28 October 2011 NAV Statement

RNS Number : 5917R

Baker Steel Resources Trust Ltd

07 November 2011

 



BAKER STEEL RESOURCES TRUST LIMITED

(Incorporated in Guernsey with registered number 51576 under the provisions of The Companies (Guernsey) Law, 2008 as amended)

7 November 2011

28 October 2011 NAV Statement

Net Asset Values

Baker Steel Resources Trust Limited (the "Company") announces its net asset value and diluted net asset value per share as at 28 October 2011:

Net asset value per Ordinary share:       113.1 pence

Diluted net asset value per Ordinary share:  110.9 pence

During the month, the undiluted NAV per share fell by 4.7 % largely due to a write down in the value of the Company's holding in Copperbelt Minerals and a recovery during October in the exchange rate of Sterling against the US Dollar, the denomination of the Company's largest investments.

The Company has a total of 66,033,061 Ordinary Shares and 13,194,622 Subscription Shares in issue.

Portfolio update

Copperbelt Minerals Limited ("Copperbelt")

During October 2011, Copperbelt successfully raised US$7.1 million through a deeply discounted rights issue to shareholders at US$8 per unit of one share plus two warrants to acquire shares at US$21.50 per share for one year. This compares to Copperbelt's previous fund raising at US$21.50 per share and the Company's carrying value at 30 September 2011 of US$20.00 per share. It should also be compared with the US$25.50 per share offer by CAD Fund which expired on 31 May 2011 as all the requisite consents including that of the government of the Democratic Republic of Congo and Copperbelt's joint venture partner, the parastatal Gécamines had not been achieved. Prior to 31 May 2011, Copperbelt informed CAD Fund that they did not intend to renew the sale deed on the same terms beyond 31 May 2011 if the relevant approvals were not forthcoming, given the significant increase in valuations for Central African copper projects seen during the previous 9 months.

As part of the Rights Issue raising, Copperbelt brought in Solway Industries Limited, part of the Solway Group ("Solway") to acquire shares in Copperbelt on the same terms as the rights issue together with an agreement to acquire further shares at US$21.50 per share dependent on certain conditions precedent being satisfied including the consent of Gécamines.

US$8 per Copperbelt share was considered a good buying opportunity and accordingly the Company participated in the rights issue. However, the further issue of shares to Solway at US$21.50 per share remains uncertain and accordingly the carrying value of the shares has been reduced from the value at the end of September. This has had an effect of reducing the NAV by 2.7% in Sterling terms. The carrying value of Copperbelt will continue to be under review. 

Black Pearl Limited Partnership ("Black Pearl")

During October the Company invested US$7 million into Black Pearl, a special purpose vehicle formed to invest in the Black Pearl beach placer iron sands project in West Java, Indonesia. The Black Pearl concession area is 15,000 ha of which 1,600 ha has been drilled. Current JORC compliant mineral resources stand at 572 million tonnes grading 11% Fe and a drilling programme is currently underway.  Once complete, resources are expected to sustain operations for at least 15 years.

Mine construction has commenced following a feasibility study undertaken by China Metallurgical Industry Planning and Research Institute. An independent review of capital and operating costs was undertaken by Minarco. At full capacity, the mine is expected to produce 10 million tonnes per annum of iron ore concentrate grading 58-60% Fe. Commissioning is scheduled for the first half of 2012 prior to an expected listing at the end of 2012. Off-take agreements are being negotiated with a number of Chinese steel mills, one of which has also invested US$50M in the project.

The Company is 98.8% invested with top 10 shareholdings as follows as a percentage of NAV:

Ivanplats Limited	28.4%
Ferrous Resources Limited	14.2%
Gobi Coal & Energy Limited	14.1%
Ironstone Resources Limited	6.9%
Black Pearl	5.8%
Silver China	5.7%
Metals Exploration plc	5.0%
Bilboes Holdings	5.0%
Polar Silver	4.4%
South American Ferro Metals	2.8%
Other Investments	6.5%
Net Cash and Equivalents	1.2%

Ferrous Resources Limited ("Ferrous")

During October, it was reported in the media that BHP Billiton may be considering a bid for Ferrous. Whilst a spokesperson for Ferrous commented that it was still in the process of choosing the strategic partner and no deadline had been set, the emergence of speculation in the media suggests that the strategic process being conducted by Deutsche Bank is nearing its conclusion.

 South American Ferro Metals Limited ("SAFM")

On 27 October 2011, SAFM announced that it had met the production milestone for the conversion of its "C" performance shares achieving production over a continuous twelve month period at a rate equal to or greater than 800,000 tonnes per annum. The "A" performance shares were converted in February 2011 leaving only the "B" performance shares remaining to be converted. The milestone triggering the "B" performance shares is expected to be achieved around the end of 2011 when a resource definition report is due, incorporating the results of the recently completed drilling campaign.

Further details of the Company and its investments are available on the Company's website www.bakersteelresourcestrust.com 

Enquiries:

Baker Steel Resources Trust Limited     [phone]

Francis Johnstone
Trevor Steel

Winterflood Investment Trusts               [phone]/0250

Robin Archibald

James Moseley

RBC Capital Markets                            [phone]

Martin Eales

Pelham Bell Pottinger

Lorna Spears                                         [phone]

Charles Vivian                                        [phone]

 

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