TIDMBSRT
RNS Number : 7629L
Baker Steel Resources Trust Ltd
15 September 2021
BAKER STEEL RESOURCES TRUST LIMITED
(Incorporated in Guernsey with registered number 51576 under the
provisions of The Companies (Guernsey) Law, 2008 as amended)
15 September 2021
BAKER STEEL RESOURCES TRUST LTD
(the "Company")
Half-Yearly Report and Unaudited Condensed Interim Financial
Statements
For the period from 1 January 2021 to 30 June 2021
The Company has today, in accordance with DTR 6.3.5, released
its Half-Yearly Report and Unaudited Condensed Interim Financial
Statements for the period ended 30 June 2021. The Report is
available via www.bakersteelresourcestrust.com and will shortly be
submitted to the National Storage Mechanism and will also shortly
be available for inspection at www.hemscott.com/nsm.do
Further details of the Company and its investments are available
on the Company's website www.bakersteelresourcestrust.com
Enquiries:
Baker Steel Resources Trust Limited +44 20 7389 8237
Francis Johnstone
Trevor Steel
Numis Securities Limited +44 20 7260 1000
David Benda (corporate)
James Glass (sales)
HSBC Securities Services (Guernsey) Limited + 44 (0)1481 717 852
Company Secretary
DIRECTORS: Howard Myles (Chairman)
Charles Hansard
Fiona Perrott-Humphrey
David Staples
(all of whom are non-executive and independent)
REGISTERED OFFICE: Arnold House
St. Julian's Avenue
St. Peter Port
Guernsey, GY1 3NF
Channel Islands
MANAGER: Baker Steel Capital Managers (Cayman) Limited
PO Box 309
George Town
Grand Cayman KY1-1104
Cayman Islands
INVESTMENT MANAGER: Baker Steel Capital Managers LLP*
34 Dover Street
London W1S 4NG
United Kingdom
STOCK BROKERS: Numis Securities Limited
10 Paternoster Square
London EC4M 7LT
United Kingdom
SOLICITORS TO THE COMPANY: Norton Rose Fulbright LLP
(as to English law) 3 More London Riverside
London SE1 2AQ
United Kingdom
ADVOCATES TO THE COMPANY: Ogier
(as to Guernsey law) Redwood House
St. Julian's Avenue
St. Peter Port
Guernsey GY1 1WA
Channel Islands
ADMINISTRATOR & COMPANY SECRETARY: HSBC Securities Services (Guernsey) Limited
Arnold House
St. Julian's Avenue
St. Peter Port
Guernsey GY1 3NF
Channel Islands
* The Investment Manager was authorised as an Alternative
Investment Fund Manager ("AIFM") for the purpose of
the Alternative Investment Fund Managers Directive ("AIFMD") on 22 July 2014.
HSBC
Securities
Services
SUB-ADMINISTRATOR TO THE COMPANY: (Ireland) DAC
1 Grand Canal
Square
Grand Canal
Harbour
Dublin 2
Ireland
HSBC
Continental
CUSTODIAN TO THE COMPANY: Europe
1 Grand Canal
Square
Grand Canal
Harbour
Dublin 2
Ireland
SAFEKEEPING
AND HSBC
MONITORING Continental
AGENT: Europe
1 Grand Canal
Square
Grand Canal
Harbour
Dublin 2
Ireland
AUDITOR: BDO Limited
P O Box 180
Place du Pre
Rue du Pre
St. Peter
Port
Guernsey GY1
3LL
Channel
Islands
Computershare
Investor
Services
(Jersey)
REGISTRAR: Limited
Queensway
House
Hilgrove
Street
St Helier
JE11ES
Jersey
Computershare
Investor
Services
(Jersey)
UK PAYING AGENT AND TRANSFER AGENT: Limited
Queensway
House
Hilgrove
Street
St Helier
JE11ES
Jersey
Computershare
Investor
Services
(Jersey)
RECEIVING AGENT: Limited
Queensway
House
Hilgrove
Street
St Helier
JE11ES
Jersey
PRINCIPAL BANKER: HSBC Bank plc
8 Canada
Square
London E14
5HQ
United
Kingdom
CHAIRMAN'S STATEMENT
For the period from 1 January 2021 to 30 June 2021
During the first six months of 2021, the unaudited net asset
value per share rose 2.7% to 98.8 pence per share with the share
price rising 27.7% to 94.5 pence per share. The market for mining
shares was mixed with precious metals shares weaker in line with
the reduction in the prices of gold and silver after their strong
performances in 2020, whilst base metal and iron ore companies
continued to be strong due to robust demand for their products. The
EMIX Global Mining Index in Sterling terms rose 11.4% over the same
period.
In the past 6 months markets have continued to be volatile as
investors struggle to balance the deflationary pressure from the
Covid-19 pandemic and the inflationary pressure from government
stimulus programmes coupled with historically low interest rates.
The Company's Investment Manager believes that on balance inflation
is likely to be the winner of this battle which will be good for
precious metals especially if negative real interest rates persist.
It is clear that one of the main beneficiaries of these stimulus
programmes and the recovery of the global economy will be
commodities, particularly those metals required for improving
infrastructure, especially related to the energy transition as
countries look to "build back better". Your Company is well
positioned for these developments with a material exposure to
copper, silver and tin.
It was a frustrating half for the Company's largest holding,
Bilboes Gold Ltd. Bilboes reached outline terms for a partial sale
of the company to a large gold producer but was unable to reach a
final agreement. The process is more fully described in the
Investment Manager's Report but ultimately Bilboes gold mine in
Zimbabwe remains a very attractive project and we are confident
that its value can be realised, albeit with some delay.
There is little doubt that the sale of Bilboes was affected by
the travel restrictions imposed by the Covid-19 pandemic with
potential acquirors unable to visit the project and meet with
management in person. With strong commodity prices over the past
year, most producing companies have generated significant cash and
once travel restrictions start to ease, we expect to see increased
mergers and acquisition activity in the mining sector. This should
help the Company to monetize some of its development projects.
COVID-19
The Company itself has been able to operate efficiently during
the global lockdown with the full use of video conferencing and
other electronic media. All of our major service providers have
maintained normal service levels throughout. The main issue has
been the Investment Manager's inability to visit potential and
existing operations due to travel restrictions. Although the
Investment Manager has continued to keep close contact with the
management of all the Company's investments and there has not been
any significant impact on any of the portfolio holdings due to
Covid during 2021, it is hoped that site visits to both existing
and potential new investments can resume shortly.
Outlook
While broader stock markets appear to be highly valued based on
historical norms, mining share valuations have lagged considerably
and look undervalued in absolute and relative terms to the general
market. Some commentators are forecasting that the commodity
markets are entering a new "supercycle" due to strong supply/demand
dynamics. This remains to be seen but either way your Company is
well positioned for either a continuation of the bull market for
commodities or a period of consolidation. In the second half of the
year we can look forward to potential IPO's from two of our core
holdings, Tungsten West Limited in the second half of 2021 and
First Tin Ltd (formerly Anglo Saxony Mining Ltd) in the first half
of 2022. Although IPO's provide price discovery and a route towards
liquidity, as major shareholders in both companies we can expect to
be requested by the sponsoring brokers to enter into lock-ups for a
period to ensure an orderly market although if there is excess
demand there may be an opportunity to sell part of holdings
concurrent with the IPO.
It was pleasing to see the discount between the share price and
the NAV narrowing towards the end of the period albeit it has
opened up again somewhat. The Investment Manager is seeing a number
of interesting opportunities and once we have realised some of the
latent value in the current portfolio, the Company will seek to
take advantage of these ahead of a potential further increase in
commodities. and possibly use its equity should the discount narrow
again.
