REG - Mineral & Financial - Interim Results for Six Months Ended 31 Dec 24
20/03/2025 07:15
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RNS Number : 3828B Mineral & Financial Invest. Limited 20 March 2025
Mineral & Financial Investments Limited
Unaudited Results for the six months ended 31 December 2024
HIGHLIGHTS:
· Net Asset Value(1) p/s ("NAVPS") on 31 Dec. 2024 was 32.2p, up 24.8%,
from 25.8p (yr/yr)
· H1-2025 NAV(1) was £12,692,000 up 26.7% from £10,020,000 year on
year
· Net Earnings 1 (#_ftn1) for H1-2025 were £1,247,000 vs. H1-2024 Net
Earnings £589,000 increase of 112%
· EPS(1) for the 6 months ending Dec 31, 2024, were 3.09p vs 1.65p, an
increase of 86.6% (Yr/Yr)
· The 5-year Compound Annual Growth rate for NAV(1) was +18.8% and for
NAVPS +16.2%
· Investable Capital as of 31 December 2024 was £13,114,000 (+26.2%
yr/yr) vs £10,388,000
· M&F remains debt free, with a strong cash position and a NAV
outperforming our benchmarks
CAMANA BAY, GRAND CAYMAN ISLANDS, 20 March 2025 - Mineral and Financial
Investments Limited (LSE-AIM: MAFL) ("M&F" or the "Company") is very
pleased to announce its unaudited interim results for the six months ended 31
December 2024 ("H1-2025"). The Company generated a H1-2025 Gross Profits of
£1,555,000, an operating profit of £1,299,000, resulting in an after-tax
profit of £1,247,000. This compares with H1-2024 Gross Profits of £899,000,
an operating profit of £660,000, resulting in an after-tax profit of
£589,000. Fully diluted earnings per share ("EPS-FD") were 3.09p per share,
this compares with H1-2024 EPS-FD of 1.65p, an increase of 86.6%
The NAVPS as at the end of the 31 December 2024, quarter was 32.2p an increase
24.8% from last year's NAVPS for the same period of 25.8p. Working capital as
of 31 December 2024 was £12,860,000 2 (#_ftn2) . The Net Asset Value (basic)
has grown at an average of rate of 23.6% per year on a compounded basis since
31 December 2019 (5 years).
M&F NAVPS vs. Comparable Benchmarks
Indexed Performance (Dec 31 2016 = 1.0)
(Fig. 1)
CHIEF EXECUTIVE'S STATEMENT:
Our NAV growth Year on Year was 26.7% despite a continued volatile economic
and political environment. We ended the period with Investable Capital ("IC")
of £13,114,000, an increase of 26.2% for the IC of £10,352,000 as of
December 31, 2023. The Company ended the first half of the year with a cash
position of £501,000. The 12-month period ending 31 December 2024, has been
characterized by volatile market activity in the equity markets and commodity
sectors, which increasingly appears to be the norm that we should be
anticipating going forward.
As of 31 December 2024, US 10 Yr. Treasury yields 3 (#_ftn3) had risen to
4.55% (+17.3% Yr./Yr.), while 10 yr. government yields in Canada and Mexico,
unusually, were down during the same period. Similarly, 10 yr. government
yields in Europe were up meaningfully. The normally disciplined German(3) 10
yr bond yields were up 17.3% (2.37% vs. 2.02%) and the UK 10 yr. gov't. bonds
yields were up 30.7% (4.60% vs. 3.52%) year/year. Whereas Italian(3) 10-year
government bonds declined from 3.68% to 3.52% during the 12-month period
ending December 31, 2024. We remain surprised that Greek 10-year bond yields
are 29.5% lower, or 134 basis points, than for similar 10-year US gov't bond
yields (3.21% vs 4.55%). In the face of generally rising yields, equity
markets performed positively. The S&P 500(3) rose 23.3%, the CSI 300
Equity Index(3) (Shanghai) was up 14.7%, the Euro-Stoxx(3) was up 8.3%, and
the FTSE 100(3) was up 5.7% during the period.
M&F - Financial Performance Summary vs Comparable Yardsticks
(Fig.2)
H1 H1 H1 H1 H1 H1 H1'25/ 5 Yr.
31/12/19 31/12/20 31/12/21 31/12/22 31/12/23 31/12/24 H1'24 CAGR
% Ch.
