REG - Mineral & Financial - Unaudited Results for Six Months Ended 31 Dec 2021
30/03/2022 07:00
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RNS Number : 4691G Mineral & Financial Invest. Limited 30 March 2022
Mineral & Financial Investments Limited
Interim Results (unaudited) for the Six Months Ended 31 December 2021
HIGHLIGHTS:
· Unaudited net earnings for the first 6 months of fiscal 2022 were
£141,740 or 0.40p p/s
· NAV per share at Dec 31, 2021 was 18.62p, up 15.7% year over year
(2021: 16.09p)
· The 5 Year Compound Annual Growth rate of the NAVPS +24.4% and +34.5%
for NAV is outperforming comparable yardsticks
· Invested capital increased by 23.6% to £6,564,169 as of December 31,
2021
· Lower year on year precious metal prices in the period slowed NAV
growth.
· The Company remains debt free, with a good cash balance and a
growing portfolio of 25 investments in the natural resource sectors
GEORGE TOWN, CAYMAN ISLANDS, March 30, 2022 - 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 2021.
The Company generated a H1-2022 after-tax profit of £141,740 and a fully
diluted EPS of 0.40p per share, this compares with H1-2021 net earnings of
£207,416 or 0.59p per share. The Net Asset Value Per Share (NAVPS) as at
the end of the December 31, 2021, quarter was 18.62p, up 15.7% from last
year's NAVPS for the same period of 16.09p. The Net Asset Value per share has
grown at an average of rate of 24.4% per year on a compounded basis since
31(st) December 2016, while the overall Net Asset Value (NAV) has grown at a
compound annual rate of 34.5%.
M&FI NAVPS vs. FTSE 350 Mining Index & GSCI - Indexed Performance
(Chart 1)
http://www.rns-pdf.londonstockexchange.com/rns/4691G_1-2022-3-29.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/4691G_1-2022-3-29.pdf)
CHIEF EXECUTIVE'S STATEMENT:
The Company has a strong cash position of £232,303, as we reinvested much of
the cash inflow in the final quarter of the previous financial year but still
retain adequate cash resources. Our modest NAV growth Quarter on Quarter was
despite a decline in precious metal prices on a quarter over quarter basis and
what we perceive to be a continued disconnect between commodity prices and the
valuation of the companies producing the respective commodities. Additionally,
on a year over year basis the DXY Index (US dollar Trade Weighted Currency
Index) was up 7.3%. As most currencies are denominated in US$, a rising US
dollar normally has a depressing effect on the dollar denominated commodities.
It is our view that precious metals were generally dragged down by the US
dollar's performance, however, in spite of the rising US dollar, we observed
base metals, and most food commodities rose year over year in the period
ending Dec. 31, 2021.
The following is a summary of the Company's NAV Performance for the 5 years to
Dec. 31 ,2021:
M&FI - Financial Performance Summary
(Fig.1)
31 Dec 2016 1 31 Dec 2017(1) 31 Dec 2018 31 Dec 2019 31 Dec 2020 31 Dec CAGR (%)
FYE FYE Q2 Q2 Q2 2021 2021/2016
Q2
NET ASSET VALUE (NAV) (,000) £1,494 £2,603 £4,393 £5,361 £5,681 £6,580 34.5%
NAV Per Share (FD) 6.2p 7.43p 12.43p 15.19p 16.11p 18.62p 24.4%
FTSE 350 Mining Index 14,799 18,719 17,705 19,049 21,699 16,679 5.4%
Goldman Sachs Commodity Index 398.20 442.44 374.33 439.58 409.46 561.18 5.5%
The most notable change in capital markets in the past 6 months, since our
Fiscal Year began July 1(st), 2021 is that interest rates in the top 20
capital market have risen, and in the UK 10-year government yields have risen
195% from their artificially low levels to 1.68% (as of March 24(th), 2022).
US Government 10 Yr. Bond yields are up 86% to 2.38%. These rises are in part
due to increased economic activity as COVID 19 constraints are being rolled
back. Also propelling interest rates upwards are increasing global
inflationary measures. In February 2022, the annual inflation rate in the UK
was 6.2% 2 , up from 0.7% in March 2021. Higher inflation and higher interest
rates should normally influence asset and financial valuations, yet there has
not been a meaningful change in equity market valuations. The Ukrainian crisis
did not occur until our Fiscal Q3-2022 period, which we will address in our
next shareholder report.
