany River Royalty Corporation	Canada	Owner of chromite royalty	100%†	100%†	100%†

Note:
† Denotes held by a subsidiary company

211

PART 10

KESTREL QUALIFIED PERSON'S REPORT

Golder Associates

6 February 2015

Project No. 147621001

The Board of Directors

Anglo Pacific PLC

1 Savile Row

London

W1S 3JR

NI 43-101 TECHNICAL REPORT ON KESTREL COAL MINE, QLD AUSTRALIA

Dear Sirs

The attached Technical Report has been prepared by Golder Associates (UK) Ltd on behalf of Anglo Pacific Group PLC. The report pertains to the Kestrel Coal Mine located in the Bowen Basin, Queensland Australia. Golder Associates (UK) Ltd understands that Anglo Pacific Group PLC will include this Technical Report in a prospectus to be published in connection with the Firm Placing and Placing and Open Offer of New Ordinary Shares of Anglo Pacific Group PLC and the admission of the New Ordinary Shares to listing on the premium segment of the Official List and to trading on the main market of the London Stock Exchange.

This Technical Report has been prepared in order to satisfy the requirements of the "National Instrument 43-101 - Standards of Disclosure for Mineral Projects" published by the Canadian Securities Administration in addition to the requirements of the "Prospectus Rules" made by the UK Financial Conduct Authority, the "Prospectus Directive" (2003/71/EC), the "Prospectus Regulations" (809/2004) and the "European Securities and Markets Authority recommendations for the consistent implementation of the European Commission's Regulation on Prospectuses No. 809/2004" (as updated by the European Securities and Market Authority on 23 March 2011).

For the purposes of Prospectus Rule 5.5.3R(2) Golder Associates (UK) Ltd is responsible for this Technical Report as part of the Prospectus and declares that they have taken all reasonable care to ensure that the information contained in this Technical Report is, to the best of their knowledge, in accordance with the facts and contains no omission likely to affect its import, and furthermore, no material change has occurred from 30 January 2015 to the date hereof that would require any amendment to the Technical Report. This declaration is included in the Prospectus in compliance with item 1.2 of Annex I of the Prospectus Regulation.

GOLDER ASSOCIATES (UK) LTD

David Arnott

Principal Consultant

Karen Dingley

Mining Sector Leader

(Natural Resources)

DA/KD/ar

Attachments: 147621001-001-R-Rev3 Technical Report

c:\project_files\kestrel\final_04feb2015\147621001-001-l-rev3-cover letter.docx

Golder Associates (UK) Ltd

Cavendish House, Bourne End Business Park, Cores End Road, Bourne End, Buckinghamshire, SL8 5AS, UK

Tel: (+44) (0) 1628 851851 Fax: (+44) (0) 1628 851852 www.golder.com

Golder Associates: Operations in Africa, Asia, Australasia, Europe, North America and South America

Company Registered in England No.1125149 At Attenborough House, Browns Lane Business Park, Stanton-on-the-Wolds, Nottinghamshire NG12 5BL

VAT No. 209 0084 92 Golder, Golder Associates and the GA globe design are trademarks of Golder Associates Corporation.

30 January 2015

ANGLO PACIFIC GROUP PLC

NI 43-101 Technical Report on Kestrel Coal Mine, QLD Australia

Technical Report compiled under NI 43-101

Qualified Person: David Arnott, Principal Geologist, MAusIMM CP(Geo)

Effective Date of Technical Report: 30 January 2015

Submitted to:

Juan Alvarez
Group Mining Analyst
Anglo Pacific Group PLC
17 Hill Street, London W1J 5LJ

Report Number. 147621001-001-R-Rev3

Distribution:

[email protected]

Golder Associates

213

NI 43-101 TECHNICAL REPORT - KESTREL COAL MINE

ITEM 1. SUMMARY ... 7

ITEM 2. INTRODUCTION ... 9
2.1 Issuer ... 9
2.2 Terms of reference ... 9
2.2.1 Anglo Pacific Group Plc ... 9
2.2.2 Kestrel Mine ... 9
2.2.3 JORC Code ... 10
2.2.4 NI 43-101 Code ... 10
2.3 Sources of information ... 10
2.4 Site inspection ... 11

ITEM 3. RELIANCE ON OTHER EXPERTS ... 12
3.1 Source material ... 12
3.2 Limitations and cautionary statements ... 12
3.3 Exemptions ... 12
3.4 Effective date ... 14
3.5 Reliance on other experts ... 14

ITEM 4. PROPERTY DESCRIPTION AND LOCATION ... 15
4.1 Compliance exemption ... 15
4.2 Location ... 15
4.3 Mineral tenure ... 15
4.4 Issuer's interest ... 17
4.4.1 Surface title ... 17
4.4.2 Royalties ... 20
4.5 Operational policies ... 20
4.6 Other factors ... 21
4.6.1 Forecast revenue ... 21
4.6.2 Strategic cropping land ... 21
4.6.3 Native title ... 21

ITEM 5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ... 24
5.1 Compliance exemption ... 24
5.2 Physiography and vegetation ... 24
5.3 Access ... 24

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5.4 Climate ... 25
5.5 Infrastructure ... 26

ITEM 6. HISTORY ... 30
6.1 Prior ownership ... 30
6.2 Exploration and development history ... 30
6.3 Significant historical Resource and Reserve estimates ... 31
6.4 Production ... 32

ITEM 7. GEOLOGICAL SETTING AND MINERALISATION ... 34
7.1 Compliance exemption ... 34
7.2 Regional geological setting ... 34
7.3 Local geology ... 36

ITEM 8. DEPOSIT TYPES ... 41
8.1 Compliance exemption ... 41
8.2 Description of coal ... 41

ITEM 9. EXPLORATION ... 42
9.1 Compliance exemption ... 42
9.2 Historical exploration of other forms ... 42
9.3 Current exploration ... 42

ITEM 10. DRILLING ... 43
10.1 Compliance exemption ... 43
10.2 Historic drilling ... 43
10.2.1 1960s ... 43
10.2.2 1970s ... 44
10.2.3 1980s ... 45
10.2.4 1990s ... 46
10.3 Current drilling ... 46

ITEM 11. SAMPLE PREPARATION, ANALYSES AND SECURITY ... 47
11.1 Compliance exemption ... 47
11.2 Historic sampling ... 47
11.2.1 1960s ... 47
11.2.2 1970s ... 47
11.2.3 1980s and 1990s ... 48
11.3 Current sampling ... 48

ITEM 12. DATA VERIFICATION ... 49

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12.1 Compliance exemption ... 49
12.2 Verification ... 49

ITEM 13. MINERAL PROCESSING AND METALLURGICAL TESTING ... 50
13.1 Compliance exemption ... 50
13.2 Processing test work ... 50
13.3 Recovery estimates ... 50

ITEM 14. MINERAL RESOURCE ESTIMATES ... 51
14.1 Compliance exemption ... 51
14.2 Resource reporting code ... 51
14.3 Reported Resources ... 51
14.4 Supportive data ... 52

ITEM 15. MINERAL RESERVE ESTIMATES ... 54
15.1 Compliance exemption ... 54
15.2 Reserves reporting code ... 54
15.3 Reported Reserves ... 54

ITEM 16. MINING METHODS ... 56
16.1 Compliance exemption ... 56
16.2 Mining technique ... 56
16.3 Parameters relevant to mine design ... 56
16.4 Production ... 57
16.5 Mining fleet ... 57

ITEM 17. RECOVERY METHODS ... 59
17.1 Compliance exemption ... 59
17.2 Coal handling preparation plant ... 59
17.3 Historic recovery ... 59

ITEM 18. PROJECT INFRASTRUCTURE ... 61
18.1 Compliance exemption ... 61
18.2 Infrastructure and transportation ... 61

ITEM 19. MARKET STUDIES AND CONTRACTS ... 62
19.1 Compliance exemption ... 62
19.2 Markets ... 62
19.3 Contracts ... 63

ITEM 20. ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT ... 64
20.1 Compliance exemption ... 64

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20.2 Sustainable development 64
20.3 Community 65

ITEM 21. CAPITAL AND OPERATING COSTS 66

21.1 Compliance exemption 66
21.2 Capital costs 66
21.3 Operating costs 66

ITEM 22. ECONOMIC ANALYSIS 69

22.1 Compliance exemption 69
22.2 Royalties received 69
22.2.1 Historic royalties 69
22.2.2 Mine planning 70
22.2.3 Coal prices forecast 71
22.2.4 Production forecast 71
22.2.5 Royalty forecast 71

ITEM 23. ADJACENT PROPERTIES 73

23.1 Adjacent properties 73
23.2 Gregory Crinum 75
23.3 Ensham 76

ITEM 24. OTHER RELEVANT DATA AND INFORMATION 77

24.1 Coal mining and the Australian economy 77
24.2 Australian coal production 77
24.3 Commodity prices 78
24.3.1 Historical coal prices 78
24.3.2 Forecast coal prices 79

ITEM 25. INTERPRETATION AND CONCLUSIONS 81

ITEM 26. RECOMMENDATIONS 81

ITEM 27. REFERENCES 82

TABLES

Table 1: Resource and Reserve statement*, December 2013 (Source: Rio Tinto Limited, 2013) 7
Table 2: QCPL mineral tenure associated with Kestrel Mine (Source: IRTM, 2014) 17
Table 3: GRPL land ownership and related private royalty lots (Source: Current Title Search Department of Natural Resources and Mines, Queensland) 19
Table 4: Royalty payment structure (Source: modified after Queensland Government, 2012) 20
Table 5: Generalised quality for Kestrel Mine coking coal product (Source: Mutton, 2003) 41

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Table 6: Historical non-drilling exploration (Source: Queensland Government, 2014d) 42
Table 7: Historic drilling in the Emerald region (Source: QDEX and Kathage, 1989) 43
Table 8: Average coal quality from wash data for German Creek seam (Source: Galligan, 1976) 45
Table 9: Reported Coal Resources, 31 December 2013 (Source: Rio Tinto Limited, 2013) 51
Table 10: Average product coal quality at Kestrel Mine (Source: Queensland Government, 2003) 53
Table 11: Reported Coal Reserves, 31 December 2013 (Source: Rio Tinto Limited, 2013) 55
Table 12: Estimated yield as a function of annual production and saleable product (Source: AMS, 2013) 59
Table 13: Kestrel Mine 2012 sustainable development site report (Source: RTCA, 2012) 65
Table 14: Operating Cost Estimates for Kestrel Mine on a financial year basis 67
Table 15: APG historic royalties and coal production (Source: APG and Rio Tinto annual reports) 70
Table 16: Gregory Crinum Coal Resources by mining method and coal type (reported to JORC 2012) as at June 2013 (Source: BHP Billiton Limited, 2013) 75
Table 17: Gregory Crinum Marketable Coal Reserves by mining method and coal type (reported to JORC 2012) as at June 2013 (Source: BHP Billiton Limited, 2013) 75
Table 18: Forecast Australian coking coal prices on a US$/metric tonne basis (Source: Consensus Economics, 2014) 79
Table 19: Forecast Australian thermal coal prices on a US$/metric tonne basis (Source: Consensus Economics, 2014) 80

FIGURES

Figure 1: Kestrel Mine location 16
Figure 2: Kestrel royalty lots 18
Figure 3: Strategic cropping land trigger area 22
Figure 4: Land subject to Native Title (indication only) 23
Figure 5: Average rainfall and temperature statistics, Emerald (Source: Bureau of Meteorology, 2013) 25
Figure 6: Annual Rainfall, Emerald (Source: Bureau of Meteorology, 2013) 26
Figure 7: Aerial view of Kestrel mine site, including Kestrel extension 27
Figure 8: Aerial view of infrastructure at Kestrel mine 28
Figure 9: Aerial view of infrastructure at Kestrel extension 29
Figure 10: Historical JORC Mineral Resources and Ore Reserves (Source: Rio Tinto Limited, 2001 to 2013) 31
Figure 11: Historical annual production rates (Source: Rio Tinto Limited, 1999 to 2015) 32
Figure 12: Queensland sedimentary basins and known coal measures 35
Figure 13: Permian coal measures (Source: Mutton, 2003) 36
Figure 15: Surface geology over Kestrel Mine 38
Figure 16: Typical stratigraphic section east of Ti-tree fault (Source: Beeston, 2000) 39
Figure 17: Schematic of longwall mining technique (Source: Patriot Coal, 2014) 57
Figure 18: Schematic of continuous mining technique (Source: Patriot Coal, 2014) 57
Figure 19: Kestrel Mine coking coal export destinations for 2012-2013 62
Figure 20: Kestrel Mine thermal coal export destinations for 2012-2013 63

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Figure 21: Average coal export price (FOB) for Australia (Source: Queensland Government, 2013b and 2014e) ... 68
Figure 22: APG historic royalties and coal prices (Source: APG and Department of Natural Resources and Mines coal statistics, 2013b) ... 70
Figure 23: Forecast coal price (Source: Consensus Economics, 2014) ... 71
Figure 24: Kestrel mining leases in relation to those of the Gregory Crinum and Ensham mines ... 74
Figure 25: Australian coal production (1980 – 2012) (Source: EIA, 2014b) ... 77
Figure 26: Australian coal net exports/imports (1980 – 2011) (Source: EIA, 2014b) ... 78
Figure 27: Historical pricing for coal (Source: Consensus Economics, 2014) ... 78
Figure 28: Forecast Australian coking coal prices on a US$/metric tonne basis (Source: Consensus Economics, 2014) ... 79
Figure 29: Forecast Australian thermal coal prices on a US$/metric tonne basis (Source: Consensus Economics, 2014) ... 80

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NI 43-101 TECHNICAL REPORT - KESTREL COAL MINE

ITEM 1. SUMMARY

Kestrel Mine (originally known as Gordonstone Mine), is an underground coal mine located some 40 km north east of the township of Emerald in the Bowen Basin, central Queensland Australia. The mine extracts coal from the Permian-aged German Creek seam using a combination of longwall and continuous miner methods, providing high quality hard coking and thermal coals to market as a washed product. Expansion of the operation commenced in 2008 and is due for completion by the end of 2014 enabling Kestrel to increase its annual production forecast capacity to 5.7 Mt.

The mine is operated by Kestrel Coal Pty Limited under the direct management of Rio Tinto Coal Australia. The mine is a joint venture between Queensland Coal Pty Limited and Mitsui Kestrel Coal Investment Pty Limited, who hold 80% and 20% operational interests respectively.

Anglo Pacific Group Plc through its subsidiary Gordon Resources Pty Limited effectively owns a 50% right to surface land titles and associated coal royalties that cover a large proportion of Kestrel's mining license tenure (ML 1978, ML 70301, ML 70302 and ML 70330). Coal royalties are payable for all coal sold (on an ad-valorem basis) that originated in-situ from ground beneath the corresponding land surface title. The royalty is payable based on a standard scale as defined by the Queensland Government.

In the process of preparing this Technical Report, Gordon Resources made contact on 24 January 2014 with Kestrel Coal and requested access to the necessary data and an inspection of the Kestrel Mine. This request was refused on the basis that it was claimed supply of such information would risk confidentiality and is of a commercially sensitive nature. As such, data and information used in the generation of this Technical Report is reliant upon what information could be collected from public domain sources. It should be noted that not all the information, typically available to an owner/operator in preparing a Technical Report of this nature is available from public domain sources. Given this, Anglo Pacific Group is relying on an exemption under "Part 9, Section 9.2 Exemptions for Royalty or Similar Interests" of the "National Instrument 43-101 Standards of Disclosure for Mineral Projects" to limit its disclosure, whereby the Qualified Person is not required to complete a current site inspection of the property or provide information on those items in this report that necessitate data verification, inspection of documents, etc.

Rio Tinto Coal Australia prepared their most recent Resource and Reserve estimates for Kestrel Mine using the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. These results were published as part of their 2013 annual reporting requirements through the Australian Stock Exchange and Australian Investment and Securities Commission and are reproduced here as Table 1.

Table 1: Resource and Reserve statement*, December 2013 (Source: Rio Tinto Limited, 2013)

JORC Classification	Tonnes (Mt)	In-situ Reserves (Mt)	Marketable Reserves (Mt)	Marketable Coal Quality
				Calorific value (MJ/kg)	Sulphur (%)
Resource	Measured	-	-
	Indicated	106
	Inferred	36
Reserve	Proved		40	34	31.6	0.59
	Probable		95	79	31.6	0.59

Resources and Reserves are exclusive of each other

The Resources and Reserves provided in Table 1 are current; hence the effective date for this report is considered the Technical Report issue date of 30 January 2015. However it should be noted that these figures are based on the latest statement dated 31 December 2013 and will be affected during 2014 and 2015 by subsequent:

mine depletion or
Resource and/or Reserve update if completed in 2015.

30 January 2015

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NI 43-101 TECHNICAL REPORT - KESTREL COAL MINE

The Qualified Person would note that in terms of reference for the issuers use of this Technical Report that the Anglo Pacific Group will only receive a portion (50%) of available private coal royalties and that these royalties only apply to some 49% of the currently authorised Mining Lease tenure.

Annual private coal royalties paid to Anglo Pacific Group have over the past decade ranged from AUD$ 7.08 M to a high of AUD$ 41.9 M in 2008. Recent drops in coal prices and the ongoing development of the expansion program have been reflected in lowered royalty payments for 2012 and 2013 with payments averaging AUD$ 16.4 M per annum for this period.

Based upon the present life-of mine-plan production will cease in 2032. During the latter part of the mine life, less of the current mine design will be covered by land title agreements that see private coal royalties payable. As a consequence forecast revenues from this arrangement to Anglo Pacific Group shall diminish. Refusal by Kestrel Coal to provide detailed long term planning data makes forecast revenue productions difficult to estimate with accuracy.

30 January 2015
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ITEM 2. INTRODUCTION

The following section contains statements in respect of Item 2 of Form NI 43-101F1 – Technical Report.

2.1 Issuer

Anglo Pacific Group Plc (APG) is a publicly listed company (its existing Ordinary Shares are listed on the premium segment of the Official List and admitted to trading on both the London Stock Exchange's (LSE:APF) main market for listed securities and the Toronto Stock Exchange (TSX:APY). APG is focused on the provision of royalty financing derived from mining of natural resources.

The main objective of APG is to build a diversified and growing portfolio of royalties in order to generate long term cash flow for shareholders.

Golder Associates (UK) Ltd (Golder) was requested by APG to prepare on their behalf as the issuer, an independent Technical Report in relation to the Kestrel underground coal mine (Kestrel Mine), located in central Queensland, Australia.

This Technical Report was prepared in accordance with the following documents published by the Canadian Securities Administrators (CSA):

National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101, 2011a)
Form NI 43-101F1 – Technical Report (Form 43-101F1) (NI 43-101, 2011b)
NI 43-101CP (Companion Policy) (NI 43-101, 2011c).

This Technical Report was also prepared in accordance with "Prospectus Rules" made by the UK Financial Conduct Authority, the "Prospectus Directive" (2003/71/EC), the "Prospectus Regulations" (809/2004) and the "European Securities and Markets Authority recommendations for the consistent implementation of the European Commission's Regulation on Prospectuses No. 809/2004" (as updated by the European Securities and Market Authority on 23 March 2011).

2.2 Terms of reference

2.2.1 Anglo Pacific Group Plc

APG by way of its wholly owned subsidiary Gordon Resources Pty Limited (GRPL) has a royalty entitlement for a proportion of the coal sales made from the production output from the Kestrel Mine. Further detail in relation to this entitlement is made in section 4.4 of this Technical Report.

Golder has been informed by APG that this Technical Report will be incorporated in a prospectus to be published in connection with the Firm Placing and Placing and Open Offer of New Ordinary Shares of APG and the admission of the New Ordinary Shares to listing on the Official List and to trading on the LSE. In addition, this Technical Report will be used to file an Annual Information Form on the CSA's System for Electronic Document Analysis and Retrieval (SEDAR), or other prescribed documents under National Instrument 43-101 and may be incorporated in a future prospectus to support capital raising efforts on both the LSE's main market for Listed Securities and the TSX.

2.2.2 Kestrel Mine

Kestrel Mine is operated by Kestrel Coal Pty Limited (Kestrel Coal), a subsidiary of Rio Tinto Coal Australia Pty Limited (RTCA), and its Kestrel joint venture (JV) partners, Queensland Coal Pty Limited (QCPL) and Mitsui Kestrel Coal Investment Pty Limited (MKCI). QCPL hold 80% and MKCI 20% interests in the operation respectively. QCPL operates as a subsidiary of the Rio Tinto group. MKCI is a subsidiary of Mitsui Coal Holdings forms part of the Mitsui group of companies. RTCA a wholly-owned subsidiary of Rio Tinto is a publicly listed company on the Australian Stock Exchange (ASX) and LSE.

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2.2.3 JORC Code

RTCA report "Coal Resources" and "Coal Reserves" for the Kestrel Mine to the ASX under the provisions of the 2012 edition of the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Coal Resources and Coal Reserves prepared under the JORC Code are considered an "acceptable foreign code" under Part 1 – Definitions and Interpretation of National Instrument 43-101 and can be considered as equivalent Mineral Resources and Mineral Reserves.

The JORC Code demands in the context of complying with its Principles that comment on the relevant sections of Table 1 should be provided on an "if-not why-not" basis within the Competent Person's documentation and must be provided where required according to the specific requirements of Clauses 19, 27 and 35 (of the JORC Code) for significant projects in a Public Report. This is to ensure that it is clear to the investor whether items have been considered and deemed of low consequence or have yet to be addressed or resolved.

2.2.4 NI 43-101 Code

National Instrument 43-101 -- Standards of Disclosure for Mineral Projects ("NI 43-101") contains certain requirements relating to the use of mineral resource and mineral reserve categories of an "acceptable foreign code" (as defined in NI 43-101) in "disclosure" (as defined in NI 43-101) made by Anglo Pacific Group with respect to a "mineral project" (as defined in NI 43-101), 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 by the Ontario Securities Commission, the information contained herein with respect to Kestrel Mine 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 in NI 43-101) 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 43-101).

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 43-101F1 technical report will be filed to support the disclosure based upon such exemption.

2.3 Sources of information

ASX listing rules do not require mine operators such as RTCA to disclose detailed information on their operations to either the public or companies holding a royalty interest in properties unless legally mandated to do so.

Furthermore, the JORC Code notes that when providing information as part of Table 1 (as defined in JORC, 2012) that it is the responsibility of the Competent Person (as defined in JORC, 2012) to consider all criteria listed in Table 1 and any additional criteria that should apply to the study of a particular project. It also notes that it will be appropriate to exclude from a Public Report some commercially sensitive information. This is a decision that is made by the company issuing the Public Report and should be made in accordance with relevant corporation's regulations such as the Corporations Act 2001 and ASX listing rules and guidance notes. Where information is excluded the report is to provide summary information and context for the purposes of informing investors and advisers.

The Qualified Person (QP) in preparation of this Technical Report and examination of historically reported Resources and Reserves (refer section 6.3) notes that no material changes are evident in classification and tonnages reported annually for the Kestrel Mine. It is inferred on this basis the decision made by RTCA to exclude Table 1 (as defined JORC, 2012) from their Public Reports.

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The QP has had to rely on information that was searched for and procured through the public domain in the preparation of this Technical Report. Data provided by APG is limited to past royalty payments and forecast royalty payments for the ensuing 12 months supplied on a quarterly basis.

A comprehensive and complete list of all reference material used in the preparation of this Technical Report is included in Item 27. References are cited throughout the body of the report to clearly indicate all source material used in developing and expressing the opinion of the QP.

2.4 Site inspection

As access to the mine site, site personnel, records and project data held by Kestrel Coal was denied in the preparation of this Technical Report. Mr David Arnott in the role of QP has been reliant on data available in the public domain to complete its preparation.

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ITEM 3. RELIANCE ON OTHER EXPERTS

The following section contains statements in respect of Item 3 – Reliance on Other Experts of Form 43-101F1 – Technical Report.

3.1 Source material

As previously outlined this report has been reliant on publicly available data. Only a small amount of historical base data, collected during the initial regional exploration of the area was available for assessment. All other base data collected and utilised by both RTCA and prior owners in the development of Resources and Reserves for the Kestrel Mine is unavailable for data verification purposes.

A comprehensive and complete list of all reference material used in the preparation of this Technical Report is included in Item 27. References are defined throughout the body of the report to clearly indicate all source material used.

Opinion offered by the QP is clearly communicated in writings to differentiate between the work of others and his own professional opinion.

3.2 Limitations and cautionary statements

In accordance with the requirements of National Instrument 43-101 surrounding disclosure of technical information in respect of mineral projects, the information contained within this Technical Report, pertaining to Kestrel Mine is sourced from information publicly available. This information has included technical, financial and legal declaration which due to their source and format has been taken in good faith.

Data verification and detailed analysis of information underlying the reported Mineral Resources and Mineral Reserves has not been possible. As such, a limited disclaimer of responsibility is made by the QP in the preparation of these and associated items.

3.3 Exemptions

"Part 9, Section 9.2 Exemptions for Royalty or Similar Interests" of the "National Instrument 43-101 Standards of Disclosure for Mineral Projects" exempts a royalty holder, who has requested but not received access to the necessary data from the owner or operator and is not able to obtain the necessary information from the public domain, from the requirement to perform an inspection on the property and to complete those items under Form 43-101F1 that require data verification, inspection of documents, or personal inspection of the property to complete those items.

APG, through its subsidiary company GRPL made contact with RTCA on 20 January 2014 requesting access to the site, personnel and, data used in the preparation of published Resources and Reserves for the Kestrel Mine. A response to this request was received on 24 January 2014, with refusal made on the grounds that the data supporting Resources and Reserves for the Kestrel Mine was confidential and commercially sensitive. The request for a site visit was also denied.

The QP is limited in the amount of information and details they can disclose and relies exclusively upon general information available in the public domain. Therefore, this Technical Report has been prepared on the basis of the exemption in Part 9, Section 9.2 of National Instrument 43-101 Standards of Disclosure for Mineral Projects.

Accordingly, APG has requested but has not received access to the necessary date from RTCA and is not able to obtain the necessary information from the public domain for the following:

The status of exploration, in addition to the nature and extent of all relevant exploration work other than drilling.
The approach or concepts in relation to drilling, sampling and recovery or the location of all boreholes, their types, accuracy and reliability in defining Resources for the Kestrel Mine.
Examples of drill sections through the mineral deposit.

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The type and location of bore holes, drilling procedures, sampling procedures or sample recovery during drilling programs.
Any drilling, sampling, or recovery factors that could materially impact the accuracy and reliability of the results.
Interpretation of all relevant drilling results.
Any significant mineralised zones encountered on the property, including a summary of the surrounding rock types, relevant geological controls, and the length, width, depth, and continuity of the mineralisation, together with a description of the type, character, and distribution of the mineralisation.
The approach or concepts in relation to sample preparation, analysis and security in defining Resources for the Kestrel Mine.
Sample preparation methods and quality control measures employed before dispatch of samples to an analytical or testing laboratory, the method or process of sample splitting and reduction, and the security measures taken to ensure the validity and integrity of samples taken.
Relevant information regarding sample preparation, assaying and analytical procedures used, the name and location of the analytical or testing laboratories, the relationship of the laboratory to the issuer, and whether the laboratories are certified by any standards association and the particulars of any certification.
A summary of the nature, extent, and results of quality control procedures employed and quality assurance actions taken or recommended to provide adequate confidence in the data collection and processing.
The nature and extent of testing and analytical procedures, and a summary of the relevant results.
The basis for any assumptions or predictions regarding recovery estimates.
The degree to which the test samples are representative of the various coal types across the deposit as a whole.
Any processing factors or deleterious elements that could have a significant effect on potential economic extraction.
Sufficient discussion of the key assumptions, parameters, and methods used to estimate the Mineral Resources, for a reasonably informed reader to understand the basis for the estimate and how it was generated.
A general discussion on the extent to which the Mineral Resource estimates could be materially affected by any known environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant factors.
Sufficient discussion and detail of the key assumptions, parameters, and methods used for a reasonably informed reader to understand how the Competent Person converted the Mineral Resources to an Ore Reserve.
The extent to which the Ore Reserve estimates could be materially affected by mining, metallurgical, infrastructure, permitting, and other relevant factors.
Geotechnical, hydrological, and other parameters relevant to mine plans.
Available information on test or operating results relating to the recoverability of the coal and amenability to the processing methods.
Permits acquired to conduct the work proposed for the property, and if the permits have been obtained.
Back-in-rights payments or other agreements and encumbrances to which the Kestrel Mine is subjected, outside those directly relating to APG as Kestrel Coal has claimed supply of such information would risk confidentiality and is commercially sensitive.
Identification of any contracts that are required for property development, including mining, concentrating, smelting, refining, transportation, handling, sales and hedging, and forward sales contracts or arrangements and their status.
A summary of capital and operating cost estimates, with the major components set out in tabular form.

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An economic analysis for the project.
Requirements and plans for waste and tailings disposal, site monitoring, and water management both during operations and post mine closure.
Project permitting requirements, the status of any permit applications, and any known requirements to post performance or reclamation bonds.
The extent of environmental liabilities to which the Kestrel Mine is subject is also unable to be commented upon.
Exact detail on availability and sources of power, water, mining personnel, potential storage areas, potential waste disposal areas and potential processing plant sites.

3.4 Effective date

The most recent Resources and Reserves reported by RTCA and used in this report have an effective date of 31 December 2013. Consideration should be made that since the time of their publication a number of factors may have resulted in their modification. This could include:

Depletion of Mineral Reserves through continued underground mining.
Reclassification of either Resource or Reserve categories based upon further work undertaken since their initial publication.

3.5 Reliance on other experts

RTCA’s 2013 published Resources for Kestrel Mine was signed off by Mr Richard Ruddock. Mr Ruddock is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) with Chartered Professional (CP) standing and would be eligible to be considered as a QP for authorising Mineral Resources.

RTCA’s 2013 published Reserves for Kestrel Mine was signed off by Mr Andrew Swiericzuk. Mr Swiericzuk is a member of the same professional association yet does not hold CP accreditation, making him unsuitable to be considered as a QP; however Golder considers Mr Swiericzuk to hold the necessary professional membership, qualifications and relevant experience to sign off as a Competent Person on the stated Reserves under the JORC Code which is considered an “acceptable foreign code”.

At the time of the Competent Persons signing off on reported Coal Resources and Coal Reserves under the JORC Code each was a fulltime employee of RTCA.

It should be noted that the previous 2012 Reserve estimate reported by RTCA for the Kestrel Mine was signed off by Mr Gregor Carr. Mr Carr is both a member of the AusIMM and has CP standing which would make him eligible as a QP. Historical Reserves appear to be reported on the basis of converting Resources and depletion of existing Reserves through mining.

This Technical Report has been prepared by a Golder employee team of geologists and mining engineers under the supervision and review of Mr David Arnott. The overall responsibility for the preparation of this report is retained by Mr Arnott, who satisfies the requirements of a QP as defined in National Instrument 43-101. Mr Arnott has had to rely on the work of Mr’s Ruddock and Swiericzuk for the published Mineral Resources and Mineral Reserves in the preparation of this technical report.

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ITEM 4. PROPERTY DESCRIPTION AND LOCATION

The following section contains statements in respect of Item 4 – Property Description and Location of Form 43-101F1 – Technical Report.

4.1 Compliance exemption

APG is relying on an exemption under “Part 9, Section 9.2 Exemptions for Royalty or Similar Interests” of the “National Instrument 43-101 Standards of Disclosure for Mineral Projects” to limit disclosure in this instance.

APG, as a royalty holder for a portion of the Kestrel Mine, is not directly involved in operational aspects or management of the mine. APG through its subsidiary company GRPL made contact with Kestrel Coal on 24 January 2014 requesting access to relevant data and a site visit to the Kestrel Mine. This request was refused and as such, data and information utilised in the generation of this Technical Report is solely reliant upon what could be collected from public domain sources (see section 3.5).

Golder in the preparation of this section of the Technical Report is unable to comment on back-in-rights payments or other agreements and encumbrances to which the Kestrel Mine is subjected, outside those directly relating to APG as Kestrel Coal has claimed supply of such information would risk confidentiality and is commercially sensitive. In addition the extent of environmental liabilities to which the Kestrel Mine is subject is also unable to be commented upon.

4.2 Location

The Kestrel Mine is an underground coal mine operated by RTCA, located (23°14′ S, 148°21′E) some 40 km north east of the township of Emerald in the Bowen Basin, central Queensland Australia (refer Figure 1). Figures included as part of this Technical Report that include locations, utilise WGS 1984 UTM mapping grid, located in Zone 55S.

4.3 Mineral tenure

Mineral tenure associated with the Kestrel Mine was granted by the Queensland Government Department of Natural Resources and Mines. Queensland coal mines such as the Kestrel Mine operate under a mineral tenure termed a mining lease (ML). A ML is granted for mining operations and:

entitles the holder to machine-mine specified minerals and carry out activities associated with mining or promoting the activity of mining
is not restricted to a maximum term, this being determined in accordance with the amount of Reserves identified and the projected mine life
can be granted for those minerals specified in either a prospecting permit, exploration permit for coal (EPC) or mineral development licence (MDL) held prior to the grant of the lease.

The Kestrel Mine operation is carried out over a number of mining leases. ML 1978 being 5 839.262 hectares (ha) in area, was the primary ML upon which coal production was founded for Kestrel Mine. Site infrastructure is located across the northern portion of this tenement area. This ML was granted on 12 April 1990 to QCPL (as principal holder for the extraction of coal) and is due to expire on 30 April 2041 (IRTM, 2014).

QCPL also holds three extensions to the west and south west of ML 1978, also in the form of mining leases. ML 70301, 70302 and 70330 increase the total holding area for the mining operation to 14 505.332 ha. Application was made (4 October 2012) to further extend the mining lease area by an additional 2 468 ha through conversion of two Mineral Development Licences (MDL 178 and MDL 345) and a portion of MDL 182 into the Kestrel Extension #4 mining lease (ML 70481), with this yet to be granted.

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The MDLs associated with Kestrel Mine only allows the holder to undertake geoscientific programs (e.g. drilling, seismic surveys), mining feasibility studies, metallurgical testing and marketing, environmental, engineering and design studies to evaluate the development potential of the defined resource. They are granted for a fixed period of up to 5 years where there is a significant mineral occurrence of possible economic potential and can be renewed upon expiration.

Table 2 provides a tabulation of the various tenements that incorporate the Kestrel Mine area, with Figure 1 depicting the same spatially.

Table 2: QCPL mineral tenure associated with Kestrel Mine (Source: IRTM, 2014)

Tenure		Status	Name	Date			Area (ha)
Type	No.			Lodged	Granted	Expires
ML	1978	Granted	Kestrel	06-Feb-1985	12-Apr-1990	30-Apr-2041	5 839.3
ML	70301	Granted	Kestrel Extension #1	09-Sep-2002	25-Sep-2003	30-Sep-2033	3 579.0
ML	70302	Granted	Kestrel Extended #2	09-Sep-2002	22-Nov-2004	30-Nov-2034	79.8
ML	70330	Granted	Kestrel Extension #3	19-May-2004	11-Jun-2009	30-Jun-2039	9.3
ML	70481	Application	Kestrel Extension #4	04-Oct-2012			2 468.0
MDL	345	Granted	Kestrel Extension #5	25-Oct-2002	07-Nov-2003	30-Nov-2013	629.0
MDL	182	Granted		24-Feb-1995	25-Nov-1996	30-Nov-2016	12 608.3
MDL	176	Granted		21-Dec-1994	19-Oct-1995	31-Oct-2015	852.3

4.4 Issuer's interest

4.4.1 Surface title

A proportion of the lands that make up the Kestrel Mine mineral tenure are owned by GRPL in a one-half share (50%) tenant in common arrangement. Title searches through the Department of Natural Resources and Mines determined that these lands are held as Estate in Fee.

All land titles are located within the County of Talbot and Parish of Yamala under the jurisdiction of the Central Highlands local government.

Figure 2 provides by way of illustration of the GRPL land title ownership boundaries relative to the authorised Kestrel Mine ML tenure, with Table 3 giving further clarity (title registration, deed of grant, upper limit where private royalty agreements are established and land area), around each of the individual GRPL land property titles.

Of the total authorised Kestrel Mine Mining Lease tenure area (ML 1978, ML 70301, ML 70302 and ML 70330) approximately 49% (~4 650 ha) of the surface title is held by GRPL as a tenant in common. Should application to ML 70481 be granted this relationship will reduce to approximately 41%.

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ANGLO PACIFIC GROUP PLC

KESTREL ROYALTY LOTS

LEGEND

Coal Mine Site

Easement

Mining Lease

Lot Boundary

Royalty Lot

NOTES

Imagery copyright Nearmap 2014, captured 29th May 2011.
Tenement information supplied by IRTM.
Inset Service Layer Credits: Sources: Esri, DeLorme, NAVTEQ, USGS, Intermap, IPC, NRCAN, Esri Japan, METI, Esri China (Hong Kong), Esri (Thailand), TomTom, 2013

6 0.75 1.5

SCALE (at A4): 1:80,000

WGS 1984 UTM Zone 55S

PROJECT: 147621001

DATE: 29 JAN 2015

DRAWN: MDC

CHECKED: AR

FIGURE

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File Location: R:\01 Client\Golder\147621001\Programs\ArcGIS\Final\147621001-001-R-Rev0-F002-Kestrel Royalty med

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Table 3: GRPL land ownership and related private royalty lots (Source: Current Title Search Department of Natural Resources and Mines, Queensland)

Lot Number	Registered Title Plan (RP)	Basements, Encumbrances and Interests			Lower depth limit (RL A.H.D.)	Approximate area beneath depth limit (ha)	Relative % of title area beneath depth limit within Kestrel ML area
		Rights and interests reserved to Crown by Deed of Grant No.	Lease No.	Transfer No.
6	615382	10306211 (pp19)	601026448 (C439164)	706359659	155	1 036	51
8	615390	10356031 (pp89)	601026448 (C439164)	706359659	160	2 072	84
10	615394	10312044 (POR 1)	601026448 (C439164)	706359659	170	259	68
14	615398	10312047 (POR 3)	601026448 (C439164)	706359659	155	259	100
16	615398	10312046 (POR 4)	601026448 (C439164)	706359659	155	259	100
18	615398	10312040 (POR 5)	601026448 (C439164)	706359659	150	221	100
20	615398	10312041 (POR 6)	601026448 (C439164)	706359659	150	147	100
22	615386	10308156 (POR 19A)	601026448 (C439164)	706359659	150	1 036	100
24	615631	10312042 (POR 7)	601026448 (C439164)	706359659	170	260	100
26	615396	10312043 (POR 9)	601026448 (C439164)	706359659	145	259	100

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4.4.2 Royalties

Mining royalties represent payments to the owners of resources for the rights to extract them. As the State owns all petroleum and gas and most minerals, royalties on these commodities are ordinarily paid to the State Government.

Royalty rates are prescribed by the Queensland Government Minerals Resources Act 1989 Regulations. The royalty payable is determined on an ad valorem (value) basis, calculated as a percentage of the value of the coal mined and then sold (irrespective of the product type). No consideration of mining costs is required in the determination of the royalty. Table 4 provides details on the rate calculation as prescribed by the Queensland Government for the payment of royalties.

Table 4: Royalty payment structure (Source: modified after Queensland Government, 2012)

Average price (AUD$) per tonne of coal for period	Rate	Rate received by APG
Up to and including $100	7%	3.5%
Over $100 and up to and including $150	First $100: 7%	3.5%
	Balance: 12.5%	6.25%
More than $150	First $100: 7%	3.5%
	Next $50: 12.5%	6.25%
	Balance: 15%	7.5%

Each GRPL land title (as defined in Table 3) carries with it rights and interests reserved to the Crown by deed of grant. Between 1877 and 1879 these royalty lots were granted, alienating from the Crown the right to the coal royalty and accordingly carrying with it the right to private coal royalties (Barlow Jonker, 1999). As GRPL remains the registered owner in freehold of the "said land" they are as such entitled to the royalty.

The Queensland Government can assign the mining rights through lease to another entity for land surface title held by another party without their consent. Since 10 June 1982 GRPL's land titles were leased (Lease No. 601026448), for a period of 300 years, to United Plantations (Australia) Pty Limited (UPAL). Transfer of this lease was then made on 14 February 2003 from UPAL to QCPL and MKCI in their present 80:20 JV partnership arrangement for mining operations carried out at Kestrel.

As GRPL has an effective 50% ownership of the surface title through their tenant in common relationship, with the remaining percentage held by another three financial institutions they only receive one half of the amount prescribed by statute (ASIC, 2014).

The coal royalties paid by Kestrel Coal (as the JV entity to QCPL and MKCI) to GRPL is only for coal mined and sold that was originally located in-situ beneath land title held by GRPL. Any coal sold that does not originate at depth from beneath the leased ground does not receive a royalty payment. In the same fashion any coal mined from beneath the leased area that is not sold also does not receive a royalty payment.

4.5 Operational policies

Coal mines operating in Queensland such as the Kestrel Mine are legislated by the State and Federal Governments. Operational policies that Kestrel Mine would operate under providing guidance to the operator and communities include:

Mineral Resources Act 1989
Coal Mining Safety and Health Act 1999
Native Title Act of 1993
Water Act 2000
Environmental Protection Act 1994.

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Please note that the absence of a policy from this list does not indicate there is no current policy on that issue.

4.6 Other factors

4.6.1 Forecast revenue

Advancement of mining operations at Kestrel Mine can only be discussed in general terms due to crucial mine planning information not being made available for this study.

As discussed previously (refer section 4.4) APG receives royalties from Kestrel Coal for coal sold that was mined beneath ground under which it has surface title. As these titles do not cover the full extent of the Kestrel ML there are areas for which they may equally receive no royalty.

The distribution of royalty ground is such that as mining development moves to the south west then the opportunity for APG to receive royalties will diminish, particularly in the later portion of the life-of-mine-plan (LOMP).

4.6.2 Strategic cropping land

A search of the Queensland Government records (IRTM, 2014) revealed that portions of all Kestrel Mine tenements are designated as Strategic Cropping Land (SCL) and fall within the Western Cropping trigger area (refer Figure 3).

SCL is legislated by the state government and is an attempt to protect Queensland best cropping land from development that will have an adverse impact on the productive capacity of the land. As the Kestrel Mine tenements are located over a trigger area, RTCA would be required to undertake an on-ground assessment to enable refining of the SCL area should they propose any surface development. Consideration is also required to assess subsidence from underground mining and its impact on the surface. Golder cannot confirm to what level RTCA have undertaken SCL studies over the Kestrel Mine tenements.

4.6.3 Native title

Investigation of the IRTM website identified that portion of the Kestrel Mine tenement is indicated as land "subject to Native Title" (refer Figure 4). This essentially means that the Native Title status is unclear and may or may not result in a claim being made should an investigation be undertaken and determination were to be made.

Presently two applications for Native Title exist in the Kestrel Mine region, the first with the Western Kangoulu People whom lodged an application on 9 May 2013 and the second with the Bidjara People #7 lodged 15 November 2012.

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ITEM 5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

The following section contains statements in respect of Item 5 – Accessibility, Climate, Local Resources, Infrastructure and Physiography of Form 43-101F1 – Technical Report.

5.1 Compliance exemption

APG is relying on an exemption under "Part 9, Section 9.2 Exemptions for Royalty or Similar Interests" of the "National Instrument 43-101 Standards of Disclosure for Mineral Projects" to limit disclosure in this instance.

Golder in the preparation of this section of the Technical Report is unable to comment in exact detail on availability and sources of power, water, mining personnel, potential storage areas, potential waste disposal areas and potential processing plant sites. Kestrel Coal has claimed supply of such information would risk confidentiality and is commercially sensitive.

5.2 Physiography and vegetation

Kestrel Mine is situated at an altitude of approximately 200 m above mean sea level (amsl) on gently undulating land (170 m to 220 m amsl). The mine site is located in the catchment of the Nogoa River (located to the south), which flows into the Mackenzie River in the Fitzroy River basin, draining into the Coral Sea at Keppel Bay in the vicinity of Rockhampton. Other than mining the predominant land use is agricultural, with focus on livestock grazing and/or crops which include cotton, grains, citrus and grapes.

The mine site is located on Gordon Downs farm ("Gordon Downs"), a significant property (11 729 ha) which historically produced grains and was acquired by the Kestrel JV in 2002. The land is dominated by rich arable basalt soils and also has some significant areas of native Queensland blue grass pastures. Since July 2003, the North Australian Pastoral Company Pty Limited (NAPCO) has leased Gordon Downs for feeding livestock on forage crops and pastures. NAPCO is one of Australia's largest beef producers with a herd of over 180 000 situated in numerous cattle stations some 6 000 head located on Gordon Downs depending on the season (NAPCO, 2014).

5.3 Access

The Kestrel Mine is located approximately 40 km north east of Emerald and 23 km south of Tieri in central Queensland, some 3 km south of the Lilyvale Road.

Emerald provides the main service center to the mining operation. Emerald is a small regional city with a population of 16 666 people and Tieri, a town of 2 012 people (Australian Bureau of Statistics, 2013).

The Kestrel Mine is accessed along a combination of sealed national and local roads.

Total travel time (by road) from Brisbane to the mine site is approximately 12 hours over a distance of approximately 950 km. Alternatively many personnel access the site via either fly-in fly-out (FIFO) (Brisbane to Emerald) then drive to site, or drive-in drive-out (DIDO) (Mackay to Kestrel Mine).

The mine is also approximately 354 km by rail from the port of Gladstone (Gordon, 2002).

Satellite imagery depicts a small runway close to the mine site, indicating potential access to the site via small aircraft. Details about this airstrip or its use were not publicly available.

A rail loop facility exists on the northern limit of ML 1978 servicing coal transportation from the mine site to port.

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5.4 Climate

The climate in the vicinity of Kestrel Mine is classified as sub-tropical where the summer is warm and humid and the winter is considered mild. Average temperatures range between 21.3 to 34.3°C during summer and 8.9 to 25.2°C in winter (refer Figure 5). This information is based on daily average data collected at Emerald Airport from 1992 to 2013 (Bureau of Meteorology, 2013).

Figure 5: Average rainfall and temperature statistics, Emerald (Source: Bureau of Meteorology, 2013)

The majority of rain falls during the summer months (December to March), often in the form of short duration thunderstorms. Precipitation is not reliable and both droughts and flooding occur in the region. The average monthly rainfall throughout the year ranges from 14.3 mm during the cooler months of winter through to 90.3 mm in the warmer summer (refer Figure 5).

Infrequently, catastrophic rainfall occurs (i.e. 1 in 100 year event); with dumping of approximately 120 mm/day and in excess of 260 mm/month being recently recorded (2010). These events, although rare, have had significant impact on the mining operations and should be considered given the proximity of the Nogoa floodplain. Flooding was experienced in the Bowen Basin region in January 2008, however whilst the Kestrel Mine, which operates all year round, was not flooded, the operation was closed for a week due to difficulties in employees gaining access from local population centres. Severe flooding occurred across Queensland in December 2010 (refer Figure 6) and had widespread effects across the Bowen Basin. This resulted in Rio Tinto declaring force majeure on coal sale contracts from Kestrel on 29 December 2010 (Rio Tinto, 2010b) due to access via roads and rail networks being cut. The force majeure remained in place for more than three weeks. Force majeure was again declared by Rio Tinto on coal sale contracts from Kestrel on 30 January 2013, due to damage to the Blackwater rail system by a tropical cyclone.

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Figure 6: Annual Rainfall, Emerald (Source: Bureau of Meteorology, 2013)

5.5 Infrastructure

Satellite imagery was examined by Golder and used to indicate the interpreted mine infrastructure at the Kestrel Mine (refer Figure 7, Figure 8 and Figure 9, image date 29 May 2011). The original Kestrel Mine and the Extension can both be seen. Google Earth™ images show a more recent image from 28 June 2013 which indicates the near completed Kestrel Mine Extension.

Golder interpreted (refer Figure 7) two circular areas seen on the image as run-of-mine (ROM) stockpiles next to each of two portals.

A large building south west of the interpreted ROM stockpile at the Kestrel Mine (refer Figure 8) site is most likely the coal handling and processing plant (CHPP). In the same image elongated stockpiles of what looks like the resulting product coal are located close to a railway loop which can be seen running at the Kestrel Mine. An interpreted handling station is located on the railway line where product coal would be loaded for transportation to the Port of Gladstone. Coal appears to be moved around the processing facilities via a series of conveyor belts. Tailings storage facilities also appear to be located to the south east of processing facilities.

The Kestrel Extension (refer Figure 9) was completed in 2013 to support an additional 20 years mine life. This included construction of two new mine access ports and associated surface infrastructure and the upgrading of the CHPP, rail system and overland conveyor system to support an annual production of 5.7 Mt per annum (RTCA, 2008). The majority of this would have been completed at the time of the satellite image shown in Figure 9.

No specific information is available regarding sources of water, power or mining personnel. Due to the proximity of the mine to local township of Emerald, no supply issues of power or personnel are anticipated. Water management may create issue in times of drought or extreme flooding, although most mine sites in the region have re-evaluated protocols after severe weather events experienced in the last 10 to 15 years and increased rigour required in meeting environmental compliance with regard to water discharge.

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AERIAL VIEW OF KESTREL MINE SITE INCLUDING KESTREL EXTENSION

NOTES: 1. Analytic (A)uright Reverses 2014, captured 296 Mins 2011, 1000 Mins 2011, 1000 Mins 2011, 1000 Mins 2011, 1000 Mins 2011, 1000 Mins 2011, 1000 Mins 2011, 1000 Mins 2011, 1000 Mins 2011, 1000 Mins 2011, 1000 Mins

SCALE (at A4) 1:59,000
WGS 1984 UTM Zone 505

PROJECT: 147621001
DATE: 29 JAN 2015
DRAWN: MOC
CHECKED: AR
FIGURE 7

240

[0,1] $\mathrm{N}_{2}$ - $\mathrm{NH}_4$ - $\mathrm{NH}_4$ - $\mathrm{NH}_2\mathrm{H}$ - $\mathrm{NH}_2\mathrm{H}$ - $\mathrm{NH}_2\mathrm{H}$ - $\mathrm{NH}_2\mathrm{H}$ - $\mathrm{NH}_2\mathrm{H}$ - $\mathrm{NH}_2\mathrm{H}$ - $\mathrm{NH}_2\mathrm{H}$ - $\mathrm{NH}_2\mathrm{H}$ - $\mathrm{NH}_2\mathrm{H}$ - $\mathrm{NH}_2\mathrm{H}$ - $\mathrm{NH}_2\mathrm{H}$ - $\mathrm{NH}_2\mathrm{H}$ - $\mathrm{NH}_2\mathrm{H}$

NI 43-101 TECHNICAL REPORT ON KESTREL COAL MINE, QLD AUSTRALIA

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AERIAL VIEW OF INFRASTRUCTURE AT KESTREL EXTENSION

NOTES

Imagery copyright Nearmap 2014, captured 29th May 2011.
Inset Service Layer Credits: Sources: Esri, DeLorme, NAVTEQ, USGS, Intermap, IPC, NRCAN, Esri Japan, METI, Esri China (Hong Kong), Esri (Thailand), TomTom, 2013

FIGURE

File Location: RI 01 Client/Golden147621001/Programs/ArcGIS/Final 147621001-001-R-Rev5-F008-Site Location.mcd

NI 43-101 TECHNICAL REPORT - KESTREL COAL MINE

ITEM 6. HISTORY

The following section contains statements in respect of Item 6 – History of Form 43-101F1 – Technical Report.

6.1 Prior ownership

In 1982 Denham Coal Management acquired authority to prospect ATP 389C over Kestrel. In 1987 the Atlantic Richfield Company (ARCO) invested in the project acquiring 80% of Kestrel with Mitsui holding the remaining 20% interest.

The mining lease application ML 1978 was granted over Kestrel in 1990, with mining operations (originally known as Gordonstone Mine) commencing in 1992.

In February 1999 RTCA purchased ARCO's 80% interest for US$150 million. The mine was redeveloped and recommenced production in June 1999, now operating as Kestrel Mine supplying thermal and metallurgical grade coal products (RTCA, 2014).

6.2 Exploration and development history

To summarise the historic development of the project it is necessary to discuss to the previous estimates of coal for the deposit and the region. All tonnages and classifications reported in this section are for historic reference and are summarised from previous work reported by Galligan, 1976. These estimates are no longer current and were not completed under JORC 2004 or 2012 reporting requirements. Some predate the JORC Code altogether and some include regional reports that only partial cover the current mine and royalty areas.

Historical drilling in the Emerald region to gain a regional view of the Coal Resources within the German Creek Formation was undertaken by the Queensland Mines Department in the 1970s. Four drilling programs were completed during this time frame. The first three programs were designed to give a regional understanding of the Permian aged geology while the fourth drilling program was designed to reduce the borehole spacing to approximately 2 km. This was with the view of bringing the Coal Resources to an "indicated" status, a term that pre-dates current Coal Resource reporting standards such as the JORC Code. These drilling programs are further described in section 9.2.

Based on the first three phases of drilling and coal testing work in the Emerald area, the Department of Mines estimated Indicated Resources "of raw coal in-situ" within the German Creek seam comprise 570 Mt of coking coal and 155 Mt of marginal coking coal and 85 Mt of non-coking coal". The resources of raw coal in-situ were calculated only where the German Creek seam thickness exceeds 1.5 m and the area included in the resource estimation extended as far north as the Oaky Creek area and beyond the boundary of the present tenements relevant to this Technical Report. Small (unspecified tonnage and quality) resources of non-coking coal and marginal coking coal were also defined as Inferred in the Corvus seam.

Resources within the German Creek seam were split into four blocks based on the coking potential of the coal (Note the tonnes for resource potential were publically released by the government mines department prior to any formal resource reporting code. The tonnages listed cover an area larger than the current Kestrel lease, are no longer current and are not compliant to either the present JORC or NI 43-101 reporting codes. They are included for historical reference only.

A – 2.95 m thick, 87 km², 375 Mt coking coal
B – 3.04 m thick, 45.5 km², 195 Mt, coking coal
C – 3.00 m thick, 36 km², 155 Mt, marginally coking coal
D – 2.97 m thick, 19 km², 85 Mt, non-coking coal.

Several boreholes were also drilled to better delineate the German Creek Seam (Galligan, 1976). The program comprised 22 boreholes drilling a total of 4 388 m of which 2,819 m were cored (Galligan, 1976). It should be noted that as this was a regional drilling program and not all these boreholes were drilled on what

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is now covered by the Kestrel Mine licences. The Mines Department later conducted stratigraphic drilling which included the Rangal Coal Measures.

Since Rio Tinto's acquisition of Kestrel exploration drilling has continued. As of 2001 approximately 1 000 boreholes had been drilled across the deposit. Information related to Kestrel's exploration programs is limited due to a lack of publicly available information.

6.3 Significant historical Resource and Reserve estimates

Coal Resources and Coal Reserves have been reported in accordance with the relevant JORC codes, that is, reports submitted from 2001 up to and including 2003 were reported in accordance with JORC 1999, from 2004 up to and including 2012 were reported in accordance with JORC 2004 and the most recent 2013 figures reported in accordance with JORC 2012.

From information publicly available, the Competent Persons for reporting Resources in 2013 was Mr Richard Ruddock and for Reserves in 2013 was Mr Andrew Swiericzuk. At the time of these reports being prepared both Competent Persons (as defined by the JORC Code) were Rio Tinto employees. A more detailed discussion of the Resource and Reserve estimate can be found in Items 14 and 15. Figure 10 shows the Resources and Reserves from 2001 up to and including 2013. This highlights the increase of Reserves in 2007 and 2013.

Figure 10: Historical JORC Mineral Resources and Ore Reserves (Source: Rio Tinto Limited, 2001 to 2013)

Total Coal Resources were relatively consistent from 2000 up to 2013 taking into consideration depletion due to mined coal. It should be noted that Coal Resources remained the same (165 Mt) from 2002 until 2007. It appears that coal depletion was not accounted for during this period. In 2009 the Competent Person reclassified the Coal Resources dropping 36 Mt of Indicated Resource back to an Inferred Resource. No comments regarding this downgrade were found in the public domain. The standard adopted by RTCA for reporting of Coal Resource statements in respect of Kestrel Mine is to report the Coal Resources exclusive of Coal Reserves. Coal Resources reported for 2001 were 2 Mt Measured Resource and 165 Mt Inferred Resources exclusive of Coal Reserves decreasing to 106 Mt Measured Resource and 36.3 Mt Inferred Resources exclusive of Coal Reserves in 2013.

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Coal Reserves show a uniform depletion from 2001 (56 Mt Proved Reserves and 76 Mt Probable Reserves) until 2012 (37 Mt Proved Reserves and 79 Mt Probable Reserves) with the exception a spike reported in 2007 and 2013. Coal Reserves rose from 49 Mt Proved Reserves and 63 Mt Probable Reserves in 2006 to 53 Mt Proved Reserves and 83 Mt Probable Reserves in 2007. This coincides with the approval of the Kestrel Extension which resulted in the upgrading of Resources into Reserves as noted in the 2006 annual report. It is not established by the Competent Persons in either the reported Resources or Reserves for 2013 why there is an increase from the previous year.

The QP is of the opinion that an increase could be considered material and as such should have resulted in a Table 1 publication under requirements of the JORC Code, however as the Kestrel mine is reported by RTCA as one of a number of coal assets it may not be seen as a material change when reported in combination with other operations.

Note the Resources and Reserves provided in this section prior to 2013 are derived from previous JORC reports using prior editions of the JORC Code. These reports are no longer current and are not compliant under either present JORC or NI 43-101 reporting requirements. They are included for historical reference only. Item 14 provides current Resource estimates, and Item 15 estimates of Reserves.

6.4 Production

Based on the annual operating results from 1999 through to 2014 Kestrel Mine has produced a total of 54.6 Mt of product coal. This comprises of 41.1 Mt of coking coal and 13.5 Mt of thermal coal.

Figure 11: Historical annual production rates (Source: Rio Tinto Limited, 1999 to 2015)

Figure 11 shows the annual production tonnes from 1999 through to 2014. Other than a reduced annual production for years 1999, 2012, 2013 and 2014 the total annual production tonnes have consistently exceeded three million tonnes per annum. The ratio of coking coal to thermal product has varied over the historical life of mine production with a general decrease in the proportion of thermal coal being produced. The average proportion of coking coal to thermal coal is approximately 3:1 for the sum total reported annual production tonnes. Increased production in coking products is evident since 2009 which would be reflective of higher coking prices in the market.

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The reduced tonnes reported in 1999 and 2012/2013 were due to the re-commissioning of the mine in 1999 and a major plant shutdown in 2012/2013 as part of the expansion project.

The Kestrel Mine Extension was announced in 2007 with construction commencing in 2008 and was fully completed in September 2013. The extension allowed a new series of underground panels to be mined to the south of the existing operation, with the upgrade including:

development of two declines (drifts) over one and a half kilometres long to access a new production area
installation of 400 m longwall
infrastructure such as an 8.9 km overland conveyor
modifications to the existing coal handling and preparation plant.