Net Asset Value ("NAV") (,000) £5,361 £5,681 £6,580 £8,214 £10,020 £12,692 26.7% 18.8%
Net Asset Value Per Share (FD) 15.19p 16.11p 18.62p 22.03p 25.8p 32.2p 25.0% 16.2%
FTSE 350 Mining Index 19,049 21,699 16,679 11,154 9,904 10,161 2.6% (11.8%)
Goldman Sachs Commodity Index 439.58 409.46 561.18 610.07 535.64 549.64 2.6% 4.6%
The US Dollar as measured by the DXY Index(3) (Trade weighted measure of the
USD) was essentially unchanged, being up 0.1% yr/yr. The US dollar is
currently the accepted reference currency for most commodities. A rising USD
will, all things being equal, result in lower US dollar denominated commodity
prices, and conversely a declining USD will result in higher USD commodity
prices. During the 12-month period, Uranium(3) was down 29.0%; Gold(3) was up
29.3%; Copper(3) was up +2.2%; Silver(3) was up 26.1%; Platinum(3) was down
1.4%; Palladium(3) (-7.2%); Rhodium(3) (-10.2%); Nickel(3) (-5.4%);
Aluminium(3) (+12.1%); Zinc(3) (+17.2%); Lead(3) (-11.2%). Oil prices were
down Yr./Yr., WTI(3) declined 5.4% and conversely Henry Hub natural gas(3)
prices exploded upwards 72.9% to $3.63/mcf. In summary, the USA is
experiencing rising rates, sticky inflation, a rising equity market and mixed
commodity prices - an incoherent set of market indicators, which as stated
earlier may be the current norm.
The following is a summary of the Company's Commodity Allocation H1-2025 vs.
H1-2024:
Portfolio Allocation by Commodity Grouping
(Fig. 3)
(£'000) H1-2025 H1-2024 % Change H1-2025 As a % of Total
Cash £500.6 £315.9 58.5% 3.8%
Precious Minerals £7,554.0 £5,484.8 37.7% 57.6%
Base Metals £3,908.6 £3,449.5 13.3% 29.8%
Tech., Energy & Ag. £1,150.6 £1,101.8 4.4% 8.8%
Total Investable Capital £13,113.8 £10,352.0 26.7% 100.0%
M&F's investable funds of £13,114,000 as at the end of H1-2025, showed an
increase of 26.2% Yr./Yr. Our cash levels are at 3.8% of our "investable
funds". This cash holding is lower than target, however this is because we
have acquired 1,210 oz of deferred gold delivery contracts, with these
included we are well within our targeted liquidity levels. These contracts, at
cost, represent 12.9% of our Investable Capital. If these contracts are
included as part of our cash position, our cash holdings marked to market
values, would be £3.04M, or 23.2% of our Investable Capital.
Our increased exposure to metals coincides well with our belief that
inflationary pressures, increased cost of capital (i.e. interest rates) and
uncertain economic framework could result in equity valuation pressure. We
believe that physical commodities provide better risk adjusted returns than
the underlying equities. The production cost break-even levels have risen
for virtually all commodities. Supplies are tight. We believe that mineral
commodity price moves will be the next leg. We wish to be as fully and
prudently invested as possible. Secondly, the rise and strength in the USD
is, in our opinion, driven by higher interest rates, which we noted how
anomalously high they are relative to interest rates for other nations, will
be difficult to sustain. These rates are due, in our opinion, to the Fed's
slow unwinding of the various QE programs created over the past 17 years,
resulting in significant sales from its portfolios by the Fed every day, of
every week, of every month. Investing in US treasuries has been seen for the
past century as a "Safe Harbour". But currently, despite its unique status as
the reserve currency of the world, we believe the USD offers a carry trade. A
carry trade is when one can borrow in one currency, the Euro for example, and
buy USD treasuries and benefit from a 150 to 190 basis point positive carry
(i.e. higher yield) along with a credit rating pickup. When it unwinds, the
correction could be more sudden than might be expected. Our precious metal
position has increased by 36.8% and now represents 57.6% of our investable
assets.
