TIDMBSRT
RNS Number : 0910C
Baker Steel Resources Trust Ltd
26 April 2012
BAKER STEEL RESOURCES TRUST LIMITED
(Incorporated in Guernsey with registered number 51576 under the
provisions of The Companies (Guernsey) Law, 2008 as amended)
26 April 2012
BAKER STEEL RESOURCES TRUST LTD
(the "Company")
Annual Report and Audited Financial Statements
For the year to 31 December 2011
The Company has today, in accordance with DTR 6.3.5, released
its Annual Audited Financial Report for the year ended 31 December
2011. 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
HIGHLIGHTS
-- Audited 31 December 2011 NAV per share increased 27.0% over the year to 131.3p.
-- Fully invested by June 2011.
-- First realisation of a core investment during the year with
First Coal Corporation being sold to Xstrata Coal Canada Limited
generating an after tax return of 129%.
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
RBC Capital Markets +44 20 7653 4000
Martin Eales
Winterflood Investment Trusts +44 20 3100 0250
James Moseley
Pelham Bell Pottinger
Lorna Spears +44 20 7861 3883
Joanna Boon +44 20 7861 3867
HSBC Securities Services (Guernsey) Limited
Company Secretary + 44 (0)1481 707 000
MANAGEMENT AND ADMINISTRATION
DIRECTORS: Howard Myles (Chairman)
Edward Flood
Charles Hansard
Clive Newall
Christopher Sherwell
all of whom are non-executive directors
REGISTERED OFFICE: Arnold House
St. Julian's Avenue
St. Peter Port
Guernsey
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
86 Jermyn Street
London SW1Y 6JD
England
United Kingdom
BROKERS: RBC Capital Markets
71 Queen Victoria Street
London EC4V 4DE
United Kingdom
Winterflood Securities Limited
Cannon Bridge House
25 Dowgate Hill
London EC4R 2GA
United Kingdom
SOLICITORS TO THE COMPANY: Simmons & Simmons
(as to English law) CityPoint
One Ropemaker Street
London EC2Y 9SS
United Kingdom
ADVOCATES TO THE COMPANY: Ogier
(as to Guernsey law) Ogier 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
SUB-ADMINISTRATOR TO THE COMPANY: HSBC Securities Services (Ireland) Limited
1 Grand Canal Square
Grand Canal Harbour
Dublin 2
Ireland
CUSTODIAN TO THE COMPANY: HSBC Institutional Trust Services (Ireland) Limited
1 Grand Canal Square
Grand Canal Harbour
Dublin 2
Ireland
AUDITORS: Ernst & Young LLP
Royal Chambers
St. Julian's Avenue
St. Peter Port
Guernsey GY1 4AF
Channel Islands
REGISTRAR: Capita Registrars (Guernsey) Limited
Longue Hougue House
St. Sampson
Guernsey GY2 4JN
Channel Islands
PRINCIPAL BANKER HSBC Bank plc
8 Canada Square
London E14 5HQ
United Kingdom
INVESTMENT OBJECTIVES AND POLICIES
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, or related instruments, of natural
resources companies. The Company will invest predominantly in
unlisted companies (i.e. those companies that have not yet made an
initial public offering or "IPO") but 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.
Investment policy
The core of Baker Steel Resources Trust Limited's (the
"Company") strategy is to invest in natural resources companies,
predominantly unlisted, that the Investment Manager considers to be
undervalued and have strong fundamentals and attractive growth
prospects. Natural resources companies, for the purposes of the
investment policy, are those involved in the exploration for and
extraction of base metals, precious metals, bulk commodities,
thermal and metallurgical coals, industrial minerals, energy and
uranium and include single-asset as well as diversified natural
resources companies.
It is intended that unlisted investments be realised through an
IPO, trade sale, management repurchase or other methods.
The Company will primarily focus on making investments in
companies with producing and/or tangible assets such as resources
and reserves that have been verified under internationally
recognised standards for reporting, such as those of the
Australasian Joint Ore Reserves Committee. The Company may also
invest from time to time in exploration companies whose activities
are speculative by nature.
The Company has flexibility to invest in a wide range of
investments in addition to unlisted and listed equities and
equity-related securities, including but not limited to
commodities, convertible bonds, debt securities, royalties,
options, warrants and futures. Derivatives may be used for
efficient portfolio management, hedging and for the purposes of
obtaining investment exposure. The Company may also have exposure
from time to time to other companies within the wider resources and
materials sector, including services companies, transport and
infrastructure companies, utilities and downstream processing
companies.
The Company may take legal or management control of a company
from time to time. The Company may invest in other investment funds
or vehicles, including any managed by the Manager or Investment
Manager, where such investment would be complementary to the
Company's investment objective and policy.
There will be no fixed limits on the allocation between unlisted
and listed equities or equity-related securities and cash although,
as a guideline, typically the Investment Manager will aim for the
Company to be invested over the long-term as follows:
-- between 40 and 100 per cent of the value of its gross assets
in unlisted equities or equity-related securities;
-- up to 50 per cent of the value of its gross assets in listed
equities or equity-related securities;
-- up to 10 per cent of the value of its gross assets in cash or cash-like holdings; and
-- typically in between 10 and 15 core positions to provide
adequate diversification whilst retaining a focused core approach.
Core positions will typically be between 5 per cent and 15 per cent
of NAV as at the date of acquisition.
The actual percentage of the Company's gross assets invested in
listed and unlisted equities and equity-related securities and cash
and cash-like holdings and the number of positions held may fall
outside these ranges from time to time. For example, listed
securities might exceed the above guideline following a significant
number of IPOs or in certain market conditions and likewise cash
balances may exceed the above guideline following the realisation
of one or more investments or following the issue of new equity in
the Company, pending investment of the proceeds.
The investment policy has the following limits:
-- Save in respect of cash and cash-like holdings awaiting
investment, the Company will invest or lend no more than 20 per
cent in aggregate of the value of its gross assets in or to any one
particular company or group of companies, as at the date of the
relevant transaction.
-- No more than 10 per cent in aggregate of the value of the
gross assets of the Company may be invested in other listed
closed-ended investment funds, except for those which themselves
have stated investment strategies to invest no more than 15 per
cent of their gross assets in other listed closed-ended investment
funds.
Where derivatives are used for investment exposure, these limits
will be applied in respect of the investment exposures so
obtained.
For so long as required by the Listing Rules, the Company will
avoid (a) cross-financing between the businesses forming part of
its investment portfolio and (b) the operation of common treasury
functions as between it and the investee companies.
When deemed appropriate, the Company may borrow up to 10 per
cent of NAV for temporary purposes such as settlement mis-matches.
Borrowings will not however be incurred for the purposes of any
Share repurchases.
The Investment Manager will not normally hedge the exposure of
the Company to currency fluctuations.
Any material change in the investment objective, investment
policy or borrowing policy will only be made with the prior
approval of holders of Ordinary Shares by Ordinary Resolution.
CHAIRMAN'S STATEMENT
For the year ended 31 December 2011
I am pleased to present the Company's second annual report. 2011
was the first full year of operation for the Company following its
admission to listing on 28 April 2010. Performance for the year was
good with the undiluted NAV per share increasing 27.0% compared to
a broader market represented by the HSBC Global Mining Index which
fell by 28.4%.
The first part of the year continued the theme of 2010 with the
focus on making suitable investments with sufficient potential at
the right price. The weak markets for IPOs assisted this process
because, without that outlet for raising capital to continue
development, private companies were compelled to raise funds in the
private market. As a result the Company was fully invested by the
end of June 2011, a little over a year after listing.
In line with the Company's investment objective, the strategy
has been to create a highly focused portfolio of strong conviction
investments. At the year end, the Company was invested in 17
companies of which the top 10 holdings comprised 94.9% of Net Asset
Value. The portfolio covers the commodities of iron ore, coal,
copper, platinum group metals, nickel, silver and gold in such
diverse locations as Mongolia, Brazil, Democratic Republic of
Congo, South Africa, China, Canada, Russia, Zimbabwe and the
Philippines.
The weakness in public markets, particularly in the second half
of the year, meant that a number of our investee companies that had
been planning to list were unable to do so. However the strengths
of their projects were underlined by their ability to attract
funding largely at substantial premiums to BSRT's acquisition
levels. Ivanplats raised US$280 million for an 8% interest in its
Platreef Project in South Africa from Japanese trading company
ITOCHU indicating an implied value for that project of US$3.5
billion and Gobi Coal raised US$91 million at a 225% premium to the
Company's carrying value at the beginning of the year.
During the year, the Company made its first significant
realisation of an investment following the acquisition of First
Coal by Xstrata Coal Canada Limited in August 2011, generating an
after tax return of 129% on the Company's C$5.2 million investment.
This disposal demonstrates the Company's strategy of investing in
projects of sufficient scale to attract major industry buyers as an
alternative to monetisation via the IPO market. During December
2011, one of the Company's investments, China Polymetallic Mining
Limited, listed on the Hong Kong Stock Exchange despite very
difficult market conditions, achieving an unrealised return of 76%
based on the closing listed price on 30 December 2011.
