REG - Mineral & Financial - Interim Results for Six Months Ended 31 Dec 2020

Mineral & Financial InvestmentsAnnouncement

31/03/2021 07:05

RNS Number : 0338U
  
Mineral & Financial Invest. Limited
  
31 March 2021
  
 

Mineral & Financial Investments Limited
Interim Results (unaudited) for the Six Months Ended 31 December 2020
 
HIGHLIGHTS:
·    Unaudited fully diluted net earnings for the first 6 months of the fiscal 2021 period were 0.6p per share, compared to 0.7p for the same period last year.
·    NAV per share at 31 Dec 2020 up 6.0% vs. same period last year, to 16.1p
·    The 5 Year Compound Annual Growth Rate (CAGR) of the NAV per share is 26.7%
·    M&FI has outperformed the FTSE 350 Mining Index and GSCI during the past 5 years
·    Strong Improvement in Sterling neutralized £435K of NAV gains in the period
·     Company is debt free, with a good cash balance and a strong Working Capital position
GEORGE TOWN, CAYMAN ISLANDS, March 31, 2021 - Mineral and Financial Investments Limited (LSE-AIM: MAFL) ("M&FI" or the "Company") is very pleased to announce its unaudited interim results for the six months ended 31 December 2020. 
CHIEF EXECUTIVE OFFICER'S STATEMENT:
The Company generated a profit after-tax of £207K and a fully diluted EPS gain of 0.6p per share compared to a profit after-tax of £247K and a fully diluted EPS gain of 0.7p per share for the same period last year.  The NAV per share increased 6.0% from 31 December 2019 to 16.1p or £5,681K, a new high for M&FI.  
The Company has increased its cash position to £578,000. The NAV growth was negatively affected by a corrective phase in precious metal prices and continued strength of the GBP versus the USD in the period. Although we reduced our precious metals weightings in the Tactical Portfolio, we did retain certain holdings which corrected along with the price of gold and silver.  Additionally, the British Pound was up 10.1% versus the US Dollar in the past six months, since our most recent year end (30 June 2020). Virtually all of our investments are directly, or indirectly, valued in US dollars and we report in British Pounds, thus the strong performance of the British Pound has caused significant headwinds to our NAV performance. Had the GBP remained unchanged from 30 September 30, 2020 our NAV would have been £250K higher, and had the June 30, 2020 Currency levels been maintained our NAV would be £435K higher.
One year ago, we stated that we remained optimistic that zinc markets would recover from the anaemic price levels of US$1,800/t reached in March of 2020. They have since reached US$2,900/t in February 2021. Additionally, and importantly, spot Tolling Charges (TC) at zinc refineries are down from a high of $300/t in February 2020 to US$65/t[1] in February 2021eriod due to a reduction on zinc production from China resulting in refineries scrambling to meet their capacity. These are all positives for our investment in zinc, particularly Redcorp, Ascendant and our recent investment in Rathdowney Resources. Ascendant and Redcorp (M&FI own 75%) continue to make progress on the Lagoa Salgada project, and they are completing a drilling program which should lead to drill results being available in the next 6 to 8 weeks. 
Your company's portfolio is overweight in precious metals. As mentioned above, we reduced our weighting in the sector, but did not eliminate entirely and thus our performance was negatively affected by the correction in the gold price from the highs of US$2,068/oz. We have begun adding back to our precious metal holdings after the price of gold pierced through the 1,700/oz level.    
The following is a summary of the NAV, updated to include the unaudited NAV calculation:




 


31 Dec 2016
FYE


31 Dec 2017
FYE


30 Jun 2018
FYE


30 Jun 2019
FYE


31 Dec 2019
Q2


31 Dec 2020
Q2


CAGR (%)
2020/2016




NET ASSET VALUE (NAV) (,000)


£1,494


£2,603


£2,623


£5,114


£5,361


£5,681


39.6%




NAV Per Share (FD)


