Grit Inv Tst Regulatory News (GRIT)

To: RNS and the Channel Islands Securities Exchange Authority Limited

From: Global Resources Investment Trust plc

Date: 30 October 2015

The Chairman, Lord St John stated,

Introduction

The relative stability in the global commodity markets that I referred to in my previous statement in April 2015 proved to be short lived, with the summer seeing a return to volatile and precipitous falls.

The junior resource sector again proved to be especially vulnerable and illiquid.

On 31 July 2015, your Company announced that it had extended its accounting period from 31 August to 31 December. The rationale behind this move was to better align the Company's accounting period with those of the majority of its investee companies and also the payment periods attaching to its Convertible Unsecured Loan Stock "CULS". Your Company is therefore presenting this second interim report covering the period from 1 September 2014 to 31 August 2015.

Investment and Share Price Performance

At 31 August 2015 your Company's NAV was 39.5p, down 24.0% since 28 February 2015 and a total of 41.2% for the year since 31 August 2014. The NAV at the time of writing is 35.4p.

The Company's ordinary share price has continued to decline faster than the NAV, falling 47.0% to 11.1p during the six month period. This decline has continued and the share price is currently 5.75p, representing a discount to the prevailing NAV per share of no less than 84%. The capitulation of investor sentiment in the sector is perhaps illustrated by the magnitude of the spread at which your Company's shares trade; the bid price is 4.0p and the offer price 7.5p.

Within the investment portfolio itself all is not doom and gloom, although there is no denying the funding problems that even robust projects have found themselves suffering. You will find more on this in the Investment Manager's Review and in the review of the top ten investments.

Gearing and 9% Cumulative Unsecured Loan Stock 2018 ('CULS')

The Company issued £5 million nominal of CULS to provide working capital. The CULS provide a degree of structural gearing and the Company was 26.9% geared at 31 August 2015.

Under the terms of the CULS your Company gave an undertaking that the cover ratio (being the ratio of the value of its investment portfolio to the principal amount of the outstanding CULS) must be at all times no less than 4:1. In October 2015, due to the further fall in the NAV noted above, the ratio dropped below this level.

The conversion of a total of £300,000 of the CULS in issue, at an exercise price of 75p per share, by Resource Development Partners Limited, which had the combined benefit of reducing your Company's debt whilst providing a small boost to the NAV per share, has seen the coverage ratio increase back above the minimum level. At the time of writing, it is 4.0:1. 

Outlook and Future Plans

When I wrote to you in April 2015 I said that we were "considering several options both to support our portfolio of companies and to pro-actively rationalise and consolidate the portfolio in anticipation of a return to a growth cycle." The speed and depth of the summer retreat has caused us to accelerate this process and I expect to be writing to you shortly with proposals for you to consider in connection with your Company's future.

Lord St John

Chairman

30 October 2015

Investment Manager's Review

The period under review has proved to be the most difficult for the resource markets since the tail end of the 2000/01 commodity bear market. While commodity prices are for the most part higher in nominal terms than then, resource equities, especially the junior stocks, have experienced considerably greater falls in many cases. This is reflected in the 24.0% decline in the NAV over the half year to 31 August 2015.

The dominant influence on the metal markets and resource equities during the summer months was undoubtedly the negative impact of the economic slowdown in China. The slump in the Shanghai Index in June wiped $2trillion off the Chinese equity market and had a severely depressing effect on bulk commodities, base metals and precious metals. The oil market came under pressure as well, as perceptions of a deal on Iran's nuclear programme heightened the possibility of increased oil production, further depressing the price.

The slowdown in demand from China, and its manufacturing sector experiencing its largest decline in six years, resulted in the CRB Index falling to a six year low in July. The associated Chinese devaluation had an unsettling effect on all financial markets, including commodities and currencies. Virtually all the gains from the so-called commodity supercycle have been eroded since the 2008 peak. In such volatile markets most resource stocks came under pressure, although many were already extremely depressed, trading at or close to all time lows.

Amongst this market turmoil gold was a lone beneficiary, again demonstrating its safe haven status, rising from under $1100 to $1160, before giving up some of the gain. There was little response from the stocks however, with the XAU gold mines index at an all time low relative to the gold price. Taking advantage of the depressed valuations there has been an increase in merger and takeover activity in the small to mid size gold sector. During the first half of the year there have been some fifteen gold company deals, eight among producers, and seven among developers. At current valuations it is easier, and in some cases cheaper, to acquire resource ounces in the market, rather than through exploration.