The weakness in IPO markets in 2011, which led to the deferral
of a number of IPOs, means that 2012 could prove to be an eventful
year for the Company should the IPO market open up again. I am
therefore looking forward to the rest of the year with much
anticipation and would like to thank all our shareholders for their
continuing support for the Company.
Howard Myles
Chairman
25 April 2012
INVESTMENT MANAGER'S REPORT
For the year ended 31 December 2011
Financial Performance
The audited undiluted net asset value per ordinary share as at
31 December 2011 was 131.3 pence an increase of 27.0% in the year
and of 34.1% from the Company's first net asset value ("NAV")
calculated on 30 April 2010. During the year the HSBC Global Mining
Index was down 28.4% (down 12.2% since 30 April 2010).
On 6 January 2012, the Company announced the unaudited NAV for
30 December 2011 of 130.3 pence per share. During December 2011 and
early January 2012, Ironstone Resources Limited undertook a placing
of stock equivalent to around 2.7% of the shares in issue of
Ironstone. At the time the year end NAV was being finalised, the
Company was not aware of the conclusion of this placing so it was
not taken into account in determining the unaudited year end NAV.
It has subsequently become apparent that this placing reflected a
change in fair value at 31 December 2011. This increase in carrying
value has been included in these financial statements and has also
led to adjustments in both the 31 January 2012 unaudited NAV and 29
February 2012 unaudited NAV statements. Accordingly the audited NAV
at the year end has been restated to 131.3p per share.
For the purpose of calculating the net asset value per share,
unquoted investments are carried at fair value as at 31 December
2011 as determined by the Directors and quoted investments are
carried at closing price as at 30 December 2011.
Net assets at 31 December 2011 comprised the following:
GBPm % net assets
Unquoted Investments 79.4 91.5
Quoted Investments 8.1 9.4
Net Cash, Equivalents and
Accruals (0.8) (0.9)
86.7 100.0
Investment Update
Largest 10 Investments
Ivanplats Limited* 25.4%
Gobi Coal & Energy Limited* 20.4%
Ferrous Resources Limited 12.7%
China Polymetallic Mining Limited 8.8%
Ironstone Resources Limited 6.9%
Black Pearl Limited Partnership 5.2%
Bilboes Holdings (Pvt) Limited 4.5%
Polar Silver Resources Ltd/Argentum 4.1%
Metals Exploration plc 3.9%
South American Ferro Metals Limited 3.1%
Other Investments 5.9%
Net Cash, Equivalents and Accruals (0.9%)
* represented less than 20% in aggregate of the value of gross
assets as at the date of the last relevant acquisition
During the first part of 2011 the emphasis continued to be on
identifying and completing on investments with the requisite
potential. By July 2011, the Company was fully invested and
continued to be fully invested at 31 December 2011 with the
proceeds of disposals being reinvested in other opportunities.
In August 2011, the Company made its first full realisation of a
core investment following the takeover of First Coal Corporation by
Xstrata Coal in an all cash offer. After taking into account
Canadian tax payable, the Company made a gain of C$6.75 million on
its investment representing a return of 129%.
During the year, a number of new positions were added to the
Company's portfolio. The commodity diversification of the portfolio
was increased with the addition of four precious metals
investments. Silver exposure was added with the investment in Polar
Silver Resources Ltd which has a 50% interest in the Prognoz silver
deposit in Russia and with the investment in China Polymetallic
Mining Limited, which commenced production from its Shizishan
silver/lead/zinc mine during the year. Gold exposure was added to
the portfolio with investments in AIM quoted Metals Exploration
plc, which owns the Runruno gold development project in the
Philippines, and in Bilboes Holdings (Pvt) Ltd, a management buyout
of Anglo American's gold projects in Zimbabwe. In addition, iron
ore exposure was increased through a structured investment in the
Black Pearl beach placer iron sands project in Indonesia. Details
of each of these investments and the Company's other significant
holdings are provided later in this report.
Good progress has been made at Ivanplats, the Company's largest
position. A Canadian National Instrument 43-101 ("NI
43-101")-compliant resource report was received from independent
consultants AMEC in February 2012 on Ivanplats' Kamoa copper
project in the Democratic Republic of Congo ("DRC") with contained
copper in the resource increased by 70% over that reported a year
before. On 3 June 2011, ITOCHU Corporation of Japan acquired an 8%
interest in Ivanplats' second major project, the Platreef Project
in South Africa for 22.4 billion Japanese Yen, valuing the Platreef
Project at approximately US$3.5 billion. A significant portion of
this cash was rapidly deployed by Ivanplats with over 260,000
metres of drilling having been undertaken on the project during the
year. A third major project was added to Ivanplats late in the year
with the acquisition of a 68% interest in the Kipushi
zinc/polymetallic mine in the DRC.
In May 2011 Ivanplats shareholders approved a reorganisation of
Ivanplats in anticipation of an IPO on a major international stock
exchange. Market conditions in the second half of 2011 were not
conducive to a listing of this scale but given positive progress at
its projects, a listing in 2012 is more likely assuming general
markets allow.
Following completion of a feasibility study on the first of its
projects, the Shinejinst coking coal project in Mongolia, Gobi Coal
& Energy Limited successfully raised US$91 million from two
sovereign wealth funds at US$6.50 per share compared to the
Company's carrying value at the beginning of the year of US$2.00
per share. This funding is expected to be sufficient to develop the
first phase of the mine and build a haul road to the Chinese
border. First production is scheduled for the third quarter 2012
following which is it understood an IPO will be considered.
Despite the prevailing adverse market conditions for IPOs in the
latter half of 2011, one of the Company's core investments, China
Polymetallic Mining Limited, did manage to list on the Hong Kong
Stock Exchange in December 2011. As a result, at year end the
Company's carrying value was showing a 76% uplift on its
acquisition price in April 2011.
Other notable progress was made at South American Ferro Metals
Limited ("SAFM") which commenced production at its Ponto Verde iron
ore project in Minas Gerais in Brazil in December 2010 and reached
its target of 125,000 run of mine ("ROM") tonnes per month in
September 2011, equivalent to 1.5 million ROM tonnes per annum.
During the year SAFM also achieved all the milestones set for the
conversion of the three different performance share classes which
were held by the Company and accordingly they were all converted to
ordinary shares prior to year end.
Description of Largest Investments
Ivanplats Limited ("Ivanplats")
Ivanplats is a private company which owns the Kamoa copper
project and Kipushi zinc mine both in the DRC and the Turfspruit
nickel, platinum, palladium, copper and gold project in South
Africa.
Ivanplats holds exploration licences covering 9000km(2) of the
Congolese Copperbelt. Primary amongst these is the Kamoa copper
project, situated less than 20km from Kolwezi, the DRC's copper
mining hub. Over 450 bore holes totalling 120,000 metres have been
drilled. A revised but unpublished NI 43-101 compliant report was
completed on Kamoa in February 2012 by independent technical
consultants AMEC.
Ivanplats acquired a 68% interest in the Kipushi
zinc/polymetallic mine in the DRC in late 2011. From 1925-1993,
Kipushi produced 60Mt of ore at 11% zinc and 6% copper together
with 120 tonnes of germanium, an element used as a semi-conductor
in fibre-optic systems. A feasibility study is planned in order to
investigate the re-opening of the mine.
The Turfspruit, platinum, palladium, nickel, copper and gold
project is situated on the northern limb of the Bushveld Igneous
Complex in South Africa. Drilling during 2010 intersected
high-grade mineralisation over substantial widths and demonstrated
a flattening of the Platreef mineralisation at depth. Over 500,000
metres of drilling has been undertaken leading to a revised but
unpublished NI 43-101 compliant resource and technical report by
independent consultants, AMEC, in December 2011.
Gobi Coal & Energy Limited("Gobi")
Gobi is an emerging coking coal producer based in Mongolia. Gobi
Coal owns 100% of three open-cut coal development projects in south
western Mongolia. Gobi's projects contain approximately 322 million
tonnes of Joint Ore Resource Committee ("JORC") resources and
include more than 500,000 hectares of tenements.
Gobi's first project, Shinejinst, contains approximately 95
million tonnes of JORC reserves and 229 million tonnes of JORC
resources and the mine is expected to begin production in Q2 2012.
At full production, Shinejinst is expected to produce approximately
5 million tonnes per annum of high quality, semi-soft coking coal
product.
Ferrous Resources Limited("Ferrous")
Ferrous is a private company with five iron-ore projects in the
iron quadrilateral region in Minas Gerais state and one in Bahia
state in Brazil. It has JORC resources of 5.1 billion tonnes of
iron ore.
Production of iron ore totalled 2 million tonnes in 2011 with an
output planned to reach 4 million tonnes in 2013 and Ferrous is
targeting a rate of 24 million tonnes per annum from 2016. Ferrous
is developing its own infrastructure system which is expected to
encompass a port terminal in Presidente Kennedy, Espirito Santo
state and a 400km slurry pipeline connecting the port terminal to
Ferrous' Viga Mine.