Howard Myles
Chairman
14 September 2021
INVESTMENT MANAGER'S REPORT
For the period from 1 January 2021 to 30 June 2021
Financial Performance
The unaudited Net Asset Value per Ordinary Share ("NAV") as at
30 June 2021 was 99.8 pence, an increase of 2.7% in the period
compared with the increase in the EMIX Global Mining Index of 11.4%
in Sterling terms.
For the purpose of calculating the NAV per share, unquoted
investments were carried at fair value as at 30 June 2021 as
determined by the Directors and quoted investments were carried at
their quoted prices as at that date.
Net assets at 30 June 2021 comprised the following:
GBPm % of net assets
Unquoted Investments 98.7 92.9
Quoted Investments 6.8 6.4
Cash and other net assets 0.7 0.7
------- ------------------
106.2 100.0
Investment Update
Largest 10 Holdings - 30 June 2021 % of NAV
Bilboes Gold Limited 18.7
Futura Resources Limited 15.4
Tungsten West Limited 15.1
Cemos Group Plc 13.6
Polar Acquisition Limited 8.4
Anglo Saxony Mining Limited (subsequently
changed to First Tin Ltd) 5.1
Azarga Metals Corporation 4.0
Mines & Metals Trading (Peru) Plc 3.8
Nussir ASA 3.8
Kanga Potash (formerly Sarmin Minerals
Exploration) 2.6
---------
90.5
Other Investments 8.8
Cash and other net assets 0.7
100.0
=========
Largest 10 Holdings - 31 December 2020 % of NAV
Bilboes Gold Limited 19.5
Futura Resources Limited 16.2
Cemos Group Plc 14.5
Tungsten West Limited 13.2
Polar Acquisition Limited 8.9
Mines & Metals Trading (Peru) Plc 4.4
Anglo Saxony Mining Limited 3.9
Nussir ASA 3.4
Azarga Metals Corporation 2.7
Kanga Potash (formerly Sarmin Minerals Exploration) 2.7
89.4
Other Investments 9.7
Cash and other net assets 0.9
--------------------------
100.0
==========================
During the first half of 2021, the performance of commodities
was mixed with precious metals weaker (gold down 6.8% and silver
down 1%) following strong performances in 2020. Industrial metal
prices continued the rises seen in 2020 with demand for iron ore
(up 33.5%) and copper (up 20.7%) both strong due to government
stimuli focused on improving infrastructure following the slowdown
induced by the COVID-19 pandemic. In addition, the price of coking
coal from Australia recovered, up 91% from around US$100 at the
beginning of the year once China recommenced imports from Australia
due to the demand from the local steel industry.
It was a frustrating half year for the Company's largest
investment, Bilboes Gold Limited, which completed a positive
Definitive Feasibility Study ("DFS") on its Isabella/McCays/Bubi
gold project in Zimbabwe in early 2020 and then undertook a formal
process for financing or sale in the second half of 2020. At the
beginning of 2021, the outline terms of a US$118 million cash offer
were agreed by the Bilboes' shareholders and detailed negotiations
commenced. Although the price offered was below that which we had
hoped for, the offer had been accepted as it allowed those
shareholders who wished an exit to sell for cash whilst the
potential purchaser had sufficient financial strength to fund the
development of the project without needing to resort to bank
finance. This was important to the local management shareholders
who would be retaining their interest. However shortly after the
period end, following exhaustive negotiations, it was decided not
to proceed with the proposed transaction due to certain post-sale
conditions required by the purchaser which would have severely
restricted the Company from reinvesting the proceeds of the sale.
Bilboes and its advisers are currently investigating the potential
of an IPO as the best way to raise the requisite development
finance and realise the significant value of the
Isabella/McCays/Bubi gold project whilst also re-engaging with
other potentially interested parties.
Futura Resources, another of the Company's core investments, has
been in a state of hiatus since the coal price was impacted by
China ceasing to import coking coal from Australia from late 2020,a
move which considerably compounded Covid induced market
uncertainty. This meant that the price of Australian hard coking
coal for the steel industry, such as that to be produced by
Futura's Wilton and Fairhill mines in Queensland, fell to around
US$100 per tonne, significantly below consensus long-term expected
prices. China has recently lifted its unofficial embargo on
Australian coal and the market has stabilised again, with
Australian coking coal prices back above US$200 per tonne. As a
result Futura has reengaged with potential investors and expects to
be able to complete the financing for the development of Fairhill,
the first of its two mines to be brought into production, before
the end of 2021.
Three of the Company's main investments are currently moving
towards a listing.
-- Tungsten West Ltd completed a positive feasibility study on
restarting the Hemerdon tungsten mine in Devon, UK in March 2021
which outlined a GBP45m initial capital requirement for a mine
expected to generate on average GBP34 million of EBITDA per annum
for over 20 years. This resulted in an after tax NPV5% of GBP272
million with an IRR of 33%. Advisers have been appointed and an IPO
on the AIM market of the London Stock Exchange is planned for
October 2021.
-- In April 2021 Anglo Saxony Mining Limited ("ASM") completed a
GBP6 million equity raising for its Tellerhauser tin mine in
Saxony, Germany. In 2020 ASM completed a pre-feasibility study for
the mine which would produce 6,500 tonnes per annum of 50% tin
concentrate. The price of tin has doubled in the past year as it is
a key ingredient in the world's increasing shift to
electrification. This background has significantly increased
interest in Tellehauser as a potential European tin producer and
ASM changed its name to First Tin Limited in August in anticipation
of an IPO in the first half of 2022.
-- Nussir ASA is planning to complete a revised feasibility
study on its copper project in northern Norway on a fully
electrified, zero carbon basis. This has taken longer than expected
due to the lack of reliable operating data as much of the electric
mining equipment has only been available as prototypes until
recently. Once the feasibility study has been completed, Nussir
will seek to raise the development capital via an IPO, likely in
early 2022.
One of the Company's investments which has successfully
completed an IPO during the first half of 2021 is Mines &
Metals Trading Peru PLC ("MMTP") which completed a business
combination with TSX-V listed mineral exploration company Oro X
Mining Corp together with a C$14.2 million equity raising with the
resultant merged company called Silver X Mining Corporation. The
combination of Oro X's and MMTP's teams, assets and operational
experience creates a growth-focused platform primed to consolidate
the fragmented Peruvian silver landscape. The Company's loan to
MMTP is convertible into Silver X shares at the Company's option
and although the statements of the newly elected government in Peru
which have suggested higher taxes on mining companies in that
country appear to have weighed on the share price of Silver X in
recent weeks, the Company has until June 2022 to decide whether to
convert or require repayment in cash.
During the first half of 2021 the Company did not make any new
core investments pending the expected sale for cash of its
investment in Bilboes. A number of new projects were reviewed as
the market for mining projects continued the recovery seen over the
past two years however due to COVID-19 pandemic travel restrictions
it has not been practical for the Investment Manager to visit
prospective projects, a pre-requisite to investment.
Elsewhere in the portfolio, the Company continues to hold a
royalty interest in the Prognoz silver project in far east Russia.
The owner of the project, Polymetal International, has approved the
accelerated development of the open-pit mine at Prognoz with ore
processing at its Nezhda concentrator. First payable concentrate
production is expected in the third quarter 2023. Cemos Group PLC
achieved strong production in the first half of the year generating
EBITDA of approximately EUR6 million. However due to new
restrictions on importing clinker, the operation's main input
material, into Morocco and difficulties in acquiring locally
produced clinker, Cemos has delayed its decision to double capacity
until the position becomes clearer.
In August 2021, TSX-V listed Azarga Metals Corporation released
the results of its updated Preliminary Economic Assessment on its
Unkur copper/silver project in far eastern Russia. A development
base case of an initial open-pit mining operation is envisaged
followed by underground mining which demonstrates attractive
returns with an IRR of 27% and NPV(8%) of US$205 million at long
term consensus metal prices and an IRR 44% and NPV(8%) of US$380m
at recent spot prices of US$10,000 per tonne for copper and US$28
per oz for silver. The exploration potential at the project remains
attractive and a program of additional drilling is planned by the
end of the year targeting additional open-pittable resources which
would likely further enhance the economic returns.