6.2p


7.4p


7.5p


14.5p


15.2p


16.1p


26.7%




FTSE 350 Mining Index


14,799


18,719


18,877


20,688


19,049


21,699


10.0%




Goldman Sachs Commodity Index


398.20


442.44


487.44


425.36


439.58


409.46


0.7%




 
Tactical Portfolio:
The purpose of the Tactical Portfolio is to allow M&FI flexibility to take advantage of short-term opportunities across asset classes in high quality names, whilst remaining liquid enough to deploy working capital in attractive investment opportunities when available. We took a firmly positive view on gold in early 2018. Any changes in our tactical holdings in precious metals are trading decisions around our long-term bullish attitude towards precious metals - which remains unaltered.
Our largest tactical holding is Barrick Gold, which is amongst the largest gold producers in the world. The value of our holding was down 22.6% in GBP, but only down 12.5% in USD. We initiated the position subsequent to the announced merger/acquisition of Randgold Resources. The acquisition of Randgold necessitated its removal from the FTSE indices, we understand that many institutional investors framed by investment mandate restrictions were forced to divest of their positions which we believe resulted in abnormal selling pressure. We believe that Barrick continues to improve its operations under the strong leadership of its new CEO, formerly of Randgold will continue to drive operational and strategic efficiencies resulting improvement relative to its history and that of its peers. 
Also, part of Tactical Portfolio is Ascendant Resources. We are pleased to see the shares doubling in value in the quarter after Ascendant completed a financing. Additionally, Ascendant announced an update to their resource which aided in the upward valuation of the company.  We made a small investment in a company called Rathdowney Resources Ltd. It is a Canadian exploration/development company with an inferred resource of 24.4Mt with a Zinc Equivalent grade of 7.02% (5.53% Zinc; 1.49% Lead) at a project in Poland called Olza. 
We were, and continue to be, concerned that there is a disconnect between overall equity market performance and the economic performance. As a defensive move to protect we initiated a copper put position which was meant as a hedge against broad market corrections. We believe that the concept was sound, but the timing was poor. We have since flattened the position, but it negatively affected performance in the period.
The Tactical Portfolio, as of December 31, 2020, includes:




Company


Development Stage


Type of Security


Primary Commodity


Geographic Area of Activities




Ascendant Resources


Exploration


Common Equity


Zn, Pb, Cu, Au, Ag


Portugal




Barrick Gold


Production


Common Equity


Gold, Copper


Global




Resolute Mining


Production


Common Equity


Gold


W.Africa, Australia




ZKB Gold ETF


Metal


ETF


Gold


N/M




ZKB Silver ETF


Metal


ETF


Silver


N/M




Barclays Bank


Food Commodities


Derivative


Food Commodities


N/M




IamGold Corporation


Production


Common Equity


Gold


Canada, West Africa, South America




Wisdom Tree


Metal


Derivative


Copper


N/M




Rathdowney Resources


Development 


Common Equity


Zinc/Lead


Poland




Draegerwerk AG


Production


Common Equity


Medical & Safety Technology


Global




UBS Gold


Metal


ETF


Gold


N/M




 
Strategic Portfolio:
After the period end, we were pleased to announce the resource update at Lagoa Salgada South which is operated by Ascendant Resources and our 75% owned investee Redcorp Empreedimentos Mineiros Lda. (Redcorp) (see announcement dated 3 March 2021). The new Mineral Resource Estimate was prepared in accordance with Canadian National Instrument 43-101 ("NI 43-101") by Micon International (Micon) and resulted in a significant upgrade and expansion of the resources at the South Zone at the Lagoa Salgada Volcanogenic Massive Sulphide ("VMS") Project. The South Zone is less than 700m from the North Zone. The Lagoa Salgada North Zone hosts a zinc rich Measured and Indicated resource of 10.334M tonnes (using 2.9 % cut-off grade) at an Avg ZnEq[2] grade of 9.06% and an Inferred resource of 2.502M tonnes (using a 2.8% cut-off grade) grading 5.93% ZnEq2 (See RNS of January 14, 2020). 
Golden Sun Exploration (Golden Sun) has succeeded in the re-instatement of its mining licences, which it voluntarily suspended 5 years ago, through application to the Costa Rican government. This licence re-instatement was a cornerstone of the business plan and will allow Golden Sun to expand its production from the self-funding "pilot plant' phase of production to a staged expansion and resumption of full mining and processing at the BellaVista Mine, located in West Central Costa Rica. Furthermore, we understand Golden Sun has built up a growing level of local and governmental support due to its operations and stakeholder engagement. This has resulted in Golden Sun being seen as an acceptable mine operator in environmentally sensitive Costa Rica. Due in large part to Golden Sun's status, exploration subsidiary Terra Sun, has secured the exploration rights from the government to a nearby project called Libano, which had been a Newmont Gold project. Additional exploration projects which have failed to meet work commitments expected by the Costa Rican Government are being reviewed by Golden Sun. Operationally, heap leach recoveries have been below target due to insufficient grind size and oxygenation, which management is addressing. 
The Strategic Portfolio allows M&FI to assess the three key fundamentals to a successful investment in the sector: management, finance and geology.  We can change the first two of these and so we exercise in depth due diligence on geology.  As such we are constantly reviewing potential investments filtering through the many underfunded projects left struggling by 10yrs of underperformance.  The Board continues to like zinc and gold which is well represented in both portfolios and is reviewing investments in other commodities, notably copper, with the potential to outperform.
The Strategic Portfolio, as at December 31, 2020, includes:




Company


Development Stage


Type of Security


Primary Commodity


Geographic Area of Activities




Redcorp Empreedimentos Mineiros Lda.


Exploration


Common Equity


Zn, Pb, Cu, Au, Ag


Portugal




Cap Energy


Exploration


Common Equity


Oil & Gas


Senegal & Guinea Bis.




Cerrado Gold


Production / Exploration


Common Equity


Gold


Argentina / Brazil




Golden Sun Mining


Production


Convertible loan


Gold


Costa Rica




Ideon Technologies


Development


Common Equity


Mineral Explo. Tech.


Global




 
The directors look forward to providing shareholders with more information on all the investments, in due course if they progress. Several of these opportunities are private. 
 
On behalf of the Board 
Jacques Vaillancourt
 
FOR MORE INFORMATION:
Jacques Vaillancourt, Mineral & Financial Investments Ltd.                        +44 777 957 7216
Katy Mitchell and Matthew Chan, WH Ireland Limited                  +44 207 220 1666
Jon Belliss, Novum Securities Limited                                          +44 207 399 9400
Dominic Baretto - Yellow Jersey PR Limited                                +44 203 004 9512
 
Statement of comprehensive Income
for the 6 months ended 31 December 2019




 


 


UNAUDITED


UNAUDITED


AUDITED




 


 


6 months to 
31 December 
2020


6 months to 
31 December 
2019


12 months to
30 June
 2020




 


Note


£'000


£'000


£'000




Continuing operations:


 


 


 


 




Investment income


 


2


1


3




Net gains on investments


 


372


399


723




 


 


 


 


 




Total income


 


374


400


726




Operating expenses


 


(152)


(144)


(321)




Other gains and losses


 


(4)


(9)


(24)


 




Profit before taxation


 


218


247


381




 
Taxation expense


 
 


 
(11)


 
-


 
(28)




Profit for the period attributable to owners of the Company 


 


207


247


353




 


 


 


 


 




 


 


 


 


 




Earnings per share attributable to owners of the Company during the period


3


 
pence


 
pence


 
pence




Basic: 


 


0.6


0.7


1.0




Diluted:


 


0.6


0.7


1.0




 
 
 
Statement of Financial Position
as at 31 December 2020
 




 


 


UNAUDITED


UNAUDITED


AUDITED




 


 


31 December
2020


31 December
2019


30 June
2020




 


 


£'000


£'000


£'000




 


 


 


 


 




CURRENT ASSETS


 


 


 


 




Financial assets


 


5,311


5,105


5,315




Trade and other receivables


 


81


70


81




Cash and cash equivalents


 


578


364


275




 


 


5,918


5,539


5,671




 


 


 


 


 




CURRENT LIABILITIES


 


 


 


 




Trade and other payables


 


156


126


127




Convertible unsecured loan notes


 


10


10


10




 


 


166


136


137




NET CURRENT ASSETS


 


5,752


5,403


5,534




NON-CURRENT LIABILITIES


 


 


 


 




Deferred tax provision


 


(71)


(42)


(60)




 


 


 


 


 




 


 


 


 


 




NET ASSETS


 


5,681


5,361


5,474




 


 


 


 


 




EQUITY


 


 


 


 




Share capital 


 


3,096


3,095


3,096




Share premium


 


5,892


5,886


5,892




Loan note equity reserve


 


6


6


6




Share option reserve


 


23


23


23




Other reserves


 


15,736


15,736


15,736




Retained earnings


 


(19,072)


(19,385)


(19,279)




SHAREHOLDERS' EQUITY


 


5,681


5,361


5,474




 
 
 
Statement of Changes in equity
for the 6 months ended 31 December 2020
 




 