China Polymetallic Mining Limited ("CPM")
CPM is an emerging Chinese mining company listed on the Hong
Kong Stock Exchange. BSRT's investment is via a special purpose
vehicle, Five Stars B.S. Limited Partnership, and the investment is
subject to a lock-up until December 2012. CPM has a number of
development projects in Yunan Province, China. The first of these,
the Shizishan lead/zinc/silver mine, commenced production in 2011
and is currently ramping up towards full production. The second
project, the Lushan tungsten/tin mine, is planned to start
production in the second half of 2012.
The Shizishan Mine has JORC compliant resources totalling 9.3
million tonnes grading 255.5g/t silver, 9.40% lead and 6.02% zinc
for contained metal of 77 million ounces silver, 878,500 tonnes
lead and 563,000 tonnes zinc. The mine is expected to produce 5
million ounces of silver, 57,000 tonnes lead and 35,000 tonnes zinc
per annum when the mine is in full production, scheduled for
2013.
Ironstone Resources Limited("Ironstone")
Ironstone is a private Canadian company which owns the Clear
Hills Iron Ore/Vanadium Project ("Clear Hills") in Alberta, Canada.
Clear Hills currently has an indicated resource of 556.5Mt at 33.3%
iron and 0.2% vanadium and an inferred resource of 86.9Mt at 34.1%
iron.
Ironstone is currently undertaking extensive pilot plant work in
conjunction with pyrotechnology experts HATCH of Toronto, utilising
a 11,000 tonne bulk sample extracted during 2011, in order to
demonstrate the metallurgical process to refine the ore into direct
reduced iron.
Black Pearl Limited Partnership ("Black Pearl")
Black Pearl is a special purpose vehicle formed to invest in the
Black Pearl beach placer iron sands project in West Java,
Indonesia. The Black Pearl concession area is 15,000 ha of which
1,600 ha has been drilled. JORC compliant mineral resources stand
at 572 million tonnes grading 11% iron and a drilling programme is
currently underway. Once complete, resources are expected to
sustain operations for at least 15 years.
Mine construction is underway and initial production is due to
commence during the third quarter of 2012. At full capacity, the
mine is expected to produce 10 million tonnes per annum of iron ore
concentrate grading 58-60% iron. Commissioning is scheduled for the
first half of 2012 prior to an expected listing at the end of 2012.
Off-take agreements are being negotiated with a number of Chinese
steel mills.
Bilboes Holdings (pvt) Limited("Bilboes")
Bilboes is a private Zimbabwean gold mining company which owns
four previously producing oxide mines in Zimbabwe containing JORC
compliant resources totalling 778,000 ounces of gold. There is a
good opportunity to expand the current resource base significantly,
through drilling of the underlying sulphide mineralisation. A drill
campaign commenced in August 2011 and is due to be completed in May
2012 with the aim of estimating a revised resource mid-2012.
Polar Silver Resources Limited/ZAO Argentum ("Polar Silver")
Polar Silver is a private company whose wholly owned Russian
subsidiary, ZAO Argentum holds a 50% indirect interest in the
Prognoz silver project, 444km north of Yakutsk in Russia
("Prognoz"). A NI 43-101 compliant report by independent consultant
Micon International Limited ("Micon") in July 2009, estimated an
indicated resource of 5.86 million tonnes of ore grading 773 g/t
silver containing 146 million ounces silver and inferred resources
of 9.64 million tonnes of ore grading 473 g/t silver containing 147
million ounces silver at Prognoz. A NI 43-101 compliant preliminary
economic assessment was completed by Micon in February 2012. This
indicates potential for a mine producing an average of 13 million
ounces of silver per annum over a 16 year mine life.
Metals Exploration plc ("Metals Exploration")
Metals Exploration is an AIM quoted company which owns the
Runruno gold project in the Philippines.
A feasibility study has been completed into a mine producing
approximately 100,000 ounces of gold per annum at Runruno and
Metals Exploration is now well positioned to finalise the financing
of the mine and commence development.
South American Ferro Metals Limited ("SAFM")
SAFM is an Australian Stock Exchange listed company whose main
asset is the Ponto Verde iron ore project in Minas Gerais in
Brazil. The property contains a JORC compliant mineral resource
estimated at 230.6 million tonnes ore grading 44.52% iron.
In September 2011, production reached its target of 125,000 run
of mine ("ROM") tonnes per month, equivalent to 1.5 million ROM
tonnes per annum. SAFM is now considering the feasibility of
increasing the mining rate to 8 million tonnes of ore per
annum.
Copperbelt Minerals Limited ("Copperbelt")
Copperbelt is a private company with a copper/cobalt project in
the DRC. Copperbelt has a 68% interest in the Deziwa Copper
Project, one of the largest copper oxide deposits in the DRC.
Gecamines, a state owned mining and exploration enterprise that
holds most of DRC's state mining activities, holds the remaining
32%. Copperbelt completed a positive Definitive Feasibility Study
on the project in January 2009, indicating potential for a mine
producing 80,000 tonnes of copper per annum.
Forbes and Manhattan Coal Corporation ("Forbes Coal")
Forbes Coal is a coal producer listed on both the Toronto Stock
Exchange and the Johannesburg Stock Exchange, with two mines in the
Kwa-Zulu Province of South Africa. The Magdalena Mine has a NI
43-101 compliant resource of 51.7 million tonnes of bituminous coal
and produced 1 million tonnes of coal in the year to 29 February
2012. The Aviemore Mine has a NI 43-101 compliant resource of 51.7
million tonnes of anthracite coal and produced 281,000 tonnes of
coal in the year to 29 February 2012.
Market Outlook
Continued strong growth in China and other developing markets is
likely to support most commodity prices during 2012. Fears of a
major slowdown of growth in China seem to be misplaced with the
economy having grown by an annual equivalent of 8.1% during the
first quarter 2012. It is expected that Chinese interest rates will
ease in 2012, which should further support growth and demand for
commodities.
Robust global industrial production and growing export demand
are likely to be accompanied by increasingly constrained supplies
for iron ore and thermal coal in 2012 whilst supply deficits for
copper and metallurgical coal may ease. The Company has exposure to
iron ore through Ferrous Resources, South American Ferro Metals,
Ironstone Resources and Black Pearl and only limited exposure to
thermal coal. Gobi Coal may be insulated from this easing given
that the market in Gansu is isolated from seaborne markets. The
fortunes of zinc and lead appear to be improving with high demand
growth expected from China by 2015/16, which augurs well for the
Company's investment in China Polymetallic Mining. Investor
interest in gold and silver continues to be supported by prevailing
macro economic downside risks and negative real interest rates in
the US and Europe, which should provide support for Polar Silver,
Bilboes and Metals Exploration.
The weak performance of equity markets, including mining shares,
in the latter half of 2011 compared to robust outlooks for most
commodity prices, together with strong cash balances for producers
is likely to result in increasing mergers and acquisitions activity
in the sector. This in turn could result in increased IPO activity
as investors seek to recycle the proceeds of takeovers.
The opening up of the IPO market has the potential to have a
significant effect on the net asset value of BSRT with several of
the Company's top holdings at the appropriate stage of their
development to have the capability of listing in 2012.
DIRECTORS' REPORT
For the year ended 31 December 2011
The Directors of the Company present their second annual report
and the audited financial statements for the year ended 31 December
2011.
Principal activity and business review
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 2008 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 shares were admitted to the Premium
listing segment of the Official List on 28 April 2010.
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 will invest predominantly in
unlisted companies (i.e. those companies that have not yet made an
initial public offering or "IPO") but 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.
The Company's investment policy is detailed further on in the
financial statements.
Portfolio analysis
A detailed analysis of the Portfolio has been provided further
on in the financial statements.
The Investment Manager's report includes a review of the main
developments during the year together with information on
investment activity within the Company's Portfolio and on the
market outlook.
Performance
In the year to 31 December 2011, the Company's undiluted NAV per
Ordinary share increased by 27.0% (2010: 5.6%). This compares with
a fall in the HSBC Global Mining Index (capital return in sterling
terms) of 28.4% (2010: rise of 25.1%).
Results and dividends
The results for the year are shown in the Statement of
Comprehensive Income and the Company's financial position at the
end of the year is shown in the Statement of Financial
Position.
Dividend policy
It is not currently envisaged that any income or gains will be
distributed by the Company by way of dividend. This does not
preclude the Directors from declaring a dividend at any time in the
future if they consider it appropriate to do so. To the extent that
any dividends are paid they will be paid in accordance with any
applicable laws and the regulations of the UK Listing
Authority.
Directors
The Directors of the Company who served during the period
were:
Howard Myles (Chairman)
Edward Flood
Charles Hansard
Clive Newall
Christopher Sherwell
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 year ended 31 December 2011 the total remuneration of
the Directors was GBP140,000 (part year 2010: GBP116,000), with
GBP36,000 (2010: GBP36,000) payable at year end.
The Directors' interests in the share capital of the Company at
both 31 December 2011 and 31 December 2010 were:
Number of Number of
Ordinary Shares Subscription Shares
Edward Flood 65,000 13,000
Christopher Sherwell 25,000 5,000
Clive Newall 25,000 5,000
Mr Sherwell also has an indirect interest in the shares of the
Company through an investment in another fund managed by the
Manager.
