Mr. Julian Treger reports

ANGLO PACIFIC GROUP PLC: KESTREL UPDATE

Anglo Pacific Group PLC has provided an update on Kestrel, the company's main producing royalty, following the operational update by Rio Tinto.

Highlights:

• Gross royalty income from Kestrel expected to be approximately 1.7 million British pounds for 2014. Total gross royalty income from Anglo Pacific's royalty portfolio for 2014 expected to be in the region of 3.2 million British pounds to 3.6 million British pounds (as per the company's trading update on Jan. 9, 2015);
• Kestrel produced 2.7 million tonnes of coal in 2014 (2.16 million tonnes of hard coking coal and 560,000 tonnes of thermal coal);
• Kestrel production rate expected to reach full capacity of 5.7 million tonnes of coal per year within the next 12 to 18 months;
• Anglo Pacific expects royalty income from Kestrel to increase substantially as mining returns to the company's royalty lands during 2015;
• Anglo Pacific expects Rio Tinto to mine over 90 per cent of coal within the company's royalty lands by 2017.

The Kestrel mine

The Kestrel mine is a low-cost underground coking and thermal coal mine in Queensland, Australia, operated and 80 per cent owned by Rio Tinto and 20 per cent owned by Mitsui. Rio Tinto completed in 2013 a $2-billion (U.S.) capital expenditure program to extend the mine life (about 18 years remaining) and increase production capacity to 5.7 million tonnes per year.

Kestrel production for 2014 was 2.7 million tonnes of coal (2.16 million tonnes of hard coking coal and 560,000 tonnes of thermal coal). During the fourth quarter of 2014 the Kestrel mine underwent a long wall changeout which significantly reduced overall mined tonnage. The Kestrel production rate is expected to reach full capacity of 5.7 million tonnes of coal per year within the next 12 to 18 months as the mine continues to ramp up.

                               KESTREL PRODUCTION
                            (in thousands of tonnes)

                   Q1 2014    Q2 2014    Q3 2014    Q4 2014       2014

Hard coking coal       781        613        621        149      2,163
Thermal coal            88        109         56        311        564

Kestrel is a low-cost operation. On a global benchmark comparison, operations at Kestrel are well positioned on the hard coking coal cost curve. 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 2015 estimated cost curve.

The Kestrel mine -- Anglo Pacific royalty areas

Anglo Pacific's royalty applies to approximately 49 per cent of the current authorized mining lease tenure.

Anglo Pacific estimates that the Rio Tinto forecast for mining within the Anglo Pacific royalty lands during the first half of 2015 represents 20 to 25 per cent of production and a pproximately 70 to 75 per cent during the second half of 2015.

Anglo Pacific expects Rio Tinto to mine over 90 per cent of coal within the company's royalty lands by 2017.

Note: Rio Tinto lodged mining lease application 70481 on Oct. 4, 2012. If approval of ML70481 is granted then Anglo Pacific's option to collect royalties from co al sales will continue for longer in terms of overall mine life.

Anglo Pacific royalty terms at Kestrel:

• 3.5 per cent of value up to $100 (Australian) per tonne;
• 6.25 per cent of the value over $100 (Australian) per tonne and up to $150 (Australian) per tonne;
• 7.5 per cent thereafter.

Royalty terms are presented on a 50-per-cent basis attributable to Anglo Pacific. The royalty rate is set by the Queensland government.

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