The fund has over forty per cent exposure to developing gold companies all of which are making steady progress. Our largest holding, Merrex, and its joint venture partner, Iamgold, reported excellent results from the last phase of its 2015 drill programme, and a maiden resource statement is expected before the year end. IncaOne, which is processing high grade ore from the artisanal miners in Peru, has embarked on an ambitious expansion programme to acquire additional plants which will enable a significant increase in production over the next 2-3 years. NuLegacy Gold has completed its fifth phase of drilling in the Cortez trend in Nevada, to earn a 70% working interest in the project from Barrick Gold. An initial estimate of the resource is put at over 100m tonnes at an average grade of 1g/t. More detailed comment can be found in the accompanying notes on the larger holdings.

While some stability has returned to the mining market, the economic outlook remains clouded. The Fed guessing game on US interest rates continues, and the much anticipated increase will be determined by a combination of US and Chinese economic data in the coming months, with any increase being construed as positive.

The commodity breakdown of the portfolio shows little change since the last report, although the gold weighting has increased slightly primarily due to market movements. During the same period, the percentage of unquoted holdings has increased significantly, as in August the GXG Market ceased operations. Both Anglo African Minerals and InCoR Holdings had previously been listed on the GXG Market and consequently they are now classified as unquoted. Both companies are reviewing their plans for re-listing on a recognised stock exchange. In the meantime we continue to rationalise the portfolio holdings and narrow the focus to those companies that have quality projects with the capability of delivering positive returns.

David Hutchins and Kjeld Thygesen

RDP Fund Management LLP

30 October 2015

Top Ten Review

Arakan Resources (19.4%)*

Through its subsidiary, Posit Coal, the company is looking to develop and expand the Kara-Keche thermal coal deposit in the Kyrgyz Republic, where it will establish a 50/50 joint venture with the government. Against a difficult market environment, the company is continuing to explore potential financing options to allow the staged expansion of the Kara-Keche resource. This remains a large scale project with strong economics and attractive payback. Arakan also has four signed copper/gold exploration leases in Myanmar.

Anglo African Minerals (13.5%)*

AAM is looking to be amongst the world's leaders in the bauxite industry, and currently owns the rights to 4 bauxite licences in Guinea and is focused on developing its assets to provide near, medium and long-term production. The company recently announced a JORC compliant inferred mineral resource of 43 million tonnes for its FAR deposit and a favourable scoping study based on a 3 million tonne per annum bauxite export operation, which could be in production within 18 months.

Alhambra Resources (12.7%)*

Canadian listed gold exploration/development company operating in Kazakhstan, where it has a 100% working interest in the 2.4 million acre Uzboy Project, located in the prolific gold belt in north central Kazakhstan, which hosts numerous world class gold deposits. The company is continuing to try and arrange finance to re-start a small scale heap leach project, while also reinstating its exploration program. The deposit was previously explored during the Soviet period and is reported to have a potential resource of over 12 million ounces based on the Soviet C1 and C2 resource categories.

Siberian Goldfields (11.9%)*

Private company developing the Zhelezny Kryazh gold and iron ore deposit in the Chita region of Russia, where a significant high grade resource has already been outlined and initial feasibility studies completed. Significant progress has already been made on-site with completion of a site office, assay labs and a mobile screening and crushing complex and first production is imminent.

Merrex Gold (11.9%)*

The company is in joint venture with IAMGOLD Corporation on the Siribaya Gold Project in Mali, West Africa, which is an advanced stage exploration project with an indicated NI43-101 resource of just over 300,000 ounces at 2.34 g/t. The Siribaya Project is on the same geological trend and only 20 kilometres from Papillion Resources project which was acquired by Canadian gold producer B2 Gold earlier this year. Recent drill results have continued to be positive and a maiden resource statement is expected before year end.

NuLegacy Gold (6.0%)*

A Canadian listed company, with a strong management team, that has been formed with the objective of discovering Carlin-type gold deposits in Nevada. The company has just recently announced that it has now completed its earn-in to a 70% interest in the Iceberg gold deposit in the Cortez gold trend in Nevada, by establishing a threshold resource of 1.0+ million NI43-101 compliant ounces.