Significant Shareholdings
The significant shareholdings in the Company at 31 December 2011
were:
Number of % of Total
Ordinary Shareholder Ordinary Shares Shares in issue
The Bank of New York (Nominees) Limited* 25,049,316 37.93
HSBC Global Custody Nominee Limited* 7,665,387 11.61
Nortrust Nominees Limited* 4,566,937 6.92
Royal Bank of Canada Europe Limited 4,001,864 6.06
Roy Nominees Limited* 2,110,710 3.20
State Street Nominees Limited* 1,943,857 2.94
Lynchwood Nominees Limited* 1,834,675 2.78
* Custodian accounts held on behalf of individual
shareholder(s). These holdings are aggregated.
CF Ruffer Baker Steel Gold Fund ("CFRBSGF") had an interest in
6,080,000 Ordinary Shares and 1,420,000 Subscription Shares in the
Company at 31 December 2011. These shares are held in a custodian
account with The Bank of New York (Nominees) Limited. CFRBSGF
shares a common Investment Manager with the Company.
The Manager, Baker Steel Capital Managers (Cayman) Limited, had
an interest in 504,832 Ordinary Shares and 100,876 Subscription
Shares at 31 December 2011.
The Investment Manager, Baker Steel Capital Managers LLP, had an
interest in 10,000 Management Ordinary Shares at 31 December
2011.
Authorised and Issued 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 raised GBP30,468,865 (before costs) through the
issue of 30,468,865 Ordinary Shares and 6,093,772 Subscription
Shares via a Placing and Offer. In addition, the Company issued
35,554,224 Ordinary Shares and 7,110,822 Subscription Shares to the
holders of shares in Genus Capital Fund pursuant to a scheme of
reorganisation of Genus Capital Fund, in exchange for substantially
all the non-cash assets of Genus Capital Fund. With effect from 30
September 2010, 7,543 Ordinary Shares were issued as a result of
the exercise of Subscription Shares. With effect from 31 March
2011, 2,429 Ordinary Shares were issued as a result of the exercise
of Subscription Shares.
Issue of Shares
The Company was admitted to trading on the London Stock Exchange
on 28 April 2010. On that date, 30,468,865 Ordinary Shares and
6,093,772 Subscription Shares were issued pursuant to a placing and
offer for subscription and 35,554,224 Ordinary Shares and 7,110,822
Subscription Shares were issued pursuant to a scheme of
reorganisation of Genus Capital Fund. In addition 10,000 Management
Ordinary Shares were issued. Following the exercise of Subscription
Shares at the end of September 2010, 7,543 Ordinary Shares were
issued and as a result, the Company had 66,030,632 Ordinary Shares
and 13,197,051 Subscription Shares in issue at 31 December
2010.
Following the exercise of Subscription Shares at the end of
March 2011, 2,429 Ordinary Shares were issued and as a result, the
Company had 66,033,061 Ordinary Shares and 13,194,622 Subscription
Shares in issue at 31 December 2011.
Going Concern
The Directors have made an assessment of the Company's ability
to continue as a going concern and are satisfied that it has the
resources to continue in business for the foreseeable future.
Although there is insufficient cash at the year end to settle the
current payables and the company is in a net current asset negative
position, this was largely due to the accrual of the performance
fee to the Manager. The Manager has agreed not to seek payment of
the performance fee until the Company has sufficient cash.
Furthermore, the Company holds listed securities that can be
realised to meet liabilities. 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. Therefore, the
financial statements have been prepared on a going concern
basis.
Corporate Governance Compliance
The Company is committed to maintaining high standards of
corporate governance. The Board has put in place a framework for
corporate governance which it believes is suitable for an
investment company and which enables the Company to comply with the
relevant provisions of the UK Corporate Governance Code issued by
the Financial Reporting Council in June 2010.
The Board has made the appropriate disclosures in this report to
ensure that the Company meets its continuing obligations. The
Company considers that it has complied with the provisions of the
UK Corporate Governance Code throughout the accounting period,
except where disclosed below.
Information and training
The Board receives full details of the Company's assets,
liabilities and other relevant information in advance of Board
meetings. Typically, the Board meets formally four times a year;
however, the Investment Manager and Company Secretary stay in more
regular, less formal contact with the Directors. Individual
Directors have direct access to the Company Secretary and may, at
the expense of the Company, seek independent professional advice on
any matter that concerns them in the furtherance of their duties.
New Directors will receive an induction from the Investment Manager
and Company Secretary on joining the Board, and all Directors
receive other relevant training as necessary.
Independence
The Board consists solely of non-executive Directors of whom
Howard Myles is Chairman. Charles Hansard has informed the Board
that he has entered into a commercial relationship with the
Manager, Baker Steel Capital Managers (Cayman) Limited. As a
result, he may no longer be deemed as independent under the UK
Corporate Governance Code. The Board considers all other Directors
as independent of the Manager, Investment Manager and the
Investment Advisers and free from any business or other
relationship that could materially interfere with the exercise of
their independent judgement.
Senior Independent Director
In view of its non-executive nature, the Board considers that it
is not appropriate for a Senior Independent Director to be
appointed.
Appointment and re-election
All the Directors are responsible for reviewing the size,
structure and skills of the Board and considering whether any
changes are required or new appointments are necessary to meet the
requirements of the Company's business or to maintain a balanced
Board. The Directors are not required to retire by rotation at each
annual general meeting of the Company. The Board's policy on tenure
is that continuity and experience are considered to add
significantly to the strength of the Board and, as such, no limit
on the overall length of service of any of the Company's Directors,
including the Chairman, has been imposed.
Performance appraisal
The performance of the Board and the Audit Committee are
evaluated through an assessment process led by the Chairman. The
performance of the Chairman is evaluated by the other
Directors.
Audit committee
The Board has established an Audit Committee. The Audit
Committee meets at least twice a year and is responsible for
ensuring that the financial performance of the Company is properly
reported on and monitored and provides a forum through which the
Company's external auditors may report to the Board. The Audit
Committee operates within established terms of reference. These are
available on the Company's website
www.bakersteelresourcestrust.com. The Directors consider there is
no need for an internal audit function because the Company operates
through service providers and the Directors receive control reports
on service providers.
Charles Hansard has informed the Board that he has entered into
a commercial relationship with the Manager, Baker Steel Capital
Managers (Cayman) Limited. As a result, he may no longer be deemed
as independent under the UK Corporate Governance Code. He has
therefore stepped down from the Audit Committee. Christopher
Sherwell has been appointed Chairman and Clive Newall have joined
the Audit Committee.
Nomination, Remuneration and Management Engagement
Committees
Given the size and nature of the Company and the fact that all
the Directors are non-executive it is not deemed necessary to form
separate Nomination, Remuneration, and Management Engagement
Committees. The Board, as a whole, will consider new Board
appointments, remuneration and the engagement of service providers,
although in view of Charles Hansard's commercial relationship with
the Manager, he will not participate in Board discussions in
relation to the Manager's appointment.
Board meetings
The Board generally meets at least four times a year, at which
time the Directors review the management of the Company's assets
and all other significant matters so as to ensure that the
Directors maintain overall control and supervision of the Company's
affairs. The Board is responsible for the appointment and
monitoring of all service providers to the Company. Between these
quarterly meetings there is regular contact with the Investment
Manager. The Directors are kept fully informed of investment and
financial controls and other matters which are relevant to the
business of the Company and which should be brought to the
attention of the Directors. The Directors also have access to the
Company Secretary (through its appointed representatives who are
responsible for ensuring that Board procedures are followed and
that applicable rules and regulations are complied with) and, where
necessary in the furtherance of their duties, to independent
professional advice at the expense of the Company.
Internal Controls
The Board recognises the need for effective high-level internal
controls. The principal controls to address financial, operational
and compliance risks are embedded in the operational procedures of
the Investment Manager, the Administrator and the Custodian.
High-level controls in operation in relation to the Company
include segregation of duties between relevant functions and
departments within the Administrator and the Investment Manager. At
every quarterly meeting, the Board considers the compliance
reports, administration reports, and portfolio valuations provided
by the Administrator, and the Investment Manager's reports and
analyses.
The Administrator has a number of internal control functions
including a dedicated Compliance Officer who is appointed as a
statutory requirement and whose role is determined by the Guernsey
Financial Services Commission which includes the maintenance of a
log of errors and breaches which are reported to the Board at each
quarterly Board meeting. The Administrator also undertakes an
independent annual review of its internal control functions in
accordance with International Standard on Assurance Engagements
3402, "Assurance Reports on Controls at a Service Organisation",
issued by the International Auditing and Assurance Standards Board.
The Administrator makes this report available to the Board for
review and assessment of the control objectives and activities in
place.
The Board reviews the effectiveness of the Company's internal
control systems on an ongoing basis. Procedures are in place to
ensure that necessary action is taken to address any significant
weaknesses identified in the control framework. The Board is not
aware of any significant failings or weaknesses in the Company's
internal controls in the period under review. The Board recognises
that the internal controls framework is designed to manage rather
than to eliminate relevant risks. The key risks faced by the
Company are set out below. The Board reviews the policies for
managing each of these principal risks as summarised below. Please
also refer to note 5.
The only fees payable to Ernst & Young LLP were for the
annual audit.