We believe the Deferred Gold Delivery Contracts as a Bridge financing
investment has been made on attractive business terms for M&F shareholders
to Golden Sun Resources. The purpose was to fund some capital shortfalls in
the ramp-up of the 450/500tpd processing facility at the BellaVista Mine. The
operations have been cash flow positive for the past 3 months. The purchase
price for the gold via these deferred gold contracts is US$1,750 /oz., with a
minimum floor price of US$2,050/ oz price (e.g. if gold went to $1,700/oz, we
would receive US$2,050/oz). The contracts have 6-month terms. These bridge
loans can be satisfied by either physical delivery of the gold at the mine
gate, or the financial equivalent. After 6 months they lock in at the
prevailing spot price and thereafter accrue at 20%, calculated quarterly, per
annum. The first deferred gold loans are secured by 66% of the shares of
Compańia Agro Parque S.A. ("Agro Parque"). Agro Parque's principal asset is
220 Hectares (544 Acres) of land in Costa Rica, overlooking the Pacific Ocean,
with various possible commercial applications. Additionally, in later rounds
we received 1,242,500 warrants with a 5-year term to acquire Golden Sun Shares
at US $0.75.
Portfolio Allocation by Portfolio Category
(Fig. 4)
(£'000) H1-2025 H1-2024 % Change H1-2025 as % of Total IC 4 (#_ftn4)
Cash £500.6 £315.9 58.5% 3.8%
Tactical Portfolio £4,224.9 £2,007.1 110.5% 32.2%
Strategic Portfolio £8,388.3 £8,029.0 4.5% 64.0%
Total Investable Capital £13,113.8 £10,352.0 26.7% 100.0%
Tactical Portfolio:
The purpose of the Tactical Portfolio ("TP") is to protect our performance by
generating "excess returns" to offset our cash holdings and by positioning
itself to hedge, if deemed appropriate, against market circumstance that would
negatively affect our Strategic Portfolio. Additionally, the TP must allow
M&F the financial flexibility to take advantage of short-term
opportunities across asset classes, when attractive and appropriate.
Our current weighting of the TP at 32.2% of IC is at the low end of our rule
of thumb range for the TP. The weighting of the TP should be considered in
conjunction with our cash holdings. The collective holding of cash and the TP
is 36.0% of IC. The TP increased by 110.5% Yr./Yr. compared to H1-2024. This
is due to the inclusion of the deferred gold delivery contracts and the
re-classification of Luca Mining as a TP holding. We are also beginning to
increase our exposure to the non-precious metal investments, notably: Capstone
Copper, a copper producer with assets in the USA, Mexico and Chile, producing
184,460 tonnes of copper in 2024; Azimut Exploration a gold, antimony and
lithium exploration development company located in Canada; HudBay Minerals, a
copper producer with assets located in Peru and Canada; McEwen Mining a north
American gold producer with a very large and highly prospective copper
development project in Argentina (Los Azules); NGEx Minerals also with an
enormous copper deposit (Vicuña) Argentina which it is developing with its
partner BHP and two other projects (Lunahuasi in Argentina and Los Helados in
Chile) which are also of world class standard.
As at the period ending 31 December 2024 the Company held tactical holdings in
20 investments. Our investments in the Tactical portfolio, include the
following: Azimut Exploration; Agnico Eagle Mines; Barrick Gold; Capstone
Copper; GoldTerra Resources; Hudbay Minerals; Northern Graphite; Orla Mining;
Discovery Silver; Sigma Lithium, Nutrien Ltd (world leading fertilizer
producer), SolGold and Gemdale Gold.
Strategic Portfolio:
The Strategic Portfolio holds investments which are longer term in nature and
which we believe had unique investment characteristics at the time we
invested. These longer-term investments require M&F to assess the four
keystone foundations to a successful investment in the natural resource
sectors: 1. Geological Assets, 2. Jurisdiction, 3. Governance and Management;
and 4. Financial capability. Geology and jurisdiction are fixed or at least
very slow to change, however, we can assist in the improvement of items 3 and
4 on our list of investment keystones. As such, we are constantly reviewing
potential investments filtering through the many underfunded projects left
struggling, we believe, by 10 years of sector neglect, underfunding. There are
also systemic funding flaws (ETF's and large specialized mutual funds that
grow and shrink with performance history) which magnify and elongate cycles.
We believe that we are exiting a period of prolonged underperformance.