Amongst the equity markets which we track, on a year on year basis, as at Dec
31(st)., 2021, the only 2 major equity markets were down - Shanghai's CSI 300
Index (-5.6%) and the Hong Kong's Hang Seng Index (-14.5%). The USA equity
markets, as measured by the S&P500 (+27.6%) led equity markets and closer
to home the FTSE 100 (+16.2%) generated some good returns. Despite Commodities
rising sharply in the period, the Reuters/Jefferies CRB Index rose 38.5%, the
FTSE 300 Mining Index underperformed the overall market in the UK declining
11.3% on a yr./yr. basis.
We continue to believe that the inflationary pressures triggered by
manufacturing and transportation delays caused by COVID 19 are not
"transitional" and will require policy adjustments by central bankers if they
are to be constrained. Therefore, we believe that the mid-term outlook for our
commodity weightings remains quite positive. With growing levels of inflation,
we believe that we must maintain liquidity but recognize that there is a
growing cost to holding significant quantities of cash in an inflationary
period. In the quarter we invested £346,416 of our cash during the quarter.
As at Dec 31, 2021, period, M&FI was 96.6% invested.
Portfolio Allocation by Commodity Grouping
(Fig. 2)
Q2-2021 Q2-2020 % Change
Cash £232,303 £577,369 (59.8%)
Precious Metals £3,193,920 £2,380,740 34.2%
Base Metals £2,889,722 £2,483,953 16.3%
Energy, Tech & Misc. £480,527 £446,201 8.2%
Total £6,796,472 £5,888,263 15.4%
Your Company's portfolios have expanded to now include 25 distinct
investments. M&FI's investable funds are broken down as follows: Precious
metals represent 47%, and; Base metals represent 43% of our investments; while
Energy Tech and Miscellaneous investments represent 7% of the remaining
investable funds, as at the end of Q2 period. The growth the relative weight
of precious metal within the overall portfolio is partly explained by the
34.2% year over year growth in the value of our precious metal holdings,
double the performance of our broad commodity groupings. This performance
validates our strategy of re-increasing our precious metals weighting last
year
Portfolio Allocation by Portfolio Grouping
(Fig. 3)
Q2-2021 Q2-2020 % Change
Cash £230,303 £577,369 (59.8%)
Tactical Portfolio £2,106,760 £1,302,773 61.5%
Strategic Portfolio £4,457,409 £4,008,121 11.3%
Total £6,796,472 £5,888,263 15.4%
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 elsewhere when
needed. Any changes in our tactical holdings in precious metals are trading
decisions around a long-term bullish attitude towards precious metals. The
Tactical portfolio grew by 61.5% year on year during the quarter.
Our largest tactical holding is Cerrado Gold. We initially invested in Cerrado
at US$0.45 and it is now trading at C$1.72 per share and represents 5.84% of
our investible funds. Barrick Gold is now our second largest tactical
investment, representing 2.21% of our total investable funds.
Our third largest holding is the Van Eck Gold Miner index. We use this index
solely as a quick means to increase our weighting in the gold miners and sell
portions of it to fund specific investments in the sector. During the past
year we re-categorised our investment in Ascendant Resources as a Tactical
Investment. The ASND shareholding corrected in value by 18.3% in the quarter,
after a strong run-up in the summer of 2021. We believe that it was subject to
end of year tax-loss selling by taxable Canadian investors.
The Tactical Portfolio, as of December 31, 2021, had the following holdings
(Fig.4)
Company Development Stage Type of Security Primary Commodity Geographic Area of Activities
Aclara Resources Inc Development Common Equity Ionic Clay and Rare Earths Chile
Ascendant Resources Exploration Common Equity Zn, Pb, Cu, Au, Ag Portugal
ATF Culpeo Minerals Exploration Common Equity Cu Chile
Barclays Bank Food Commodities Derivative Food Commodities N/M
Barrick Gold Production Common Equity Gold, Copper Global
Cerrado Gold Production / Exploration Common Equity Gold Argentina / Brazil
Coeur Mining Production Common Equity Gold Americas
East West Petroleum Production / Exploration Common Equity Oil & Gas New Zealand / Romania
Equinox Gold Production Common Equity Gold North America
Fiore Gold (now Calibre Mining) Production Common Equity Gold USA and Central America
Fortuna Silver Mines Production Common Equity Gold / Silver Argentina, Peru, Mexico, Cote d'Ivoire, Burkina Faso
Fresnillo Plc Production Common Equity Gold / Silver Mexico
Hochschild Mining Plc Production Common Equity Gold / Silver Peru & Argentina
Kinross Gold Production Common Equity Gold Global
Northern Star Resources Production Common Equity Gold Australia / Alaska
Orla Mining Production / Development Common Equity Gold Mexico / Panama
Resolute Mining Production Common Equity Gold Australia / Mali, Senegal
VanEck Vectors Gold Miners Production ETF Gold, et al. Global
UBS Gold Metal ETF Gold N/M
Zimplats Holding Production Common Equity PGM Zimbabwe
ZKB Gold ETF Metal ETF Gold N/M
ZKB Silver ETF Metal ETF Silver N/M
We added Coeur Mining, a US based, precious metals miner whose mining
operations span the Americas from Alaska to Bolivia. We added Fiore Gold, a
Canadian domiciled company with Nevada gold mining assets, and gold resources
totalling 3.0M/oz at a grade of 0.79g/t. Fiore has since the period end been
acquired by Calibre Mining, also a Canadian Mining company with mining Assets
in Central America. We also added Hochschild, a Peruvian Mining company
listed on the LSE, Kinross a Canadian gold mining Company with assets around
the world (this position has since been sold), and lastly, we acquired Orla
Mining a Canadian company initiating production from its Camino Rojo mine in
Mexico which a pre-feasibility stage project, Cerro Quema, in Panama.