At 30 June 2021 Price / % Change % Change
Index Level in 6 Months in 3 years
Net Asset Value (pence/share) 99.8 +2.7% +55.3%
------------- ------------- ------------
Ordinary Share Price (pence/share) 94.5 +27.7% +87.3%
------------- ------------- ------------
EMIX Global Mining Index (GBP) 973.86 +11.4% +50.1%
------------- ------------- ------------
Chinese Import Iron Ore Fines 62%
Fe spot (US$) 211.13 +33.5% +148.7%
------------- ------------- ------------
Copper (US$/t) 9,351.50 +20.7% +45.4%
------------- ------------- ------------
Gold (US$/oz) 1,770.11 -6.8% +29.0%
------------- ------------- ------------
Silver (US$/oz) 26.13 -1.0% +43.7%
------------- ------------- ------------
Baker Steel Capital Managers LLP
Source: Bloomberg
Investment Manager
September 2021
DIRECTORS' REPORT
For the period from 1 January 2021 to 30 June 2021
The Directors of the Company present the Half-Yearly Report and
Unaudited Condensed Interim Financial Statements for the six months
ended 30 June 2021.
The Directors' Report contains information that covers this
period and the period up to the date of publication of this Report.
Please note that more up to date information is available on the
Company's website www.bakersteelresourcestrust.com .
Status
Baker Steel Resources Trust Limited (the "Company") is a
closed-ended investment company with limited liability incorporated
on 9 March 2010 in Guernsey under the Companies (Guernsey) Law,
2008 with registration number 51576. The Company is a registered
closed-ended investment scheme registered pursuant to the
Protection of Investors (Bailiwick of Guernsey) Law, 1987, as
amended ("POI Law") and the Registered Collective Investment Scheme
Rules 2015 issued by the Guernsey Financial Services Commission
("GFSC"). On 28 April 2010 the Ordinary Shares and Subscription
Shares of the Company were admitted to the Official List of the UK
Listing Authority and to trading on the Main Market of the London
Stock Exchange, Premium Segment.
Investment Objective
The Company's investment objective is to seek capital growth
over the long-term through a focused, global portfolio consisting
principally of the equities, loans or related instruments of
natural resources companies. The Company invests predominantly in
unlisted companies (i.e. those companies that have not yet made an
initial public offering ("IPO")) but also in listed securities
(including special situations opportunities and less liquid
securities) with a view to making attractive investment returns
through the uplift in value resulting from the development
progression of the investee companies' projects and through
exploiting value inherent in market inefficiencies and pricing
anomalies.
Performance
During the period ended 30 June 2021, the Company's unaudited
NAV per Ordinary Share increased by 2.7% and the share price
increased by 28% on the London Stock Exchange. This compares with a
rise in the EMIX Global Mining Index (capital return in Sterling
terms) of 11.4%. A more detailed explanation of the performance of
the Company is provided within the Investment Manager's Report on
pages 4 to 6.
The results for the period are shown in the Statement of
Comprehensive Income on pages 14 and 15 and the Company's financial
position at the end of the period is shown in the Statement of
Financial Position on page 13.
Dividend and distribution policy
During the year ended 31 December 2015 the Board introduced a
capital returns policy whereby, subject to applicable laws and
regulations, it will allocate cash for distributions to
shareholders. The amount to be distributed will be calculated and
paid following publication of the Company's audited financial
statements for each year and will be no less than 15% of the
aggregate net realised cash gains (after deducting losses) in that
financial year. The Board will retain discretion for determining
the most appropriate manner to make such distribution which may
include share buybacks, tender offers and dividend payments. In the
longer term the Board intends to formulate a more regular dividend
policy once it starts to receive income from its royalty
interests.
Directors and their interests
The Directors of the Company who served during the period and up
until the date of signing of the financial statements are:
Howard Myles (Chairman)
Charles Hansard
Fiona Perrott-Humphrey
David Staples
Biographical details of each of the Directors who were on the
Board of the Company at the time of signing the annual report and
financial statements for the year ended 31 December 2020 ("the
Annual Report") are presented on page 17 of that report.
Each of the Directors is considered to be independent in
character and judgement.
On 26 April 2021, David Staples purchased 35,000 shares in the
Company. No other director has a beneficial interest in the
Company.
Attendance at the Board and Audit Committee meetings during the
period was as follows:
Audit Committee
Board Meetings Meetings
Held Attended Held Attended
Howard Myles 2 2 2 2
Charles Hansard 2 2 2 N/A
Fiona Perrott-Humphrey 2 2 2 2
David Staples 2 2 2 2
In addition to the quarterly meetings, ad hoc Board and
committee meetings are convened as required. All Directors
contribute to a significant ad hoc exchange of views between the
Directors and the Investment Manager on specific matters, in
particular in relation to developments in the portfolio.
The Directors are remunerated for their services at such rate as
the Directors determine provided that the aggregate amount of such
fees may not exceed GBP200,000 per annum (or such sum as the
Company in general meeting shall from time to time determine).
For the period ended 30 June 2021 the total remuneration of the
Directors was GBP57,500 (30 June 2020: GBP57,500), with GBP28,750
payable at 30 June 2021 (31 December 2020: GBP28,750).
Authorised share capital
The share capital of the Company on incorporation was
represented by an unlimited number of Ordinary Shares of no par
value. The Company may issue an unlimited number of shares of a
nominal or par value and/or of no par value or a combination of
both.
Shares in issue
The Company was admitted to trading on the London Stock Exchange
on 28 April 2010. The Company had 107,153,335 Ordinary and 9,167
Management Ordinary Shares totalling 107,162,502 Ordinary Shares in
issue as at 30 June 2021, of which 700,000 Ordinary Shares were
held in Treasury.
Going concern
Having reassessed the principal and emerging risks described on
pages 14 and 15 of the 31 December 2020 Annual Report, and the
other matters discussed in connection with the viability statement
as set out on pages 15 and 16 of the said report, the Directors
consider it is appropriate to adopt the going concern basis in
preparing these interim Financial Statements. There will be a
discontinuation vote at the AGM in 2021, however following
consultation with major shareholders, the Board consider it likely
that the discontinuation vote will not be passed and the Company
will continue following the AGM. The following discontinuation vote
will be held at the AGM in 2024. As at 30 June 2021, approximately
6.75% of the Company's assets were represented by cash and
unrestricted listed and quoted investments which are readily
realisable. The Directors are not aware of any material
uncertainties that may cast significant doubt upon the Company's
ability to continue as a going concern.
Related party transactions
Transactions with related parties are based on terms equivalent
to those that prevail in an arm's length transaction and are
disclosed in Note 9.
Principal and emerging risks
The principal and emerging risks facing the Company, which
include market and financial risk and portfolio management and
performance risk, are considered in detail, on pages 14 and 15 of
the 31 December 2020 Annual Report which is available on the
Company's website www.bakersteelresourcestrust.com. The Directors
do not consider that these risks have materially changed during the
period ended 30 June 2021 and do not expect any changes in the
second half of 2021.
Directors' responsibility statement
The Directors confirm that to the best of their knowledge:
- the condensed set of financial statements have been prepared
in accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union ("EU") and give a true
and fair view of the assets, liabilities and financial position and
profit or loss of the Company; and
- the Interim Management Report includes a fair review of the
information required by 4.2.7R and 4.2.8R of the FCA's Disclosure
and Transparency Rules.
Corporate governance compliance
As described in the Company's Annual Report, the Board has
considered the principles and recommendations set out in UK
Corporate Governance Code that was revised in 2018 and is effective
for periods commencing on or after 1 January 2019 (the "UK Code")
issued by the Financial Reporting Council (the "FRC"). Page 21 of
the 31 December 2020 Annual Report presents and explains those
matters where the Company has not complied with the UK Code. There
is no change in compliance since the Annual Report.