The new operation (termed Kestrel South) was expected to reach full capacity by the end of 2014 as the existing mine (Kestrel North) decreased production and completing mining in the first quarter of 2014. The extension uncovered its first coal in July 2011 at a depth of approximately 250 m. Capacity is expected to increase to up to seven million tonnes per annum with an average of more than five million tonnes per annum of saleable coal expected over the extended 20 year life of the mine (RTCA, 2013).

There was a significant reduction in the amount of production lost during a longwall changeover with Kestrel safely achieving 86% of normal production of the changeover period compared to typical longwall changeovers where production drops to an average of 40% of normal production over the twelve week changeover window (RTCA, 2012). Methods used during the more efficient longwall changeover are expected to be repeatable as mining advances.

Safety performance and awareness continue to be a major focus across all of Rio Tinto's sites. In 2012 the all injury frequency rate (AIFR) continued to decline from 1.67 in 2011 to 1.27 in 2012 (RTCA, 2012). In 2012 Kestrel Mine became the first mine in Queensland to receive official certification of rehabilitated land under the Queensland Governments Environmental Protection Act. Rehabilitation of the area began in 2003 and was completed in 2006. To be successfully certified, the land needed to be stable and deemed to be good quality agricultural land as specified in the environmental approval for Kestrel Mine.

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ITEM 7. GEOLOGICAL SETTING AND MINERALISATION

The following section contains statements in respect of Item 7 – Geological Setting and Mineralisation of Form 43-101F1 – Technical Report.

7.1 Compliance exemption

Golder in the preparation of this section of the Technical Report is unable to comment on current interpretations of geological controls, the length, width, depth and continuity of coal mineralisation, together with a detailed description of the coals type and character. Kestrel Coal has claimed supply of such information would risk confidentiality and is commercially sensitive.

7.2 Regional geological setting

The Kestrel Mine is located in central Queensland, Australia and is one of a number of operations that exploits coal measures contained within the Bowen Basin. This basin is one of a number of sedimentary basins positioned along eastern Australia, with an extent of some 60 000 km², extending from the town of Collinsville in the north to Dawson in the south (refer Figure 12). The Bowen Basin continues beneath the younger Surat Basin and links up with the Gunnedah and Sydney Basins in New South Wales.

Hawthorne (1974) recognised four intervals of commercially important coal measures in the Bowen Basin, of which the late Permian-aged German Creek Formation present at the Kestrel Mine was classified into Group III (refer Figure 13). The German Creek Formation comprises quartz sandstones, sandstone, carboneous siltstone and mudstone, coal and conglomerate (Veevers J., et al, 1969).

The oldest coal deposits developed in the Bowen Basin are those of the Lower Permian Reids Dome Beds, which are restricted to the Denison Trough in the west of the Basin and are best developed at shallow depth in the Capella district. The Denison Trough was at this time one of a number of structural depressions in the embryonic basin.

With an increase in the rate of deposition in the Bowen Basin, coal seams became insignificant and were smothered by freshwater conglomerates, sandstones and shales with intercalations of marine sediments. In the north west a transgressive phase with some marine incursions resulted in the deposition of coals in local basins. The most important of these deposits is the Collinsville Coal Measures, but other coals, probably of equivalent age, are known to occur intermittently as far south as the Capella district.

At the beginning of the Upper Permian, a regression to non-marine conditions began in the Bowen Basin which was more pronounced in the north west, where extensive coal deposits of the Fair Hill and the German Creek Formations were laid down. The regression continued throughout the Basin under conditions that were generally inimical to coal deposition and a distinctive sequence of fine grained siliceous, carbonaceous and tuffaceous freshwater sediments were deposited throughout. These are represented by the Burngrove shale member of the Fair Hill Formation in the north west, the Gyranda Formation in the south east, and the upper part of the Fort Cooper Coal Measures in the north east of the Basin. This sequence was followed by the most widespread deposition of coal in the history of the Basin. There are indications that these coals extended over the whole of the northern sector of the Basin covering some 15 000 km². Coal formation was presumably terminated by an arid climatic phase characterised by an influx of distinctive red and green mudstone and green sandstone of the Triassic aged Rewan Formation. Figure 12 provides by way of illustration the interpreted structural geology of the Bowen Basin.

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NI 43-101 TECHNICAL REPORT ON KESTREL COAL MINE, QLD AUSTRALIA

ANGLO PACIFIC GROUP PLC

COAL MEASURES

LEGEND

Town

Operating Coal Mine

Railway

Coal Export Port

Mineral Export Port

Jesse, LNG Export Port Under Development

NOTES

Port and Coal measures digitised from Central Queensland Coal measures Map created by Spatial and Graphic Services, Geological Survey of Queensland 2010.
Operating coal mine information supplied by the IRTM.
Queensland outline provided by Mapinfo.
Inset Service Layer Credits: Sources: Esri, DeLorme, NAVTEQ, USGS, Intermap, IPC, NRCAN, Esri Japan, METI, Esri China (Hong Kong), Esri (Thailand), TomTom, 2013

0 10 20 40 60 80 100 km

SCALE (at A4) 1:3,000,000

DATUM WGS 84, PROJECTION GCS

PROJECT: 147621001

DATE: 29 JAN 2015

DRAWN: MDC

CHECKED: AR

FIGURE

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Figure 13: Permian coal measures (Source: Mutton, 2003)

7.3 Local geology

The following subsection is reported from the Bowen Basin Geologists Group (BBGG) and Geological Society of Australia (GSA) Coal Geology Group proceedings of the Bowen Basin 2000 Symposium (Beeston, 2000). Additional information on the surface geology is drawn upon from the 1:100 000 Geology Map series (Emerald sheet).

The Kestrel Mine lies on the western limb of the gently dipping Talagai Syncline, which plunges southwest between the Capella Block to the north-west and the Comet Ridge to the east (refer Figure 14) resulting in an overall regional dip of the stratigraphic sequence to the south and south-east.

ML 1978 contains gently folded Permian strata unconformably overlain by flat lying Tertiary and Quaternary sediments.

At surface (refer Figure 15) an isolated pocket of German Creek Formation (Pud) outcrops near the Kestrel Mine, with the remaining tenement area covered by unconformably overlying Cainozoic aged volcanics and sediments. Tertiary aged Minerva Hills Volcanics (Tr) comprising olivine basalt, trachy basalt, minor agglomerate and tuff are eroded and deposited over the Nogoa River fluvial system as undifferentiated (Cz) soil, sand and gravels and Quaternary aged alluviums (Qa).

The recent Tertiary sequence averages 65 m in thickness and ranges up to 110 m. As many as eight distinct basalt flows can be recognised in the Kestrel Mine area (Hanna, 1985). These are often interbedded or underlain by clay and water bearing sand/gravel beds. The main Tertiary aquifers are the basalts and the basal sand/gravel beds. Airlift water flows of >30 l/s have been measured from these aquifers.

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Figure 14: Structural geology of the Bowen Basin (Source: modified after CSIRO et.al, 2008)

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Subsurface the Permian strata in ML 1978 comprise the Blackwater Group and Back Creek Group. Within the coal bearing sequence (refer Figure 16) the Fairhill and German Creek Formations contain the majority of the coal seams.

Figure 16: Typical stratigraphic section east of Ti-tree fault (Source: Beeston, 2000)

The Fairhill Formation, which averages 100 m in thickness, contains lithic sandstones with numerous interbeds of siltstone or claystone, as well as four coal horizons. The coal seams have no economic significance.

The Macmillan Formation is a marine sequence at the top of the Back Creek Group. It averages 45 m in thickness and consists predominantly of siltstone with interbeds of lithic sandstone in the basal 20 m.

The upper German Creek Formation averages 120 m in thickness and is dominated by quartz lithic sandstones with minor siltstone interbeds and up to eight coal seams. The German Creek seam, which is the only seam suitable for underground mining, ranges in thickness from 1.8 to 4 m, with an average of 3 m.

The mine lease is bounded on the east by the San Michelle Boundary Fault, which trends north-south and is downthrown 50 to 70 m to the west. This complex fault zone extends north into Gregory and probably south

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into the Ensham mine MDL 217 area. The remaining mining lease is divided by the north-south Ti-Tree Fault. The Ti-Tree is a high angle reverse fault downthrown 6 to 30 m to the east. This fault dies out to the north and has not been intersected by Crinum. The Western Area Drivage (WAD) has traversed the fault with three headings, in order to access the Kestrel West area. Minor faulting between these major fault zones has not impacted significantly in the current mining area. Between the faults the Permian strata are relatively undeformed with dips of 1° to 3°, increasing to 6° towards the subcrop.

No igneous intrusions have been intersected by drill holes or the current workings. In the current workings sedimentary or clastic dykes, most consisting of clayey sandstone, have been intersected. However these have not impeded significantly on the mining operation.

Within ML 1978 the depth of cover for the German Creek seam ranges from 80 to 400 m.

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ITEM 8. DEPOSIT TYPES

The following section contains statements in respect of Item 8 – Deposit Types of Form 43-101F1 – Technical Report.

8.1 Compliance exemption

APG, as a royalty holder for a portion of the Kestrel Mine, is not directly involved in exploration or geological concepts at the mine. APG through its subsidiary company GRPL made contact with Kestrel Coal on 24 January 2014 requesting access to relevant data and a site visit to the Kestrel Mine. This request was refused and as such, data and information utilised in the generation of this Technical Report is solely reliant upon what could be collected from public domain sources (see section 3.5).

Golder in the preparation of this section of the Technical Report is unable to directly comment on Kestrel Coal’s approach or concepts being applied for further investigation and exploration of the Kestrel Mine. Kestrel Coal has claimed supply of such information would risk confidentiality and is commercially sensitive.

The QP is of the opinion that typically operations in this area of the Bowen Basin have a strong understanding of geological controls on a regional basis and further exploration for a project at this level of maturity would largely involve infill drilling studies to increase Resource classification categorisation.

8.2 Description of coal

Kestrel Mine exploits the German Creek seam (part of the German Creek Formation) through underground mining operations using longwall and continuous miner techniques. The German Creek seam ranges in thickness from 1.8 to 4.0 m, with an average thickness of 3.0 m (Galligan, 1976). Product coals produced are (Mutton, 2003):

High volatile, low ash hard coking coal
Medium ash, high energy thermal coal.

Average coal qualities for the Kestrel Mine coking coal and thermal products are presented below in Table 5.

Table 5: Generalised quality for Kestrel Mine coking coal product (Source: Mutton, 2003)

Product	Coking Coal	Thermal
Coal Quality Parameter	Value
Total Moisture (% ar)	8.0	6.0
Ash (% ad)	6.5	13.0
Volatile Matter (% ad)	33.5	31.0
Fixed Carbon (% ad)	58.0	54.0
Gross Specific Energy (MJ/kg ad)	32.5	29.9
Total Sulphur (% ad)	0.7	0.75
Phosphorus (% ad)	0.025
Crucible Swelling Number	8.5
Grindability (HGI)		55

Note: ar = as received, ad = air dried

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ITEM 9. EXPLORATION

The following section contains statements in respect of Item 9 – Exploration of Form 43-101F1 – Technical Report.

9.1 Compliance exemption

APG, as a royalty holder for a portion of the Kestrel Mine, is not directly involved in exploration at the Kestrel Mine. APG through its subsidiary company GRPL made contact with Kestrel Coal on 24 January 2014 requesting access to relevant data and a site visit to the Kestrel Mine. This request was refused and as such, data and information utilised in the generation of this Technical Report is solely reliant upon what could be collected from public domain sources (see section 3.5).

Golder in the preparation of this section of the Technical Report is unable to comment on exploration techniques used in the development of the deposit understanding outside that information which could be sourced from the public domain. Kestrel Coal has claimed supply of such information would risk confidentiality and is commercially sensitive.

9.2 Historical exploration of other forms

The Queensland Government Department of Natural Resources and Mines provides through the public domain an interactive web based portal (Queensland Government, 2014d) that enables a search to be undertaken for public records on non-drilling exploration techniques.

Investigation highlighted two aerial geophysical programs that have been undertaken in the past, one by Kennecott Explorations (Australia) Limited (KEAL) and another by the Geological Survey of Queensland (GSQ). These are summarised in Table 6.

Table 6: Historical non-drilling exploration (Source: Queensland Government, 2014d)

	KEAL	GSQ
Survey no	282	1100
Survey name	Gregory South	Central Bowen Basin
Date flown	31 July 1983	16 July - 11 September 2003
Company	Kennecott Explorations (Australia) Ltd	Qld Geological Survey
Contractor	Austirex International Ltd	UTS
Data available	No
Open file	Yes
Line length (km)	No Data	65357
Interval (m)	250	400
Direction (deg.)	90	090/270
T_Internal	2500	4000
T_Direction	180	000/180
Height (m)	80	80
Mag	MAG	MAG
Rad	RAD	RAD

9.3 Current exploration

RTCA purchased the ARCO's share in the Kestrel Mine in early 1999. Information related to non-drilling exploration programs carried out by RTCA since the mining lease was granted in 1990 is unavailable in the public domain.

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ITEM 10. DRILLING

The following section contains statements in respect of Item 10 – Drilling of Form 43-101F1 – Technical Report.

10.1 Compliance exemption

APG, as a royalty holder for a portion of the Kestrel Mine, is not directly involved in operational aspects such as drilling at Kestrel Mine. APG through its subsidiary company GRPL made contact with Kestrel Coal on 24 January 2014 requesting access to relevant data and a site visit to the Kestrel Mine. This request was refused and as such, data and information utilised in the generation of this Technical Report is solely reliant upon what could be collected from public domain sources (see section 3.5). Kestrel Coal has claimed supply of such information would risk confidentiality and is commercially sensitive.

Golder in the preparation of this section of the Technical Report is unable to directly comment on Kestrel Coal’s approach or concepts in relation to drilling, sampling and recovery or the location of all boreholes, their types, accuracy and reliability in defining Resources for the Kestrel Mine, but rather has had to rely on the experience of the QP in working with RTCA in the past to form a generalised opinion.

10.2 Historic drilling

Details in the following sections are derived from annual exploration reports required for submission to the government for all exploration leases and which can become open file and publicly accessible. No exploration reporting is required for mining leases. Hence the available information for this Technical Report is restricted to exploration completed up until the exploration leases were converted to mining leases.

There is limited and incomplete information in the public domain with regard to type and location of bore holes, drilling procedures, sampling procedures or sample recovery during the 1960s and 1970s drilling programs. In a similar fashion, information on drilling undertaken during the 1980s by Denham Coal Associates is also limited.

A summary of information found on Queensland Digital Exploration (QDEX) Reports, for the 1960s and 1970s drilling, along with data from a journal article on the Gordonstone Project for drilling during the 1980s (Kathage, 1989) is presented in Table 7.

Table 7: Historic drilling in the Emerald region (Source: QDEX and Kathage, 1989)

Period	Company	EPC/ATP	Holes	Drill type	Drilled length (m)	Cored length (m)
1968	Mount Isa Mines	ATP42C	7	rotary	1 170.4	0
1971-1972	QLD Department of Mines	-	17	non-core collar/core	6 212.3	5 695.8
1972-1973	QLD Department of Mines	-	17	non-core collar/core	3 620.4	2 379.3
1974	QLD Department of Mines	-	35	non-core collar/core	8 087.6	Unknown
1975	QLD Department of Mines	-	22	non-core collar/core	4 388.2	2 819.2
1982-1984	Denham Coal Associates	ATP389C	280	open and cored	unknown	unknown

A portion of EPC 389 was converted to ML 1978 in 1990, and as such there is no publicly available exploration reports available after this date providing detail of drilling carried out.

10.2.1 1960s

Following reports of coal intersections from water bores in the Emerald area in the early 1960s, a number of companies were granted Authorities to Prospect (“ATP”) in the region.

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Mount Isa Mines Ltd held ATP 42C in 1968 which covered a large area from the current Kestrel Mine tenement area to south of Emerald (Bennett, 1968). During this time a geological map of the area was compiled and seven rotary drill holes were completed over the region. Only one of these was in the current Kestrel ML 1978.

10.2.2 1970s

Between 1971 and 1975 drilling was undertaken by the Queensland Department of Mines via a four stage drilling program. This was to investigate the Permian geology and provide a regional assessment of coal measures across the Emerald region of the Bowen Basin. A prior Technical Report by SRK (2010) states that during this period of exploration by the department of mines “a total of 37 boreholes were drilled in the Kestrel area and 29 of these boreholes intersected the German Creek coal seam.” It is unclear where this information was sourced from and therefore further discussion in this report refers to the whole drilling programs carried out over a wider area.

Exploration carried out by the Department of Mines and the related reports pre-date current Coal Resource reporting standards such as the JORC Code. Throughout the Department of Mines exploration reports coal Reserves are referred to which, under the current JORC Code (2012), would be considered today as Resources.

The first Department of Mines drilling program was carried out between 1971 and 1972 and identified two formations with seams of workable thickness and quality – the Rangal Coal Measures and the German Creek Formation. The following description is summarised from Park (1973).

Seventeen boreholes were drilled in the Emerald area (including two redrills). These were a combination of open hole and cored drilling. Nine of these were drilled at “wide” (unspecified distance) intervals to reveal the geology and structure. A further eight holes were drilled at “wide” (unspecified distance) intervals to delineate the sub-crops of the Rangal Coal Measures and the German Creek Formation, revealed by the initial drilling. Drill holes were named from N.S. 1 - N.S. 17 including a total 20,381' 5" (6 212.3 m), of which 18 687' 2" (5 695.5 m) was cored.

Two of the seams within the German Creek Formation were identified as being potentially economic. Test results in the lower section of the Corvus seam (Corvus II), sampled in boreholes N.S.6 and N.S.10 indicated thermal coal potential. The German Creek seam was sampled in all holes in which it was intersected and test results showed both coking coal potential and increasing rank from west to east. Samples in the east showed coking coal, although high ash content meant that washing would be required during processing. Steaming coal potential was indicated in drill holes N.S.6 and N.S.10, with coal also requiring washing.

Resources were not defined for the German Creek formation due to lack of seam intersections.

A second drilling program was carried out between 1972 and 1973 to further assess the coal resources in the Rangal Coal Measures and the German Creek Formation. The following description is summarised from Park (1974).

Seventeen boreholes (N.S.18 - N.S.34) were completed in the area north-east of Emerald at approximately two mile intervals, for a total of 11,877'10" (36 701.4 m), of which 7,806' (2378.3 m) was cored. Ten drill holes intersected the German Creek Formation. The German Creek seam was sampled in all holes except N.S.33, in which both sections were only two feet (0.6 m) thick.

In the German Creek Formation, “small” resources (unspecified tonnages or quality) of non-coking coal were defined in the Corvus seam and “large” resources (unspecified tonnages or quality) of both coking and non-coking coal in the underlying German Creek seam. The Resources were classified as Inferred, defined on a drill hole spacing of approximately two miles, a minimum seam thickness of 5' (1.5 m) and a maximum depth of underground mining of 1,500' (457.2 m).

A third drilling program by the Department of Mines was carried out in 1974 which included a further 35 drill holes, N.S.35 to N.S.75 (including two re-drills) for 8,087.6 m (Park and Gilligan, 1974). Further details of this exploration program could not be found.

It should be noted that the three stages of drilling previously described were part of a regional drilling program and not all the drill holes were drilled on what is currently covered by the Kestrel Mine tenure.

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A fourth drilling program was carried out during 1975, designed to reduce the borehole spacing between cored intersections of the German Creek seam to approximately 2 km and to delineate the seam sub-crop which was unconformably masked by Cainozoic cover. This was aimed at upgrading the previous Coal Resource to Indicated classification for coal between a depth of approximately 80 m and 300 m (Gilligan, 1976).

The program comprised 22 drill holes (including one redrill) for a total of 4388.2 m, of which 2819.2 m were cored.

Using this drilling, the Department of Mines estimated Indicated Resources "of raw coal in-situ" within the German Creek seam which includes the Kestrel mine and leases. Further details are provided in Item 6.

Summary wash data of the coal samples tested during all four phases of the Department of Mines exploration program (refer Table 8) are broadly comparable to a number of the published chemical and physical properties of the typical coking and thermal coal produced by the Kestrel Mine including: ash, volatile matter, sulphur, phosphorous and specific energy. These are reported for four blocks (A to D). It is uncertain the exact location of the individual blocks with respect to the current MLs, however examination of the Interactive Resource and Tenure Maps (IRTM, 2014) indicates that the southern half of block A and all of block B represent the coal quality of the German Creek seam in the area now covered by the Kestrel Mine area.

There is no specific in-situ coal quality data for the Kestrel leases or Resources. Table 8 provides the summary of the available regional exploration coal quality data. This can be compared to production quality data in Item 14.

Table 8: Average coal quality from wash data for German Creek seam¹ (Source: Galligan, 1976)

Variable	Block
	A		B		C		D
	Avg	Range	Avg	Range	Avg	Range	Avg	Range
Wash density (g/cc)	1.6	1.5-1.6	1.6	1.5-1.6	1.4	1.4-1.5	not stated	1.3-1.6
Moisture (%)	2.1	1.8-2.3	2.8	2.4-3.4	3.7	3.2-4.5	not stated	4.2-6.4
Ash (%)	8.3	6.4-10.4	8.2	7.1-8.3	8.1	7.3-8.7	not stated	5.7-18.3
Volatile Matter (%)	32.3	30.5-34.1	33.8	32.2-34.4	33.2	32-34.2	not stated	26.8-35.0
Fixed Carbon (%)	57.3	55.3-59	55.2	54.6-57.1	55	52.6-56.3	not stated	48.5-55.1
Sulphur (%)	0.59	0.5-0.69	0.57	0.5-0.68	0.57	0.53-0.62	not stated	0.55-0.59
Phosphorus (%)	0.04	0.016-0.2	0.017	0.01-0.036	0.01	0.004-0.021	not stated	0.002-0.005
Specific Energy (MJ/kg)	31.63	30.88-32.14	29.17	28.03-30.97	29.78	29.11-30.38	not stated	25.44-30.31

10.2.3 1980s

Denham Coal Associates (later Gordonstone Coal Associates) was awarded ATP 389C in March 1982. A total of 280 open and cored holes were drilled from 1982 to 1984 to define the resource at Gordonstone, including downhole geophysics. Indicative coal quality of the coking coal was stated to be 6.5% ash, 33% volatile matter, 0.6% sulphur and a crucible swelling number of 8.5. It is not stated if this is washed or in-situ. Management of the project was carried out by Gordonstone Coal Management (Kathage, 1989).

Gordonstone Coal Associates applied for a mining lease in early 1985. In 1987 ARCO Coal Australia Inc. invested in the project, acquiring an 80% share.

¹ Reporting basis for phase one and two were air dried, three and four are not stated.

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10.2.4 1990s

In 1990 ML 2251 (later renamed ML 1978) was granted to ARCO. This covered a central part of the original EPC 389 and the remaining EPC 389 was divided into sub blocks covering areas to the east and west of ML 1978 (Shekar, 1993).

It is unclear how many drill holes were drilled in the western portion during this time. Three sub-blocks in the western portion of EPC 389 were relinquished in 1993 (Shekar, 1993). The rest of the area to the west of ML 1978 was later covered by MDL 182 and MDL 176. Three drill holes were drilled in the final remaining eastern block of EPC 389 in 1994 before it was relinquished in 1997 (Sommer, 1997).

During this period the project was known as the Gordonstone Mine. In late 1998, Kestrel Coal took control of the mine. At the time Kestrel Coal took control, a total of 1022 boreholes had been drilled across the deposit and since late 1998; Kestrel Coal has continued exploration drilling work (SRK, 2010).

10.3 Current drilling

No information was found in the public domain with regard to type and location of boreholes, drilling procedures, sampling procedures or sample recovery during the recent and current drilling programs by RTCA.

Opinion of the QP based upon personnel experience working with RTCA is that they employ strict corporate based documented protocols around the drilling, logging and sampling of exploratory and production drilling. This includes quality assurance and quality control (QAQC) systems to provide for robust data sets from which Resource models are then built. Typically, given the longevity of projects of this nature, minor errors can be found in larger data silos, as a result of technical personnel succession over time within these groups. Generally these are not considered to be material on the larger mine scale, though some inconsistencies may be seen locally.

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ITEM 11. SAMPLE PREPARATION, ANALYSES AND SECURITY

The following section contains statements in respect of Item 11 – Sample Preparation, Analyses and Security of Form 43-101F1 – Technical Report.

11.1 Compliance exemption

APG, as a royalty holder for a portion of the Kestrel Mine, is not directly involved in operational aspects such as sample preparation, analysis and security at Kestrel Mine. APG through its subsidiary company GRPL made contact with Kestrel Coal on 24 January 2014 requesting access to relevant data and a site visit to the Kestrel Mine. This request was refused and as such, data and information utilised in the generation of this Technical Report is solely reliant upon what could be collected from public domain sources (see section 3.5). Kestrel Coal has claimed supply of such information would risk confidentiality and is commercially sensitive.

Golder in the preparation of this section of the Technical Report is unable to directly comment on Kestrel Coal’s approach or concepts in relation to sample preparation, analysis and security in defining Resources for the Kestrel Mine.

11.2 Historic sampling

There is very little information on historic sampling, sample preparation or analytical methods. What could be found through public records is summarised as follows.

11.2.1 1960s

Bore holes drilled by Mount Isa Mines in the 1960s were geologically logged, but it is unclear if photographs were taken. The sample basis and sample size is also unclear. Analysis of samples was carried out at the Australian Coal Industry Research Laboratories Limited (ACIRL), although the analytical basis is unclear (i.e. as received, air dried etc.). Samples were tested for the following:

Moisture
Ash
Volatile matter
Fixed carbon
Sulphur
Calorific value (BTU)
Crucible swelling number.

Some duplicates were taken for what is referred to as “microanalyses” for carbon, hydrogen, nitrogen, sulphur, ash and loss of weight on drying. In addition, petrographic studies were carried out for some samples (Bennett, 1968).

11.2.2 1970s

The sampling and analytical methods used by the Department of Mines in the 1970s were the same for phases one and two. Boreholes were geologically logged and sample recovery recorded. Photos were taken for most seams (phase one) and all seams (phase two). Samples were taken on all sections of clean coal in excess of $3^{\prime}$ (0.91 m). Sample analysis was carried out at Australian Coal Industry Research Laboratories and reported on an air dried basis. Analysis was carried out on raw coal, in addition to washability testing and analysis of floats/sinks. The following coal quality parameters were included in reporting (Park, 1973 and 1974):

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Specific gravity
Moisture (basis unclear)
Ash
Volatile matter
Calorific value (BTU)
Crucible swelling number
Gray-king coke type.

No details of sampling and analytical methods were recorded in the report for phase three exploration (refer: Park and Gilligan, 1974).

Boreholes drilled during the phase four exploration by the Department of Mines were geologically logged and sample recovery recorded. It is unclear if photos were taken. Samples were stated to be taken in plies up to 1.5 m thick. The laboratory used is not stated nor the analytical basis (i.e. as received, air dried etc.). Analyses were carried out on raw coal and in addition to washability tests and analysis of floats/sinks. Coal quality parameters stated were the same as for previous phases. In addition, Gieseler plastometer tests, Audibert-Arnu Dilatometer tests and petrographic studies were carried out.

11.2.3 1980s and 1990s

There was limited information regarding sampling and analytical methods used by Denham Coal Associates or ARCO in the 1980s and 1990s within the EPC 389 area.

The final relinquishment report for EPC 389 partially describes procedures used for ten bore holes drilled to the east of ML1978 (within the EPC 389). The drill holes were in part rotary open holes and partly cored (core diameter 64 mm). The boreholes were geologically logged and sample recovery recorded, but it is unclear if photos were taken. The sample basis and sample size is also unclear. Analyses were reported on a mixture or air dried and dry ash free bases. Sample analysis was undertaken at SGS Laboratories in Perth. Raw coal analysis, size analysis and float/sink analysis were carried out. Washed coal composites were also tested and petrographic analysis carried out on some samples.

There were two different sample preparation procedures stated in the appendices of the relinquishment report (Sommer, 1997).

The first sample preparation procedure was stated as follows: "The sample is crushed to pass 19 mm then wet tumbled with 30 litres of water in a 60 litre drum for 4 minutes. The sample was then wet screened at 0.5 (w/w) mm with float/sink testing of the plus 0.5 (w/w) mm material. The minus 0.5 (w/w) mm material was subject to froth flotation testing".

The second was stated as follows: "The sample was crushed to pass 31.5 mm, screened at 0.7 mm and 0.125 mm with float/sink testing of the plus 0.7 mm fraction and the minus 0.7 mm plus 0.125 mm fraction. The minus 0.125 mm and minus 0.5 mm plus 0.125 mm fractions were analysed for ash percentage".

There was no information on sampling or analytical procedures used for bore holes drilled to the west of ML1978 (within EPC 389) or within the area now covered by ML1978 (when it was EPC 389). Nor was there any information on sampling or analytical procedures used for bore holes drilled within the ML1978, MDL176 and MDL182 by Denham or ARCO.

11.3 Current sampling

No information was found available in the public domain with regard to sample preparation, QAQC, analytical or assaying procedures or the laboratories used during the recent or current sampling programs by RTCA at Kestrel. Rio Tinto's annual report states that "Analyses of coal is undertaken on an "Air Dried" moisture basis in accordance with Australian Standards".

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ITEM 12. DATA VERIFICATION

The following section contains statements in respect of Item 12 – Data Verification of Form 43-101F1 – Technical Report.

12.1 Compliance exemption

APG, as a royalty holder for a portion of the Kestrel Mine, is not directly involved in operational aspects such as Mineral Resource and Mineral Reserve estimation at Kestrel Mine. APG through its subsidiary company GRPL made contact with Kestrel Coal on 24 January 2014 requesting access to relevant data and a site visit to the Kestrel Mine. This request was refused and as such, data and information utilised in the generation of this Technical Report is solely reliant upon what could be collected from public domain sources (refer section 3.5).

12.2 Verification

Golder in the preparation of this Technical Report has attempted where possible to use as many sources of publicly available information as possible, corroborating information through a process of cross matching data sources and verification by comparison with independent sources. Statutory information available through Queensland government agencies such as the Department or Natural Resources and Mines has been used where possible to provide independence over public reporting by RTCA, their subsidiaries or other organisations.

In lieu of Golder being able to inspect the site or collect samples the following forms of verification are available:

Exploration has been completed by multiple parties and operating companies that includes the State Government (1960s and 1970s), Denham (1980s), ARCO and RCTA (since 1990s).
Golder reviewed the available exploration reports and not determined any contradiction with the stated resources, data quality or geological understanding of the area.
Continued production at RTCA without any reports of significant production shortcomings or mine call factors indicates the stated Resources and Reserves are producing coal as expected.

The QP considers that the reported Resource and Reserve data used in the preparation of this report is adequate for its intended purpose (refer section 2.2.1). However, provision of long term intended production figures and the intended mine planning schedule directly from Kestrel Coal would provide greater surety around economic forecasts for APG. Such additional information would enable an estimate to be made on the probable delivery of royalty payments on an annualised basis.

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ITEM 13. MINERAL PROCESSING AND METALLURGICAL TESTING

The following section contains statements in respect of Item 13 – Mineral Processing and Metallurgical Testing of Form 43-101F1 – Technical Report.

13.1 Compliance exemption

APG, as a royalty holder for a portion of the Kestrel Mine, is not directly involved in operational aspects such as mineral processing and metallurgical testing at Kestrel Mine. APG through its subsidiary company GRPL made contact with Kestrel Coal on 24 January 2014 requesting access to relevant data and a site visit to the Kestrel Mine. This request was refused and as such, data and information utilised in the generation of this Technical Report is solely reliant upon what could be collected from public domain sources (see section 3.5).

Golder in the preparation of this section of the Technical Report is unable to directly comment on Kestrel Coal's approach or concepts in relation to mineral processing and metallurgical testing in defining Resources and Reserves for the Kestrel Mine.

13.2 Processing test work

Little information is available through public sources regarding processing test work carried out on coal at the Kestrel Mine.

Details of historic processing test work carried out are detailed in section 11.2. These included washability testing and float/sink analysis carried out by the Department of Mines on samples taken in the 1970's. A summary of the resulting data is presented in Table 8. The Department of Mines concluded that average wash data for blocks A and B, which cover the Kestrel Mine area, indicated suitable Coking Coal.

No information was available for processing test work carried out by previous companies Denham or ARCO (1980s-1990s), nor current operators RTCA.

Estimated yields calculated from production statistics (refer Table 12) indicate an average yield for 2002 to 2011 to be 80%. This is slightly lower than the average yield used by RTCA to calculate Marketable Reserves. It is unclear what RTCA's recovery estimates are based upon.

There is insufficient information available to comment on how representative the processing test work carried out historically is of the coal extracted from the German Creek seam at Kestrel Mine.

13.3 Recovery estimates

Table 12 in section 17.3 summarises historic annual production from the 2013 edition of the Australian Coal year Book (AMS, 2013). This indicates a yield of 83% or greater was only achieved in two years from the last eleven. The average for the previous ten years is 80%. The yield used by RTCA to modify Reserves to Marketable Reserves is 83%.

Figure 10 in section 6.3 presents historical Coal Reserve statements for Kestrel Mine for the period 2000 to 2012 on an annual basis, inclusive for the periods ending 31 December. In summary it appears that the overall statements have remained relatively static since 2007 with minor adjustments for depletion. The smaller decrease in 2010 Reserves is due to partial conversion of Resources to Reserves and subsequent re-evaluation of mine plan.

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ITEM 14. MINERAL RESOURCE ESTIMATES

The following section contains statements in respect of Item 14 – Mineral Resource Estimates of Form 43-101F1 – Technical Report.

14.1 Compliance exemption

APG, as a royalty holder for a portion of the Kestrel Mine, is not directly involved in Resource estimates at Kestrel Mine. APG through its subsidiary company GRPL made contact with Kestrel Coal on 24 January 2014 requesting access to relevant data and a site visit to the Kestrel Mine. This request was refused and as such, data and information utilised in the generation of this Technical Report is solely reliant upon what could be collected from public domain sources (see section 3.5).

RTCA report using the 2012 edition of the JORC Code as the minimum standard for preparing the last published Resource estimate for the Kestrel Mine. Under ASX listing rules (for which RTCA publicly reports) there is no requirement for public disclosure of the technical report which supports the Resource estimate.

Kestrel Coal has claimed supply of such information would risk confidentiality and is commercially sensitive, as such, Golder in the preparation of this section of the Technical Report is unable to directly comment on Kestrel Coal’s key assumptions, parameters, and methods used to estimate the Mineral Resources, in addition to comply with all disclosure requirements for Mineral Resources set out in the Instrument.

14.2 Resource reporting code

The standard adopted by RTCA for reporting of Coal Resource statements in respect of Kestrel Mine and reproduced herein as Table 9 is based on the guiding principles, terms and definitions given in the 2012 edition of the JORC Code. The Competent Person for Coal Resources declared at Kestrel Mine in 2013 was Mr Richard Ruddock.

The JORC Code requires a discussion be made when preparing a technical report for Resources with comparisons with previous estimates. Material differences are to be discussed and details provided as to determining why differences occur. As APG is reliant on public domain data and does not have access to the Technical Report supporting the RTCA primary estimate Golder was unable to provide a detailed reconciliation of either the reported Resources as required under Item 7.1 of National Instrument 43-101 and rather has had to rely on comparison with previous estimates in earlier years to measure the relative size of estimates.

14.3 Reported Resources

The current Resource statement provided by the Kestrel mine operator is provided in Table 9. This was dated 31 December 2013 and is documented in the Rio Tinto Limited Annual Report for 2013 (Rio Tinto Limited, 2013). The proportion comprised within APG royal blocks is not defined as part of the tabled Resources, but rather represents the total across the various mining leases, exclusive of Reserves.

Table 9: Reported Coal Resources*, 31 December 2013 (Source: Rio Tinto Limited, 2013)

Operation	Coal Type	JORC Resource classification	Tonnes (Mt)
Kestrel Coal	Coking	Inferred	3.0
Kestrel West	Thermal	Indicated	106
	Thermal	Inferred	33

Exclusive of Reserves in Table 11

The Resources provided in Table 9 are current; hence the effective date for this report is considered the Technical Report issue date of 30 January 2015. However it should be noted that the Resources are based on the latest statement dated 31 December 2013 and will be affected during 2014 by subsequent:

mine depletion or

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resource update if completed or
conversion to Reserves that are reported separately.

The Resource statement issued a total Coal Resource (exclusive of Reserves) comprising 106 Mt of Indicated and 36 Mt of Inferred Resources. The Resource is divided into operational area and product type. Neither average in-situ coal qualities nor ranges are disclosed by Rio Tinto Limited in the publication of their Coal Resources.

14.4 Supportive data

Figure 10 (refer section 6.3) presents the historical Coal Resource statements for Kestrel Mine from 2000 through 2013 inclusive for the periods ending 31 December. In 2009 there would appear to be some write off and downgrading of portions of the previously reported exclusive Measured and Indicated Coal Resources. It would appear that the overall statements have remained relatively static since 2009 with minor adjustments for depletion.

There is limited information available in the public domain which supports the declarations as presented, therefore Golder notes the following:

No coal quality values are reported for the in-situ Coal Resources.
In respect of the Coal Resources as declared, no information is presented to support the assumption that these are potentially economic (although there is a requirement in the JORC Code for reported Resources to have potential for economic extraction), or what current constraints limit their conversion to Coal Reserves.
The Coal Resources at Kestrel West comprise thermal coal potential only.
No information was available relating to how the Mineral Resource estimates could be materially affected by any known environmental, permitting, legal, title, taxation, socio-economic, marketing or political factors (although the basis of the JORC Code and compliance with such would mean that any material impacts should be considered prior to classification as such).
It is unclear if Rio Tinto's Competent Person carried out a site visit prior to or as part of the Resource estimation process.

Golder notes the following in respect of Coal Resource estimation and classification methodology, assumptions and parameters:

Quality and Quantity of Data: No direct information is available in the public domain to ascertain the methodologies employed in data gathering or the assessment of the quality and quantity of data used to support estimation and/or classification of the Coal Resources from which the Coal Reserves are derived or the residual Coal Resources reported on an exclusive basis.
Geological Modelling and Spatial Domaining: No direct information is available in the public domain.
Statistical Analysis and Variography: No direct information is available in the public domain.
Seam Modelling and Interpolation: No direct information is available in the public domain.
Validation: No direct information is available in the public domain.
Reconciliation: No direct information is available in the public domain specifically with respect to reported qualities of Coal Resources.
Classification: A previous NI 43-101 report (SRK, 2010) states that Rio Tinto refers to using drilling grid spacing for classification of Coal Reserves. SRK assumed that the basis of the classification for Measured Coal Resources relates to 500 m grid spacing and for Indicated Coal Resources 1000 m grid spacing, applied prior to conversion to Reserves. Golder found no reference to Resource Classification criteria in the public domain. It should be noted that classification should not be focused solely on drill-hole spacing and consideration for structure, quality and yield may also play an important role depending on the variability and confidence in estimating these aspects.

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Exploration Potential: No assessment of the potential exploration targets within the current tenure boundaries is reported in the public domain and accordingly consideration for delineation of such targets, associated expenditures and likelihood of success is not possible.

Table 10 summarises coal quality stated for Kestrel coking and thermal coal in the Department of Natural Resources and Mines publication "Queensland Coals Physical and Chemical Properties, Colliery and Company Information, 14th Edition, 2003" (green book). The averages are consistent with the available historic exploration data summarised in section 10.2.2, except for total sulphur which is higher in the data from the green book, compared to the data from exploration.

Table 10: Average product coal quality at Kestrel Mine (Source: Queensland Government, 2003)

Quality parameter	Coal Product
	Coking	Thermal
Total Moisture (% ar)	8.0	6.0
Moisture (% adb)	2.0	2.0
Ash (% adb)	6.5	13.0
Volatile Matter (% adb)	33.5	31.0
Fixed Carbon (% adb)	58.0	54.0
Gross Specific Energy (MJ/kg adb)	32.5	29.9
Total Sulphur (% adb)	0.70	0.75
Phosphorus (% adb)	0.025
Grindability (HGI)	58	85
Vitrinite (% by volume)	75
Liptinite (% by volume)	4
Semi-inertinite	10
Mean max Vitrinite Reflectance (Rv,max)	0.93	0.92
Crucible Swelling Number (CSN)	9	7
Gray-King coke type	G9
Gieseler Maximum Fluidity (dd/min)	>1000
Maximum dilatation (%)	0 145
Coke strength after reaction (CSR)	8.0
Ultimate Analysis Carbon (% daf)		85.0
Ultimate Analysis Hydrogen (%daf)		5.7
Ultimate Analysis Nitrogen (% daf)		2.17
Ash Fusion Temp. (Reducing Atmosphere) Deformation (°C)		>1600
Ash Fusion Temp.(Reducing Atmosphere) Sphere (°C)		>1600
Ash Fusion Temp.(Reducing Atmosphere) Hemisphere (°C)		>1600
Ash Fusion Temp.(Reducing Atmosphere) Flow (°C)		>1600

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ITEM 15. MINERAL RESERVE ESTIMATES

The following section contains statements in respect of Item 15 – Mineral Reserve Estimates of Form 43-101F1 – Technical Report.

15.1 Compliance exemption

APG, as a royalty holder for a portion of the Kestrel Mine, is not directly involved in Reserve estimates at Kestrel Mine. APG through its subsidiary company GRPL made contact with Kestrel Coal on 24 January 2014 requesting access to relevant data and a site visit to the Kestrel Mine. This request was refused and as such, data and information utilised in the generation of this Technical Report is solely reliant upon what could be collected from public domain sources (see section 3.5).

RTCA have used the 2012 edition of the JORC Code as the minimum standard for preparing the last published Reserve estimate for the Kestrel Mine. Under ASX listing rules (for which RTCA publicly reports) there is no requirement for disclosure of the technical report upon which a Reserve estimate would have been made.

Kestrel Coal has claimed supply of such information would risk confidentiality and is commercially sensitive, as such Golder in the preparation of this section of the Technical Report is unable to directly comment on Kestrel Coal’s key assumptions, parameters, and methods used to convert the Resource estimate to Mineral Reserves, in addition to complying with all disclosure requirements for Mineral Reserves as set out in the Instrument.

15.2 Reserves reporting code

The standard adopted by RTCA for reporting of Coal Reserve statements in respect of Kestrel Mine and reproduced herein as Table 11 is based on the guiding principles, terms and definitions given in the 2012 edition of the JORC Code. The Competent Person for Coal Reserves declared at Kestrel Mine in 2013 was Mr Andrew Swiericzuk.

The JORC Code requires a discussion be made when preparing a technical report for Reserves into comparisons with previous estimates. Material differences are to be discussed and details provided as to determining why differences occur. As APG is reliant on public domain data and does not have access to the Technical Report supporting the RTCA primary estimate Golder was unable to provide a detailed reconciliation of either the reported Reserves as required under Item 7.1 of National Instrument 43-101 and rather has had to rely on comparison with previous estimates in earlier years to measure the relative size of estimates.

15.3 Reported Reserves

The current Reserves statement provided by the Kestrel mine operator is provided in Table 11. This was dated 31 December 2013 and is documented in the Rio Tinto Limited Annual Report for 2013.

The Reserves provided in Table 11 are current; hence the effective date for this report is considered the Technical Report issue date of 30 January 2015. However it should be noted that the Reserves are based on the latest statement dated 31 December 2014 and will be affected during 2014 by subsequent:

mine depletion or
Resource update if completed in 2014.

The Reserve statement references an RTCA Competent Person and is stated to be compliant with the minimum requirements of the 2012 edition of the JORC Code. The Competent Person however does not comply with the requirements of NI43-101 as a QP requiring not only being a member of the AusIMM but also a Chartered Professional. However, the Reserve statement as reported under the JORC Code does meet the requirements of an acceptable foreign code.

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Total Coal Reserves (in-situ) comprise 40 Mt of Proved and 95 Mt of Probable Coal Reserve categories (refer Table 11). No information is available in the public domain which allows the proportion of reported Reserves contained within specified royalty areas to be determined. Furthermore, no detail is provided as to the relative proportion of thermal to metallurgical grade coals.

The average product yield from washing was stated to be 83% which when applied to the Coal Reserves of 135 Mt established Marketable Coal Reserves of 112 Mt with an average product quality of 31.6 MJ/kg calorific value (CV) and 0.59% sulphur (Rio Tinto Limited, 2013).

Table 11: Reported Coal Reserves*, 31 December 2013 (Source: Rio Tinto Limited, 2013)

In-situ Reserves (Mt)	Marketable Reserves (Mt)	Marketable coal quality
		Calorific value (MJ/kg)	Sulphur (%)
Proved	40	34	31.6	0.59
Probable	95	79	31.6	0.59

Exclusive of Resources in Table 9

Figure 10 in section 6.3 presents historical Coal Reserve statements for Kestrel Mine for the period 2000 to 2013 on an annual basis, inclusive for the periods ending 31 December. In summary it appears that the overall statements have remained relatively static since 2007 with minor adjustments for depletion. The smaller decrease in 2010 Reserves is due to partial conversion of Resources to Reserves and subsequent re-evaluation of mine plan.

There is limited information available in the public domain which supports the declarations as presented, and as such Golder would note:

The 2013 Coal Reserves for Kestrel comprises coking coal only (pre-2012 comprise both thermal and coking coal).
The declaration of modifying factors is limited to the assumption regarding average yield (refer Table 11). No assumptions regarding mining recovery factors such as dilution and ore losses were stated.
No detail is made available on stockpiled materials.
In support of the assumed economic viability of the Coal Reserve no declarations was made publicly available in respect of historical or assumed operating expenditures and commodity price assumptions.

The economic viability of the Kestrel mine, including royalty stream and coal price forecasts is discussed in Item 22 with operating costs discussed in section 21.3.

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ITEM 16. MINING METHODS

The following section contains statements in respect of Item 16 – Mining Methods of Form 43-101F1 – Technical Report.

16.1 Compliance exemption

APG, as a royalty holder for a portion of the Kestrel Mine, is not directly involved in mining operations at Kestrel Mine. APG through its subsidiary company GRPL made contact with Kestrel Coal on 24 January 2014 requesting access to relevant data and a site visit to the Kestrel Mine. This request was refused and as such, data and information utilised in the generation of this Technical Report is solely reliant upon what could be collected from public domain sources.

geotechnical, hydrological, and other parameters relevant to mine or pit designs and plans
mining dilution factors used
requirements for underground development
required mining fleet and machinery.

16.2 Mining technique

Kestrel Mine operates underground using both longwall and continuous mining techniques producing hard coking and thermal coals (Infomine, 2014).

Longwall mining is a technique which has revolutionised underground coal mining, enabling large scale and efficient extraction of coal in a cost effective and relatively safe manner when compared with other techniques such as board and pillar mining. Mechanical shearers are employed on the longwall panel, traversing across a face cutting coal with the roof supported behind the shearer with hydraulic supports. Cut coal is then transported to surface by a conveyor network. As the mining face advances the hydraulic roof supports are brought forward, the resultant goaf collapsing as earlier mined faces which are no longer supported subside (refer Figure 17). Longwall mining requires relatively benign geological conditions to be economically viable as set up costs for panel layouts are both time consuming and expensive, with the equipment unable to make radical changes in orientation should unexpected geological conditions be intersected.

Continuous mining uses traditional bord and pillar approach of cutting room areas of coal and leaving remnant pillars behind to support the roof and maintain stability with the overlying strata. Coal is collected by shuttle cars and transported to a conveyor for dispatch to surface (refer Figure 18). This technique enables greater flexibility in areas of more complex geology, although at the expense of lower recovery and extraction rates when compared to a properly operating longwall panel. Pillars can be robbed at a later stage in the mine life to increase recovery of coal.

16.3 Parameters relevant to mine design

As previously outlined Kestrel Coal has not provided information in relation to parameters such geotechnical and hydrological aspects that are relevant to the planned design of underground workings at Kestrel.

Golder in its search of public domain information did find that the planned orientation of the mine has changed since 2000 with the Kestrel extension portal being placed further north from the original published design. It is not clearly established what the primary drivers were around the reorientation of the design, although it is likely this relates to geotechnical stress and/or seam orientation requiring reconfiguration to enable an optimal design.

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Figure 17: Schematic of longwall mining technique (Source: Patriot Coal, 2014)

Figure 18: Schematic of continuous mining technique (Source: Patriot Coal, 2014)

16.4 Production

In 2011, the mine produced 3.545 million tonnes of coking coal and 0.326 million tonnes of thermal coal (Infomine, 2011).

The Kestrel Mine extension, has been designed to access the mine's existing resources more efficiently. The proposed extension, shall increase average annual production to 5.7 million tonnes of coal per year coming on stream at the end of 2014, with the planned mine closure in 2032.

The new longwall shall be 375 m wide and would be able to extract the full 2.9 m thick German Creek seam by employing three continuous miner units. Panel lengths would vary from 2 km to 6.5 km. Rubber tyred vehicles would be used for the transport of personnel and equipment. The mine would be accessed via new drifts.

16.5 Mining fleet

Based upon lack of available information in the public domain Golder is unable to comment on the minimum requirements of mining fleet to meet the expected production schedules for Kestrel Mine. The QP is of the

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opinion though it would be reasonable to assume that given the costs (AUD$2B) involved in recent upgrading of the operation through the expansion project that the following equipment list sourced (AMS, 2013) should suffice. Mining equipment used at Kestrel includes:

5 x MB650 continuous miner units
4 x Joy 10SC32 shuttle cars
9 x 10T Jug-A-0 LHDs
10 x drift runner man transport machines
1 x CAT longwall unit 375 m face width with name plate capacity of 3500 tph
2 x CAT EL3000 EVO shearers
185 x CAT roof supports 1400T set pressure weighing 50T.

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ITEM 17. RECOVERY METHODS

The following section contains statements in respect of Item 17 – Recovery Methods of Form 43-101F1 – Technical Report.

17.1 Compliance exemption

APG, as a royalty holder for a portion of the Kestrel Mine, is not directly involved in processing operations at Kestrel Mine. APG through its subsidiary company GRPL made contact with Kestrel Coal on 24 January 2014 requesting access to relevant data and a site visit to the Kestrel Mine. This request was refused and as such, data and information utilised in the generation of this Technical Report is solely reliant upon what could be collected from public domain sources. Kestrel Coal has claimed supply of such information would risk confidentiality and is commercially sensitive.

17.2 Coal handling preparation plant

The original coal handling preparation plant (CHPP) for the then Gordonstone Coal Mine consisted of dense medium baths, dense medium cyclones and conventional froth floatation cells. In 1995 the CHPP underwent an upgrade to increase the daily capacity to 1000 t/h. The upgrade consisted of the addition of two 5 m diameter Jameson cells and an 85 m² horizontal belt vacuum filter (HBVF) dewatering unit to Module 2 of the plant. Further modifications were made to the coarse coal circuit including the installation of 1000 mm diameter dense media cyclones and banana screens for drain and rinse (Tenova Bateman, 2014).

A second major upgrade of the plant coincided with the Kestrel Mine Expansion Project. The expansion contract which was valued at AUD$53M was awarded on 11 May 2010 to AECOM Technology to manage the underground development, constructing the surface infrastructure and upgrading the coal preparation plant. The CHPP has been designed to produce two premium products: low ash coking coal and a higher ash coking product for blending. The raw coal capacity is 20 000 t/d and a clean coal capacity of 16 000 t/d. The percentage of waste material is 15%. Wash size is to pass through 180 mm (AMS, 2013). Limited information was available in the public domain with regard to the upgraded plant specifications.

17.3 Historic recovery

Table 12 summarises from the Australian Coal year Book 2013 edition (AMS 2013), Kestrel's historic annual production. Included with the annual ROM coal production are saleable product coal (2002 to 2012) tonnages.

Table 12: Estimated yield as a function of annual production and saleable product (Source: AMS, 2013)

Year	ROM coal (Mt)	Saleable product (Mt)	Est. Yield (%)
2002	5.1	4.1	80
2003	4.4	3.3	75
2004	4.1	3.3	80
2005	4.5	3.7	82
2006	4.5	3.6	80
2007	4.5	3.6	80
2008	5.3	4	75
2009	4.3	3.7	86
2010	5.4	4.5	83
2011	5.1	3.8	75
2012	5	2.9	58

Using these figures, Golder has calculated an estimated plant yield. In doing so an assumption is made that that all coal is sold and nothing is retained in stockpiles. Figures generated by such a manner generally only

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differ marginally from those reported by RTCA annual reports. Typically RTCA in their annual reports have provided a consistent average yield to give marketable Reserves of 83%.

The 2011 and 2012 data indicates an average estimated yield (based upon data in Table 12) of 75% and 58% which is far lower than that reported by RTCA annual reports. This lower than normal figure may not actually be related to poor recovery but rather a depression in market sales resulting in stock piling of product coal, although the QP cannot verify the actual cause based upon the data available. Years preceding this with the exception of 2003 and 2008 are far closer in terms of reported yields by RTCA to that calculated from ROM tonnages and coal sold.

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ITEM 18. PROJECT INFRASTRUCTURE

The following section contains statements in respect of Item 18 – Project Infrastructure of Form 43-101F1 – Technical Report.

18.1 Compliance exemption

18.2 Infrastructure and transportation

Kestrel Mine recently underwent a two billion dollar expansion that was officially opened in October 2013. The new operation is expected to reach full capacity by the end of 2014. The mine uses longwall and continuous mining methods to optimise recovery rates (RTCA, 2013). These methods require less roof support materials and provide better roof protection to miners than alternative methods. In 2012 Kestrel Mine was employing approximately 459 employees (RTCA, 2012).

Methods of mining include continuous miners used during development and single seam longwall extraction. The mine includes two declines over a kilometre and a half long to access the production area. The longwall blocks are up to 375 m wide and 4 km long. At full capacity Kestrel is expected to produce 5.7 Mtpa of coking coal and thermal coal. From the information publicly available it could not be confirmed if the amount of coal expected to be produced refers to ROM coal or product coal.

The raw coal is delivered from the production area to the surface via a series of conveyors. Surface infrastructure includes an 8.9 km overland conveyor, bins and a coal handling preparation plant which was upgraded as part of the extension project.

To support the expansion of Kestrel mine new infrastructure was added and existing facilities, such as the coal handling and preparation plant (CHPP), were upgraded. New surface infrastructure included a workshop, administration building and storage and warehouse facilities. The expansion also involved the construction of a water system which includes three water management dams with a combined capacity totalling 575 million litres. The construction management contract of the expansion project was awarded to Ausenco, a diversified engineering services and project management company, to a value of AUD$53M. The contract involved managing underground development, constructing the surface infrastructure and upgrading the coal preparation plant (Mining Technology, 2014). Figure 7, Figure 8 and Figure 9 in section 5.5 show satellite images of the infrastructure at Kestrel mine.

Coal is transported 365 km by rail to the port of Gladstone where the coal is then exported via the R.G. Tanna coal terminal. A typical coal haul can have four electric locomotives and 105 bottom dump wagons, carrying an average of 8400 t of coal. To complete the journey from Kestrel mine to the Port of Gladstone takes approximately 11 hours (AMS, 2013).

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ITEM 19. MARKET STUDIES AND CONTRACTS

The following section contains statements in respect of Item 19 – Market Studies and Contracts of Form 43-101F1 – Technical Report.

19.1 Compliance exemption

APG, as a royalty holder for a portion of the Kestrel Mine, is not directly involved in coal marketing for the Kestrel Mine, but rather receives royalty fees based on coal sales made by Kestrel Coal. APG through its subsidiary company GRPL made contact with Kestrel Coal on 24 January 2014 requesting access to relevant data and a site visit to the Kestrel Mine. This request was refused and as such, data and information utilised in the generation of this Technical Report is solely reliant upon what could be collected from public domain sources. Kestrel Coal has claimed supply of such information would risk confidentiality and is commercially sensitive.

19.2 Markets

Kestrel Mine’s saleable products are exported to various international destinations. Based on statistics sourced from Department of Natural Resources and Mines (Queensland Government, 2013b) Golder compiled both the coking coal and thermal exports per country for the financial year ending 30 June 2013 (refer Figure 19 and Figure 20). Of this 84% of coking coal and 86% thermal coal were sold to customers located in Asia markets.

Compiled from Queensland Government (2013b)
Figure 19: Kestrel Mine coking coal export destinations for 2012-2013

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Compiled from Queensland Government (2013b)
Figure 20: Kestrel Mine thermal coal export destinations for 2012-2013

No site specific market studies were found for Kestrel Mine in the public domain.

19.3 Contracts

No site specific details on contracts in place at Kestrel Mine were found in the public domain.

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ITEM 20. ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT

The following section contains statements in respect of Item 20 – Environmental Studies, Permitting and Social or Community Impact of Form 43-101F1 – Technical Report.

20.1 Compliance exemption

APG, as a royalty holder for a portion of the Kestrel Mine, is not directly involved in environmental, permitting, social or community impact studies for the Kestrel Mine, but rather receives royalty fees based on coal sales made. APG through its subsidiary company GRPL made contact with Kestrel Coal on 24 January 2014 requesting access to relevant data and a site visit to the Kestrel Mine. This request was refused and as such, data and information utilised in the generation of this Technical Report is solely reliant upon what could be collected from public domain sources. Kestrel Coal has claimed supply of such information would risk confidentiality and is commercially sensitive.

20.2 Sustainable development

Kestrel Mine adopts the same corporate philosophy as RTCA’s approach to sustainable development – “to act responsibly, to get the most value from what they do and leave things in the best possible way once they are finished” (RTCA, 2012).

Table 13 summarises the sustainable development performance of Kestrel Mine from 2010 to 2012.

Each year RTCA sets targets for RTCA as a whole with the aim of continual improvement. The following is a summary of the 2012 results based on targets taken from RTCA’s 2012 sustainable development report.

The target for freshwater use measured in litres per tonne of product coal is 350. Results for 2011 and 2012 were 361 and 402 respectively. There was an increase in freshwater consumption in 2012 resulting in the target not being achieved.
Kestrel’s AIFR (1.27) fell short of the RTCA 2012 target of 0.68. RTCA’s AIFR as a whole came under the target with a rate of 0.67.
Greenhouse gas emissions from Kestrel Mine are not included on the scorecard as emissions and management from underground operations varies greatly and would skew the voluntary greenhouse gas emissions target were it included when determining the targets.

In 2012 Kestrel Mine became the first mine in Queensland to receive official certification of rehabilitated land under the Queensland Government’s Environmental Protection Act. Rehabilitation of the area, known as the ‘200 series’, commenced in 2003 and was completed in 2006. To be successfully certified, the land needed to be stable and determined to be good quality agricultural land, as outlined in the completion criteria specified in the environmental approval for Kestrel Mine (RTCA, 2012).

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Table 13: Kestrel Mine 2012 sustainable development site report (Source: RTCA, 2012)

Area		2010	2011	2012
Employees	Male	341	386	430
	Female	19	37	29
	Total	360	423	459
Saleable production (Mt)		4.5	3.9	2.8
All injury frequency rate (AIFR)		1.3	1.67	1.27
Freshwater use (l/t of product coal)		485	361	402
Proportion of recycled water used (%)		67	68	74
Energy use (Gj/t of material moved)		0.085	0.084	0.099
Greenhouse gas emissions (kg CO2-e / t of equivalent material moved)		17.72	17.99	19.07
Annual rehabilitation (Ha)		0	0	0
Annual disturbance (Ha) (not including infrastructure area)		6	43	104
Proportion of non-mineral waste recycled (%)		66	88	70
Community complaints		1	1	1
Community investment (AUD$)		$656 235	$857 582	$503,406
Spend on suppliers (AUD$)	Local*	n/a	$69 million on 179 suppliers	$131 million on 169 suppliers
	Rest of Queensland	n/a	$376 million on 483 suppliers	$604 million on 479 suppliers
	Rest of Australia	n/a	$193 million on 232 suppliers	$223 million on 287 suppliers

Local areas defined as Emerald, Capella and Tieri.