Strategic Portfolio:
The Strategic Portfolio holds investments which are longer term in nature and
which we believe had unique investment characteristics at the time when we
invested in these companies and/or assets. These longer-lived investments
require M&FI to assess the four keystone foundations to a successful
investment in the natural resource sectors: 1. Management; 2. Finance; 3.
Location, and 4. Geology. We can assist in the improvement of the first two,
however, we cannot affect the location (i.e. jurisdiction and logistics) or
the geology of the asset, and therefore must evaluate these investments more
cautiously on the latter two keystones. As such, we are constantly reviewing
potential investments filtering through the many underfunded projects left
struggling by 10 years of sector underperformance, neglect, and
underfunding. The Board continues to be optimistic towards precious metals
generally and certain specific base metals that should benefit from the
evolving needs of the planet. We are aggressively searching for suitable
investments that will provide our shareholders the benefit of a world evolving
towards increased renewable energy sources, requiring advanced energy sources
all of which will be increasingly stored in various power storage
technologies. We are overweighted in zinc which is used for stainless steel,
battery technology, nutrition and anti-corrosion applications. We are also
overweighted precious metals in both portfolios. We continue to review
investments in other commodities, notably copper, with the potential to
outperform.
Our partner Ascendant continues to make progress on the Lagoa Salgada project
and is working very diligently to advance towards completing a Feasibility
Study by December 22, 2022. Redcorp Empreedimentos Mineiros Lda. (Funded by
Ascendant Resources as part of the Earn-In agreement of June 2018) is
currently completing a drilling program, partly for exploration, but also for
further metallurgical testing purposes. Additionally, Redcorp has initiated an
Environmental Impact Study (EIS) on the Lagoa Salgada project. Moreover, we
have been having some constructive discussions with management which could
lead to possible project financing solutions.
Golden Sun Exploration has achieved a very important watershed as the Costa
Rican government re-instated its mining licence on its BellaVista mine.
Originally Golden Sun's BellaVista was solely an Open Pit mine, but the new
license allows it Golden Sun to increase its mine production and use CIL
extraction technology. The mine plan call for higher grade underground mining.
Golden Sun has been producing on a small scale as it bulk tested the ore with
small scall heap leach technology. The net result is a more environmentally
prudent and responsible means of extracting or producing gold and dealing with
the mining residue. We believe that the next 12 months should lead to the next
step upwards phase for the BellaVista Mine.
Ideon Technologies Inc. is a world pioneer in the application of cosmic-ray
muon tomography. Ideon's discovery platform provides x-ray-like visibility up
to 1 km beneath the Earth's surface, much like medical tomography images the
interior of the body using x-rays. Using proprietary detectors, imaging
systems, inversion technologies, and artificial intelligence, Ideon's
technology maps the intensity of cosmic-ray muons underground and construct
detailed 3D density profiles of subsurface anomalies. Ideon's discovery
platform can identify and image anomalies such as mineral and metal deposits,
air voids, caves, and other structures with density properties that contrast
with the surrounding earth. Ideon is working with several world leading mining
companies, such as BHP, Orano, Teck Corp, Nyrstar and several others, in
applying Ideon's technology to their exploration programs. Our initial
investment at C$0.375 p/s was followed by a financing at C$1.00 p/s nine
months later. We anticipate that another financing round will be sought in
2022 and should allow for a review of our holding value of the investment.
M&FI are currently reviewing several other investment opportunities. The
directors look forward to providing shareholders with more information on all
the investments, in due course if they progress.
On behalf of the Board
Mark T. Brown, Chairman
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon
the publication of this announcement via a Regulatory Information Service,
this inside information is now considered to be in the public domain.