Signed for and on behalf of the Directors:
David Staples
Audit Committee Chairman
14 September 2021
UNAUDITED PORTFOLIO STATEMENT
AS AT 30 JUNE 2021
Shares Investments Fair value % of Net
/Warrants/ GBP equivalent assets
Nominal
Listed equity shares
Australian Dollars
5,091,910 Akora Resources Limited 691,150 0.65
1,230,000 Resolute Mining Limited 337,247 0.32
Australian Dollars Total 1,028,397 0.97
--------------- ---------
Canadian Dollars
7,858,031 Azarga Metals Corporation 574,247 0.54
20,000 Endeavour Mining Corporation 311,253 0.29
1,314,326 Silver X Mining Corporation 319,778 0.30
Canadian Dollars Total 1,205,278 1.13
--------------- ---------
Great Britain Pounds
31,000 Fresnillo Plc 239,196 0.23
122,760,000 Metals Exploration Plc 2,393,820 2.25
28,700 Polymetal International Plc 446,142 0.42
Great Britain Pounds Total 3,079,158 2.90
--------------- ---------
United States Dollars
21,000 AngloGold Ashanti Limited 282,535 0.27
76,000 Coeur Mining Inc 488,689 0.46
104,000 Harmony Gold Mining Company Limited 280,898 0.26
218,000 Iamgold Corporation 465,677 0.44
United States Dollars Total 1,517,799 1.43
--------------- ---------
Total investment in listed equity
shares 6,830,632 6.43
--------------- ---------
Debt instruments
Australian Dollars
1,000,000 Futura Resources Limited 499,505 0.47
Australian Dollars Total 499,505 0.47
--------------- ---------
Canadian Dollars
PRISM Diversified Limited Loan Note
305,000 1 132,207 0.12
PRISM Diversified Limited Loan Note
250,500 2 421,244 0.40
Canadian Dollars Total 553,451 0.52
--------------- ---------
Shares Investments Fair value % of Net
/Warrants/ GBP equivalent assets
Nominal
Debt instruments (Continued)
Euro
Cemos Group Plc Convertible Unsecured
1,045 Loan Security 7,632,433 7.18
Euro Total 7,632,433 7.18
--------------- -----------
Great Britain Pounds
Tungsten West Limited Convertible
16,666,667 Loan Note 11,360,745 10.70
Great Britain Pounds Total 11,360,745 10.70
--------------- -----------
United States Dollars
Azarga Metals Secured Convertible
3,500,000 Loan Note 3,461,261 3.26
440,000 Bilboes Holdings Loan Note 1 2,622,229 2.47
220,000 Bilboes Holdings Loan Note 2 507,998 0.48
7,009,332 Black Pearl Limited Partnership 1,267,198 1.19
Mines & Metals Trading (Peru) Plc
1,000,000 Promissory Note 724,113 0.68
Mines & Metals Trading (Peru) Plc
4,000,000 Convertible Debenture 3,341,737 3.15
United States Dollars Total 11,924,536 11.23
--------------- -----------
Total investments in debt instruments 31,970,670 30.10
--------------- -----------
Unlisted equity shares, warrants and
royalties
Australian Dollars
7,800,000 Futura Gross Revenue Royalty 5,109,064 4.81
11,309,005 Futura Resources Limited 10,745,193 10.12
Australian Dollars Total 15,854,257 14.93
--------------- -----------
Canadian Dollars
13,490,414 Azarga Metals Warrants 31/12/2022 211,875 0.20
13,083,936 PRISM Diversified Limited 1,017,185 0.96
PRISM Diversified Limited Warrants
1,000,000 31/12/2023 25,688 0.02
Canadian Dollars Total 1,254,748 1.18
--------------- -----------
Great Britain Pounds
35,788,014 Anglo Saxony Mining Limited 5,368,202 5.05
1,594,646 Celadon Mining Limited 15,947 0.02
24,004,167 Cemos Group plc 6,831,955 6.43
7,869,319 Tungsten West Limited 4,721,591 4.44
Great Britain Pounds Total 16,937,695 15.94
--------------- -----------
Shares Investments Fair value % of Net
/Warrants/ GBP equivalent assets
Nominal
Unlisted equity shares and warrants
and royalties (Continued)
Norwegian Krone
12,785,361 Nussir ASA 4,051,779 3.81
Norwegian Krone Total 4,051,779 3.81
--------------- ---------
United States Dollars
451,445 Bilboes Gold Limited 16,723,774 15.74
4,244,550 Gobi Coal & Energy Limited 144,456 0.14
16,352 Polar Acquisition Limited 8,958,180 8.43
Kanga Potash (formerly Sarmin Minerals
56,042 Exploration) 2,759,490 2.60
United States Dollars Total 28,585,900 26.91
--------------- ---------
Total unlisted equity shares, warrants
and royalties 66,684,379 62.77
--------------- ---------
Financial assets held at fair value
through profit or loss 105,485,681 99.30
--------------- ---------
Other Assets & Liabilities 743,063 0.70
--------------- ---------
Total Equity 106,228,744 100.00
--------------- ---------
UNAUDITED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Unaudited Audited
30 June 31 December
2021 2020
Notes GBP GBP
Assets
Cash and cash equivalents 336,626 424,140
Interest receivable 625,736 684,184
Other receivables 20,221 19,628
Financial assets held at fair value through
profit or loss 3 105,485,681 102,607,947
Total assets 106,468,264 103,735,899
------------ -------------
Equity and Liabilities
Liabilities
Directors' fees payable 9 28,750 28,750
Management fees payable 7,9 150,829 110,825
Administration fees payable 10,731 35,000
Audit fees payable 27,000 54,000
Custodian fees payable 8,536 7,587
Other payables 13,674 8,338
Total liabilities 239,520 244,500
------------ -------------
Equity
Management Ordinary Shares 8 9,167 9,167
Ordinary Shares 8 75,972,688 75,972,688
Revenue Reserves 10,727,353 10,971,969
Capital Reserves 19,519,536 16,537,575
Total equity 106,228,744 103,491,399
------------ -------------
Total equity and liabilities 106,468,264 103,735,899
============ =============
Net Asset Value per Ordinary Share (in
Pence) - Basic and Diluted 5 99.8 97.2
These unaudited condensed financial statements on pages 13 to 27 were
approved by the Board of Directors on 14 September 2021 and signed
on its behalf by:
David Staples
UNAUDITED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD FROM 1 JANUARY 2021 TO 30 JUNE 2021
Unaudited Unaudited Unaudited
period ended period ended period ended
30 June 30 June 30 June
2021 2021 2021
Revenue Capital Total
Notes GBP GBP GBP
Income
Interest income 778,743 - 778,743
Dividend income 39,189 - 39,189
Loan guarantee income 46,247 - 46,247
Net gain on financial assets at
fair value through profit or loss 3 - 2,994,059 2,994,059
Net foreign exchange loss - (12,098) (12,098)
Net income 864,179 2,981,961 3,846,140
-------------- -------------- --------------
Expenses
Management fees 7,9 816,287 - 816,287
Directors' fees 9 57,500 - 57,500
Administration fees 63,393 - 63,393
Other expenses 53,900 - 53,900
Custody fees 51,725 - 51,725
Audit fees 27,000 - 27,000
Broker fees 17,500 - 17,500
Directors' insurance and expenses 3,750 3,750
Legal fees 17,740 - 17,740
Total expenses 1,108,795 - 1,108,795
-------------- -------------- --------------
Net gain / (loss) for the period (244,616) 2,981,961 2,737,345
============== ============== ==============
Net gain / (loss) for the period
per Ordinary Share:
Basic and Diluted (in pence) 5 (0.23) 2.80 2.57
In the period ended 30 June 2021 there were no other gains or losses than those recognised
above.
