Interim Management Statement (4979W)

TIDMARCL

RNS Number : 4979W

Altus Resource Capital Limited

19 November 2010

ALTUS RESOURCE CAPITAL LIMITED

Interim Management Statement for the period 1 July 2010 to 31 October 2010 (the "Period").

Overview

Altus Resource Capital Limited (LSE:ARCL) (the "Company") is a Guernsey registered, closed-ended investment company which listed on the Specialist Fund Market of the London Stock Exchange on 30 June 2009 and the Channel Island Stock Exchange on 22 December 2009.

The Company is pleased to announce that the unaudited net asset value over the Period has risen 35.3%.

Investment Objectives and Policy

The Company's objective is to realise capital growth from a concentrated portfolio of junior resource equities and to generate a significant capital return to shareholders.

The Company invests in companies engaged in the exploration, development and/or mining of metals and minerals with a focus on companies that operate in the gold sector. Portfolio companies will be predominantly, but not exclusively, listed or quoted on either UK markets or other recognised stock exchanges including the Canadian and Australian markets.

Financial Highlights and Investment Review by Altus Capital Limited

The unaudited net asset value of the Company increased to GBP72.1 million or GBP1.82 per share over the period, showing a 35.3% rise since the beginning of the Period and a 91.2% rise since the Company's launch on 30 June 2009.

At the end of October 2010, Company's portfolio comprised 29 holdings in junior mining and exploration companies and a single investment in a commodity exchange traded fund (ETF). The Company has acquired its positions in the market and through participating in new equity issues.

The Company has benefited from its exposure to junior mining equities with metal prices generally rising over the Period. Gold rose 9.4% to end the Period at US$1,359 per ounce and since the end of October the gold price has risen further, breaching the US$1,400 per ounce level and reaching an intraday high of US$1,424 per ounce on 9 November 2010. The strength in the gold price at least in part reflects continued dollar weakness with the dollar index losing 10.2% over the Period. Other metals, in which investee companies are exposed, have shown even stronger performance with copper, zinc and silver rising 26.3%, 36.2% and 33.3% respectively.

At the end of the period the Company held a cash position of 17.4% of AUM following profit-taking in many positions. However the Company has already taken two new positions in November 2010 and is continuing to look for further opportunities.

Outlook - as provided by the Investment Manager, Altus Capital Limited

"The outlook for the Company remains positive with further strength anticipated in metals prices and related junior mining equities.

It is anticipated that the gold price will remain strong for at least the next eighteen months, given continued concerns over the speed of the global economic recovery, further quantitative easing in the US and fears over Euro-zone sovereign debt. In addition, central banks have become net buyers of gold and retail investment demand continues to rise particularly in Asia and the Middle East. A year ago, the Manager forecast a gold price of US$1,450 per ounce for the end of 2010 and, while there will be volatility and profit-taking which will cause pull backs in the commodity and related mining equities, we expect the price of gold to breach the US$1,500 per ounce level and rise as high as US$1 600 per ounce over the next twelve to eighteen months.

Other commodities also have a positive outlook. The primary driver behind this outlook is the continued strong demand for raw materials from China and other developing economies. Chinese groups have made significant investments over recent years in industrial metal and mineral projects, and particularly in iron ore, copper and coal assets, but also increasingly in Western gold companies. Notably, portfolio company Kryso Resources, which is developing a three million ounce in Tajikistan, is negotiating a strategic 29.9% investment by China Nonferrous Metals.

Uranium has also become an increasingly attractive commodity with the price rising over 10% in recent weeks to US$58.5 per pound. As with other commodities, much of this interest is being driven by demand from China. The French integrated nuclear group, Areva, recently announced a deal to supply 20,000 tonnes of uranium to the Chinese over a ten year period. This deal, worth US$3.5 billion, implies a uranium price of close to US$80 per pound of uranium which is well above the previous norms for long-term contracts of between US$70 and US$75 per pound.

Rare earth elements, which are essential for many emerging and high-tech applications including the permanent magnets used in electric and hybrid cars, have also seen significant price gains in recent months. This price gain has again been influenced by China which controls over 90% of supply of rare earths and has been reducing export quotas. The Chinese have also been investing directly in the more advanced rare earth projects globally and look set to maintain their monopoly on this increasingly important mineral group.