Investment Manager Assessment
The Investment Manager prepares regular reports to the Board to
allow it to review and assess the Company's activities and
performance on an ongoing basis. The Board and the Investment
Manager have agreed clearly defined investment criteria, exposure
limits and specified levels of authority. Regular reports on these
matters, including performance information and portfolio
valuations, are submitted to the Board at each meeting.
Relations with Shareholders
The Board believes that the maintenance of good relations with
shareholders is vital for the long-term prospects of the Company.
The Board receives feedback on the views of shareholders from the
Company's brokers, RBC Capital Markets and Winterflood Securities
Limited, and from the Investment Manager.
General Meetings
All general meetings of the Company are held in Guernsey. The
Company holds an Annual General Meeting each year.
Principal risks & uncertainties
Performance risk
The Board is responsible for determining the investment strategy
to allow the Company to fulfil its objectives and also for
monitoring the performance of the Investment Manager which has been
delegated day-to-day discretionary management of the Company's
portfolio. An inappropriate strategy may lead to poor performance.
The investment policy of the Company is for a highly focused
portfolio which can lead to a concentration of risk. To manage this
risk the Investment Manager provides to the Board, on an ongoing
basis, an explanation of the significant stock selection
recommendations and the rationale for the composition of the
investment portfolio. The Board monitors and mandates an adequate
diversification of investments, both geographically and sectorally,
in order to reduce the risks associated with particular sectors,
based on the diversification requirements inherent in the Company's
investment policy.
Market risk
Market risk arises from volatility in the prices of the
Company's underlying investments which, in view of the Company's
investment objectives, in turn are particularly sensitive to
commodity prices. Market risk represents the potential loss the
Company might suffer through holding investments in the face of
negative market movements. The Board has set investment
restrictions and guidelines which are monitored and reported on by
the Investment Manager on a regular basis.
Financial risk
The Company's investment activities expose it to a variety of
financial risks that include foreign currency risk and interest
rate risk. Further details are disclosed in note 5.
Operational risk
In common with most other investment vehicles, the Company has
no employees. The Company therefore relies upon the services
provided by third parties and is dependent on the control systems
of the Investment Manager and the Company's other service
providers. For example, the security of the Company's assets,
dealing procedures, accounting records and compliance with
regulatory and legal requirements depend on the effective operation
of these systems.
Business/Other risks
The Company invests in companies whose projects are located in
emerging markets. In such countries government can exercise
substantial influence over the private sector and political risk
can be a significant factor. In adverse social and political
circumstances, governments have been involved in policies of
expropriation, confiscatory taxation, nationalisation, intervention
in the securities markets and imposition of foreign exchange
controls and investment restrictions. The Investment Manager and
the Board take into account specific political risks when entering
into an investment and seek to mitigate them by diversifying
geographically.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the financial
statements in accordance with applicable Guernsey law and generally
accepted accounting principles.
The Guernsey Company Law requires the Directors to prepare
financial statements for each financial year which give a true and
fair view of the state of affairs of the Company and of the profit
or loss of the Company for that period. In preparing these
consolidated financial statements the Directors should:
- select suitable accounting policies and then apply them consistently;
- make judgments and estimates that are reasonable and prudent;
- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements;
- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business;
- confirm that there is no relevant audit information of which
the Company's auditor is unaware; and
- confirm that they have taken reasonable steps they ought to
have taken as directors to make themselves aware of any relevant
audit information and to establish that the Company's auditor is
aware of that information.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and which enable the Directors to
ensure that the financial statements comply with the Companies
(Guernsey) Law, 2008. The Directors are also responsible for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors confirm that to the best of their knowledge:
- The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union (EU);
- The financial statements have been prepared in accordance with
the applicable set of accounting standards and give a true and fair
view of the assets, liabilities and financial position and profit
or loss of the Company;
- The Chairman's Statement, Directors' Report and Investment
Manager's Report include a fair review of the development and
performance of the business and position of the Company together
with the description of the principal risks and uncertainties that
the Company faces, as required by the Disclosure and Transparency
Rules of the UK Listing Authority; and
- So far as each of the Directors is aware, there is no relevant
audit information of which the Company's auditors are unaware and
each Director has taken all the reasonable steps he ought to have
taken as a director to make himself aware of any relevant audit
information and to establish that the Company's auditors are aware
of that information.
Signed on behalf of the Board of Directors by:
Howard Myles Christopher Sherwell
25 April 2012
BOARD OF DIRECTORS
Howard Myles (aged 62): Howard Myles currently acts as a
non-executive director of a number of investment companies. Howard
was a partner in Ernst & Young from 2001 until 2007 and was
responsible for the Investment Funds Corporate Advisory team. He
was previously with UBS Warburg from 1987 to 2001. Howard began his
career in stockbroking in 1971 as an equity salesman and joined
Touche Ross in 1975 where he qualified as a chartered accountant.
In 1978 he joined W. Greenwell & Co. in the corporate broking
team and in 1987 moved to SG Warburg Securities where he was
involved in a wide range of commercial and industrial transactions
in addition to leading UBS Warburg's corporate finance function for
investment funds. He is a fellow of the Institute of Chartered
Accountants and of The Chartered Institute for Securities and
Investments.
R. Edward Flood (aged 66): In March 2007, Edward Flood was
appointed Managing Director, Investment Banking, Haywood Securities
(UK) Limited. Following graduation from university Edward enjoyed a
career as an economic geologist with several different companies in
the mining industry over a 20-year period. At Nerco Minerals he was
head of the Company's acquisition team during a period of rapid
growth fuelled by the purchase of a number of operating precious
metal mines. This experience enabled him to make a transition to
the financial community as a principal at Robertson Stephens
investment bank in San Francisco in 1992. He initially worked as a
securities analyst following the gold mining industry before
becoming a member of the firm's investment management team for the
Contrarian Fund, a public mutual fund concentrated on natural
resource opportunities in emerging markets around the world and the
Orphan Fund, a similarly structured hedge fund. The funds managed a
portfolio of approximately US$2 billion. Edward became Ivanhoe
Mines' founding President in 1995 and served in that capacity until
1999. He has been a member of the board of directors since Ivanhoe
was formed. Between 1999 and 2001, Edward held the position of
senior mining analyst with Haywood Securities in Vancouver before
returning to Ivanhoe Mines as deputy chairman, a position held
until joining Haywood Securities (UK) Limited in March 2007. He is
also the Chairman of Western Uranium Corporation and director of
several mineral exploration and development companies. Edward holds
a Masters of Science (Geology) degree from the University of
Montana and is a member of the Geological Society of London.
Charles Hansard (aged 63): Charles Hansard has over 30 years'
experience in the investment industry as a professional and in a
non-executive capacity. He currently serves as a non-executive
director on a number of boards which include the Moore Capital
group of funds, AAA- rated Deutsche Bank Global Liquidity Fund, and
Electrum Ltd., a privately owned gold exploration company. He
formerly served as a director of Apex Silver Mines Ltd., where he
chaired the finance committee during its capital raising phase and
as chairman of the board of African Platinum Plc, which he led
through reorganisation and feasibility prior to its sale to Impala
Platinum. He commenced his career in South Africa with Anglo
American Corporation and Fleming Martin as a mining analyst. He
subsequently worked in New York as an investment banker for Hambros
before returning to the UK to co-found IFM Ltd., one of the
earliest European hedge fund managers. Charles holds a B.B.S. from
Trinity College Dublin.
Clive Newall (aged 62): Clive Newall graduated from the Royal
School of Mines, University of London, England in 1971 with an
honours degree in Mining Geology, and was awarded an MBA from the
Scottish Business School at Strathclyde University. He has worked
in mining and exploration throughout his career, having held senior
management positions with Amax Exploration Inc. and the Robertson
Group plc. Clive has been a director of a number of public
companies in the United Kingdom and Canada.
Christopher Sherwell (aged 64): Christopher Sherwell has worked
since 2004 as a senior Non-Executive Director based in Guernsey
with roles in the offshore finance industry. Christopher has served
as director with a variety of listed funds managed by institutions
such as Goldman Sachs, Hermes and Dexion. Christopher also acts as
a non-executive director of a number of locally incorporated
operational companies including Raven Russia Limited. Prior to
January 2004, Christopher was a Managing Director of Schroders'
offshore investment and private banking operations in the Channel
Islands. Christopher was previously Investment Director from
1993-2000 and also served on the boards of various Schroder group
companies and funds during his period there. Prior to Schroders he
worked at Smith New Court as a research analyst specialising in
asset allocation for Asian markets. Christopher is a Rhodes Scholar
with degrees in science and in economics and politics. He has
worked as a university lecturer and was for sixteen years a
journalist, most of them working for the Financial Times.