The Directors consider all results to derive from continuing activities.
The format of the Statement of Comprehensive Income follows the recommendations of the AIC
Statement of Recommended Practice and is provided for information purposes.
UNAUDITED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020
Unaudited Unaudited Unaudited
period ended period ended period ended
30 June 30 June 30 June
2020 2020 2020
Revenue Capital Total
Notes GBP GBP GBP
Income
Interest Income 684,545 - 684,545
Dividend Income 117,212 - 117,212
Net gain on financial assets at
fair value through profit or loss 3 - 3,420,604 3,420,604
Net foreign exchange gain - 33,349 33,349
Net income 801,757 3,453,953 4,255,710
-------------- -------------- --------------
Expenses
Management fees 7,9 494,503 - 494,503
Directors' fees 9 57,500 - 57,500
Administration fees 53,960 - 53,960
Other expenses 50,474 - 50,474
Custody fees 40,276 - 40,276
Audit fees 28,450 - 28,450
Broker fees 26,003 - 26,003
Directors' insurance and expenses 7,511 - 7,511
Legal fees 4,531 - 4,531
Total expenses 763,208 - 763,208
-------------- -------------- --------------
Net gain for the period 38,549 3,453,953 3,492,502
============== ============== ==============
Net gain for the period per Ordinary
Share:
Basic and Diluted (in pence) 5 0.04 3.24 3.28
In the period ended 30 June 2020 there were no other gains or losses than those recognised
above.
The Directors consider all results to derive from continuing activities.
The format of the Statement of Comprehensive Income follows the recommendations of the AIC
Statement of Recommended Practice and is provided for information purposes.
UNAUDITED CONDENSED INTERIM STATEMENT OF CHANGES
IN EQUITY
FOR THE PERIOD FROM 1 JANUARY 2021 TO 30 JUNE 2021
Management
Ordinary Ordinary Treasury Revenue Capital Period
Shares Shares Shares reserves reserves end
GBP GBP GBP GBP GBP GBP
Balance as at 1 January
2021 9,167 76,113,180 (140,492) 10,971,969 16,537,575 103,491,399
Net gain for the
period - - - (244,616) 2,981,961 2,737,345
Balance as at 30
June 2021 9,167 76,113,180 (140,492) 10,727,353 19,519,536 106,228,744
============= =========== =========== =========== =========== ============
Note: 8 8
UNAUDITED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020
Management
Ordinary Ordinary Treasury Revenue Capital Period
Shares Shares Shares reserves reserves end
GBP GBP GBP GBP GBP GBP
Balance as at 1 January
2020 9,167 76,113,180 (140,492) 10,808,636 (8,127,181) 78,663,310
Net gain for the
period - - - 38,549 3,453,953 3,492,502
Balance as at 30
June 2020 9,167 76,113,180 (140,492) 10,847,185 (4,673,228) 82,155,812
============= =========== =========== =========== ============ ===========
UNAUDITED CONDENSED INTERIM STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM 1 JANUARY 2021 TO 30 JUNE 2021
Unaudited Unaudited
Period Period
ended ended
30 June 30 June
2021 2020
GBP GBP
Cash flows from operating activities
Net gain for the period 2,737,345 3,492,502
Adjustments to reconcile net gain for the period
to net cash used in operating activities:
Interest income (778,743) (684,545)
Dividend income (39,189) (117,212)
Net gain on financial assets at fair value through
profit or loss 3 (2,994,059) (3,420,604)
Net increase in other receivables (593) (7,504)
Net (decrease)/increase in payables (4,980) 5,269
------------- -------------
(1,080,219) (732,094)
Interest received 837,191 962,982
Dividend received 39,189 117,212
------------- -------------
Net cash (used in)/provided by operating activities (203,839) 348,100
------------- -------------
Cash flows from investing activities
Purchase of financial assets at fair value through
profit or loss (12,665,636) (7,462,339)
Sale of financial assets at fair value through
profit or loss 12,781,961 6,947,756
Net cash provided by/(used in) investing activities 116,325 (514,583)
------------- -------------
Net decrease in cash and cash equivalents (87,514) (166,483)
Cash and cash equivalents at the beginning of
the period 424,140 659,757
Cash and cash equivalents at the end of the
period 336,626 493,274
============= =============
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL
STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2021 TO 30 JUNE 2021
1. GENERAL INFORMATION
Baker Steel Resources Trust Limited (the "Company") is a
closed-ended investment company with limited liability incorporated
and domiciled on 9 March 2010 in Guernsey under the Companies
(Guernsey) Law, 2008 with registration number 51576. The Company is
a registered closed-ended investment scheme registered pursuant to
the Protection of Investors Law and the Registered Collective
Investment Scheme Rules 2018 issued by the Guernsey Financial
Services Commission ("GFSC"). On 28 April 2010 the Ordinary Shares
and Subscription Shares of the Company were admitted to the
Official List of the UK Listing Authority and to trading on the
Main Market of the London Stock Exchange. The Company's Ordinary
and Subscription Shares were admitted to the Premium Listing
Segment of the Official List on 28 April 2010.
The final exercise date for the Subscription Shares was 2 April
2013. No Subscription Shares were exercised at this time and all
residual/unexercised Subscription Shares were subsequently
cancelled.
The Company's portfolio is managed by Baker Steel Capital
Managers (Cayman) Limited (the "Manager"). The Manager has
appointed Baker Steel Capital Managers LLP (the "Investment
Manager") as the Investment Manager to carry out certain duties.
The Company's investment objective is to seek capital growth over
the long-term through a focused, global portfolio consisting
principally of the equities, or related instruments, of natural
resources companies. The Company invests predominantly in unlisted
companies (i.e. those companies which have not yet made an Initial
Public Offering ("IPO")) and also in listed securities (including
special situations opportunities and less liquid securities) with a
view to exploiting value inherent in market inefficiencies and
pricing anomalies.
Baker Steel Capital Managers LLP was authorised to act as an
Alternative Investment Fund Manager ("AIFM") of Alternative
Investment Funds ("AIFs") on 22 July 2014. On 14 November 2014, the
Investment Manager signed an amended Investment Management
Agreement with the Company, to take into account AIFM regulations.
AIFMD focuses on regulating the AIFM rather than the AIFs
themselves, so the impact on the Company is limited.
The Half-Yearly financial report has not been audited or
reviewed by the auditors pursuant to the Auditing Practices
Board
Guidance on review of Interim Financial Information. However,
the Board did procure the independent external auditor to undertake
certain agreed upon procedures to assist the Audit Committee and
Board with its review of this report.
2. SIGNIFICANT ACCOUNTING POLICIES
The unaudited condensed interim financial statements in the half
year report for the six months ended 30 June 2021 have been
prepared in accordance with International Accounting Standard (IAS)
34, 'Interim Financial Reporting' as adopted by the European Union.
This half year report and condensed financial statements should be
read in conjunction with the Company's annual report and financial
statements for the year ended 31 December 2020, which have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union and are available
at the Company's website (www.bakersteelresourcestrust.com).
The accounting policies adopted and methods of computation
followed in the condensed interim financial statements are
consistent with those applied in the preparation of the Company's
annual financial statements for the year ended 31 December 2020 and
are expected to be applied to the Company's annual financial
statements for the year ending 31 December 2021.
3. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Period ended Year ended
30 June 31 December
Investment Summary: 2021 2020
GBP GBP
Opening book cost 81,003,041 74,539,152
Purchases at cost 12,665,636 12,871,078
Proceeds on sale of investments (12,781,961) (11,870,016)
Realised gains 3,660,428 5,462,827
------------- -------------
Closing cost 84,547,144 81,003,041
Unrealised gains 20,938,537 21,604,906
------------- -------------
Financial assets held at fair value through profit
or loss 105,485,681 102,607,947
============= =============
The following table analyses net gains on financial assets at
fair value through profit or loss for the period/year ended 30 June
2021, 31 December 2020 and 30 June 2020.
