(Alliance News) - Gunsynd PLC said its loss widened sharply in the first half of its financial year as investee Brazil Tungsten Holdings Ltd floundered.
Shares in Gunsynd were down 11% at 0.008 pence in London in afternoon trading.
For the six months ended January 31, Gunsynd recorded a GBP642,000 loss, much wider than the previous year's GBP248,000 loss after incurrings a GBP400,000 impairment expense on Brazil Tungsten.
Back in February, Gunsynd said that a financially-constrained investee in Brazil may undertake a discounted equity issue to stay in operation or even enter administration.
Brazil Tungsten Holdings Ltd, which Gunsynd has a 6.2% stake in, may turn to a rights issue which would in turn dilute the investment company's stake in the firm.
BTHL may also place itself in administration, which would likely wipe out Gunsynd's stake, Gunsynd said in February.
Since then, Gunsynd has written down its Brazil Tungsten investment to nothing from GBP400,000.
Gunsynd Chair Hamish Harris said on Monday: "The rights issue was not taken up by shareholders and as a result BTHL are in discussion with lawyers over the best way to wind the company up. There will be likely to be no money distributed to shareholders after liquidation."
Harris commented on the Covid-19 outbreak and lockdown measures, noting that panic selling has sharply hit share prices but "in recent days there seems to be a shift towards optimism as parts of Europe are talking of partially ending their lockdowns". He expressed hope that this positive sentiment might "flow through to the markets".
"Historically alcohol has been regarded as recession proof which gives us grounds for some confidence even if the economy enters a prolonged recession which we obviously hope it won't," said Harris.
Gunsynd rolled up its investment in liquor firm Human Brands Inc into a GP378,575 convertible loan note in late January 2020.
Harris said: "Over the past quarter the board of Gunsynd has been actively conducting due diligence on a number of early stage exploration opportunities in the Australian precious metals sector. With the current gold price reaching record highs of 1,800 USD [per ounce] early stage exploration has a strong tail-wind of risk capital willing to invest in in this sector. Due diligence is ongoing and the board hopes to secure an attractive exposure in this space in the short to medium term.
"Gunsynd maintains a low fixed cost structure and with no large general and administration expenses and this will continue through volatile and uncertain conditions across global markets."
By Anna Farley; annafarley@alliancenews.com
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Gunsynd (GUN)