Tirex Resources (4.9%)*

Listed in Canada, Tirex is focused on mineral exploration and development activities in Albania, where it has recently announced that it has signed an agreement with the Albanian Geological Survey to collaborate in the metallurgical studies of the zinc-rich copper deposit at Koshai. This collaboration will include the re-opening of the underground workings in Koshai. The company continues to have the support and financial backing of the European Bank for Reconstruction and Development ('EBRD').

Inca One Resources (3.3%)*

A Canadian mineral resource and ore processing company with a gold milling facility in Peru, servicing government permitted small-scale miners. The company's objective is to become the 'processor of choice' for the local miners, by offering long lasting and reliable relationships and superior service. The company announced commercial production earlier this year, and already has significant expansion plans, which will require additional funding.

InCoR Holdings (3.0%)*

InCoR Holdings is a venture capital and holding company in the natural resource sector looking to identify and acquire developing projects and distressed assets identified by its experienced management team. The company was previously listed on the GXG exchange, which closed earlier in the year. As a result, InCoR Holdings is now unquoted. As at the end of September, InCoR Holdings is no longer a top 10 holding.

Saturn Minerals (2.3%)*

An oil and gas, exploration and development company focused in Saskatchewan, Canada. The Williston Basin, located in North Dakota, Montana and Saskatchewan hosts some of the largest reserves of oil and potash as well as significant reserves of coal and natural gas. Since mid-2000, exploration and development of the central parts of the basin has resulted in the basin becoming the second largest oil-producing basin in North America. Saturn Minerals has a 95% interest in over 370,000 acres of oil and gas rights in the Northern Williston Basin, which are some of the largest oil and gas permits in Saskatchewan. The company has completed initial seismic programs on the permits and is currently planning the next stage of exploration, which will include drilling.

* % of total investments as at 31 August 2015.

Enquiries:

RDP Fund Management LLP

David Hutchins

Tel +44 (0) 207 290 8541

Beaumont Cornish Limited

Roland Cornish

Tel: +44 (0) 207 628 3396

Felicity Geidt

Tel: +44 (0) 207 628 3396

R&H Fund Services Limited

Martin Cassels

Tel: +44 (0) 131 524 6140

Condensed Income Statement

Comparative figures for the six months ended 31 August 2014 are not separately presented as the Company did not trade and received no income and incurred no expenditure prior to 7 March 2014 and therefore the figures for the year ended 31 August 2014 are identical to the figures for the six months ended 31 August 2014.

The 'total' column of this statement represents the Company's profit and loss account, prepared in accordance with IFRS.

All revenue and capital items in this statement derive from continuing operations. All of the loss for the period is attributable to the owners of the Company.

No operations were acquired or discontinued in the year.

A Statement of Total Recognised Gains and Losses is not required as all gains and losses of the Company have been reflected in the above Income Statement.

Reconciliation of Movement in Shareholders' Funds

Condensed Balance Sheet

Condensed Cash Flow Statement

Notes to the Condensed Financial Statements

1. Interim results

The unaudited condensed financial statements have been prepared in accordance with International Accounting Standard 'IAS' 34 'Interim Financial Reporting' and the accounting policies set out in the statutory accounts of the Company for the year ended 31 August 2014. The condensed financial statements do not include all of the information required for a complete set of International Financial Reporting Standards ('IFRS') financial statements and should be read in conjunction with the financial statements of the Company for the year ended 31 August 2014, which were prepared under full IFRS requirements.

The Company has extended its accounting period to 31 December 2015. The Company therefore presents interim accounts for the second interim period to 31 August 2015.

2. Income

Income for the year ended 31 August 2015 was in a net negative position as a result of accrued interest income recognised in the year ended 31 August 2014 relating to Alhambra Resources, Arakan Resources, Siberian Goldfields and Archer Petroleum being receivable in the form of shares rather than cash as initially anticipated. The value of the shares to be received is expected to be at a lower level than the cash receivable and therefore a reduction to interest accrued on the securities was made to reflect this change. The level of income earned for the six months ended 31 August 2015 was £132,000 (year ended 31 August 2015: £358,000) and the write back of income accrued in relation to the year ended 31 August 2014 during the six months ended 31 August 2015 amounted to £39,000 (year ended 31 August 2015: £406,000).

