Net Asset Value(s)

RNS Number : 3547R

Baker Steel Resources Trust Ltd

04 November 2021

 

BAKER STEEL RESOURCES TRUST LIMITED

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

4 November 2021

29 October 2021 Unaudited NAV Statement

Net Asset Value

Baker Steel Resources Trust Limited (the "Company") announces its unaudited net asset value per share at 29 October 2021:

Net asset value per Ordinary Share:  97.7 pence

The NAV per share has increased by 0.7% against the unaudited NAV at 30 September 2021, mainly due an increase in the carrying value of Tungsten West Plc following its successful IPO on AIM during the month.

The Company had a total of 106,462,502 Ordinary Shares in issue with a further 700,000 shares held in treasury as at 29 October 2021 .

Investment Update

The Company's top 12 investments were as follows as a percentage of NAV:

	29 October 2021	31 December 2020
Bilboes Gold Limited	19.3%	19.5%
Futura Resources Ltd	16.4%	16.2%
Tungsten West Plc	15.9%	13.2%
Cemos Group plc	13.8%	14.5%
Polar Acquisition Ltd	8.7%	8.9%
First Tin Ltd	5.2%	3.9%
Mines & Metals Trading Peru PLC/Silver X Mining Corporation	4.1%	4.5%
Nussir ASA	4.0%	3.4%
Kanga Potash	2.7%	2.7%
Azarga Metals Corp	2.6%	2.7%
Prism Diversified	1.6%	1.5%
Metals Exploration plc	1.5%	1.9%
Listed Precious Metal Shares	1.8%	3.9%
Other Investments	1.9%	2.4%
Net Cash, Equivalents and Accruals	0.5%	0.8%

Tungsten West Plc (Tungsten West)

Tungsten West commenced trading on the AIM market of the London Stock Exchange during October 2021 following an IPO at 60p per share raising £39 million. The target amount to be raised was £25 million, however the Board of Tungsten West, on which the Company is represented, decided to accept additional applications, as the increased equity raising provides extra contingency in case of capital overruns or delays or otherwise reduces the amount of loan than will need to be drawn down thereby reducing the financing risk of the project. As a part of the IPO, the Company's convertible loan was converted into ordinary shares such that the Company is now Tungsten West's largest shareholder with 15.35% of its issued shares.

As one of 4 founders the Company has been issued options over a total of 4,971,585 shares. The options are exercisable in three equal tranches for a nominal amount dependent on certain corporate milestones being achieved. The milestone for the first tranche was the IPO and is therefore immediately exercisable. The second tranche is exercisable when the Hemerdon mine is fully financed to production, which should be achieved once the various conditions precedent to the US$49 million royalty and loan facility from Orion Resource Partners (UK) LLP are fulfilled. This is expected in the first half of 2022. The third tranche is exercisable on commercial production at Hemerdon, expected in 2023.

As the Company is a substantial shareholder in Tungsten West, its shareholding is subject to a one year lock-up in accordance with AIM rules. The Company using a Black Scholes option valuation methodology is carrying its Tungsten West shares at a 25% discount) to the 29 October 2021 market bid price on AIM, albeit this discount should decrease as the time remaining on the lock-in reduces. The carrying values of tranches 2 and 3 of the options are discounted further to allow for the risk of the milestones not being achieved.

Tungsten West is the 100 per cent. owner and operator of the historical Hemerdon tungsten and tin mine located near Plymouth in southern Devon, England. The Hemerdon Mine represents the world's third largest tungsten mineral resource, with a JORC Code (2012) compliant Mineral Resource Estimate of approximately 325Mt at 0.12 per cent. WO₃. Tungsten West identified a number of reasons which it believes contributed to the failure of the previous operations at the Hemerdon Mine and has devised a new operating plan which aims to remedy these to enable it to recommence operations with significantly improved operational efficiencies and financial profitability.

Tungsten West's financial model estimates planned capital expenditure and corporate commitments of £44.6 million for improvement works at the Hemerdon Mine. It has an estimated 18.5 year life of mine, generating a NPV_5% of £272 million and an IRR of 45 per cent. The ramp up in production is planned to commence in Q4 2022, reaching steady state production within eight months, when operations are expected to produce approximately 3.5ktpa WO₃ and 388tpa Sn generating an average of £34 million EBITDA per annum over the life of the Hemerdon Mine.

The Company is pleased to have been instrumental in Tungsten West's formation and the acquisition of the Hemerdon Mine, which promises to be an important strategic producer of tungsten outside of the main producing country, China. The Company's average cost in acquiring its equity position was approximately 20.3p per Tungsten West share compared to the closing bid price of 70p on 29 October 2021 and 76p on 2 November 2021.

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 are set out in the Company's Prospectus dated 26 January 2015.

 

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