The platinum group metals market is also dominated by a single country with South Africa accounting for over 80% of global supply of platinum. Demand for platinum group metals is set to increase, driven by the rapid increase in the number of new cars in China and developing economies as well as an anticipated increase in the use of diesel engines (which require larger amounts of platinum) in the US. South Africa poses a number of issues for platinum group metals producers with power costs increasing by 25% this year and similar rises expected in 2011 and 2012. In addition, increasing industrial action is causing disruption at mines and other organisations throughout the country. The Manager therefore believes this creates an interesting tension in the platinum group metals market and anticipates that while the miners may struggle, metal prices will rise. The Manager has therefore invested directly in the metal through an exchange traded fund (ETF) but has also invested in Eastern Platinum, a junior producer with a very significant resource that offers leverage to a rising platinum price.

Merger and acquisition activity across the whole mining sector is increasingly becoming a driver of value. Higher profile deals have been dominated by the mid-tiers and majors although this deal flow is beginning to impact the junior sector. An increasing number of the Company's portfolio holdings are either the subject of speculation about possible takeovers or have received takeover approaches. Recent deals in the gold space include the acquisition of Red Back Mining by Kinross for C$8.0 billion and the likely take-over of Andean Resources by Goldcorp for US$3.4 billion valuing its current resource at US$1,000 per ounce and pricing-in further expected resource growth. The Manager anticipates further takeovers of a number of its portfolio holdings and that M&A activity elsewhere in the sector will drive up the value of its holdings.

A further driver of value is expected to come from the fact that resource equities and gold miners in particular have not performed as strongly thus far as would have been anticipated on the back of the metal price gains. Further value is expected to be realised as these higher metal prices flow through to increased margins and enhanced earnings in mining equities.

For example, gold has gained 46% or US$428 per ounce since the Company's launch in June 2009 when the price was US$930 per ounce to the end of October level of US$1,358 per ounce, Major gold mining indices, the FTSE Gold Mines Index and the S&P/ TSX Gold Index, have risen 44.3% and 29.4% respectively therefore performing in line with and underperforming the metal. If we assume mine operating costs are US$550 per ounce (close to the industry average) and attribute a further US$200 per ounce for corporate overhead and non-mining costs, the total cost is US$750 per ounce. This cost structure would have realised an operating margin of US$180 per ounce based on the June 2009 gold price rising to US$608 per ounce based on the gold price at the end of October 2010, representing a 238% increase. We therefore anticipate that mining equities will continue to perform strongly even if there are no further advances in metals prices as these enhanced earnings are realised".

End of Investment Managers Outlook report.

Investment Allocation

At 29 October 2010, the Company's assets were allocated in the following approximate proportions:

 
 Asset Allocation by Commodity        Asset Allocation by Geography 
 Gold & Silver                55.9%   Africa                    41.7% 
 Bulk Minerals                4.1%    Europe                    11.4% 
 Base Metals                  7.5%    North America             3.9% 
 Energy Minerals              7.2%    South America             10.8% 
 Platinum Group Metals        5.1%    Central Asia & Russia     4.4% 
 Diamonds                     0.4%    South East Asia           3.8% 
 Other                        2.4%    Australasia               4.6% 
 Cash                         17.4%   Other (ETFs)              2.1% 
                                      Cash                      17.4% 
 Asset Allocation by Development 
  Stage 
 Production                   23.1% 
 Development                  36.3% 
 Exploration                  21.1% 
 ETF                          2.1% 
 Cash                         17.4%

Material events

Other than the information set out above, the Board is not aware of any events during the Period, which would have had a material impact on the financial position of the Company.

Investor Information

The latest available information on the Company can be accessed via www.altrescap.com.

This document has been issued by, and is the sole responsibility of, Altus Resource Capital Limited (the "Company") and is for information purposes only. It is not, and is not intended to be an invitation, inducement, offer, or solicitation, to deal in the shares of the Company. The price of shares in the Company and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of shares in the Company. An investment in the Company should be considered only as part of a balanced portfolio of which it should not form a disproportionate part. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decision.

By order of the Board

Altus Resource Capital Limited

Administrative Enquiries: Investment Manager: Shareholder Enquiries:

Anson Fund Managers Limited Altus Capital Limited Nimrod Capital LLP

Tel: +44 (0) 1481 722 260 Tel: +44 (0) 1235 511767 Tel: +44 (0) 20 3355 6855

info@altus-cap.com info@nimrodcapital.com

19 November 2010

E&OE - In Transmission

END OF ANNOUNCEMENT

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