Period ended Year ended Period ended
30 June 31 December 30 June
2021 2020 2020
GBP GBP GBP
Financial assets at fair value through
profit or loss
Realised (losses)/gains on:
- Listed equity shares (273,452) 5,462,245 4,117,283
- Debt instruments 3,933,880 582 -
3,660,428 5,462,827 4,117,283
Movement in unrealised (losses)/gains
on:
- Listed equity shares (399,854) (2,924,836) (3,510,145)
- Unlisted equity shares 3,438,849 10,821,831 1,349,473
- Royalties (445,518) (428,348) (400,286)
- Debt instruments (3,355,920) 11,731,267 1,667,381
- Warrants 96,074 12,027 196,898
------------- ------------- -------------
(666,369) 19,211,941 (696,679)
------------- ------------- -------------
Net gain on financial assets at fair
value through profit or loss 2,994,059 24,674,768 3,420,604
------------- ------------- -------------
The following table analyses investments by type and by level
within the fair valuation hierarchy at 30 June 2021.
Quoted prices
in active Quoted market Unobservable
markets based observables inputs
Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
Financial assets at fair
value through profit
or loss
Listed equity shares 6,830,632 - - 6,830,632
Unlisted equity shares - - 52,379,572 52,379,572
Royalties - - 14,067,244 14,067,244
Warrants - - 237,563 237,563
Debt instruments - - 31,970,670 31,970,670
------------- ------------------ ------------ -----------
6,830,632 - 98,655,049 105,485,681
============= ================== ============ ===========
The following table analyses investments by type and by level
within the fair valuation hierarchy at 31 December 2020.
Quoted prices
in active Quoted market Unobservable
markets based observables inputs
Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
Financial assets at fair
value through profit
or loss
Listed equity shares 7,185,851 - - 7,185,851
Unlisted equity shares - - 36,987,733 36,987,733
Royalties - - 14,512,762 14,512,762
Warrants - - 141,489 141,489
Debt instruments - - 43,780,112 43,780,112
------------- ------------------ ------------ -----------
7,185,851 - 95,422,096 102,607,947
============= ================== ============ ===========
The table below shows a reconciliation of beginning to ending
fair value balances for Level 3 investments and the amount of total
gains or losses for the period included in net gain on financial
assets and liabilities at fair value through profit or loss held at
30 June 2021.
Unlisted
30 June 2021 Equities Royalties Debt instruments Warrants Total
GBP GBP GBP GBP GBP
Opening balance 1 January
2021 36,987,733 14,512,762 43,780,112 141,489 95,422,096
Purchases of investments 12,287,971 - - - 12,287,971
Sales of investments - - (12,387,402) - (12,387,402)
Transfer to Level 1 (334,981) - - - (334,981)
Change in net unrealised
gains/(losses) 3,438,849 (445,518) (3,355,920) 96,074 (266,515)
Realised gains - - 3,933,880 - 3,933,880
----------- ----------- ----------------- --------- -------------
Closing balance 30 June
2021 52,379,572 14,067,244 31,970,670 237,563 98,655,049
----------- ----------- ----------------- --------- -------------
Unrealised gains on
investments still held
at 30 June 2021 12,538,435 2,300,267 9,749,560 224,438 24,857,700
=========== =========== ================= ========= =============
The table below shows a reconciliation of beginning to ending
fair value balances for Level 3 investments and the amount of total
gains or losses for the year included in net loss on financial
assets and liabilities at fair value through profit or loss held at
31 December 2020.
Unlisted Debt
31 December 2020 Equities Royalties instruments Warrants Total
GBP GBP GBP GBP GBP
Opening balance 1 January
2020 24,780,551 14,019,975 29,293,224 116,337 68,210,087
Purchases of investments 1,519,012 921,135 2,818,227 13,125 5,271,499
Sales of investments - - (63,188) - (63,188)
Transfer to Level 1 (133,661) - - - (133,661)
Change in net unrealised
gains 10,821,831 (428,348) 11,731,267 12,027 22,136,777
Realised gains - - 582 - 582
Closing balance 31 December
2020 36,987,733 14,512,762 43,780,112 141,489 95,422,096
----------- ----------- ------------ --------- -----------
Unrealised gains on investments
still held at 31 December
2020 9,366,113 2,745,785 13,105,480 128,364 25,345,742
=========== =========== ============ ========= ===========
It is the Company's policy to recognise a change in hierarchy
level when there is a change in the status of the investment, for
example when a listed company delists or vice versa, or when shares
previously subject to a restriction have that restriction released.
The transfers between levels are recorded either on the value of
the investment immediately after the event or the carrying value of
the investment at the beginning of the financial year. Mines &
Metals Trading (Peru) Plc merged with Silver X Mining Corp (Silver
X) on 23 June 2021. The shares of Silver X are traded on the
Toronto Stock Exchange and accordingly the investment has been
transferred from Level 3 to Level 1 in these financial
statements.
In determining an investment's position within the fair value
hierarchy, the Directors take into consideration the following
factors:
Investments whose values are based on quoted market prices in
active markets are classified within Level 1. These include listed
equities with observable market prices. The Directors do not adjust
the quoted price for such instruments, even in situations where the
Company holds a large position and a sale could reasonably impact
the quoted price. The Company does not currently hold a
sufficiently large position in any listed company that it could
impact the quoted price via a sale of its investment.
Investments that trade in markets that are not considered to be
active but are valued based on quoted market prices, dealer
quotations or alternative pricing sources supported by observable
inputs, are classified within Level 2. These include certain
less-liquid listed equities. Level 2 investments are valued with
reference to the listed price of the shares should they be freely
tradable after applying a discount for illiquidity if relevant. As
Level 2 investments include positions that are not traded in active
markets and/or are subject to transfer restrictions, valuations may
be adjusted to reflect illiquidity and/or non-transferability,
which are generally based on available market information. The
Company held no Level 2 investments at 30 June 2021 (31 December
2020: none).
Investments classified within Level 3 have significant
unobservable inputs. They include unlisted debt instruments,
royalty rights, unlisted equity shares and warrants. Level 3
investments are valued using valuation techniques explained below.
The inputs used by the Directors in estimating the value of Level 3
investments include the original transaction price, recent
transactions in the same or similar instruments if representative
in volume and nature, completed or pending third-party transactions
in the underlying investment of comparable issuers, subsequent
rounds of financing, recapitalisations and other transactions
across the capital structure, offerings in the equity or debt
capital markets, and changes in financial ratios or cash flows.
Level 3 investments may also be adjusted with a discount to reflect
illiquidity and/or non-transferability in the absence of market
information.
Valuation methodology of Level 3 investments
The primary valuation technique is of "Latest Recent
Transaction" being either recent external fund raises or
transactions. In all cases the valuation considers whether there
has been any change since the transaction that would indicate the
price is no longer fair value. Where an unquoted investment has
been acquired or where there has been a material arm's length
transaction during the past six months it will be carried at
transaction value, having taken into account any change in market
conditions and the performance of the investee company between the
transaction date and the valuation date. Where there has been no
Latest Recent Transaction the primary valuation driver is IndexVal.
For each core unlisted investment, the Company maintains a weighted
average basket of listed companies which are comparable to the
investment in terms of commodity, stage of development and location
("IndexVal"). IndexVal is used as an indication of how an
investment's share price might have moved had it been listed.
Movements in commodity prices are deemed to have been taken into
account by the movement of IndexVal.
A secondary tool used by Management to evaluate potential
investments as well as to provide underlying valuation references
for the Fair Value already established is Development Risk Adjusted
Value ("DRAV"). DRAVs are not a primary determinant of Fair Value.
