9th Sep 2019 18:12
(Alliance News) - Baker Steel Resources Trust Ltd on Monday reported a rise in net asset value in the first half of the year but was still outperformed by its benchmark index.
Net asset value per ordinary share at June 30 was 66.80 pence, Baker Steel reported, 17% higher than 56.90p in December. Net assets rose by 7.7% to GBP71.1 million from GBP66.0 million.
The net asset value per share increase of 17% fell short of the EPIX Global Mining Index which grew by 22% in sterling terms, Baker Steel conceded.
The company said it made three major investments during the period.
In February, it acquired a 0.75% gross revenue royalty on the metallurgical coal assets of Resources Ltd in Queensland, Australia for AUD6 million, roughly GBP3.3 million. It also has the option to acquire an additional 0.25% royalty for a further AUD2 million.
Later that month, the company invested USD3 million into Canadian mineral exploration firm Azarga Metals Corp. Baker Steel agreed to make the investment in three tranches, via a four year convertible loan with an 8.0% per annum interest rate and conversion price of CAD0.14 per share.
The company said Azarga Metals plans to use the proceeds to undertake a second-phase drilling and exploration programme to increase the existing resource estimate of its Unkur copper-silver project, in Russia.
The third major investment in the first half was the subscription for USD4 million in a convertible debenture with Mines & Metals Trading (Peru) PLC, a private company based in the Isle of Man which owns the Recuperada silver and zinc project in Peru. Mines & Metals is planning to list on the Toronto Stock Exchange, Baker Steel said.
Its largest investment, by net asset value, is in London-listed miner Polymetal International PLC. Bilboes Gold Ltd, a subsidiary of privately own mining and exploration firm Bilboes Holdings (Pvt) Ltd, is its second largest investment.
Looking ahead, the second half of the year will see both Bilboes and another investee, Nussir ASA, complete feasibility studies on their assets in Zimbabwe and Norway respectively.
Baker Steel said: "The company has been invested in both these companies for some time and it is hoped that our patience will be rewarded now that the final feasibility studies are imminent."
Turning to the market, the company said there remains "significant uncertainty" around the outlook for the global economy - any deterioration could reduce demand for most metals, baker Steel added.
It did however say that Brexit, even in the event of a no-deal, will have no "significant effect" on the company and a fall in sterling could even lead to an increase in the company's net asset value as the majority of its investments are denominated in other currencies. A rise in sterling could have the opposite effect however, Baker Steel said.
Shares in the company closed untraded, last quoted at 53.27p each.
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