TIDMBSRT

Baker Steel Resources Trust Ltd

07 February 2022

London, UK, 7 February 2022

Edison issues update on Baker Steel Resources Trust (BSRT)

In FY21, Baker Steel Resources Trust (BSRT) reported a modest unaudited NAV total return (TR) of 1.2% (after the strong 31.5% posted in FY20), below the c 11.0% TR recorded by the EMIX Global Mining Index. The positive revaluation of several industrial commodity projects, supported by higher price projections and/or development progress, was mostly offset by writing down its precious metals mining investments, which now make up c 25% of BSRT's portfolio vs c 35% at end 2020. We consider BSRT's portfolio to be reasonably mature, providing scope for value uplifts in the medium term as the projects initiate mine construction and then approach first production.

Following the successful IPO of Tungsten West in October 2021, BSRT now seeks to float three to four holdings this year to fund mine construction (and potentially to recover its initial investment in the case of high investor demand). This may reduce execution risk and in turn facilitate revaluation as these projects move up the development curve and approach first production in the next 24-36 months. As a broad reference point, we estimate that the carrying value of BSRT's unlisted stake in Cemos (a cement production project in Morocco) has been revalued by c 152% since late 2020 following the full ramp-up of its first production line. The expiry of BSRT's lock-ups, agreed as part of the listings, will give it the flexibility to conduct realisations, especially if commodity price inflation continues.

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