FOR MORE INFORMATION:
Jacques Vaillancourt, Mineral & Financial Investments
Ltd. +44 777 957 7216
Katy Mitchell and Ben Good, WH Ireland Limited
+44 207 220 1666
Jon Belliss, Novum Securities
Limited
+44 207 399 9400
Statement of comprehensive Income
for the 6 months ended 31 December 2021
UNAUDITED UNAUDITED AUDITED
6 months to 6 months to 12 months to
31 December 31 December 30 June
2021 2020 2021
Note £'000 £'000 £'000
Continuing operations:
Investment income 50 2 96
Fee revenue - - 3
Net gains on investments 233 372 1,263
Total income 283 374 1,362
Operating expenses (198) (152) (341)
Other gains and losses 57 (4) (24)
Profit before taxation 142 218 997
Taxation expense - (11) (33)
Profit for the period attributable to owners of the Company 142 207 964
Earnings per share attributable to owners of the Company during the period 3
pence pence pence
Basic: 0.4 0.6 2.7
Diluted: 0.4 0.6 2.7
Statement of Financial Position
as at 31 December 2021
UNAUDITED UNAUDITED AUDITED
31 December 31 December 30 June
2021 2020 2021
£'000 £'000 £'000
CURRENT ASSETS
Financial assets 6,564 5,311 5,822
Trade and other receivables 14 81 27
Cash and cash equivalents 233 578 855
6,811 5,918 6,704
CURRENT LIABILITIES
Trade and other payables 128 156 163
Convertible unsecured loan notes 10 10 10
138 166 173
NET CURRENT ASSETS 6,683 5,752 6,531
NON-CURRENT LIABILITIES
Deferred tax provision (93) (71) (93)
NET ASSETS 6,580 5,681 6,438
EQUITY
Share capital 3,096 3,096 3,096
Share premium 5,892 5,892 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 (18,173) (19,072) (18,315)
SHAREHOLDERS' EQUITY 6,580 5,681 6,438
Statement of Changes in equity
for the 6 months ended 31 December 2021
Share Share Loan note Share option reserve Other reserves Accumulated Total
capital premium reserve losses equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 June 2020 3,096 5,892 6 23 15,736 (19,279) 5,474
Profit for the 6 months to - - - - - 207 207
31 December 2020
At 31 December 2020 3,096 5,892 6 23 15,736 (19,072) 5,681
Profit for the 6 months to - - - - - 757 757
30 June 2021
At 30 June 2021 3,096 5,892 6 23 15,736 (18,315) 6,438
Profit for the 6 months to - - - - - 142 142
31 December 2021
At 31 December 2021 3,096 5,892 6 23 15,736 (18,173) 6,580
Statement of Cash flows
for the 6 months ended 31 December 2021
UNAUDITED UNAUDITED AUDITED
6 months to 6 months to 12 months to
31 December 31 December 30 June
2021 2020 2021
£'000 £'000 £'000
OPERATING ACTIVITIES
Profit/(loss) before taxation 142 218 997
Adjustments for:
Net gains on investments (233) (372) (1,263)
Investment income (50) (2) (96)
Operating cashflow before working capital changes (141) (156) (362)
(Increase)/decrease in trade and other receivables 13 52 54
Increase/(decrease) in trade and other payables (35) 29 36
Net cash outflow from operating activities (163) (75) (272)
INVESTING ACTIVITIES
Purchase of financial assets (811) (906) (2,269)
Disposal of financial assets 343 1,282 3,116
Investment income 9 2 5
Net cash (outflow)/inflow from investing activities (459) 378 852
Net (decrease)/increase in cash and cash equivalents (622) 303 580
Cash and cash equivalents at start of period 855 275 275
Cash and cash equivalents at end of period 233 578 855
Notes to the unaudited interim statement
for the 6 months ended 31 December 2021
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 2021.
This interim financial information for the 6 months to 31 December 2021 was
approved by the board on 30 March 2022.
The unaudited interim financial information for the 6 months to 31 December
2021 does not constitute statutory accounts. The comparative figures for the
year ended 30 June 2021 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
2020 2019 2020
£'000 £'000 £'000
Weighted average number of shares for calculating basic earnings per share 35,135,395 35,135,395 35,135,395
Weighted average number of shares for calculating fully diluted earnings per 35,465,395 35,192,285 35,204,897
share
4. The interim report is available to view and download from the Company's
website: www.mineralandfinancial.com (http://www.mineralandfinancial.com/)
1 Audited Fiscal Year end results
2 UK Office for National Statistics
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