TIDMARCL
RNS Number : 4555R
Altus Resource Capital Limited
19 November 2012
ALTUS RESOURCE CAPITAL LIMITED
Interim Management Statement for the period 1 July 2012 to 19
November 2012 (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 Islands Stock Exchange on 22 December
2009.
The Company announces that the unaudited net asset value at the
end of the Period was GBP64.1 million, representing a rise of 5.7%
over the Period and a rise of 69.9% since the Company's launch on
30 June 2009.
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 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 was GBP64.1 million
or GBP1.61 per share at the end of October 2012, representing a
5.7% rise since the beginning of the Period and a 69.9% rise since
the Company's launch on 30 June 2009.
At the end of October, the Company's portfolio comprised 28
holdings in junior mining and exploration companies, exposure to
gold, silver and platinum metals via exchange traded funds (ETFs)
and an investment in Altus Global Gold Limited which is an
open-ended vehicle seeded by the Company and focused on the
mid-tier gold sector. The Company has acquired its positions in the
market and through participating in new equity issues.
Global capital markets continue to be dominated by political and
economic uncertainty with concerns over the sustainability of
China's economic growth, the strength of the US economy and the
on-going Eurozone debt crisis. During the Period the central banks
of the US, Europe, Japan and China launched initiatives to
stimulate growth and reduce borrowing costs in their respective
economies which gave markets, and precious metals in particular a
brief lift. Gold and precious metals equities performed strongly
with the FTSE Gold Mines Index and the S&P/TSX Gold Index
rising 15.4% and 17.8% respectively against a rise in the gold
price of 7.7% to US$1,722 per ounce to the end of October. The
Company's net asset value underperformed the major gold indices
primarily because junior and non-gold mining equities
underperformed the larger capitalised gold equities but the Company
did outperform the FTSE AIM Basic Resources Index which was
unchanged over the to the end of October.
As anticipated by the Manager, M&A activity within the gold
sector has been increasing following the sustained period of
underperformance of gold equities relative to the strength of the
gold price. This corporate activity, and in particular the
increased involvement of Chinese groups in global gold deals, is
expected to help drive up the valuations of gold equities.
The re-rating of companies through their acquisition has already
benefitted the Company and is an endorsement of the Manager's
approach of targeting companies with quality assets yet anomalously
low valuations. Since the beginning of July, four gold companies
within the portfolio have been involved in M&A transactions,
including one with a Chinese group. Of particular note are the
acquisitions of Australian-listed Integra Mining and Toronto-listed
Avion Gold. The Company's initial entry price in Integra was at 29
cents in July prior to the announcement of the transaction which is
expected to conclude in December. At the end of October Integra's
shares were trading at 54 cents, a rise of 84.5%. The Company's
initial entry price for Avion was at 49 cents during July and ahead
of the announcement of its acquisition by Endeavour Mining. This
transaction concluded during October at an effective price of 88
cents per Avion share representing an uplift of 79.6%. These
transactions highlight the very significant short-term returns that
can be generated from such quality under-valued opportunities.
The threat of nationalisation and increasing taxes poses a risk
to the profitability of the mining sector and equity investors
remain wary. In recent months a number of countries in Africa, Asia
and South America have openly discussed or been rumoured to be
considering increased state participation in mining projects.
Elsewhere royalty and tax rate increases have been implemented or
are under review. These changes are expected to have a negative
impact on equity valuations of impacted companies and reduce the
appeal of inward investment in those countries.
Outlook - As provided by the Investment Manager, Altus Capital
Limited
Political and economic uncertainty prevails dominated by the
current changes to the leadership of China, the US approaching its
"fiscal cliff" and the lack of a resolution of the Eurozone crisis.
Against this backdrop the Manager intends to maintain a cautious
approach.
However, the Manager believes the fundamentals for gold remain
robust. Investment demand for gold remains strong from a number of
emerging economies and in particular China and Central Banks remain
net buyers. The re-election of President Obama for a second term is
also seen as a positive for the gold price given the greater
likelihood that his government will back further quantitative
easing measures.
The portfolio remains focused on quality gold development and
production companies. At the end of October, 75.0% of assets under
management were invested in gold and gold equities with the balance
held in cash and companies with non-gold assets. In addition 73.3%
of assets under management were held in development and production
stage companies with the balance held in cash, precious metals
backed ETFs and exploration stage companies. The Manager expects to
maintain these portfolio weightings over the short to medium
term.
Given the depressed valuations of many junior resource equities,
a number of recent investments have been made in companies that
have a very strong cash backing or indeed are trading at a discount
to cash. The Manager believes these represent good investment
opportunities with limited downside risk given the cash backing and
significant upside potential from the respective company's
assets.
The majority of investments are held in companies that represent
likely targets of corporate takeovers. As is illustrated by the
acquisitions of Integra and Avion, very significant short-term
returns can be generated from successfully identifying these
potential takeover targets and the manager remains focused on
identifying and investing in them. The Manager is confident that
M&A activity will continue to be a significant factor in
realising fair value for quality assets and that the recent Chinese
involvement in gold projects in Africa, Australasia and
Asia-Pacific regions has the potential to add a new dimension to
this acquisition activity.
Investment Allocation
At 31 October 2012, the Company's assets were allocated in the
following approximate proportions:
Asset Allocation by Commodity Asset Allocation by Geography
Gold 75.0% Africa 39.2%
Silver 2.7% Europe 2.8%
Bulk Minerals 5.9% North America 18.4%
Base Metals 2.6% South America 8.2%
Energy Minerals 4.1% Central Asia & Russia 0.0%
Platinum Group Metals 0.5% Asia - Other 4.4%
Diamonds 1.4% Australasia 4.9%
Other (incl. commodity
Other 0.8% exposure) 15.2%
Cash 6.9% Cash 6.9%
Asset Allocation by Development
Stage
Production 43.2%
Development 30.1%
Exploration 11.9%
Commodity Exposure 7.9%
Cash 6.9%
Note: There may be overlap between the holdings of the Company
and Altus Global Gold Ltd. These common holdings are not
consolidated in the asset allocation splits above.
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, 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
E&OE - In Transmission
END OF ANNOUNCEMENT
This information is provided by RNS
The company news service from the London Stock Exchange
END
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