20.3 Community

Kestrel Mine established a community development fund (CDF) in 2003 to support the local community and surrounding districts to meet the economical, educational and social challenges faced in the region. RTCA has committed to continue funding the CDF with AUD$750 000 between January 2012 and December 2014.

Kestrel Mine has worked closely with the local indigenous community to boost indigenous employment at the site. In May 2012 Kestrel employed seven new trainees and one apprentice as part of Kestrel Mine's agreement with the Western Kangoulu traditional owners to provide employment and career development opportunities for local indigenous people. Kestrel has a target of five per cent indigenous employment which exceeds the regional demographic in many areas.

A Land Use Agreement was developed between Kestrel Mine and the Western Kangoulo people to provide for a financial contribution to the Aboriginal community through an Aboriginal community development fund. The intent is to formalise and structure a mutually beneficial working relationship. The agreement is focussed primarily on relationships rather than funding.

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ITEM 21. CAPITAL AND OPERATING COSTS

The following section contains statements in respect of Item 21 – Capital and Operating Costs of Form 43-101F1 – Technical Report.

21.1 Compliance exemption

APG, as a royalty holder for a portion of the Kestrel Mine, is not directly involved in operational aspects for the Kestrel Mine, but rather receives royalty fees based on coal sales made. APG through its subsidiary company GRPL made contact with Kestrel Coal on 24 January 2014 requesting access to relevant data and a site visit to the Kestrel Mine. This request was refused and as such, data and information utilised in the generation of this Technical Report is solely reliant upon what could be collected from public domain sources. Kestrel Coal has claimed supply of such information would risk confidentiality and is commercially sensitive.

21.2 Capital costs

Little site specific details on capital costs at the Kestrel Mine could be located in the public domain. It is therefore not possible to present validated tabulated capital costs.

Rio Tinto has reported spending approximately US$2.0 billion developing the Kestrel Mine extension. Work commenced in 2008 and was completed in September 2013. The extension included development of infrastructure such as a workshop, warehouse and storage facilities, administration building and services. In addition two new access declines were developed and an 8.9 km overland conveyor installed and upgrades to the existing CHPP were also carried out. The new longwall mining system is designed to operate with panels up to 400 m wide with the shearer having a nameplate capacity of 5000 t/hr. The Mine extension was officially opened during October 2013 and is expected to reach full capacity by the end of 2014 (RTCA, 2014g).

There is limited data available in the public domain to identify levels of sustaining capital forecast to be invested at Kestrel. However with the significant investment in infrastructure and equipment for the Kestrel Mine extension it is not unreasonable to assume that an estimated annual capital expenditure of approximately 10% of operating expenditure would support the production forecast of 5.7 Mtpa.

21.3 Operating costs

No detailed site specific operating costs for the Kestrel Mine were found in the public domain. It is therefore not possible to present validated tabulated operating costs. Table 14 presents the historical unit cash operating costs and coal sales sourced from Mitsui Kestrel Pty Ltd financial reports for the Australian financial years ending 30 June (sourced from ASIC). The reported figures are considered indicative of the economic performance of Kestrel Mine. These are assumed to only include costs proportional to Mitsui's interest in the Kestrel JV. The reported costs have been scaled appropriately to represent estimates of the Kestrel operating costs.

Mitsui Kestrel Coal financial reports for years 2011 to 2013 could not be found. However, figures from Rio Tinto Limited's 2012 financial statements within the annual report show that RTCA operating assets for the year ending 31 December 2012 were US$5.63 billion. In addition, gross sales revenue was US$4.99 billion and saleable coal production was 50.6 Mt. From this an average operating cost was calculated as US$111 per tonne of coal for 2012.

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Table 14: Operating Cost Estimates for Kestrel Mine on a financial year basis

Statistic	2009	2010	2011
Saleable coal (Mt)	4.326	4.385	3.436
OPEX, Mitsui Kestrel share (AUD$M)	77.42	69.65	82.54
Mitsui Share of JV (%)	20	20	20
Total Kestrel OPEX (AUD$M)	387	348	413
Average cash costs (AUD$/t product)	89	79	120
Coal sales, Mitsui Kestrel share (AUD$M)	215	153	202
Total Kestrel coal sales (AUD$M)	1,074.08	763.21	1,008.95
Average coal price (AUD$/t)	248.28	174.05	293.64

It should be noted that 2012 operating costs were high and in 2013 Rio Tinto implemented numerous measures to reduce costs. The following planned cost reductions were detailed in the Rio Tinto 2013 cost savings case study presentation (Rio Tinto, 2013):

20% reduction in skilled labour
18% reduction in maintenance spend
Reductions in goods and services spend by using suppliers in emerging markets.

Financial figures from Rio Tinto Limited's 2013 annual results (Rio Tinto, 2014b) and the fourth quarter operations review show that RTCA operating assets for the year ending 31 December 2013 were US$3.95 billion. In addition, gross sales revenue was US$4.41 billion and saleable coal production was 56.2 Mt. From this an average operating cost was calculated as US$70 per tonne of coal.

In 2013 the Minerals Council of Australia (MCA 2013) estimated that the average cash free on board (FOB) cost for seabourne thermal coal produced in Australia was US$74.2/tonne and the average cash FOB cost for seabourne metallurgical coal produced in Australia was US$107.4/tonne. Therefore considering the significant investment in infrastructure and equipment for the Kestrel Mine extension, the experience of operating longwall technology in the lease area and the outlined cost reduction measures implemented it is not unreasonable to assume that Kestrel could achieve FOB production costs in the range of US$65 to US$75/tonne.

The financial figures used represent total coal production within RTCA, and not just for the Kestrel Mine. 95% of the 2013 total saleable coal production was from multiple open cut operations and 5% was from one underground operation (Kestrel). In addition, 73% of the total saleable coal production was thermal coal and 27% coking coal.

Average coal export prices for Australia per financial year were sourced from the Department of Natural Resources and Mines coal statistics (Queensland Government, 2013b and 2014e) and are summarised in Figure 21. Coking coal price have more than halved since 2008 from AUD$310 to AUD$133.80 in 2014. Thermal coal price has also decreased, although not by the same magnitude, from AUD$136 in 2008 to AUD$85.41 in 2014.

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Figure 21: Average coal export price (FOB) for Australia (Source: Queensland Government, 2013b and 2014e)

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ITEM 22. ECONOMIC ANALYSIS

The following section contains statements in respect of Item 22 – Economic Analysis of Form 43-101F1 – Technical Report.

22.1 Compliance exemption

APG, as a royalty holder for a portion of the Kestrel Mine, is not directly involved in production at Kestrel Mine. APG through its subsidiary company GRPL made contact with Kestrel Coal on 24 January 2014 requesting access to relevant data and a site visit to the Kestrel Mine. This request was refused and as such, data and information utilised in the generation of this Technical Report is solely reliant upon what could be collected from public domain sources.

Kestrel Coal has claimed supply of such information would risk confidentiality and is commercially sensitive, as such Golder in the preparation of this section of the Technical Report is unable to directly comment on cash flow forecasts on an annual basis using Mineral Reserves or Mineral Resources and an annual production schedule for the life of project; a discussion of net present value (NPV), internal rate of return (IRR), and payback period of capital with imputed or actual interest; a summary of the taxes, and other government levies or interests applicable to the mineral project or to production, and to revenue or income from the mineral project; and sensitivity or other analysis using variants in commodity price, grade, capital and operating costs, or other significant parameters, as appropriate, and discuss the impact of the results.

22.2 Royalties received

The revenue stream from Kestrel Mine to APG is solely in the form of coal royalties on sales as previously described in section 1.1.1. On 18 August 2014 APG announced that it had entered an agreement with Kestrel Coal relating to the provision of information in respect of Kestrel. The information to which APG is entitled on a quarterly basis encompasses:

The invoiced payable tonnes (including hard and soft coking coals and thermal coal splits), royalty payable and the split between public and private royalty payments.
The estimated private royalty payable for the next quarter and the forecast production tonnages, split on a public and private royalty basis for the next 4 quarters.

22.2.1 Historic royalties

Table 15 presents historic royalty revenue received by APG from Kestrel coal production and production figures for the Kestrel Mine. The revenue received from royalties is strongly linked to the coal prices as production has been relatively consistent over recent years; however, the proportion of thermal to coking coal has changed. Figure 22 shows the royalty income versus the average annual coal prices for Australia (FOB). There is a decrease in revenue from AUD$41.9 million in 2008 to AUD$16.1 in 2013. The decrease in thermal coal price is significantly smaller than the decrease in coking coal price. Average Australian coking coal prices have decreased from over AUD$310 in 2008 to AUD$153 in 2013. In addition, the proportion of coking coal production at Kestrel compared to thermal coal production has increased from 66% in 2000 to 85% in 2013.

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Table 15: APG historic royalties and coal production (Source: APG and Rio Tinto annual reports)

Year	Adjusted Royalty received by APG (AUD$)	Saleable product (Mt)	Coking coal production (Mt)	Thermal coal production (Mt)	% coking coal of total production
2000	3 643 992	3.3	2.2	1.1	66%
2001	5 325 886	3.3	2.1	1.2	63%
2002	8 066 775	4.1	2.4	1.7	59%
2003	1 752 005	3.3	1.9	1.5	57%
2004	7 089 591	3.3	2.7	0.6	81%
2005	13 917 273	3.7	2.9	0.8	80%
2006	17 827 901	3.6	2.7	0.9	76%
2007	13 062 517	3.6	2.6	1.0	72%
2008	41 914 350	4.0	3.1	0.9	77%
2009	30 025 743	3.7	2.9	0.8	78%
2010	36 061 703	4.5	3.8	0.7	85%
2011	40 519 679	3.8	3.5	0.3	93%
2012	16 660 307	2.9	2.5	0.4	85%
2013	16 127 750	3.0	2.6	0.5	85%

Average coal prices are for all Australian exports, for financial year ending March 31
Figure 22: APG historic royalties and coal prices (Source: APG and Department of Natural Resources and Mines coal statistics, 2013b)

22.2.2 Mine planning

The Kestrel Extension is predicted to have a mine life of 20 years from a reserve of 115 Mt and be at a full production rate of 5.7 Mt per year by the end of 2014 (RTCA, 2013). It is not stated if the figure of 5.7 Mtpa is ROM or saleable product. Golder assumes the figure is ROM that will then be decreased by a probable yield to create saleable coal for the purposes of then generating royalty forecasts.

Kestrel have indicated that longwall panels in the Kestrel Extension area will be designed to be up to 400 m wide and range in length from 2000 to 6500 m (RTCA 2013). With the design capacity of the longwall system, associated coal clearance and coal preparation upgrades and mining experience in adjacent lease areas these production forecasts are not unreasonable.

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22.2.3 Coal prices forecast

Coal price forecasts are discussed in section 24.3.2 of this Technical Report. The longer term trend based on consensus modelling predicts coal prices to rise gradually over the next 5 years (aligned with normal trends over the past decade), as depicted in Figure 23.

Figure 23: Forecast coal price (Source: Consensus Economics, 2014)

22.2.4 Production forecast

The Kestrel Mine extension was expected to be completed in September of 2013. Production from the Kestrel extension area commenced in July of the same year. Rio Tinto expects that production will ramp up to 5.7 Mtpa over the next 12 to 18 months, after some commissioning issues were encountered with the new longwall (Citi, 2015). The QP is of the opinion that such problems are not unexpected when using new technology and that it would be reasonable that the forecast ROM production of 5.7 Mt per year will be achieved as production ramps up. With a yield of around 83% or greater at that time, which should be achievable (as reported by RTCA in their annual reports) then annual saleable coal in the order of 4.73 Mt should be realised. A balance of 85% coking coal (4.02 Mt) and 15% thermal coal (0.71 Mt) as in years previous would be reasonable to expect in terms of product coal mix based upon recent historic production statistics.

Coal prices have been volatile in the recent short term market. Based on extension of the Consensus Economic forecast trends (refer sections 22.2.3 and 24.3.2), it would not be unreasonable to assume that slight increases in the value of both coking and thermal coals could be realised. This would be in alignment with longer term trends over the past decade.

22.2.5 Royalty forecast

Royalty forecasts can only be based accurately with an understanding of the proposed mine schedule and its relationship to land title. As forward looking mine schedule information has not been made available to the QP comment cannot be made on expected future revenues to APG in the form of royalty payments with any accuracy. However; the disclosure agreement made between Kestrel Coal and APG has enabled reporting

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(APG, 2014) that for the second half of 2014 is 43% of coal produced at Kestrel will be within APG royalty held lands.

Kestrel produced 2.7Mt of coal in 2014 (2.16Mt of hard coking coal and 0.56Mt of thermal coal). The gross royalty income from Kestrel to APG is expected to be approximately £1.7m (AUD$ 3.1m) for 2014 (APG, 2015).

Rio Tinto report during the first half of 2015 coal production royalty payments to APG will be minimal with substantial recovery thereafter as Kestrel Coal move back into and mine more coal from APG held royalty lands.

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ITEM 23. ADJACENT PROPERTIES

The following section contains statements in respect of Item 23 – Adjacent Properties of Form 43-101F1 – Technical Report.

23.1 Adjacent properties

The Queensland State Government interactive resource tenure mapping website (IRTM, 2014), provides details of the tenements adjacent to the Kestrel Mine, which is reproduced in Figure 24 depicting MLs of mines immediately adjacent and proximal to Kestrel Mine.

The Kestrel Mine adjoins the following project tenements (IRTM, 2014):

To the north:
BHP Billiton Minerals Pty Ltd (BHPB) Gregory Extension (open cut coal) – ML 1923
BHPB’s Gregory Crinum (open cut and underground coal) Mine – ML 1789, ML 7007 and ML 70061
MDL 133 (held by BHP Queensland Coal Investments Pty Ltd)
EPC 2841 held by Linc Energy Ltd (Linc Energy)
EPC 1266 held by New Emerald Coal Pty Ltd (New Emerald, a wholly owned subsidiary of Linc Energy).
To the south:
MDL 217 held by Idemitsu Australia Resources Pty Ltd (Ensham Project)
EPC 1687 held by Stanmore Coal Ltd (Stanmore)
EPC 2157 held by Area Coal Pty Ltd (Area).
To the east:
MDL 486/EPC 1273 held by Glencore Coal Queensland Pty Ltd (Glencore)
MDL 490/EPC 1273 held by Glencore.
To the west:
ML application 70405/EPC 980 held by New Emerald
ML application 70442/EPC 1267 held by New Emerald.

The Gregory Crinum open cut and underground coal mine located to the north of Kestrel Mine similarly targets the German Creek seam, whilst the Ensham Mine targets the Rangal Coal Measures encountered stratigraphically above.

The QP notes that the Resources and Reserves reported for Gregory Crinum by BHP Billiton have not been verified as part of the preparation of this Technical Report and although targeting the same seam grouping the coal quality is not necessarily indicative of the mineralisation at the Kestrel Mine.

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ANGLO PACIFIC GROUP PLC

ADJACENT PROPERTIES

LEGEND

□ Town

Coal Mine Site

Kestrel Mining Lease

Gregory Crinum Mining Lease

Ensham Mining Lease

NOTES

Imagery copyright Nearmap 2014, captured 29th May 2011.
Tenement information supplied by IRTM.
Inset Service Layer Credits: Sources: Esri, DeLorme, NAVTEQ, USGS, Intermap, IPC, NRCAN, Esri Japan, METI, Esri China (Hong Kong), Esri (Thailand), TomTom, 2013

SCALE (at A4) 1:250,000

WGS 1984 UTM Zone 55S

PROJECT: 147621001

DATE: 29 JAN 2015

DRAWN: MDC

CHECKED: AR

FIGURE

Golder

Associate

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23.2 Gregory Crinum

Both the Gregory open cut mine and the Crinum underground mine (herein referred to as Gregory Crinum) fall under the Gregory Joint Venture, which is a joint venture between BHP Billiton (50%) and Mitsubishi Development (50%). Gregory Crinum is operated by the BHP Mitsubishi Alliance (BMA) (BHP Billiton Limited, 2013).

Gregory Crinum is located approximately 45 km north east of Emerald, Queensland.

Access to Gregory Crinum is by way of public road. Coal is transported by rail to the Hay Point and Gladstone Ports, a distance of some 310 and 370 km respectively (BHP Billiton Limited, 2013).

The Gregory open cut mine commenced operations in 1979, and the Crinum underground mine commenced longwall production in 1997. The Crinum mine was planned as a source of replacement capacity for Gregory. The Gregory mine ceased production in October 2012 (BHP Billiton Limited, 2013).

Both Gregory and Crinum mine bituminous coal from the Permian aged German Creek coal measures, producing a high volatile, low ash hard coking coal (BHP Billiton Limited, 2013).

All coal is beneficiated at on site processing facilities, which have a combined capacity in excess of 5 Mtpa (BHP Billiton Limited, 2013).

Table 16 provides the Coal Resources listed for Gregory Crinum as at June, 2013.

Table 17 provides the Marketable Coal Reserves listed for Gregory Crinum as at June, 2013.

Resources and Reserves list presented in Table 16 and Table 17 are public released reports by BMA. They are provided for reference as a neighbouring property from the same or similar coal seam group as Kestrel. They do not reflect material related to the Kestrel properties or the AGP royalty entitlements.

Table 16: Gregory Crinum Coal Resources* by mining method and coal type (reported to JORC 2012) as at June 2013 (Source: BHP Billiton Limited, 2013)

Mining Method / Coal Type	JORC Resource Classification	Tonnage (Mt)	Ash (% adb)	Volatile Matter (% adb)	Sulphur (% adb)
Open cut/Coking	Measured	7.9	6.0	33.0	0.60
	Indicated	0.7	5.7	32.4	0.63
Underground/Coking	Indicated	130	6.3	32.9	0.60
	Inferred	0.3	7.1	31.5	0.62

*Cut-off criteria applied: ≥0.50m seam thickness. Tonnages quoted are on an in-situ moisture basis.

Table 17: Gregory Crinum Marketable Coal Reserves* by mining method and coal type (reported to JORC 2012) as at June 2013 (Source: BHP Billiton Limited, 2013)

Mining Method/Coal Type	JORC Reserve Classification	Tonnage (Mt)	Ash (% adb)	Volatile Matter (% adb)	Sulphur (% adb)
Open cut/Coking	Proved Marketable	5.4	7.0	34.8	0.6
	Probable Marketable	0.2	7.0	35.3	0.60
Underground/Coking	Probable Marketable	14	7.5	33.7	0.60

*Cut-off criteria applied: ≥0.30m seam thickness and recovery of 82%.

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23.3 Ensham

The Ensham coal mine (Ensham) is located approximately 40 km east of Emerald, Queensland. Ensham is owned and operated by Ensham Resources Pty Ltd (Ensham), a wholly owned subsidiary of Idemitsu Australia Resources Pty Ltd (Idemitsu). Ensham operates the mine on behalf of a group of joint venture partners which comprise the following (Ensham Resources Pty Ltd, 2014a):

Bligh Coal Pty Ltd (47.5%)
Idemitsu Australia Resources Pty Ltd (37.5%)
J-Power Australia Pty Ltd (10%)
LG International (Australia) Pty Ltd (5%)

Ensham's mining operations currently comprise five separate open cut pits (Pits A, B, C, D and Yongala). The mine is currently in the process of transitioning to underground mining and is in the final stages of obtaining the relevant statutory approvals for the development of the underground operation. The first workings bord and pillar mine is a brownfield development with the footprint of the existing open cut operations. Underground mining will use two continuous miner sections operating simultaneously to produce approximately 1.7 Mtpa (Ensham, 2014).

Within the Ensham area, the Rangal Coal Measures comprise the Aries, Castor, Pollux and Orion seams in descending order, the upper three being exploited by open cut mining and the Aries-Castor being exploited by underground mining methods. Seam thickness in the open cut area averages 5 to 6 m whilst the underground area generally comprises a single seam averaging 3 m in thickness (Ensham, 2014).

Ensham produces only a limited amount of semi-soft coking coal, with the majority product being a low ash, sulphur, high energy thermal coal. They can produce thermal coals with ash content between 10 to 16% and a calorific value of 6000 to 7000 kcal/kg. Total sulphur content commonly ranges between 0.6 and 0.9% and volatile matter is commonly in the order of 25 to 27% (Ensham, 2014).

Total production is currently in the order of 7 Mtpa (Ensham, 2014).

Detailed information in relation to the current Resource and Reserve base is not available due to the fact that Ensham is not a publicly listed company.

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ITEM 24. OTHER RELEVANT DATA AND INFORMATION

The following section contains statements in respect of Item 24 – Other Relevant Data and Information of Form 43-101F1 – Technical Report.

24.1 Coal mining and the Australian economy

Currently, Australia is ranked number four among the world's top coal producers and number two in terms of the world's largest coal exporters on a weight basis. Coal ranks as the second largest export commodity in terms of revenue (EIA, 2014a).

Australia ranks as one of the key sources of coal in the world with the commodity playing a major role in the country's economy.

In 2008, Australia held approximately 76 billion metric tonnes of recoverable coal reserves, the fourth largest worldwide according to the World Energy Council. In terms of total coal production, Australia is the world's fourth largest producer. Black coal (primarily bituminous or anthracite) is Australia's second largest export commodity, behind iron ore in terms of total revenue and accrued some AUD$62 billion in 2012 (EIA, 2014a).

Queensland and New South Wales account for approximately 97% of the total Australian black coal production, whilst Victoria accounts for approximately 96% of brown coal reserves (largely used for domestic electricity generation). The majority of Australian coal is bituminous or sub-bituminous (black coal) in rank (EIA, 2014a).

24.2 Australian coal production

Figure 25 presents total Australian coal (all coal types) produced from mining, commencing in 1980 up until 2012. Australia produced a total of approximately 456 million short tons or 413 Mt of coal in 2012 (EIA, 2014b). Production rates for coal on a national basis have increased at a relatively constant rate of around 125 million short tons per annum.

Figure 25: Australian coal production (1980 – 2012) (Source: EIA, 2014b)

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Australia exported a total of approximately 322 million short tons or 292 Mt of coal in 2012 Coal net exports/imports. As expected the export demand for Australian coals has also been increased on an annualised basis. Figure 26 presents total Australian coal (all coal types) net exports/imports between 1980 and 2011 (EIA, 2014b).

Figure 26: Australian coal net exports/imports (1980 – 2011) (Source: EIA, 2014b)

24.3 Commodity prices

This section of the Technical Report is presented solely for information purposes and should not be considered a suitable replacement for detailed historical and forecast supply and demand price analysis.

24.3.1 Historical coal prices

Historical prices for both Australian coking and thermal coal (USD$/metric tonne) between January 2000 and January 2014 are presented in Figure 27. Prices although dropping over the past 2 years still depict a general increase when considered over a longer range such as the last decade.

Figure 27: Historical pricing for coal (Source: Consensus Economics, 2014)

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24.3.2 Forecast coal prices

The mean forecast price for both coking and thermal coal is aligned with the longer term trend seen in historical prices as illustrated in Figure 27. The mean forecast prices for coking coal and thermal coal in Table 18 and Figure 28 indicate a 20% increase in price from US$117.7 (December 2014) to US$145.2 (March 2017).

Table 18: Forecast Australian coking coal prices on a US$/metric tonne basis (Source: Consensus Economics, 2014)

	Dec-14	Mar-15	Jun-15	Sep-15	Dec-15	Mar-16	Jun-16	Sep-16	Dec-16	Mar-17
Wilson HTM	120	130	140.0	145	150	160	160	160	160	165
Investec	120	130	130	140	140	150	150	160	160	175
Liberium Capital	115	120	120	140	140	140	140	140	na	na
BoA Merrill Lynch	119	120	120	130	130	140	na	na	na	na
RBC Capital Markets	119	120	125	130	135	135	135	135	135	145
ANZ	119	119	122	125	128	130	133	137	140	145
Citigroup	112	112	117	125	135	140	140	140	140	na
Credit Suisse	119	117	125	125	125	130	130	130	130	135
Macquarie	119	130	130	125	125	145	145	145	145	155
Australia Dept of Industry	119	122	122	122	122	131	131	131	131	137
CIMB Group	114	120	120	120	120	130	130	130	130	140
Morgan Stanley	115	120	125	120	120	125	120	115	115	120
Commonwealth Bank	119	110	111.3	114.8	118.1	120.3	123.8	126.8	131.7	135.2
Deutsche Bank	119	115	112	110	105	110	115	115	125	na
Maximum	120.0	130.0	140.0	145.0	150.0	160.0	160.0	160.0	160.0	175.0
Minimum	112.0	110.0	111.3	110.0	105.0	110.0	115.0	115.0	115.0	120.0
Mean	117.7	120.4	122.8	126.6	128.1	134.7	134.8	135.8	136.9	145.2
Median	119.0	120.0	122.0	125.0	126.5	133.0	133.0	135.0	133.4	142.5
Standard Deviation	2.6	6.2	7.4	9.8	11.4	12.6	12.3	13.9	13.3	16.0

Figure 28: Forecast Australian coking coal prices on a US$/metric tonne basis (Source: Consensus Economics, 2014).

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The mean forecast prices for thermal coal in Table 19 and Figure 29 depicts a 3% decrease in price from US$81.7 (December 2014) to US$79.0 (March 2017), with the long term price returning to a positive increase beyond June 2016.

Table 19: Forecast Australian thermal coal prices on a US$/metric tonne basis (Source: Consensus Economics, 2014)

	Dec-14	Mar-15	Jun-15	Sep-15	Dec-15	Mar-16	Jun-16	Sep-16	Dec-16	Mar-17
Investec	81.8	81.8	80.9	80.0	80.0	82.5	82.5	85.0	85.0	85.0
RBC Capital Markets	81.8	81.8	80.0	80.0	80.0	80.0	85.0	85.0	85.0	85.0
Macquarie	81.8	81.8	76.0	76.0	76.0	76.0	81.0	81.0	81.0	81.0
ANZ	81.8	81.8	75.0	75.0	75.0	75.0	82.0	82.0	82.0	82.0
Morgan Stanley	81.8	81.8	73.0	73.0	73.0	73.0	75.0	75.0	75.0	75.0
Australia Dept of Industry	81.0	81.0	72.0	72.0	72.0	72.0	75.0	75.0	75.0	75.0
Deutsche Bank	81.8	81.8	67.0	67.0	67.0	67.0	63.0	63.0	63.0	na
Credit Suisse	81.8	81.8	63.0	63.0	63.0	65.0	65.0	65.0	65.0	70.0
Maximum	81.8	81.8	80.9	80.0	80.0	82.5	85.0	85.0	85.0	85.0
Minimum	81.0	81.0	63.0	63.0	63.0	65.0	63.0	63.0	63.0	70.0
Mean	81.7	81.7	73.4	73.3	73.3	73.8	76.1	76.4	76.4	79.0
Median	81.8	81.8	74.0	74.0	74.0	74.0	78.0	78.0	78.0	81.0
Standard Deviation	0.3	0.3	6.1	5.9	5.9	6.0	8.2	8.6	8.6	5.7

Figure 29: Forecast Australian thermal coal prices on a US$/metric tonne basis (Source: Consensus Economics, 2014).

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ITEM 25. INTERPRETATION AND CONCLUSIONS

The following section contains statements in respect of Item 25 – Interpretation and Conclusions of Form 43-101F1 – Technical Report.

This Technical Report is reliant on information gleaned from the public domain. The ability to validate information at its source is hampered by Kestrel Coals right to refuse access to data, mine site personal and the operational site, on the basis that this is considered commercially sensitive. As a consequence this Technical Report is based on information available in the public domain rather than direct inputs that would have been used as part of RTCA reported Resources and Reserves.

The Kestrel Mine completed final stages of an expansion project that predicts its underground coking and thermal coal mine will increase production up to 5.7 Mt ROM coal on an annual basis up until closure in 2032. Given operational costs efficiencies can be achieved and the price of coal sees a modest annual increase then the mine appears to stand as a viable and profitable long term operation.

APG receive royalties from Kestrel Coal on the basis of land title they hold in partnership over the Kestrel Mine tenure area. The revenue they have received in the past number of years through royalty payments has decreased markedly. This is due to market price adjustments being realised across the coal industry and also as a result of production output decreases with the expansion development being undertaken.

Although the value of both coking and thermal coals has taken a battering since highs of 2008 and 2012 the longer economic trends appear to see a return to price increases although these are likely modest and in alignment with long term coal pricing trends tracked over the past decade. Thermal coal prices predict less value increase than coking coal over the same period. This in its own right will provide opportunity for higher revenues as the royalty is payable on the sale price per tonne and not revenue achieved.

If approval of Mining Lease application 70481 by the Queensland Government is granted then APG shall find that its option to collect royalties from coal sales continue for longer in terms of the overall mine life.

ITEM 26. RECOMMENDATIONS

The following section contains statements in respect of Item 26 – Recommendations of Form 43-101F1 – Technical Report.

Due to the nature of APG's relationship with Kestrel Coal (i.e. a royalty holder) the QP has no recommendations to make about operational aspects.

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ITEM 27. REFERENCES

Anglo Pacific Group, 2013. Communication received 11 February 2014

Anglo Pacific Group, 2014. [online]. Available at http://www.anglopacificgroup.com/pdf/522689_140818_Kestrel_Update_Final.pdf accessed on 13 October 2014.

Anglo Pacific Group, 2015. [online]. Available at http://www.anglopacificgroup.com/pdf/522713_KestrelUpdateQ12015.pdf accessed on 21 January 2015. ASIC, 2014. Company search [online]. Available at https://connectonline.asic.gov.au/RegistrySearch/faces/landing/panelSearch.jspx?searchType=OrgAndBusNm&searchText=united+plantations&searchTab=search&_adf.ctrl-state=gu2629n6e_19 accessed on 11 February 2014.

Australian Bureau of Statistics, 2013. 2011 Census Quick Stats [online]. Available at http://www.abs.gov.au/websitedbs/censushome.nsf/home/quickstats?opendocument&navpos=220, accessed on 31 January 2014.

Australia's Mining Series (AMS), 2013. Australian Coal Yearbook, Twenty-Sixth Edition, 2013/14.

Barlow Jonker, 1999. Gordon Resources Private Royalty Valuation for Kestrel and Crinum Private Royalties, October 1999

Beeston, J.W., 2000. Kestrel Mine Poster Paper. Bowen Basin Symposium

Bennett, E.M., 1968. A-P42C: Mount Isa Mines Limited ATP42C "Emerald" report for the six months ended 31.3.68. QDEX report number 2465.

BHP Billiton Limited, 2013. BHP Billiton Annual Report 2013 [online]. Available at http://www.bhpbilliton.com/home/investors/reports/Documents/2013/BHPBillitonAnnualReport2013.pdf, accessed on 31 January 2014.

Bureau of Meteorology, 2013. Climate Data Online [online] Available at http://www.bom.gov.au/climate/data/index.shtml, accessed 31 January 2014.

Citi Research Equities, 2014. Rio Tinto Ltd Alert: Energy Roundtable.

Clayton Utz, 2011. Summary of Advice – Anglo Pacific Group PLC – Kestrel. Memorandum reference 14118/17018/80117430

Consensus Economics, 2014. Energy and Metals Forecasts. Minerals Monitor. December 2013 edition.

EIA, 2014a. U.S. Energy Information Administration [online]. Available at http://www.eia.gov/countries/cab.cfm?fips=AS, accessed 17 February, 2014.

EIA, 2014b. U.S. Energy Information Administration [online]. Available at http://www.eia.gov/countries/country-data.cfm?fips=AS&trk=m#coal, accessed 17 February, 2014.

Ensham, 2014. Ensham Resources Pty Ltd [online]. Available at http://www.ensham.com.au/updated/index.html.asp, accessed 7 February 2014.

Galligan, A.G., 1976. Coal Resources of the German Creek Formation in the Emerald Area – South Central Bowen Basin. Geological Survey Queensland Record 1976/21.

Gordon, N., 2002. The Development of Hazard Plans at Kestrel Mine, in Aziz, N (ed), Coal 2002: Coal Operators' Conference, University of Wollongong & the Australasian Institute of Mining and Metallurgy, 2002, 159-168.

Golder, 2014. Golder Associates Pty Ltd Australian Coal Industry, An Overview, PowerPoint presentation dated 7 February 2014.

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Infomine, 2014, Minesite, Kestrel [online]. Available at http://www.infomine.com/minesite/minesite.asp?site=kestrel accessed 7 February 2014

IRTM, 2014. Geological Survey of Qld, Interactive Resource and Tenure Maps. Available at https://webgis.dme.qld.gov.au/webgis/webgmin/viewer.htm, accessed 7 February 2014

JORC, 2004. Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Report of the Joint Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC), issued December 2004.

JORC, 2012. Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC), issued December 2012.

Kathage, B.A., 1989. Gordonstone. Australian Mine Surveyor, Journal of the Australian Institute of Mine Surveyors, 7(3), p1. http://www.minesurveyors.com.au/files/AustralianMineSurveyorVol7No3.pdf, accessed 7 February 2014

MCA 2013 Dr. John Kunkel, Deputy CEO (Minerals Council of Australia) - Australia's Coal Industry: Short-term Challenges, Long-term Opportunities

Mining Technology, 2014. Projects, Kestrel Mine Central Queensland, Australia [online]. Available at http://www.mining-technology.com/projects/kestrelminecentralqu/, accessed 31 January 2014

NAPCO, 2014. Gordon Downs property information [online] Available at http://www.napco.com.au/default.asp?PageID=37, accessed 31 January 2014

NI 43-101, 2011a. National Instrument 43-101 Standards of Disclosure for Mineral Projects. Chapter 5 Rules and Polices. 5.1.1 NI 43-101 Standards of Disclosure for Mineral Projects, Form 43101F1 Technical Report and Related Consequential Amendments. 24 June 2011. Available at http://web.cim.org/standards/documents/Block484_Doc111.pdf, accessed 28 January 2014.

NI 43-101, 2011b. Companion Policy 43-101CP to National Instrument 43-101 Standards of Disclosure for Mineral Projects. 24 June 2011. (2011) 34 OSCB 7068

NI 43-101, 2011c. Form 43-101F1 Technical Report. 24 June 2011. (2011) 34 OSCB 7068.

Ontario Securities Commission. Securities Law & Instruments. IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the "Jurisdiction") AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF ANGLO PACIFIC GROUP PLC (the "Filer"). 24 September 2012. [online] Available at http://www.osc.gov.on.ca/en/SecuritiesLaw_ord_20120927_218_anglo-pacific.htm

Park, W.J., 1973. Coal Exploration, Southern Central Bowen Basin, Emerald Area. G.S.Q record number 1973/28.

Park, W.J., 1974. Coal Exploration, Southern Central Bowen Basin - Emerald Area Stage II Drilling. G.S.Q record number 1974/6.

Park, W.J., and Galligan, A.G. 1974. Coal Exploration, Southern Central Bowen Basin - Emerald Area Stage III Drilling, Volume B. G.S.Q record number 1974/10.

Patriot Coal, 2014, How we mine [online]. Available at http://www.patriotcoal.com/index.php?view=how-we-mine&p=3&s=52, accessed 7 February 2014

Queensland Government, 2003. Department of Natural Resources and Mines publication "Queensland Coals Physical and Chemical Properties, Colliery and Company Information, 14th Edition.

Queensland Government, 2012. Determination of Coal Royalty. MIN 140 [online]. Available at https://www.osr.qld.gov.au/royalties/royalty-policy-min-140-coal-royalty.pdf, accessed 5 February 2014.

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Queensland Government, 2013a. Mineral Resources Act 1989 [online]. Available at https://www.legislation.qld.gov.au/LEGISLTN/CURRENT/M/MineralReA89.pdf, accessed 5 February 2014.

Queensland Government, 2013b. Department of Natural Resources and Mines, Coal Statistics [online]. Available at http://mines.industry.qld.gov.au/mining/coal-statistics.htm, accessed 5 February 2014.

Queensland Government, 2014a. Office of State Revenue, Mining and Petroleum Royalties, Overview of Royalties [online]. Available at https://www.osr.qld.gov.au/royalties/overview.shtmlhttps://www.osr.qld.gov.au/royalties/overview.shtml, accessed 5 February 2014.

Queensland Government, 2014b. Department of Natural Resources and Mines, Mines home, Mining, exploration & petroleum, Land access and native title, Minerals tenure types and forms [online]. Available at http://mines.industry.qld.gov.au/mining/minerals-tenures.htm, accessed 5 February 2014.

Queensland Government, 2014c. Queensland Spatial Catalogue. Cadastral data by Local Government Area series [online]. Available at http://qspatial.information.qld.gov.au/geoportal/catalog/search/resource/details.page?uuid=%7B7C801C48-675D-45E4-89D0-D17B9C627E32%7D

Queensland Government, 2014d. Queensland Globe [online]. Available at https://data.qld.gov.au/dataset/queensland-globe

Queensland Government, 2014e. Queensland Government data, Average export price per tonne [online]. Available at https://data.qld.gov.au/dataset/coal-industry-review-statistical-tables/resource/6a8a7efd-ec91-48d4-8456-d37d88a2655b, accessed 5 February 2014.

Rio Tinto Limited, 1999. Rio Tinto 1999 Annual Report.

Rio Tinto Limited, 2000. Rio Tinto 2000 Annual Report.

Rio Tinto Limited, 2001. Rio Tinto 2001 Annual Report.

Rio Tinto Limited, 2002. Rio Tinto 2002 Annual Report.

Rio Tinto Limited, 2003. Rio Tinto 2003 Annual Report.

Rio Tinto Limited, 2004. Rio Tinto 2004 Annual Report.

Rio Tinto Limited, 2005. Rio Tinto 2005 Annual Report.

Rio Tinto Limited, 2006. Rio Tinto 2006 Annual Report.

Rio Tinto Limited, 2007. Rio Tinto 2007 Annual Report [online]. Available at http://www.riotinto.com/annualreport2007/, accessed 30 January 2014.

Rio Tinto Limited, 2008. Rio Tinto 2008 Annual Report [online]. Available at http://www.riotinto.com/annualreport2008/, accessed 30 January 2014.

Rio Tinto Limited, 2009. Rio Tinto 2009 Annual Report [online]. Available at http://www.riotinto.com/annualreport2009/, accessed 30 January 2014.

Rio Tinto Limited, 2010. Rio Tinto 2010 Annual Report [online]. Available at http://www.riotinto.com/annualreport2010/, accessed 30 January 2014.

Rio Tinto Limited, 2010b. Press release: Weather impacts Rio Tinto Coal Australia's Queensland operations. Dec 29, 2010.

Rio Tinto Limited, 2010c. 4th quarter 2010 operations review, January 18, 2011

Rio Tinto Limited, 2011. Rio Tinto 2011 Annual Report [online]. Available at http://www.riotinto.com/annualreport2011/, accessed 30 January 2014.

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Rio Tinto Limited, 2012. Rio Tinto 2012 Annual Report [online]. Available at http://www.riotinto.com/annualreport2012/, accessed 30 January 2014.

Rio Tinto Limited, 2013. Rio Tinto 2013 Cost Saving Case Studies presentation [online]. Available at http://www.riotinto.com/documents/RT_Cost_saving_case_studies.pdf, accessed 30 January 2014.

Rio Tinto Limited, 2014. Rio Tinto Media Release 16 January 2014, Rio Tinto Announces Record Production for Iron Ore, Bauxite and Thermal Coal in 2013 [online]. Available at http://www.riotinto.com/documents/PR828g2_Rio_Tinto_announces_record_production_for_iron_ore_bauxite_and_thermal_coal_in_2013.pdf accessed on 10 February 2014.

Rio Tinto Limited, 2014b. Rio Tinto 2013 Annual results [online]. Available at: http://www.riotinto.com/documents/PR829g_Rio_Tinto_announces_a_10_per_cent_increase_in_underlying_earnings_to_10.2_billion_and_15_per_cent_increase_in_full_year_dividend.pdf, accessed 14 February 2014.

Rio Tinto, 2015. Fourth quarter operations review [online]. Available at: http://www.riotinto.com/documents/150120_RT_fourth_quarter_operations_review.pdf, accessed 21 January 2015.

RTCA, 2008. Rio Tinto Coal Australia, Kestrel Mine Extension Fact Sheet, March 2008 [online]. Available at http://www.riotintocoalaustralia.com.au/documents/Kestrel_Mine_Extension_fact_sheet.pdf, accessed 30 January 2014.

RTCA, 2012. Rio Tinto Coal Australia, Sustainable Development Report, 2012.

RTCA, 2013. Rio Tinto Media Release, Queensland Treasurer Opens Kestrel Mine Extension 15 October 2013 [online]. Available at http://www.riotinto.com/media/media-releases-237_9286.aspx

RTCA, 2014: Rio Tinto Coal Australia, Our Operations, Kestrel Mine (QLD) [online]. Available at http://www.riotintocoalaustralia.com.au/ouroperations/321_kestrel_mine.asp, accessed 7 February 2014.

RTCA, 2014b. Rio Tinto Coal Australia, Our Operations, Kestrel Mine (QLD), Overview [online]. Available at http://www.riotintocoalaustralia.com.au/ouroperations/321_kestrel_mine_450.asp, accessed 30 January 2014.

RTCA, 2014c. Rio Tinto Coal Australia, Our Operations, Kestrel Mine (QLD), Mining and Production [online]. Available at http://www.riotintocoalaustralia.com.au/ouroperations/321_kestrel_mine_452.asp, accessed 30 January 2014.

RTCA, 2014d. Rio Tinto Coal Australia, Our Operations, Kestrel Mine (QLD), Site report [online]. Available at http://www.riotintocoalaustralia.com.au/ouroperations/321_kestrel_mine_458.asp, accessed 30 January 2014.

RTCA, 2014e. Rio Tinto Coal Australia, Our Operations, Kestrel Mine (QLD), Community [online]. Available at http://www.riotintocoalaustralia.com.au/ouroperations/321_kestrel_mine_1196.asp, accessed 30 January 2014.

RTCA, 2014f. Rio Tinto Coal Australia, Our Operations, Kestrel Mine (QLD), Library [online]. Available at http://www.riotintocoalaustralia.com.au/ouroperations/321_kestrel_mine_1195.asp, accessed 30 January 2014.

RTCA, 2014g. Rio Tinto Coal Australia, Media, Media Releases, Queensland Treasurer Opens Mine Extension [online]. Available at http://www.riotintocoalaustralia.com.au/media/38_media_releases_5242.asp, accessed 30 January 2014.

Shekar, C. 1993. EPC 389, Gordonstone, Partial Relinquishment Report for 3 Sub-Blocks Relinquished On 1/3/93. QDEX report number 24900.

Sommer, D. 1997. EPC 389, Report for the period 1/3/96 To 7/1/97 and Final Report, Gordonstone Coal Management Pty Ltd. QDEX report number 28681.

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Report No. 147621001-001-R-Rev3

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NI 43-101 TECHNICAL REPORT - KESTREL COAL MINE

SRK, 2010. Amended and Restated NI-43-101 Technical Report on Kestrel Coal Mine Royalty, Queensland, Commonwealth of Australia, March, 2010 [online]. Available at www.sedar.com.

Tenova Bateman, 2014. Project Sheet, Gordonstone Plant Upgrade [online]. Available at http://www.tenovagroup.com/main_project.php?id=131&id_company=&id_prodotto=133&provenienza=, accessed 6 February 2014.

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CONSENT OF QUALIFIED PERSON

I, David John Arnott, employed by Golder Associates Pty Limited, 147 Coronation Drive, Milton QLD 4064, Australia do hereby certify that:

I graduated with a B.App.Sc. (Geol.) from the University of Technology, Sydney, in 1989.

I am a Member of the Australasian Institute of Mining and Metallurgy and Chartered Professional (Geology).

I have worked as a geologist for a total of twenty-five years since my graduation from university, of which a total of twenty years has involved Mineral Resource estimation, for a variety of deposit types.

I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements of a “qualified person” for the purposes of NI 43-101.

I am responsible for the preparation of the technical report titled “NI 43-101 Technical Report on Kestrel Coal Mine, QLD Australia”, dated 30 January 2015 (the “Technical Report”) relating to the Kestrel coal deposit.

I have not personally visited the Kestrel area in relation to this study.

I have had no prior involvement with the property that is the subject of the Technical Report. As of the effective date of this Technical Report, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

I am independent of the issuer, applying the test in part 1.5 of NI 43-101. I have read NI 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form.

I consent to the filing of the Technical Report with any stock exchange and any other regulatory authority and any publication by them, including electronic publication in the public company files on their websites accessible by the public, of the Technical Report.

Dated at Brisbane this 30 January 2015.

David John Arnott

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NARRABRI QUALIFIED PERSON'S REPORT

palaris

6 February 2015

Project No. ANGP2221-10

The Directors

Anglo Pacific PLC

1 Savile Row

London W1S 3JR

United Kingdom

NI 43-101 Technical Report on NARRABRI UNDERGROUND COAL Mine, NSW Australia

Dear Sirs

The attached Technical Report has been prepared by Palaris Australia Pty Ltd (Palaris) on behalf of Anglo Pacific. The report pertains to the Narrabri Underground Coal Mine located in the Gunnedah Basin, NSW Australia. Palaris understands that Anglo Pacific will include this Technical Report in a prospectus to be published in connection with the Firm Placing and Placing and Open Offer of New Ordinary Shares of Anglo Pacific and the admission of the New Ordinary Shares to listing on the premium segment of the Official List and to trading on the main market of the London Stock Exchange.

For the purposes of Prospectus Rule 5.5.3R(2) Palaris is responsible for this Technical Report as part of the Prospectus and declares that they have taken all reasonable care to ensure that the information contained in this Technical Report is, to the best of their knowledge, in accordance with the facts and contains no omission likely to affect its import, and furthermore, no material change has occurred from 30 January 2015 to the date hereof that would require any amendment to the Technical Report. This declaration is included in the Prospectus in compliance with item 1.2 of Annex I of the Prospectus Regulation.

Yours faithfully

John Pala

Managing Director

Attachments: ANGP2221-10 Narrabri NI 43-101 Report

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Report

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

New South Wales

Company	Anglo Pacific Group PLC
Site	Narrabri NSW Australia
Report Date	30 January 2015
Effective Date	14 January 2015
Doc No	ANGP2221-10
Qualified Persons	Dr William John Bamberry, Principal Geologist, MAIG Mr Gregor Carr, Senior Mine Planning Consultant, MAusIMM CP(Min)

palaris

Report To	Juan Alvarez
Project No.	ANGP2221
Doc No.	ANGP2221-10
Document History	Name	Date	Version
Authors	John Bamberry,
Gregor Carr
Anthony Yarrow
Steve Peart	October 2014	1
Peer Review By	Martin Hibberd	October 2014	1
Draft Issued To	Juan Alvarez	January 2015	11
Final Review By	Martin Hibberd
Final Issued To	Juan Alvarez	January 2015	13

Qualified Persons responsible for preparation of this report:-

Dr William John Bamberry

Principal Geologist

Palaris Australia Pty Ltd

30th January 2015

Mr Gregor CARR

Senior Mine Planning Consultant

Underground

Palaris Australia Pty Ltd

30th January 2015

palaris.com | ABN: 13 093 424 867

Newcastle

PO Box 1225, Newcastle NSW 2300

1/264 Hunter St, Newcastle NSW 2300

Australia

P: +61 2 4927 5511

F: +61 2 4927 5522

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GPO Box 3112, Brisbane QLD 4001

7/500 Queen St, Brisbane QLD 4000

Australia

P: +61 7 3221 5566

F: +61 7 3221 5622

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PO Box 1225, Newcastle NSW 2300

Suite 2a, 3/189 Kaira St, Wollongong

NSW 2500

Australia

P: +61 427 507 686

Perth

PO Box 1225, Newcastle NSW

2300

1/17 Ord St, West Perth WA 6005

Australia

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Palaris Europe Limited

(PEL)

New Broad Street House

35 New Broad Street

London EC2M 1NH

United Kingdom

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Important Notice

The Client

This document has been produced by or on behalf of Palaris Australia Pty Ltd ("Palaris") to be included in a prospectus to be published in connection with the firm placing and placing and open offer of new ordinary shares of Anglo Pacific Group PLC ("APG") and the admission of such shares to listing on the premium segment of the official list and to trading on the main market of the London Stock Exchange. Use of this document by the client is subject to the provisions of Palaris' Terms and Conditions of Service.

Palaris owns copyright in this document. Palaris grants the Client a non-transferable royalty-free licence to use this report for the above purposes and its internal business purposes only and to make copies of this report as it requires for those purposes.

Scope of the Document

This document should only be used for the purpose set out as above. Palaris will not be liable for any use of this document outside its intended scope.

Currency of Information

Palaris has used its best endeavours to ensure the information included in this report is as accurate as possible, based upon the information available to Palaris at the time of its creation. Any use of this document should take into account that it provides a 'point in time' based assessment and may need to be updated. That is, any information provided within this document may become outdated as new information becomes available. Any person relying upon this document should consider its appropriateness based upon the currency of the information it contains. Palaris is under no obligation to update the information within this document at any time.

Completeness of Information

This document has been created using information and data provided by the Client and third parties. Palaris is not liable for any inaccuracy or incompleteness of the information or data obtained from, or provided by, the Client, or any third party.

APG made contact with Whitehaven Coal during September 2014 requesting access to relevant data and for a site visit to the Narrabri Mine to be granted to Palaris. This request was refused and as such, data and information utilized in the generation of this Technical Report is solely reliant upon what could be collected from public domain sources. However, Palaris has taken all reasonable care to ensure that the information contained in this report is, to the best of their knowledge, in accordance with the facts and contains no omission likely to affect its import.

Reliance on Information

Palaris is proud of its reputation as a provider of prudent and diligent consultancy services when addressing risks associated with its Clients' operations. Nevertheless, there are inherent risks which can never totally be removed. As such, and save as provided by Prospectus Rule 5.5.3 (2), the contents of this document including any findings or opinions contained within it, are not warranted or guaranteed by Palaris in any manner, expressed or implied, however, Palaris has taken all reasonable care to ensure that the information contained in this report is, to the best of their knowledge, in accordance with the facts and contains no omission likely to affect its import. Any person relying upon this document should accommodate for such risks when relying upon any information supplied in this report. Such risks include, but are not limited to:

environmental constraints or hazards and natural disasters
plant and equipment constraints
capability and availability of management and employees
workplace health and safety issues
availability of funding to the operation
availability and reliability of supporting infrastructure and services
efficiency considerations
variations in cost elements
market conditions and global demand
industry development
regulatory and policy changes

30 January 2015 | ANGP2221-10 | Page 3 of 120

palaris
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

1 Item 1: Summary 10
1.1.1 Property Description and Ownership 10
1.1.2 Geology & Mineralisation 10
1.1.3 Status of Exploration 10
1.1.4 Status of Development and Operations 10
1.1.5 Coal Resources 11
1.1.6 Coal Reserves 13
1.1.7 Conclusions and Recommendations 13
2 Item 2: Introduction 16
2.1 Source Material 16
3 Item 3: Reliance on Other Experts 18
3.1 Limitations and Cautionary Statement 18
3.2 Effective Date 20
3.3 Reliance on Other Experts 20
4 Item 4: Property Description and Location 22
4.1 Compliance Exemption 22
4.2 Location 22
4.3 Tenure 23
4.4 Datum 23
4.5 Project Ownership 23
4.6 Environmental 26
4.7 Royalties and Payments 26
4.7.1 Ad Valorem Royalty 26
4.7.2 Coal Reject Royalty 26
4.8 Operating Policies 26
4.9 Native Title 27
5 Item 5: Accessibility, Climate, Local Resources, Infrastructure and Physiography 28
5.1 Compliance Exemption 28
5.2 Physiography and Vegetation 28
5.3 Access 28
5.4 Climate 29
5.5 Workforce 30
5.6 Site Infrastructure 30
6 Item 6: History 31
6.1 Compliance Exemption 31
6.2 Prior Ownership 31
6.3 Exploration and Development History 31
6.3.1 Previous Exploration 31
6.4 Historical Resource and Reserve Estimates 32
6.5 Production 33
7 Item 7: Geological Setting and Mineralisation 35

30 January 2015 | ANGP2221-10 | Page 4 of 120

pagers
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

7.1 Compliance Exemption ... 35
7.2 Regional Geology ... 35
7.3 Local Geology ... 37
7.4 Property Geology ... 37
8 Item 8: Deposit Types ... 39
8.1 Compliance Exemption ... 39
9 Item 9: Exploration ... 41
9.1 Compliance Exemption ... 41
9.2 Historical Exploration of Other Forms Than Drilling ... 41
9.3 Current Exploration ... 42
10 Item 10: Drilling ... 43
10.1 Compliance Exemption ... 43
10.2 Historical Exploration Drilling ... 43
10.3 Recent Drilling ... 46
10.4 Current Drilling Practices ... 46
11 Item 11: Sample Preparation, Analyses, and Security ... 47
11.1 Compliance Exemption ... 47
11.2 Historic Sampling ... 47
11.2.1 DMR Sampling and Analysis ... 47
11.2.2 Narrabri Coal – Sampling and Analysis ... 48
11.3 Current sampling ... 49
12 Item 12: Data Verification ... 50
12.1 Compliance Exemption ... 50
13 Item 13: Mineral Processing and Metallurgical Testing ... 51
13.1 Compliance Exemption ... 51
13.2 Testing and analytical procedures ... 51
13.3 Coal Recovery ... 52
13.4 Representativity of Test Samples ... 52
14 Item 14: Mineral Resource Estimates ... 53
14.1 Compliance Exemption ... 53
14.2 Resources Reporting Code ... 53
14.2.1 The JORC Code ... 54
14.2.2 Competent Persons ... 55
14.3 Reported Resources ... 55
14.4 Opinion of Stated Resources ... 56
15 Item 15: Mineral Reserve Estimates ... 57
15.1 Compliance Exemption ... 57
15.2 Reserves Reporting Code ... 57
15.2.1 The JORC Code ... 57
15.2.2 Competent Persons ... 58
15.3 Reported Reserves ... 59
15.4 Opinion of Stated Reserves ... 62

30 January 2015 | ANGP2221-10 | Page 5 of 120

pagers
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

16 Item 16: Mining Methods ... 67
16.1 Compliance Exemption ... 67
16.2 Mining Method ... 67
16.3 Narrabri Mine Design Parameters ... 70
16.3.1 Geotechnical Parameters ... 70
16.3.2 Hydrological Parameters ... 70
16.4 Mining Unit Dimensions ... 71
16.5 Mining Dilution Factors ... 73
16.6 Mining Fleet ... 73
16.7 Production Capacity ... 74
16.7.1 Whitehaven Forecasts ... 74
16.7.2 Narrabri Potential ... 75
16.8 Expected Mine Life ... 76
17 Item 17: Recovery Methods ... 78
17.1 Compliance Exemption ... 78
17.2 Coal Handling and Preparation Plant ... 78
17.3 Processing Plant Design ... 80
17.4 Processing Plant Performance ... 82
18 Item 18: Project Infrastructure ... 84
18.1 Compliance Exemption ... 84
18.2 Project Infrastructure ... 84
18.2.1 Access Roads and Service Corridors ... 87
18.2.2 Power Supply and Distribution ... 87
18.2.3 Mine Infrastructure Area ... 87
18.2.4 Ventilation Shafts ... 87
18.2.5 Gas Drainage ... 88
18.2.6 Reject Emplacement Area ... 88
18.2.7 Brine Storage Ponds ... 88
18.2.8 Raw Water ... 88
18.2.9 Coal Handling and Processing Plant ... 88
18.3 Transport Infrastructure ... 88
18.3.1 Rail Track ... 89
18.3.2 Rail Haulage ... 90
18.3.3 Port ... 90
19 Item 19: Market Studies and Contracts ... 92
19.1 Compliance Exemption ... 92
19.2 Market Studies ... 92
19.2.1 Thermal Coal Market ... 94
19.2.2 Coking Coal Market ... 96
19.2.3 Consensus Forecasts ... 97
19.3 Marketability of Narrabri Product ... 98
19.4 Contracts ... 99

30 January 2015 | ANGP2221-10 | Page 6 of 120

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Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

20 Item 20: Environmental Studies, Permitting, and Social or Community Impact ... 100
20.1 Environmental Studies and Impacts ... 100
20.1.1 Subsidence ... 100
20.1.2 Noise ... 100
20.1.3 Air Quality ... 101
20.1.4 Tailings and Reject Management ... 101
20.2 Environmental Monitoring and Management ... 101
20.3 Project Permitting ... 103
20.3.1 Stage 2 PA 08_0144 ... 105
20.3.2 Exploration Licence 6243 ... 105
20.3.3 Narrabri South Project ... 105
20.4 Social Engagement ... 105
20.4.1 Community Consultative Committee ... 106
20.4.2 Landholder Rights ... 106
20.4.3 Financial Contributions ... 106
20.5 Mine Closure Requirements ... 106
20.5.1 Closure Costs ... 107
20.6 Current Developments in New South Wales ... 107
21 Item 21: Capital and Operating Costs ... 109
21.1 Compliance Exemption ... 109
21.2 Capital Costs ... 109
21.3 Operating Costs ... 109
22 Item 22: Economic Analysis ... 111
22.1 Compliance Exemption ... 111
22.2 Production Forecast ... 111
22.3 Revenue Forecast ... 112
23 Item 23: Adjacent Properties ... 113
23.1 Compliance Exemption ... 113
23.2 Adjacent Properties ... 113
24 Item 24: Other Relevant Data and Information ... 115
25 Item 25: Interpretation and Conclusions ... 116
26 Item 26: Recommendations ... 117
27 Item 27: References ... 118
28 Certification of Qualified Persons ... 119
28.1 Certification by Qualified Person – Dr John Bamberry ... 119
28.2 Certification by Qualified Person – Mr Gregor Carr ... 120

30 January 2015 | ANGP2221-10 | Page 7 of 120

palaris
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Figures

Figure 1.1 Property location overview ... 12
Figure 4.1 Location of the Narrabri North mine and Narrabri South project ... 25
Figure 5.1 Monthly climate statistics for Narrabri West post office ... 29
Figure 5.2 Aerial photo and site infrastructure ... 30
Figure 6.1 Coal resource estimates for the project since 2007 ... 33
Figure 6.2 Quarterly production for Narrabri North mine ... 34
Figure 7.1 Regional geological setting ... 36
Figure 8.1 Typical Hoskissons seam stratigraphic column ... 40
Figure 10.1 Drilling undertaken by the DMR ... 44
Figure 15.1 Narrabri North mine plan ... 64
Figure 15.2 Narrabri South mine plan ... 65
Figure 15.3 Recoverable coal reserves history ... 66
Figure 15.4 Marketable coal reserves history ... 66
Figure 16.1 Schematic retreat longwall mine layout ... 68
Figure 16.2 Thick seam longwall mining ... 69
Figure 16.3 Narrabri South mine plan detail ... 72
Figure 16.4 Narrabri North mine forecast ROM output (EA 2009) ... 76
Figure 16.5 Narrabri North mine forecast marketable output (EA 2009) ... 77
Figure 17.1 Narrabri North surface facilities ... 79
Figure 17.2 Narrabri coal flow sheet ... 81
Figure 17.3 Narrabri coal preparation plant flow sheet ... 82
Figure 17.4 Narrabri coal production history ... 83
Figure 18.1 Narrabri key surface infrastructure ... 86
Figure 18.2 Gunnedah Basin line contracted and prospective upgrades ... 89
Figure 18.3 Whitehaven Coal port allocation and demand ... 91
Figure 19.1 Whitehaven Coal customer locations ... 93
Figure 19.2 Thermal coal spot prices ... 94
Figure 19.3 Projected electricity generation by fuel ... 95
Figure 19.4 Major thermal coal importers ... 95
Figure 19.5 Coking coal spot prices ... 96
Figure 19.6 Major coking coal importers ... 97
Figure 19.7 Consensus coal price forecast ... 98
Figure 23.1 Location of coal seam gas wells ... 114

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palaris
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Tables

Table 1.1 Narrabri coal resources (at 12% in situ moisture) as at end August, 2014 11
Table 1.2 Narrabri coal quality 11
Table 1.3 Narrabri recoverable coal reserves as at end August, 2014 13
Table 1.4 Narrabri marketable coal reserves as at end August, 2014 13
Table 4.1 Project tenure summary 23
Table 6.1 Coal resource estimates for the project since 2007 32
Table 7.1 Stratigraphy of the Gunnedah Basin 36
Table 10.1 Summary of part of Narrabri drilling program and Hoskissons seam intersections 45
Table 13.1 Average raw coal analysis of Hoskissons seam working section 51
Table 13.2 Average raw coal analysis of Hoskissons seam sections HC1 and HC2 52
Table 13.3 Average washed coal analysis of Hoskissons seam working section 52
Table 14.1 Narrabri coal resources (at 12% in situ moisture) as at end August, 2014 56
Table 15.1 Narrabri 2014 JORC recoverable coal reserves 59
Table 15.2 Narrabri 2014 JORC marketable coal reserves 60
Table 16.1 Narrabri gateroad pillar parameters 70
Table 16.2 Loss and dilution assumptions 73
Table 16.3 Narrabri mining equipment 74
Table 19.1 Narrabri coal quality 93
Table 20.1 Narrabri North mine environmental management plans 102
Table 20.2 Narrabri North mine permit and approvals status 103

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Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

1 Item 1: Summary

1.1.1 Property Description and Ownership

Narrabri North Mine ("the mine") and Narrabri South ("the project"), collectively referred to as "the property" are situated in the Gunnedah Coalfield, in the Gunnedah Basin of New South Wales, Australia. The mine is centred on Mining Lease No. 1609 (ML1609), whereas the project is based on Exploration Licence No. 6243 (EL6243).