The Investment Manager prepares discounted cash flow models for the
Company's core investments annually taking into account significant
new information, and for decision making purposes when required.
From these, DRAVs are derived. The computations are based on
consensus forecasts for long term commodity prices and investee
company management estimates of operating and capital costs. Some
market analysts incorporate development risk into the discount rate
in arriving at a net present value ("NPV"). Instead, the Investment
Manager establishes an NPV discounted purely for cost of capital
and country risk and then applies a further overall discount to the
project economics dependent on where such project sits on the
development curve per the DRAV calculations.
The valuation technique for Level 3 investments can be divided
into six groups:
i. Transactions & Offers
Where there have been transactions within the past 6 months
either through a capital raising by the investee company or known
secondary market transactions, representative in volume and nature
and conducted on an arm's length basis, this is taken as the
primary driver for valuing Level 3 investments, having taken into
account of any change in market conditions and the performance of
the investee company between the transaction date and the valuation
date. This includes offers, binding or otherwise from third parties
around the year end which may not have completed prior to the
period end but have a high chance of success and are considered to
represent the situation at period end.
ii. IndexVal
Where there have been no known transactions for 6 months, at the
Company's half year and year end, movements in IndexVal will
generally be taken into account in assessing Fair Value where there
has been at least a 10% movement in IndexVal over at least a
six-month period. The IndexVal results are used as an indication of
trend and are viewed in the context of investee company progress
and any requirement for finance in the short term for further
progression.
iii. Royalty Valuation Model
The rights to receive royalties are valued on projected
cashflows taking into account expected time to production and
development risk and adjusted for movement in commodity prices.
iv. EBITDA Multiple
In the case of Cemos Group plc, which moved to full production
during 2020 and so could reflect maintainable earnings, it is a
cement plant with no defined life like a mining project and
therefore has been valued on the basis of a multiple of historical
and forecast earnings before interest, tax, depreciation and
amortisation when compared to listed comparable cement
producers.
v. Warrants
Warrants are valued using a simplified Black Scholes model
taking into account time to expiry, exercise price and volatility.
Where there is no established market for the underlying shares the
average volatility of the companies in that investment's basket of
IndexVal comparables is utilised in the Black Scholes model.
vi. Convertible loans
Convertible loans are valued taking into account credit risk and
the value of the conversion aspect.
Quantitative information on significant unobservable inputs -
Level 3
Range of unobservable
30 June input
2021 Unobservable (weighted
Description GBP Valuation technique input average)
Unlisted Equity 40,462,706 Transactions Private transactions n/a
Unlisted Equity 5,068,964 IndexVal Change in index n/a
Unlisted Equity 6,831,955 EBITDA Multiple EBITDA Multiple n/a
Royalties 14,067,244 Royalty Valuation Commodity price n/a
model and discount
rate risk
Unlisted Equity 15,947 Other Exploration n/a
results, study
results, financing
Debt Instruments
Black Pearl Limited Valued at mean Estimated recovery
Partnership 1,267,198 estimated recovery range +/-50%
Other Convertible 3,130,227 Transactions Private transactions n/a
Debentures/Loans
Valued at fair
Other Convertible value with reference Rate of Credit
Debentures/Loans 27,573,245 to credit risk Risk 20%-40%
Simplified Black
Warrants 237,563 Scholes Model Volatilities 50%
Range of unobservable
31 December input
2020 Unobservable (weighted
Description GBP Valuation technique input average)
Unlisted Equity 27,236,964 Transactions Private transactions n/a
Unlisted Equity 2,790,916 IndexVal Change in index n/a
Unlisted Equity 6,943,907 EBITDA Multiple EBITDA Multiple n/a
Royalties 14,512,762 Royalty Valuation Commodity price n/a
model and discount
rate risk
Unlisted Equity 15,946 Other Exploration n/a
results, study
results, financing
Debt Instruments
Black Pearl Limited Valued at mean Estimated recovery
Partnership 1,281,629 estimated recovery range +/-50%
Other Convertible 13,070,904 Transactions Private transactions n/a
Debentures/Loans
Valued at fair
Other Convertible value with reference Rate of Credit
Debentures/Loans 29,427,579 to credit risk Risk 20%-40%
Simplified Black
Warrants 141,489 Scholes Model Volatilities 50%
Information on third party transactions in unlisted equities is
derived from the Investment Manager's market contacts. The change
in IndexVal for each particular unlisted equity is derived from the
weighted average movements of the individual baskets for that
equity so it is not possible to quantify the range of such
inputs.
Sensitivity analysis to significant changes in unobservable
inputs within Level 3 investments
The significant unobservable inputs used in the fair value
measurement categorised within Level 3 of the fair value hierarchy
together with a quantitative sensitivity analysis as at 30 June
2021 are as shown below:
Description Input Sensitivity Effect on Fair
used* Value (GBP)
Transactions & Expected
Unlisted Equity Transactions +/- 10% +/-4,046,271
Unlisted Equity Change in IndexVal +126/-25%* +6,386,895/-1,267,241
Unlisted Equity EBITDA Multiple +/- 20% +/-1,366,391
Royalties Commodity Price +/- 20% +/-2,813,449
Royalties Discount Rate +/-20% +1,516,619/-1,331,453
Debt Instruments
Black Pearl Limited
Partnership Probability weighting +/-33% +/-418,175
Others/Loans Risk discount rate +/-20% -4,141,795/+94,572
Volatility of Index
Others/Loans Basket +/-40% +1,706,809/-1024,742
Transactions and
Others/Loans expected transactions +/- 10% +/- 313,023
Volatility of Index
Warrants Basket +/-40% +96,228/-108,245
* The sensitivity analysis refers to a percentage amount added
or deducted from the input and the effect this has on the fair
value. The +126%/-25% sensitivity was used as this was the range of
movements of the constituents in the IndexVal basket for Nussir and
Prism..
The significant unobservable inputs used in the fair value
measurement categorised within Level 3 of the fair value hierarchy
together with a quantitative sensitivity analysis as at 31 December
2020 are as shown below:
Description Input Sensitivity Effect on Fair
used Value (GBP)
Transactions & Expected
Unlisted Equity Transactions +/- 10% +/-2,723,696
Unlisted Equity Change in IndexVal +82/-42%* +2,288,551/-1,172,185
Unlisted Equity EBITDA Multiple +/- 20% +/-1,388,781
Royalties Commodity Price +/-20% +/-2,862,119
Royalties Discount Rate +/-20% -2,732,511/+2,223,695
Debt Instruments
Black Pearl Limited
Partnership Probability weighting +/-33% +/-422,938
Others/Loans Risk discount rate +/-20% -4,272,633/+1,996,328
Volatility of Index
Others/ Loans Basket +/-40% +2,109,175/-2,346,725
Transactions and
Others/ Loans expected transactions +/-10% +/-1,307,090
Volatility of Index
Warrants Basket +/-40% +87,968/-92,079
* The sensitivity analysis refers to a percentage amount added
or deducted from the input and the effect this has on the fair
value. The +82%/-42% sensitivity was used as this was the range of
movements of the constituents in the IndexVal basket for Sarmin,
the only investment valued on the basis of IndexVal in the 2020
Annual Financial Statements.
4. OTHER FINANCIAL INSTRUMENTS
The Directors consider the carrying amount for financial
instruments such as cash and cash equivalents and short-term
receivables and payables, are a reasonable approximation of fair
values.
Cash and cash equivalents include cash in hand, deposits held
with banks and other short-term investments in an active
market.
Other assets include the contractual amounts for settlement of
the trades and other obligations due to the Company. Investment
management fees payable, Directors' fees payable, audit fees
payable, administration fees payable and other payables represent
the contractual amounts and obligations due by the Company for
settlement for trades and expenses.
