Anglo Pacific a mining investor is a company I have held for about three weeks now and I have only just got around to posting about its excelent forward potential.
What I was really looking for was a play on coking coal as China just cant get enough of the stuff to build up its industrial infrastructure, and the World spot prices have risen drammaticaly which will lead to increased end profits for coal mining companies and coal mining investment companies.

I looked at a few options and this one easily came out on top not only that but it has other mining interests in its portfolio as you will see.

From last results year ending 31st DEC 2003.

HIGHLIGHTS

• Proposed Final Dividend of 1.3p per share (2002:- 0.65p)

• Total Dividends for the year increase by 49% to 2.6p (2002:-1.75p)

• Australian Coal Royalty Independent Valuation increases by 54% to 44.3
million

• Cash and Strategic Investments increases by 64% to 11.2 million

• Earnings of 3.7p per share (2002:- 4.09p) due to reduced coal royalties
on account of mining more on Crown Land than Private Ground

• Much stronger Royalty Flows from Private Ground expected in 2004

• Encouraging outlook for Coking Coal prices and Production Rates due to
Chinese, Indian and Far East demand

• Increased holding in substantial Canadian Coal Deposits in British
Columbia which are currently included in the accounts at negligible value

• Canadian Coal Bed Methane opportunity in British Columbia

• 40 million of Unused Tax Losses

Chairmens Comments.

Our coal royalty interests are independently valued at 44.3 million as of
December 2003 which is 15.6 million more than the valuation at 31st December
2002.

During the year your Company has participated in financings for a number of
strategic mining opportunities. Our mining operational interests and quoted
stakes in gold, diamond and PGM projects were valued at 31st December 2003 at
9.6 million. This included an unrealised profit over book value of 3.5 million
in addition to the realised gains referred to earlier. The Company also had cash
of 1.6 million at 31st December 2003.

The Mining Investments.

COAL ENERGY INTERESTS

COAL ROYALTIES

In Australia, coal royalty receipts from the Kestrel and Crinum mines, operated
by Rio Tinto and BHP Billiton respectively, were 3,376,000 (2002: 5,802,000).
The Company has increased its holding in its Canadian coal deposits in British
Columbia to 65% of the Groundhog and Peace River projects. The outlook for the
potential joint venture development of these resources has further improved due
to the increasing demand for coal products from China, Japan and the Far East as
well as North American domestic demand. The Groundhog and Peace River projects
are reflected in the accounts at negligible value.

COAL BED METHANE

The Company owns a circa 15% interest in the Merritt coal and coal bed methane
project in British Columbia. With coal bed gas prices having risen sharply
during 2003 joint venture discussions continue with potential partners to
progress this project.

GOLD AND PLATINUM GROUP METALS

At 31st December 2003 the Company had investments at a market value of 9.6
million in gold, diamond and platinum projects based mostly in North America and
Australia.

The Company's strategy continues to be to acquire projects that expect to yield
dividend and royalty cashflow as well as substantial share appreciation in the
next few years. The two largest strategic mining stakes of the Company are in
Kirkland Lake Gold and Platinum Australia .

• Kirkland Lake Gold is now producing gold at its Macassa mine in Northern
Ontario . Its higher market rating has resulted in a substantial capital
gain for the Company on its holding. Kirkland Lake Gold is still
discovering gold at grades in excess of 16 grams per ton and sometimes at
much higher grades and hopes to further increase gold production in 2004.
Other strategic holdings include Aquiline Resources, Starfield Resources and
Muscox Minerals.

TALC

The Board continues to look for a joint venture funding partner for the
Company's Shetland talc interests. The company intends to jointly mine this
deposit with a view to establishing a royalty flow in due course.

OUTLOOK

The outlook for coking coal prices remains extremely encouraging and, with
production at the two mines in Australia expected to be at record levels and
mostly on the private ground, the Board expects much stronger coal royalties
this year. Furthermore current spot prices are well ahead of this year's fixed
contract prices which themselves are over 25% up on the previous year.

With the weakness of the US dollar and the current demand for metals and energy
fuels worldwide driven by Chinese, Indian and Far Eastern demand, the Board is
optimistic about the opportunities for its gold, diamond, base metal and PGM
interests, as well as for the substantial coal and coal gas projects that the
Company has in Canada.

Website www.anglopacificgroup.com

I think this company is a medium to long term investment and if you are interested please DYOR and you are responsible for your buying and selling timing actions.



cheers GF.

>>petob

Where did you see that info please? I thought they had just increased their holding in CBM to 5.3%.

rgrds
gk

Gone ballistic again.

rgrds
gk

10% up, and I don't have a clue why! Anyone in the know??

gallick,

Sorry for not replying, computer caught a flu, am recovering archivos!
Something about the new Asia Energy ??????