The mine is operated by Narrabri Coal Pty Ltd, through a joint venture consisting of:

Whitehaven Coal Limited (70%)
Electric Power Development Co. Ltd (J-Power) (7.5%)
EDF Trading (7.5%)
Upper Horn Investments Limited (wholly owned subsidiary of China's Guangdong Yudean Group Co. Ltd) (7.5%) and
Daewoo International Corporation and Korea Resources Corporation (7.5%)

The property is located approximately 25 km south to south-east of the town of Narrabri and lies adjacent to the North-Western Branch Railway and the Kamilaroi Highway, as shown in Figure 1.1. The property is 382 km by rail to the Port of Newcastle.

1.1.2 Geology & Mineralisation

The mine currently produces coal by underground mining methods from the Hoskissons seam; a thick, dull coal containing a basal working section of ~4.2 m thickness. The seam is of formation status within the Late Permian Black Jack Group, which dips gently westwards within the lease. Overlap of the seam by a low angle unconformity at the base of the Digby Formation (conglomerate) causes thinning and wedging out of the seam in the eastern parts of the property. Several normal and reverse faults with up to 5 m throw have a northwest-southeast structural trend, but do not severely impact on the coal resource. No igneous intrusions within the target seam have been identified to date. The seam is also the target of exploration in the project area.

1.1.3 Status of Exploration

Exploration in the mine area is at an advanced stage with sufficient data captured to understand the variation in seam thickness and quality. In the project area, less exploration has occurred. However, sufficient data has been collected to enable layout of a conceptual mine plan.

1.1.4 Status of Development and Operations

The mine first produced coal in June 2010 when development commenced after the establishment of drifts into the coal seam. Since that time, production from longwall mining has produced coal for export as thermal coal and for use as Pulverised Coal Injection (PCI) feed in steel making. The maximum Run of Mine (ROM) production per quarter has been 2,082 kt of coal (quarter ending Sep. 2014). The mine is consented to produce no more than 8.0 Mt of ROM Coal per calendar year.

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

1.1.5 Coal Resources

Coal resources occur in the Hoskissons seam only at the project. Coal resources have been reported to a minimum seam thickness of 1.8 m, using a cut-off ash grade for the lower working section of 35% (ad), and no ash cut off for the upper section of the seam to allow longwall top coal caving assessment. A summary of the resources for the property is shown in Table 1.1 and is reported to in situ moisture basis of 12%.

Table 1.1 Narrabri coal resources (at 12% in situ moisture) as at end August, 2014

Titles	Measured (Mt)	Indicated (Mt)	Inferred (Mt)	Measured plus Indicated (Mt)
ML1609, EL6243	180	380	180	560

Source: Whitehaven, 2014: Mr Mark Dawson is CP for the Narrabri Coal Resources, under the JORC Code, (2012)

No coal qualities of the resources have been reported by Whitehaven Coal, although this now an implicit requirement of the JORC Code (2012 Edition). Indicative quality, as reported in the NSW 2013 Coal Industry Profile, is shown in Table 1.2

Table 1.2 Narrabri coal quality

Narrabri Coal Quality	Thermal
Moisture % (ad)	5.0
Moisture % (ar)	11.0
Ash % (ad)	12.0
Volatile matter % (ad)	28.5
Sulphur % (ad)	0.5
Specific energy (kcal / kg) (gross air dried)	6850

Source: 2013 NSW Coal Industry Profile

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Figure 1.1 Property location overview

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Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

1.1.6 Coal Reserves

Coal reserves occur in the Hoskissons seam only at the property. The Coal Reserve estimate was undertaken by Mr Graeme Rigg of RungePincockMinarco Ltd, in compliance with the JORC Code (2012 Edition). A summary of the recoverable coal reserves for the property is shown in Table 1.3 and is reported to a Run of Mine (ROM) moisture basis of 12%.

Table 1.3 Narrabri recoverable coal reserves as at end August, 2014

Titles	Proved (Mt)	Probable (Mt)	Total(Mt)
Narrabri North (ML1609)	57	83	140
Narrabri South (EL6243)	-	94	94
Total	57	177	234

Source: Whitehaven, 2014: Mr Mark Dawson is CP for the Narrabri Coal Reserves, under the JORC Code, (2012)

A summary of the marketable coal reserves for the property are shown in Table 1.4 and is reported to a marketable moisture basis of 11% for PCI product and up to 13% for thermal/bypass product. No coal qualities have been reported.

Table 1.4 Narrabri marketable coal reserves as at end August, 2014

Titles	Proved (Mt)	Probable (Mt)	Total(Mt)
Narrabri North (ML1609)	54	79	133
Narrabri South (EL6243)	-	75	75
Total	54	154	208

Source: Whitehaven, 2014: Mr Graeme Rigg is CP for the Narrabri Coal Reserves, under the JORC Code, (2012)

1.1.7 Conclusions and Recommendations

Resources and Reserves

The geology of the site is well understood, and the continuity of the coal is demonstrated by drill hole data inside the property, and from drill hole data from regional drilling and coal seam gas wells. Geological hazards affecting the property include faulting which is at a scale that is considered not to severely impact on the development of the resources.

The quantity of coal reported as Resources reflects a significant amount of coal, and encompasses the full Hoskissons seam. The resources are not differentiated between the working section or for the North and South properties. The resource statement is supported by a "Table 1" checklist, as prescribed by the JORC Code (2012 Edition), and most information provided in this report adequately describes the sampling and estimation procedures. The classification of coal resources for the property is not described in a clear and transparent manner; Palaris cannot validate the resource categories, and subsequently reserve categories, as the distribution of all borehole data and seismic surveys is not publicly available.

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Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

The Narrabri project Resources and Reserves have been reported under the JORC Code (2012). The defined terms used in the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards for Mineral Resources and Mineral Reserves, 2014 are referenced in NI 43-101. The definition of the terms Mineral Resource and the categories (Measured, Indicated and Inferred) are identical to those defined in the JORC Code (2012 Edition). CIM definitions of Mineral Reserves, and the sub categories Proven and Probable Mineral Reserves, align with the JORC Code definitions for Ore Reserves and the subcategories Proven and Probable Ore Reserves. No material differences exist between the two codes. The Competent Persons who prepared the Resource and Reserves estimates both satisfy the requirements of the JORC Code.

Operations

As an operating longwall mine, there is no large capital expenditure required for existing operations. Potential expansion projects will require additional capital, with the 400 m face extension project estimated to cost A$70M ($50M on longwall equipment and $20M for additional belts and drives). No data is publicly available for future sustaining capital requirements, however, A$4 to $6 per tonne of ROM coal can be estimated for ongoing operations

No public data is available to estimate forward looking operating costs. Narrabri is currently producing at an FOB cost of AUD$67/t, and is in a very competitive position in relation to the global cost curve for thermal coal and coking coal. Narrabri is expected to improve FOB operating costs in FY2015 but the extent of cost reduction is unclear. Whitehaven has provided cost guidance of A$59-62/t for FY 2015, however, it is unclear if this includes Government and private royalty payments.

Full economic analysis is not possible due to insufficient public information being available to construct a detailed production schedule and coal quality analysis. Whitehaven currently describe the Narrabri product type as being 80% thermal and 20% PCI, however in the past it has been described as up to 30% PCI.

The ROM production target of 6.5 Mt for FY2015 is considered achievable given recent quarterly results. Significant upside exists to expand production by optimising longwall change-outs, increase in future longwall block lengths and the plan to widen the longwall face. Palaris consider that there is potential to increase Narrabri output by 10-15% above that forecast by Whitehaven for FY2015 without infrastructure expansion.

Narrabri South has a similar coal resource to Narrabri North. Subject to sufficient infrastructure capacity, a second longwall mine could be developed in this area. This would require amended approvals, and construction of second CHPP similar to the existing plant servicing Narrabri North if both longwalls were to be operated concurrently. Alternatively, a second longwall mine could provide a reserves based mine life extension of ~14 years at a production rate of 6.5 Mtpa ROM by transferring coal mining operations to the south once Narrabri North has been depleted.

Marketing

Whitehaven sells thermal and coking coal to power generators and steel producers in the premium Asian markets, but data is unavailable to determine specific contracts and destination for Narrabri coal.

Two recent developments in Chinese coal policy – import tariffs and the restriction on low quality coal – are expected to have a limited impact. According to company reports, Whitehaven sells

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Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

approximately 7% of total product to China (8% of thermal coal and no coking coal) however, information on specific contracts for Narrabri coal are not publicly available. The coal quality restrictions are not expected to impact Narrabri due to the high quality of thermal coal.

The global thermal coal market is currently oversupplied which is expected to lead to mine closures and production cut-backs as many producers are reportedly unprofitable at current spot prices. The downward pressure on prices is expected to ease as supply normalises in the medium term. On the demand side, coal continues to remain a dominant source of energy due to cost and reliability advantages, with most of the growth in world energy demand coming from non-OECD emerging countries and expected to drive growth in seaborne thermal coal trade by 2 per cent per annum to 2019 (Source: BREE).

The global coking coal market has seen price reductions due to a slowdown in the Chinese property sector and oversupply of steel. At current spot prices, a large portion of coking coal producers are unprofitable and this is expected to lead to a market re-balancing through cut-backs and closures. On the demand side, the main drivers of coking coal consumption growth are expected to be China and India with seaborne coking coal trade forecast to grow at 1 per cent per annum to 2019 (Source: BREE).

Consensus price forecasts for thermal coal are for a slight recovery with nominal prices rising from US$75/t in 2014 to US$101/t in 2020. Similarly for PCI, nominal prices are forecast to rise from US$89/t in 2014 to US$132/t in 2020. Coal price forecasts are sourced from Consensus Economics, August 2014.

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palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

2 Item 2: Introduction

This technical report has been prepared for Anglo Pacific Group PLC (APG), a publicly listed company traded on both the London Stock Exchange (LSE) and the Toronto Stock Exchange (TSX).

APG's strategy is to build a diversified portfolio of royalties, focusing on accelerating income growth through acquiring royalties in cash or near-term cash producing assets. It is an objective of the company to provide shareholders with a long term cash flow by paying a substantial portion of these royalties as dividends.

Palaris Australia Pty Ltd (Palaris) was requested by APG to prepare on their behalf as the issuer, an Independent Technical Report in relation to the Narrabri North Mine and the planned Narrabri South Mine (currently at project status), located in New South Wales, Australia. This Technical Report has been prepared to support a prospectus to be issued by APG seeking capital to acquire the Narrabri royalty stream.

This Technical Report was prepared in accordance with the following documents published by the Canadian Securities Administrators (CSA):

National Instrument 43-101 – Standards of Disclosure for Mineral Projects
Form NI 43-101F1 – Technical Report (Form 43-101F1)

Although Palaris and APG attempted to gain access to Narrabri property data (through a formal request for information process) and to undertake a site visit, Whitehaven Coal declined both requests. Consequently, this report is based solely on a review of publicly available information about the Narrabri property.

Whitehaven Coal has recently reported estimated Resources and Reserves for Narrabri North Mine/Narrabri South Project in accordance with The Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2012 Edition).

Whitehaven Coal's reporting is governed by ASX listing rules, under which there is no requirement for disclosure of any technical reports which support Resource or Reserve estimates. As such reports have been deemed commercially sensitive by Whitehaven Coal, Palaris is unable to directly comment upon the key parameters, assumptions, and methodology used in the conversion of estimated Mineral Resources to Mineral Reserves as set out in NI 43-101.

2.1 Source Material

This Technical Report has been prepared utilising data that is available in the public domain. The primary sources of data include:

Whitehaven Coal's website ( http://www.whitehavencoal.com.au/)

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

NSW Division of Resources and Energy DIGS® document database and MinView Geographic Information system (http://www.resourcesandenergy.nsw.gov.au/)
NSW Planning & Environment Major Projects Assessment database (http://majorprojects.planning.nsw.gov.au/)

Item 27 of this Technical Report contains a list of reference material used in the preparation of this report. Footnotes have also been used to refer to specific data sources.

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

3 Item 3: Reliance on Other Experts

3.1 Limitations and Cautionary Statement

This information has included technical, financial and legal material which has been taken in good faith as dependable.

Data verification and detailed analysis of information underlying the reported Mineral Resources and Mineral Reserves has not been possible. Exemptions

This Technical Report has been prepared on the basis of the exemption allowable under Part 9, Section 9.2 of National Instrument 43-101 Standards of Disclosure for Mineral Projects.

Section 9.2 exempts a royalty holder, who has requested but not received access to the necessary data and is not able to obtain the information from the public domain, from the requirement to perform a personal inspection on the property and to complete those items under Form 43-101F1 that require data verification, inspection of documents, or personal inspection of the property.

Palaris and APG requested, but did not receive access to the mine site, key personnel, and data used in the estimation of the published Resources and Reserves from Whitehaven during September 2014 and is not able to obtain all the necessary information from the public domain. A response to this request was received denying a site visit and refusing data access.

The Qualified Persons have therefore relied exclusively upon general information available in the public domain in preparation of this Technical Report.

Palaris have not received access to the following data:

Item 4 Property Description and Location

The terms of any royalties, back-in rights, payments, or other agreements and encumbrances to which the property is subject

Item 5 Accessibility, Climate, Local Resources, Infrastructure and Physiography

The sufficiency of surface rights for the mining operations, availability and sources of power, water, mining personnel, or waste disposal requirements

Item 7 Geological Setting and Mineralisation

The presence of any faulting or intrusions in the coal seam

Item 9 Exploration other than Drilling

The procedures and parameters relating to surveys and investigations
Sampling methods and sample quality, including comment on whether samples are representative or biased
Information on location, number, type, nature and spacing or density of samples collected and the area recovered
The status of exploration, in addition to the nature and extent of all relevant exploration work other than drilling

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Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Item 10 Drilling

The type and extent of drilling, procedures followed, and summary and presentation of results
Any drilling, sampling, or recovery factors that could materially impact the accuracy and reliability of the results
Drill hole information, such as collar location, azimuth, dip and depth
Relationship between sample length and true seam thickness

Item 11 Sample Preparation, Analyses and Security

Sample preparation methods and quality control measures employed
Details of the testing laboratories and their sample preparation, assaying and analytical procedures, and whether the laboratories are certified by an standards association
A summary of the quality control and quality assurance actions undertaken to provide adequate confidence in data collection and processing

Item 12 Data Verification

The data verification procedures applied by the competent persons estimating the JORC resources

Item 13 Mineral Processing and Metallurgical Testing

The nature and extent of testing and analytical procedures
Basis for any assumptions or predictions regarding recovery estimates
The extent to which test samples are representative of the coal deposit as a whole
Any processing factors or deleterious elements that could have a significant effect on potential economic extraction

Item 14 Mineral Resource Estimates

Sample preparation methods and quality control measures employed
Sufficient discussion of the key assumptions, parameters, and methods used to estimate the Mineral Resources, for a reasonably informed reader to understand the basis for the estimate and how it was generated
General discussion on the extent to which the Mineral Resource estimates could be materially affected by any known environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant factors

Item 15 Mineral Reserve Estimates

Sufficient discussion and detail of the key assumptions, parameters, and methods used for a reasonably informed reader to understand how the Competent Person converted the Mineral Resources to Ore Reserves
The extent to which the Ore Reserve estimates could be materially affected by mining, metallurgical, infrastructure, permitting, and other relevant factors

Item 16 Mining Methods

Geotechnical, hydrological, and other parameters relevant to development of mine plans

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Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Item 17 Recovery Methods

Available information on test or operating results relating to the recoverability of the coal and amenability to the processing methods
Requirements for energy, water and process materials

Item 19 Market Studies and Contracts

Identification of any contracts that are required for property development, including mining, concentrating, smelting, refining, transportation, handling, sales and hedging, and forward sales contracts or arrangements and their status

Item 21 Capital and Operating Costs

A summary of capital and operating cost estimates, with the major components set out in tabular form

Item 22 Economic Analysis

An economic analysis for the project, addressing annual costs, revenue, and cash flow forecasts to determine net present value and other valuation parameters
Sensitivity analysis of the economic robustness of the project

3.2 Effective Date

This Technical Report relies upon the most recent Resources and Reserves estimates reported by Whitehaven. The estimates were announced to the ASX on 27 August 2014. The most recent subsequent announcement, Whitehaven Coal December 2014 Quarterly Production Report, was made on 14th January 2015 and this has been taken as the effective date of this Technical Report.

Readers of this report should take into consideration that, since the announcement of the Resources and Reserves estimate, the estimates will have been depleted through continued mining. Readers should also take into account that further work may have been undertaken which may result in updated estimates or reclassification of resource and/or reserve confidence.

3.3 Reliance on Other Experts

This document references the public release of the Whitehaven Resources and Reserves Statement for the period ending August, 2014. The public release includes two companion documents being:-

Whitehaven Coal Ltd, 2014 – Coal Resources and Coal Reserves; ASX Release dated 27th August, 2014
Whitehaven Coal Ltd, 2014 – Narrabri North Mine/ Narrabri South Project – Resources and Reserve: Table 1 Checklist of Assessment and Reporting Criteria (The JORC Code, 2012 Edition); ASX Release dated 27th August, 2014

The Qualified Persons named in this report have relied on this documentation for the official source of resource and reserve numbers, the description of the sampling and analytical methods, the description of resource and reserve estimates, and the assumptions behind those estimates.

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palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

In relying on these documents, the Qualified Persons are reliant on the information provided by the Competent Persons named in the Whitehaven statements as being factual and correct.

Whitehaven's 2014 published Resources for the Narrabri project was signed off by Mr Mark Dawson. Mr Dawson is not a member of the Australian Institute of Geoscientists – he is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) however he has not attained Chartered Professional (CP) standing, and does not appear to have the necessary membership of an Accepted Foreign Association to be considered as a Qualified Person for authorising Mineral Resources as defined in NI 43-101.

Whitehaven's 2014 published Reserves for the Narrabri project was signed off by Mr Graeme Rigg. Mr Rigg is a member of the AusIMM and also has Chartered Professional (CP) standing and would be eligible to be considered as a Qualified Person for authorising Mineral Reserves.

This Technical Report has been prepared by employees of Palaris, including Dr John Bamberry and Mr Gregor Carr who share overall responsibility for this report and who both satisfy the requirements of a Qualified Person as defined in National Instrument 43-101.

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palaris
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

4 Item 4: Property Description and Location

4.1 Compliance Exemption

APG made contact with Whitehaven Coal during September 2014 requesting access to relevant data and for a site visit to the Narrabri Mine to be granted to its consultants Palaris. This request was refused and as such, data and information utilized in the generation of this Technical Report is solely reliant upon what could be collected from public domain sources (see Item 3).

In preparing this part of the report Technical Report, Palaris has solely relied on publicly available documents and on-line databases, and has endeavoured to use the most up to date information available in these domains.

Palaris are unable to comment on details of:

the terms of any royalties, back-in rights, payments, or other agreements and encumbrances to which the property is subject

4.2 Location

The Narrabri North Mine and Narrabri South Project are contiguous properties, located in the Shire of Narrabri, in the State of New South Wales of Australia. The plan area of all the tenements covering the property is 11,289 ha¹. The mine is located at latitude: 30° 21' 08" S and longitude: 149° 48' 58" E; and is approximately 25 km south to south-east of the town of Narrabri and 10 km north to north-west of the village of Baan Baa (Figure 1.1). The surface elevation of the project site is approximately 200 m to 400 m above sea level.²

Access to the Narrabri North Mine and adjacent Narrabri South Project is provided by the Kamilaroi Highway, which connects Narrabri and Baan Baa (Figure 4.1). A rail loop constructed at Narrabri North connects to the North-Western Branch Railway, which parallels the Kamilaroi Highway and eventually connects to the Main North Line leading to the Port of Newcastle (Gunnedah Basin Line).

The nearest operating mines, Maules Creek and Boggabri, are located approximately 20-25 km to the east and are open cut coal mines working coal seams of the Maules Creek Formation. No other underground coal mines operate in the Gunnedah Basin.

The former Gunnedah and Preston Collieries, which operated for most of the 1900's are located 60 km south-east and worked the Hoskissons and Melvilles seams by bord and pillar methods. BHP Billiton's Caroona proposed underground coal mine, which plans to mine Hoskissons seam by longwall methods, is located 110 km to the south-east.

¹ The exploration licence and mining lease associated with the property partially overlap
² Google Earth imagery data

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Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

4.3 Tenure

In New South Wales, mineral tenure is administered by the Division of Resources and Energy of the NSW Department of Trade and Investment. The tenure is granted under the authority of the Mining Act 1992. Information regarding tenements and their status has been obtained from the Division of Resources and Energy DIGS® (Digital Imaging Geological Systems) and MinView databases.

The Narrabri tenure consists of two mineral tenure types, which are both held in the name of Narrabri Coal Pty Ltd, a wholly owned subsidiary of Whitehaven Coal Ltd (Table 4.1).

The project commenced with the granting of Exploration Licence No. 6243 (EL6243), which, when first granted on 21 May, 2004, had an area of 113.4 km². This licence area was excised from the Government held Authorisation No. 216; the tenure under which the Government had undertaken the regional exploration to prove the potential of the Gunnedah Basin.

The Narrabri North Mine is developed within the Mining Lease No. 1609 (ML1609). This licence was granted on 18 January 2008 and covers an area of 5,298 ha. Parts of EL6243 were excised when ML1609 was granted and has subsequently been reduced to 6,942 ha.

Table 4.1 Project tenure summary

Title Code	Title Number	Owner	Area	Grant Date	Expiry Date	Status
ML	1609	NARRABRI COAL PTY LTD	5298 HA	18 Jan 2008	18 Jan 2029	Mining
EL	6243	NARRABRI COAL PTY LTD	8251 HA	21 May 2004	20 May 2014	Renewal Sought

Source: New South Wales Trade & Investment – Resources & Energy October 2014
(http://www.resourcesandenergy.nsw.gov.au/miners-and-explorers/geoscience-information/services/online-services/minview)

At the time of writing, the status of EL6243 was still in the process of renewal. Delays in the processing of tenement renewals by the NSW Government authority administering the Mining Act (1992) are commonplace and Palaris are of the view that the delay in this renewal is not a specific issue related to the tenement.

4.4 Datum

All figures are presented, unless otherwise stated, using the Universal Transverse Mercator (UTM) based Geocentric Datum of Australia 1994 (GDA94), and the Map Grid Australia (MGA) Zone 55 projection. Heights are given relative to the Australian Height Datum (AHD).

4.5 Project Ownership

Narrabri Coal Pty Ltd manages the Narrabri North Mine in a Joint Venture made up of the following:

70% - Whitehaven Coal Limited
7.5% - Electric Power Development Co. Ltd (J-Power)

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

7.5% - EDF Trading
7.5% - Upper Horn Investments Limited (wholly owned subsidiary of China's Guangdong Yudean Group Co. Ltd)
7.5% - Daewoo International Corporation and Korea Resources Corporation

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327

ESMA 133(ind)

pagina

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Figure 4.1 Location of the Narrabri North mine and Narrabri South project

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

4.6 Environmental

The mine operates under Environmental Protection Licence (EPL) 12789, granted to Narrabri Coal Pty Ltd on 20 February 2008 by the then Department of Environment and Climate Change (DECC). The licence was issued in accordance with the provisions of the Protection of the Environment Operations Act 1997 for the scheduled activities of coal mining and coal works.

A detailed outline of environmental licences and requirements is provided in Section 20.

4.7 Royalties and Payments

In NSW, lease holders are required to lodge monthly returns and payment on or before the 21st day of each month following extraction of coal. Royalties are levied on all coal recovered in New South Wales, and the two types of coal royalties are outlined below. While most royalty rights are held by the state government, some are held privately. APG have the opportunity to purchase private royalty rights for the Narrabri project.

4.7.1 Ad Valorem Royalty

Royalty for coal is charged as a percentage of the value of production (total revenue less allowable deductions). The coal ad valorem royalty rates are 6.2% for deep underground mines (coal extracted below 400 metres), 7.2% for underground mines and 8.2% for open cut mines.

4.7.2 Coal Reject Royalty

Royalty is payable on coal mine reject if the coal reject is used or disposed of for the purpose of producing energy. Coal reject is defined as a by-product of the mining or processing of coal that has energy value of less than 16 gigajoules per dry tonne or contains more than 35% ash by dry weight. The rate of royalty on coal in coal reject is no more than half the rate applicable to coal.

4.8 Operating Policies

The following overarching licences, approvals and policies are required and have been obtained for the Narrabri Project to operate:

Department of Environment and Climate Change (Protection of the Environment Operations Act 1997) - Environment Protection Licence 12789
Department of Primary Industries (Mineral Resources) (Mining Act, 1992) - Mining Licence 1609
Department of Planning and Environment (Environmental Planning and Assessment Act, 1979) - Project Approval (PA 05_0102)

For a more comprehensive list of licences and approvals held by the Narrabri Project, refer to Table 20.2 Narrabri North mine permit and approvals status. The project approval allows extraction of up to eight million tonnes of ROM coal per calendar year.

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palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

4.9 Native Title

The project area is subject to native title with the Narrabri Local Aboriginal Land Council (Narrabri LALC) and Narrabri Gomeroi Traditional Owner Group (Gomeroi) consulted.

Palaris is of the view that given ML1609 has been granted for the Narrabri North Mine, if a Native Title (NT) was made over an area of the ML an appropriate NT Agreement would have been agreed between the two parties. Given the highly confidential nature of NT agreements, Palaris is unaware of the status of any NT agreements associated with Narrabri North. Given ML1609 has been granted there is no material business risk from Native Title for the Narrabri North Mine. In determining whether Native Title remains a risk to a Mining Lease application over the Narrabri South Project, a 'Native Title Extinguishment Assessment' would be required. Palaris is unable to comment or provide further advice on whether Native Title is likely to pose a risk to the Narrabri South Project without an Extinguishment Assessment.

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palaris
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

5 Item 5: Accessibility, Climate, Local Resources, Infrastructure and Physiography

5.1 Compliance Exemption

Palaris are unable to comment on details of:

the sufficiency of surface rights for the mining operations, details of availability and sources of power, water, mining personnel, or waste disposal requirements

5.2 Physiography and Vegetation

The physiography of the region is dominated by the open plains of the Namoi River Valley and the elevated and dissected country of the Nandewar, Warrumbungle and Liverpool Ranges, located to the east and northeast of the project. Local topography is generally flat to undulating with mine site variations between 240-370 m AHD.

Vegetation of the region consists of six broad natural communities, and one artificial community. The artificial community consists of cleared/semi-cleared or cultivated land. Natural communities include:

Sandstone Slopes Woodland
Lower flats and Floodplain Woodlands
Riparian Forest
White Cypress Forest
River Red Gum Riparian Open Forest/Woodland
Weeping Myall Woodland

The western parts of the property coincide with areas of the Pilliga East State Forest. This land is owned by the Crown and exploration in this area is likely to require preparation of Review of Environmental Factors for each phase of exploration.

5.3 Access

The property is located 28 km south of the town of Narrabri and is accessed by the Kamilaroi Highway from Narrabri or from the south via Boggabri (Figure 4.1). The nearest township of Baan Baa is 10 km to the south, with a small community of 525 residents³. The largest regional centre is

³ Australian Bureau of Statistics, 2011 Census, http://www.censusdata.abs.gov.au/census_services/getproduct/census/2011/, accessed 23 Oct 2014

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Narrabri, with a population of 7,392 people. The Shire of Narrabri has a population of about 14,000.

A rail loop constructed at Narrabri North connects to the North-Western Branch Railway, which parallels the Kamilaroi Highway and eventually connects to the Main North Line leading to the Port of Newcastle. The distance to the Port of Newcastle is 382 km by rail.

5.4 Climate

The region is located in a tropical to temperate climatic zone, with seasonal fluctuations typical. The average maximum temperature for the summer months, between December, January, February is 33.3°C, and the average minimum temperatures are 18.7°C. The winter months of June, July and August record the lowest temperatures with a daily averages of 4.5-18.8°C.

Average monthly rainfall is 55 mm, with a yearly total of 658.8 mm. This is highest in the summer months.

Temperature and rainfall data is presented in Figure 5.1, and is sourced from the Australian Bureau of Meteorology (BOM) Narrabri West Post Office, station number 053030, for the period from 1891 to 2014. The station is located approximately 25 km northwest of the mine area. The mine operates all year round and is not limited by climatic conditions.

Figure 5.1 Monthly climate statistics for Narrabri West post office

Source: http://www.bom.gov.au/climate/averages/tables/cw_053030.shtml

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

5.5 Workforce

A local workforce based out of Narrabri staffs the site. The downturn in the Australian mining industry has meant that access to an experienced workforce does not present any difficulty.

5.6 Site Infrastructure

Key site infrastructure is shown in Figure 5.2. Further details of project infrastructure are provided in Section 18.2.

Road access to the Narrabri site is provided by the Kamilaroi Highway. A rail loop from the Gunnedah-Narrabri line allows loading of trains destined for the Port of Newcastle.

Permanent mains power is supplied via a spur line from a new 66 kV power line located to the east of the Kamilaroi Highway. The 66 kV of the spur line is converted to 11 kV for use at the site offices, buildings and the crushing / sizing plant within a substation on the Pit Top Area.

Figure 5.2 Aerial photo and site infrastructure

Sources: http://goto.arcgisonline.com/maps/World_Imagery

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

6 Item 6: History

6.1 Compliance Exemption

In preparing this part of the report Technical Report, Palaris has solely relied on publicly available documents and quarterly reports published by Whitehaven Coal on line.

6.2 Prior Ownership

The area now covered by the Narrabri tenements was formerly part of Authorisation No. 216 (A216), which was held by the NSW Department of Mineral Resources (DMR). The DMR conducted regional drilling in the Gunnedah Basin in the 1970's and 1990's.

When EL6243 was granted in 2004, the part of A216 that overlapped EL6243 was excised from A216.

No prior mining has taken place within the property area.

6.3 Exploration and Development History

6.3.1 Previous Exploration

Hill (1983) reported on the coal resources of the "Narrabri Coalfield", following an assessment of part of the regional drilling undertaken by the DMR in the early 1980's. This work mapped out possible subcrop limits of the Hoskissons Seam beneath the overlapping Digby Formation. Broad definition of the seam structure, ash content and depth of cover of the seam is defined in this work.

In 1983, the Electricity Commission of NSW formed a joint venture with the DMR with the aim of identifying coal suitable for power generation. This program consisted of 41 holes drilled at approximate four kilometre centres. This work identified the "major economic potential" for the development of low to medium-ash coal for power generation (Tadros et al. 1987). This work also identified the vertical zonation of the Hoskissons seam into a thick, basal low- to mid-ash working section, beneath a high ash upper part.

Eleven drill holes drilled by the DMR occur within the current boundaries of the Narrabri tenements.

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

6.4 Historical Resource and Reserve Estimates

Prior to the granting of EL6243 to Narrabri Coal, no specific resource or reserve estimate was done within the boundaries of the tenement. However, in a document describing resources of the Gunnedah Basin, Wiles (1996) quoted “Inferred Class 1”⁴ resources of 445 Mt for the whole seam having average raw ash content less than 20% (ad) to 300 m depth of cover. The maximum ash content of this estimate was 35% and minimum seam thickness of 1.5 m. This resource estimate extended over an area stretching from Baan Baa to 4 km north of Narrabri town. “Inferred Class 1” resources were a low confidence category of resource that are equivalent to Inferred Mineral Resource of the CIM or JORC definitions.

The Narrabri North Mine and Narrabri South Project are entirely within the zone identified by Wiles (1996) as “North Narrabri”.

Whitehaven have listed resources for the property since 2007. Table 6.1 lists the resource reports since that time, and they are also shown in Figure 6.1. Up until 2012, coal resources were supported separately for Narrabri North (ML1609) and Narrabri South (EL6243). In 2010, a substantial increase in resources occurred in response to the recognition that the upper part of the coal seam may be recovered by top coal caving methods. Since the mine has commenced operations, this method has not been installed; however, current resources include coal with the potential for this mining method.

Table 6.1 Coal resource estimates for the project since 2007

Date	Licence	Measured (Mt)	Indicated (Mt)	Inferred (Mt)
August, 2007	ML1609	88.64	81	60
	EL6243	30.66	103	75
February, 2010	ML1609	169.4	171	135
	EL6243	45.2	114	220
August, 2012	ML1609, EL6243	153	375	254
August, 2013	ML1609, EL6243	188.4	381	180
August, 2014	ML1609, EL6243	180	380	180

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4 Inferred Class 1 Resources is a now obsolete classification of coal resource that was defined by the Standing Committee on Coalfield Geology of New South Wales (1980)

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Figure 6.1 Coal resource estimates for the project since 2007

6.5 Production

Prior to Narrabri North mine, no historical production of coal has occurred within the tenement.

First coal was produced at the Narrabri North mine on 28 June, 2010 from development workings. The longwall was installed in the June quarter, 2012, which is marked by the step up in production after that time (Figure 6.2).

The first longwall relocations were completed during the June quarter of 2013 and the March and December quarters of 2014, resulting in a slight drop in output during those periods. Loss of horizon control at the tailgate end of the longwall panel also contributed to the drop in output during the March 2014 quarter.

The quarter ending September, 2014, resulted in the highest ROM coal production for a quarter achieved to date at 2,082 kt of coal.

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Figure 6.2 Quarterly production for Narrabri North mine

Source: Quarterly reports from http://www.whitehavencoal.com.au

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palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

7 Item 7: Geological Setting and Mineralisation

7.1 Compliance Exemption

In preparing this part of the Technical Report, Palaris is unable to comment on any factors affecting the coal seam that are not described in publicly available documentation. Palaris are unable to comment on details of:

the presence of any faulting or intrusions in the coal seam

7.2 Regional Geology

The Narrabri North mine and Narrabri South project are located in the Gunnedah Basin, which forms part of the Early Permian to Late Triassic Sydney-Gunnedah-Bowen Basin system that runs for 1,800 km in a north-south direction along the east coast of Australia.

The Gunnedah Basin is contiguous with strata of the Sydney Basin to the south, and the Bowen Basin to the north. The eastern boundary is a structural boundary with the adjacent New England Fold Belt, marked by the Hunter-Mooki Fault System, whereas the western boundary is defined by onlap of basin strata onto the older Lachlan Fold Belt.

Geological units in the area consist of Permian-Triassic-age Gunnedah Basin strata, Jurassic-age Surat Basin strata and undifferentiated Quaternary sediments. The stratigraphy of the Gunnedah Basin is shown in Table 7.1. Locally, the basement to the Gunnedah Basin sequence comprises Early Permian volcanic rocks of the Boggabri Ridge. These volcanics form a northerly trending basement high that divides the Gunnedah Basin into the Maules Creek and Mullaley sub-basins. The project area is located in the eastern part of the Mullaley Sub-Basin.

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Figure 7.1 Regional geological setting

Source: Pratt (1998)

Table 7.1 Stratigraphy of the Gunnedah Basin

Group	Formation
Narrabeen Group	Deriah Formation
	Napperby Formation
	Digby Formation
Black Jack Group	Trinkey Formation
	Wallala Formation
	Clare Sandstone / Benelabri Formation
	Hoskissons Coal
	Brigalow Formation / Arkarula Formation
	Pamboola Formation
Millie Group	Watermark Formation
	Porcupine Formation
Bellata Group	Maules Creek formation
	Goonbri & Leard Formations
Boggabri Volcanics

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palaris
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

7.3 Local Geology

The local geological structure at Narrabri has been influenced by the presence of the Boggabri Ridge. The strata strike north-south and dip westwards at less than 5°. The stratigraphic sequence (Table 7.1) developed at the mine site includes the following units, described in descending order:-

Pilliga Sandstone – coarse grained quartz sandstone up to 60 m thick, which crops out in the western parts of ML1609 and EL6243
Purlawaugh Formation – up to 140 m thickness of thinly bedded sandstone and siltstone, with subordinate claystone and coal
Garrawilla Volcanics – up to 40 m thickness of alkali basalt flows with thin intervening mudstone and clastic rocks, unconformably overlying Triassic rocks where it is present
Deriah Formation – sporadically developed, lithic sandstone up to 15 m thick
Napperby Formation – siltstone, sandstone/siltstone laminate and fine- to medium-grained quartz-lithic sandstone to 140 m thick
An intrusive basalt sill is present 30-35 m above the base of the Napperby Formation and is 15 to 20 m thick
Digby Formation – lithic, pebble conglomerate, typically 12-24 m thick, overlying the Black Jack Group; the boundary between the two being a low angle unconformity
Black Jack Group – consists of lithic sandstone, siltstone, claystone, coal and minor tuff; thickness is up to 70 m in the western part of ML1609 and less than 40 m thick in the east where the sequence is partially overlapped by the Digby Formation
The Hoskissons Coal, which forms the mineable resource at the property, has formation status and is part of the Black Jack Group
The Black Jack Group is underlain by a sequence of rock of marine sedimentary origin, namely the Watermark and Porcupine Formations
The marine sequence is underlain by the Maules Creek Formation, which is mined to southeast of Narrabri and is, in turn, underlain by the Leard Formation
The basement to the Gunnedah Basin sequence in the area comprises the dacite- to rhyolite-basalt and pyroclastic rocks of the Boggabri Volcanics

7.4 Property Geology

The Hoskissons Coal consists of mainly of dull coal, comprising a lower ash basal section and a higher ash upper section. The full seam thickness within ML1609 and EL6243 is in the range 0 to 11.8 m thick (Ditton, 2009); the seam is overlapped in the eastern part of the tenements by the conglomerate at the base of the Digby Formation. Over the area where the seam is being mined, and is planned to be mined, the full seam thickness is generally of the range 5-9 m thick. The basal 4.2 m section of the coal seam is defined as the working section for underground development within ML1609.

The Hoskissons seam is developed over an approximate area of 7,200 ha and occurs at depths ranging from 140 m in the east to 360 m in the west. The contained strike length of the coal seam is approximately 16 km whereas the down-dip width of the coal seam within the tenements is 4.5 km.

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palaris
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Strata of the Black Jack Group are developed above the Hoskissons Coal where the seam is not overlapped. The thickness of these strata range from zero in the east to over 30 m in the west. These strata consist of lithic sandstone, siltstone and minor coal of the Benelabri Formation.

The strata immediately below the Hoskissons Coal include the Arkarula Formation, comprising 10 m of quartz sandstone and siltstone. These strata grade laterally westwards into the Brigalow Formation, which comprises coarse-grained sandstone and conglomerate.

A northwest-southeast structural trend has been identified from interpretation of regional magnetic data, and relates to fault blocks in the basement Boggabri Volcanics. Several normal and reverse faults of this orientation with throws of 1 to 5 m, have been identified in the mine area (Ditton, 2009) but are not considered to have a significant impact on continuity of longwall mining operations (Narrabri Coal Operations, 2012).

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palaris
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

8 Item 8: Deposit Types

8.1 Compliance Exemption

APG contacted Whitehaven Coal during September 2014 requesting access to relevant data and a site visit to the Narrabri Mine. This request was refused and as such, data and information utilized in the generation of this Technical Report is solely reliant upon what could be collected from public domain sources (see Item 3).

In preparing this part of the Technical Report, Palaris has relied on publicly available documents and those published by Whitehaven Coal on-line.

Description of Coal

The Hoskissons Coal is a widespread geological unit in the Gunnedah Basin, having formation status. It developed as a nearly continuous peat blanket synchronously over most of the Sydney and Gunnedah Basins during a period of tectonic stability characterised by little to no subsidence (Tadros, 1993).

The Narrabri mine exploits coal from the Hoskissons seam. A typical seam stratigraphic column is shown in Figure 8.1. At this site, the seam is divided into two sections, namely an upper section (HC1) and a lower section (HC2). The lower section (HC2) contains low ash coal, suitable for underground mining and production of thermal coals (raw ash 8-13%). HC2 is 2.0 to 4.2 m in height and is the working section for the mine. The seam is thinnest in the east, where it is overlapped by the Digby Formation, but is consistently 4.2 m thick, allowing for thick seam longwall extraction. The upper section (HC1) contains high ash stony coal and tuffaceous claystone and as such, is higher in ash content.

The upper part of the seam (HC1) forms a mainly coal roof against the conglomerates of the Digby Formation, which is dominated by conglomerate (12-24 m thick) and consisting of hard lithic pebble- to cobble-size clasts (>100 mm) within a variable strength matrix.

The extent of planned mine workings in Narrabri North is approximately 33 km² whereas reserves quoted for Narrabri South cover an area of approximately 26 km².

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Figure 14

Source: http://whitehavencoal.com.au/operations/documents/67405_Part10_Geology.pdf, accessed 24 Oct 2014

Figure 8.1 Typical Hoskissons seam stratigraphic column

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palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

9 Item 9: Exploration

9.1 Compliance Exemption

In preparing this part of the Technical Report, Palaris is unable to comment on specific methods, standards or exploration methods used by Whitehaven Coal other than what is available in the public domain. Palaris are unable to comment on details of:

the procedures and parameters relating to surveys and investigations
sampling methods and sample quality, including comment on whether samples are representative or biased
information on location, number, type, nature and spacing or density of samples collected and the area recovered
the status of exploration, in addition to the nature and extent of all relevant exploration work other than drilling

9.2 Historical Exploration of Other Forms Than Drilling

Cowan Geodata Services (1995) provided an interpretation of the airborne geophysical data (magnetic and radiometrics) collected by Kevron Geophysics Pty Ltd for the DMR. The survey was flown at a height of 60 m and a line spacing of 100 m with 1 km tie lines.

The report specifically listing interpretation for the Narrabri area defined a "Central anomaly zone", which coincides with the property. The Central anomaly zone is defined by a series of north-west and west-northwest faults and is dominated by broad magnetic lows with superimposed sill and basement anomalies.

Pratt (1997) discussed this interpretation and concluded that the anomaly zone is an expression of the Garrawilla Volcanics. He also related magnetic anomalies to the intrusions in the Narrabeen Group, and acknowledged that no intrusions had been identified within the Black Jack Group.

Seismic data was collected in 2009 over part of ML1609 to investigate faulting.

Narrabri Coal (2012) also list the following

Uniaxial Compressive Strength (UCS) determination for roof and floor strata
slake durability testing of floor strata
analysis of regional and high resolution aeromagnetic data
assessment of gas
"televiewer" interpretation on 25 deep holes for evidence of stress-related breakout
assessment permeability and porosity of strata
geotechnical review of data with emphasis on assessment of likely mining conditions
spontaneous combustion investigations

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Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

9.3 Current Exploration

Documents outlining future exploration plans are not available in the public domain.

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345

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

10 Item 10: Drilling

10.1 Compliance Exemption

In preparing this part of the Technical Report, Palaris is unable to the comment on specific methods, standards or drilling methods directly used by Whitehaven Coal other than what is available in the public domain.

Palaris are unable to comment on details of:

the type and extent of drilling, procedures followed, and summary and presentation of results
any drilling, sampling, or recovery factors that could materially impact the accuracy and reliability of the results
drill hole information, such as collar location, azimuth, dip and depth
relationship between sample length and true seam thickness

10.2 Historical Exploration Drilling

Prior to the grant of EL6243, exploration was carried out by the DMR as shown in Figure 10.1.

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Figure 10.1 Drilling undertaken by the DMR

In the 1970's to 1980's, the DMR undertook regional drilling that lead to the indication of substantial coal resources in the Hoskissons seam. Drill holes undertaken during this phase of exploration) included:-

DM Gorman DDH 1 (west of ML1609): intersected a 6.99 m section of Hoskissons seam having a raw ash content of 30.6 % (ad) over the basal 2.69 m
DM Tullamullen DDH 1 (south of EL6243): intersected a split Hoskissons seam consisting of an upper 2.80 m thick seams (raw ash 38.1% (ad)) and a lower seam of 1.14 metres thickness (raw ash 24.1% (ad); separated by 5.25 m of interburden
DM Turrawan DDH 1 (eastern part of ML1609): intersected 6.47 m of Hoskissons seam having a raw coal ash of 13.0% (ad) for the full seam, and 11.0% (ad) over the basal 4.0 m; the depth to coal was 167 m

In 1984-85, the DMR undertook the Narrabri Stage 2 drilling program in joint venture with the then Electricity Commission of New South Wales. This work and subsequent reporting (Tadros et. al, 1987) lead to the recognition of a large resource base in the region.

A summary of the holes from this program in and around the vicinity of ML1609 and EL6243 are presented in Table 10.1. Tadros et al. (1987) defined the subcrop limits of the Hoskissons seam and potential resource areas as a result of this drilling.

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palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Table 10.1 Summary of part of Narrabri drilling program and Hoskissons seam intersections

Location	Borehole	Thickness (m)	Ash % (ad)	Moisture % (ad)
North of ML1609	DM Narrabri DDH 37	7.64	15.4	3.0
“	DM Narrabri DDH 15	hole terminated in Digby Formation
“	DM Narrabri DDH 27	not present
“	DM Narrabri DDH 35	not present
ML1609	DM Narrabri DDH 30	10.12	28.4	3.3
“	DM Narrabri DDH 14	8.36	22.2	4.6
“	DM Narrabri DDH 26	0.22	19.9	3.8
“	DM Narrabri DDH 13	9.35	26.5	3.4
“	DM Narrabri DDH 25	0.37	18.5	3.6
EL6243	DM Narrabri DDH 12	9.75	26.2	4.4
“	DM Narrabri DDH 24	not present
“	DM Narrabri DDH 29	9.87	39.6	2.5
“	DM Narrabri DDH 11	6.00	18.6	4.6
“	DM Narrabri DDH 39	5.98	34.0	2.9
East of EL6243	DM Narrabri DDH 23	not present
South of EL6243	DM Narrabri DDH 6	2.77	37.8	18.1
“	DM Narrabri DDH 22	0.57	47.4	3.2

The core sizes used for this drilling were HQ and NQ size. Upper sections of the holes were chipped, presumably by hammer drilling.

Wireline logs have been collected on most of the holes drilled, and included some or all of gamma, neutron, density, point resistance, self-potential, resistivity and caliper logs. Scanned copies of the logs are available for the 1982 series of drilling. All core has been photographed.

Whole core intersections of the Hoskissons seam were sampled in these holes on a ply-by-ply basis. Core recovery for each sample has been recorded on laboratory reports.

The DIGS® database lists 88 drill holes put down by Narrabri Coal in 2011. These holes, prefixed with "NC", were completed for gas compliance, gas testing and fault definition.

In August, 2014, Whitehaven published a "Table 1 Checklist" to support their 2014 Resources and Reserves Statement, published in accordance with the JORC Code (2012 Edition). According to this document, 1,021 drill holes were included in the project database as at 30th June, 2013. Many of these drill holes are related to mine support activities.

Of these, 548 drill holes were used for defining structural points of observation, and 164 points used for defining quality points of observation.

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

10.3 Recent Drilling

Whitehaven (2014) describes use of 4C (100 mm diameter), HQ triple tube, percussion and rotary open hole methods for the drilling techniques used at site.

Drilling, sampling or recovery issues that could materially impact the accuracy and reliability of results are managed by:

all holes were drilled vertically
sample recovery was determined by comparison to wireline logs, and volumetrically from laboratory results; samples with less than 90% recoveries were excluded from the digital geological model used for the resource estimate
logging was undertaken by geologists experience in coal resource investigation and evaluation

10.4 Current Drilling Practices

Current drilling practices used at Narrabri Coal are partly described in Whitehaven (2014) as required by the JORC Code (2012 Edition). Details of planned or future drilling are not available in the public domain.

However, Dr Bamberry, one of the QP’s for this report, is familiar through other means, of the standards of work undertaken by Whitehaven’s geological team and considers those practices meet industry accepted standards.

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palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

11 Item 11: Sample Preparation, Analyses, and Security

11.1 Compliance Exemption

In preparing this part of the Technical Report, Palaris is unable to the comment on the specific sample preparation, analyses and sample security practices employed by Whitehaven Coal, other than to draw conclusions from publicly available documentation.

Palaris are unable to comment on details of:

sample preparation methods and quality control measures employed
the testing laboratories and their sample preparation, assaying and analytical procedures, and whether the laboratories are certified by an standards association
the quality control and quality assurance actions undertaken to provide adequate confidence in data collection and processing

11.2 Historic Sampling

Sampling of coal seams has been undertaken by using the industry accepted practice of ply-by-ply sampling. Whole core samples have been sampled and analysed at coal laboratories.

11.2.1 DMR Sampling and Analysis

The procedures used by the Department of Mineral Resources in the 1980's⁵ involved designation of samples as either coal or stone, which determined the level of analysis that was undertaken. Each ply was identified, sampled, and sealed in plastic bags for delivery to coal laboratories. The preparation and subdivision of samples from the DMR holes is not documented but is likely to have involved air-drying, as per Australian Standards, crushing to -11.2 mm and subdivision by rotary sample divider or riffle splitter.

The analyses undertaken by the DMR for samples collected from holes drilled in 1982 included the following on raw coal:

Ash
Hygroscopic moisture
Volatile matter (coal plies only)
Relative density
British Swelling Index (coal plies only)

⁵ Dr Bamberry, one of the authors of the reports, worked for the DMR in the 1980's and 1990's and was familiar with the sampling practices of that time.

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palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Composited sample assays were calculated by weighting on a length-times relative density basis. No washability tests were conducted on this early drilling.

The analysis undertaken on samples from the Stage 2 Narrabri Drilling program included:

Raw coal analysis

Ash
Moisture of the analysis sample (ad)
Volatile matter
Relative density
Crucible Swelling Index

Float-sink Analysis

float-sink analysis at densities of 1.40 to 1.90 in 0.1 RD increments on composited seam sections
full proximate analysis, CSN, relative density and total sulphur on float-fractions

Composite Analysis

proximate analysis, CSN, relative density, sulphur and specific energy on cumulative floats to F1.90 (CF1.90) and select raw coal composites
moisture, ash, ultimate analysis, carbonate carbon, chlorine and fluorine on select raw coal composites and CF1.90 composites
ash composition (10 oxides) and ash fusions temperatures (reducing atmosphere) on select raw coal composites and CF1.90 composites

This analysis was undertaken at the Mineral Resources Development Laboratory. Palaris cannot comment on the standards or any national certification of this laboratory.

11.2.2 Narrabri Coal – Sampling and Analysis

Holes drilled by Narrabri Coal include a combination of cored, partly cored and open holes. Sampling practice is described in Whitehaven (2014), which describes sampling techniques. Some of the more salient points are:-

HQ and 4C core is used to ensure sample is representative and sufficient sample is available for sub-sampling
sample preparation, sub-sampling and quality control procedures was undertaken in accordance with Australian Standards at NATA accredited laboratories

No specific security measures are described by Whitehaven (2014) other than the samples being delivered to a local laboratory.

Analytical data for the Narrabri Coal series of holes is not specified in publicly available documents. However, Narrabri Coal Pty Ltd (2007) described raw coal properties in terms of:-

proximate analysis, sulphur, specific energy, relative density and Hardgrove Grindability Index on raw coal
floats-sink analysis of composited sections at densities of 1.40 (or 1.45) and 1.60
analysis of washed coal composites, including ash analysis and ultimate analysis

30 January 2015 | ANGP2221-10 | Page 48 of 120

palaris
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

In Palaris' view, the quantum of analysis undertaken by Narrabri Coal is likely to be greater than what is described here, which has been obtained from public documents only.

11.3 Current sampling

Palaris have not viewed the current sampling, analytical and quality control practices of Whitehaven. However, Palaris understand that Whitehaven Coal follow accepted industry practices in sample preparation, security of samples and analytical procedures. As such, these are considered to adequately satisfy JORC and NI 43-101 requirements.

30 January 2015 | ANGP2221-10 | Page 49 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

12 Item 12: Data Verification

12.1 Compliance Exemption

Palaris are unable to comment on details of:

The data verification procedures applied by the competent persons estimating the JORC resources

Palaris has obtained as much data as possible from public domain. In lieu of Palaris being able to examine confidential geological data, the following forms of verification are available:

Details of exploration by the DMR prior to the granting of the lease, reports on coal seam gas wells west of the lease, and reports concerning the regional geology provide enough information to validate the trends in the data described by Whitehaven (2014), which summarises salient points about the coal resources

Whitehaven (2014) describe their internal processes of verification of data:

Coal intersections in drill holes are verified by reconciliation of thicknesses and depths with wireline logs. Coal seam intersections have also been independently checked and audited by a database geologist (Whitehaven, 2014)
Drill hole collar, lithology and raw coal quality are stored in a LogCheck software, which allows storage of drill hole header, drilling, geological and geotechnical data. Data is exported into a format suitable for modelling in Minescape software

These practices are industry accepted practices.

Based on this review, the Qualified Person considers that the reported resource data described in this report are adequate for the intended use.

30 January 2015 | ANGP2221-10 | Page 50 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

13 Item 13: Mineral Processing and Metallurgical Testing

13.1 Compliance Exemption

Palaris are unable to comment on details of:

the nature and extent of testing and analytical procedures
the basis for any assumptions or predictions regarding recovery estimates
the extent to which test samples are representative of the coal deposit as a whole
any processing factors or deleterious elements that could have a significant effect on potential economic extraction

In preparing this part of the Technical Report, Palaris has relied on data that is publicly available through Government repositories and Whitehaven Coal.

13.2 Testing and analytical procedures

The analysis that has been undertaken on drill hole samples was described in Section 11. The Hoskissons seam is subdivided into an upper high-ash section of coal named HC1

Coal quality of the basal working section of the coal seam was summarized by Narrabri Coal (2007) (Table 13.1). This summary outlines the quality of raw coal from 19 drill holes, and may not entirely be representative of the coal quality across the property.

Table 13.1 Average raw coal analysis of Hoskissons seam working section

Moisture % (ad)	Ash % (ad)	Volatile Matter % (ad)	Sulphur % (ad)	Specific Energy (MJ/kg) (ad)	Relative Density
4.0	10.4	26.3	0.34	28.9	1.43

Source: Narrabri Coal, 2007

Narrabri Coal (2012) presented a summary of raw coal quality for the upper high ash part of the seam (HC1) and the lower targeted working section (HC2). These results are presented in Table 13.2. The HC1 interval has been examined as a possible target of longwall top coal caving; however, this section being high in ash content would require processing to beneficiate the coal to an acceptable product. In the quarterly report for the period ending September, 2014, Whitehaven reported that "a decision was made ... to pursue the feasibility of extending the longwall face to 400 m in lieu of top coal caving as the superior optimization path for Narrabri". It should be noted that the coal within the high ash HC1 section is included in the Coal Resources for the site, but is excluded from Reserves (Whitehaven, 2014).

30 January 2015 | ANGP2221-10 | Page 51 of 120

pagers

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Table 13.2 Average raw coal analysis of Hoskissons seam sections HC1 and HC2

Section	Moisture % (ad)	Ash % (ad)	Volatile Matter % (ad)	Sulphur % (ad)	Specific Energy (MJ/kg) (ad)	Relative Density
HC1	4.8	30.1	23.4	0.33	24.7	1.61
HC2	4.8	11.3	27.5	0.34	28.2	1.43

Source: Narrabri Coal, 2012

Narrabri Coal (2007) also described the average quality of washed coal of the working section from 17 drill hole composites (Table 13.3).

Table 13.3 Average washed coal analysis of Hoskissons seam working section

Cumulative Floats 1.45 Yield %	Cumulative Floats 1.45 Ash %	Cumulative Floats 1.60 Yield %	Cumulative Floats 1.60 ash %
87.9	7.1	93.9	7.8

Source: Narrabri Coal, 2007

13.3 Coal Recovery

Borecore analysis indicates that the working section (HC2) yields high proportion of coal at CF1.60 (Table 13.3) with low ash content.

Whitehaven (2014) described the metallurgical factors or assumptions for the site. Approximately 60% of the coal is produced raw (i.e. bypasses the coal plant) to yield coal suitable for export as thermal coal. The Narrabri North CHPP includes dry screening raw crushed coal at 20 mm. Undersize and secondary product from dense medium cyclone middlings reports to thermal coal product with around 12% ash content. The mine produces a PCI coal of 7-8% ash content, expecting to produce 0.85 Mt of PCI product during 2014, out of a total forecast output of 5.5 Mt.[6]

Whitehaven (2014) state that all coal produced from the project area (Narrabri South) will require washing, and is expect to yield thermal coal only of 8 to 15% ash content.

