Net Asset Value(s)

RNS Number : 2943D

Baker Steel Resources Trust Ltd

06 July 2016

 

BAKER STEEL RESOURCES TRUST LIMITED

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

  5 July 2016

30 June 2016 Unaudited NAV Statement

Net Asset Value

Baker Steel Resources Trust Limited (the "Company") announces its unaudited net asset value per share at 30 June 2016:

Net asset value per Ordinary Share: 38.7 pence

Since 31 May 2016, the NAV per share has increased by 4.6% largely due to the decrease in the exchange rate of Sterling against the US Dollar and the Canadian Dollar in which the majority of the Company's investments are denominated. Increases in the carrying values of Bilboes Gold and Polar Silver have been outweighed by impairment in the carrying value of Black Pearl.

The Company had a total of 114,568,335 Ordinary Shares in issue with 700,000 shares held in treasury as at 30 June 2016.

Portfolio Update

The Company is fully invested with top 10 investments as follows as a percentage of NAV:

Polar Silver Resources Ltd	28.9%
Metals Exploration plc	16.8%
Bilboes Gold Limited	16.6%
Ivanhoe Mines Limited	8.1%
Cemos Group plc	8.1%
Black Pearl Limited Partnership	5.9%
Ironstone Resources Limited	5.5%
Gobi Coal & Energy Limited	2.9%
Archipelago Metals Limited	2.7%
Nussir ASA	2.5%
Other Investments	3.3%
Net Cash, Equivalents and Accruals	-1.3%

Polar Silver Resources Limited ("Polar Silver")

Following the announcement made on 27 April 2016 outlining the offer by a subsidiary of the Company to acquire Polar Silver's 100% owned subsidiary, ZAO Argentum ("Argentum"),  all the shareholders and loan holders of Polar Silver have agreed an alternative settlement whereby all loans in the Polar Silver group will be converted into equity in Polar Silver. In addition, the Company has agreed to acquire the interests of certain other Polar Silver shareholders, immediately following the debt conversion for a total outlay of US$1.2 million in cash.

Argentum holds a 50 per cent. indirect interest in the Prognoz silver project, 444km north of Yakutsk in Russia (the "Prognoz Asset"). An NI 43-101 compliant report by independent consultants Micon International Limited ("Micon") in July 2009 estimated an indicated resource of 5.86 million tonnes of ore grading 773 g/t silver containing 146 million ounces silver and inferred resources of 9.64 million tonnes of ore grading 473g/t silver containing 147 million ounces silver. An NI 43-101 compliant preliminary economic assessment by Micon envisages a mine producing an average of 13 million ounces of silver per annum over a 16-year mine life.

On completion of the debt/equity exchange and acquisition of the additional interests, the Company's shareholding in Polar Silver will increase from 27.3% to 62.8%. The overall effect is an approximate 2% increase in the Company's NAV before currency considerations.

A second step is envisaged, dependent on renewal of the Prognoz Mining Licence, which will incorporate a further reorganisation and a subscription by a new investor. Renewal of the Prognoz Mining Licence has been applied for and is anticipated to be received in the second half of this year.

Half Year Adjustments to Carrying Values

The Company has carried out its normal half yearly review of general market movements in mining equities, as well as specific factors, and an assessment of whether these should impact the carrying values of its unlisted holdings. In order to quantify how the share price of a particular unlisted stock might have moved during the period had it been listed, the Investment Manager maintains an index of comparable listed companies for each unlisted investment.

Black Pearl Limited Partnership ("Black Pearl")

In October 2011, the Company invested in the Black Pearl beach placer iron sands project located at Cianjur, Indonesia via a convertible bond. Black Pearl's simple process and proximity to China meant it expected to be able to deliver iron ore concentrate, CIF China, at one of the lowest costs in the world. However in January 2014, the Indonesian Government banned the export of unrefined raw materials, which compelled Black Pearl to revise its strategy for the mine. The first phase of the mine was constructed and Black Pearl made its first shipment of concentrate in December 2014 under provisional export arrangements. However since permits for sufficient volumes were not forthcoming these provisional arrangements proved unworkable and no further shipments were made.

Since that time Black Pearl has engaged with a number of parties interested in using Black Pearl's iron sands operations as the basis for a new iron/steel smelter in Indonesia. All negotiations to date had envisaged the full repayment of bondholders including the Company.

However, at the end of June 2016 the agent of the bond holders informed the Company that as part of the latest contemplated transaction, there is the risk that bond holders would be required to accept a significant reduction in principle and interest due should they wish to be repaid in cash rather than accept a forced conversion into equity. Having considered this, the Company has decided to reduce the carrying value of its bond (including accrued interest) by 68%. This has the effect of reducing the Company's NAV by 12% before currency considerations.

Bilboes Gold Limited

Due to the significant increase in the prices of gold stocks during 2016, the carrying value of Bilboes Gold has been increased by 86% in June in US$ terms. Following the increased mineral resource statement earlier this year to 5.2 million ounces of gold, this uplift in valuation of Bilboes still values its JORC compliant resources at less than US$10 per ounce. This has the effect of increasing the Company's NAV by approximately 7% before currency considerations.

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

Numis Securities Limited                        [phone]

David Benda (corporate)

James Glass (sales)

The Net Asset Value ("NAV") figure stated is based on unaudited estimated valuations of the underlying investments and not necessarily based on observable inputs. Such estimates are not subject to any independent verification or other due diligence and may not comply with generally accepted accounting practices or other generally accepted valuation principles. In addition, some estimated valuations are based on the latest available information which may relate to some time before the date set out above.

Accordingly, no reliance should be placed on such estimated valuations and they should only be taken as an indicative guide. Other risk factors which may be relevant to the NAV figure is set out in the Company's Prospectus dated 26 January 2015.

 

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