Share
capital


Share
premium


Loan note
reserve


Share option reserve


Other reserves


Accumulated
losses


Total
equity




 


£'000


£'000


£'000


£'000


£'000


£'000


£'000




 


 


 


 


 


 


 


 




At 30 June 2019


3,095


5,886


6


23


15,736


(19,632)


5,114




Profit for the 6 months to 
31 December 2019


-


-


-


-


-


247


247




At 31 December 2019


3,095


5,886


6


23


15,736


(19,385)


5,361




Profit for the 6 months to 
30 June 2020


-


-


-


-


-


106


106




Share issues


1


6


-


-


-


-


7




At 30 June 2020


3,096


5,892


6


23


15,736


(19,279)


5,474




Profit for the 6 months to 
31 December 2020


-


-


-


-


-


207


207




 


 


 


 


 


 


 


 




At 31 December 2020


3,096


5,892


6


23


15,736


(19,072)


5,681




                                                                                
 
Statement of Cash flows
for the 6 months ended 31 December 2020
 




 


 


UNAUDITED


UNAUDITED


AUDITED




 


 


6 months to 
31 December 
2020


6 months to 
31 December 
2019


12 months to
30 June
 2020




 


 


£'000


£'000


£'000




 


 


 


 


 




OPERATING ACTIVITIES 


 


 


 


 




Profit/(loss) before taxation 


 


218


247


381




Adjustments for:


 


 


 


 




Net gains on investments


 


(372)


(399)


(723)




Investment income


 


(2)


(1)


(3)




Tax paid


 


-


-


(10)




Operating cashflow before working capital changes


 


(156)


(153)


(355)




(Increase)/decrease in trade and other receivables


 


52


8


(3)




Increase/(decrease) in trade and other payables


 


29


38


39




Net cash outflow from operating activities


 


(75)


(107)


(319)




INVESTING ACTIVITIES


 


 


 


 




Purchase of financial assets


 


(906)


(474)


(1,279)




Disposal of financial assets


 


1,282


720


1,639




Investment income


 


2


1


3




Net cash (outflow)/inflow from investing activities


 


378


247


363




 
FINANCING ACTIVITIES


 


 


 


 




Proceeds of share issues


 


-


-


7




 


 


-


-


7




 


 


 


 


 




Net increase/(decrease) in cash and cash equivalents


 


303


140


51




Cash and cash equivalents at start of period


 


275


224


224




 


 


 


 


 




Cash and cash equivalents at end of period


 


578


364


275




 
 
Notes to the unaudited interim statement
for the 6 months ended 31 December 2020
 
1. General information 
The Company is a limited company quoted on AIM, a market of the London Stock Exchange, and is registered in the Cayman Islands. 
The address of its registered office is One Nexus Way, Camana Bay, Grand Cayman, KY1-9005, Cayman Islands.  The financial statements are presented in Pounds Sterling which is the Company's functional and presentational currency. 
 
 
2. Basis of preparation 
The interim financial statements of Mineral & Financial Investments Limited have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and on the historical cost basis using the accounting policies which are consistent with those set out in the Company's Annual Report and Accounts for the year ended 30 June 2020. 
This interim financial information for the 6 months to 31 December 2020 was approved by the board on 30 March 2021. 
The unaudited interim financial information for the 6 months to 31 December 2020 does not constitute statutory accounts. The comparative figures for the year ended 30 June 2020 are extracted from the statutory financial statements which contain an unqualified audit report. 
 
3. Earnings per share 




 


The basic and diluted earnings per share is calculated by dividing the profit/(loss) attributable to owners of the Company by the weighted average number of ordinary shares in issue during the year.




 


 


6 months to 
31 December 
2020


6 months to 
31 December 
2019


12 months to
30 June
 2020




 


 


£'000


£'000


£'000




 


Weighted average number of shares for calculating basic earnings per share


35,135,395


35,037,895


35,080,784




 


Weighted average number of shares for calculating fully diluted earnings per share


35,192,285


35,064,391


35,146,295




 
4. The interim report is available to view and download from the Company's website: www.mineralandfinancial.com
 
 

 


[1] Wood Mackenzie & BMO Capital Markets 


[2] ZnEq% = ((Zn Grade*25.35)+(Pb Grade*23.15)+(Cu Grade * 67.24)+(Au Grade*40.19)+(Ag Grade*191.75))/25.35
 
 


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