13.4 Representativity of Test Samples

Raw coal analysis that is representative of the HC2 working section is available for the DMR series of drill holes and 20 Narrabri Coal drill holes (Narrabri Coal, 2012). The spread of this data is considered by the QP (J. Bamberry) to be representative of the raw coal quality of the Hoskissons seam at the property and the style of mineralisation (i.e. the coal seam).

Palaris cannot comment on the degree to which washability the test samples are representative of the various types and styles of mineralization and the mineral deposit as a whole, as little of this information is available publicly. Increasing ash content in the working section is implied by the comments that all coal in Narrabri South will require washing.

30 January 2015 | ANGP2221-10 | Page 52 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Bas

14 Item 14: Mineral Resource Estimates

14.1 Compliance Exemption

APG are currently investigating purchasing a royalty stream on revenue generated from both the existing Narrabri North Mine and the planned Narrabri South Mine which is currently at Project status. APG has not been involved in estimation of Resources at Narrabri Mine.

Palaris are unable to comment on details of:

sample preparation methods and quality control measures employed
sufficient discussion of the key assumptions, parameters, and methods used to estimate the Mineral Resources, for a reasonably informed reader to understand the basis for the estimate and how it was generated
the extent to which the Mineral Resource estimates could be materially affected by any known environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant factors

Whitehaven Coal have recently reported estimate Resources for Narrabri North Mine/Narrabri South Project in accordance with The Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2012 Edition).

Whitehaven Coal's reporting is governed by ASX listing rules, under which there is no requirement for disclosure of any technical reports which support Reserves estimates. As such reports have been not been supplied by Whitehaven Coal, Palaris are unable to directly comment upon the key parameters, assumptions, and methodology used in the estimation of Mineral Resources as set out in NI 43-101.

14.2 Resources Reporting Code

The Committee for Mineral Reserves International Reporting Standards (CRIRSCO), formed in 1994⁷, is a grouping of representatives of organisations that are responsible for developing mineral reporting codes and guidelines. These organisations are known as National Reporting Organisations (NRO's), and include⁸:

30 January 2015 | ANGP2221-10 | Page 53 of 120

7 About CRIRSCO, http://www.crirso.com/background.asp, accessed 20 October 2014
8 http://www.crirso.com/crirso_terms_of_reference.pdf, accessed 20 October 2014

pataric
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Bas

Australasia – Joint Ore Reserves Committee (JORC)
Canada – Canadian Institute of Mining, Metallurgy and Petroleum (CIM)
Chile – Mining Commission for the Qualification of Competencies in Mineral Resources and Reserves
Europe – Pan European Resources and Reserves Reporting Committee (PERC)
South Africa – South African Mineral Resource Committee (SAMREC)
United States of America – Society for Mining, Metallurgy and Exploration (SME)
Russia – National Association for Subsoil Use Auditing (NAEN)

CRIRSCO aims to promote best practice in the international public reporting of mineral exploration results, mineral resources and mineral reserves.

14.2.1 The JORC Code

As highlighted in the scope of The JORC Code, 2012 Edition⁹, the principles governing the operation and application of the JORC code are Transparency, Materiality, and Competence:

"Transparency requires that the reader of a Public Report is provided with sufficient information, the presentation of which is clear and unambiguous, to understand the report and not be misled by this information or by omission of material information that is known to the Competent Person
Materiality requires that a Public Report contains all the relevant information that investors and their professional advisers would reasonably require, and reasonably expect to find in the report, for the purpose of making a reasoned and balanced judgement regarding the Exploration Results, Mineral Resources or Ore Reserves being reported. Where relevant information is not supplied an explanation must be provided to justify its exclusion
Competence requires that the Public Report be based on work that is the responsibility of suitably qualified and experienced persons who are subject to an enforceable professional code of ethics (the Competent Person)"

The JORC Code is an "acceptable foreign code" as per Part 1 of National Instrument 43-101.

Whitehaven Coal have reported¹⁰ a summary of important assessment and reporting criteria for the Narrabri North Mine/Narrabri South Project in accordance with the "Table 1 checklist" of The JORC Code, 2012 Edition. The estimated Resources are based on the guiding principles, terms and definitions set out in The JORC Code, 2012.

30 January 2015 | ANGP2221-10 | Page 54 of 120

palans
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

14.2.2 Competent Persons

The "Table 1 checklist" (Section 4 Estimation and Reporting of Coal Reserves) states that the Mineral Resource estimate used as the basis for the Coal Reserves Statement was "Coal Resource Report for the Narrabri Coal Project, ML1609; EL6243, NSW, Australia", prepared by Whitehaven Coal Limited, July 2014. The Competent Person for the Resource estimates was Mr Mark Dawson, B.Sc. who is a Member of the Australian Institute of Mining and Metallurgy and was the Geology Manager employed by Whitehaven Coal Limited. It was stated that the Resources Statement was compiled in accordance with The JORC Code 2012 Edition. The Coal Resources were reported inclusive of those Coal Resources modified to produce the Coal Reserves.

A search of the Australasian Institute of Mining and Metallurgy's register of members¹¹ indicates that as of 1 October 2014, Mr Dawson was a Member without Chartered Professional accreditation. A search of the Australian Institute of Geoscientists indicates that Mr Dawson is not a member of the AIG¹². Unless he is a member of another Accepted Foreign Association, Mr Dawson does not appear to satisfy the requirements of a Qualified Person as defined by NI43-101.

Mr Dawson however is known to the QP (Dr Bamberry) who considers that Mr Dawson's use of industry accepted standards, the use of reviewers and peer review of the resources and database by others (also known to the QP), confirms that the standard of resource estimation and reporting is adequate for the purposes of this report.

14.3 Reported Resources

Coal resources for the property were last reported as at August, 2014. The resources are reported in accordance with the JORC Code (2012 Edition). The Competent Person for the August, 2014 Resource Statement for the property was Mr Mark Dawson, a full time employee of Whitehaven Coal and a Member of the Australian Institute of Mining and Metallurgy.

The defined terms used in the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards for Mineral Resources and Mineral Reserves, 2014 are referenced in NI 43-101. The definition of the terms Mineral Resource and the categories (Measured, Indicated and Inferred) are identical to those defined in the JORC Code (2012 Edition). No material differences exist between the two codes. The Competent Person who prepared the Resource estimate satisfies the requirements of the JORC Code.

The coal resources reported at this time include a total resource for the property, and does not split up the coal resources by the mine or project area. The coal resources quoted cover the whole of the Hoskissons seam and the assumptions described to define the resources (Whitehaven, 2014) are as follows:

a maximum raw ash content of 35% (ad) for the WS42 section (the 4.2 m basal working section)
a minimum mineable seam thickness of 1.8 m
no maximum ash was applied to limit resources in the upper section of coal that may be amenable to longwall top coal caving

¹¹ http://www.ausimm.com.au/content/docs/membership/AusIMM_Register_of_Members.pdf, accessed 15 Oct 2014
¹² http://www.aig.org.au/about-aig/membership/member-search/, accessed 22 Oct 2014

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358

palans

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

A geological model based on validated drill hole data was constructed in Ventryx Minescape software. The grid models generated by the software permit estimation of the volume of coal within the tenements. Relative density was modelled from ply sample data and adjusted to in situ moisture basis, which has been estimated at 12% (ar). The gridded density data was then used to determine mass of coal for individual resources categories.

Resource classification for the site was undertaken by the Competent Person. The resource categories is based on distribution of "point of observation", which in this instance, comprise drill hole data providing evidence for the continuity of seam structure and quality. Specific distances of categorisation are not described in the 2014 Resources and Reserves Statement, or preceding public releases. Palaris cannot validate whether distances are in line with accepted codes as no resource diagrams are publically available. The Competent Person describes the continuity of coal but does not ascribe distances of extrapolation in publicly available documents.

Table 14.1 shows the reported resources as at August, 2014. The grade in terms of ash, calorific value or other relevant properties is not described in public documentation.

Table 14.1 Narrabri coal resources (at 12% in situ moisture) as at end August, 2014¹³

Titles	Measured (Mt)	Indicated (Mt)	Inferred (Mt)
ML1609, EL6243	180	380	180

No grade parameters for this resource were published by Whitehaven Coal in their 2014 statement of Coal Resources and Reserves, although this an implicit requirement of the JORC Code (2012 Edition).

No legal, political or environmental risks that are material to the development of the property have been identified.

14.4 Opinion of Stated Resources

Palaris consider that the described processes for sampling, estimation and reporting of the coal resources is adequate but public documentation lacks justification for the classification of resources and no resource diagrams are available. As such it is difficult to qualify the validity of resource classification in this instance.

¹³ The terms Measured, Indicated and Inferred Resources under JORC (2012 Edition) have exactly the same meaning under the CIM Definition Standards for Mineral Resources and Reserves, as at October, 2012.

30 January 2015 | ANGP2221-10 | Page 56 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

15 Item 15: Mineral Reserve Estimates

15.1 Compliance Exemption

Palaris are unable to comment on details of:

the key assumptions, parameters, and methods used for a reasonably informed reader to understand how the Competent Person converted the Mineral Resources to Ore Reserves
the extent to which the Ore Reserve estimates could be materially affected by mining, metallurgical, infrastructure, permitting, and other relevant factors

Whitehaven Coal have recently reported estimate Reserves for Narrabri North Mine/Narrabri South Project in accordance with The Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2012 Edition).

Whitehaven Coal's reporting is governed by ASX listing rules, under which there is no requirement for disclosure of any technical reports which support Reserves estimates. As such reports have not been supplied by Whitehaven Coal, Palaris are unable to directly comment upon the key parameters, assumptions, and methodology used in the conversion of estimated Mineral Resources to Mineral Reserves as set out in NI 43-101.

15.2 Reserves Reporting Code

15.2.1 The JORC Code

As noted in section 14.2.1 earlier, the JORC Code is an "acceptable foreign code" as per Part 1 of National Instrument 43-101.

Whitehaven Coal have reported¹⁴ a summary of important assessment and reporting criteria for the Narrabri North Mine/Narrabri South Project in accordance with the "Table 1 checklist" of The JORC Code, 2012 Edition. The estimated Reserves are based on the guiding principles, terms and definitions set out in The JORC Code, 2012.

¹⁴ http://www.whitehavencoal.com.au/investors/docs/narrabri-underground26163159.pdf, accessed 14 Oct 2014

30 January 2015 | ANGP2221-10 | Page 57 of 120

palans
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

15.2.2 Competent Persons

The "Table 1 checklist" (Section 4 Estimation and Reporting of Coal Reserves) states that the Mineral Resource estimate used as the basis for the Coal Reserves Statement was "Coal Resource Report for the Narrabri Coal Project, ML1609; EL6243, NSW, Australia", prepared by Whitehaven Coal Limited, July 2014. The Competent Person for the Resource estimates was Mr Mark Dawson, B.Sc. who is a Member of the Australasian Institute of Mining and Metallurgy and was the Geology Manager employed by Whitehaven Coal Limited. It was stated that the Resources Statement was compiled in accordance with The JORC Code 2012 Edition. The Coal Resources were reported inclusive of those Coal Resources modified to produce the Coal Reserves.

The "Table 1 checklist" does not state the Competent Person who estimated the Reserves, but in the ASX Announcement releasing the 2014 Coal Resources and Coal Reserves¹⁵, the Competent Person for the Reserve estimate is named as Mr Graeme Rigg, a full time employee of RungePincockMinarco Ltd. Further details of Mr Rigg were presented in a Prospectus issued by Whitehaven Coal in 2007¹⁶ - his qualifications were reported as including:

Bachelor of Engineering (Mining-Hons)
Third Class Certificate of Competency, Coal Mines Qualifications Board, 1984
Second Class Certificate of Competency, Coal Mines Qualifications Board, 1984

The prospectus further details Mr Rigg's experience as including:

over 17 years' experience (as of 2007) associated with the coal mining industry
considerable experience in underground mine design
extensive experience in bord and pillar and longwall mining operations
carried out several mine planning studies and other technical reviews
experience includes Reserves assessment
worked on projects in Australia, USA, Canada, and other countries

He is reported¹⁷ as having been employed by RungePincockMinarco from 1998 to the present.

A search of the Australasian Institute of Mining and Metallurgy's register of members¹⁸ indicates that as of 1 October 2014, Mr Rigg was a Member with Chartered Professional accreditation. Mr Rigg appears to satisfy the requirements of a Qualified Person as defined by NI43-101.

¹⁵ http://www.whitehavencoal.com.au/investors/docs/august-2014-coal-resources-and-reserves-update.pdf, 27 August 2014, accessed 14 Oct 2014
¹⁶ http://whitehavencoal.com.au/investors/documents/Whitehaven_Coal_Limited_Prospectus_May2007.pdf, accessed 14 Oct 2014
¹⁷ www.linkedin.com, profile accessed 14 Oct 2014.
¹⁸ http://www.ausimm.com.au/content/docs/membership/AusIMM_Register_of_Members.pdf, accessed 15 Oct 2014

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palans
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

15.3 Reported Reserves

Whitehaven reports its Reserves and Resources in accordance with the guiding principles, terms and definitions given in The JORC Code 2012 Edition.

The defined terms used in the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards for Mineral Resources and Mineral Reserves, 2014 are referenced in NI 43-101. The CIM definitions of Mineral Reserves, and the sub categories Proven and Probable Mineral Reserves, align with the JORC Code definitions for Ore Reserves and the subcategories Proven and Probable Ore Reserves. No material differences exist between the two codes. The Competent Person who prepared the Reserves estimate satisfies the requirements of the JORC Code.

Resources are reported inclusive of Reserves. Reserves for Narrabri are shown in the table below.

The latest JORC Reserve statement¹⁹ for Narrabri was announced to the ASX on 27 August 2014, and is summarised in Table 15.1 and Table 15.2. Supporting mine plans are shown in Figure 15.1 and Figure 15.2. Figure 15.1 shows the area mined out to June 2014 shaded in magenta.

Table 15.1 Narrabri 2014 JORC recoverable coal reserves

Narrabri North (ML1609)	Mt
Proved	57
Probable	83
Total	140
Narrabri South (EL6243)	Mt
Proved	-
Probable	94
Total	94

Source: Whitehaven Coal Resources and Reserves statement, August 2014

¹⁹ Coal Resources and Coal Reserves, Whitehaven Coal, August 2014
http://www.whitehavencoal.com.au/investors/docs/august-2014-coal-resources-and-reserves-update.pdf, accessed 14 Oct 2014

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362

palans

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Table 15.2 Narrabri 2014 JORC marketable coal reserves

Narrabri North (ML1609)	Mt
Proved	54
Probable	79
Total	133
Narrabri South (EL6243)	Mt
---	---
Proved	-
Probable	75
Total	75

Source: Whitehaven Coal Resources and Reserves statement, August 2014

A footnote in the Reserves statement states that Whitehaven owns a 70% share in the Narrabri Joint Venture, however the statement does not explicitly state if the reserves are in 100% or 70% terms.

A total of 140 Mt proved plus probable reserves is stated for Narrabri North. A quick estimation of the potential tonnage contained within the mine plan shown in Figure 15.1 can be made:

$(2km \times 8km + 2km \times 6km)$ footprint $x 4.2m$ extraction height $x 1.45t/m^3$ density $x 70\%$ overall recovery $= 120$ Mt

This is in approximate agreement with the total reserve of 140 Mt, and suggests that the reserves are stated in 100% terms.

In the announcement, it is noted that the named Competent Persons consent to the inclusion of material in the form and context in which it appears.

While the ASX Announcement is dated 27 August 2014, the date in the Reserves statement table header is not stated more precisely than "August 2014". A report date of "Jun-14" is shown in the table, but it is unclear whether this is the date of preparation of a report, or the date at which the reserves have been estimated (possibly supported by the magenta shading in Figure 15.1).

The Reserves summarised above are the most up to data value currently available, however it should be noted that they must be depleted for any production since the date of the Reserves being estimated to today's date.

No average product yield is stated in the Reserves statement. The average yield from the Recoverable Coal Reserves to realise the Marketable Coal Reserves is 95.0% for Narrabri North and 79.8% for Narrabri South. "Table 1" does not discuss if a plant recovery performance factor has been applied to laboratory-scale exploration data in order to reflect a plant-scale practical yield.

The following information is extracted from "Table 1":

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palans
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

no coal quality cut-off parameters were applied when converting Resources to Reserves, however 35% ash was used as a cut-off for the 4.2 m working section in the Resource statement
approximately 60% of ROM coal currently bypasses the CHPP
ROM moisture is 12%
two marketable products are prepared – a 7-8% ash PCI product, and a 12% ash thermal product
an 11% moisture is assumed for the PCI product, and the thermal product moisture will vary, depending upon the proportion of 13% moisture middlings that is added back to the bypass split

Whitehaven describe the Narrabri coal product type as being about 80% high calorific value, low ash thermal coal, and 20% PCI coal.²⁰ While not explicitly stated, this is assumed to be representative of Narrabri North. The expected production from Narrabri North during 2014 was expected to be 0.85 Mt of PCI product, out of a total forecast output of 5.5 Mt (84.5% thermal, 15.5% PCI)²¹.

Mining losses and dilution are discussed in Item 16: Mining Methods.

Mining operations in New South Wales are required to submit Mining Operations Plans to the state government, outlining projected operations, potential environmental impact and proposed controls. The MOP submitted in March 2010 and amended in June 2010²² refers to Stage 1 coal processing consisting only of size reduction during Stage 1 (2.5 Mtpa continuous miner operation), with a Coal Handling and Processing Plant (CHPP) to be installed for Stage 2 (8 Mtpa longwall mining operation). The CHPP is described²³ as being expected to remove up to 5% of the total Run of Mine (ROM) feed as reject. This is consistent with the average yield of 95% calculated for Narrabri North earlier.

The raw coal ash of the resource increases²⁴ towards the south, and it is reasonable to assume that additional coal processing will be required to prepare a marketable product, resulting in lower yields for Narrabri South than for Narrabri North. This is confirmed in Section 4 of "Table 1" – while 60% of Narrabri North ROM coal currently bypasses the washery, 100% of Narrabri South ROM coal will be washed to produce a thermal product of 8-15% ash which would be blended as required with other Whitehaven products.

A history of Reserves declared for Narrabri by Whitehaven has been prepared by accessing Whitehaven reserve statements and annual reports²⁵, and is shown in Figure 15.3 and Figure 15.4.

20 Whitehaven Coal Limited 2014 Annual Report, http://www.whitehavencoal.com.au/investors/docs/2014-annual-report.pdf, accessed 6 Nov 2014
21 Narrabri North Mine, http://www.whitehavencoal.com.au/operations/narrabri_north_mine.cfm, accessed 6 Nov 2014
22 Mining Operations Plan for the Construction and Continuous Miner Development of Stage 1 of the Narrabri Coal Mine for the Period Ending 31 December 2011, Narrabri Coal Operations Pty Ltd, June 2010, http://whitehavencoal.com.au/operations/documents/MOPamendment_2010_text.pdf, accessed 14 Oct 2014
23 http://www.whitehavencoal.com.au/environment/docs/section-2-description-of-the-longwall-project.pdf, accessed 14 Oct 2014
24 Coal Resource Audit of the Gunnedah Basin, New South Wales Department of Mineral Resources, 1996
25 http://www.whitehavencoal.com.au/investors/asx_announcements.cfm, accessed 14 Oct 2014

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palans
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

The reserves base increased significantly in 2009, when a maiden reserve was declared for Narrabri South. No reason is given for the increase in reserves at North Narrabri in 2010. The minor increase in 2013 at North Narrabri was attributed to a Resources update. At that time it would also appear that while the reserves base increased at Narrabri South by nine percent, the reserve confidence decreased – the original Proven Reserves were written down to Probable status.

It is possible that this is due to a lack of sufficient washability data, as mentioned in Section 4 of "Table 1" ("all Reserves from Measured and Indicated Resources have been classified as Probable Reserves. Approximately 25 Mt of Probable Reserves have been derived from Measured Resources." This comment is presumed to apply to Narrabri South.

The Narrabri North Recoverable Reserves have been depleted by 6.4 Mt from 2013 to 2014, however ROM production of 5.7 Mt was reported²⁶. It is not possible to determine from publicly available information whether the difference of 0.7 Mt is derived from a difference between annual reporting and reserve declaration dates, or whether a reconciliation of actual and modelled ROM production has been completed and this has resulted in a write-down. Similarly, Marketable Reserves have been depleted by 5.5 Mt, while reported marketable production was 5.3 Mt.

The presence of the Pilliga East State Forest would appear to have an impact upon the ability to improve deposit confidence by drilling, as can be seen from the cored and open hole collar locations shown in Figure 15.1 and Figure 15.2.

A total probable reserve of 94 Mt is stated for Narrabri South. A quick estimation of the potential tonnage contained within the mine plan shown in Figure 15.2 can be made:

$$4\ \mathrm{km} \times 6\ \mathrm{km}\ \text{footprint} \times 4.2\ \mathrm{m}\ \text{extraction height} \times 1.45\ \mathrm{t/m^3}\ \text{density} \times 70\%\ \text{overall recovery} = 102\ \mathrm{Mt}$$

This is in approximate agreement with the probable reserve of 94 Mt, and suggests that the entire mine plan footprint as shown in Figure 15.1 has been estimated as a probable reserve.

As noted earlier, Palaris consider that the described processes for sampling, estimation and reporting of the coal resources is adequate but public documentation lacks justification for the classification of resources and no resource diagrams are available. As such it is difficult to qualify the validity of resource classification and subsequent reserve classification in this instance.

15.4 Opinion of Stated Reserves

Palaris consider that the described processes for estimation and reporting of the coal reserves is adequate but public documentation lacks justification for the classification of reserves and no detailed reserve diagrams are available. As such it is difficult to qualify the validity of reserve classification in this instance.

²⁶ http://www.whitehavencoal.com.au/investors/docs/fy2014-annual-financial-report.pdf, accessed 14 Oct 2014

30 January 2015 | ANGP2221-10 | Page 62 of 120
365

palans
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Beyond the generic technical risks affecting any longwall mining operation (e.g. presence of unsuspected geological structures), Palaris are unaware of any unique technical risks that exist at Narrabri apart from a reference to the risk of periodic weighting²⁷ in Section 4 of "Table 1". The Competent Person notes:

For Narrabri North -

Pre-conditioning of conglomerate has been successfully employed to reduce the risk of significant periodic weighting impacting longwall operations
An Environmental Impact Statement has been prepared and all environmental approvals have been obtained
All key stakeholder agreements are in place providing social licence to operate
All material legal agreements, marketing agreements and government agreements are in place to allow Narrabri North to successfully operate. As mining proceeds it is reasonably expected any modifications to existing agreements or additional agreements that may be required can be obtained as required

For Narrabri South -

No Environmental Impact Statement has been prepared
No key stakeholder agreements are in place providing social licence to operate
No legal agreements, marketing agreements or government agreements are in place to allow the Narrabri South Project to commence mining operations. The existence of Narrabri North immediately adjacent to Narrabri South should simplify the approval process somewhat

The key non-technical risks appear to have been recognised.

30 January 2015 | ANGP2221-10 | Page 63 of 120

27 Periodic weighting of longwall supports can occur during retreat of the face under certain geological conditions. Strong strata in the immediate and main roof can cantilever over the waste, weighting the supports periodically, and potentially interrupting production.

palans

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Source: Narrabri Table 1, JORC Reserves, August 2014. "June 2014 Limit" is area mined to that date.
Figure 15.1 Narrabri North mine plan

30 January 2015 | ANGP2221-10 | Page 64 of 120

palana

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Source: Narrabri Table 1, JORC Reserves, August 2014
Figure 15.2 Narrabri South mine plan

30 January 2015 | ANGP2221-10 | Page 65 of 120

palans

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Figure 15.3 Recoverable coal reserves history

Source: http://www.whitehavencoal.com.au/investors/asx_announcements.cfm

Figure 15.4 Marketable coal reserves history

Source: http://www.whitehavencoal.com.au/investors/asx_announcements.cfm

30 January 2015 | ANGP2221-10 | Page 66 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

16 Item 16: Mining Methods

16.1 Compliance Exemption

Palaris are unable to comment on details of:

geotechnical, hydrological, and other parameters relevant to development of mine plans

Whitehaven Coal's reporting is governed by ASX listing rules, under which there is no requirement for disclosure of any technical reports which support Reserves estimates. As such reports have not been supplied by Whitehaven Coal, Palaris are unable to directly comment upon the following key parameters, assumptions, and methodology used in the conversion of estimated Mineral Resources to Mineral Reserves as set out in NI 43-101:

geotechnical, hydrological, and other parameters relevant to mine or pit designs and plans
production rates, expected mine life, mining unit dimensions, and mining dilution factors used
requirements for stripping, underground development, and backfilling
required mining fleet and machinery

16.2 Mining Method

Longwall mining is the predominant underground coal mining technique in use in Australia. It has significant safety, productivity and cost advantages over other coal mining methods.

Both Narrabri North and Narrabri South Reserves assume the use of retreat longwall mining. In retreat longwall mining, two parallel sets of roadways (gateroads) are driven from main headings to block out an initial longwall panels. Panel widths can range from 100 to 440 m, and lengths can reach 4 to 5 km. Once the gateroads reach the extent of the longwall panel, a connecting roadway is driven, then the longwall face equipment is installed in this. As the longwall face retreats back to the main headings, the roof of the mined area behind the longwall collapses (goaf). Subsequent longwall blocks are formed up by driving more gateroads. A schematic retreating longwall mine plan is shown in Figure 16.1, and an artist's impression of the Narrabri operation is shown in Figure 16.2.

Four main factors determine the potential length of longwall panels:

geological constraints – e.g. seam thickness, faults, coal quality

30 January 2015 | ANGP2221-10 | Page 67 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

ventilation constraints – adequate quantity of air is required to manage seam gas and strata temperatures, at a safe panel pressure
conveyor constraints – sufficient power must be provided to attain the required coal clearance rates, and the belting must be capable of operating at required tensions
face equipment service life – key equipment must be designed with a service life so as to avoid mid-panel change-outs of key equipment

The potential width of longwall panels is governed by:

geological constraints – e.g. seam thickness, cross grade, depth of cover
face equipment constraints – the face conveyor must have sufficient capacity to cater for expected coal/stone loadings and cross grades
subsidence constraints – the potential impact of surface subsidence must be taken into account. Widths are reduced in areas with stringent surface subsidence constraints

Figure 16.1 Schematic retreat longwall mine layout

Source: http://eis.uow.edu.au/longwall/html/retreat.html

30 January 2015 | ANGP2221-10 | Page 68 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Figure 16.2 Thick seam longwall mining

30 January 2015 | ANGP2221-10 | Page 69 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

16.3 Narrabri Mine Design Parameters

16.3.1 Geotechnical Parameters

No information was found in the public domain with regard to main headings design parameters.

Significant subsidence modelling has been conducted in order to model the likely environmental impact of longwall mining at Narrabri²⁸, and gateroad pillar dimensions used in the subsidence modelling is presented in Table 16.1.

Table 16.1 Narrabri gateroad pillar parameters

Cover Depth (m)	Virgin Stress (MPa)	Pillar Width (m)	Applied Pillar Stress (MPa)	Pillar Factor of Safety Under Final Loading
160	4.0	24.6	15.7	1.66
180	4.5	24.6	19.2	1.36
200	5.0	24.6	23.0	1.14
220	5.5	24.6	27.1	0.97
240	6.0	29.6	27.3	1.21
260	6.5	29.6	31.3	1.05
280	7.0	29.6	35.7	0.93
300	7.5	34.6	35.6	1.17
320	8.0	34.6	39.9	1.04
340	8.5	37.6	41.5	1.15
360	9.0	37.6	45.9	1.04

Source: Narrabri Mine Stage 2 Subsidence Predictions and Impact Assessment, November 2009

The gateroad pillar dimensions appear appropriate.

16.3.2 Hydrological Parameters

Groundwater and surface modelling has also been completed²⁹. This modelling predicted peak groundwater inflows between 3.2 Ml/day and 5.2 Ml/day. Mine water management systems will have to be capable of controlling this inflow. As the water is expected to be saline (Total Dissolved Solids of up to 8,000 mg/l), a water conditioning plant will be required³⁰. Water will be used for coal processing, dust suppression and equipment cooling. Storage facilities will be constructed on site for concentrated brine, while excess treated water will be discharged offsite.

30 January 2015 | ANGP2221-10 | Page 70 of 120

palaris
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

16.4 Mining Unit Dimensions

Mine plans³¹ for the Narrabri operation were shown earlier in Figure 15.2 and Figure 15.1. In both mine plans, access to pit bottom is provided by drifts from the surface. From pit bottom, main headings are driven to the west. Longwall panels are developed to the north and south of the main headings by driving two-entry gateroads.

Narrabri North's original longwall panel width is 305 m³² (295 m actual face plus development roadways³³). Longwall panel lengths reach to approximately 4 km. While recent studies into widening the face are being pursued³⁴, the current reserves mine plans appear to still be based on the 305 m face width. Standard development roadways are 3.5 m in height and 5.4 m wide.

The longwall and development dimensions are typical of other Australian longwall operations.

The longwall face equipment has been designed with a 4.2 m mining height,³⁵ and will only extract the lower section of the Hoskissons Seam which ranges from 4.6 to 10 m in thickness.

Whitehaven Coal announced recently announced³⁶ that a decision has been made to pursue the feasibility of extending the longwall face to 400 m in lieu of introducing longwall top coal caving (LTCC). Whitehaven claim that this is the superior optimization path for Narrabri, stating that "the key attributes of a wider longwall face compared to top coal caving are lower operating risk, higher incremental production and reduced underground development, all of which can be achieved for a similar capital cost".

If technically viable, LTCC could significantly increase the Narrabri Reserves base. While the Hoskissons Seam thickness appears suited to LTCC, a range of factors affect the technical viability of LTCC³⁷, including:

coal strength
cover depth
joints and cleats
coal banding
roof strata
cutting and caving ratio

30 January 2015 | ANGP2221-10 | Page 71 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

No further material has been found in the public domain to elaborate upon Whitehaven's choice to pursue a wider face with partial recovery rather than to pursue higher recovery from LTCC, although the high strength of the coal seam and overlying strata together with poorer quality of the upper coal plies is believed to be a major factor in making this decision.

The eastern longwall panels at Narrabri North appear to be constrained by either seam thinning or outcropping. The western panels appear to be constrained by lease boundaries. To the west of the lease boundary, the seam continues but gets deeper and thinner.

The eastern longwall panels at Narrabri South appear to be constrained by either seam thinning or outcropping. The northern panels appear to be constrained by lease boundaries, while the southern panels appear to be constrained by structural constraints.

It can be seen in Figure 16.3 that two of the north eastern Narrabri South longwall panels have two installation roadways, highlighted in red. Take-off positions are not shown on the mine plan. The presence of some structure may be inferred from this plan.

In Whitehaven's 2007 Prospectus$^{38}$ for a capital raising, an independent technical expert's report noted that no igneous intrusions had been detected to that date, and that a structural risk interpretation had identified a number of NW, NE, and more locally N-NNW trending structural zones. The risk of encountering full-seam displacement faults was perceived to be very low, and the thick seam conditions were expected to mitigate the risk of longwall production interruptions.

Figure 16.3 Narrabri South mine plan detail

Source: Narrabri Table 1, JORC Reserves, August 2014

30 January 2015 | ANGP2221-10 | Page 72 of 120

palaris
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

16.5 Mining Dilution Factors

The mining loss and dilution parameters used when estimating the Narrabri Reserves have been extracted from "Table 1" supporting the 2014 JORC Reserves statement³⁹, and are summarised in Figure 16.2.

Table 16.2 Loss and dilution assumptions

Assumption	Longwall	Development
Roadway dimensions	3.0 – 4.2 m high	3.2 – 3.5 m high
	295.6 m wide	5.4 m wide
Coal loss – Roof	20 mm	20 mm
Coal Loss – Floor	40 mm	30 mm
Coal Loss – Additional (washouts/partings)	2%	-
Dilution – Roof	60 mm	100 mm
Dilution – Floor	100 mm	50 mm

Source: Narrabri Table 1, JORC Reserves, August 2014

According to "Table 1", the Prestons-Sanders formula has been used in the estimation of in situ moistures, and default dilution qualities used when estimating overall ROM coal quality.

The in situ and ROM moistures have been taken as 12%, as supported by a study completed in 2013.

The loss and dilution factors appear reasonable, and in line with those experienced at other Australian longwall operations.

16.6 Mining Fleet

The principal components of the Narrabri longwall system include⁴⁰:

a double-ended ranging drum shearer rated at 3,500 tph with full horizon control
an armoured face conveyor rated at 3,500 tph with provision for single tailgate drive and dual maingate drives
beam Stage Loader rated at 3,500 tph
high capacity two leg and four leg chocks shields with shearer initiation, base lift and high set functions

30 January 2015 | ANGP2221-10 | Page 73 of 120

pagers

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

The longwall system was supplied by Bucyrus Australia Underground Pty Ltd⁴¹. Bucyrus was acquired by Caterpillar in 2010, and the parts and support for the longwall system are now provided by Caterpillar.

The longwall system capacity appears adequate to support projected annual production.

Additional underground mining equipment used in association with the longwall mining unit is listed in Table 16.3.

Table 16.3 Narrabri mining equipment

Equipment	No	Use
Continuous miner	4	Underground roadway development
Shuttle car	8	Coal transfer from continuous miner to shuttle car
Breaker feeder	4	Sizing/regulation of coal feed on to conveyors
Load haul dump unit	6	Material transport
Personnel transporter	7	Personnel transport
Panel conveyor belt	3	Coal transfer from feeder breaker to trunk conveyors

Source: Narrabri MOP, April 2011;

In February 2013, the number of operational development units was reduced to three as sufficient development in advance of the longwall had been established⁴².

The equipment fleet is typical of a modern longwall operation, and appears adequate to support projected annual production.

16.7 Production Capacity

16.7.1 Whitehaven Forecasts

An indicative production schedule was presented in the Narrabri Coal Mine Environmental Assessment in 2009,⁴³ showing an annual ROM output of approximately 6.5 Mtpa. The Environmental assessment schedule time base "project years" – Palaris have converted the time base to financial years to match actual project commencement date. This is shown in Figure 16.4, and shows a steep ramp-up to the 6.5 Mtpa rate. Some fluctuation in output is most likely due to the number of longwall relocations being affected by longwall panel length.

30 January 2015 | ANGP2221-10 | Page 74 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

The average yield from the Recoverable Coal Reserves to realise the Marketable Coal Reserves is 95.0% for Narrabri North (from Table 15.1 and Table 15.2) – applying this to the 2009 forecast annual ROM output of 6.5 Mtpa results in a marketable output of 6.2 Mtpa, as shown in Figure 16.5.

While this forecast is somewhat dated, a more up to date detailed production schedule was not found in the public domain.

When reporting their FY2014 results, Whitehaven Coal confirmed forecast annual ROM output to be 6.5 Mtpa for FY2015 and beyond⁴⁴. Whitehaven representatives have previously stated that upside potential exists and 7.0 Mtpa is achievable, flagging that as a target for FY2017⁴⁵,⁴⁶. Whitehaven has stated that in the longer term, production is planned to reach the permitted 8.0 Mtpa level.⁴⁷

16.7.2 Narrabri Potential

The third longwall panel at Narrabri was near completion in October 2014,⁴⁸ and production from the fourth panel (LW04) commenced on 30th November 2014.⁴⁹ The actual production achieved to date shows a ramp-up profile typical of operational longwall mines, with 5.66 Mt being achieved in FY2014. During Q1 of FY2015, ROM output was 2.08 Mt – annualising this rate (allowing for a 6 week longwall relocation each year) demonstrates potential capacity of 7.4 Mtpa as currently configured.

Whitehaven expect that increasing the longwall face width to 400 m will enable an increase in annual ROM production between 0.7 Mtpa⁵⁰ and 0.8 Mtpa⁵¹

Palaris consider that there is potential upside to increase Narrabri output by 10-15% from the FY2015 forecast of 6.5 Mtpa by increasing the longwall width to 400 m, with associated savings in

30 January 2015 | ANGP2221-10 | Page 75 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

required roadway development. A hypothetical 10% upside case from the 6.5 Mtpa forecast, delivering 7.15 Mtpa ROM, is shown in Figure 16.4 and Figure 16.5.

16.8 Expected Mine Life

Assuming that a 6.5 Mtpa rate was sustained in to the future, the 2014 Reserves of 140 Mt at Narrabri North would result in a mine life of a further 22 years, as shown in Figure 16.4. The 94 Mt of Reserves at Narrabri South could provide a further 14 years of mine life at this rate. Should an increase of 10% be implemented and 7.15 Mtpa be sustained, the remaining mine life for Narrabri North reduces to 20 years, with Narrabri South providing a further 13 years of mine life.

Figure 16.4 Narrabri North mine forecast ROM output (EA 2009)

30 January 2015 | ANGP2221-10 | Page 76 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Figure 16.5 Narrabri North mine forecast marketable output (EA 2009)

30 January 2015 | ANGP2221-10 | Page 77 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

17 Item 17: Recovery Methods

17.1 Compliance Exemption

Palaris are unable to comment on details of:

test or operating results relating to the recoverability of the coal and amenability to the processing methods
requirements for energy, water and process materials

17.2 Coal Handling and Preparation Plant

ROM coal is transported from the mining faces via panel conveyors and main trunk conveyors, then to the surface by a drift conveyor.

As can be seen in Figure 17.1, the drift conveyor discharges to a ROM stockpile. The ROM stockpile footprint as of October 2013 was approximately 2.5 ha. The stockpile area is to be increased to 4.2 ha according to the Mining Operations Plan (MOP) $^{52}$, which will result in a claimed stockpile capacity of 400,000 t. This will provide an increased capacity to cater for longwall relocations and CHPP shutdowns.

The drift conveyor capacity is shown as 3,500 tph capacity on a coal flow chart extracted from the MOP, as shown in Figure 17.2. Palaris did not have the opportunity to inspect the conveyor installation as no site visit was possible, but it is not unreasonable to expect that the capacity could be increased – depending upon the details of the installation, that may be achieved through a combination of some or all of conveyor drive power, belt speeds, belt strength, belt widths and troughing angles.

The MOP states that ROM coal is recovered from the ROM stockpiles, and passed through a rotary breaker to reduce sizing. Material less than 20 mm goes directly to the product coal stockpile, while the remainder goes to the Coal Preparation Plant (CPP). (Note that the size split is shown as -16 mm on the MOP flow sheet)

The MOP states that fine and ultra-fine reject from the CPP will be dewatered to produce a filter cake which will be disposed of in combination with the coarse coal reject. Palaris did not have the opportunity to inspect current reject disposal practice as no site visit was possible. The washed

30 January 2015 | ANGP2221-10 | Page 78 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

coal is transferred to the product coal stockpile area (300,000 t capacity) from where it is loaded into train wagons for transport from site.

The MOP states that the CPP is expected to remove up to 5% of the ROM feed as reject, predominantly floor dilution. This consistent with the 95% conversion of Recoverable Reserves to Marketable Reserves shown in the 2014 Reserves statement.

Reject material is trucked to a reject disposal area, visible in Figure 17.1

Commissioning of the Narrabri Coal Handling and Preparation Plant (CHPP) commenced in August 2011⁵³. It was originally operated by a contractor—Whitehaven took over operation in February 2014⁵⁴, hoping to reduce costs and operate more efficiently.

Figure 17.1 Narrabri North surface facilities

Source: Google Earth, Imagery Date 10/10/13, n.t.s.

30 January 2015 | ANGP2221-10 | Page 79 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

17.3 Processing Plant Design

A coal flow chart extracted from the MOP is shown in Figure 17.2. Details of the Coal Preparation Plant are shown in Figure 17.3

According to "Table 1" of the JORC Reserves statement, the Narrabri North process generates a PCI coal product from a low cut point that will produce a 7 - 8% ash product and a thermal product of around 12% ash is produced from the screening undersize and the Dense Media Cyclone (DMC) middlings. It is envisaged that the Narrabri South product range would be restricted to a thermal product of 8 - 15% ash, which would then be blended as required with other Whitehaven products at the port.

An 11% moisture is assumed for the PCI product, and the thermal product moisture will vary, depending upon the proportion of 13% moisture middlings that is added back to the bypass split.

30 January 2015 | ANGP2221-10 | Page 80 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Source: Narrabri MOP, April 2011
Figure 17.2 Narrabri coal flow sheet

30 January 2015 | ANGP2221-10 | Page 81 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Figure 17.3 Narrabri coal preparation plant flow sheet

Source: Narrabri Coal Mine Environmental Assessment, 2009

17.4 Processing Plant Performance

A review of Narrabri's production history has been compiled from Whitehaven's Quarterly Reports, and is summarised in Figure 17.4. Due to stockpile movements, the reported apparent yield[55] can exceed 100%.

The average yield from Narrabri North Recoverable Coal Reserves to realise the Marketable Coal Reserves is 95.0%. Reported apparent yield for the last 12 months (2013Q4-2014Q3) was 92.9%.

As described by Whitehaven, Narrabri is producing a high energy export thermal coal and a low ash, low sulphur, low phosphorus, mid volatile PCI coal.[56]

30 January 2015 | ANGP2221-10 | Page 82 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Figure 17.4 Narrabri coal production history

Source: Whilehaven Coal Quarterly Reports

30 January 2015 | ANGP2221-10 | Page 83 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

18 Item 18: Project Infrastructure

18.1 Compliance Exemption

The following description of the Narrabri infrastructure is sourced from the Narrabri Coal Mine Environmental Assessment.57 This document focuses on the development of Narrabri North. Much of the major infrastructure can be reutilised for Narrabri South. Additional infrastructure will be required to service the increased footprint of Narrabri South.

18.2 Project Infrastructure

Stage 1 was the construction and operation of an underground coal mine extracting up to 2.5 Mtpa of ROM coal for export, and construction and operation of mine surface facilities58, and was approved in February 200859. Site works on the pit top area for the Narrabri Coal Mine commenced on 7 April 200860, and Stage 1 was completed towards the end of 2010. Stage 2 covered progression from underground mining by continuous miner to longwall mining with an annual production rate of up to 8 Mtpa.

As described in the Stage 2 Mining Operations Plan, the infrastructure was completed in two tranches, supporting Stage 1 and Stage 2. Stage 1 infrastructure consisted of

site access road
main office, administration and light vehicle carpark
workshop and stores buildings

30 January 2015 | ANGP2221-10 | Page 84 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

intersection upgrade between the Kamilaroi Highway and Kurrajong Creek Road
rail crossing upgrade over the North-Western Branch Railway Line
ventilation fans within the box cut
electrical sub-station and associated electricity infrastructure
equipment laydown area
rail loop
sewage treatment plant
box cut and mine portals
drift construction to pit bottom
drift and skyline conveyors
coal crushing station
Run of Mine (ROM) coal and product coal pad hardstand areas
train loadout bin and train loader
water storages and lined evaporation ponds
amenity bund
explosives magazine
CHPP (commenced but not completed)
West Mains ventilation shaft (commenced but not completed), and
gas pre-drainage infrastructure

Stage 2 infrastructure consisted of

construction and use of mine ventilation and gas drainage infrastructure, including completion of the 5.5 metre diameter blind bored ventilation shaft with associated fan installation
mine dewatering facilities
Coal Handling and Preparation Plant (CHPP)
water pipeline from the Namoi River

As can be seen in Figure 18.1, the key infrastructure is in place and operational.

30 January 2015 | ANGP2221-10 | Page 85 of 120

paglaris

Aeglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Source: Google Earth, Imagery Date 10/10/13, n.t.s.
Figure 18.1 Narrabri key surface infrastructure

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Key site infrastructure requirements are summarised below.

18.2.1 Access Roads and Service Corridors

Approximately 80 km of access road and service corridor will be required throughout the life of the mine.

18.2.2 Power Supply and Distribution

Incoming electrical power is supplied via a 66 kV spur line. This is reduced to 11 kV for use on the mine site. Initial underground power supply will be via the drift. Each future ventilation shaft site will also include provision for boreholes to take power underground.

18.2.3 Mine Infrastructure Area

The Mine Infrastructure Area (MIA) includes:

mine offices
car parking
bath house facilities
first aid facilities
fire-fighting facilities
workshop facilities
warehouse facilities
laydown area
substation area
gas monitoring facilities
main ventilation fans
explosive storage magazines
fuel storage
air compressors
ballast supply facilities
stone dust storage/distribution facilities
longwall support fluid storage/distribution facilities
clean and dirty water management structures

18.2.4 Ventilation Shafts

Ventilation shafts of up to 6 m in diameter will be required to maintain production. The preferred construction technique is blind boring from the surface prior to underground development reaching the shaft bottom area. Construction of the No. 1 ventilation shaft and fans was completed in January 2012⁶¹.

Three main shafts will eventually be required as the workings progress down dip. Smaller shafts (1 - 1.5 m diameter) will be required at intervals of three to four longwall panels.

30 January 2015 | ANGP2221-10 | Page 87 of 120

⁶¹ Narrabri Mine Community Newsletter, Issue 2, February 2013, http://www.whitehavencoal.com.au/operations/documents/NarrabriMineNewsletter2_web.pdf, accessed 31 Oct 2014

palaris
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

18.2.5 Gas Drainage

The Hoskissons Seam gas content is such that gas drainage will be required, both in advance of development and after longwall extraction.

Surface to In-Seam Pre-Drainage

Surface to In-Seam (SIS) pre-drainage requires a number of small diameter SIS boreholes to be drilled into and along the length of the coal seam. These holes will be spaced at 1.5 km intervals along the longwall panels. A pump well will be required for each set of SIS holes to extract gas and water. Each pump site will require water storage facilities.

Goaf Gas Drainage

Vacuum pumps will be used to drain goaf gas from vertical holes drilled at nominal 200 m intervals along the length of the longwall panels.

18.2.6 Reject Emplacement Area

Up to 25 ha will be required for the storage of coarse and fine reject material from the CHPP.

18.2.7 Brine Storage Ponds

Up to 160 ha will be required for the brine storage over the life of Narrabri North. The area proposed for brine storage in the Environmental Assessment was undisturbed as of October 2013.

18.2.8 Raw Water

Two pipeline will be installed, enabling water to be drawn from the nearby Namoi River, and for treated waste water to be discharged from the mine site to the river.

18.2.9 Coal Handling and Processing Plant

As described earlier, the CHPP consists of:

ROM coal stockpile facilities
Coal Processing Plant
Product coal stockpile facilities
Train loading facilities

18.3 Transport Infrastructure

The first train load of coal was despatched from Narrabri Mine in August 2010.⁶² The train loader is a multi-batch design allowing flexibility to load various wagon sizes in a train, allowing full utilisation of the limited capacity rail line.

⁶² Australian Bulk Handling Review, September/October 2010. Accessed on-line 17 Oct 2014.

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National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

18.3.1 Rail Track

Australian Rail Track Corporation (ARTC) lease and operate on the Narrabri-Werris Creek-Newcastle Ports line (Gunnedah Basin line), an element of the Hunter Valley Rail Corridor.

The rail track has been upgraded to allow 72 wagon (5,400 t) trains to be utilised $^{63}$ , and provide an annual capacity of 11-12 Mtpa to be shared between Whitehaven and neighbouring Idemitsu mines. Average train capacities are forecast to reach 7,634 t in $2015^{64}$ . ARTC have plans to further increase Gunnedah Basin rail line capacity to $\sim 16$ Mtpa, with planned line upgrades shown in Figure 18.2.

Whitehaven has sufficient contracted rail capacity with ARTC to deliver both current production and also expected future production levels $^{65}$ .

Source: ARTC 2014-2023 Hunter Valley Corridor Capacity Strategy - Consultation Draft
Figure 18.2 Gunnedah Basin line contracted and prospective upgrades

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National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

18.3.2 Rail Haulage

Whitehaven has two rail haulage contracts in place extending out to 2026, one with Pacific National, and a second one with Aurizon⁶⁶.

The current operating contract with Pacific National for 9.5 Mtpa was renegotiated and extended to 2026. The second haulage contract with Aurizon is for an amount of up to 16.0 Mtpa commencing with the start-up of Whitehaven's Maules Creek project. Aurizon have already begun hauling coal from existing operations under a short term spot contract which has assisted them in establishing operations in the region ready for the commencement of Maules Creek operations

18.3.3 Port

There are two major coal loading facilities at the Port of Newcastle – Port Waratah Coal Services (PWCS) and Newcastle Coal Infrastructure Group (NCIG). Whitehaven owns an 11% share in NCIG and access to the resulting capacity entitlements⁶⁷.

Whitehaven's capacity at NCIG is 6.0 Mtpa, through Whitehaven's equity share of the coal terminal, and its capacity at the PWCS terminal is 5.3 Mtpa until FY2015⁶⁸.

As per Whitehaven Coals forecast (as shown in Figure 18.3), their current port allocation exceeds saleable production forecasts due to delays in gaining approvals for the Maules Creek project. Additional capacity will however be required by FY2017 as access to third-party capacity drops⁶⁹.

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Port Capacity v Export Saleable Production
Figure 18.3 Whitehaven Coal port allocation and demand

Note: Data shown for the year ending 30 June. These estimates relate to planned future events and expectations and as such involve known and unknown risks and uncertainties. The actual production is likely to vary on an annual basis as a function of demand, supply and other market conditions

Source: Whitehaven Coal Limited, Fully Year Results FY2014

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19 Item 19: Market Studies and Contracts

19.1 Compliance Exemption

Palaris are unable to comment on details of:

any contracts that are required for property development, including mining, concentrating, smelting, refining, transportation, handling, sales and hedging, and forward sales contracts or arrangements and their status

19.2 Market Studies

Whitehaven sells coal to power generators and steel makers in the Asian region. The destination of Whitehaven coal in FY2014 is illustrated in Figure 19.1.⁷⁰ Whitehaven managed sales of 10.8 Mt in FY2014, however, no public information is available to determine the specific customers for the coal from Narrabri Mine, with FY2014 sales of 5.1 Mt accounting for approximately 47% of total Whitehaven sales.⁷¹

⁷⁰ http://www.whitehavencoal.com.au/investors/docs/2014-annual-report.pdf
⁷¹ http://www.whitehavencoal.com.au/investors/docs/15093956-june-quarterly-report-2014.pdf

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Figure 19.1 Whitehaven Coal customer locations

Source: http://www.whitehavencoal.com.au/investors/docs/2014-annual-report.pdf

Detailed quality information for the Narrabri reserves does not appear to be reported in the public domain, however representative quality has been sourced from the 2013 NSW Coal Industry Profile $^{72}$ . Given the expected high quality of Narrabri thermal coal (Table 19.1), sales from the mine are not expected to be impacted by the recently announced restrictions on the import of coal into China. China's National Development and Reform Commission ("NDRC") released new guidelines for coal quality on September 15 extending existing coal quality requirements of maximum $16\%$ ash and $1\%$ sulphur to the Pearl and Yangtze River Deltas (previous version released in December 2013 applied only to coal sold in Beijing, Tianjin and Hebei). Narrabri's thermal product meets both the ash and sulphur restrictions, and therefore sales from the mine will not be impacted when the guidelines are planned to come into effect from 1 January 2015.

Table 19.1 Narrabri coal quality

Narrabri Coal Quality	Thermal
Moisture % (ad)	5.0
Moisture % (ar)	11.0
Ash % (ad)	12.0
Volatile matter % (ad)	28.5
Sulphur % (ad)	0.5
Specific energy (kcal / kg) (gross air dried)	6850

Source: 2013 NSW coal industry profile

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

From October 15, China will levy import tariffs on coal set at 3% for anthracite and coking coal (such as PCI), 6% for non-coking coal (such as Newcastle benchmark thermal coal) and 5% for briquettes and other coal-based fuels. Indonesia – the second-biggest exporter of coal – will be exempt from the tariffs due to a free trade agreement between China and the Association of Southeastern Asian Nations (ASEAN). The impact on Whitehaven sales and prices is expected to be limited, with approximately 7% of total Whitehaven FY2014 sales traded with China⁷³. However, the tariff in Australia may only apply in the short-to-medium term, as there is potential for the coal import tariffs to be exempted in the Australia-China Free Trade Agreement (FTA) which is currently in advanced stages of negotiation.

19.2.1 Thermal Coal Market

Thermal coal prices have been in decline since 2011 (Figure 19.2), with recent price falls due in large part to oversupply in the seaborne thermal coal market. Lower prices are expected to lead to mine closures and production declines for uncompetitive mines, as many producers are currently unprofitable at current spot prices. The downward pressure on prices is expected to ease as supply normalises in the medium term. On the demand side, coal continues to remain a dominant source of energy due to cost and reliability advantages (Figure 19.3), with most of the growth in world energy demand coming from non-OECD emerging countries (Figure 19.4), and expected to drive growth in seaborne thermal coal trade by 2 per cent per annum to 2019.⁷⁴

Figure 19.2 Thermal coal spot prices

Source: BREE

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Figure 19.3 Projected electricity generation by fuel

Source: BREE

Figure 19.4 Major thermal coal importers

Source: BREE

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National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

19.2.2 Coking Coal Market

Metallurgical coal, also known as coking coal, is used to produce metallurgical coke, an essential raw material in the manufacturing of iron and steel. There are different types of coking coal based on the inherent qualities of the coal (such as volatile material, swell and coke strength) - hard coking coal, semi-hard coking coal, semi-soft coking coal and pulverised coal injection (PCI). Steel producers look to blend an ideal mix of coking coals to produce a coke blend and increase the efficiency of the blast furnace. With approximately 70% of global steel production dependant on coking coal, demand for coking coal is driven by production of steel for consumption in industries such as construction, auto manufacturing, transport and infrastructure.

While hard / semi-hard / semi-soft coking coals are combined to produce a coke blend, PCI is injected directly into the blast furnace to reduce the amount of coke required, reducing coking coal consumption and lowering the cost of steel making. Low volatile PCI coals are generally priced at a premium compared to high volatile PCI, due to a higher coal replacement ratio.

Coking coal prices have been in decline since 2011 (Figure 19.5) due to reduced import demand from China and oversupply in the seaborne market. China's sustained downturn in the property market has led to reduced demand and production in the steel sector, however, this is expected to moderate as the property market recovers. At current spot prices, a large portion of coking coal producers are unprofitable and this is expected to lead to a market balancing as supply growth normalises. On the demand side, the main drivers of coking coal consumption growth is expected to be China and India (Figure 19.6), with seaborne coking coal trade forecast to grow at 1 per cent per annum to 2019.⁷⁵

Figure 19.5 Coking coal spot prices

Source: BREE

⁷⁵ http://www.bree.gov.au/sites/bree.gov.au/files/files//publications/req/REQ-2014-09.pdf

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National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Figure 19.6 Major coking coal importers

Source: BREE

19.2.3 Consensus Forecasts

The consensus coal price forecast for thermal coal is for prices to increase from US$75/t in 2014 to US$101/t in 2020, and for the PCI price to increase from US$89/t in 2014 to US$132/t in 2020⁷⁶. The PCI price is derived from the benchmark hard coking coal price sourced from Consensus Economics using an historical discount of 26%. The nominal price forecasts are highlighted in Figure 19.7 with the shaded area representing the forecast range for each commodity.

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Figure 19.7 Consensus coal price forecast

19.3 Marketability of Narrabri Product

"Table 1" of the Narrabri JORC Reserves Statements notes that the Estimator anticipates no foreseeable issues in demand for the Narrabri North product.

As noted in Section 1.1.1, Narrabri is owned by a joint venture and managed by Narrabri Coal Pty Ltd. Such an arrangement allows strategic marketing benefits by including potential customers and trading houses as joint venture partners. At Narrabri, the joint venture partners have life of mine offtake contracts in place which account for most of the mine output. The contracts are for an agreed tonnage each year, sold at the prevailing Newcastle market price.77

Whitehaven believe that the thermal coal market is transitioning from a period of strong growth (7.5% pa over the past five years) when China and India installed significant amounts of new generating capacity, to a more moderate growth (2.7% pa over the next five years). While this means that coal production growth will have to slow in response, they believe that Whitehaven's coal quality is such that demand for it will be strong into the future.

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

All production and sales at Whitehaven are managed by Whitehaven Coal.78 Whitehaven Coal's customer base comprises major world steel producers and a number of electricity generators located in Japan, Korea, Taiwan, India and China.

Early in 201479 Whitehaven resolved the impact of low energy levels being experienced in the Narrabri thermal coal product. The reinstallation of the upgraded by-pass circuit enabled blending of crushed ROM coal with washed thermal coal product resulting in a thermal coal product that meets the Newcastle thermal coal benchmark specifications. Consequently, all Narrabri coal sold during the year has met the required specifications.

19.4 Contracts

Coal marketing contracts are commercially sensitive. No information relating to coal marketing contracts in place for Narrabri Mine were found in the public domain.

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National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

20 Item 20: Environmental Studies, Permitting, and Social or Community Impact

20.1 Environmental Studies and Impacts

The Narrabri North Mine is authorised by the Stage 2 Project Approval (PA) 08_0144; the key NSW approval instrument required for the mine. Issues raised through the Environmental Impact Statement (EIS) and consultation processes primarily related to subsidence impacts on the environment, including ground and surface water, Aboriginal cultural heritage, and biodiversity impacts. Other issues raised included air quality and noise management, potential socio-economic impacts, rail traffic impacts and rehabilitation of the site.

20.1.1 Subsidence

Subsidence predictions were made using an empirical model developed in 2003 for an Australian Coal Industry research project. Reference was also made to published information regarding the subsidence-reducing potential of dolerite sills over South African underground coal mines. The Stage 2 EIS predicted a maximum subsidence level of 2.44 m.

The possible effects of subsidence have been well considered in an 'Extraction Plan' required to be developed and approved by the NSW Government. Narrabri North Mine has monitored the subsidence movement across the surface of LW101 to LW103 in accordance with the approved Extraction Plan.

In the Narrabri Coal Mine 2014 Annual Review, subsidence monitoring for LW101 and LW102 indicated that maximum subsidence is likely to be closer to 2.65 m.

20.1.2 Noise

The Narrabri Coal EIS included a noise impact assessment undertaken in accordance with recognised government and industry standards. Both the PA and Environmental Protection Licence (EPL) set noise compliance requirements for the mine. Compliance requirements are based on noise impacts to private receivers. Operational noise impacts have been considered, and appropriate monitoring and management measures are detailed in the Mine's Noise Management Plan.

In the Narrabri Coal Mine 2014 Annual Review, a number of exceedances of the Mine's noise criteria were recorded and reported. Exceedances were recorded in May, June, September, and December 2013, and March 2014. Exceedances were recorded at the "Naroo" and "Bow Hills" properties and were generally caused by audible mining noise related to dozers working on the coal stockpiles.

Narrabri Coal has commenced acquisition negotiations with the owner of the "Naroo" property and the results of further noise model validation have been provided to the owner of the "Bow Hills"

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property. The owner of the "Bow Hills" has since requested additional noise mitigation measures (e.g. double glazing, air conditioning). The Mine has also erected a shed to mitigate the potential for adverse noise impacts at "New Haven" regarding a temporary ventilation fan.

20.1.3 Air Quality

The Narrabri Coal EIS included an air quality impact assessment undertaken in accordance with recognised government and industry standards. Both the PA and EPL set dust compliance requirements for the project. Compliance requirements are based on dust impacts on private receivers. Dust impacts have been considered, and appropriate monitoring and management measures are detailed in the Mine's Air Quality Management Plan.