3. Losses on investments

Included within losses on investments for the six months ended 31 August 2015 were realised losses of £3,232,000 and unrealised losses of £1,224,000. Included within losses on investments for the year ended 31 August 2015 were realised losses of £3,567,000 and unrealised losses of £6,116,000.

4. Return per ordinary share

The revenue loss per ordinary share for the six months ended 31 August 2015 is based on a net loss after taxation of £477,000 and on a weighted average of 39,570,012 ordinary shares in issue during the period.

The revenue loss per ordinary share for the year ended 31 August 2015 is based on a net loss after taxation of £1,269,000 (31 August 2014: £184,000) and on a weighted average of 39,570,012 (31 August 2014: 39,122,895) ordinary shares in issue during the year.

The capital return per ordinary share for the six months ended 31 August 2015 is based on a net capital loss after taxation of £4,456,000 and on a weighted average of 39,570,012 ordinary shares in issue during the period.

The capital return per ordinary share for the year ended 31 August 2015 is based on a net capital loss after taxation of £9,683,000 (31 August 2014: £10,117,000) and on a weighted average of 39,570,012 (31 August 2014: 39,122,895) ordinary shares in issue during the year.

5. 9% Convertible Unsecured Loan Stock 2017

On 7 March 2014, the Company issued £4,850,000 9% Convertible Unsecured Loan Stock 2017 ('CULS') and 4,850,000 warrants (for nil consideration on the basis of one warrant for every £1 of CULS subscribed). A further £150,000 CULS and 150,000 warrants were issued on 28 November 2014.

On 30 October 2014, the Company's CULS were admitted to listing on the Channel Islands Securities Exchange Authority Limited.

The CULS are convertible in amounts of multiples of £50,000 nominal of loan notes into ordinary shares at the option of the holder of the CULS at the conversion price per ordinary share, which for the period from 7 March 2015 (the first anniversary) to the business day preceding the second anniversary is the higher of:

(i) the 15-day Volume Weighted Average Price ('V WAP') for the ordinary shares calculated on the first anniversary of the CULS capped at £1.00 per ordinary share and

(ii) the sum of £0.75, from the first anniversary of the CULS until the business day preceding the second anniversary of CULS.

The 15-day V WAP based on the mid-market share price calculated on the first anniversary was £0.2089. The conversion rate will therefore be £0.75 for the year to 6 March 2016.

From 7 March 2016 (the second anniversary) until the redemption of the CULS the conversion price per ordinary share will be the higher of:

(i) the 15-day V WAP for the ordinary shares calculated on the second anniversary of CULS capped at £1.00 per ordinary share and

(ii) the sum of £0.50.

V WAP is the volume weighted average price and is a measure of the average price within a time period.

Warrant instrument

The warrants are unlisted and are exercisable up to the fifth anniversary of admission in amounts or multiples of 50,000 warrants at £1.00 per ordinary share.

As at 31 August 2015, the Company had issued £5,000,000 CULS and 5,000,000 warrants.

6. Reserves

7. Net Asset Value per Ordinary Share

The net asset value per ordinary share is based on net assets of £15,647,000 (31 August 2014: £26,599,000) and on 39,570,012 (31 August 2014: 39,570,012) ordinary shares, being the number of ordinary shares in issue at the period end.

8. Related Party Transactions and fees paid to RDP Fund Management LLP

The Board of Directors is considered to be a related party. No Director has an interest in any transactions which are, or were, unusual in their nature or significant to the nature of the Company.

Mr N Paris is an employee of LIM Advisors which is a manager of LIM Asia Multi-Strategy Fund ('LIM'). LIM is the largest holder of the Company's CULS and is authorised to appoint a director to the Board to represent its interest. Mr N Paris is the representative appointed on behalf of LIM.

The Directors of the Company received fees for their services. Total fees for the six months to 31 August 2015 were £44,000 (year ended 31 August 2015: £87,000, year ended 31 August 2014: £43,000) of which £17,000 (31 August 2014: £22,000) remained payable at the period end.

RDP Fund Management LLP ('RDP') received £138,000 in relation to the six months ended 31 August 2015 (year ended 31 August 2015: £303,000, year ended 31 August 2014: £204,000) of which £20,000 (31 August 2014: £50,000) remained payable at the period end.

