TIDMBSRT

RNS Number : 4126U

Baker Steel Resources Trust Ltd

06 April 2021

BAKER STEEL RESOURCES TRUST LIMITED

(Incorporated in Guernsey with registered number 51576 under the provisions of The Companies (Guernsey) Law, 2008 as amended)

6 April 2021

31 March 2021 Unaudited NAV Statement

Net Asset Value

Baker Steel Resources Trust Limited (the "Company") announces its unaudited net asset value per share at 31 March 2021:

   Net asset value per Ordinary Share:   97.4 pence 

The NAV per share has increased by 2.3% against the unaudited NAV at 26 February 2021, partly due to an alteration to certain carrying values at the 2020 year end, and an increase in the carrying value of the convertible loan to Azarga Metals Corp following the increase in its share price on the TSX-V exchange.

The Company had a total of 106,462,502 Ordinary Shares in issue with a further 700,000 shares held in treasury as at 31 March 2021 .

Amendment to Unaudited NAV for 31 December 2020

Since publication of the unaudited NAV for 31 December 2020, additional market information has become available which, together with a small number of audit adjustments accepted by the Company, has led to changes to the carrying values of certain investments. The audit is almost complete and the Company expects to publish its audited results shortly.

In arriving at the unaudited NAV for 31 December 2020, it was decided to apply a discount for execution risk to the value of the cash offer made for Bilboes Gold Ltd. It has now been decided that the offer is the best reflection of Fair Value at the year end, regardless of whether the transaction completes or not and therefore the discount for execution risk has been removed. This has a resulted in a 17% increase in the valuation of Bilboes, equivalent to a 3.7% increase in NAV.

In valuing Polar Acquisition Limited's (PAL) royalty over the Prognoz Silver project owned by Polymetal International, the Company applies a discount rate relevant to silver royalties in its net present value calculation and then applies a further discount for development risk to take account of the project's stage of development. Overall, this came to an annual discount rate of approximately 7%. However, in valuing its liability for the royalty at 31 December 2020, Polymetal used a discount rate of 9% which it applies for fair value calculation purposes across all its mining assets. It has been decided to bring the Company's discount rate in valuing the Prognoz royalty in line with Polymetal's, which has resulted in the reduction of the valuation of PAL by 19.4% and a consequent 2.8% reduction in NAV.

There have also been smaller adjustments to the carrying values of Tungsten West and Cemos Group, to take account of an additional interest accrual and an exchange rate error respectively.

The above changes result in the unaudited December 2020 NAV being increased by 1.8% to 97.2 pence per share. These adjustments have all been taken into account in the NAV at 31 March 2021 above.

Investment Update

The Company's top 12 investments were as follows as a percentage of NAV:

 
                                    31 March 2021    31 December       31 December 
                                                     2020(revised)    2020(previous) 
 Bilboes Gold Limited                   19.3%           19.5%             16.9% 
 Futura Resources Ltd                   16.0%           16.2%             16.5% 
 Cemos Group plc                        13.6%           14.5%             14.6% 
 Tungsten West Limited                  13.1%           13.2%             12.6% 
 Polar Acquisition Ltd                  8.8%             8.9%             11.2% 
 Anglo Saxony Mining Limited            5.2%             3.9%             4.0% 
 Mines & Metals Trading 
  Peru PLC                              4.3%             4.5%             4.5% 
 Azarga Metals Corp                     4.0%             2.7%             2.8% 
 Nussir ASA                             3.4%             3.4%             3.5% 
 Sarmin Minerals Exploration            2.7%             2.7%             2.7% 
 Metals Exploration plc                 1.7%             1.9%             1.9% 
 Black Pearl Limited Partnership        1.2%             1.2%             1.2% 
 Listed Precious Metal Shares           2.9%             3.9%             3.9% 
 Other Investments                      2.9%             2.7%             2.8% 
 Net Cash, Equivalents and 
  Accruals                              0.9%             0.8%             0.8% 
 

Tungsten West Limited ("Tungsten West")

During March 2021 Tungsten West released the findings of its Bankable Feasibility Study (BFS) which covers the restart of its Hemerdon Tungsten Mine in Devon, UK. The BFS shows a GBP45m initial capital requirement for a mine expected to produce on average GBP34 million of EBITDA per annum for over 20 years. This results in an after tax NPV(5%) of GBP272 million based on current spot Tungsten prices with an IRR of 33%. The ore reserve estimate in the BFS is 63.3 million tonnes at 0.18% WO(3) , such that Hemerdon has the second largest JORC compliant tungsten ore reserve in the world outside China.

The BFS business plan includes an aggregates business, which processes waste rock from tungsten and tin production into several different aggregate products. This has a double benefit of providing both an additional and stable source of income, but also reducing the amount of waste rock needed to be stored at site from an environmental point of view. Sales of aggregates have already commenced from existing waste stockpiles.

Tungsten West is in the process of appointing advisers for the project finance debt raising and an equity raising to finance the recommencement of mine operations. Tungsten West's objective is to start work in the second half of this year, targeting commercial production in approximately 18 months. A listing of Tungsten West in 2021 is being considered.

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)

The Net Asset Value ("NAV") figure stated is based on unaudited estimated valuations of the underlying investments and not necessarily based on observable inputs. Such estimates are not subject to any independent verification or other due diligence and may not comply with generally accepted accounting practices or other generally accepted valuation principles. In addition, some estimated valuations are based on the latest available information which may relate to some time before the date set out above.

Accordingly, no reliance should be placed on such estimated valuations and they should only be taken as an indicative guide. Other risk factors which may be relevant to the NAV figure are set out in the Company's Prospectus dated 26 January 2015.

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April 06, 2021 02:00 ET (06:00 GMT)