REG - Baker Steel Res.Tst. - Investment Update and 31 December 2024 NAV

Baker Steel Resources TrustAnnouncement

17/01/2025 07:00

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RNS Number : 6724T  Baker Steel Resources Trust Ltd  17 January 2025

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION (EU) NO 596/2014 WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN
UNION (WITHDRAWAL) ACT 2018 ("MAR"). UPON PUBLICATION OF THIS ANNOUNCEMENT,
THE INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN FOR THE
PURPOSES OF MAR.

BAKER STEEL RESOURCES TRUST LIMITED

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

 

17 January 2025

Investment Update and 31 December 2024 unaudited NAV

Net Asset Value

Baker Steel Resources Trust Limited (the "Company") announces its unaudited
net asset value per share at 31 December 2024.

Net asset value per Ordinary Share: 89.6 pence. (Total NAV £95.4 million).

The NAV per share at 31 December 2024 increased by 9.8% from the last
published NAV at 30 November 2024 largely due to an increase in the carrying
value of certain unlisted investments as outlined below, outweighing further
falls in the share prices of the listed precious metals stocks Caledonia
Mining, Metals Exploration and Silver X. Over the full year 2024, the NAV per
share has increased by 16.1%.

 

The Company had a total of 106,462,502 Ordinary Shares in issue with a further
700,000 shares held in treasury as at 31 December 2024.

 

Investment Update

 

The Company's top 10 investments, as a percentage of NAV, were as follows:

 

                                     31 December 2024  31 December 2023
 Futura Resources Ltd                33.4%             36.3%
 Cemos Group plc                     31.4%             29.3%
 Bilboes Royalty                     8.8%              7.2%
 Nussir ASA/Blue Moon                7.6%              4.1%
 Caledonia Mining Corporation Plc    3.5%              5.4%
 Metals Exploration Plc              3.5%              3.0%
 Tungsten West Plc                   3.3%              1.7%
 First Tin PLC                       2.8%              2.1%
 Silver X Mining Corporation         2.2%              3.5%
 Kanga Investments Ltd               1.5%              3.6%
 Other Investments                   1.8%              3.4%
 Net Cash, Equivalents and Accruals  0.2%              0.4%

 

 

Full Year Adjustments to Carrying Values

The Company has carried out its normal review of its unlisted holdings, which
it performs at the half-year and year-end. This review takes into account
general market movements in mining equities, as well as specific factors, and
an assessment of whether these should impact the carrying values of the
Company's unlisted holdings.

The Investment Manager maintains an index of comparable listed companies for
each unlisted investment for comparison purposes and as a benchmark against
which the valuation of a particular unlisted stock might have moved during the
period had it been listed which it terms "IndexVal".  In addition, the
Investment Manager updates its royalty models for the royalty interests it
owns, the most material of which are Futura Resources and Bilboes to take
account of the latest estimated production profiles of the underlying projects
and commodity prices. The net present values produced by these royalty models
are then discounted for development and other risks to arrive at a valuation.

The following is a summary of the key results of this review and the main
changes to carrying values of the unlisted investments since 30 November 2024:

 

Futura Resources Ltd ("Futura")

 

Futura commenced production from its Wilton mine in March 2024 and has now
reached its budgeted production rate. During July 2024, Futura completed a
A$34 million offtake finance arrangement with an international trading
company. This enabled Futura to start the development of its second mine,
Fairhill, with work progressing well towards first production in January 2025
and is planned to be in full production around the middle of this year.

 

The Company's investment in Futura takes three forms: a 1.5% gross revenue
royalty on all future production from both mines; a A$4.6 million nominal
investment in the September 2023 convertible, and an equity stake amounting to
23.4% of Futura on a fully diluted basis assuming conversion by all
convertible holders.

 

The above development progress has been reflected in an adjustment to the
development discount applied which has been partially offset by lower near
term coal price forecasts and a weaker Australian Dollar when the values are
translated to Sterling. However, the overall carrying value of Futura has been
increased by 12% from November 2024 and 7% from December 2023 in Sterling
terms.

 

CEMOS Group Plc ("Cemos")

 

Cement sales from Cemos's Tarfaya operation in Morocco increased by
approximately 10% with EBITDA for the year expected to be around €8 million.
The shares in Cemos are valued on the basis of a multiple of EBITDA when
compared to listed Moroccan cement producers, suitably discounted.

 

In addition, Cemos expects to complete the construction of its own compact
calcination unit during the first quarter of 2025 which will enable Cemos to
produce its own clinker and supplementary cementitious materials, the
principal raw materials in cement production. This will not only provide
security of supply of clinker but should materially reduce costs as well as
lower the carbon footprint associated with cement production. Cemos has also
acquired a second grinding line which it plans to install during 2025 and will
enable it to double production.

 

Taking into account the improved sales and the progress on its expansion
projects the carrying value of Cemos has been increased by 14% from November
2024 and 25% from December 2023 in Sterling terms.

 

Bilboes Royalty

The model for the Bilboes net smelter gold royalty has been updated to reflect
the increased initial gold production profile announced by Caledonia Mining at
the beginning of June 2024 as well as the 27% increase in the gold price
during the year and being one year closer to production. This resulted in a
24% increase in the carrying value of the Bilboes royalty from November 2024
and 43% from December 2023 in Sterling terms.

Nussir ASA ("Nussir")

As announced on 29 November 2024 the Company and the other 3 main shareholders
of Nussir, together representing 70.8% of Nussir's issued share capital,
agreed to sell their shares in Nussir to Blue Moon Metals Inc ("Blue Moon"), a
company listed on the TSX-V stock exchange. The transaction values Nussir at
US$55.3 million. The two key conditions of the transaction, being the raising
by Blue Moon of at least C$30 million of new equity capital and acceptance of
the transaction by over 90% of Nussir shareholders, were both satisfied during
December 2024. The Company supported the transaction with a subscription in
the Blue Moon placing. Completion is expected around the end of February 2025
once approval has been granted by the TSX.

At 30 November 2024, the Company increased its carrying value of Nussir by 91%
which represented a 30% discount to the ascribed value of the transaction to
reflect that the Company's shares in Blue Moon will initially be subject to
lock-up arrangements and to allow for transaction risk. This discount was
adjusted to 28.6% at the year end following the closing of Blue Moon's fund
raising and more detailed calculations. The value of the investment in Nussir
has increased by 77% in Sterling terms during 2024.

 

Further details of the Company and its investments are available on the Baker
Steel Capital Managers website www.bakersteelcap.com
(http://www.bakersteelcap.com)

 

Enquiries:

Baker Steel Resources Trust Limited             +44 20 7389 8237

Francis Johnstone

Trevor Steel

 

Shore Capital
      +44 20 7408 4050

Henry Willcocks (Corporate Broking)

Gillian Martin, Daphne Zhang (Corporate)

Adam Gill (Sales)

 

This announcement contains inside information for the purposes of Article 7 of
MAR. Upon publication of this announcement, the inside information is now
considered to be in the public domain for the purposes of MAR. The person
responsible for arranging the release of this announcement on behalf of the
Company is Lucy McDowall of Aztec Financial Services (Guernsey) Limited, the
Company Secretary.

 

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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