5. NET ASSET VALUE PER SHARE AND GAIN PER SHARE
Net asset value per share is based on the net assets of
GBP106,228,744 (31 December 2020: GBP103,491,399) and 106,462,502
(31 December 2020: 106,462,502) Ordinary Shares, being the number
of shares in issue at 30 June 2021excluding 700,000 shares which
are held in treasury. The calculation for basic and diluted NAV per
share is as below:
30 June 2021 31 December 2020
Ordinary Shares Ordinary Shares
Net assets at the period end (GBP) 106,228,744 103,491,399
Number of shares 106,462,502 106,462,502
Net asset value per share (in pence)
basic and diluted 99.8 97.2
Weighted average number of shares 106,462,502 106,462,502
The basic and diluted gain per share for the period ended 30
June 2021 is based on the net gain for the period of the Company of
GBP2,737,345 (30 June 2020: GBP3,492,502) and on 106,462,502 (30
June 2020: 106,462,502) being the weighted average number of
Ordinary Shares in issue during the period.
6. TAXATION
The Company is a Guernsey Exempt Company and is therefore not
subject to taxation in Guernsey on its income under the Income Tax
(Exempt Bodies) (Guernsey) Ordinance, 1989. An annual exemption fee
of GBP1,200 (2020: GBP1,200) has been paid. The Company may,
however, be exposed to taxes in certain other territories in which
it invests such as withholding taxes on interest payments and
dividends and taxes on realisations of investments.
7. MANAGEMENT AND PERFORMANCE FEES
The Manager was appointed pursuant to a management agreement
with the Company dated 31 March 2010 (the "Management Agreement").
The Company pays to the Manager a management fee which is equal to
1/12th of 1.75 per cent of the total average market capitalisation
of the Company during each month. The management fee is calculated
and accrued as at the last business day of each month and is paid
monthly in arrears. The Investment Manager's fees are paid by the
Manager.
The management fee for the period ended 30 June 2021 was
GBP816,287 (30 June 2020: GBP 494,503) of which GBP150,829 (31
December 2020: GBP110,825 ) was outstanding at the period end.
The Manager is also entitled to a performance fee. The
Performance Period is each 12-month period ending on 31 December
(the "Performance Period"). The amount of the performance fee is 15
per cent of the total increase in the NAV, if the Hurdle has been
met, at the end of the relevant Performance Period, over the
highest previously recorded NAV as at the end of a Performance
Period in respect of which a performance fee was last accrued,
having made adjustments for numbers of Ordinary Shares issued
and/or repurchased ("Highwater Mark"). The Hurdle is the Issue
Price multiplied by the shares in issue, increased at a rate of 8%
per annum compounded to the end of the relevant performance period.
In addition, the performance fee will only become payable if there
have been sufficient net realised gains. As at 30 June 2021, the
Highwater Mark was the equivalent of approximately 94 pence per
share with the relevant Hurdle being the equivalent of
approximately 146 pence per share.
There were no earned performance fees for the current or prior
period.
If the Company wishes to terminate the Management Agreement
without cause it is required to give the Manager 12 months prior
notice or pay to the Manager an amount equal to: (a) the aggregate
investment management fee which would otherwise have been payable
during the 12 months following the date of such notice (such amount
to be calculated for the whole of such period by reference to the
Market Capitalisation prevailing on the Valuation Day on or
immediately prior to the date of such notice); and (b) any
performance fee accrued at the end of any Performance Period which
ended on or prior to termination and which remains unpaid at the
date of termination which shall be payable as soon as, and to the
extent that, sufficient cash or other liquid assets are available
to the Company (as determined in good faith by the Directors),
provided that such accrued performance fee shall be paid prior to
the Company making any new investment or settling any other
liabilities; and (c) where termination does not occur at 31
December in any year, any performance fee accrued at the date of
termination shall be payable as soon as and to the extent that
sufficient cash or other liquid assets are available to the Company
(as determined in good faith by the Directors), provided that such
accrued performance fee shall be paid prior to the Company making
any new investment or settling any other liabilities.
8. SHARE CAPITAL
The share capital of the Company on incorporation was
represented by an unlimited number of Ordinary Shares of no par
value. The Company may issue an unlimited number of shares of a
nominal or par value and/or of no par value or a combination of
both.
The Company has a total of 106,453,335 (31 December 2020:
106,453,335) Ordinary Shares in issue with an additional 700,000
(31 December 2020: 700,000) held in treasury. In addition, the
Company has 9,167 (31 December 2020: 9,167) Management Ordinary
Shares in issue, which are held by the Investment Manager.
The Ordinary Shares are admitted to the Premium Listing segment
of the Official List of the London Stock Exchange. Holders of
Ordinary Shares have the right to receive notice of and to attend
and vote at general meetings of the Company.
Each holder of Ordinary Shares being present in person or by
proxy at a meeting will, upon a show of hands, have one vote and
upon a poll each such holder of Ordinary Shares present in person
or by proxy will have one vote for each Ordinary Share held by
him.
The details of issued share capital of the Company are as
follows:
30 June 2021 31 December 2020
Amount No. of shares* Amount No. of shares**
GBP GBP
Issued and fully paid share
capital
Ordinary Shares of no par value** 76,122,347 107,162,502 76,122,347 107,162,502
(including Management Ordinary
Shares)
Treasury Shares (140,492) (700,000) (140,492) (700,000)
----------- -----------
Total Share Capital 75,981,855 75,981,855
----------- -----------
The outstanding Ordinary Shares as at the period ended 30 June
2021 are as follows:
Ordinary Shares Treasury Shares
No. of
Amount No. of shares* Amount shares
GBP GBP
Balance at 1 January 2021 &
30 June 2021 76,122,347 106,462,502 140,492 700,000
----------- --------------- ------------ ------------
The outstanding Ordinary Shares as at the year ended 31 December
2020 are as follows:
Ordinary Shares Treasury Shares
No. of
Amount No. of shares* Amount shares
GBP GBP
Balance at 1 January 2020 &
31 December 2020 76,122,347 106,462,502 140,492 700,000
----------- --------------- -------- --------
* Includes 9,167 (31 December 2020: 9,167) Management Ordinary
Shares.
** The value reported for the Ordinary Shares represents the net
of subscriptions and redemptions (including any associated
expenses).
9. RELATED PARTY TRANSACTIONS
The Investment Manager, Baker Steel Capital Managers LLP, had an
interest in 9,167 Management Ordinary Shares at 30 June 2021 (31
December 2020: 9,167).
The Management fees paid and accrued for the year are disclosed
under Note 7.
Baker Steel Global Funds SICAV - Precious Metals Fund ("Precious
Metals Fund") had an interest of 4,922,877 Ordinary Shares in the
Company at 30 June 2021 (31 December 2020: 4,922,877). Precious
Metals Fund shares a common Investment Manager with the
Company.
David Baker and Trevor Steel, Directors of the Manager, are
interested in the shares held by Northcliffe Holdings Limited
and The Sonya Trust respectively, which are therefore considered
to be Related Parties. Northcliffe Holdings Limited holds
12,452,177 shares (31 December 2020; 12,452,177) and The Sonya
Trust holds 12,722,129 shares (31 December 2020: 12,673,350).
David Staples, a Director of the Company purchased 35,000 shares
in the Company on 26 April 2021.
Management fees and Directors' fees paid and accrued during the
periods to 30 June were:
2021 2020
GBP GBP
Management fees 816,287 494,503
Directors' fees 57,500 57,500
The Management fees and Directors' fees outstanding at the
period-end were:
30 June 2021 31 December 2020
GBP GBP
Management fees 150,829 110,825
Directors' fees 28,750 28,750
10. SUBSEQUENT EVENTS
Since the period end, the Company has increased the bridging
loan to Futura Resources by a further AUS$1 million.
There were no other events subsequent to the period end that
materially impacted on the Company.
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END
IR ZZLFFFKLEBBE
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