PORTFOLIO STATEMENT
AT 31 DECEMBER 2011
Shares Investments Fair value % of Net
/Warrants/ GBP equivalent assets
Nominal
Listed equity shares
Australian Dollars
20,560,122 South American Ferro Metals Limited 2,642,935 3.05
Australian Dollars Total 2,642,935 3.05
--------------- ---------
Canadian Dollars
3,383,333 BacTech Environmental Corporation 363,479 0.42
1,100,000 Forbes & Manhattan Coal Corporation 1,230,416 1.42
19,316,667 REBgold Corporation 488,290 0.56
Canadian Dollars Total 2,082,185 2.40
--------------- ---------
Great Britain Pounds
27,815,933 Metals Exploration Plc 3,407,452 3.93
Great Britain Pounds Total 3,407,452 3.93
--------------- ---------
Total investment in listed equity shares 8,132,572 9.38
--------------- ---------
Fixed Income Instruments
United States Dollars
5,100,000 Argentum Convertible Note @ 0.1% 25/01/2013 3,276,793 3.78
450,000 Polar Silver Convertible Note 289,129 0.33
United States Dollars Total 3,565,922 4.11
--------------- ---------
Total investment in Fixed Income Instruments 3,565,922 4.11
--------------- ---------
Unlisted equity shares and warrants
Canadian Dollars
10,250,000 BacTech Mining Corporation Warrants 17/06/2015 82,265 0.09
6,666,667 BacTech Mining Corporation Warrants 06/08/2013 24,436 0.03
6,282,341 Ironstone Resources Limited 5,955,232 6.87
3,036,605 Ironstone Resources Limited Warrants 30/06/2012 69,084 0.08
2,400,000 REBgold Corporation Warrants 20/11/2016 5,915 0.01
Canadian Dollars Total 6,136,932 7.08
--------------- ---------
Great Britain Pounds
1,594,646 Celadon Mining Limited 143,518 0.16
Great Britain Pounds Total 143,518 0.16
--------------- ---------
United States Dollars
3,034,734 Archipelago Metals Limited 389,968 0.45
451,445 Bilboes Holdings (Private) Limited 3,855,063 4.44
7,000,000 Black Pearl Limited Partnership 4,497,558 5.19
55,246,318 China Polymetallic Mining Limited 7,645,090 8.82
311,815 Copperbelt Minerals Limited 2,404,125 2.77
285,852 Copperbelt Minerals Warrants 15/10/2012 19,412 0.02
5,713,642 Ferrous Resources Limited 11,013,188 12.70
4,244,550 Gobi Coal and Energy Limited 17,726,532 20.44
9,787,495 Ivanplats Limited 22,009,917 25.38
1,070 Polar Silver Resources Limited 687 0.00
United States Dollars Total 69,561,540 80.21
--------------- ---------
Total unlisted equity shares and warrants 75,841,990 87.45
--------------- ---------
Financial Assets held at fair value through
profit or loss 87,540,484 100.94
--------------- ---------
Other Assets & Liabilities (816,834) (0.94)
--------------- ---------
Total Equity 86,723,650 100.00
--------------- ---------
INDEPENDENT AUDITOR'S REPORT
For the year ended 31 December 2011
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BAKER STEEL
RESOURCES TRUST LIMITED
We have audited the financial statements of Baker Steel
Resources Trust Limited for the year ended 31 December 2011 which
comprise the Statement of Financial Position, Statement of
Comprehensive Income, Statement of Changes in Equity, Statement of
Cash Flows, and the related notes 1 to 14. The financial reporting
framework that has been applied in their preparation is applicable
law and International Financial Reporting Standards as adopted by
the European Union.
This report is made solely to the Company's members, as a body,
in accordance with Section 262 of the Companies (Guernsey) Law,
2008. Our audit work has been undertaken so that we might state to
the Company's members those matters we are required to state to
them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's
members as a body, for our audit work, for this report, or for the
opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors'
Responsibilities set out in the Directors' Report, the directors
are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view. Our
responsibility is to audit the financial statements in accordance
with applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Auditing
Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Company's circumstances and have been
consistently applied and adequately disclosed; the reasonableness
of significant accounting estimates made by the directors; and the
overall presentation of the financial statements. In addition, we
read all the financial and non-financial information in the Annual
Report to identify material inconsistencies with the audited
financial statements. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.
Opinion on financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 31 December 2011, and of its comprehensive income for
the year then ended;
-- have been properly prepared in accordance with International
Financial Reporting Standards as adopted by the European Union;
and
-- have been prepared in accordance with the requirements of the
Companies (Guernsey) Law, 2008.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies (Guernsey) Law, 2008, we are required to
report to you, if in our opinion:
-- proper accounting records have not been kept; or
-- the financial statements are not in agreement with the accounting records; or
-- we have not received all the information and explanations we require for our audit.
Under the Listing Rules, we are required to review the parts of
the Corporate Governance disclosures in the Director's Report
relating to the Company's compliance with the nine provisions of
the June 2008 UK Corporate Governance Code specified for our
review.
Michael Bane
For and on behalf of Ernst & Young LLP
Guernsey, Channel Islands
25 April 2012
Insofar as the financial statements are published on the company
website, the maintenance and integrity of the Baker Steel Resources
Trust Limited website is the responsibility of the directors; the
work carried out by the auditors does not involve consideration of
these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the
financial statements since they were initially presented on the
website.
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2011
2011 2010
Notes GBP GBP
Assets
Cash and cash equivalents 10 1,629,044 1,013,506
Tax refund receivable 6 1,402,642 -
Other receivables 12,111 330,561
Financial assets held at fair value through
profit or loss
(Cost: GBP63,535,547 (2010: GBP63,126,417)) 3 87,540,484 67,160,848
Total assets 90,584,281 68,504,915
----------- --------------
Equity and Liabilities
Liabilities
Performance fees payable 8 3,651,275 -
Management fees payable 8 84,635 79,513
Directors' fees payable 36,000 36,000
Audit fees payable 40,000 40,000
Administration fees payable 7 27,443 10,193
Other payables 21,278 38,382
Formation expenses payable - 26,529
Total liabilities 3,860,631 230,617
----------- --------------
Equity
Management Ordinary Shares 11 10,000 10,000
Ordinary Shares 11 64,657,584 64,655,155
Profit and loss account 22,056,066 3,609,143
Total equity 86,723,650 68,274,298
----------- --------------
Total equity and liabilities 90,584,281 68,504,915
=========== ==============
Ordinary Shares in issue 11 66,043,061 66,040,632
Net asset value per Ordinary Share (in Pence)
- Basic 4 131.3 103.4
These financial statements were approved by the Board of Directors
on 25 April 2012 and signed on its behalf by:
Howard Myles Christopher Sherwell
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2011
Year ended Year ended Year ended
2011 2011 2011
Revenue Capital Total
Notes GBP GBP GBP
Income
Interest income 71,323 - 71,323
Net gain on financial assets and
liabilities at fair value through
profit or loss 3 - 24,624,322 24,624,322
Net foreign exchange loss - (166,176) (166,176)
Other income 112 - 112
Net income 71,435 24,458,146 24,529,581
------------ ----------- -----------
Expenses
Performance fees 8 - 3,651,275 3,651,275
Management fees 8 1,129,886 - 1,129,886
Directors' fees and expenses 143,589 - 143,589
Audit fees 49,465 - 49,465
Administration fees 7 87,671 - 87,671
Custody fees 49,775 - 49,775
Other expenses 9 337,347 - 337,347
Total expenses 1,797,733 3,651,275 5,449,008
------------ ----------- -----------
Less withholding tax paid - 633,650 633,650
Total comprehensive (expense)/income
for the year (1,726,298) 20,173,221 18,446,923
============ =========== ===========
Net (expense)/earnings for the year
per Ordinary Share:
Basic and diluted (in pence) 4 (2.6) 30.5 27.9
Weighted Average Number of Ordinary
Shares Outstanding:
Basic and diluted 4 66,042,454
In the year ended 31 December 2011 there were no gains or losses other than those recognised
above.
The Directors consider all results to derive from continuing activities.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD FROM 9MARCH 2010 (DATE OF INCORPORATION) TO 31
DECEMBER 2010
Period Period Period
ended ended ended
2010* 2010* 2010*
Revenue Capital Total
Notes GBP GBP GBP
Income
Interest income 132,564 - 132,564
Net gain on financial assets and liabilities
at fair value through profit or loss 3 - 3,950,281 3,950,281
Net foreign exchange gain - 494,905 494,905
Other income 335,021 - 335,021
Net income 467,585 4,445,186 4,912,771
----------- ----------- -----------
Expenses
Management fees 8 724,147 - 724,147
Directors' fees and expenses 116,000 - 116,000
Audit fees 40,000 - 40,000
Administration fees 7 74,773 - 74,773
Custody fees 27,220 - 27,220
Other expenses 9 168,618 - 168,618
Formation expenses 152,870 - 152,870
Total expenses 1,303,628 - 1,303,628
----------- ----------- -----------
Net comprehensive (loss)/income for the
period (836,043) 4,445,186 3,609,143
=========== =========== ===========
Net (loss)/earnings for the period per
Ordinary Share:
Basic and diluted (in pence) 4 (1.3) 6.7 5.5
Weighted Average Number of Ordinary Shares
Outstanding:
Basic and diluted 4 66,035,918
In the period ended 31 December 2010 there were no gains or losses
other than those recognised above.
The Directors consider all results to derive from continuing activities.