Redcorp and Ascendant had been subjected to a period of political uncertainty
in Portugal, as a minority government was formed in 2024, and in March 2025
was defeated in a no-confidence vote. Another election will occur in May 2025,
with a new government expected to be formed by June 2025. Redcorp has used the
period productively to complete some metallurgical optimization and processing
optimization studies, as well as some exploration work. Also, it has filed the
Environmental Impact Study on the Lagoa Salgada Project ("LS Project") and is
in the very final acceptance stages.
Little change is expected, at the moment, from the upcoming election. However,
until the formation of a new government a resolution of our ownership
discussions with Empressa de Desenvolvimento Mineiro, SA ("EDM") is unlikely.
In 2023/24 EDM requested and was granted an extension to the time window to
decide how it wishes to proceed with its option on 15% of the LS Project. We
remain hopeful to come to an agreement with EDM, however, there is no
certainty that this will be achieved. If EDM does not take-up its option
M&F is left with a 20% carried interest ("CI") on the LS Project. If it
opts to take up its full interest, then M&F would be diluted down to a 5%
CI. The Feasibility Study ("FS") was completed and the agreement with
Ascendant that granted M&F a Put Option to sell its interest to Ascendant
for 5% of the Feasibility Study's NPV using a 10.5% Discount Rate has become
exercisable. The Put Option's term lapses 4 months after EDM's decision as to
whether it will exercise its option to earn a 15% Working Interest ("WI")
directly in the LS Project. An additional subsequent event after the end of
the period - Ascendant announced that it received a takeover proposal by
Cerrado Gold. Cerrado Gold is also held in our portfolio and is a Canadian
gold producer with assets in Argentina; it has recently sold its Brazil
exploration assets to Hochschild for C$80M and an Argentinian exploration
property for $20M. If, and when, this merger is completed M&F's partner on
the LS project will be a financially much stronger counterparty capable of
accelerating the LS Project.
Golden Sun Resources (GSR) has achieved yet another very important milestone.
It was generating positive cash flow as of December 2024. This was achieved
from the 450tpd/500tpd processing facilities that were completed in mid-2024.
We estimate that breakeven cash flow is achieved when the mill is operating at
or above 200 tpd. The mill is now operating 24 hours a day and has achieved
rates as high as 375 tpd. There have been the usual start-up issues, which are
being overcome. The ball mill is capable of 500 tpd, the detox tanks and the
filter press are capable of 400 tpd to 450 tpd and may require some minor
additions to achieve 500tpd. The mill is currently reprocessing the tailings
from the Pilot Heap Leach operations, this provides ore to the mill grading
3.2 g/t of gold and should last another 9 to 10 months (depending on operating
rates). In July 2025 work will begin on underground mining which is expected
to provide ore grading 5 to 6 g/t. The Underground ore is expected to begin
feeding the mill as the current tailing is used up. The current plan expects
production to exit the year at a rate of 25,000 oz per year. Additionally, GSR
has spun-out to GSR shareholders its exploration company, Terrasun Resources
SA (Terrasun). Terrasun has 20 distinct exploration permits covering 202km(2)
of which 7 projects have either historical resources and / or had historical
production. Terrasun also owns a new 500TPD CVL gold processing plant and six
drill rigs. We are encouraging GSR to move towards a monetization event
within the next 12 months.
The directors look forward to providing shareholders with an update on
investments in due course.
