Last checked at 19 Dec 2019 07:00
MINERAL AND FINANCIAL INVESTMENTS LIMITED
Quarterly Net Asset Value and Operational Update
HIGHLIGHTS:
·; NAV (Fully Diluted) per share on September 30, 2019 was 15.15p, up 124.4% y/y from 6.75p
·; NAV at the end of September 30, 2019 was £5.346M up 126.7% year on year, from £2.359M
·; Precious metals deliver solid gains in portfolio as uncertainty dominates markets
·; Lagoa Salgada increased Measured & Indicated resource by 71% during the quarter
George Town, Cayman Islands - December 19, 2019 - Mineral and Financial Investments Limited (LSE-AIM: MAFL) ("M&FI" "MAFL" or the "Company") is very pleased to provide an unaudited quarterly update of its Net Asset Value (NAV) and provide an operational update for the quarterly period ending 30th September, 2019. During the period M&FI's net assets increased by 4.5% to £5,346,000 from £5,114,000 at 30 June 2019. The Company's tactical portfolio continues to face uncertainty around trade policy and commodity demand globally whilst benefitting from its precious metals exposure.
The following is a summary of the NAV, updated to include this unaudited NAV calculation:
| 31 Dec. 2016 (FYE) | 31 Dec. 2017 (FYE) | 30 June 2018 (FYE) | 30 June 2019 (FYE) | 30 Sept. 2018 (Q1) | 30 Sept. 2019 (Q1) | CAGR (%) Q1-'19 vs FYE '16 |
Net Asset Value (£'000)1 | £1,495 | £2,603 | £2,623 | £5,114 | £2,359 | £5,346 | 68.0% |
NAV per share (FD)1 | 6.25p | 7.43p | 7.49p | 14.50p | 6.75p | 15.15p | 38.0% |
NET ASSET VALUE
Our First Quarter Net Asset Value NAV (FD), for the period ending September 30, 2019 (unaudited) rose to 15.15p, an annual increase of 124.4% from 6.75p, and an increase of 5% on the previous quarter. The NAV increased from £2.359 million a year ago to £5.346 million an increase of 126.7% Q1/Q1, or an increase of 4.5% sequentially over Q4. The increase in the NAV this quarter is due to a strong performance in precious metals. Over the past couple of years M&FI has been building exposure to an anticipated move in precious metals through investments in gold, silver and platinum ETFs, major gold producers and as the cycle evolves adding earlier stage development and exploration companies. The prices of precious metals continued to outperform base metals during the quarter with a rise in gold and silver of 4.5% and 11% respectively as investors moved into safe haven assets.
The quarter's NAV was negatively impacted by the decline in the market value of the Company's total holding of shares in Ascendant Resources (ASND), reflecting a weak performance by industrial metals including zinc. The Company values ASND's position on the cost curve, providing leverage to the price of zinc. Zinc metal inventories continue to languish at multi-decade lows whilst smelting capacity remains constrained, restricting any potential rise in output of refined metal.
The Company's cash position at the end of the quarter is £104,000, while its working capital is £5,393,000. We continue to have no long term debt.
ECONOMIC OVERVIEW
M&FI uses the IMF Economic studies to assess global economic performance due to its consistent, disciplined and global span. We include an economic comment as our portfolio is and will always be impacted by global economic performance. The world's economic performance has been positive in 2019, but growth rates were lower than in 2018 (IMF, 2019). We believe this subdued rate of growth is a consequence of rising trade barriers; elevated uncertainty surrounding trade and geopolitics; idiosyncratic factors causing macro-economic strain in several emerging market economies; and structural factors, such as low productivity growth and aging demographics in advanced economies. Growth in advanced economies, notably the USA, slowed in large part due to, we believe, to its imposition of various tariffs on trade, chiefly with China.
As we enter into 2020, a US presidential election year, there is cause for hope that trade hostilities will diminish. The IMF expects that economic growth rates will increase to an average of 4.60% for the economic activities of Emerging Markets and Developing Economies. In contrast, the economic growth of advanced economies, as defined by the IMF, will experience no change in its forecasted 2019 average economic growth rate of 1.70% in 2020. In the IMF's forecast, what would appear to be a muted economic outlook generally, should nevertheless be a sound environment for metal consumption as emerging and developing economies have been and will continue to be the source of most new demand for metals and minerals as they advance from "Developing" to "Emerging" economies.
TACTICAL PORTFOLIO
With the exception of Ascendant Resources, the broader Tactical Portfolio performed well during the quarter, up 25% after stripping out ASND. Early in the first quarter of this financial year M&FI also announced it had increased its position in Ascendant Resources (which owns 25% of Redcorp as part of its earn in agreement) by 190,000 shares to 2,242,000 shares. MAFL has also initiated several new positions this quarter in Victoria Gold, Teranga, Leagold and Fresnillo whilst adding to Artemis Resources, EnCana Corp., ProShares UltraPro Short QQQ ETF and Trevali. EnCana was a new addition to the portfolio in Q3, it is a a leading North American energy producer that is focused on growing its strong portfolio of diverse resource plays producing natural gas, oil and natural gas liquids. We have closed out our Platinum ETF position and the Newmont holding.
STRATEGIC PORTFOLIO
We believe that M&FI's strategic decision to invest in zinc 4 years ago continues to reward shareholders through our 75% ownership of Redcorp Empreedimentos Mineiros Lda. (Redcorp), whose Lagoa Salgada project progresses towards PEA. Following ASND's successful drill campaign, in September 2019 Redcorp significantly increased the Measured & Indicated Resource by 71% to 10.3Mt, while the total resource (M&I and Inferred) for the LS North, Central and South zones now totals 23.1Mt (see announcement dated 25 September 2019). One of the company's smaller gold positions Toro Gold, was acquired by Resolute Mining during the quarter for $274m in cash and Resolute Mining Ltd shares thereby moving the position into the more liquid Tactical Portfolio. Resolute is an Australian based gold mining company with a market cap of A$1.02 Billion and gold mining assets in west Africa and Australia. Its resource base is about 18.0 million ounces of gold, while its production and cost guidance for the 12 months to 31 December 2019 is 400,000 ounces of gold at an All-In Sustaining Cost of US$1,020 per ounce.
MAFL is 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. Several of these opportunities are private.
FOR MORE INFORMATION:
Jacques Vaillancourt, Mineral & Financial Investments Ltd. +44 780 226 8247
Katy Mitchell and Jessica Cave, WH Ireland Group Limited +44 161 832 2174
Jon Belliss, Novum Securities Limited +44 207 382 8300
1The net asset value calculation is not auditted and is made on the basis that the Company has 35,037,895 shares in issue. All listed investmentsare valued at the closing bid price as at September 30, 2018. The Company has investments in unquoted companies that are currently valued at the price at which they last raised capital, although this is subject to review. Full year NAVs are audited. Quarterly NAV statements are unaudited