>> petob

Sorry, I'm not with you. You mentioned that APF were altering their portfolio, reducing their stake in Cambrian adding to HIF etc, and I was wondering where you got the info.

I heard KMR described in a newspaper as potentially the new Asia Energy - but that is a diffrent matter.

rgrds
gk

gallick,

05/10/04 - APF holds 6.4% CBM
www.uk-wire.com/cgi-bin/articles/200410050730006908D.html

03/02/05 - APF holds 5.3% CBM ..........I do not have the number of shares in the Oct 04 deal, but on checking back CBM has been issueing a lot and the % change may be due to dilution.

02/02/05 - APF purchases further 6,500,000 HIF, increasing holding to 14.23%
www.uk-wire.com/cgi.bin/articles/200502021637501446I.html

21/12/04 - APF increases control of Groundhog and Trefi coal projects from 65%-100%.
www.uk-wire.com/cgi-bin/articles/200412211000026605G.html

I was trying to remember where I'd heard about the new Asia Energy ...KMR!, that's ok with me. Thanks.

Re: APF sp - certainly going ballistic, something going on!!!!.....If not I put sp support at 110p.

>>petob

Cheers for that.

Good to see that APF has started to push on again. I was getting a little concerned that we were heading back under 120p but it's been a better end to the week (so far....)

Bad day at the office today. Anyone have any ideas why?

I think this is the trend given that the mining sector has taken a clobbering in the last week -10 days or so. I jumped out at 127p. I think it is just sentiment- not based on news. Don't think the rise in the dollar is a factor and the China story has plenty of legs in it to run. Perhaps it is safer to be on the sidelines for now.

rgrds
gk

Hmmn - with my current luck I'd jump out and the next day a bid at a 60% premium to the previous day's closing sp would come in!

chart looking good, no nothing about this company but worth a look. anybody following it or have any views.

Anybody else still in these?, theres been a bit of interest from the t1ps.com camp Ive been told.

I see "my man" has just put me into this lot while I was out yesterday, but have yet to find out exactly why (other than mining issue!), or what target he is looking for .... No doubt he'll tell me on Monday.

I see "my man" has just put me into this lot while I was out yesterday, but have yet to find out exactly why (other than mining issue!), or what target he is looking for .... No doubt he'll tell me on Monday.

Will be interested, cheers GF.

A great write up in Shares mag today...the summary of which is ' Owning shares in Anglo Pacific is almost as safe as owning shares in a FTSE 100 miner, due to its enormous spread of investments and risk, but considerably cheaper.'
I can't copy it but well worth a read....
III also have APF as a buy today
"With oil prices remaining high, it is worth being aware of their influence on coal prices and the companies benefiting from this. Coal tends to track oil due to its role as a substitute, also reflecting changing industry demand with economic cycles. It is a vital input for the steel industry, an industry very much influenced by growth rates of developing countries.

Perhaps the key question for all resources-driven shares is whether the US can avoid a recession, which would likely hurt everyone. Obviously, if you feel negative about the big picture, then oil and coal are a tricky proposition. Yet India and China have strong long-term momentum and supply constraints are

keeping oil and coal prices well bid. For the time being at least, oil and coal-related shares are proving more comfortable to hold than consumer or financial.

Most investors' sense of gaining exposure to coal is via large diversified mining groups such as BHP Billiton (BLT.L) or Xstrata (XTA.L), with the smaller resources companies regarded as inherently speculative. Yet Anglo Pacific Group (APF.L) in the FTSE Small Cap index is an interesting example of a conservatively managed firm with a proven track record. Over the last decade, under a new management, it has utilised royalties from Australian coal mining interests to acquire further royalties and a spread of investments, besides paying useful dividends. Via a proactive style, over the last four years the management has achieved a 76% compound rate of return on its investments, which has helped to drive Anglo Pacific shares from about 40p to 166p, currently capitalising the group at 176 milion.


Assets in low political risk areas

The group also has some exposure to uranium, gold and platinum group metals also diamonds, is un-hedged and debt free, hence well positioned to gain from strong commodity prices without the gearing that typically causes trouble for smaller firms. Anglo Pacific's assets are mainly in countries of low political risk such as Australia and Canada, with management generally avoiding developing countries where resources nationalism has become a problem.

All told, it is a shrewd approach to managing financial risk and reward that coincides with the executive chairman and finance director each holding about 6 million worth of shares hence their interests are aligned with outside investors. Furthermore, the directors continue to take up their dividend entitlements via a scrip issue of shares, a vote of confidence in long-term capital growth.