On behalf of the Board
Mark T. Brown, CA
CPA
Jacques Vaillancourt, CFA
Chairman
President, CEO and Director
FOR MORE INFORMATION:
Jacques Vaillancourt, Mineral & Financial Investments
Ltd. +44 780 724 6247
Katy Mitchell and James Bavister,
Zeus
+44 203 829
5000
Jon Belliss, Novum Securities
Limited
+44 207 399 9400
Statement of comprehensive Income
for the 6 months ended 31 December 2024
UNAUDITED UNAUDITED AUDITED
6 months to 6 months to 12 months to
31 December 31 December 30 June
2024 2023 2024
Note £'000 £'000 £'000
Continuing operations:
Investment income 4 11 20
Net gains on investments 1,551 888 2,547
Total income 1,555 899 2,567
Operating expenses (256) (229) (444)
Share based payment expense - (8) (17)
Other gains and losses (37) (67) (53)
Profit before taxation 1,262 595 2,053
Taxation expense (15) (6) (48)
Profit for the period attributable to owners of the Company 1,247 589 2,005
Earnings per share attributable to owners of the Company during the period 3
pence pence pence
Basic: 3.4 1.6 5.4
Diluted: 3.1 1.5 5.3
Statement of Financial Position
as at 31 December 2024
UNAUDITED UNAUDITED AUDITED
31 December 31 December 30 June
2024 2023 2024
£'000 £'000 £'000
CURRENT ASSETS
Financial assets 12,613 10,072 11,643
Trade and other receivables 11 6 19
Cash and cash equivalents 501 315 141
13,125 10,393 11,803
CURRENT LIABILITIES
Trade and other payables 255 238 195
Convertible unsecured loan notes 10 10 10
265 248 205
NET CURRENT ASSETS 12,870 10,145 11,598
NON-CURRENT LIABILITIES
Deferred tax provision (168) (125) (153)
NET ASSETS 12,692 10,020 11,445
EQUITY
Share capital 3,116 3,116 3,116
Share premium 6,203 6,203 6,203
Loan note equity reserve 6 6 6
Reserve for employee share option schemes 222 213 222
Other reserves 15,736 15,736 15,736
Retained earnings (12,591) (15,254) (13,838)
SHAREHOLDERS' EQUITY 12,692 10,020 11,445
Statement of Changes in equity
for the 6 months ended 31 December 2024
Share Share Loan note Reserve for Other reserves Accumulated Total
capital premium reserve Employee losses equity
Share schemes
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 June 2023 3,114 6,182 6 228 15,736 (15,843) 9,423
Profit for the 6 months to - - - - - 589 589
31 December 2023
Exercise of Restricted Stock Units 2 21 - (23) - - -
Share based payment expense - - - 8 - - 8
At 31 December 2023 3,116 6,203 6 213 15,736 (15,254) 10,020
Profit for the 6 months to - - - - - 1,416 1,416
30 June 2024
Share based payment expense - - - 9 - - 9
At 30 June 2024 3,116 6,203 6 222 15,736 (13,838) 11,445
Profit for the 6 months to - - - - - 1,247 1,247
31 December 2024
At 31 December 2024 3,116 6,203 6 213 15,736 (12,591) 12,692
Statement of Cash flows
for the 6 months ended 31 December 2024
UNAUDITED UNAUDITED AUDITED
6 months to 6 months to 12 months to
31 December 31 December 30 June
2024 2023 2024
£'000 £'000 £'000
OPERATING ACTIVITIES
Profit before taxation 1,262 595 2,053
Adjustments for:
Net gains on investments (1,551) (888) (2,547)
Investment income (4) (11) (20)
Share based payment expense - 8 17
Tax paid - - (14)
Operating cashflow before working capital changes (293) (296) (511)
Decrease in trade and other receivables 8 19 6
Increase in trade and other payables 61 41 11
Net cash outflow from operating activities (224) (236) (504)
INVESTING ACTIVITIES
Purchase of financial assets (1,738) (470) (1,563)
Disposal of financial assets 2,318 214 1,392
Investment income 4 11 20
Net cash (outflow)/inflow from investing activities 584 (245) (151)
Net increase/(decrease) in cash and cash equivalents 360 (481) (655)
Cash and cash equivalents at start of period 141 796 796
Cash and cash equivalents at end of period 501 315 141
Notes to the unaudited interim statement
for the 6 months ended 31 December 2024
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 2024.
This interim financial information for the 6 months to 31 December 2024 was
approved by the board on 19 March 2025.
The unaudited interim financial information for the 6 months to 31 December
2024 does not constitute statutory accounts. The comparative figures for the
year ended 30 June 2024 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 6 months to 12 months to
31 December 31 December 30 June
2024 2023 2024
£'000 £'000 £'000
Weighted average number of shares for calculating basic earnings per share 37,105,871 35,465,395 37,091,117
Weighted average number of shares for calculating fully diluted earnings per 40,405,871 38,365,395 38,188,380
share
4. The interim report is available to view and download from the Company's
website: www.mineralandfinancial.com (about%3Ablank)
1 (#_ftnref1) Fully Diluted Unaudited
2 (#_ftnref2) Current Assets of £13,125,506 less Current Liabilities of
£265,625 = Working Capital of £12,859,881
3 (#_ftnref3) Bloomberg LLC
4 (#_ftnref4) Investable Capital
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