No exceedances of the Mine's dust criteria were recorded in 2013-2014. However, during the latter half of 2013, numerous complaints were made to the mine regarding visible dust from the coal processing area. The Narrabri Coal Mine 2014 Annual Review reports the dust as resulting from old coal being stockpiled for longer than usual combined with hot, dry and windy weather conditions⁸⁰.

The Mine has recognised the ongoing dust impacts on the community and has committed to implementing a range of additional management controls. Additional measures include removing fine dust from the toe of stockpiles, designing an automated sprinkler system for the coal stockpiles and installing coal discharge chutes on the skyline conveyor.

20.1.4 Tailings and Reject Management

The coal preparation process is expected to remove up to 5% of the total ROM feed as reject. Approximately 90% of the reject will be coarse reject (16 mm to 25 mm) and 10% will be filter cake, with both reject streams stockpiled within a temporary reject pile⁸¹. From the reject pile, the consolidated reject will be transferred to a constructed 25 ha Reject Emplacement Area immediately to the west of the box cut. Approximately 5.7M m³ of reject will be produced throughout the life of the mine.

Narrabri Coal will require approval under s100 of the Coal Mines Health and Safety Act for emplacement of reject material. Palaris did not have the opportunity to inspect current reject disposal practice as no site visit was possible.

20.2 Environmental Monitoring and Management

Narrabri Coal maintains a current and live environmental management strategy consisting of a series of Environmental Management Plans (EMP) that dictate management and monitoring requirements for the project (Table 20.1). EMPs provide the framework for management of environmental risks across the Mine. An integral part of the EMPs is a program to effectively monitor and check the environmental performance of the Mine. Environmental monitoring currently being undertaken in accordance with the North Narrabri Mine PA and EPL includes noise and air quality, ground and surface water, flora and fauna, and subsidence.

⁸⁰ Narrabri Coal Mine Annual Review (2014), http://www.whitehavencoal.com.au/environment/narrabri_north_mine_environmental_management.cfm
⁸¹ GSS Environmental, 2011. Narrabri Coal Mine – Revised Conceptual Mine Closure Plan for Stage 2 Longwall Operations

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Table 20.1 Narrabri North mine environmental management plans

EMP	Status
Extraction Plan (for all second workings in the project area), including a:
• Coal Resource Recovery Plan
• Subsidence Predictions
• Subsidence Monitoring Program
• Built Features Management Plan;
• Public Safety Management Plan
• Landscape Management Plan
• Water Management Plan
• Biodiversity Management Plan
• Land Management Plan; and
• Heritage Management Plan	Longwall panels (LW) 101 to 105 approved by the DP&I on 27 March 2012 and DRE on 5 June 2012
Noise Management Plan	Plan approved 6 December 2011
Air Quality Monitoring Program	Plan approved 6 December 2011
Water Management Plan, including a:
• site water balance
• erosion and sediment control plan
• surface water monitoring plan
• raffinate discharge and transfer control and monitoring plan
• groundwater monitoring program; and
• surface and groundwater response plan	Plan approved 5 April 2013
Aboriginal Cultural Heritage Management Plan	Plan approved 6 December 2011
Energy Savings Action Plan	Plan approved 6 December 2011
Greenhouse Gas Minimisation Plan	Plan approved 12 June 2012
Waste Management Plan	Plan approved 6 December 2011
Landscape Management Plan	Plan approved 27 March 2012, updated as part of the Extraction Plan
Mine Closure Plan	Plan approved 6 December 2011
Environmental Management Strategy	Plan approved 6 December 2011
Pollution Incident Response Management Plan	Submitted August 2012
Major Hazard Management Plans incorporating:
• Surface Transport Management Plan
• Underground Transport Management Plan
• Airborne Dust Management Plan
• Explosives Handling Management Plan
• Slope Stability Management Plan
• Fire and Explosion Management Plan
• Strata Failure Management Plan
• Inrush Management Plan
• Dust Explosion Management Plan
• Outburst Management Plan
• Spontaneous Combustion Management Plan	All plans currently managed and implemented by Narrabri Mine

Source: Narrabri Coal Mine Annual Review (2014)

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

20.3 Project Permitting

The Narrabri North Mine was developed after substantial investigations were undertaken under Exploration Licence (EL) 6243, granted in May 2004. Following completion of relevant geological assessments and feasibility studies, the Narrabri Coal Project applied for Project Approval (PA) through the NSW and Commonwealth Governments. An Environmental Impact Statement (EIS) was prepared and submitted to the NSW Department of Planning (DP&E) in March 2007. PA 05_0102 was subsequently granted for Stage 1 of the Project on 13 November 2007. Subsequent approvals for Stage 1 were granted in early 2008.

Since commencing Stage 1, continued geological exploration and a range of related technical studies were completed to evaluate the feasibility of converting the Stage 1 continuous mining operation to a longwall mining operation. An application for PA for the Narrabri Mine Stage 2 Longwall Project was submitted to DP&E in July 2008 and subsequently approved on 26 July 2010. Table 20.2 summarises the current status of approvals relative to the Narrabri North Mine.

Table 20.2 Narrabri North mine permit and approvals status

Issuing/Responsible Authority	Type of Lease, Licence, Approval	Date of Issue	Expiry	Comments
Division of Resources and Energy (DRE)	Exploration Licence EL 6243	21 May 2004	20 May 2014	Approval for exploration. renewal application has been submitted
Minister for Planning	Project Approval (PA 05_0102)	13 November 2007	18 January 2029	Project approval for Stage 1. Surrender of the Stage 1 project approval approved on 2 August 2011
DRE	Mining Lease (ML 1609)	18 January 2008	18 January 2029	Approval for mining
Environment Protection Authority (EPA)	Environment Protection Licence 12789	20 February 2008	Nil – Anniversary date: 20 February	For mining operation >5,000,000 t (handled and produced)
Narrabri Shire Council (NSC)	Construction Certificate DP 816020
Inspection Report/Permit to Occupy No 2413	17 October 2008
6 August 2009	N/A	Stage 1 mine surface facilities

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Issuing/Responsible Authority	Type of Lease, Licence, Approval	Date of Issue	Expiry	Comments
NSW Office of Water (NOW)	90CA811347 / WAL15922
90WA812891 / WAL20131			GAB – Water supply (248 ML)
90AL807276 / WAL12833
90CA802130 / WAL6762			GW – Water supply (150 ML)
90CA802130 / WAL2671			GW – Water supply (67 ML)
90CA802130 / WAL2728
90CA802130 / WAL20152			River – High Security (20 ML)
90BL254679 / WA822539			River (48 ML)
90WA822539 / WA822539			River (10 ML)
90BL254481 -90BL254487			River (600 ML)
90BL254660 - 90BL254663
90BL254658
90BL254659			Mining (Low Security) (818 ML)
90BL254701
90BL254958 - 90BL254967			Mine De-gassing/De-Watering
90BL255167 - 90BL255173
90BL255216 - 90BL255218			Groundwater Monitoring Purposes
90BL255769 - 90BL255772
90BL256060 - 90BL256063
Minister for Planning	Project Approval (PA 05_0102 MOD 1)	26 March 2010	18 January 2029	Notice of modification under Section 75W of the EP&A Act. PA surrendered, refer above
Minister for Planning	Project Approval (PA 08_0144)	26 July 2010	26 July 2031	Project Approval for Stage 2
WorkCover NSW	Notification for explosives use and storage	5 August 2010	20 July 2015	Licence to store – 07-100215-001
Licence to handle – various
Narrabri Shire Council (NSC)	Construction Certificate DP 816020	23 September 2010	N/A	Stage 2 Mine Surface Facilities
Minister for Planning	Project Approval (PA 08_0144 MOD 1)	30 March 2011	26 July 2031	Notice of modification under Section 75W of the EP&A Act
	Project Approval (PA 08_0144 MOD 2)	21 December 2011	26 July 2031	Notice of modification under Section 75W of the EP&A Act

Source: Narrabri Coal Mine Annual Review (2014)

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Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

20.3.1 Stage 2 PA 08_0144

The Narrabri North Mine is currently authorised under the NSW Environmental Planning and Assessment Act 1979 by the conditions of the Stage 2 PA 08_0144. PA conditions are generally consistent with, and reflective of those issued to other NSW underground coal mining operations. Of significance to the Project is the limit on ROM coal extraction to 8.0 million tonnes per calendar year.

In 2011, Narrabri Coal commissioned an Independent Audit of the Mine's PA⁸². At the time of the Audit, both the Stage 1 and Stage 2 PA's were reviewed. The Audit identified a number of administrative non-compliances which required Narrabri Coal to consult with, or gain approval from government agencies for certain activities. The Audit found that whilst the non-compliances were administrative in nature, the Mine generally complied with the overall intent of the relevant conditions.

20.3.2 Exploration Licence 6243

An application for renewal of Exploration Licence (EL) 6243 was submitted prior to the expiration date of 20 May 2014. The renewal application currently remains outstanding. For the purposes of ongoing exploration activities within EL6243, the NSW Mining Act 1992 states "If an application for the renewal of an authority is not finally dealt with before the date on which the authority would otherwise cease to have effect, the authority continues to have effect, in relation only to the land to which the application relates, until the application is finally disposed of".

Narrabri Coal understand that after considering an application for the renewal of an EL, the decision maker can refuse the application, amend any conditions of the EL, or require relinquishment of a portion of the land currently the subject of the EL.

20.3.3 Narrabri South Project

Palaris recently examined the approvals timeframes for 13 major mining and quarrying projects in NSW since 2011. The average timeframe for approval (Project Approval) of all projects (new projects and major modifications) was 22 months. For the purposes of developing an indicative approvals timeframe, the approvals process was deemed to have commenced once the initial request for Director Generals Requirements (DGR) was made. This assumes that a preliminary background document had been completed to support the DGR request. For projects where Commonwealth approval was also required, the average timeframe was 36 months.

20.4 Social Engagement

The NSW Government approvals process for the Narrabri Coal Project required an open and transparent consultation process for the local and regional communities. The Stage 2 EIS was publicly exhibited for seven weeks in November and December 2009 and received only one public submission objecting to the project. The Stage 1 EIS only received 7 public submissions on the application. More recent project applications across NSW have received greater than 200

⁸² Umwelt Environmental Consultants, 2011. Independent Environmental Compliance Audit-Narrabri North Coal Mine

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Anglo Pacific Group PLC
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public submissions objecting to the project. No significant social engagement commitments or community contribution funds were identified through publicly available documentation.

20.4.1 Community Consultative Committee

Narrabri Coal currently facilitates a Community Consultative Committee (CCC) required under its Project Approval. The CCC meets quarterly and will be required to continue throughout the life of the mine. A review of the most recent CCC minutes indicates that operational noise and dust issues remain a concern for the local community.

20.4.2 Landholder Rights

Narrabri North Mine

The Stage 2 PA includes specific conditions relating to landholder rights where the Mine is considered to be exceeding its impact assessment criteria. At any point in time if a landowner considers the project to be exceeding the impact assessment criteria then they may ask the NSW Government in writing for an independent review of the impacts on their land. Where the Mine is deemed to not be complying with the relevant impact assessment, the Mine must take all reasonable and feasible measures to ensure compliance. Where the Mine is deemed to be exceeding the defined 'land acquisition' criteria, the Mine is obliged to enter into acquisition negotiations with the landholder.

Narrabri South Project

In order to continue exploration and undertake relevant environmental studies to support an EIS over the Narrabri South Project area, Narrabri Coal will require legal land access. Land access can be obtained via direct ownership or through a negotiated access agreement. Such access is also required prior to the final grant of a ML; particularly where surface access is required to facilitate mining. Allotments of private land currently exist across areas of EL6243.

20.4.3 Financial Contributions

A review of the Planning Agreements and financial contributions required to be paid to the Narrabri and Gunnedah Shire Councils indicates that no further financial contributions are required to be paid.

20.5 Mine Closure Requirements

Narrabri Coal has developed the "Narrabri Coal Mine – Revised Conceptual Mine Closure Plan for Stage 2 Longwall Operations". The Mine Closure Plan (MCP) was approved by the NSW Government on 6 December 2011.

With the exception of a proportion of the perimeter amenity bund wall, covering approximately 3.0 ha, and the rail loop covering 4.7 ha, all land disturbed during the life of the mine is proposed to be returned to a land capability similar to the pre-mining agricultural environment. The presence of the rail loop may lend the site to be used for some other related activity or industry, including sale yards, transport hub or bulk goods storage.

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National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

At the completion of mining, all infrastructure at the site will be removed (excluding the rail loop, southern section of the perimeter amenity bund and water management structures).

Decommissioning will also require the sealing of the underground access portals and the removal of surface infrastructure, including offices, bath house, ROM coal stockpile infrastructure, reject emplacement area, workshop, fuel storages, conveyors, ventilation shafts and operational water management structures. The post mining landform will then be reshaped to create a stable surface with slopes at a maximum of 4 degrees. Surface water management structures such as contour banks, diversion drains and settlement ponds required to provide permanent, long-term stable water flow and storage will be constructed. The open areas will be rock raked and ripped, in particular where roads and hardstand areas have compacted the existing ground, with ripping up to 1 m in depth. At least 150 mm of soil will then be spread over the site and seeded with a suitable cover crop to minimise soil erosion. Some roads may remain open if required for future land uses, and access to the site. All areas above the longwall mining area will be rehabilitated to remediate areas affected by mine induced subsidence.

Narrabri Coal has developed industry standard rehabilitation success criteria in order to demonstrate stability and sustainability of the site. Demonstration of compliance with the success criteria will ultimately determine the Mine's success in relinquishing its ML and recovering the rehabilitation security bond.

After decommissioning works have been undertaken, a monitoring program will be designed to demonstrate that the rehabilitation success criteria have been met and that the site is not resulting in any off site impacts. The current conceptual schedule for ML relinquishment is 10 years following the cessation of mining.

20.5.1 Closure Costs

The NSW Government requires that all coal title holders lodge a security deposit with the government to ensure that the liability for rehabilitation is borne by the titleholder. The security deposit must cover the Government's full costs in undertaking rehabilitation in the event of default by the titleholder. Whilst the rehabilitation costs for the Narrabri North Mine are not publicly available.

20.6 Current Developments in New South Wales

Recent developments in NSW have highlighted that with the current arrangements in place, despite having all the requisite approvals and support from sections of the government, that there is a risk of projects failing to obtain final approval.

The NSW Planning Assessment Commission (PAC) is a statutory body established under the Environmental Planning and Assessment Act 1979 (EP&A Act) in November 2008. The Commission is independent of the NSW Government, the Minister for Planning and the Department of Planning and Environment.

The EP&A Act details the functions of the Commission including the determination of development applications when those matters are delegated to it by the Minister, and the provision of independent expert advice to the Minister on a range of planning and development matters.

30 January 2015 | ANGP2221-10 | Page 107 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Anglo American Metallurgical Coal had applied to extend operations at the Drayton Mine, near Muswellbrook, into the Drayton South Coal Project Area. The PAC has refused permission for this, stating that it was not in the public interest,83 despite all required approvals being in placed, and the project having the support of the Department of Planning and Environment. Another project, the Coalpac Consolidation Project near Lithgow, was also dismissed.84 Both of these projects are in highly environmentally sensitive areas.

While a similar decision is not expected affect the established Narrabri North operation, there is a slight risk that a similar decision could impact Narrabri South project.

30 January 2015 | ANGP2221-10 | Page 108 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

21 Item 21: Capital and Operating Costs

21.1 Compliance Exemption

Palaris are unable to comment on details of:

capital and operating cost estimates, with the major components set out in tabular form

21.2 Capital Costs

Limited site specific details on capital costs at Narrabri Mine could be located in the public domain. It is therefore not possible to present validated tabulated capital costs.

Works for stage 1 of Narrabri North commenced in FY2008 and were completed in FY2010 for a capital cost of AUD$227M.⁸⁵ Stage 2 of the project was completed in FY2012 within the budgeted AUD$300M.

The longwall face extension project is flagged for introduction on longwall block 7, with capital expenditure for additional longwall equipment estimated at A$50M and approximately A$20M of capital for additional belts and drives.⁸⁶

There is limited data available in the public domain to identify forecast levels of sustaining capital required for ongoing operations at Narrabri. Sustaining capital for FY14 was reported at $38.7M (on a 100% owned basis) inclusive of $18M of mains development, resulting in sustaining capital of approximately $21M or $4/t ROM⁸⁷,⁸⁸. This is in line with Australian benchmarks of A$4-6/t ROM coal with the expectation for Narrabri to comfortably spend within that range to sustain operations.

Information on estimated capital expenditure for the Narrabri South project is not available in the public domain due to the early stage conceptual nature of the project.

21.3 Operating Costs

No detailed site specific operating costs for Narrabri Mine could be located in the public domain. It is therefore not possible to present validated tabulated operating costs.

⁸⁵ http://www.whitehavencoal.com.au/investors/documents/2010_Whitehaven_Coal_Limited_Annual_Report.pdf

⁸⁶ http://www.whitehavencoal.com.au/investors/docs/septemberquarterlyinvestorbriefing.mp3

⁸⁷ http://www.whitehavencoal.com.au/investors/docs/27090837-fy2014-results-presentation.pdf

⁸⁸ http://www.whitehavencoal.com.au/investors/docs/whitehaven-coal-fy14-annual-results-presentation-audio.mp3

30 January 2015 | ANGP2221-10 | Page 109 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Narrabri North FOB operating costs are currently operating at approximately A$67/t and have the potential to decrease in future due to increased productivity and lower development ratio from the longwall face extension project.⁸⁹ Narrabri is expected to improve FOB operating costs in FY2015 but the extent of cost reduction is unclear. Whitehaven has provided cost guidance of A$59-62/t for FY 2015, however, it is unclear if this includes Government and private royalty payments⁹⁰.

⁸⁹ http://www.whitehavencoal.com.au/investors/docs/24152812-ubs-australian-iron-ore-coal-conference.pdf
⁹⁰ Whitehaven Coal Limited, Full Year Results FY2014, http://www.whitehavencoal.com.au/investors/docs/27090837-fy2014-results-presentation.pdf

30 January 2015 | ANGP2221-10 | Page 110 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

22 Item 22: Economic Analysis

22.1 Compliance Exemption

Palaris are unable to comment on details of:

an economic analysis for the project, addressing annual costs, revenue, and cash flow forecasts to determine net present value and other valuation parameters
sensitivity analysis of the economic robustness of the project

In the preparation of this section of the Technical Report, Palaris is unable to directly comment on cash flow forecasts on an annual basis using Mineral Reserves or Mineral Resources and an annual production schedule for the life of project; a discussion of net present value (NPV), internal rate of return (IRR), and payback period of capital with imputed or actual interest; a summary of the taxes, and other government levies or interests applicable to the mineral project or to production, and to revenue or income from the mineral project; and sensitivity or other analysis using variants in commodity price, grade, capital and operating costs, or other significant parameters, as appropriate, and discuss the impact of the results.

22.2 Production Forecast

Narrabri North currently has an estimated Reserves based mine life of 22 years (at 6.5 Mtpa), with FY2014 production of 5.66 Mt of ROM coal and 5.25 Mt of saleable coal⁹¹. The mine has a permit to extract up to 8 Mt of coal per annum. Historical annual production was shown earlier in Figure 17.4.

Whitehaven has forecast a target production of 6.5 Mt for FY2015, with rates demonstrated during the September 2014 quarter of 2.082 Mt ROM and 1.819 Mt saleable, suggesting the company is on track to meet or exceed production targets for FY2015.⁹²

Narrabri is actively pursuing opportunities to expand production using the following strategies:

Reducing the frequency of longwall change-outs as panel lengths increase. Productivity at Narrabri is expected to improve as the panel lengths increase from approximately 3.5 Mt blocks (panel 3) to 5 Mt (panel 4) and eventually to approximately 7 Mt (panel 9 onwards), reducing the frequency of longwall change outs.

30 January 2015 | ANGP2221-10 | Page 111 of 120

palaris
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Optimising longwall change-out methods by improving processes and purchasing additional equipment if feasible (such as shearers) to reduce wait time for major equipment overhauls
Extending the longwall face to approximately 400 m to reduce the number of longwall change-outs and reduce development driveage requirements
Narrabri South - the tenement area to the south of the existing mining lease – potential mine development to either extend the mine life by transferring longwall operations to Narrabri South after Narrabri North, or to increase total project output by running Narrabri North and Narrabri South concurrently (with appropriate infrastructure and approval changes). Whitehaven have stated that Narrabri South could be comparable in size and quality to Narrabri North.⁹³

The full impact and timing of the planned productivity improvements and expansion projects is unknown at this stage due to the absence of detailed technical and mine scheduling information in the public domain. As discussed in Section 16.7.2, Palaris consider that there is potential upside to increase Narrabri North output by 10-15% - a hypothetical 10% upside case from the FY2015 forecast will deliver 7.15 Mtpa ROM.

22.3 Revenue Forecast

Prices are forecast to rise gradually over the medium-to-long term, as discussed previously in Section 19.2.3. A comprehensive cash flow analysis is not possible in the absence of a detailed mine plan and coal quality analysis.

Limited coal product type information is available. As noted earlier, Whitehaven currently describe the Narrabri coal product type as being about 80% high calorific value, low ash thermal coal, and 20% PCI coal. Whitehaven delivered presentations in 2012 and 2014, where Narrabri's output was described as being up to 30% PCI coal (2012)⁹⁴ and 20% PCI (2014)⁹⁵.

⁹³Whitehaven Coal Investor Presentation, 2008, https://www.whitehavencoal.com.au/investors/documents/AmendedInvestorPresentation-170608.pdf, accessed 6 Nov 2014
⁹⁴ Whitehaven Coal 2012 AGM Managing Director’s presentation, http://www.whitehavencoal.com.au/investors/documents/ASXRelease-ChairmansaddressandManagingDirectorsPresentation.pdf, accessed 6 Nov 2014
⁹⁵ Whitehaven Coal, Presentation to 2014 Global Metals, Mining and Steel Conference, 2014, http://www.whitehavencoal.com.au/investors/docs/global-metals-mining-and-steel-conference-2014.pdf, accessed 6 Nov 2014

30 January 2015 | ANGP2221-10 | Page 112 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

23 Item 23: Adjacent Properties

23.1 Compliance Exemption

23.2 Adjacent Properties

The Narrabri North and South mine and project area are surrounded by Authorisation No. 216, which is held by the NSW Government.

Regional studies of the geology of the Gunnedah Basin, such as Tadros (1993), describes the continuity of the Hoskissons seam, and describe the resource potential across the Gunnedah Coalfield.

No resources or reserves in compliance with the JORC Code (2012) are described for A216, since they are held by the Government and not a publicly listed company.

However, Wiles (1996) described 760 Mt of "Inferred Class 1"96 Resources in the Hoskissons seam to 300 m depth of cover in an area referred to as "South Narrabri". This area does not coincide with the Whitehaven Narrabri South project area, but is an area south of this. The workable coal in this area is generally in the range 1.5 to 3.0 m thick over most of the area where the coal is <300 m depth of cover, and up to 5.4 m thick. These resources are not JORC compliant. This estimate was not undertaken by a Competent Person, as prescribed by the JORC Code and should be treated as an indicative estimate of the in situ tonnes in the "South Narrabri" area.

Petroleum exploration licences overlap the Narrabri property and large areas surrounding the tenements. Drilling by Eastern Star Gas Ltd has explored PEL238 (now owned by Santos) for coal seam gas. This exploration has occurred in areas west of the Narrabri North mine, approximately 12 km west. Wells drilled in the area have intersected the Hoskissons seam with thicknesses comparable to those encountered in the western part of the property. As the target of this exploration and development is coal seam gas, JORC resources have not been reported.

Figure 23.1 shows the location of coal seam gas wells in relation to the property. Rights to mining tenure in the area immediately to the west of Narrabri reside with the Crown.

30 January 2015 | ANGP2221-10 | Page 113 of 120

pagarls

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

Figure 23.1 Location of coal seam gas wells

30 January 2015 | ANGP2221-10 | Page 114 of 120

palaris
Anglo Pacific Group PLC
National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

24 Item 24: Other Relevant Data and Information

No other relevant data or technical information is considered appropriate to include in this NI Statement.

30 January 2015 | ANGP2221-10 | Page 115 of 120
418

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

25 Item 25: Interpretation and Conclusions

This Technical Report is based solely upon data found within the public domain during preparation of the report. Further information may be in the public domain which has not been found by the searches conducted.

Without complete access to the data and techniques used to estimate the Resources and Reserves of the Narrabri Project, it is not possibly to fully audit the estimates

Based on the publicly available data, Palaris have made the following interpretations and conclusions:-

the geology of the property area is well understood
trends in coal quality across the site are broadly described in publicly available documentation and show a tendency to higher ash content and hence, lower yields towards the west and south
geological hazards such as faults and igneous intrusions are a low risk to continued development of the coal resource
distribution of drill hole data is poor in places, particularly in those areas of the Pilliga State Forest
coal resources are estimated for the working section (the lower 4.2 m thickness of coal) using appropriate grade and thickness cut-off assumptions
no quality criteria have been applied to the upper section of coal, which may be mined as top coal caving in the future
resource classification distances are not specified in publicly available documentation: in future resource statements greater transparency is required on this matter
the mining method, equipment in use, and mine plan appear suited to the characteristics of the resource
the forecast production rates appear to be achievable, and supported by recent performance

30 January 2015 | ANGP2221-10 | Page 116 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

26 Item 26: Recommendations

Recommended work programs for the property should include:

Additional exploration drilling is required in the western part of the defined "Reserve" areas of Narrabri North. This work should include gas testing of coal seams that are developed above the Hoskissons seam, additional washability testing on the working section and evaluation of the gas content of the target seam
Maps presented in Whitehaven (2014) suggest that the Pilliga Forest is likely to be an impediment to exploration, as each proposed drill hole location will require considerable disturbance to reach required locations, and as such, a Review of Environmental Factors undertaken for each site/program
The reserve areas of Narrabri South need to be proved up with more washability data, and drill holes in general, to describe the resource in this area. This is equally affected by the presence of the Pilliga State Forest

30 January 2015 | ANGP2221-10 | Page 117 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

27 Item 27: References

Cowan Geodata Services, 1995. Scone-Gunnedah surveys, Narrabri area; Aeromagnetic and radiometric interpretation. NSW Geological Survey Report 1997/076.

Ditton S. – 2009. Narrabri Coal Mine Stage 2 Longwall Project Mine Subsidence Prediction and Impact Assessment. Report by Ditton Geotechnical Services Pty Ltd for Narrabri Coal Operations Pty Ltd.

Hill, M.B.L. – 1983. Preliminary Assessment of the Coal Resources of the Narrabri Coalfield. NSW Department of Mineral Resources, Coal Geology Branch Report CGB: 1983//003

Narrabri Coal Pty Ltd – 2007 Narrabri Coal Project – Geological Assessment. Prepared by Belford Dome Resource Assessment; Specialist Consultant Studies Compendium, Vol. 2, Part 10. pp95.

Narrabri Coal Operations Pty Ltd -2012. Mining Operations Plan for the Stage 2 Longwall Project of the Narrabri Mine for the Period Ending 31 December 2017

Pratt, W. – 1997. Geological interpretation of the Narrabri Aeromagnetic Survey. NSW Geological survey report GS1997/512

Pratt, W. – 1998. Gunnedah Coalfield (North) Regional Geology 1:100 000. First Edition. Geological Survey of New South Wales.

Standing Committee on Coalfield Geology of New South Wales, 1980. Code for calculating and reporting coal reserves (fourth edition). NSW Geological Survey Records 19 (2).

Tadros, N.Z. – 1993. The Gunnedah Basin, New South Wales. Geological Survey of New South Wales, Memoir Geology 12, 649pp.

Tadros, N.Z., Whitehouse, J., and Moffitt, R.S. – 1987. Geology and Coal Resources of the Narrabri Area. NSW Geological Survey, Quarterly Notes 68, 1-18.

Whitehaven Coal Ltd., 2014 – Narrabri North Mine/ Narrabri South Project – Resource and Reserve: Table 1 – Checklist of Assessment and Reporting Criteria (The JORC Code, 2012 Edition). http://www.whitehavencoal.com.au/investors/docs/narrabri-underground26163159.pdf

Wiles, L. 1996 – Coal Resource audit of the Gunnedah Basin. NSW Department of Mineral Resources, 319pp.

30 January 2015 | ANGP2221-10 | Page 118 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

28 Certification of Qualified Persons

28.1 Certification by Qualified Person – Dr John Bamberry

I, Dr William John Bamberry, MAIG, do hereby certify that:

a) My full name is William John Bamberry, and I am a principal geologist employed by Palaris Australia Pty Ltd, Level 1, 384 Hunter Street, Newcastle NSW 2300 Australia
b) This certificate applies to the technical report titled “National Instrument 43 101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin, New South Wales”, dated 30th January 2015 (the Technical Report”)
c) I graduated with a Bachelor of Applied Science (Geology) (Hons) from the NSW Institute of Technology in 1985, and was awarded a Doctor of Philosophy (Geology) in 1992 from the University of Wollongong. I have over 25 years’ experience as a geologist, and have worked in the coal industry for all of that time. I have been involved in mineral resource estimation for over 20 years

I am a Member of the Australian Institute of Geoscientists. The AIG is an Accepted Foreign Association as listed in Appendix A of National Instrument 43-101 (“NI 43-101”)

I have read the definition of “qualified person” set out in NI 43-101 and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements of a “qualified person” for the purposes of NI 43-101

d) The Technical Report has been compiled solely from public domain information and I have not personally visited Narrabri North or Narrabri South
e) I am jointly responsible with Mr Gregor Carr of Palaris Australia Pty Ltd for the content, compilation, and editing of all sections of the Technical Report relating to Narrabri North Mine and Narrabri South
f) I am independent of Anglo Pacific Group PLC, applying the test in part 1.5 of NI 43-101
g) I have not had prior involvement with the properties that are the subject of the Technical Report
h) I have read NI 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form in reliance on the exemption provided by Section 9.2 of NI 43-101
i) The effective date of the Technical Report is 14th January 2015. As of 30th January 2015, to the best of my knowledge, information and belief, I am not aware of any material fact or material change with respect to the Narrabri North Mine and Narrabri South that is not reflected in the Technical Report, and the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading

Dr William John Bamberry

Principal Geologist

Palaris Australia Pty Ltd

30th January 2015

30 January 2015 | ANGP2221-10 | Page 119 of 120

palaris

Anglo Pacific Group PLC

National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin

28.2 Certification by Qualified Person – Mr Gregor Carr

I, Mr Gregor CARR, MAusIMM CP (Min), RPEQ, do hereby certify that:

a) My full name is Gregor Robert CARR, and I am a mining engineer employed by Palaris Australia Pty Ltd, 7/500 Queen Street, Brisbane QLD 4000 Australia
b) This certificate applies to the technical report titled "National Instrument 43 101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin, New South Wales", dated 30th January 2015 (the Technical Report")
c) I graduated with a Bachelor of Engineering (Mining) from The University of Queensland in 1981, and was awarded a Graduate Diploma in Mine Ventilation from The University of New South Wales in 2006. I have over thirty years of experience as a mining engineer, and hold both open cut and underground coal mining statutory qualifications. I have been involved in Mineral Reserve estimation for over twenty years

I am a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) with Chartered Professional accreditation in the discipline of Mining. The AusIMM is an Accepted Foreign Association as listed in Appendix A of National Instrument 43-101 ("NI 43-101"). I am also a registered Professional Engineer in the state of Queensland

I have read the definition of "qualified person" set out in NI 43-101 and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements of a "qualified person" for the purposes of NI 43-101

d) The Technical Report has been compiled solely from public domain information and I have not personally visited Narrabri North or Narrabri South
e) I am jointly responsible with Dr John Bamberry of Palaris Australia Pty Ltd for the content, compilation, and editing of all sections of the Technical Report relating to Narrabri North Mine and Narrabri South
f) I am independent of Anglo Pacific Group PLC, applying the test in part 1.5 of NI 43-101
g) I have not had prior involvement with the properties that are the subject of the Technical Report
h) I have read NI 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form in reliance on the exemption provided by Section 9.2 of NI 43-101
i) The effective date of the Technical Report is 14th January 2015. As of 30th January 2015, to the best of my knowledge, information and belief, I am not aware of any material fact or material change with respect to the Narrabri North Mine and Narrabri South that is not reflected in the Technical Report, and the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading

Mr Gregor CARR

Senior Mine Planning Consultant

Underground

Palaris Australia Pty Ltd

30th January 2015

30 January 2015 | ANGP2221-10 | Page 120 of 120

PART 12

UNAUDITED PRO FORMA FINANCIAL INFORMATION

Deloitte.

Athene Place
66 Shoe Lane
London
EC4A 3BQ

The Board of Directors
on behalf of Anglo Pacific Group PLC
1 Savile Row
London
W1S 3JR

BMO Capital Markets Limited
1st Floor
95 Queen Victoria Street
London EC4V 4HG

6 February 2015

Dear Sirs,

Anglo Pacific Group PLC (the “Company”)

We report on the pro forma financial information (the “Pro forma financial information”) set out in Part 12 of the prospectus and the Class 1 circular dated 6 February 2015 (the “Prospectus”), which has been prepared on the basis described in the “basis for preparation” set out on page 426 of this document, for illustrative purposes only, to provide information about how the transaction might have affected the financial information presented on the basis of the accounting policies adopted by the Company in preparing the financial statements for the period ended 31 December 2013. This report is required by the Commission Regulations (EC) No 809/2004 (the “Prospectus Directive Regulation”) and is given for the purpose of complying with that requirement and for no other purpose.

Responsibilities

It is the responsibility of the directors of the Company (the “Directors”) to prepare the Pro forma financial information in accordance with Annex II items 1 to 6 of the Prospectus Directive Regulation.

It is our responsibility to form an opinion, as to the proper compilation of the Pro forma financial information and to report that opinion to you in accordance with Annex II item 7 of the Prospectus Directive Regulation.

Save for any responsibility arising under Prospectus Rule 5.5.3R (2)(f) to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with Annex I item 23.1 of the Prospectus Directive Regulation, consenting to its inclusion in the Prospectus.

In providing this opinion we are not updating or refreshing any reports or opinions previously made by us on any financial information used in the compilation of the Pro forma financial information, nor do we accept responsibility for such reports or opinions beyond that owed to those to whom those reports or opinions were addressed by us at the dates of their issue.

424

425

Basis of Opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. The work that we performed for the purpose of making this report, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Pro forma financial information with the Directors.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Pro forma financial information has been properly compiled on the basis stated and that such basis is consistent with the accounting policies of the Company.

Opinion

In our opinion:

(a) the Pro forma financial information has been properly compiled on the basis stated; and
(b) such basis is consistent with the accounting policies of the Company.

Declaration

For the purposes of Prospectus Rule 5.5.3R(2)(f) we are responsible for this report as part of the Prospectus and declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the Prospectus in compliance with Annex I item 1.2 of the Prospectus Directive Regulation.

Yours faithfully

Deloitte LLP

Chartered Accountants

Pro forma financial information

The unaudited pro forma balance sheet and unaudited pro forma income statement of the Enlarged Group set out below has been prepared on the basis discussed below, and in accordance with the requirements of item 20.2 of Annex I and items 1 to 6 of Annex II of the Prospectus Directive, to illustrate the effect of the acquisition of the Narrabri Royalty on the Group's net assets and the issuance of 53,510,238 ordinary shares at 80 pence per share (the "Transactions"). The unaudited pro forma balance sheet has been presented assuming that the Transactions had occurred as at 30 June 2014. The unaudited pro forma income statement has been presented assuming that the Transactions had occurred on 1 January 2013.

The unaudited pro forma financial information has not been prepared, or shall not be construed as having been prepared, in accordance with the Regulation S-X under the Securities Act. In particular a pro forma income statement is not presented for the six months ended 30 June 2014. In addition, the unaudited pro forma financial information has been prepared for illustrative purposes only and, because of its nature, addresses a hypothetical situation and therefore does not represent the Group's actual financial position or results as at such date. Future results of operations may differ materially from those presented below due to various factors.

Basis of preparation

The pro forma balance sheet is based on the balance sheet of the Group as at 30 June 2014, which have been extracted without material adjustment from Anglo Pacific's published interim financial statements as at 30 June 2014. The pro forma income statement is based on the income statement of the Group for the year ended 31 December 2013, which has been extracted without material adjustment from the Group's 2013 historical financial information which is included within Part 9, Section B of this document. The nature of the transaction is such that there is no historical financial information on the Narrabri Royalty. The other adjustments are discussed in the notes below. The accounting policies used in the preparation of the unaudited pro forma information are consistent with those used by Anglo Pacific in the audited consolidated financial statements as at and for the year ended 31 December 2014 which have been incorporated by reference into Part 9, Section A of this document, and the income statement of the Group for the year ended 31 December 2013, which are set out in Part 9 of this document.

Pro forma balance sheet of the Enlarged Group

		Adjustments
	Anglo Pacific
Net assets at
30 June 2014
GBP £'000	Proceeds
GBP £'000	Acquisition
and
consideration
GBP £'000	Enlarged
Group
Pro forma
30 June 2014
GBP £'000
Notes	1	2	3	4
ASSETS
Non-current assets
Property, plant and equipment	1,945			1,945
Coal royalties (Kestrel)	116,702			116,702
Royalty financial instruments	24,643			24,643
Royalty and exploration
intangible assets	46,088		44,028	90,116
Mining and exploration interests	14,877			14,877
Other receivables	11,874			11,874
Deferred tax	3,084			3,084
	219,213		44,028	263,241
Current assets
Trade and other receivables	1,699			1,699
Cash and cash equivalents	14,413	35,789	(36,093)	14,109
	16,112	35,789	(36,093)	15,808
Total assets	235,325	35,789	7,935	279,049

426

		Adjustments
	Anglo Pacific Net assets at 30 June 2014 GBP £'000	Proceeds GBP £'000	Acquisition and consideration GBP £'000	Enlarged Group Pro forma 30 June 2014 GBP £'000
Notes	1	2	3	4
LIABILITIES
Non-current liabilities
Borrowings			5,000	5,000
Deferred tax	35,116			35,116
	35,116		5,000	40,116
Current liabilities
Income tax liabilities	794			794
Trade and other payables	7,467			7,467
	8,261	-	-	8,261
Total liabilities	43,377	-	5,000	48,377
Capital and reserves attributable to shareholders
Share capital	2,329	987	82	3,398
Share premium	29,328		3,207	32,535
Other reserves				0
Merger reserve	9,479	36,671		46,150
Warrant reserve	143			143
Investment revaluation reserve	1,815			1,815
Share based payment reserve	171			171
Foreign currency translation reserve	12,350			12,350
Special reserve	632			632
Investment in own shares	(2,601)			(2,601)
Retained earnings	138,302	(1,869)	(354)	136,079
Total equity	191,948	35,789	2,935	230,672
Total equity and liabilities	235,325	35,789	7,935	279,049

Notes:
(1) The balance sheet of the Group as at 30 June 2014 has been extracted without material adjustment from the published unaudited interim financial statements of the Group for the six months ended 30 June 2014, which are incorporated herein by reference.
(2) This adjustment represents the effect of the receipt by the Company of the net proceeds of the New Issue of £35.8m. This is reflected as an increase in cash and cash equivalents with a corresponding increase in share capital and merger reserve net of costs directly attributable to the issue of shares, with other transaction costs recognised in the income statement.
(3) This adjustment represents the effect of the Acquisition. Under the Group's accounting policies and IFRS, the acquisition of a royalty arrangement represents the purchase of a royalty intangible asset which is recognised at cost and amortised to the income statement on a systematic basic. The corresponding royalties received are recognised as income as they accrue. This adjustment reflects the recognition of the royalty intangible asset at its cost of £44.0m. The acquisition is to be funded from cash and cash equivalents of £36.1m, the drawdown of borrowings net of costs of £4.6m and the issue of shares valued at £3.3m to the Seller.
(4) No adjustment has been made to the unaudited pro forma balance sheet to reflect the trading results of Anglo Pacific or any amortisation or income in respect of the royalty intangible asset since the balance sheet date shown.

Unaudited pro forma income statement

	Adjustments
	Anglo Pacific audited consolidated income statement for the year ended 31 December 2013 GBP'000 Notes	Revenue from the Narrabri royalty GBP'000 1	Amortisation of the Narrabri royalty GBP'000 2	Amortisation of the Narrabri royalty GBP'000 3	Enlarged Group Pro forma income statement for the year ended 31 December 2013 GBP'000 4
Royalty related income	14,731	1,792	-	-	16,523
Amortisation of royalties	(854)	-	(1,934)	-	(2,788)
Operating expenses	(3,275)	-	-	-	(3,275)
Operating profit	10,602	1,792	(1,934)	-	10,460
(Loss)/Gain on sale of mining and exploration interests	(6,398)	-	-	-	(6,398)
Impairment of mining and exploration interests	(26,321)	-	-	-	(26,321)
Impairment of royalty intangible assets	(8,313)	-	-	-	(8,313)
Revaluation of coal royalties (Kestrel)	(13,568)	-	-	-	(13,568)
Revaluation of royalty financial instruments	(8,689)	-	-	-	(8,689)
Finance income	789	-	-	-	789
Finance costs	(2,964)	-	-	(2,223)	(5,187)
Other income/(costs)	1,966	-	-	-	1,966
Loss before tax	(52,896)	1,792	(1,934)	(2,223)	(55,261)

Notes:
(1) The consolidated income statement of Anglo Pacific for the year ended 31 December 2013 has been extracted without material adjustment from the 2013 historical financial information which is included within Part 9, Section B of this document.
(2) This represents the royalty related revenue as invoiced to the Seller earned from the Narrabri Royalty in 2013. Assuming production continues, revenue, albeit of an unquantifiable amount at this time, will be recorded on a recurring basis.
(3) This represents Anglo Pacific management's calculation of the additional amortisation charge that would have been calculated in 2013 had the Narrabri Royalty been acquired on 1 January 2013 and based on an expected mine life of 22 years. Assuming production continues, amortisation will be recorded on a recurring basis.
(4) This adjustment represents the transaction costs of the acquisition of the Narrabri Royalty reflected in the income statement.
(5) No adjustment has been made to the unaudited Pro forma income statement to reflect any changes in tax charges that may have arisen as a result of the issuance of 53,510,238 ordinary shares and the acquisition of the Narrabri Royalty.

PART 13

ADDITIONAL INFORMATION

Responsibility

1.1 The Company and the Directors, whose names are set out on page 48 of this document, accept responsibility for all the information contained in this document. To the best of the knowledge and belief of the Company and the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information.

1.2 Golder Associates (UK) Limited accepts responsibility for the information contained in the Kestrel Qualified Person's Report set out in Part 10 (Kestrel Qualified Person's Report) of this document. To the best of the knowledge and belief of Golder Associates (UK) Limited, and having taken all reasonable care to ensure that such is the case, the information contained in the Kestrel Qualified Person's Report is in accordance with the facts and does not omit anything likely to affect the import of such information.

1.3 Palaris Australia Pty. Limited accepts responsibility for the information contained in the Narrabri Qualified Person's Report set out in Part 11 (Narrabri Qualified Person's Report) of this document. To the best of the knowledge and belief of Palaris Australia Pty. Limited, and having taken all reasonable care to ensure that such is the case, the information contained in the Narrabri Qualified Person's Report is in accordance with the facts and does not omit anything likely to affect the import of such information.

1.4 Deloitte LLP accepts responsibility for their reports contained in Part 9 (Financial Information relating to Anglo Pacific Group PLC) and Part 12 (Unaudited Proforma Financial Information) of this document. To the best of the knowledge and belief of Deloitte LLP, and having taken all reasonable care to ensure that such is the case, the information contained in their reports in Part 9 (Financial Information relating to Anglo Pacific PLC) and Part 12 (Unaudited Proforma Financial Information) is in accordance with the facts and does not omit anything likely to affect the import of such information.

1.5 In connection with this document and the Proposals, no person is authorised to give any information or make any representations other than as contained in this document and, if given or made, such information or representations must not be relied upon as having been so authorised.

The Company

2.1 The Company was incorporated on 7 February 1967 under the Companies Act 1948 as a private limited company limited by shares and registered in England and Wales under the name Diversified Bank Shares Limited. On 25 June 1982, it changed its legal form to a public limited company and its name to North Sea & General Oil Investments plc. On 13 July 1987, it changed its name to North Sea & General PLC. On 28 September 1989, it changed its name to Anglo Pacific Resources PLC. Finally, on 11 November 1997, it changed its name to Anglo Pacific Group PLC. The Company is registered under company number 00897608.

2.2 The registered and head office of the Company is at 1 Savile Row, London W1S 3JR and the telephone number is +44 (0)20 3435 7400. The Company is domiciled in the UK.

2.3 The principal legislation under which the Company operates and under which the New Ordinary Shares and the Acquisition Shares will be created is the Companies Act and regulations made thereunder.

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3. Share capital

3.1 The issued and fully paid-up share capital of the Company as at 5 February 2015 (being the latest practicable date before the publication of this document) was as follows:

Existing Ordinary Shares of 2 pence each	Number	Amount
	116,431,796	£2,328,635.92

The issued and fully paid-up share capital of the Company immediately following Admission (assuming there has been no exercise of share options under the Share Schemes) will be as follows:

Ordinary Shares of 2 pence each	Number	Amount
	169,942,034	£3,398,840.68

At the end of the financial year ended 31 December 2012, there were 109,605,376 Ordinary Shares in issue with an aggregate nominal value of £2,192,107.5 and at the end of the financial year ended 31 December 2013, there were 110,887,425 Ordinary Shares in issue with an aggregate nominal value of £2,217,748.5. At the end of the financial year ended 31 December 2014, there were 116,431,796 Ordinary Shares in issue with an aggregate nominal value of £2,328,635.92.

3.2 There have been the following material changes in the amount of authorised and issued share capital of the Company during the three years preceding the date of this document:

(a) on 28 March 2011, 356,208 Ordinary Shares of 2p each were allotted and fully paid up in cash at £3.26 per share;

(b) on 12 September 2011, 61,675 Ordinary Shares of 2p each were allotted and fully paid up in cash at £2.92 per share;

(d) on 21 October 2013, 1,282,049 Ordinary Shares of 2p each were allotted and fully paid up in cash at £1.95 per share; and

(e) on 2 June 2014, 5,544,371 Ordinary Shares of 2p each were allotted and fully paid up in cash at £1.80 per share.

If Shareholders vote in favour of the Ordinary Resolutions set out in the Notice of General Meeting, pursuant to Resolution 1, the Directors will be unconditionally authorised, in accordance with section 551 of the Companies Act, to exercise all powers of the Company to allot shares, up to a maximum nominal amount of £1,070,205 (representing 53,510,238 Ordinary Shares, equating to approximately 46 per cent of the issued existing ordinary share capital as at 5 February 2015, being the latest practicable date prior to the publication of this document) pursuant to the Firm Placing and Placing and Open Offer and the Acquisition, such authority to expire on the earlier of the Company's next annual general meeting or the date which is 6 months after the date on which the resolution is passed, save that the Company may, before the authority expires, make an offer or agreement which would or might require shares to be allotted after it expires.

3.3 The authority currently granted to the Directors to allot and issue shares and rights to subscribe for shares in the Company are as follows:

(a) at the Company's annual general meeting held on 11 June 2014, the Directors were authorised to allot all relevant securities (pursuant to section 551 of the Companies Act) up to an aggregate nominal amount of £739,249; and

(b) at the Company's annual general meeting held on 11 June 2014, the Directors were given power to allot equity securities or to sell or make offers or agreements to sell treasury shares (as defined for the purposes of the Companies Act) as if section 561 of the Companies Act did not apply to the allotments not exceeding an aggregate nominal amount of £110,887,

representing approximately five per cent of the Company's issued Ordinary Share capital as at 8 May 2014.

3.4 On 22 May 2014, the Company resolved to create 500,000 warrants (the Warrants), to be issued pursuant to a warrant instrument dated 10 June 2014 (the Warrant Instrument). These Warrants entitle the warrantholders to subscribe in cash for Ordinary Shares at the subscription price of £2.50 per Ordinary Share (subject to any adjustment events in accordance with the Warrant Instrument). The rights to subscribe for Ordinary Shares conferred by the Warrants may only be exercised within 5 years from the date of the grant of the Warrants and in accordance with the Warrant Instrument.

3.5 Save as disclosed in this Part 13 (Additional Information), neither the Company nor any of its subsidiaries has granted any options over its share or loan capital which remain outstanding or has agreed, conditionally or unconditionally, to grant any such options.

3.6 The Existing Ordinary Shares currently in issue are, and the New Ordinary Shares and the Acquisition Shares will be, in registered form and capable of being held in uncertificated form in CREST. Where New Ordinary Shares are held in certificated form, share certificates will be sent to the registered member by first-class post.

3.7 When admitted to trading, the New Ordinary Shares and the Acquisition Shares will be registered with the International Security Identification Number GB0006449366, the same as the current ISIN number for Existing Ordinary Shares.

3.8 The New Ordinary Shares to be issued pursuant to the Firm Placing and Placing and Open Offer and the Acquisition Shares will be credited as fully paid and will rank equally in all respects with the Existing Ordinary Shares, including the right to receive any dividends or distributions made, paid or declared after Admission.

3.9 The provisions of section 561 of the Companies Act and the Listing Rules confer on Shareholders rights of pre-emption in respect of the allotment of equity securities (as defined in section 560 of the Companies Act) which are to be paid up in cash, except to the extent disapplied by resolutions of the Company.

4. Articles of Association

The Articles of Association are available for inspection at the address specified in paragraph 2.2 of this Part 13 (Additional Information).

4.1 Articles of Association

The Articles of Association contain provisions, amongst others, to the following effect:

(a) Dividends

Unless the rights attached to shares provide otherwise, all dividends shall be apportioned and paid pro rata according to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid. Any dividend unclaimed after a period of 12 years from the date it became payable will be forfeited and revert to the Company.

The Directors may (when authorised by ordinary resolution of the Company) offer ordinary shareholders the right to receive in lieu of cash in respect of such dividend (or part thereof) an allotment of new ordinary shares credited as fully paid.

(b) Directors

The Directors shall not be fewer than two and there shall be no maximum number of directors. The Company may by ordinary resolution elect and the Directors shall at any time appoint, any person to be a Director.

The remuneration of the Directors shall be determined by the Directors but must not exceed £400,000 per annum in aggregate or such higher amount as may be determined by ordinary

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resolution, except that any Director who holds an executive office or who otherwise performs services outside the scope of the ordinary duties of a directory may be paid such extra remuneration as the Directors may determine.

Each Director shall retire at the Annual General Meeting held in the third Annual General Meeting after the Annual General Meeting at which he was elected. A Director who retires at any Annual General Meeting may, if willing to continue to act, be reappointed. If he is not reappointed, he shall retain office until the meeting appoints someone in his place or, if it does not do so, until the end of the meeting.

The Company may remove any Director from office by ordinary resolution of which special notice has been given without prejudice to any claim he may have for damages for breach of contract.

The quorum for the transaction of business of the Directors may be fixed from time to time and unless so fixed shall be two. The Chairman shall have a casting vote in the event of an equality of votes.

So far as permitted by legislation, every Director shall be entitled to be indemnified by the Company out of its own funds against any liability in the course of performance of his duties.

Where a Director has an interest which can reasonably be regarded as likely to give rise to a conflict of interest, the Director may, and shall if so requested by the Directors, take such steps as may be necessary or desirable for the purpose of managing such conflict of interest. The Directors shall have the power to authorise conflicts of interest in accordance with the provisions of the Articles.

Subject to the Articles and to any special rights or restrictions attached to voting of any class of shares, on a show of hands, every member who is entitled to vote, being an individual who is present in person or by proxy at a general meeting, shall have one vote. On a poll, every member who is present in person or by proxy shall have one vote for every share of which he is the holder.

In the case of joint holders of a share, the vote of the senior holder (determined by the order in which the names stand in the register) who tenders a vote either in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders.

(d) Variation of class rights

Rights attached to any class of shares may be varied or abrogated either with the written consent of the holders of not less than three-quarters in nominal value of the issued shares of that class, or the sanction of a special resolution passed at a separate general meeting of the holders of those shares.

(e) Issue of shares

The Company may issue shares with such rights or restrictions as determined by either the Company by ordinary resolution or, if the Company passes a resolution to so authorise them, the Directors.

(f) Alteration of share capital

Subject to the provisions of the Companies Act, the Company may by special resolution reduce its share capital or any capital redemption reserve, share premium account or redenomination reserve in any manner.

The Company may issue any shares which are, or at the option of the Company or the holder are liable, to be redeemed on such terms and the Directors may determine the terms, conditions and manner of redemption if any of such shares.

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(g) Transfer of shares

All transfers of shares which are in certificated form may be effected by transfer in writing in any usual or in any other form acceptable to the Board. The instrument of transfer of a certificated share shall be signed by or on behalf of the transferor and if any of the shares are not fully-paid shares, by the transferee. The transferor shall remain the holder of the shares concerned until the name of the transferee is entered in the Register in respect thereof.

The Directors may (for certificated shares), refuse to register any transfer of shares which is not fully paid. The Directors may likewise refuse to recognise any instrument of transfer of shares in certificated form unless it is in respect of only one class of share, it is lodged at the registered office of the Company (or other place that the Board may determine from time to time) accompanied by the relevant share certificate and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer. The Directors may also refuse to register an allotment or transfer of shares (whether fully-paid or not) in favour of more than four persons jointly.

Subject to the passing of the Special Resolution at the General Meeting, the Articles will be amended to include a provision which will allow the Board to also refuse to register a transfer of any Ordinary Shares if the transfer is in favour of any person, as determined by the Board, to whom a sale or transfer of shares, or whose direct, indirect or beneficial ownership of shares, would or might (i) result in any shares being owned, directly or indirectly, by Benefit Plan Investors or Controlling Persons other than shareholders that acquire shares with the written consent of the Company; (ii) cause the assets of the Company to be considered "plan assets" under the Plan Asset Regulations; (iii) result in Ordinary Shares being owned by a person whose giving, or deemed giving, of the representations as to ERISA and the Internal Revenue Code set forth in the Articles is or is subsequently shown to be false or misleading; or (iv) cause the Company to otherwise be in violation of ERISA, the Internal Revenue Code or any applicable federal, state, local, non-US or other laws or regulations that are substantially similar to section 406 of ERISA or section 4975 of the Internal Revenue Code (any such person a Non-Qualified Holder).

In addition, under the proposed amendment to the articles and subject to the passing of the Special Resolution at the General Meeting, if it comes to the notice of the Company that any shares are owned directly, indirectly or beneficially by any Non-Qualified Holder, the Board may, serve a notice upon such non-qualified holder requiring such Non-Qualified Holder to transfer the shares to an eligible transferee within 14 days of such notice; and, if the obligation to transfer is not met, the Company may compulsorily transfer the shares.

(h) General meetings

Notice of general meetings shall be given to all Shareholders other than Shareholders who are not entitled to receive such notices from the Company pursuant to the Articles. The Company may determine that only those persons entered on the register at the close of business on a day decided by the Company, such day being not less than 21 days' clear notice in writing before the day that notice of the meeting is sent, shall be entitled to receive such a notice.

No business other than the appointment of a chairman shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business.

4.2 Mandatory bids, squeeze-out and sell-out rules

(a) Mandatory bid

The Takeover Code applies to the Company. Under the Takeover Code, if an acquisition of shares were to increase the aggregate holding of the acquirer and its concert parties to shares carrying 30 per cent or more of the voting rights in the Company, the acquirer and, depending on the circumstances, its concert parties would be required (except with the consent of the Panel) to make a cash offer for the outstanding shares in the Company at a price not less than

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the highest price paid for the shares by the acquirer or its concert parties during the 12 months prior to the announcement of the offer. This requirement would also be triggered by any acquisition of shares by a person holding (together with its concert parties) shares carrying between 30 and 50 per cent of the voting rights in the Company if the effect of such acquisition were to increase that person's percentage of the voting rights.

(b) Squeeze-out

Under the Companies Act, if an offeror were to acquire or contract to acquire 90 per cent of the shares to which the offer relates within four months of making its offer, it could then compulsorily acquire the remaining 10 per cent. It would do so by sending a notice to the other Shareholders telling them that it will compulsorily acquire their shares and then, six weeks later, it would execute a transfer of the outstanding shares in its favour and pay consideration to the Company, which would hold the consideration on trust for the other Shareholders. The consideration offered to the Shareholders whose shares are compulsorily acquired under the Companies Act must, in general, be the same as the consideration that was available under the takeover offer.

The Companies Act would also give minority Shareholders in the Company a right to be bought out in certain circumstances by an offeror who made a takeover offer. If a takeover offer related to all the shares and, at any time before the end of the period within which the offer could be accepted, the offeror held or had agreed to acquire not less than 90 per cent of the shares to which the offer relates, any holder of shares to which the offer related who had not accepted the offer could, by a written communication to the offeror, require it to acquire those shares.

The offeror would be required to give any Shareholder notice of his right to be bought out within one month of that right arising. The offeror may impose a time limit on the rights of minority Shareholders to be bought out, but that period cannot end less than three months after the end of the acceptance period. If a Shareholder exercises his or her right, the offeree is bound to acquire those shares on the terms of the offer or on such other terms as may be agreed.

There have been no public takeover bids by third parties in respect of the share capital of the Company in the last or current financial year.

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435

5. Subsidiaries

The Company is the holding company of the Group. The following table sets out the details of the principal subsidiaries of the Company (which are owned, directly or indirectly, by the Company and are considered by the Company to be likely to have a significant effect on the assessment of the assets, liabilities, financial position and/or profits and losses of the Group):

Name	Field of activity	Country of incorporation and registered office	Proportion of share capital held
Anglo Pacific Finance Ltd	Treasury Company	Ireland	100%
Albany River Royalty Corporation	Royalty Holder	Canada	100%
APG Aus No 1 Pty Ltd	Royalty Holder	Australia	100%
APG Aus No 2 Pty Ltd	Royalty Holder	Australia	100%
APG Aus No 3 Pty Ltd	Royalty Holder	Australia	100%
APG Aus No 5 Pty Ltd	Royalty Holder	Australia	100%
APG Aus No 6 Pty Ltd	Royalty Holder	Australia	100%
APG Aus No 7 Pty Ltd	Royalty Holder	Australia	100%
Gordon Resources Pty Limited	Royalty Holder	Australia	100%
Indian Ocean Resources Pty Ltd	Investments	Australia	100%
Panorama Coal Corporation	Royalty Holder	Canada	100%
Starmont Holdings Pty Limited	Holding Company	Australia	100%
Trefi Coal Corporation	Owner of coal tenures	Canada	100%

6. Employees

As at 5 February 2015 (being the latest practicable date prior to the publication of this document), the Company had 13 employees, two of whom were Executive Directors.

7. Employee Share Plans

The Company operates the following employee share plans:

Value Creation Plan (the VCP)

The purpose of the VCP is to ensure strong alignment of interest between participants and shareholders over a vital period in the Company's development and will only reward the participants for delivering strong performance against the Company's new strategy. All employees will be eligible to participate in the VCP, although it is expected that participation will initially be limited to the Chief Executive Officer and the Chief Investment Officer and other non-board members at the discretion of the Remuneration Committee acting in consultation with the Chief Executive Officer.