Since 31 August 2015, the Company has received a notification of exercise in relation to the CULS from Resources Development Partners Limited, a company related to the Investment manager. See note 9 for details.

9. Post Balance Sheet Events

As disclosed in note 5, at 30 June 2015 the Company had issued £5,000,000 nominal of 9% Convertible Unsecured Loan Stock. The Company has given an undertaking that the coverage ratio (being the ratio of the value of its investment portfolio to the principal amount of the outstanding CULS) is at all times no less than 4:1. As a result of the NAV issued on 8 October 2015, the coverage ratio reduced to 3.8:1 and, accordingly, the Company was in breach of this undertaking.

On 15 October 2015, the Company received a notification of exercise from Resources Development Partners Limited, a company related to the Investment Manager, to convert £250,000 of CULS into equity. As a result of the conversion the Company issued 333,333 Ordinary Shares to Resources Development Partners Limited at an issue price of £0.75 per share. Following the conversion of the CULS, the coverage ratio increased to 4.04 and the Company was no longer in breach of the coverage ratio undertaking.

As a result of the NAV announced on 23 October 2015, the cover ratio again fell below the required level. On 29 October 2015, the Company received a notification of exercise from Resources Development Partners Limited to convert an additional £50,000 of CULS into equity. As a result of the conversion the Company issued 66,667 Ordinary Shares to Resources Development Partners Limited at an issue price of £0.75 per share. Following the conversion of the CULS, the coverage ratio increased to 4.01 and the Company was no longer in breach of the coverage ratio undertaking.

The Company has a ten day remedy period, from the date at which it becomes aware of a breach of the required cover ratio, in which to restore the cover ratio to 4 times, failing which, the CULS holders have the ability to require the immediate repayment of the CULS. Any such demand for immediate repayment could adversely impact the Net Asset Value of the Company.

At 30 October 2015, following the conversion of the CULS and the issue of the loan notes detailed above, the Company had 39,970,012 Ordinary Shares in issue and £4,700,000 nominal of 9% Convertible Loan Stock.

The Company's NAV and coverage ratio will subsequently fluctuate due to market movements, however, as at 29 October 2015, the latest practicable date prior to the publication of this report, the Company's NAV was 35.35 pence per Ordinary Share and the coverage ratio was 4.01.

10. Accounts

The results for the six months ended 31 August 2015 and the year ended 31 August 2015, which have not been reviewed by the Company's auditors pursuant to the Auditing Practices Board guidance on 'Review of Interim Financial Information', constitute non-statutory accounts in terms of Section 434 of the Companies Act 2006. The latest published accounts which have been delivered to the Registrar of Companies are for the year ended 31 August 2014; the report of the auditors thereon was unqualified and did not contain a statement under Section 498 of the Companies Act 2006. The abridged financial statements shown above for the year ended 31 August 2014 are an extract from those accounts.

The second interim report and accounts for the period ended 31 August 2015 will be made available on the website www.grit.london. Copies may also be obtained from the Company Secretary, R&H Fund Services Limited, 15-19 York Place, Edinburgh, EH1 3EB.

Directors' Statement of Principal Risks and Uncertainties

The risks, and the way in which they are managed, are described in more detail in the Strategic report contained within the Annual Report and Financial Statements for the year ended 31 August 2014. In the opinion of the Directors, other than the matter in relation to the CULS discussed in note 9, the Company's principal risks and uncertainties have not changed materially since the date of the report and are not expected to change materially for the rest of the Company's financial reporting period to 31 December 2015.

Statement of Directors' Responsibilities in respect of the Interim Report

We confirm that to the best of our knowledge:

• the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' and gives a true and fair view of the assets, liabilities, financial position and profit of the Company;

• the Chairman's Statement and Investment Manager's Review (together constituting the Interim Management Report) include a fair review of the information required by the Disclosure and Transparency Rules ('DTR') 4.2.7R, being an indication of important events that have occurred during the period and their impact on the financial statements;

• the Statement of Principal Risks and Uncertainties referred to above is a fair review of the information required by DTR 4.2.7R; and

• the condensed set of financial statements includes a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the period and that have materially affected the financial position or performance of the Company during the period.

On behalf of the Board

Lord St John

Chairman

30 October 2015