In terms of portfolio spread, Anglo Pacific has some 63 million (equivalent) invested in 19 different companies in the UK, Australia and Canada, with a further 30 'incubator' investments. Management is wary not to share much detail about its smaller stakes, but this is in their commercial interests and Anglo Pacific is not a complex group to understand like the larger miners.

First half 2007 results were strong indeed. Due to strength in coal prices, the Australian-based coal royalty interests rose in value by 23% to 59 million; cash and strategic investments by 77% to 99.8 million; and pre-tax profit by 22% to 15 million. The bulk of this, 11.2 million, was via capital gains from mature mining interests, the rest in royalties. The shares trade at a small premium to the end-June net asset value of 153p per share, although this figure under-rates the potential value of substantial private coal interests in British Columbia and Australia, all of which are valued on the balance sheet at minimal cost.

The shares are also backed by a prospective 4% yield assuming a 7p per share total dividend - as forecast by Bell Lawrie White, previously broker to the group, although Numis Securities has recently been appointed and it would be fair to expect presentations soon to their clients.


Anglo Pacific overlooked by brokers?

Company REFS shows the previous broker as offering the only forecast in the market, for 24.4 million pre-tax profit this year and 26.1 million next, although this was dated 1 March and there looks to be scope for upgrades. It is quite rare for brokers to overlook smaller miners with this kind of profit dynamics, also ironic when Anglo Pacific is "unique for all the right reasons", but the City has tended to emphasise big companies or promoting AIM flotations - for the best commissions.

Another aspect of the investment rationale for Anglo Pacific is currently tightening conditions for equity and debt finance prompting more unquoted companies to raise finance by selling royalties on assets, which management says is already enhancing their deal flow.

The latest purchase was a package of Canadian uranium assets, for 4.3 million via a share issue, with nearly 13 million remaining on the group balance sheet for further investments. Besides the non-executive directors, there is a three-man advisory panel to assist with evaluating projects. This year's deals have covered the range of usual commodities, as well as gas production.

A low tax charge, just below 1 million in the first half, relates to tax losses accumulated before the current management took control in 1997, with 13 million remaining unused, hence the tax charge will rise in the medium-term.


Shares at an all-time high

So, are the shares worth buying, as they entertain an all-time high? Ultimately, this depends on whether you concur with the directors' confidence, that "recent increases in underlying coking coal prices will be maintained for some time". They have created probably the best stockmarket vehicle for risk-adjusted returns from the mining sector, conservatively managed with robust cash flows, yet small enough and with various dynamic 'incubator' stakes to offer useful upside. You must still expect some volatility with commodity prices.

Specifically regarding tax-free PEPs and ISAs, Anglo Pacific is well worth considering to protect income and capital gains, also because the shares' downside looks limited relative to speculative smaller miners where you ought to ensure ability to utilise capital losses (tax losses not applying to tax shelters).

In itself, the company is well worth following as an ongoing success story in the relevance of traditional 'merchant banking' skills to modern business, when so many financial operators nowadays end up compromising them in pursuit of quick gains".

A nice rise today...the chart of APF looks really good :-)

Coking coal prices set to increase over $200 MT so on the back of that RIO tipped to do well, also BLT, also:
"At the junior end of the market Anglo Pacific stands to be the key beneficiary. APF's principal asset is its 50% owned royalty over Rio Tinto's Kestrel coking coal mine in Queensland. Taking Friday's settlement price for 2010 and 2011 and a long term price of US$180/t, we estimate Anglo Pacific's NAV at �2.90/shr (a 14% premium to its share price). At these prices, the value of Anglo Pacific's Kestrel coal royalty alone is worth 58% of its current market cap, or 65% once we add in cash. Our 'all in' NAV which includes Anglo Pacific's thermal coal exploration assets in Canada takes our NAV to �3.24/shr and we continue to think its shares look attractively priced for further upside."

"At the Annual General Meeting of Anglo Pacific Group plc (the "Company") held on 21st April 2010 ordinary resolutions were passed to authorise scrip dividends, pay a final dividend of 4.65p per share (Ex-divi date 5th May '10), adopt director and employee incentive schemes, de-list from the Australian Stock Exchange and obtain authority to allot new shares from unissued share capital under section 551 of the Companies Act 2006. Special resolutions to authorise the allotment for cash of new equity shares or from treasury and to authorise the Company to make one or more market purchases of its own shares were also passed.

At a subsequent meeting of the Board it was resolved to offer a scrip dividend alternative in respect of the final dividend of 4.65p per share for the year ended 31st December 2009."