Under the VCP, no value would accrue under the plan to its participants unless growth in the Company's total shareholder return (TSR) over a five year period is at least equal to 7% growth per annum (or approximately 40% total growth over the period). Subject to such growth being achieved, participants would become entitled to receive nil or nominal cost options over ordinary shares in the capital of the Company, set by reference to a share of a pool value equal to 10% of the growth in the Company's TSR over the five year period, or, if less, 50% of the growth in the Company's TSR over the five year period in excess of the threshold.

The maximum number of shares set under the option grants will not be capable of exceeding a number equating to 7.5% of the Company's issued share capital as at the end of the measurement period. This cap will apply for total growth in TSR above 300%. This will mean that, for total growth in TSR over the five year period:

below approximately 40%, no value accrues;

between approximately 40% and 50%, the value that accrues is equal to 50% of the growth in the Company's TSR over the five year period in excess of the threshold;
between 50% and the cap (300%), the value that accrues is equal to 10% of the growth in the Company's total shareholder return over the five year period; and
above the cap, the value that accrues is equal to the value of 7.5% of the Company's issued share capital as at the end of the measurement period.

The following unit awards were made on 16 June 2014:

	Number of Plan Units comprised within the Unit Award	Corresponding maximum % share of Plan Pool
Directors/PDMRs	88,000	88
Other employees	2,000	2

Company Share Option Scheme

The Company also operates an HMRC approved Company Share Ownership Plan. Share options are granted at the prevailing market price on the date of grant. The employee must have completed three years' service following the grant of the options (the vesting period) and if an option remains unexercised after a period of 10 years from the date of grant, the option will lapse. The award is conditional upon the Group's absolute total shareholder return growing at an annual rate (not compounded) of 3% in excess of the UK Retail Price Index over the three year vesting period. The Board envisages that future grants will be limited to employees that are not Directors.

As at 5 February 2015 (being the latest practicable date prior to the publication of this document), the following Company Share Ownership Plan options were outstanding:

	Number of CSOP Options Outstanding	Value of CSOP options on grant date (£)
PDMRs	16,693	39,997.72
Other employees	27,529	59,995.75
Total	44,222	99,993.47

Joint Share Ownership Plan

The Company also operates a Joint Share Ownership Plan. This is open to selected employees and Directors; however, the Board does not envisage there being any future grants to Directors. The shares are held in the name of the Anglo Pacific Group Employee Benefit Trust (the Co-Owner); however, the selected employees maintain a beneficial interest in these shares. As above, the employee must have completed three years' service following the grant of the options (the vesting period). The award is conditional upon the Group's absolute total shareholder return growing at an annual rate (not compounded) of 3% in excess of the UK Retail Price Index over the three year vesting period and upon the Group's share price reaching a hurdle level during the vesting period, as determined by the Committee at the time the option is granted. Upon satisfying the performance targets and service requirements, the beneficial interest conferred will entitle the employee to receive a proportion of the proceeds of sale of the ordinary shares. Their entitlement will be to receive the equivalent of all sales proceeds in excess of the threshold amount, settled in ordinary shares of the Company. The threshold amount is fixed by the Remuneration Committee and will not be set less than the market value of the ordinary shares of the Company at the time the award is made.

The awards are limited in value such that the initial value of shares acquired jointly with the Co-Owner under the award will not exceed 400% of the employee's gross annual salary. During the vesting period, the Co-Owner and the employee agree to limit the exercise of their voting rights to matters concerning alterations to the Articles of Association of the Company that could adversely affect the employee's rights under the award, and to waive their rights to dividends.

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As at 5 February 2015 (being the latest practicable date prior to the publication of this document), the following Joint Share Ownership Plan awards were outstanding:

	Number of Shares Awarded	Value of JSOP Shares on grant date (£)
PDMRs	99,841	284,996.50
Other employees	54,819	181,999.08
Unallocated Shares held by the EBT	771,273	–
Total	925,933	466,995.58

8. Pension benefits

The Company makes contributions to employees' pensions. Executive Directors receive an amount up to 10% of salary into a money purchase pension scheme, or a cash allowance in lieu of pension at the request of the individual.

9. Directors

9.1 The Directors of the Company and their respective functions are as follows:

Mike Blyth Non-executive Chairman and chair of the Nomination Committee

Julian Treger Chief Executive Officer and Executive Director

Mark Potter Chief Investment Officer and Executive Director

David Archer Non-executive Director, chair of the Remuneration Committee and Senior Independent Director

Rachel Rhodes Non-executive Director and chair of the Audit Committee

Robert Stan Non-executive Director

Anthony Yadgaroff Non-executive Director

9.2 The business address of each of the Directors is 1 Savile Row, London W1S 3JR, London, England.

9.3 Brief biographical details of the Directors are set out in paragraph 9 of Part 5 (Information on the Group) of this document. Set out below are the names of all companies and partnerships outside of the Group of which any Director is or has been a member of the administrative, management or supervisory body or partner at any time in the previous five years (excluding subsidiaries of any company of which the Director in question is also a member of an administrative, management or supervisory body):

Mike Blyth
Position: Non-Executive Chairman and chair of the Nomination Committee

Company	Position	Status (Current/Previous)
Erskine Hospital Limited	Vice Chair/Director	Current
Wheatley Housing Group Limited	Director	Current
Haldane Property Company Limited	Director	Current
Glasgow and Suburban Property Company Limited	Director	Current
Bequest Fund for Ministers	Trustee	Current
The Greenbank Trust	Trustee	Current
Baker Tilly	Partner	Previous

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Julian Treger
Position: Chief Executive Officer

Company	Position	Status (Current/Previous)
Audley Capital Advisors LLP	Partner	Current
Tinco Investments Limited	Director	Current
Firestone Diamonds plc	Director	Previous
Blackstar Investors plc	Director	Previous
JAB Holdings Limited	Director	Previous
West African Diamonds plc	Director	Previous
Western Coal Corp	Director	Previous
Whetstone Minerals Limited	Director	Previous

Mark Potter
Position: Chief Executive Officer

Company	Position	Status (Current/Previous)
Audley Capital Advisors LLP	Principal	Previous

Rachel Rhodes
Position: Non-Executive Director and chair of the Audit Committee

Company	Position	Status (Current/Previous)
In Kind Direct	Trustee	Current
Sirius Minerals plc	CFO	Previous
London Mining plc	Director/CFO	Previous

Robert Stan
Position: Non-Executive Director

Company	Position	Status (Current/Previous)
Spruce Bluff Resources Limited	Director	Current
Quantex Resources Limited	Director	Current
Whetstone Minerals Limited	Director	Current
Grande Cache Coal Limited	Director/CEO	Previous

David Archer
Position: Non-Executive Director, chair of the Remuneration Committee and Senior Independent Director

Company	Position	Status (Current/Previous)
Savannah Resources plc	CEO	Current
Steelmin Limited	Non-executive Chairman	Current
Crusader Resources Limited	Non-executive Chairman	Previous
Caravel Minerals Limited	Executive Chairman	Previous
Hillgrove Resources Limited	Managing Director	Previous

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Anthony Yadgaroff
Position: Non-Executive Director

Company	Position	Status (Current/Previous)
Allenbridge Capital Limited	Director	Current
Allenbridge Limited	Director	Current
Allenbridge Investment Solutions LLP	Director	Current
Financial Directory Limited	Director	Current
Bolton Street Nominees Limited	Director	Current
A.H. Yadgaroff & Co. Limited	Director	Current
Simon Wiesenthal Centre in the United Kingdom Limited	Director	Current
The Tel Aviv University Trust Limited	Director	Current
Western Charitable Foundation Limited	Director	Current
Advanced Transmission Systems plc	Director	Previous
Advanced Transmission Systems (Operating) Limited	Director	Previous
CBAM (AB) Limited	Director	Previous
AC Financial Limited	Director	Previous
Backing Jewish Youth	Director	Previous
Hammerson Home Charitable Trust	Director	Previous
ISA Direct Limited	Director	Previous

9.4 None of the Directors:

(a) is or has been a member of the administrative, management or supervisory body of any company or partner of any partnerships outside the Group at any time in the previous five years, save as disclosed in paragraph 9.3 above; or
(b) has any convictions in relation to fraudulent offences at any time in the previous five years; or
(c) has been bankrupt, been the subject of or entered into an individual voluntary arrangement at any time in the previous five years; or
(d) has, at any time in the previous five years, been a member at the time of any administrative, management or supervisory body of any company that has been subject to any receivership, compulsory liquidation, creditors' voluntary liquidation, administration, company voluntary arrangement or any composition or arrangement with that company's creditors generally or with any class of its creditors; or
(e) has, at any time in the previous five years, been a partner in a partnership at the time of any compulsory liquidation, administration or partnership voluntary arrangement of such partnership; or
(f) has, at any time in the previous five years, had any of his or her assets the subject of any receivership or has been a partner of a partnership at the time of any assets thereof being the subject of the receivership; or
(g) has, at any time in the previous five years, been subject to any official public criticism, incrimination and/or sanction by any statutory or regulatory authority (including any designated professional body) nor has ever been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of any company or from acting in the management or conducting the affairs of any company.

9.5 As at 5 February 2015 (being the latest practicable date prior to the publication of this document), the interests of the Directors, their immediate families and persons connected with them (within the meaning of the Disclosure and Transparency Rules) in the share capital of the Company (all of which are beneficial unless stated) and the existence of which was known to or could, with reasonable diligence, be ascertained by the Directors, together with such interests as are expected to be held immediately following completion of the New Issue, are as follows:

Director	Number of shares	Percentage of Enlarged Share Capital of Company
J.A. Treger	6,561,988	3.86%
A.H. Yadgaroff	180,501	0.11%
M.R. Potter	127,500	0.08%
W.M. Blyth	70,600	0.04%
R.H. Stan	100,000	0.06%

9.6 As at 5 February 2015 (being the latest practicable date prior to the publication of this document), no Director has any options over Ordinary Shares. However, the Directors have the following unit awards under the VCP:

Name of Director/PDMR	Number of Plan Units comprised within Unit Award	Corresponding maximum % share of Plan Pool
Julian Treger, Chief Executive Officer	56,000	56
Mark Potter, Chief Investment Officer	24,000	24

9.7 As at 5 February 2015 (being the latest practicable date prior to the publication of this document), none of the Directors, their immediate families or persons connected with them (within the meaning of the Disclosure and Transparency Rules) had any interests, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery of any relevant Anglo Pacific securities, save as disclosed in this Part 13 (Additional Information).

9.8 As at 5 February 2015 (being the latest practicable date prior to the publication of this document), none of the Directors, their immediate family or persons connected with them (within the meaning of the Disclosure and Transparency Rules) had any outstanding loans or guarantees with, granted or provided by any relevant Group member save as disclosed in this document.

9.9 The interests of the Directors together represent 1.3 per cent of the Existing Ordinary Shares as at 5 February 2015 (being the latest practicable date prior to publication of this document) and are expected to represent 4.1 per cent of the issued Ordinary Shares of the Company immediately following Admission.

10. Directors' service contracts

10.1 Details of the service agreements currently in place between the Company and the Executive Directors are:

Executive	Date of appointment	Notice period	Termination payment
J.A. Treger	21 October 2013	Six months	Six months’ basic salary
M.R. Potter	21 October 2013	Six months	Six months’ basic salary

10.2 Details of the appointment agreements currently in place between the Company and the Non-executive Directors are set out below:

(a) Mr. Yadgaroff has a letter of appointment for an indefinite term, although this may be terminated by either party subject to one month’s notice. Mr. Archer, Mr. Blyth, Mr. Stan and Ms. Rhodes were appointed on rolling three-year contracts with a one-month notice period and

the Board intends that all future Non-executive Directors appointments will be on similar terms. None of the letters of appointment have provisions that relate to a change of control of the Company.

(b) The details of the Non-Executive Director’s letters of appointment are as follows:

Non-Executive	Date of Appointment	Notice Period
W.M. Blyth	20 March 2013	One month
D.S. Archer	15 October 2014	One month
R.C. Rhodes	8 May 2014	One month
R.H. Stan	19 February 2014	One month
A.H. Yadgaroff	19 May 2003	30 days

10.3 Save as disclosed above, there is no service contract between any of the Directors and any member of the Group, and no such contract has been entered into or amended within the six months preceding the date of this document.

10.4 No proposal exists in connection with the Firm Placing and Placing and Open Offer that any payment or other benefit be made or given to any Director as compensation for loss of office or as consideration for, or in connection with, his retirement from office.

10.5 The aggregate emoluments, excluding pensions, of the Directors for the year ended 31 December 2013 are set out below:

	Salary/fees £’000	Benefits⁴ £’000	Total bonus £’000	Long-term incentives £’000	Pension/cash allowance £’000	Other £’000	Total remuneration £’000
Executive Directors
J.A. Treger¹	39	–	–	–	–	–	39
M.R. Potter²	31	–	–	–	–	–	31
Non-Executive Directors
W.M. Blyth³	30	–	–	–	–	–	30
A.H. Yadgaroff	38	–	–	–	–	–	38

Notes:
1. J.A. Treger was appointed to the Board on 21 October 2013
2. M.R. Potter was appointed to the Board on 21 October 2013
3. W.M. Blyth was appointed to the Board on 20 March 2013
4. Benefits include taxable and non-taxable benefits including death in service policy premiums

10.6 The Company has entered into or will enter into qualifying third party indemnity arrangements for the benefit of all its directors in a form and scope which comply with the requirements of the Companies Act.

10.7 Details of the Executive Directors’ pension entitlements are set out at section 8 above.

11. Conflict of interest

The Directors have notified the Board of all their directorships and other interests. Save for the interests arising from the current positions of Julian Treger, Robert Stan and David Archer, from Julian Treger’s and David Archer’s shareholdings in the same entities and from Rachel Rhodes’s former positions as CFO of Sirius Minerals PLC and of London Mining PLC (each as set out in paragraph 9.3 above), there are no actual or potential conflicts of interests between any duties the Directors have to the Company, either in respect of the Firm Placing and the Placing and Open Offer or otherwise, and the private interests and/or other duties they may also have. The Board has approved the potential conflicts of interest and reserves its rights to preclude such Directors from voting on matters relating to such other companies. Save as disclosed in this Part 13 (Additional Information), there are no interests, including conflicting ones, that are material to the Firm Placing and the Placing and Open Offer.

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12. Board practices

The Corporate Governance Code recommends that at least half the members of the Board (excluding the chairman) of a public limited company incorporated in the UK should be independent in character and judgement and free from relationships or circumstances which are likely to affect, or could appear to affect, their judgement. Having considered the contents and requirements of the Corporate Governance Code, the Board believes that, as at the date of this document and save as set out below, the Company is in compliance with the provisions of the Corporate Governance Code.

The notice period for the General Meeting complies with the requirements of the Companies Act and the Articles but in the light of, amongst other things, the desire to keep the underwriting period as short as possible and of the Seller to complete the Acquisition as soon as possible, has not been extended to the 14 working day period set out in E.2.4 of the Corporate Governance Code.

The Board is currently comprised of seven members including two Executive Directors, namely Julian Treger and Mark Potter, a non-executive chairman, namely Mike Blyth, three independent Non-executive Directors Robert Stan, Rachel Rhodes and David Archer (the Group's Senior Independent Director), and one other Non-executive Director, Anthony Yadgaroff.

The Board has established Nomination, Remuneration and Audit Committees, with formally delegated duties and responsibilities with written terms of reference. From time to time, separate committees may be set up by the Board to consider specific issues when the need arises.

Nomination Committee

The current Nomination Committee members are Mike Blyth, David Archer, Rachel Rhodes and Robert Stan. The Nomination Committee meets as and when appropriate, but not less than once annually, and is chaired by Mike Blyth.

The Nomination Committee's terms of reference are available on the Company's website, but its main duties are to:

review the structure, size and composition of the Board and the Board committees;
ensure that adequate succession planning is in place; and
identify and nominate suitable candidates for Board appointments.

In carrying out its duties, the Nomination Committee considers candidates on merit, irrespective of background, against objective criteria and with due regard for the benefits of diversity on the Board, ensuring that appointees have enough time available to devote to the position.

Remuneration Committee

The current Remuneration Committee members are David Archer, Mike Blyth, Rachel Rhodes and Robert Stan. The Remuneration Committee meets as and when appropriate, but not less than twice annually, and the chair of the Committee is David Archer.

The Remuneration Committee's terms of reference are available on the Company's website, but its main duties are to:

determine and agree with the Board the Company's remuneration policy for its executive management (the remuneration of non-executive directors shall be a matter for the executive members of the Board, as no director shall be involved in any decisions as to their own remuneration);
review the ongoing appropriateness and relevance of the remuneration policy and ensure that it facilitates the employment and motivation of top quality personnel in a fair and responsible manner;
within the terms of the remuneration policy and in consultation with the chairman of the Board and/or the Chief Executive Officer, as appropriate, determine the total remuneration packages for executive management, including bonuses, pension rights and share plans; and

approve the design of, and determine targets for, and review all performance related pay schemes and share incentive plans operated by the Company.

In carrying out its duties, the Remuneration Committee gives due regard to all necessary factors with the objective to ensure that members of the executive management of the Company are provided with appropriate incentives to encourage enhanced performance and are, in a fair and reasonable manner, rewarded for their individual contributions to the success of the Company.

Audit Committee

The current Audit Committee members are Rachel Rhodes, Mike Blyth and Robert Stan. The Audit Committee meets at least three times a year and is chaired by Rachel Rhodes.

The Audit Committee’s terms of reference are available on the Company’s website, but its main duties are:

monitoring the integrity of the financial statements of the Company;
reviewing and challenging, where necessary, the consistency of, and any changes to, the Company’s accounting policies, methods and standards;
reviewing and challenging, where necessary, the clarity of the Company’s financial disclosure and all material information presented with the financial statements;
monitoring and reviewing the Company’s internal controls and risk management processes;
overseeing the appointment and work of the external auditors;
monitoring the Company’s policies and procedures in relation to anti-corruption and whistleblowing; and
monitoring the environmental and social impact of the Company’s activities.

13. Substantial shareholdings

13.1 As at 5 February 2015 (being the latest practicable date prior to the publication of this document) insofar as is known to the Company, the following person(s) were, directly or indirectly, interested in 3 per cent or more of the existing issued ordinary share capital of the Company (such an interest being notifiable under the Company’s national law):

Company	Ordinary Shares of 2p each	Representing (%)
Liontrust Investment Partners LLP	16,392,716	14.07%
Ransome’s Dock Limited	7,489,360	6.43%
Aberforth Partners LLP	6,549,032	5.62%
Schroders PLC	5,501,515	4.73%
AXA Investment Managers UK (Framlington)	5,494,332	4.72%

13.2 Save as disclosed in this Part 13 (Additional Information), the Directors are not aware of any person who as at 5 February 2015 (being the latest practicable date prior to the publication of this document), directly or indirectly, has an interest in Existing Ordinary Shares which represents 3 per cent or more of the Company’s issued ordinary share capital.

13.3 The Company is not aware, as at 5 February 2015 (being the latest practicable date prior to the publication of this document): (1) of any persons who, directly or indirectly, jointly or severally, exercise, or could exercise, control over the Company, or (2) of any arrangements or measures, the operation of which may, at a subsequent time, result in a change of control of the Company.

13.4 The voting rights of the Company’s major Shareholders (as detailed at paragraph 13.1 of this Part 13 (Additional Information)) do not differ from the voting rights enjoyed by any other holder of Existing Ordinary Shares.

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14. Material contracts

14.1 The following contracts are all: (i) the material contracts (not being contracts entered into in the ordinary course of business) which have been entered into within the two years prior to the date of this document by members of the Group; and (ii) the contracts (not being contracts entered into in the ordinary course of business) entered into at any time by members of the Group which contain provisions under which any member of the Group has an obligation or entitlement which is or may be material to the Group as at the date of this document:

(a) Placing Agreement

The Company has entered into a Placing Agreement dated 4 February 2015 with Macquarie Capital, Shard Capital and BMO Capital Markets. Pursuant to the Placing Agreement, each of the Banks has agreed, subject to the terms and conditions contained in the Placing Agreement: (i) as agent for the Company, to use reasonable endeavours to procure Placees for the New Ordinary Shares at the Offer Price (subject to clawback to satisfy valid applications from Qualifying Shareholders under the Open Offer); and (ii) as principal, to acquire (at the Offer Price) the New Ordinary Shares for which subscribers have not been procured and which are not otherwise the subject of valid applications in the proportions set out in the Placing Agreement.

Under the terms of the Placing Agreement, if on or before 7.00 a.m. on 9 February 2015, Placees acceptable to the Company were procured for an amount equal to or greater than US$47.5 million but less than US$55 million (the difference between such amount and US$55 million being the "Shortfall") BMO Capital Markets and Macquarie Capital each agreed on and subject to the terms set out in the Placing Agreement to acquire such number of New Ordinary Shares at the Offer Price as are required to cover 50 per cent. of the Shortfall (rounded down to the nearest whole share). Any New Ordinary Shares which BMO Capital Markets and Macquarie Capital acquire as a result shall be subject to clawback in respect of any Open Offer Shares required to satisfy Valid Applications by Qualifying Shareholders under the terms of the Open Offer, in priority to any right of clawback in respect of the Conditional Placed Shares.

The Company has also appointed BMO Capital Markets as sponsor in relation to the New Issue.

The Joint Bookrunners' obligation to subscribe for New Ordinary Shares is conditional on certain conditions that are customary for an agreement of this nature. These include, among other things, the passing of the Resolutions at the General Meeting and Admission occurring on or before 8.00 a.m. on 6 March 2015 or such other time as the Company and the Joint Bookrunners may agree. The Joint Bookrunners have the ability to terminate the Placing Agreement prior to Admission in certain specific circumstances that are typical for an agreement of this nature.

The Company has agreed, subject to Admission occurring, to pay to the Banks:

as a base commission, an aggregate fee of 3 per cent. of the amount equal to the product of the Offer Price and the number of New Ordinary Shares provided that in respect of any such amount raised from the Directors and employees of the Company and their connected persons the base commission shall instead be equal to 1 per cent.; and
at the sole and absolute discretion of the Company, an incentive fee of up to 0.5 per cent. of the amount equal to the product of the Offer Price and the number of New Ordinary Shares, to be split between the Joint Bookrunners at the sole and absolute discretion of the Company.

The Company has also agreed to pay all expenses of or incidental to the Placing and Open Offer, the application to the UK Listing Authority for admission to the Official List and the application to the LSE for admission to trading and the allotment and issue of the New

Ordinary Shares including, without limitation, the fees and expenses of its professional advisers, the cost of preparation, printing, advertising and distribution of Prospectus and all other documents connected with the Placing and Open Offer, the Registrars' fees, the listing fees payable to the UK Listing Authority, the fees of the LSE, the Banks' properly incurred costs and expenses in connection with the Placing and Open Offer, including the properly incurred fees and expenses of the Banks' legal counsel and any printing costs and, where applicable, VAT.

The Company has given certain customary warranties to the Banks including, among other things, warranties in relation to the business, the accounting records and the information contained in this document. The Company has also given certain customary undertakings to the Banks, including an undertaking that from the date of the Placing Agreement until 120 calendar days after such date (both dates inclusive) the Company shall not, without the prior written consent of the Joint Bookrunners (acting in good faith), directly or indirectly, issue, offer, pledge, sell, contract to issue or sell, any Ordinary Shares or any securities convertible into or exercisable or exchangeable for Ordinary Shares subject to certain exceptions (including the issue of Ordinary Shares or other securities in connection with any acquisition by the Company of a royalty or stream, provided that no issue of Ordinary Shares shall result in the requirement for the publication by the Company of a prospectus pursuant to the Prospectus Directive). The Company has agreed to indemnify the Banks against certain liabilities, including (and as appropriate), in respect of the accuracy of the information contained in this document and other losses suffered or incurred in connection with the New Issue. The liability of the Company under the Placing Agreement is not limited in time or amount.

(b) Subscription and Transfer Deed

In connection with the Firm Placing, Placing and Open Offer, the Company, Newco and BMO Capital Markets have entered into a Subscription and Transfer Deed dated 4 February 2015, in respect of the subscription and transfer of ordinary shares and redeemable preference shares in Newco. Under the terms of the Subscription and Transfer Deed:

(i) the Company and BMO Capital Markets have agreed to subscribe for ordinary shares in Newco and enter into put and call options in respect of the ordinary shares in Newco subscribed for by BMO Capital Markets that are exercisable if the Firm Placing, Placing and Open Offer does not proceed;

(ii) following the Placing Agreement becoming unconditional, payments received from Qualifying Shareholders taking up Open Offer Shares shall be held by the Receiving Agent, and payments received by BMO Capital Markets from places taking up New Ordinary Shares in connection with the Firm Placing and Placing shall be held by BMO Capital Markets, in each case for the purpose of enabling BMO Capital Markets to subscribe for redeemable preference shares in Newco to an aggregate value equal to such monies, after deduction of the amount of certain commissions and expenses; and

(iii) the Company will allot and issue the New Ordinary Shares to those persons entitled thereto in consideration of BMO Capital Markets transferring its holding of redeemable preference shares and ordinary shares in Newco to the Company.

Accordingly, instead of receiving cash as consideration for the issue of New Ordinary Shares, at the conclusion of the Firm Placing and Placing and Open Offer, the Company will own the entire issued ordinary and redeemable preference share capital of Newco whose only assets will be its cash reserves, which will represent an amount equivalent to the net proceeds of the Firm Placing, Placing and Open Offer. The Company will be able to utilise this amount by exercising its right of redemption over the redeemable preference shares it will hold in Newco and, during any interim period prior to redemption, by procuring that Newco lends the amount to the Company (or one of the Company's subsidiaries).

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Qualifying Shareholders are not party to these arrangements and so will not acquire any direct right against BMO Capital Markets pursuant to these arrangements. The Company will be responsible for enforcing BMO Capital Markets’ obligations thereunder.

The conditional placing agreement dated 2 June 2014 between the Company, Barclays, and BMO Capital Markets relates to a placing to institutional places which was undertaken by the Company, on the terms and subject to the conditions of the Maracás Royalty Placing Agreement. The Banks (as defined therein) agreed, as agents for the Company, to use their respective reasonable endeavours to procure places for the Placing Shares (as defined therein) in such number and at such price as may have been agreed between the Banks (as defined therein) and the Company and then set out in the executed Terms of Subscription (as defined therein).

The Company gave certain customary warranties and undertakings to the Banks (as defined therein) including, among other things, warranties in relation to the business, the accounting records and the information contained in public disclosures. The Company agreed to indemnify the Banks (as defined therein) against certain liabilities, including (and as appropriate), in respect of the accuracy of the information contained in public disclosures and other losses suffered or incurred in connection with the New Issue (as defined therein). The liability of the Company under the Maracás Royalty Placing Agreement is not limited in time or amount.

(d) Kestrel Settlement Deed

The settlement deed dated 1 August 2014 between Gordon Resources Pty Ltd, Kestrel Coal Pty Ltd, Queensland Coal Pty Limited and Mitsui Kestrel Coal Investment Pty Limited is an agreement to settle a dispute regarding a deduction made from royalty entitlements paid to Gordon Resources Pty Ltd, a subsidiary of the Company, as part owner of the Kestrel Royalty Area (the Dispute).

It was agreed that Queensland Coal Pty Limited and Mitsui Kestrel Coal Investment Pty Limited, as joint venture parties, must pay Gordon Resources Pty Ltd the sum of AU$758,000 plus any GST on or before five business days after the date of the settlement deed.

Under the Kestrel Settlement Deed, all parties agreed to severally release and discharge the other parties from any claim or other remedy arising from the Dispute and agreed to indemnify each other party against all damage, loss, cost or expense arising from any claim or remedy in relation to the Dispute.

It was further agreed under the Kestrel Settlement Deed that Gordon Resources Pty Ltd was entitled to certain information rights on a quarterly basis, including the invoiced payable tonnes (including the hard coking coal, soft coking coal and thermal coal splits), royalty payable and the split between the public royalty payable and the private royalty payable.

(e) Revolving Credit Facility

The Company and Anglo Pacific Finance Limited (the Borrowers) are party to a new revolving credit facility agreement (the Revolving Credit Facility Agreement) with Barclays Bank PLC as lender (the Lender) dated 4 February 2015.

Under the terms of the Revolving Credit Facility Agreement, the Lender will, subject to the satisfaction of certain conditions precedent, provide to the Borrowers a revolving credit facility in the amount of US$30 million (the Revolving Credit Facility), which will be used to part-finance the Acquisition, to fund certain Acquisition costs and for working capital and for general corporate purposes. The Borrowers must repay loans made pursuant to the Revolving Credit Facility on the last day of the interest period relating to the relevant loan. The loans must be repaid in full on the date falling three years after the signing date (the Final Maturity Date).

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The Revolving Credit Facility is available to be utilised until the date falling one month prior to the Final Maturity Date. As at 5 February 2015, (being the latest practicable date prior to the publication of this document) no amounts had been drawn down pursuant to the Revolving Credit Facility.

The Revolving Credit Facility incurs interest at a rate of LIBOR plus a margin of 2.50 per cent. per annum. Certain fees are also payable in connection with the Revolving Credit Facility including commitment fees and an arrangement fee. The Revolving Credit Facility Agreement permits voluntary prepayments and voluntary cancellation of unutilised amounts (subject to payment of any applicable break costs). The Revolving Credit Facility Agreement also contains customary representations, undertakings and conditions precedent as well as financial and general covenants that the Obligors (as defined below) must observe. The general covenants include a negative pledge, restrictions on incurring additional indebtedness, restrictions on acquisitions and disposals of assets and other restrictions on changing the nature of the Company's business. The covenants are subject to customary and negotiated exceptions. It also contains various events of default which will entitle the Lender to cancel the Revolving Credit Facility and demand immediate repayment.

The Revolving Credit Facility is guaranteed by each Borrower and by the Purchaser and Gordon Resources (together the Obligors). The Revolving Credit Facility has the benefit of security which includes first-priority security in the form of debentures over the assets of the Borrowers and security over the shares in Anglo Pacific Finance Limited, the Purchaser and Gordon Resources.

(f) Kestrel Royalty

Details of the Kestrel royalty are set out in paragraph 7(a) of Part 5 (Information on the Group) at page 97.

(g) Narrabri Royalty

Details of the documents relating to the Narrabri Royalty Acquisition are set out at Part 3 (Terms and Conditions of the Acquisition) and details of the Narrabri Royalty Contracts are set out in Part 2 (Information on the Narrabri Royalty).

14.2 Save for the documents relating to the Narrabri Royalty Acquisition referred to in paragraph 14.1(g) above or the Narrabri Royalty Contracts referred to in Part 2 (Information on the Narrabri Royalty), no contract has been entered into otherwise than in the ordinary course of business in respect of the Narrabri Royalty: (a) in the two years immediately preceding the date of this document that is or may be material; and (b) otherwise than in the two years immediately preceding the date of this document that contains any provision under which there are any obligations or entitlements which are material to the Narrabri Royalty as at the date of this document.

Related party transactions

Save as disclosed below or in the financial information incorporated by reference into this document for the financial information for the six months ended 30 June 2014 as set out in section A of Part 9 (Financial Information relating to Anglo Pacific Group PLC) or the financial information for the financial years ended 31 December 2011, 2012 and 2013 set out in note 27 of section B of Part 9 (Financial Information relating to Anglo Pacific Group PLC), there were no related party transactions between the Company or members of the Group that were entered into during the financial years ended 31 December 2011, 2012 and 2013 in Part 9 (Financial Information relating to Anglo Pacific Group PLC), or during the period between 31 December 2013 and 5 February 2015 (being the latest practicable date prior to the publication of this Prospectus).

Related party transactions between 1 January 2014 and 5 February 2015 (being the last practicable date prior to the publication of this document) were payments of £21,843 to Audley Capital Advisors LLP, a company which Mr J.A. Treger, Chief Executive Officer, is both a director and shareholder, mainly for the

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reimbursement of travel related expenditure along with an IT subscription of USD$4,000 (2013: £nil). In addition, the Group received £48,201.60 from Audley Capital Advisors LLP for the reimbursement of office relocation expenditure. At 5 February 2015 a total of £nil was owing to Audley Capital Advisors LLP (2013: £nil). During October 2014, a sub lease was entered into with Audley Capital Advisors LLP whereby the latter agreed to sub let a portion of the Group's new office on arm's length terms. Under the terms of the sub lease, Audley Capital Advisors LLP will be required to pay an amount of £9,875 a quarter in advance to the Company from 23 June, 2015.

16. Working capital

The Company is of the opinion that the Group has sufficient working capital for its present requirements that is at least 12 months following the publication of this document.

17. UK taxation

The following paragraphs are intended as a general guide only to current United Kingdom tax law and HMRC practice (which may not be binding on HMRC) as at the date of this document, both of which are subject to change, possibly with retrospective effect. They relate only to certain limited aspects of the United Kingdom taxation treatment of the holders of Existing Ordinary Shares and apply only to Shareholders who own their Existing Ordinary Shares beneficially as an investment and who are resident or, in the case of an individual, resident and domiciled for tax purposes in (and only in) the United Kingdom (except where the position of an overseas resident Shareholder is expressly referred to). Certain categories of Shareholders, such as traders, broker-dealers, banks, financial institutions, insurance companies, investment companies, collective investment schemes, tax-exempt organisations, persons connected with the Company or Group, persons holding the shares as part of hedging or conversion transactions, Shareholders who are or have been officers or employees of the Company or a company forming part of the Group and Shareholders who have (or are deemed to have) acquired their Existing Ordinary Shares by virtue of an office or employment, may be subject to special rules and this summary does not apply to such Shareholders. Any person who is in any doubt about his own tax position, or is resident or otherwise subject to taxation in a jurisdiction other than the United Kingdom, should consult an appropriate independent professional adviser.

(a) Taxation of capital gains

(i) New Ordinary Shares acquired pursuant to the Open Offer

For the purposes of United Kingdom taxation of chargeable gains, a Shareholder should not be treated as making a disposal of all or part of his Existing Ordinary Shares by reason of taking up his entitlement under the Open Offer or the issue to that Shareholder of New Ordinary Shares pursuant to the Open Offer.

It is arguable that, as a matter of UK tax law, the Open Offer is not, strictly speaking, a reorganisation of the share capital of the Company for the purposes of UK taxation of chargeable gains. Although HMRC's published practice to date has been to treat an open offer as a reorganisation notwithstanding the strict legal analysis, we understand that HMRC may not apply this practice in circumstances where an open offer is not made to all Shareholders. Consequently, as this Open Offer may not be regarded as having been made to all Shareholders, the capital gains tax treatment is not free from doubt.

If the Open Offer is treated as a reorganisation, the cost of any New Ordinary Shares subscribed for by a Shareholder pursuant to the Open Offer up to such Shareholder's Open Offer Entitlement should generally be added to the base cost of such Shareholder's Existing Ordinary Shares (i.e., the Shareholder's Existing Ordinary Shares and the New Ordinary Shares up to the Qualifying Shareholder's Open Offer Entitlement, should be treated as the same asset for the purposes of UK taxation of chargeable gains).

If the Open Offer is not treated as a reorganisation, New Ordinary Shares allotted to a Shareholder pursuant to the Open Offer will be treated as having been acquired as part of a separate acquisition. In these circumstances, subject to specific rules for acquisitions within

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specified periods either side of disposal and pre-1982 holdings held by corporates, the Existing Ordinary Shares and the New Ordinary Shares will be treated as the same asset, the base cost of which will be the aggregate of the subscription amount paid for the New Ordinary Shares and the base cost of the Existing Ordinary Shares.

(ii) Disposal of Ordinary Shares

A subsequent disposal of Ordinary Shares by a Shareholder may, depending on the Shareholder's circumstances, and subject to any available exemption or relief, give rise to a chargeable gain or an allowable loss for the purposes of UK taxation of chargeable gains.

A Shareholder who is an individual and who acquired the Ordinary Shares whilst a UK resident, and subsequently ceased to be UK resident for taxation purposes, or is treated as resident outside the UK for the purposes of a double tax treaty, for a period of five complete tax years of assessment or less, and who disposes of all or part of his Ordinary Shares during the period, may be liable to capital gains tax on his return to the UK, subject to any available exemptions and reliefs.

(b) Taxation of dividends

Under current UK tax legislation, the Company is not required to withhold tax at source when paying a dividend.

A Shareholder who is an individual resident in the UK for tax purposes and who receives a dividend from the Company will be entitled to a tax credit which such Shareholder may set off against his total income tax liability on the dividend. The tax credit will be equal to 10 per cent of the aggregate of the dividend and the tax credit (the gross dividend), which is also equal to one-ninth of the cash dividend received. A UK resident individual Shareholder who is liable to income tax at the basic rate will be subject to tax on the dividend at the rate of 10 per cent of the gross dividend, so that the tax credit will satisfy in full such Shareholder's liability to income tax in respect of the gross dividend. A UK resident individual Shareholder who is liable to income tax at the higher rate will be subject to income tax at the rate applicable to dividends for such Shareholders (currently 32.5 per cent) on the gross dividend. After taking into account the 10 per cent tax credit such Shareholders will have to account for additional tax equal to 22.5 per cent of the gross dividend (an effective tax rate of 25 per cent of the cash dividend received). A UK resident individual Shareholder who is liable to income tax at the additional rate will be subject to income tax at the rate applicable to dividends for such Shareholders (currently 37.5 per cent) on the gross dividend. After taking into account the 10 per cent tax credit such Shareholders will have to account for additional tax equal to 27.5 per cent of the gross dividend (an effective tax rate of 30.6 per cent of the cash dividend received). Generally, a UK resident individual Shareholder who is not liable to income tax in respect of the gross dividend will not be entitled to repayment of the tax credit.

UK resident taxpayers who are not liable to UK tax on dividends, including pension funds and charities, will not be entitled to claim repayment of the tax credit attaching to dividends paid by the Company.

It is expected that UK resident corporate Shareholders will generally not be subject to tax on dividends paid by the Company. Those Shareholders will not be able to claim repayment of tax credits attaching to dividends.

No stamp duty or stamp duty reserve tax will be payable on the allotment, issue or registration of New Ordinary Shares. The Company will not be responsible for payment of stamp duty or stamp duty reserve tax in any such case.

The following statements are intended as a general guide to the current UK stamp duty and SDRT position for holders of Ordinary Shares. Certain categories of person, including intermediaries,

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brokers, dealers and persons connected with depositary receipt systems and clearance services, may not be liable to stamp duty or SDRT or may be liable at a higher rate. Furthermore, such persons may, although not primarily liable for the tax, be required to notify and account for it under the Stamp Duty Reserve Tax Regulations 1986.

The comments in this section relating to stamp duty and SDRT apply whether or not a Shareholder is resident in the UK.

(i) The Offer

Neither stamp duty nor SDRT will arise on the issue of Ordinary Shares. The sale of existing Ordinary Shares by the Selling Shareholders will generally give rise to a liability to stamp duty and/or SDRT at a rate of 0.5 per cent. of the Offer Price (in the case of stamp duty, rounded up to the nearest multiple of £5). If Ordinary Shares are transferred into a clearance service or a depositary receipt system, a liability to stamp duty and/or SDRT may be payable at the rate of 1.5 per cent. of the Offer Price, as described further below in this section under the heading “Depositary receipt systems and clearance services”.

(ii) Subsequent transfers

Stamp duty at the rate of 0.5 per cent. (rounded up to the next multiple of £5) of the amount or value of the consideration given by the purchaser is generally payable on an instrument transferring Ordinary Shares. An exemption from stamp duty is available on an instrument transferring Ordinary Shares where the amount or value of the consideration is £1,000 or less and it is certified on the instrument that the transaction effected by the instrument does not form part of a larger transaction or series of transactions in respect of which the aggregate amount or value of the consideration exceeds £1,000.

A charge to SDRT will also generally arise on an unconditional agreement to transfer Ordinary Shares (at the rate of 0.5 per cent. of the amount or value of the consideration payable). However, if within six years of the date of the agreement (or, if the agreement is conditional, the date on which it becomes unconditional), an instrument of transfer is executed pursuant to the agreement, and stamp duty is duly paid on that instrument, or that instrument is exempt, any SDRT already paid will generally be refunded, provided that a claim for payment is made, and any outstanding liability to SDRT will be cancelled.

The purchaser or transferee of the Ordinary Shares will generally be responsible for paying such stamp duty or SDRT.

(iii) Ordinary Shares held through CREST

Paperless transfers of Ordinary Shares within CREST are generally liable to SDRT, rather than stamp duty, at the rate of 0.5 per cent. of the amount or value of the consideration in money or money’s worth payable by the purchaser. CREST is obliged to collect SDRT on relevant transactions settled within the CREST system. Under the CREST system, generally no stamp duty or SDRT will arise on a deposit of Ordinary Shares into the system unless such a transfer is made for consideration in money or money’s worth, in which case a liability to SDRT will arise usually at a rate of 0.5 per cent. of the amount or value of the consideration for the Ordinary Shares.

(iv) Depositary receipt systems and clearance services

Under UK legislation, where Ordinary Shares are issued or transferred (i) to, or to a nominee or agent for, a person whose business is or includes the provision of clearance services or (ii) to, or to a nominee or agent for, a person whose business is or includes issuing depositary receipts, stamp duty or SDRT will generally be payable at the higher rate of 1.5 per cent. of the amount or value of the consideration payable or, in certain circumstances, the value of the Ordinary Shares (rounded up to the next multiple of £5 in the case of stamp duty).

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HMRC has confirmed following the decisions in HSBC Holdings plc and another v HMRC (Vidacos) C-569/07 [2010] STC 58 and HSBC Holdings plc and The Bank of New York Mellon Corporation v The Commissioners for Her Majesty's Revenue & Customs [2012] UKFTT 163 (TC) that it will no longer seek to apply the 1.5 per cent. stamp duty or SDRT charge when shares are issued into a clearance service or depositary receipt system.

There is an exception from the 1.5 per cent. charge on the transfer to, or to a nominee or agent for, a clearance service where the clearance service has made and maintained an appropriate election which has been approved by HMRC. In these circumstances, the normal rates of stamp duty and SDRT (rather than the higher rate regime referred to above) will generally apply to any transfer of Ordinary Shares into the clearance service and to any transactions in Ordinary Shares held within the clearance service.

Any liability for stamp duty or SDRT in respect of a transfer into a clearance service or depositary receipt system, or in respect of a transfer of Ordinary Shares held within such a service or system, will strictly be payable by the operator of the clearance service or depositary receipt system or its nominee, as the case may be, but in practice will generally be reimbursed by participants in the clearance service or depositary receipt system.

The application of the 1.5 per cent. charge may also be affected in other circumstances. Accordingly, specific professional advice should be sought before paying the 1.5 per cent. stamp duty or SDRT charge in any circumstances.

THE ABOVE DESCRIPTION OF TAXATION IS GENERAL IN CHARACTER. IF YOU ARE IN ANY DOUBT AS TO YOUR TAX POSITION OR YOU ARE SUBJECT TO TAX IN A JURISDICTION OTHER THAN THE UNITED KINGDOM, YOU SHOULD CONSULT AN APPROPRIATE INDEPENDENT PROFESSIONAL ADVISER WITHOUT DELAY.

18. Certain United States Federal Income Tax Considerations

The following is a summary of certain United States federal income tax consequences of the acquisition, ownership and disposition of Ordinary Shares by a US Holder (as defined below). This summary is based upon the Internal Revenue Code of 1986, as amended (the Internal Revenue Code), Treasury Regulations promulgated thereunder, judicial decisions, and the current administrative rules, practices and interpretations or law of the United States Internal Revenue Service (the IRS), all as in effect on the date of this Prospectus, and all of which are subject to change and differing interpretations, possibly with retroactive effect.

As used herein, the term "US Holder" means a beneficial owner of Ordinary Shares that is, for United States federal income tax purposes: (i) a citizen or individual resident of the United States; (ii) a corporation created or organised in or under the laws of the United States or any State thereof (including the District of Columbia); (iii) an estate, the income of which is subject to United States federal income tax without regard to its source; or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust, or the trust has validly elected to be treated as a domestic trust for United States federal income tax purposes.

If an entity treated as a partnership for United States federal income tax purposes holds Ordinary Shares, the United States federal income tax treatment of a partner in the partnership generally will depend on the status of the partner and the activities of the partnership. An entity treated as a partnership for United States federal income tax purposes holding Ordinary Shares should consult its own tax advisors with respect to the United States federal income tax consequences applicable to it and its partners of the acquisition, ownership and disposition of Ordinary Shares.

This summary is only a general discussion and is not intended to be, and should not be construed to be, legal or tax advice to any prospective investor. In addition, this summary does not discuss all aspects of United States federal income taxation that may be relevant to a US Holder in light of such person's particular circumstances, including certain US Holders of Ordinary Shares that may be subject to special treatment under the Internal Revenue Code, such as (i) tax-exempt organisations, qualified retirements plans,

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individual retirement accounts and other tax-deferred accounts; (ii) financial institutions, insurance companies, grantor trusts, real estate investment trusts, regulated investment companies, or brokers, dealers or traders in securities; (iii) US Holders that own Ordinary Shares as part of a straddle, hedging, conversion transaction or constructive sale; (iv) expatriates or other former long-term residents of the United States; (v) US Holders that own (or are deemed to own) 10 per cent or more (by voting power or value) of the stock of the Company; and (vi) US Holders that hold Ordinary Shares other than as capital assets or do not use the US Dollar as their functional currency. Moreover, this summary does not include any discussion of United States federal estate, gift, the Medicare tax on net investment income or alternative minimum tax consequences or state, local or non-United States income, estate, gift or other tax consequences. This summary only addresses US Holders that purchase the Ordinary Shares in the offering.

The summary of United States federal income tax consequences set out below is for US Holders for their general information only. US Holders are urged to consult their own tax advisors as to the particular tax consequences to them of owning the Ordinary Shares including the applicability and effect of state, local, non-United States and other tax laws and possible changes in tax law.

18.1 PFIC Considerations

As described below, if the Company is considered to be a passive foreign investment company (PFIC) during a US Holder's holding period for the Ordinary Shares, such a US Holder may be subject to certain adverse United States federal income tax consequences with respect to distributions and dispositions related to the Ordinary Shares. A non-United States corporation will be a PFIC for United States federal income tax purposes for any taxable year if either:

(a) 75% or more of its gross income for such year is 'passive income', which for this purpose generally includes dividends, interest, royalties, rents and gains from commodities and securities transactions and gains from assets that produce passive income (the Income Test); or

(b) 50% or more of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income (the Asset Test).

For this purpose, a corporation will be treated as owning its proportionate share of the assets and earning its proportionate share of the income of any other corporation in which the corporation owns, directly or indirectly, at least 25% (by value) of the stock.

Based on the Company's currently anticipated investments and activities, the Company expects that it will be a PFIC for the current taxable year and the foreseeable future. A separate determination with respect to the Asset Test and Income Test must be made by the Company after the close of each taxable year as to whether it was a PFIC for that year and, therefore, the Company's status as a PFIC is subject to change.

If the Company is a PFIC in any year during which a US Holder owns Ordinary Shares, such US Holder generally will be subject to special tax rules with respect to any "excess distribution" that it receives and any gain realised from a sale or other disposition (including a pledge) of the Ordinary Shares, unless such US Holder makes a "mark-to-market" election as discussed below. A US Holder that does not make a mark-to-market election will be referred to in this summary as a "Non-Electing US Holder."

Distributions received in a taxable year that are greater than 125% of the average annual distributions received during the shorter of the three preceding taxable years or a US Holder's holding period for the Ordinary Shares will be treated as an excess distribution. Under these rules:

(a) the excess distribution or gain will be allocated rateably over a Non-Electing US Holder's holding period for the Ordinary Shares;

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(b) the amount allocated to the current taxable year, and any taxable years in a US Holder's holding period prior to the first taxable year in which the Company was a PFIC, will be treated as ordinary income; and

(c) the amount allocated to each other taxable year will be subject to the highest tax rate on ordinary income in effect for individuals or corporations, as applicable, for each such year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

The tax liability for amounts allocated to taxable years prior to the year of disposition or excess distribution cannot be offset by any net operating losses for such years, and gains (but not losses) realised on the sale of the Ordinary Shares cannot be treated as capital gains, even if the Ordinary Shares are held as capital assets.

If the Company is a PFIC for any tax year during which a Non-Electing US Holder holds Ordinary Shares, the Company will continue to be treated as a PFIC with respect to such US Holder, regardless of whether the Company ceases to be a PFIC in one or more subsequent tax years. If the Company ceases to be a PFIC, a Non-Electing US Holder may terminate this deemed PFIC status with respect to Ordinary Shares by electing to recognise gain (which will be subject to the special tax rules discussed above), but not loss, as if such Ordinary Shares were sold on the last day of the last tax year for which the Company was a PFIC.

To the extent the Company has any subsidiaries and any of the Company's subsidiaries is also a PFIC, a US Holder may be deemed to own shares in such lower-tier PFIC that are directly or indirectly owned by the Company in that proportion which the value of the Ordinary Shares such US Holder owns bears to the value of all of the Company's Ordinary Shares, and such US Holder may be subject to the adverse tax consequences described above with respect to the shares of any such lower-tier PFIC that the US Holder would be deemed to own. As a result, if the Company is a PFIC and receives a distribution from any lower-tier PFIC or any shares in a lower-tier PFIC are disposed of (or deemed disposed of), a US Holder generally will be subject to tax under the PFIC rules described above in the same manner as if the US Holder had held its proportionate share of the lower-tier PFIC stock directly even though such US Holder has not received the proceeds of the distribution or disposition directly. US Holders should consult their tax advisors regarding the application of the PFIC rules to any of the Company's subsidiaries.

Holders of PFIC stock are also subject to additional information reporting rules. Generally, each US Holder of a PFIC is required to file an annual report containing such information as the United States Treasury may require. US Holders should consult their tax advisors regarding any reporting requirements that may apply to them.

Mark-to-Market Election

A US Holder of "marketable stock" (as defined below) in a PFIC may make a mark-to-market election for such stock to elect out of the tax treatment under the general PFIC rules discussed above. If a US Holder makes a mark-to-market election for its Ordinary Shares, such US Holder will include in income for each year that the Company is treated as a PFIC an amount equal to the excess, if any, of the fair market value of the Ordinary Shares as of the close of such US Holder's taxable year over its adjusted basis in such Ordinary Shares. An electing US Holder will be allowed a deduction for the excess, if any, of the US Holder's adjusted basis in the Ordinary Shares over the fair market value of the Ordinary Shares as of the close of the taxable year. However, such deductions will be allowable only to the extent of any net mark-to-market gains on the Ordinary Shares included in the electing US Holder's income for prior taxable years. Amounts included in income under a mark-to-market election, as well as gain on the actual sale or other disposition of the Ordinary Shares, will be treated as ordinary income. Ordinary loss treatment will also apply to the deductible portion of any mark-to-market loss on the Ordinary Shares, as well as to any loss realised on the actual sale or disposition of the Ordinary Shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included in income for such Ordinary Shares. An electing US Holder's basis in the

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Ordinary Shares will be adjusted to reflect any such income or loss amounts. Once made, the election cannot be revoked without the consent of the IRS unless the Ordinary Shares cease to be marketable. If the Company is a PFIC for any year in which the US Holder owns the Ordinary Shares but before a mark-to-market election is made, the interest charge rules described above will apply to any mark-to-market gain recognised in the year the election is made. The tax rules described below that apply to distributions by corporations which are not PFICs would apply to distributions by the Company, except that the lower capital gains rate applicable to qualified dividend income (as defined in the Internal Revenue Code) would not apply.

The mark-to-market election is available only for “marketable stock”, which is stock that is regularly traded on a qualified exchange as defined in applicable Treasury Regulations. “Regularly traded”, in general, means that the Ordinary Shares are traded in more than de minimis amounts on a qualified exchange for 15 or more days during each calendar quarter. The Company expects that the Ordinary Shares will be listed on the London Stock Exchange. A “qualified exchange” includes any non-US exchange that is regulated by a government authority in the jurisdiction in which the exchange is located and in respect of which certain other requirements are met.

Although the London Stock Exchange is likely to constitute a qualified exchange for these purposes, the question is factual, and there is no specific authority that designates the London Stock Exchange as a “qualified exchange”. Even assuming the London Stock Exchange is a qualified exchange for these purposes, the Company can give no assurance that its Ordinary Shares will be regularly traded. Additionally, as a mark-to-market election cannot be made for equity interests in any lower-tier PFICs that the Company may own, a US Holder may continue to be subject to the PFIC rules discussed above relating to taxation of Non-Electing US Holders with respect to any indirect interest in any investments held by the Company (including stock in a subsidiary of the Company) that are treated as an equity interest in a PFIC for United States federal income tax purposes. US Holders should consult their tax advisors as to the availability and desirability of a mark-to-market election, as well as the impact of such election on interests in any lower-tier PFICs.

QEF Election

A US Holder can generally mitigate the adverse United States federal income tax consequences of holding stock in a PFIC by making a qualified electing fund (QEF) election to include in income its share of the Company's income on a current basis. However, US Holders may make a QEF election with respect to their Ordinary Shares only if the Company agrees to furnish them annually with certain tax information, and the Company currently does not intend to prepare or provide the information necessary for a US Holder to make a QEF election with respect to its Ordinary Shares. Therefore, the QEF election will not be available to US Holders to mitigate the adverse United States federal income tax consequences arising under the PFIC rules described above.

US Holders should consult their own tax advisors concerning the Company’s PFIC status and the consequences to them of treatment of the Company and entities in which the Company holds equity interests as PFICs for any taxable year, and the availability and advisability of any election relating to PFIC status.

18.2 General Taxation on Distributions

Subject to the discussion above in section 18.1 “PFIC Considerations”, a US Holder that receives a distribution, including a constructive distribution, of cash or property with respect to the Ordinary Shares, other than certain distributions, if any, of the Company’s stock distributed pro rata to all shareholders, generally will be required to include the amount of such distribution in gross income as dividend income to the extent of the current or accumulated earnings and profits of the Company, as determined under United States federal income tax principles. To the extent that a distribution exceeds the current and accumulated earnings and profits of the Company, such distribution will be treated (a) first, as a tax-free return of capital to the extent of a US Holder’s tax basis in the Ordinary Shares, causing a reduction in the adjusted basis of the Ordinary Shares and (b) thereafter as capital gain from the sale or exchange of Ordinary Shares (as discussed below). However, the Company does not

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maintain calculations of its earnings and profits in accordance with United States federal income tax accounting principles. US Holders should, therefore, assume that any distribution by the Company with respect to the Ordinary Shares will constitute ordinary dividend income. Dividends paid by the Company will not be eligible for the dividends received deduction generally allowed to corporate US Holders. In addition, because the Company is a PFIC, (as discussed above) dividends on the Ordinary Shares will not be eligible for the preferential tax rate generally applicable to dividends paid by a “qualified foreign corporation” to non-corporate US Holders.

Any such dividend paid in a currency other than the US Dollar will be included in the gross income of a US Holder in an amount equal to the US Dollar value of such currency on the date the dividend is actually or constructively received, regardless of whether such currency is converted into US Dollars at that time. The amount of any distribution of property other than cash will be the fair market value of such property on the date of distribution. If a distribution that is made in a currency other than the US Dollar is converted into US Dollars on the date of receipt, a US Holder receiving such distribution generally should not be required to recognise foreign currency gain or loss in respect of such distribution. A US Holder may have foreign currency gain or loss if the amount of such distribution is converted into US Dollars on a date other than the date of receipt. Any gain or loss realised by a US Holder on such conversion will generally be treated as United States source ordinary income or loss.

18.3 Sale or other taxable disposition

Subject to the discussion above in section 18.1 “PFIC Considerations”, a US Holder generally will recognise gain or loss on the sale or other taxable disposition of Ordinary Shares in an amount equal to the difference, if any, between (a) the amount of cash plus the fair market value of any property received, determined on (i) the date of receipt of payment in the case of a cash basis US Holder and (ii) the date of such sale or other disposition in the case of an accrual basis US Holder, and (b) such US Holder’s adjusted tax basis in the Ordinary Shares sold or otherwise disposed of. Any such gain or loss generally will be treated as a capital gain or loss, which will be a long-term capital gain or loss if the Ordinary Shares are held by such US Holder for more than one year. Long-term capital gain is currently taxable at a reduced rate for non-corporate US Holders, including individuals. The deductibility of capital losses is subject to limitations. A cash basis US Holder, or an electing accrual basis US Holder, that receives payment in a currency other than the US Dollar upon the sale or other taxable disposition of the Ordinary Shares will realise an amount equal to the US Dollar value of such currency on the settlement date if Ordinary Shares are treated as being traded on an established securities market. The election by an accrual basis US Holder referred to in the previous sentence must be applied consistently from year to year and cannot be revoked without the consent of the IRS. Any other US Holder generally will determine the amount realised based on the US Dollar value of such currency on the date of sale and will have additional ordinary foreign exchange gain or loss attributable to the movement in exchange rates between the date of sale and the settlement date. Any gain or loss realised by a US Holder on a subsequent conversion of the currency for a different amount generally will be ordinary foreign currency gain or loss. A US Holder’s initial tax basis in its Ordinary Shares will be the US Dollar value of the purchase price for such Ordinary Shares determined on the date of purchase. If the Ordinary Shares are treated as traded on an established securities market, a cash basis US Holder, or an electing accrual basis US Holder, will determine the US Dollar value of the purchase price for such Ordinary Shares by translating the amount paid at the spot rate of exchange on the settlement date of the purchase.

18.4 Backup withholding and information reporting

United States information reporting requirements and backup withholding tax generally apply to certain payments to certain non-corporate holders of Ordinary Shares. Information reporting generally will apply to payments of dividends on, and to proceeds from the sale or redemption of, Ordinary Shares by a paying agent within the United States, and by certain paying agents outside the United States, to a holder of Ordinary Shares (other than an exempt recipient, which includes corporations, payees that are not US Holders that provide an appropriate certification and certain other persons). A

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paying agent or other intermediary within the United States, and certain paying agents and intermediaries outside the United States, generally will be required to withhold on any payment of dividends with respect to, and on the proceeds from the sale or redemption of, Ordinary Shares within the United States to a US Holder (other than a corporation or other 'exempt recipient') if such person fails to furnish its correct taxpayer identification number or otherwise fails to comply with such backup withholding requirements.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a US Holder generally may be refunded (or credited against such US Holder's United States federal income tax liability, if any) provided the required information is furnished to the IRS in a timely manner. US Holders should consult their tax advisors as to the application of United States information reporting and backup withholding and their qualification for exemption from backup withholding and the procedure for obtaining such an exemption. If information reporting requirements apply to a US Holder, the amount of dividends paid with respect to, and the gross proceeds from the sale or redemption of, such Ordinary Shares will be reported annually to the IRS and such US Holder.

US taxpayers that own certain foreign financial assets, including equity of foreign entities, with an aggregate value in excess of US$50,000 at the end of the taxable year or US$75,000 at any time during the taxable year (or, for certain individuals living outside the United States and married individuals filing joint returns, certain higher thresholds) may be required to file an information report with respect to such assets with their tax returns. The Ordinary Shares are expected to constitute foreign financial assets subject to these requirements unless the Ordinary Shares are held in an account at a financial institution (in which case the account may be reportable if maintained by a foreign financial institution). US Holders should consult their tax advisers regarding the application of the rules relating to foreign financial asset reporting.

US Holders who acquire any Ordinary Shares for cash may be required to file a form 926 (return by a US Transferor of Property to a Foreign Corporation) with the IRS and to supply certain additional information to the IRS if (i) immediately after the transfer, the US Holder owns directly or indirectly at least 10% of the Company's total voting power or value, or (ii) the amount of cash transferred to the Company in exchange for the Ordinary Shares, when aggregated with all related transfers under applicable regulations, exceeds USD $100,000. Substantial penalties may be imposed on a US Holder that fails to comply with this reporting requirement. Investors are encouraged to consult with their own tax advisor regarding this reporting obligation.

18.5 FATCA

The United States has enacted rules, commonly referred to as "FATCA", that generally impose a new reporting and withholding regime with respect to certain United States source payments (including dividends and interest), gross proceeds from the disposition of property that can produce United States source interest and dividends and certain payments made by, and assets maintained with, entities that are classified as financial institutions under FATCA. As currently drafted, the Company does not expect that withholding under FATCA will apply to payments on the Ordinary Shares. However, significant aspects of whether or how FATCA will apply to non-United States issuers like the Company remain unclear, and no assurance can be given that withholding under FATCA will not become relevant with respect to payments on the Ordinary Shares in the future. Even if FATCA were to become relevant to payments on the Ordinary Shares, it would not be applicable earlier than 1 January 2017. Shareholders and prospective investors should consult their own tax advisors regarding the potential impact of FATCA to an investment in the New Shares.

19. Certain ERISA Considerations

The following paragraphs in this section 19 relate to the purchase of Ordinary Shares by (i) US employee benefit plans that are subject to Title I of the US Employment Retirement Income Security Act of 1974 (ERISA), (ii) individual retirement accounts, Keogh and other plans that are subject to Section 4975 of the Internal Revenue Code, and (iii) entities whose underlying assets are deemed to be ERISA "plan assets" by

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reason of investments made in such entities by such employee benefit plans, individual retirement accounts, Keogh and other plans (collectively referred to as Benefit Plan Investors). This Part could also be relevant to the acquisition of Ordinary Shares by governmental plans (as defined in Section 3(32) of ERISA), certain church plans (as defined in Section 3(33) of ERISA) and non-US plans (as described in Section 4(b)(4) of ERISA) that are not subject to ERISA but may be subject to similar laws (Similar Laws).

THE FOLLOWING DISCUSSION IS GENERAL IN NATURE AND DOES NOT ADDRESS EVERY ERISA-RELATED ISSUE THAT MAY PERTAIN TO THE ACQUISITION, HOLDING AND/OR DISPOSITION OF ORDINARY SHARES. THIS DISCUSSION IS NOT A SUBSTITUTE FOR AND MAY NOT BE RELIED UPON AS LEGAL ADVICE. EACH INVESTOR IS THEREFORE URGED TO CONSULT WITH ITS OWN COUNSEL BEFORE ACQUIRING ORDINARY SHARES FOR A COMPLETE ANALYSIS OF WHETHER AND HOW THE RULES OF ERISA, THE INTERNAL REVENUE CODE (AND SIMILAR LAW) MAY APPLY IN THE CONTEXT OF SUCH INVESTOR'S OWN SITUATION.

19.1 General Fiduciary Considerations for Benefit Plan Investors

Fiduciaries of Benefit Plan Investors subject to Title I of ERISA should consider their basic fiduciary duty under ERISA, which requires them to discharge their investment-related functions prudently and solely in the interest of the plan participants and their beneficiaries. Before authorising an investment in Ordinary Shares, the fiduciaries of a Benefit Plan Investor should consider, among other things, (i) whether the investment satisfies the prudence, diversification and other fiduciary standards imposed by ERISA, including whether restrictions on transferability of the Ordinary Shares is not inconsistent with the plan liquidity needs, (ii) whether the fiduciaries have the authority to make the investment under the governing plan documents and any applicable investment policies, and (iii) whether the investment will give rise to a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue Code.

In analysing the prudence of an investment in Ordinary Shares, an ERISA fiduciary should also take into account the factors set forth in the regulations issued by the US Department of Labor (DOL) under Section 404 of ERISA, including the role the investment will play in the plan's investment portfolio subject to the fiduciary's control, taking into account the composition of the portfolio, the liquidity and current return of the portfolio relative to the funding objectives of the plan, and the projected return of the portfolio relative to the funding needs of the plan. In general, fiduciaries of an ERISA Plan who breach their fiduciary obligations may be held liable for resulting losses incurred by the plan.

19.2 Plan Asset Look-Through Rule

ERISA and regulations issued by the DOL (the Plan Asset Regulations) provide that, if a Benefit Plan Investor acquires an equity interest (such as the Ordinary Shares) in an entity (such as the Company) that is neither a widely-held publicly offered security registered in the US nor a security issued by an investment company registered under the Investment Company Act, the assets of the Benefit Plan Investor will generally be deemed to include both its equity interest in the entity and an undivided interest in the underlying assets of the entity, unless the entity is an "operating company" or the equity participation in the entity by all Benefit Plan Investors is not "significant." Under the Plan Asset Regulations, an "operating company" is defined generally as an entity that is "primarily engaged, directly or through a majority-owned subsidiary or subsidiaries, in the production or sale of a product or service other than the investment of capital." The Plan Asset Regulations also provide that equity participation in an entity by Benefit Plan Investors is not "significant" if Benefit Plan Investors hold less than 25% of the value of each class of equity interest in the entity, determined without regard to equity interests held by a person who has discretionary authority or control over the entity's assets or by an affiliate of such person (Controlling Persons). The 25% ownership test is applied at the time of an acquisition by any person of an equity interest in the entity (including, for this purpose, the indirect acquisition of an additional percentage interest in the entity resulting from the redemption of another owner's interest, as well as a direct acquisition of an equity interest from the entity or an existing equity holder).

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The Company intends (but cannot assure) that the Company’s underlying assets will not be treated as ERISA plan assets under the Plan Asset Regulations. In this regard, the Company believes that, given the nature of its business, it is not likely that the Company would qualify for the “operating company” exception under the Plan Asset Regulations. The Company does, however, intend to use reasonable efforts to restrict or prohibit the acquisition of Ordinary Shares by Benefit Plan Investors, whether pursuant to this Offering or pursuant to a subsequent transfer, in an effort to limit the ownership of Ordinary Shares by Benefit Plan Investors to less than 25% of their total value (excluding Ordinary Shares held by Controlling Persons) as of any relevant time. Toward that end, each purchaser pursuant to the Offering and each subsequent transferee of Ordinary Shares will be required or, in the case of a subsequent transferee, will be deemed to represent, warrant and agree that (i) it is not and is not acting on behalf of a Benefit Plan Investor unless it acquires the Ordinary Shares with the written consent of the Company, (ii) (A) if such purchaser is or is acting on behalf of a Benefit Plan Investor, its acquisition, holding and disposition of such Ordinary Shares does not and will not constitute or result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Internal Revenue Code, or (B) if such purchaser is a governmental, church or non-US plan which is subject to Similar Law, its acquisition, holding and disposition of such Ordinary Shares will not constitute or result in a non-exempt violation of any Similar Law, and (iii) it will be and remain subject to certain transfer restrictions regarding its interest in such Ordinary Shares. No Ordinary Shares will be issued pursuant to this Offering to purchasers who have represented that they are Benefit Plan Investors without the written consent of the Company. Also, each Benefit Plan Investor who holds Ordinary Shares will be prohibited from subsequently transferring such Ordinary Shares to a Benefit Plan Investor without the consent of the Company. The Company will be entitled to rely on the representations provided by persons who acquire and transfer Ordinary Shares as to matters relating to their status as Benefit Plan Investors and other ERISA (or Similar Law) matters.

Notwithstanding the Company’s intention, there can be no assurance that the Company’s efforts to limit the acquisition and holding of Ordinary Shares by Benefit Plan Investors will be successful and that the Company will at all relevant times satisfy the 25% ownership exception under the Plan Asset Regulations. If the underlying assets of the Company were deemed to be ERISA “plan assets” of Benefit Plan Investors who hold Ordinary Shares, then, among other things, (i) the persons who have certain discretionary responsibilities or control with respect to the Company’s assets and operations would be deemed to be ERISA fiduciaries of such Benefit Plan Investors and would be subject to the fiduciary and other applicable requirements of ERISA and the Internal Revenue Code in connection with the management of the Company and its assets; (ii) the fiduciaries of the Benefit Plan Investors may have co-fiduciary responsibility under ERISA and the Internal Revenue Code with respect to the investment of the Company’s assets; and (c) certain transactions that the Company might enter into in the ordinary course of its business might constitute non-exempt prohibited transactions under ERISA or the Internal Revenue Code, resulting in the imposition of excise taxes and penalties.

The sale of Ordinary Shares to a Benefit Plan Investor is in no respect a representation or warranty by the Company or any other person that the investment in such Ordinary Shares meets or, in the future, will meet all relevant legal requirements applicable to such Benefit Plan Investors. As indicated, even though it is contemplated that the assets of the Company will not be deemed to be ERISA plan assets under the Plan Asset Regulations, no assurance can be given that the such treatment can be avoided, particularly as a result of subsequent transfers, and that the fiduciary and prohibited transaction provisions of ERISA and the Internal Revenue Code would not become applicable to investments made and transactions entered into by the Company. The fiduciaries of any Benefit Plan Investor considering whether to acquire Ordinary Shares should consult with their own counsel regarding the potential consequences of such investment under the fiduciary responsibility and prohibited transaction provisions of ERISA and the Internal Revenue Code. Similarly, the fiduciaries of governmental and other plans that are not subject to ERISA but are subject to Similar Law should consult with their own counsel regarding the potential consequences of an investment in the Ordinary Shares under such Similar Law.

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19.3 Prior Relationships with Certain Persons, Including each of the Banks

Each of the Banks or their respective affiliates may be the sponsor of, or investment advisor with respect to one, or more Benefit Plan Investors. As such parties may receive certain benefits in connection with the sale of Ordinary Shares to such Benefit Plan Investors, and the purchase of such Ordinary Shares using the assets of any Benefit Plan Investor over which any of such parties has investment authority might be deemed to be a violation of the prohibited transaction rules of ERISA and/or section 4975 of the Internal Revenue Code for which no exemption may be available. Accordingly, Ordinary Shares may not be acquired using the assets of a Benefit Plan Investor if any of the Banks or any of their respective affiliates has investment authority with respect to such assets (except to the extent (if any) that a favourable statutory or administrative exemption applies).

Litigation

20.1 There are no, nor have there been any, governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware), during at least the 12 month period prior to the publication of this document which may have, or have had in the recent past, significant effects on the Company and/or the Group's financial position or profitability.

20.2 There are no, nor have there been any, governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware), during at least the 12 month period prior to the publication of this document which may have, or have had in the recent past, significant effects on the Narrabri Royalty.

Third Party Information

The Company confirms that the information contained in the document sourced from any third party has been accurately reproduced and, as far as the Company is aware and has been able to ascertain from information published by any such third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. Where third party information has been used in this prospectus the source of such information has been identified.

General

22.1 Macquarie Capital (Europe) Limited is registered in England and Wales (with number 03704031) and has its registered office at Ropemaker Place, 28 Ropemaker Street, London EC2Y 9HD. Macquarie Capital (Europe) Limited has given and has not withdrawn its written consent to the issue of this document and the references to its name in the form and context in which they are included.

22.2 BMO Capital Markets Limited is registered in England and Wales (with number 02928224) and has its registered office at 95 Queen Victoria Street, London EC4V 4HG. BMO Capital Markets Limited has given and has not withdrawn its written consent to the issue of this document and the references to its name in the form and context in which they are included.

22.3 Shard Capital Partners LLP is registered in England and Wales (with number OC360394) and has its registered office at 1 Tudor Street, London EC4Y 0AH. Shard Capital Partners LLP has given and has not withdrawn its written consent to the issue of this document and the references to its name in the form and context in which they are included.

22.4 Golder Associates (UK) Limited is registered in England and Wales (with number 01125149) and has its registered office at Attenborough House, Browns Lane Business Park, Stanton-on-the-Wolds, Nottingham NG12 5BL. Golder Associates (UK) Limited has given and has not withdrawn its written consent to the inclusion in this Prospectus of its Kestrel Qualified Person's Report as included in Part 10 (Kestrel Qualified Person's Report) of this Prospectus and the references thereto in the form and context in which they are included and has authorised the contents of that report.

22.5 Palaris Australia Pty Ltd is registered in Australia and has its registered office at Level 1, 384 Hunter Street, Newcastle NSW, 2300. Palaris Australia Pty Ltd has given and has not withdrawn its written consent to the inclusion in this Prospectus of its Narrabri Qualified Person's Report as included in Part 11 (Narrabri Qualified Person's Report) of this Prospectus and the references thereto in the form and context in which they are included and has authorised the contents of that report.

22.6 The Company's registrars are Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom and Equity Financial Trust Company, 200 University Avenue, Suite 300, Toronto, M5H 4HI, Canada. Equitini Limited and Equity Financial Trust Company have given and have not withdrawn their written consent to the issue of this document and the respective references to their names in the form and context in which they are included.

22.7 The Company's accounts for the three financial years ended 2011, 2012 and 2013, upon which unqualified reports have been given (noting the accounts in 2013 restated the 2012 comparatives and the accounts in 2012 restated the 2011 comparatives), were audited by Grant Thornton UK LLP, chartered accountants. Grant Thornton UK LLP is a member of the Institute of Chartered Accountants in England and Wales.

22.8 Deloitte LLP has given and not withdrawn its written consent to the inclusion of its reports on the historical financial information and the unaudited pro forma financial information contained respectively in Parts 9 (Financial Information relating to the Anglo Pacific Group PLC) and 12 (Unaudited Pro Forma Financial Information) of this document in the form and context in which they appear and has authorised the contents of those reports. A written consent under the Prospectus Rules is different from a consent filed with the SEC under Section 7 of the Securities Act. As the New Ordinary Shares have not been paid and will not be registered under the Securities Act, Deloitte LLP has not filed a consent under Section 7 of the Securities Act.

22.9 Save as set out below, there has been no significant change in the financial or trading position of the Group since 30 June 2014, being the date of the Group's latest unaudited interim financial statements. The following items of significance have occurred since 30 June 2014. Royalty related income in the three months ended 30 September 2014 of £0.5 million (the three months ended 30 September 2013: £3.2 million). Total royalty income for 2014 expected to be in the region of £3.2–£3.6 million (31 December 2013: £14.7 million). Cash and cash equivalents of £9.2 million as at 30 September 2014 (£14.4 million at 30 June 2014) and approximately £8.8 million at 31 December 2014 (£15.7 million at 31 December 2013). An impairment charge of £15.4 million for the Isua royalty, an early stage iron ore project owned by London Mining PLC due to London Mining PLC entering into administration.

22.10 There have been no material changes since the respective dates of the Kestrel Qualified Person's Report and the Narrabri Qualified Person's Report the omission of which would make such reports misleading.

22.11 The total expenses payable by the Company in connection with the Firm Placing and Placing and Open Offer and the issue of the Acquisition Shares (including, professional fees and expenses, the costs of printing and distribution of documents and the listing fees of the FCA) are expected to amount to approximately £3.6 million, excluding VAT.

22.12 The Existing Ordinary Shares are in registered form, are capable of being held in uncertificated form and are listed on the premium segment of the Official List and traded on the market for listed securities of the London Stock Exchange and also listed on the Toronto Stock Exchange. Application will be made for the New Ordinary Shares and the Acquisition Shares to be so listed and traded on the London Stock Exchange and has been made for the New Ordinary Shares and the Acquisition Shares to be listed on the Toronto Stock Exchange.

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23. Market quotations

The following table shows the Closing Price on the LSE of Existing Ordinary Shares on the first Business Day of each of the six months immediately before the date of this document and on 5 February 2015 (being the latest practicable date prior to the posting of this document):

Date	Closing Price (p)
5 February 2015	83.0
2 February 2015	82.3
2 January 2015	103.0
1 December 2014	105.0
3 November 2014	133.3
1 October 2014	125.3
1 September 2014	156.9

24. Documents available for inspection

Copies of the following documents will be available for inspection during normal business hours on any weekdays (Saturdays, Sundays and public holidays excepted) at the Company's registered office, 1 Savile Row, London W1S 3JR and the offices of Norton Rose Fulbright LLP, 3 More London Riverside, London SE1 2AQ, until Admission:

the Articles of Association;
the Annual Reports and Accounts of the Group for the financial years ended 30 December 2011, 2012, 2013;
the unaudited financial statements for the Group for the six months ended 30 June 2014, incorporated by reference into Section A of Part 9 (Financial Information relating to Anglo Pacific Group PLC) of this document;
the Accountant's Report prepared by Deloitte LLP on the historical financial information set out in Section B of Part 9 (Financial Information relating to Anglo Pacific Group PLC) of this document;
the Accountant's Report prepared by Deloitte LLP on the unaudited pro forma financial information set out in Part 12 (Unaudited pro forma financial information) of this document;
the Acquisition Agreement; and
this document.

25. Announcement of results of the Open Offer

The Company will make an appropriate announcement(s) to a Regulatory Information Service giving details of the results of the Open Offer and details of the sale of the Open Offer Shares not taken up by Shareholders in the Open Offer on or about 26 February 2015.

Dated 6 February 2015

CHECKLIST OF DOCUMENTATION INCORPORATED BY REFERENCE

The following document, which was sent to Shareholders at the relevant time and/or is available for inspection in accordance with paragraph 24 of Part 13 (Additional Information) of this Prospectus, contains information which is relevant to the Firm Placing and Placing and Open Offer:

Document	Section	Page numbers in such documents
Unaudited financial statements for the Group for the six months ended 30 June 2014	Consolidated income statement	8
	Consolidated statement of comprehensive income	9
	Consolidated balance sheet	10
	Consolidated statement of changes in equity	11-13
	Consolidated cash flow statement	14
	Notes to the accounts	15-35
	Independent review report	36

Subsequent to the issuance of the unaudited financial statements for the Group for the six months ended 30 June 2014, the Group has updated its basis of segment reporting. The updated basis is reflected in the historical financial information for the three years ended 31 December 2013 included within Part 9 (Financial Information relating to Anglo Pacific Group PLC) of this Prospectus, and will form the basis of the Group's segmental reporting going forward.

Copies of the document which is incorporated by reference in this Prospectus is available as provided in paragraph 24 of Part 13 (Additional Information) of this Prospectus.

Any non-incorporated parts of the document incorporated by reference in this Prospectus are either not relevant for prospective investors in the New Ordinary Shares or the relevant information is included elsewhere in this Prospectus. Information that is itself incorporated by reference in the above document is not incorporated by reference into this Prospectus. It should be noted that, except as set forth above, no other portion of the above document is incorporated by reference into this Prospectus.

Any statement contained in a document which is deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purpose of this Prospectus to the extent that a statement contained herein (or in a later document which is incorporated by reference herein) modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded for the purpose of this Prospectus shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus.

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DEFINITIONS

In this document and the Notice of General Meeting and accompanying Form of Proxy, the following expressions have the following meanings, unless the context otherwise requires

Acquisition
the proposed acquisition by the Purchaser of the Narrabri Royalty

Acquisition Agreement
the Royalty Sale Agreement between the Company, APG Aus No 7 Pty Ltd and the Ross Family Trust dated 4 February 2015 in relation to the sale and purchase of the Narrabri Royalty

Acquisition Shares
the 4,135,238 Ordinary Shares to be issued pursuant to the Acquisition

Admission
the admission of the New Ordinary Shares to the premium segment of the Official List and to trading on the London Stock Exchange’s main market for listed securities becoming effective

Alliance Resources
Alliance Resources Limited

Amapá
the Amapá Iron Ore System

Application Form
the personalised application form which accompanies this document for Qualifying Shareholders for use in connection with the Open Offer

Articles or Articles of Association
the articles of association of the Company in force as at the date of this document, details of which are set out in paragraph 4 of Part 13 (Additional Information) of this document

ASIC
Australian Securities and Investments Commission

ASX
Australian Securities Exchange

Banks
BMO Capital Markets, Macquarie Capital and Shard Capital

Beadell
Beadell Resources Limited

Benefit Plan Investors
(i) US employee benefit plans that are subject to Title I of ERISA, (ii) individual retirement accounts, Keogh and other plans that are subject to Section 4975 of the Internal Revenue Code, and (iii) entities whose underlying assets are deemed to be ERISA “plan assets” by reason of investments made in such entities by such employee benefit plans, individual retirement accounts, Keogh and other plans

Berkeley
Berkeley Resources Ltd

BHP Billiton
BHP Billiton Limited

BMO Capital Markets
BMO Capital Markets Limited

Board
the Directors of the Company

Borrowers
the Company and Anglo Pacific Finance Limited

Business Day
a day (excluding Saturdays and Sundays or public holidays in England and Wales) on which banks are generally open for business in London for the transaction of normal banking business

certificated or in certificated form
where a share or other security is not in uncertificated form

463

464

CAGR
Compound annual growth rate

CIM Standards
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

CISA
Swiss Collective Investment Schemes Act of 23 June 2006

Cliffs
Cliffs Natural Resources Inc.

Closing Price
the closing middle-market quotation of an Existing Ordinary Share as derived from the daily official list published by the London Stock Exchange

CO
Swiss Code of Obligations

Co-Manager
Shard Capital

Companies Act
the Companies Act 2006 (as amended) including any statutory modification or re-enactment thereof for the time being in force

Company
Anglo Pacific Group PLC, registered in England and Wales under number 00897608

Conditional Placed Shares
the 22,625,000 Open Offer Shares to be allotted and issued by the Company under the Placing subject to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer, on the terms and subject to the conditions of the Placing Agreement

Conditional Places
any persons who have agreed to subscribe for Conditional Placed Shares

Controlling Person
any person (other than a Benefit Plan Investor) that has discretionary authority or control with respect to the assets of the Company or that provides investment advice for a fee (direct or indirect) with respect to such assets or an "affiliate" (within the meaning of the Plan Asset Regulations) of such a person

Corporate Governance Code
the UK Corporate Governance Code published in September 2014 by the Financial Reporting Council

Corporations Act
Australian Corporations Act 2001

CREST
the relevant system, as defined in the CREST Regulations (in respect of which Euroclear is operator as defined in the CREST Regulations)

CREST Applications Host
the CREST core processor

CREST Manual
the CREST manual consisting of the CREST reference manual; CREST international manual; CREST central counterparty service manual; CREST rules; CCSS operations manual and CREST glossary of terms available at https://www.euroclear.com

CREST member
a person who has been admitted by Euroclear as a system member (as defined in the CREST Regulations)

CREST Participant
a person who is, in relation to CREST, a system participant (as defined in the CREST Regulations)

465

CREST personal member
a CREST member who holds their securities in dematerialised electronic form in CREST in their own name

CREST Proxy Instruction
the form of proxy instruction to be used by CREST Shareholders in connection with the General Meeting

CREST Regulations
the Uncertificated Securities Regulations 2005, as amended

CREST Shareholders
Shareholders holding Existing Ordinary Shares in uncertificated form

CREST sponsor
a CREST participant admitted to CREST as a CREST sponsor

CREST-sponsored member
a CREST member admitted to CREST as a sponsored member (which includes all CREST personal members)

CSOP
Company Share Ownership Plan

Directive
the Takeover Directive (2004/25/EC)

Directors
the Directors of the Company whose names appear on page 48 of this document

Disclosure and Transparency Rules
the disclosure and transparency rules made by the FCA in exercise of its functions as competent authority pursuant to Part VI of FSMA

Enlarged Group
Anglo Pacific following the acquisition of the Narrabri Royalty

Enlarged Share Capital
the issued ordinary share capital of the Company following the Firm Placing and Placing and Open Offer and the Acquisition

ERISA
the US Employee Retirement Income Security Act of 1974, as amended from time to time, and the applicable regulations thereunder

EU or Euroclear
Euroclear UK & Ireland Limited (formerly CrestCo Limited), the operator of CREST

European Economic Area
the member states of the European Union, Iceland, Norway and Liechtenstein

EVBC
El Valle-Boinás/Carlés

Exemption Order
an exemption order granted to the Company by the Ontario Securities Commission

Exchange Act
the US Securities Exchange Act of 1934, as amended

Excluded Territories
Australia, Canada, Japan, New Zealand, Switzerland, South Africa and the United States and any other jurisdiction where the availability of the Firm Placing and Placing and Open Offer would breach any applicable law

Executive Directors
Julian Treger and Mark Potter

Existing Ordinary Shares
the 116,431,796 existing ordinary shares of 2 pence each in nominal value in the capital of the Company as at the date of this document

FATCA
the US Foreign Account Tax Compliance Act of 2010, including laws promulgated pursuant to an intergovernmental agreement relating thereto

466

Final Maturity Date
has the meaning ascribed in paragraph 14.1(e) in Part 13 (Additional Information)

Financial Conduct Authority or FCA
the UK Financial Conduct Authority

FINMA
Swiss Financial Market Supervisory Authority

Firm Placed Shares
the 26,750,000 New Ordinary Shares which the Company has agreed to issue pursuant to the Firm Placing

Firm Placees
any persons who have agreed to subscribe for Firm Placed Shares

Firm Placing
the conditional placing of the Firm Placed Shares by the Banks on behalf of the Company, on the terms and subject to the conditions of the Placing Agreement

Form of Proxy
the form of proxy accompanying this document for use in connection with the General Meeting

FRC
Financial Reporting Council

FSMA
the Financial Services and Markets Act 2000 (as amended) and all regulations promulgated thereunder from time to time

General Meeting
the General Meeting of the Company convened for the purpose of passing the Resolutions, to be held on 26 February 2015, including any adjournment thereof

Gordon Resources
Gordon Resources Pty Ltd

Group or Anglo Pacific
Anglo Pacific Group PLC and, where the context requires, its subsidiaries

Gross Revenue Royalty or GRR
a royalty that entitles the royalty holder to a fixed portion of the gross revenues generated from the sales of mineral production from a property

GST
has the meaning ascribed in A New Tax System (Goods and Services Tax) Act 1999 (Cth)

HMRC
HM Revenue & Customs

Hummingbird
Hummingbird Resources PLC

IFRS
International Financial Reporting Standards

Internal Revenue Code
the US Internal Revenue Code of 1986, as amended

Investment Company Act
the US Investment Company Act of 1940, as amended

Joint Bookrunners
Macquarie Capital and BMO Capital Markets

JORC Code
means the Joint Ore Reserves Committee 2012 edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves"

JSOP
Joint Share Ownership Plan

Kestrel
means the Kestrel coal mine in Australia, which is operated by Kestrel Coal Pty Ltd, a subsidiary of Rio Tinto Coal Australia on behalf of the joint venture partners, Queensland Coal Pty Limited and Mitsui Kestrel Coal Investment Pty Ltd

467

Kestrel Qualified Person
Golder Associates (UK) Limited of Attenborough House, Browns Lane Business Park, Stanton-on-the-Wolds, Nottingham NG12 5BL

Kestrel Qualified Person’s Report
means the report addressed to the Company and titled “NI 43-101 Technical Report on Kestrel Coal Mine, QLD Australia” produced by the Kestrel Qualified Person and dated 30 January 2015 as set out in Part 10 (Kestrel Qualified Person’s Report)

Kestrel Royalty Area
has the meaning given on page 98

Kestrel Settlement Deed
means the settlement deed dated 1 August 2014 between Gordon Resources Pty Ltd, Kestrel Coal Pty Ltd, Queensland Coal Pty Limited and Mitsui Kestrel Coal Investment Pty in connection with a dispute regarding the deduction of royalty entitlements paid to Gordon Resources Pty Ltd

Largo
Largo Resources Limited

Lender
Barclays Bank PLC

Listing Rules
the listing rules made by the FCA in exercise of its functions as competent authority pursuant to Part VI of FSMA

London Stock Exchange or LSE
London Stock Exchange plc

Macquarie Capital
Macquarie Capital (Europe) Limited

Maracás Royalty Placing Agreement
The conditional placing agreement dated 2 June 2014 between the Company, Barclays, and BMO Capital Markets in connection with the acquisition of the Maracás vanadium project NSR

Mitsui
Mitsui Kestrel Coal Investment Pty Limited

ML
mining lease

Model Code
the Model Code set out in the Annex to the Listing Rules

Money Laundering Regulations
the United Kingdom Money Laundering Regulations 2007(512007 No. 2157)

Narrabri or the Project
the Narrabri coal project consisting of the Narrabri North underground longwall mine and the adjacent Narrabri South project area held under an exploration title

Narrabri Qualified Person
Palaris Australia Pty Ltd of 1/384 Hunter St, Newcastle NSW 2300 Australia, PO Box 1225

Narrabri Qualified Person’s Report
means the report addressed to the Company and titled “National Instrument 43-101 Technical Report on Narrabri North Mine and Narrabri South, Gunnedah Basin, New South Wales” produced by the Narrabri Qualified Person and dated 30 January 2015 as set out in Part 11 (Narrabri Qualified Person’s Report)

Narrabri Royalty
a 1% Gross Revenue Royalty at the Narrabri coal project

Narrabri Royalty Contracts
has the meaning given thereto in paragraph 1 of Part 2 (Information on the Narrabri Royalty)

NI 43-101
Canadian National Instrument 43-101 – Standards of Disclosure for Mineral projects

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Net Smelter Return or NSR
a royalty that entitles the royalty holder to a fixed portion of the net revenues received from a smelter or refinery from the sales of mineral production from a property, after the deduction of certain offsite realisation costs

New Issue
the issue of 49,375,000 New Ordinary Shares pursuant to the Firm Placing and Placing and Open Offer

Newco
Auctus (Jersey) Limited

New Ordinary Shares
the 49,375,000 new Ordinary Shares of 2 pence each in nominal value in the capital of the Company issued in connection with the Firm Placing and Placing and Open Offer

Non-CREST Shareholders
Shareholders holding Ordinary Shares in certificated form

Non-Qualified Holder
has the meaning given thereto in paragraph C5 in the section headed “Summary Information” of this Prospectus

Notice of General Meeting
the notice of General Meeting set out at the end of this document

Obligors
the Borrower, the Purchaser and Gordon Resources Pty Ltd

Offer Price
80 pence per New Ordinary Share

Official List
the Official List of the FCA

Open Offer
the conditional invitation to Qualifying Shareholders to apply for up to 22,625,000 New Ordinary Shares at the Offer Price on and subject to the terms and conditions set out in this document and in the case of Qualifying non-CREST Shareholders only, the Application Form

Open Offer Entitlement
the pro-rata entitlement to subscribe for 0.1943197716 Open Offer Shares for every 1 Existing Ordinary Share registered in their name as at the Record Date allocated to a Qualifying Shareholder pursuant to the Open Offer

Open Offer Shares
the 22,625,000 New Ordinary Shares for which Qualifying Shareholders are being invited to apply at the Offer Price to be issued pursuant to the terms of the Open Offer

Operating profit
means operating profit before impairments, revaluations and gains/losses on disposals

Ordinary Resolutions
the ordinary resolutions to be proposed at the General Meeting, as set out in the Notice of General Meeting

Ordinary Shares
ordinary shares in the capital of the Company from time to time

Orvana
Orvana Minerals Corp

Overseas Shareholders
Qualifying Shareholders who have registered addresses outside the United Kingdom

Panel
the Panel on Takeovers and Mergers

PCI
pulverised coal injection

PDMR
a person discharging managerial responsibility

PD Regulation
Regulation number 809/2004 of the European Commission

469

Pensions Regulator
the UK pensions regulator of work based pension schemes

Placee
a Firm Placee or a Conditional Placee

PFIC
passive foreign investment company

PFS
pre-feasibility study

Placing
the conditional placing of the Conditional Placed Shares on the terms and subject to the conditions of the Placing Agreement

Placing Agreement
the Placing Agreement dated 4 February 2015 between Macquarie Capital, BMO Capital Markets, Shard Capital and the Company relating to the Firm Placing and Placing and Open Offer, the principal terms of which are summarised in paragraph 14 of Part 13 (Additional Information) of this document

Plan Asset Regulations
US Department of Labor regulation 29 C.F.R. Section 2510.3-101 (as modified by Section 3(42) of ERISA)

Proposals
the New Issue and the Acquisition

Proposed Transfer
means the Company's intention to apply for a transfer of the Company's listing category from a “premium listing (commercial company)” on the Official List and into the category of a “standard listing”

Prospectus Rules
the prospectus rules made by the FCA in exercise of its functions as competent authority pursuant to Part VI of FSMA

Purchaser
APG Aus No 7 Pty Ltd, a wholly-owned subsidiary of the Company

QCPL
Queensland Coal Pty Limited

qualified institutional buyer or QIB
has the meaning given to it in Rule 144A under the Securities Act

Qualifying CREST Shareholders
Qualifying Shareholders whose Existing Ordinary Shares are in uncertificated form

Qualifying non-CREST Shareholders
Qualifying Shareholders whose Existing Ordinary Shares are in certificated form

Qualifying Shareholders
holders of Existing Ordinary Shares on the register of members of the Company on the Record Date (other than certain Overseas Shareholders as described in Part 8 (Terms and Conditions of the Open Offer) of this document)

Quasar
Quasar Resources Pty Ltd

Receiving Agent
Equiniti Limited

Record Date
4 February 2015

Registrar or Equiniti
Equiniti Limited

Regulation S
Regulation S under the Securities Act

Regulatory Information Service
a Regulatory Information Service that is approved by the FCA as meeting the Primary Information Provider criteria and that is on the list of Regulatory information Services maintained by the FCA

Resolutions
the Ordinary Resolutions and the Special Resolution

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Revolving Credit Facility
has the meaning ascribed in paragraph 14.1(e) in Part 13 (Additional Information)

Revolving Credit Facility Agreement
has the meaning ascribed in paragraph 14.1(e) in Part 13 (Additional Information)

Rio Tinto
Rio Tinto Coal Australia Pty Limited

Royalty Documents
the existing associated royalty documents in connection with the Narrabri Royalty

Royalty Property
a property in relation to which the Company holds a royalty interest, streaming interest or other investment

Rule 144A
Rule 144A under the Securities Act

SDRT
stamp duty reserve tax

Securities Act
the United States Securities Act of 1933, as amended

SEC
The US Securities and Exchange Commission

Seller
the Ross Family Trust, a private Australian family trust

Share Schemes
the CSOP, JSOP and VCP

Shard Capital
Shard Capital Partners LLP

Shareholder
a holder of Existing Ordinary Share(s)

Similar Law
any federal, state, local or non-US law that is similar to the prohibited transaction provisions of section 406 of ERISA and/or section 4975 of the Code

SIX
SIX Swiss Exchange

Special Resolution
the special resolution to be proposed at the General Meeting, as set out in the Notice of General Meeting

Sponsor
BMO Capital Markets Limited

Takeover Code
the City Code on Takeovers and Mergers issued by the Panel

TSR
total shareholder return

TSX
the Toronto Stock Exchange

UK Listing Authority or UKLA
the FCA in its capacity as the competent authority for the purposes of Part VI of FSMA

uncertificated or in uncertificated form
recorded on the relevant register of the share or security concerned as being held in uncertificated form in CREST, and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST

United Kingdom or UK
the United Kingdom of Great Britain and Northern Ireland

US, USA or United States
the United States of America, its territories and possessions, any State of the United States of America and the District of Columbia

USE
Unmatched Stock Event

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US GAAP
Generally Accepted Accounting Principles in the United States in force from time to time

US Investor Letter
the form of investor letter to be delivered to the Company and the Banks by any Shareholder or investor who is located in the United States or is a US Person prior to delivery of New Ordinary Shares to such Shareholder or investor

VCP
Value Creation Plan

Whitehaven
Whitehaven Coal Limited

Zamin
Zamin Ferrous Ltd

For the purposes of this document, “subsidiary”, “subsidiary undertaking” and “parent undertaking” shall, unless the context otherwise requires, have the respective meanings given to them by the Companies Act.

All references to “pounds”, “pounds sterling”, “sterling”, “£”, “pence”, “penny” and “p” are to the lawful currency of the United Kingdom.

All references to “Euros”, “EUR” and “€” are to the lawful currency of the member states of the European Union that adopt a single currency in accordance with the Treaty establishing the European Community as amended by the Treaty on European Union.

All references to “USD”, “US$”, “US Dollars” and “United States Dollars” are to the lawful currency of the United States.

All references to “C$”, “Canadian Dollars”, “CD”, “CAD” or “CA$” are to the lawful currency of Canada.

All references to “A$”, “Australian Dollars”, “AD”, “AUSD” or “AUS$” are to the lawful currency of Australia.

NOTICE OF GENERAL MEETING OF ANGLO PACIFIC GROUP PLC

(incorporated in England and Wales with registered number 00897608)

Notice is hereby given that a General Meeting of Anglo Pacific Group PLC (the Company) will be held at The Royal Institution of Great Britain, 21 Albemarle Street, London W1S 4BS at 10.30 a.m. on 26 February 2015 for the purpose of considering and, if thought fit, passing the following resolutions, which will be proposed as ordinary or special resolutions.

ORDINARY RESOLUTIONS

THAT the Directors be and they are hereby generally and unconditionally authorised pursuant to section 551 of the Companies Act 2006 (the Act) to exercise all the powers of the Company to allot shares in the Company and to grant rights to subscribe for or to convert any security into such shares (all of which transactions are hereafter referred to as an allotment of “relevant securities”) up to an aggregate nominal amount of £1,070,205 pursuant to the Firm Placing and Placing and Open Offer as defined in the Prospectus (the Prospectus) to which this Notice is attached (the Firm Placing and Placing and Open Offer) and the Acquisition (as defined in Resolution 2 below), which authority shall be in addition to the existing authority conferred on the Directors on 11 June 2014, which shall continue in full force and effect. The authority conferred by this resolution shall expire on the earlier of the Company’s next annual general meeting or the date which is 6 months after the date on which the resolution is passed (unless previously revoked or varied by the Company in general meeting), save that the Company may, before such expiry, revocation or variation make an offer or agreement which would or might require relevant securities to be allotted after such expiry, revocation or variation and the Directors may allot relevant securities in pursuance of such offer or agreement as if the authority hereby conferred had not expired or been revoked or varied.
THAT the acquisition (Acquisition) by the Company or a wholly owned subsidiary of the Company of a 1 per cent. gross revenue royalty relating to the Narrabri coal mine located in New South Wales, Australia substantially on the terms and subject to the conditions summarised in Part 3 (Terms and Conditions of the Acquisition) of the Prospectus be and is approved and the board of directors of the Company (or any duly constituted committee thereof) (Board) be and are authorised (1) to take all such steps as the Board considers to be necessary or desirable in connection with, and to implement, the Acquisition including agreeing such modification or variation to the manner in which the Acquisition is proposed to be effected as they may in their discretion think fit; and (2) to agree such modifications, variations, revisions, waivers, extensions or amendments to any of the terms and conditions of the Acquisition and/or to any document relating thereto (provided such modifications, variations, revisions, waivers, extensions or amendments are non-material), as they may in their absolute discretion think fit.

SPECIAL RESOLUTION

THAT the Articles of Association of the Company be amended as follows:

(i) the definition of UKLA in Article 2 shall be amended to replace the words “Financial Services Authority” with the words “Financial Conduct Authority”; and

(ii) the following will be inserted as new Article 38A:

38A. PROCEDURES WITH RESPECT TO CERTAIN PARTIES IN SHARES

(A) Definitions

In this Article 38A, the following expressions shall have the following meanings:

“Benefit Plan Investor”

(i) US employee benefit plans that are subject to Title I of the US Employment Retirement Income Security Act of 1974 (ERISA), (ii) individual retirement accounts, Keogh and other plans that are subject to Section 4975 of the Internal Revenue Code, and (iii)

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entities whose underlying assets are deemed to be ERISA “plan assets” by reason of investments made in such entities by such employee benefit plans, individual retirement accounts, Keogh and other plans;

“Controlling Person” any person (other than a Benefit Plan Investor) that has discretionary authority or control with respect to the assets of the Company or that provides investment advice for a fee (direct or indirect) with respect to such assets or an “affiliate” (within the meaning of the Plan Asset Regulations) of such a person;

“Eligible Transferee” has the meaning given to it in paragraph (G) of this Article 38A;

“ERISA” the United States Employee Retirement Income Security Act of 1974, as amended from time to time, and applicable regulations thereunder;

“Mandatory Disposal” has the meaning given to it in paragraph (G) of this Article 38A;

“Non-Qualified Holder” any person whose direct, indirect or beneficial ownership of shares in the Company may, in the determination of the Board, (i) result in any shares in the Company being owned, directly or indirectly, by Benefit Plan Investors or Controlling Persons other than holders that acquire the shares in the Company with the written consent of the Company; (ii) cause the assets of the Company to be considered “plan assets” under the Plan Asset Regulations; (iii) result in shares in the Company being owned by a person whose giving, or deemed giving, of the representations as to ERISA and the US Code set forth in paragraph (c) of this Article 38A is or is subsequently shown to be false or misleading; or (iv) cause the Company to be in violation of ERISA, the US Code or any applicable federal, state, local, non-US or other laws or regulations that are substantially similar to section 406 of ERISA or Section 4975 of the US Code;

“Plan Asset Regulations” the plan asset regulations promulgated by the United States Department of Labor at 29 C.F.R. section 2510.3-101, as modified by section 3(42) of ERISA;

“Similar Law” any federal, state, local or non-US law that is similar to the prohibited transaction provisions of section 406 of ERISA and/or section 4975 of the US Code;

“Transfer Notice” has the meaning given to it in paragraph (F) of this Article 38A; and

“US Code” the United States Internal Revenue Code of 1986, as amended.

(B) Imposition of Restrictions on Shares in the Company

The Board may impose such restrictions as it may think necessary for the purpose of implementing and ensuring compliance with paragraphs (C) to (H) of this Article 38A below, ensuring that no shares in the Company are acquired or held by or transferred to any person whose ownership of shares in the Company may:

(a) result in any shares in the Company being owned, directly or indirectly, by Benefit Plan Investors or Controlling Persons other than holders that acquire the shares in the Company with the written consent of the Company;

(b) cause the assets of the Company to be considered “plan assets” under the Plan Asset Regulations;

473

(c) result in shares in the Company being owned by a person whose giving, or deemed giving, of the representations as to ERISA and the US Code set forth in paragraph (C) of this Article 38A is or is subsequently shown to be false or misleading; or
(d) cause the Company to be in violation of ERISA, the US Code or any Similar Law.

(C) Prohibition on Acquisition of Shares in the Company

A person may not acquire shares in the Company, either as part of an initial allotment of shares in the Company or subsequently, if such person is a Non-Qualified Holder. Each purchaser and transferee of shares in the Company will be required to represent, warrant and covenant, or will be deemed to have represented, warranted and covenanted, for the benefit of the Company, its affiliates and advisers that:

(a) it is not a Non-Qualified Holder;
(b) no portion of the assets it uses to purchase, and no portion of the assets it uses to hold, the shares in the Company or any beneficial interest therein constitutes or will constitute the assets of a Benefit Plan Investor or a Controlling Person other than holders that acquire the shares in the Company with the written consent of the Company;
(c) if it is, or is acting on behalf of, a Benefit Plan Investor, its acquisition, holding and disposition of such share in the Company does not and will not constitute or result in a non-exempt prohibited transaction under ERISA or Section 4975 of the US Code; and
(d) if a holder is a governmental, church, non-US or other plan, (i) it is not, and for so long as it holds such shares in the Company or interest therein will not be, subject to any federal, state, local, non-US or other laws or regulations that could cause the underlying assets of the Company to be treated as assets of the holder by virtue of its interest in the shares in the Company and thereby subject the Company (or any persons responsible for the investment and operation of the Company's assets) to any Similar Law and (ii) its acquisition, holding and disposition of such shares in the Company will not constitute or result in a non-exempt violation of any Similar Law.

(D) Refusal to Register Transfers in Favour of any Non-Qualified Holder

The Board may refuse to register a transfer of shares in the Company if the transfer is in favour of any Non-Qualified Holder.

(E) Notification of Non-Qualified Holder Status

(a) The Board may at any time give notice in writing to any holder requiring him, within such period as may be specified in the notice (being 7 (seven) days from the date of service of the notice or such shorter or longer period as the Board may specify in the notice), to deliver to the Company at the Office such information, certificates and statutory declaration as to his place of residence, citizenship or domicile and any such information as the Board may require to establish that such person is not a Non-Qualified Holder or is otherwise qualified to hold shares in the Company.
(b) If any holder becomes aware that he is, or is likely to be, a Non-Qualified Holder or is otherwise holding or owning shares in the Company in breach of any law or requirement of any country or governmental authority or by virtue of which he is not qualified to hold such shares in the Company, he shall forthwith, unless he has already received a notice pursuant to paragraph (F)(a) of this Article 38A, (i) transfer all his shares in the Company to one or more persons who are not Non-Qualified Holders or (ii) give a request in writing to the Board for the issue of a Transfer Notice in accordance with the provisions referred to in paragraph (F) of this Article 38A. Every such request shall, in the case of certificated shares in the Company, be accompanied by the certificate(s) for the shares in the Company to which it relates.

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(F) Obligation to Dispose

(a) If it shall come to the notice of the Board that any shares in the Company are owned directly, indirectly, or beneficially by a person who is, or may be, a Non-Qualified Holder, the Board may at any time give written notice to such person (a “Transfer Notice”) requiring him to sell or transfer his shares in the Company to a person who is not a Non-Qualified Holder within 14 (fourteen) days and within such 14 (fourteen) days to provide the Company with satisfactory evidence of such sale or transfer.

(b) Pending such sale or transfer the Board may, in its absolute discretion, at any time by notice to such holder of such shares in the Company direct that in respect of such shares in the Company the holder shall not be entitled to attend or to vote either personally or by proxy at a general meeting of the Company or a meeting of the holders of any class of shares of the Company or to exercise any other rights conferred on holders in relation to general meetings of the Company or meetings of the holders of any class of shares of the Company and (to the extent permitted from time to time by the Toronto Stock Exchange and the Listing Rules of the UKLA) except in a liquidation of the Company, no payment shall be made of any sums due from the Company on such shares, whether in respect of capital or dividend or otherwise, and the Company shall not have any liability to pay interest on any such payment when it is finally paid to the holder and no other distribution shall be made on such shares in the Company.

(G) Mandatory Disposal

(a) If any person upon whom such a Transfer Notice is served pursuant to paragraph (F)(a) of this Article 38A does not within 14 (fourteen) days after such Transfer Notice either (i) transfer his shares in the Company to a person who is not a Non-Qualified Holder or (ii) establish to the satisfaction of the Board (whose judgment shall be final and binding) that he is not a Non-Qualified Holder, the Board may in their sole discretion arrange for the Company to sell such shares in the Company (a “Mandatory Disposal”) to a person who is not a Non-Qualified Holder (an “Eligible Transferee”). For this purpose, the Board may make such arrangements as it deems appropriate. In particular, without limitation, it may authorise any director or other officer or (if any) employee of the Company to execute any transfer or other document on behalf of the holder or holders of the relevant shares and, in the case of shares in uncertificated form, may make such arrangements as they think fit on behalf of the relevant holder or holders to transfer title to the relevant shares. The Eligible Transferee shall be entered in the Register as the holder of the relevant shares comprised in any such transfer and he shall not be bound to see to the application of the relevant purchase moneys nor shall his title to the relevant shares be affected by any irregularity in or invalidity of the proceedings in reference to the sale, and after the name of the Eligible Transferee has been entered in the Register, the remedy of any person aggrieved by the sale shall be in damages only and against the Company exclusively.

(b) Any sale pursuant to paragraph (a) above of this Article shall be at the price which the Board considers is the best price reasonably obtainable and the Board shall not be liable to the holder or holders of the relevant shares for any alleged deficiency in the amount of the sale proceeds or any other matter relating to the sale.

(c) The net proceeds of the sale of any share under paragraph (b) above of this Article (less the expenses of sale) shall be paid over by the Company to the former holder or holders of the relevant shares upon surrender of any certificate or other evidence of title relating to them, without interest. The receipt of the Company shall be a good discharge for the purchase money.

(d) The Board shall not be obliged to serve any notice required under this Article 38A upon any person if they do not know either his identity or his address. The absence of service of such a notice in such circumstances or any accidental error in or failure to give any notice to any person upon whom notice is required to be served under this Article 38A shall not prevent the implementation of or invalidate any procedure under this Article 38A.

(e) The provisions of this Article 38A shall apply to the service upon any person of any notice required by this Article 38A. Any notice required by this Article 38A to be served upon a person who is not a

475

holder or upon a person who is a holder but whose address is not within the United Kingdom and who has failed to supply to the Company an address within the United Kingdom shall be deemed validly served if such notice is sent through the post in a pre-paid cover addressed to that holder or person at the address (if any) at which the Board believes him to be resident or carrying on business or, in the case of a holder of depository receipts or similar securities, to the address, if any, in the register of holders of the relevant securities. Service shall, in such a case, be deemed to be effected on the day of posting and it shall be sufficient proof of service if that notice was properly addressed, stamped and posted.

(H) General

(a) The Board shall be entitled to presume without enquiry, unless it has reason to believe otherwise, that a person is not a Non-Qualified Holder.

(b) If at any time the Board believes that a Non-Qualified Holder has an interest in any shares in the Company then the Board shall be required to invoke the above provisions of this Article 38A unless the Board determines that the continued interest in the shares in the Company by the Non-Qualified Holder shall not result in the Company not being in compliance with ERISA, the US Code or any Similar Law.

(c) The Board shall be under no liability to any other person or, so long as the Board acts reasonably and in good faith, to the Company, and the Company shall be under no liability to any holder or any other person, for identifying or failing to identify any person as a Non-Qualified Holder or performing or exercising their duties, powers, rights or discretions under this Article 38A in relation to such holder's shares.

(d) The Board shall not be required to give any reasons for any decision or determination (including any decision or determination not to take action in respect of a particular person) pursuant to this Article 38A and any such determination or decision shall be final and binding on all persons unless and until it is revoked or changed by the Board. Any disposal or transfer made or other thing done by or on behalf of the Board or any director pursuant to this Article 38A shall be binding on all persons and shall not be open to challenge on any ground whatsoever."

BY ORDER OF THE BOARD

Peter Mason

Secretary

Registered Office:

1 Savile Row

London

W1S 3JR

Dated 6 February 2015

Notes:

(1) Members entitled to attend and vote at the General Meeting are also entitled to appoint one or more proxies to exercise all or any of their rights to attend and to speak and vote on their behalf at the meeting. A shareholder may appoint more than one proxy in relation to the General Meeting, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder which must be identified on the form of proxy. A proxy need not be a shareholder of the company. A proxy form which may be used to make such appointment and give proxy instructions accompanies this notice. If you wish your proxy to speak at the meeting, you should appoint a proxy other than the chairman of the meeting and give your instructions to that proxy.

(2) Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not do so in relation to the same shares.

(3) A form of proxy is enclosed for use by members. To be valid, it should be completed, signed and delivered (together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power of authority) to Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom or submitted electronically (see note 11), not later than 48 hours before the time appointed for holding the General Meeting or, in the case of a poll taken subsequently to the date of the General Meeting, or any adjourned meeting, not less than 48 hours before the time appointed for the taking of the poll or for holding the adjourned meeting. Shareholders who intend to appoint more than one proxy can photocopy the form of proxy prior to completion. The forms of proxy should be returned in the same envelope and each should indicate that it is one of more than one appointments being made.

(4) An abstention (or “vote withheld”) option has been included on the form of proxy. The legal effect of choosing the abstention option on any resolution is that the shareholder concerned will be treated as not having voted on the relevant resolution. The number of votes in respect of which there are abstentions will, however, be counted and recorded, but disregarded in calculating the number of votes for or against each resolution.

(5) Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act 2006 to enjoy information rights (a Nominated Person) may, under an agreement between him/her and the shareholder by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to execute it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights.

(6) The statement of rights of shareholders in relation to the appointment of proxies in paragraphs 1 and 3 above does not apply to Nominated Persons. The rights described in these paragraphs can only be exercised by shareholders of the Company.

(7) CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so by utilising the procedures described in the CREST Manual. CREST personal members or other CREST-sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

(8) In order for a proxy appointment by means of CREST to be valid, the appropriate CREST message (a CREST Proxy Instruction) must be properly authenticated in accordance with Euroclear's specification and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by the Registrar (ID RA19) by 10.30 a.m. on 24 February 2015. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST applications host) from which the Registrar is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.

(9) CREST members and, where applicable, their CREST sponsors or voting service providers should note that CRESTCo does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST members concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

(10) The Company may treat as invalid a CREST proxy instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

(11) Completion and return or submission electronically of a form of proxy will not affect the right of such member to attend and vote in person at the meeting or any adjournment thereof.

(12) Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company gives notice that only those shareholders entered on the register of members of the Company at 6.00 p.m. on 24 February 2015 (or, if the meeting is adjourned, the day being two days prior to the day of the adjourned meeting excluding any part of a day that is not a business day) will be entitled to attend or vote (whether in person or proxy) at the General Meeting in respect of the number of shares registered in their name at that time. Changes to entries on the register after the relevant deadline will be disregarded in determining the rights of any person to attend or vote at the meeting or any adjourned meeting (as the case may be).

(13) As at 5 February 2015 (being the last Business Day prior to the publication of this Notice), the Company's issued share capital consists of 116,431,796 Ordinary Shares, carrying one vote each. Therefore, the total voting rights in the Company as at 5 February 2015 are 116,431,796.

(14) Information regarding the General Meeting, including information required by section 311A of the Companies Act 2006, and a copy of this notice of General Meeting is available from the Company's website www.anglopacificgroup.com.

(15) Under section 319A of the Companies Act 2006, the Company must cause to be answered any question relating to the business being dealt with at the General Meeting put by a member attending the meeting unless answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information, or the answer has already been given on a website in the form of an answer to a question, or it is undesirable in the interests of the Company or the good order of the meeting that the question be answered. Except as provided above, members who wish to communicate with the Company in relation to the General Meeting should do so using the following means: (a) by writing to the Company Secretary at the Company's registered office address at 1 Savile Row, London W1S 3JR; or (b) by writing to the Registrars, Equiniti, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA. No other methods of communication will be accepted. In particular, members may not use any electronic address provided in this notice or in any related documents (including the accompanying proxy form) to communicate with the Company for any purpose other than those expressly stated in this notice or in such other related documents.

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ECORA RESOURCES PLC — Proxy Solicitation & Information Statement 2015

4763_rns_2015-02-06_3c0e1ddb-85fb-4f09-a54e-373719a05ab6.pdf

ANGLO PACIFIC GROUP PLC

CONTENTS

SUMMARY INFORMATION

Key performance indicators

Statement of financial position data

Cash flow data

RISK FACTORS

Risks Relating to the Group

The Group's revenues are impacted by the demand for steel

It may be difficult or impossible for the Group to ensure that the Royalty Properties are developed or operated in the Group's best interest

The Group's royalties may not produce anticipated revenues

The Group may be unable to successfully acquire additional royalties

Several of the Group’s royalties are significant to it, particularly the Kestrel royalty, and any adverse development related to these Royalty Properties could adversely affect its revenues

There may be disputes in relation to the Group’s royalties

The Group is dependent on the owners and the operators of the Royalty Properties making payments due under the royalties and any delay in or failure to make such royalty payments will affect the revenues generated by the royalty portfolio

Operators of the Royalty Properties may not honour the Group’s royalties

The Group is subject to risks related to acquisitions, disposals or other material transactions

The success of the Group depends on the services of its Chief Executive Officer, Chief Investment Officer and other key employees

Current global financial conditions continue to present challenges

The Group is exposed to risks associated with the fluctuation of exchange rates

Certain of the Group's directors and officers serve in similar positions with other companies which may result in a conflict of interest

The Group may acquire a royalty subject to rights in favour of the operator or third parties that could adversely affect the revenues generated from the asset portfolio

The Group's accounting policies and their interpretation and application may change

The Group's tax structure may be challenged by relevant tax authorities

Changes in the local tax regimes governing the jurisdictions where the Group's revenues are deemed to be sourced may be implemented

Standard listing

Risks Related to the Acquisition

The Group may be unable to realise the benefits that it believes will result from the Acquisition

The Group will not have full recourse to the seller against all potential liabilities in connection with the Acquisition, whether identified or unidentified

Risks Relating to Mining Operations

The Group is subject to many of the same risks as the operators of its Royalty Properties

The Group’s Royalty Properties are exposed to risks of changes in government regulation and changing political attitudes and stability in the countries in which they are situated

The Group's Royalty Properties are exposed to risks related to their permitting, construction, development and/or expansion

Adequate infrastructure may not be available to develop the Royalty Properties

Production is dependent on operators' employees

Certain of the Royalty Properties may be subject to the rights of indigenous peoples

Operations in foreign jurisdictions are subject to many risks, which could decrease the Group's revenues

The Group's Royalty Properties are exposed to changes in the taxation laws of multiple jurisdictions

Risks Related to the Company's Ordinary Shares

The Company's Shareholders will suffer a dilution to their interests in the Company

The Company may not be able to pay dividends in the future

The Company's Ordinary Shares are subject to price volatility

There may be limitations on enforcement of civil judgments against the Company and/or the experts chosen by the Company

Additional issuance of Ordinary Shares by the Company may dilute the holders of the Company's Ordinary Shares, reduce some or all of the Company's financial measures on a per share basis, reduce the trading price of the Ordinary Shares or impede the Company's ability to raise future capital

Canadian investors may be required to pay United Kingdom stamp taxes on transfer of shares to CDS

The Ordinary Shares are subject to transfer restrictions and forced transfer provisions in respect of Non-Qualified Holders

Investment in the Company by Benefit Plan Investors may be, or result in, a violation of the fiduciary requirements of ERISA and/or the prohibited transaction provisions of ERISA and the Internal Revenue Code

The Company expects to be treated as a passive foreign investment company

Holders of Ordinary Shares may be subject to risks associated with taxation, including United States Tax Withholding and Reporting under the Foreign Account Tax Compliance Act ("FATCA")

Pre-emption rights for US, Canadian and other Overseas Shareholders may be unavailable

IMPORTANT INFORMATION

Presentation of financial information

International Financial Reporting Standards

Forward-looking statements

Market, Economic and Industry Data

Disclosure of technical information relating to mineral projects

Note to Canadian investors

Note to US investors

General

Royalties

Notice to persons in the United States

Notice to persons in Canada

Notice to European Economic Area investors

Notice to Swiss investors

Notice to Australian investors

Enforcement of civil liabilities

Notice to all investors

Prior issue of 5,544,371 Ordinary Shares

General Notice

WHERE TO FIND HELP

Shareholder Helpline

DIRECTORS, SECRETARY AND ADVISERS

Directors

Company Secretary and Registered Office

Sole Sponsor and Joint Bookrunner

Joint Bookrunner

Co-Manager

ECORA RESOURCES PLC Proxy Solicitation & Information Statement 2015