*For the period from 9 March 2010 (date of incorporation) to 31
December 2010.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2011
Management
Ordinary Ordinary Profit and Year ended
Shares Shares loss account 2011
GBP GBP GBP GBP
Balance as at 1 January
2011 10,000 64,655,155 3,609,143 68,274,298
Proceeds on issue of Ordinary
Shares - 2,429 - 2,429
Net gain for the year - - 18,446,923 18,446,923
Balance as at 31 December
2011 10,000 64,657,584 22,056,066 86,723,650
=========== =========== ============== ===========
Management
Ordinary Ordinary Profit and Period Ended
Shares Shares loss account 2010*
GBP GBP GBP GBP
Proceeds on issue of Ordinary
Shares 10,000 66,030,632 - 66,040,632
Share issue costs - (1,375,477) - (1,375,477)
Net gain for the period - - 3,609,143 3,609,143
Balance as at 31 December
2010 10,000 64,655,155 3,609,143 68,274,298
=========== ============ ============== =============
*For the period from 9 March 2010 (date of incorporation) to 31
December 2010.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2011
Year ended Period ended
2011 2010*
Notes GBP GBP
Cash flows from operating activities
Net income for the year/period 18,446,923 3,609,143
Adjustments to reconcile income for the
year/period to net cash used in operating
activities:
Net change in fair value of financial
assets at fair value through profit or
loss (24,624,322) (3,780,046)
Net increase in other receivables (1,084,192) (330,561)
Net increase in other payables 3,630,014 230,617
------------- -------------
Net cash used in operating activities (3,631,577) (270,847)
------------- -------------
Cash flows from investing activities
Purchase of financial assets at fair value
through profit or loss (22,167,287) (33,367,828)
Sale of financial assets at fair value
through profit or loss 26,411,973 5,541,250
------------- -------------
Net cash provided by/(used in) investing
activities 4,244,686 (27,826,578)
------------- -------------
Cash flows from financing activities
Proceeds from shares issued 11 2,429 30,486,408
Share issue costs - (1,375,477)
------------- -------------
Net cash provided by financing activities 2,429 29,110,931
------------- -------------
Net increase in cash and cash equivalents 615,538 1,013,506
Cash and cash equivalents at the beginning 1,013,506 -
of the year/period
Cash and cash equivalents at the end of
the year/period 10 1,629,044 1,013,506
============= =============
Represented by:
Cash and cash equivalents 1,629,044 1,013,506
Cash and cash equivalents at the end of
the year/period 10 1,629,044 1,013,506
============= =============
*For the period from 9 March 2010 (date of incorporation) to 31
December 2010.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
1. GENERAL INFORMATION
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 POI Law
and the Registered Collective Investment Scheme Rules 2008 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 shares were admitted to the Premium listing segment of
the Official List on 28 April 2010.
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 or "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.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of preparation
The financial statements have been prepared on an historic cost
basis except for financial assets and financial liabilities at fair
value through profit or loss, which are designated at fair value
through profit or loss.
The Company's functional currency is the Great Britain pound
sterling ("GBP"), being the currency in which its Ordinary Shares
and Subscription Shares are issued and in which returns are made to
shareholders. The presentation currency is the same as the
functional currency. The Company invests in companies around the
world whose shares are denominated in various currencies. Currently
the majority of the portfolio is denominated in US Dollars but this
will not necessarily remain the case as the portfolio develops.
The Statement of Comprehensive Income is presented in accordance
with the Statement of Recommended Practice 'Financial Statements of
Investment Trust Companies and Venture Capital Trusts' issued in
January 2009 by the Association of Investment Companies, to the
extent that it does not conflict with International Financial
Reporting Standards ("IFRS").
Statement of Compliance
These financial statements have been prepared in accordance with
IFRS as adopted by the European Union.
b) Significant accounting judgements and estimates
The preparation of the Company's financial statements requires
the Directors to make judgements, estimates and assumptions that
affect the amounts recognised in the financial statements. However,
uncertainty about these assumptions and estimates could result in
outcomes that could require a material adjustment to the carrying
amount of the asset or liability affected in the future. The most
significant judgement relates to the valuation of the Company's
unlisted investments which are valued by the Board at fair value in
accordance with IFRS having regard to such factors as they deem
relevant. This may include information received from market sources
as to trading on unofficial or "grey" markets requiring a judgement
on whether a particular transaction represents fair value. It may
also include using industry specific models which require judgement
about the investee Company's resources, reserve estimates and
associated operating and cost projections. Judgement is also
required regarding the long term market prices for relevant
commodities produced and comparison with comparable transactions
and listed company multiples.
c) Financial assets and liabilities at fair value through profit or loss
The Company designates its investments, other than derivatives,
as at fair value through profit or loss, at initial recognition.
All derivatives are classified as held for trading and included in
financial assets at fair value through profit or loss.
Recognition and derecognition
The Company recognises financial assets and financial
liabilities on the date it becomes a party to the contractual
provisions of the instruments. Routine purchases and sales of
investments are accounted for on the trade date.
Financial assets and financial liabilities at fair value through
profit or loss are initially recognised at fair value. Transaction
costs are expensed in the Statement of Comprehensive Income.
Subsequent to initial recognition, all financial assets and
financial liabilities at fair value through profit or loss are
re-measured at fair value. Gains and losses arising from changes in
fair value are recognised in the Statement of Comprehensive Income
in the period in which they arise.
A financial asset is derecognised when the Company no longer has
control over the contractual rights that comprise that asset. This
occurs when the rights are realised, expired or are surrendered. A
financial liability is derecognised when it is extinguished or when
the obligation specified in the contract is discharged, cancelled
or expired.
Basis of designation of fair value
Designation of the investments in this way is consistent with
the Company's documented risk management policy and investment
strategy, and information about the investments is provided to the
Board on this basis.
After initial recognition, investments are measured at fair
value, with unrealised gains and losses on investments recognised
in the Statement of Comprehensive Income. Investments are
derecognised on sale. Gains and losses on sale of investments are
recognised in the Statement of Comprehensive Income.
Determination of fair value
Fair value is the amount for which an asset could be exchanged,
or a liability settled, between knowledgeable, willing parties in
an arm's length transaction.
The fair value for financial instruments traded in active
markets at the reporting date is based on their last quoted price
or binding dealer price quotations (bid price for long positions
and ask price for short positions), without any deduction for
transaction costs.
For all other financial instruments not traded in an active
market, fair value is determined by using appropriate valuation
techniques. Valuation techniques include: using recent arm's length
market transactions; reference to the current market value of
another instrument that is substantially the same; discounted cash
flow analysis and option pricing models making as much use of
available and supportable market data as possible. An analysis of
fair values of financial instruments and further details as to how
they are measured are provided in note 3.
d) Interest income and expense
Bank interest income, fixed income instruments interest and
interest expense are recognised on an accruals basis based on the
effective interest method.
e) Cash and cash equivalents, margin accounts with brokers and cash overdrawn
Cash and cash equivalents in the statement of financial position
comprise cash balances held at banks.
f) Expenses
All expenses are recognised on an accruals basis.
g) Translation of foreign currencies
Foreign currency transactions during the period are translated
into GBP at the rate of exchange ruling at the date of the
transaction. Assets and liabilities denominated in foreign
currencies are translated into GBP at the rate of exchange ruling
at the Statement of Financial Position date. Exchange differences
including those arising from adjustment to fair value of financial
instruments during the period, are included in the Statement of
Comprehensive Income.
h) Segment information
The Directors are of the opinion that the Company is engaged in
a single segment of business, being investing in natural resources
companies.
i) Net asset value per share
Net Asset Value per share disclosed on the face of the Statement
of Financial Position is calculated in accordance with the
Company's Prospectus by dividing the net assets of the Company on
the Statement of Financial Position date by the number of Ordinary
Shares outstanding at that date.
j) New accounting pronouncements
The following standards, amendments and interpretations are
effective for the current period:
IAS 24: Related party disclosures - for accounting periods
commencing on or after 1 January 2011
IFRIC 19: Extinguishing Financial Liabilities with Equity
Instruments - for accounting periods commencing on or after 1 July
2010
IFRIC 14: Prepayments of a minimum funding requirement - for
accounting periods commencing on or after 1 January 2011
IAS 32 amendments: Classification of rights issue-for accounting
periods commencing on or after 1 February 2010
IFRS 1 amendments: Limited exemption from comparative IFRS 7
disclosures - for accounting periods commencing on or after 1 July
2010
IAS 12: Income Taxes -Tax recovery of underlying assets
(Amendment)
IAS 39: Financial Instruments: Recognition and Measurement -
Classification of rights issues 2010 improvements to IFRS
These standards have been adopted in the Company's accounting
policies but had no material impact on these financial
statements.
k) New accounting pronouncements not yet effective
At the date of authorisation of these financial statements, the
following standards and interpretations, which have not been
applied, were in issue but not yet effective:
IFRS 7: Disclosures - Transfer of financial assets- for
accounting periods commencing on or after 1 July 2011
IFRS 9: Financial Instruments - for accounting periods
commencing on or after 1 January 2013
IFRS 10 : Consolidated Financial Statements - for accounting
periods commencing on or after 1 January 2013
IFRS 11 : Joint Arrangements - for accounting periods commencing
on or after 1 January 2013
IFRS 12 : Disclosure of Interests in Other Entities - for
accounting periods commencing on or after 1 January 2013
IFRS 13: Fair value measurement - for accounting periods
commencing on or after 1 January 2013
IAS 1 : Presentation of Financial Statements
IAS 19 : Employee Benefits
IAS 27 : Consolidated and Separate Financial Statements
The Directors have not yet assessed the impact that the adoption
of these standards and interpretations in future periods will have
on the financial statements of the Company. These standards and
interpretations will be adopted when they become effective.
3. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
Listed equity
31 December 2011 shares Unlisted equity shares Fixed income instruments Warrants Total
GBP GBP GBP GBP GBP
Financial assets at fair value
through profit or loss
Cost 9,006,135 51,020,003 3,509,409 - 63,535,547
Unrealised gain/(loss) (873,563) 24,620,875 56,513 201,112 24,004,937
Market value at 31 December
2011 8,132,572 75,640,878 3,565,922 201,112 87,540,484
============= ====================== ======================== ======== ==========
Listed equity
31 December 2010 shares Unlisted equity shares Fixed income instruments Warrants Total
GBP GBP GBP GBP GBP
Financial assets at fair
value through profit or loss
Cost 5,021,326 36,930,304 12,766,600 8,408,187 63,126,417
Unrealised gain/(loss) 1,983,502 (1,741,792) (13,090)* 3,805,811 4,034,431
Market value at 31 December
2010 7,004,828 35,188,512 12,753,510 12,213,998 67,160,848
============= ====================== ======================== ========== ==========
*includes interest income of GBP170,235.
The following table analyses net gains on financial assets and
liabilities at fair value through profit or loss for the
year/period ended 31 December 2011 and 31 December 2010.
Year ended Period ended
2011 2010
GBP GBP
Financial assets and liabilities at fair value
through profit or loss
Realised gains/(losses) on:
- Listed equity shares (317,716) -
- Unlisted equity shares 5,058,617 -
- Fixed income instruments (257,320) (84,150)
------------ -------------
4,483,581 (84,150)
Movement in unrealised gains/(losses) on:
- Listed equity shares (2,857,065) 1,983,502
- Unlisted equity shares 26,362,666 (1,741,792)
- Fixed income instruments 239,838 (13,090)
- Warrants (3,604,698) 3,805,811
------------ -------------
20,140,741 4,034,431
Net gain on financial assets and liabilities
at fair value through profit or loss 24,624,322 3,950,281
============ =============
The following table analyses investments by type and by level
within the fair valuation hierarchy at 31 December 2011.
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 8,132,572 - - 8,132,572
Unlisted equity shares - 75,640,878 75,640,878
Warrants - - 201,112 201,112
Fixed income instruments - - 3,565,922 3,565,922
------------- ------------------ ------------ ----------
8,132,572 - 79,407,912 87,540,484
============= ================== ============ ==========
The following table analyses investments by type and by level
within the fair valuation hierarchy at 31 December 2010.
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 7,004,828 - - 7,004,828
Unlisted equity shares - - 35,188,512 35,188,512
Warrants - - 12,213,998 12,213,998
Fixed income instruments 12,753,510 - - 12,753,510
------------- ------------------ ------------ ----------
19,758,338 - 47,402,510 67,160,848
============= ================== ============ ==========
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 earnings attributable to
the change in unrealised gains or losses relating to assets and
liabilities held at 31 December 2011.
Fixed income
Total Equities instruments Warrants
GBP GBP GBP GBP
Opening balance 1 January
2011 47,402,510 35,188,512 - 12,213,998
Purchases of investments 17,599,108 14,089,699 3,509,409
Investment option converted
and
exercised (8,408,187) - - (8,408,187)
Change in net unrealised
appreciation/(depreciation) 22,814,481 26,362,667 56,513 (3,604,699)
------------- ----------- ------------- ------------
Closing balance 31
December 2011 79,407,912 75,640,878 3,565,922 201,112
============= =========== ============= ============
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 earnings attributable to
the change in unrealised gains or losses relating to assets and
liabilities held at 31 December 2010.
Total Equities Warrants
GBP GBP GBP
Opening balance 9 March - -
2010 -
Purchases of investments 45,338,491 36,930,304 8,408,187
Change in net unrealised appreciation/(depreciation) 2,064,019 (1,741,792) 3,805,811
----------- ------------ -----------
Closing balance 31
December 2010 47,402,510 35,188,512 12,213,998
=========== ============ ===========
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.
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. 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.
Investments classified within Level 3 have significant
unobservable inputs. They include unlisted fixed income
instruments, unlisted equity shares and warrants. Level 3
investments are valued using valuation techniques explained in the
Company's accounting policies. 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 to reflect illiquidity and/or non-transferability,
with the amount of such discount estimated by the Directors in the
absence of market information. In cases where there have been no
relevant transactions during the year, the Directors will take due
consideration of the change in Development Risk Adjusted Net
Present Values of the assets underlying the investments, prepared
by the Investment Manager, since the last change in valuation and
of whether such change is indicative of a change in fair value.
4. NET ASSET VALUE PER SHARE AND EARNING PER SHARE
Basic net asset value per share is based on the net assets of
GBP86,723,650 (31 December 2010: GBP68,274,298) and 66,043,061 (31
December 2010: 66,040,632) Ordinary Shares, being the number of
shares in issue at the year end. The Subscription Shares are
entitled to be converted to Ordinary Shares at 100p per share. The
calculation for basic net asset value is as below:-
31 December 2011 31 December 2010
Ordinary Subscription Ordinary Subscription
Shares Shares Shares Shares
Net assets at the year/period
end (GBP) 86,723,650 13,194,622 68,274,298 13,197,051
Number of shares 66,043,061 13,194,622 66,040,632 13,197,051
Basic net asset value per share
(in pence) 131.3 103.4
The basic and diluted earnings per share is based on the net
income for the year/period of the Company of GBP18,446,923 (2010:
GBP3,609,143) and on 66,042,454 (2010: 66,035,918) Ordinary Shares,
being the weighted average number of Ordinary Shares in issue
during the year/period. As the average market share price for the
year of the Company is lower than the subscription price the
diluted net asset value per share is not disclosed. This
calculation is prepared in accordance with IFRS.
5. RISK MANAGEMENT POLICIES AND DISCLOSURES
The Company's principal financial instruments comprise financial
assets, primarily unlisted equity investments in natural resources
companies. These investments reflect the core of the Company's
investment strategy.
The Company's financial liabilities principally comprise fees
payable to various parties and arise directly from its
operations.
Risk exposures and responses
The Company manages its exposure to key financial risks in
accordance with the Company's financial risk management policy. The
objective of the policy is to support the delivery of the Company's
core investment objective whilst maintaining future financial
security. The main risks that could adversely affect the Company's
financial assets, or future cash flows are market risk (comprising,
market price risk, currency risk and interest rate risk), commodity
price risk, liquidity risk and credit risk.
The Company's Board of Directors oversees the management of
financial risks, each of which is summarised below.
a) Market risk
Market risk is the risk that the fair value of a financial
instrument will fluctuate because of changes in market prices.
Market risk comprises three types of risk: market price risk,
currency risk and interest rate risk.
i. Market Price risk
Market price risk is the risk that the fair value of future cash
flows will fluctuate because of changes in the market prices of the
Company's investment portfolio.
The following illustrates the sensitivity of the income to an
increase or decrease of 10% in the fair value of the Company's
investment portfolio. The level of change is considered to be
reasonably possible based on observations of current market
conditions in 2012. The sensitivity analysis assumes all other
variables are held constant.
The impact of a 10% decrease in the value of investments on the
net assets and income of the Company as at 31 December 2011 would
have been a decrease of GBP8,754,048 (31 December 2010:
GBP6,716,084). An increase of 10% would increase the net asset
value by GBP8,754,048. In practice, the actual results may differ
from the sensitivity analysis above and the difference could be
material.
ii. Currency risk
The majority of the Company's financial assets and liabilities
are denominated in US dollars. The functional currency of the
Company is sterling. Currency risk is the risk that the value of
non-GBP denominated financial instruments will fluctuate due to
changes in foreign exchange rates. The table below shows the
currencies and amounts the Company was exposed to at 31 December
2011 and 31 December 2010.
31 December 2011
Currency Amount in Conversion rate Value % of net assets
local currency (based on GBP) GBP
AUD 4,009,246 0.6592 2,642,935 3.05%
CAD 15,225,605 0.6319 9,621,759 11.09%
EUR (11,801) 0.8347 (9,930) (0.01%)
GBP 1,352,133 1.0000 1,352,133 1.56%
USD 113,800,395 0.6425 73,116,753 84.31%
----------- ---------------
86,723,650 100.00%
----------- ---------------
31 December 2010
Currency Amount in Conversion rate Value % of net assets
local currency (based on GBP) GBP
AUD 5,577,272 0.6555 3,655,902 5.35
CAD 20,726,156 0.6439 13,345,572 19.55
EUR (10,469) 0.8589 (8,992) (0.01)
GBP 14,403,704 1.0000 14,403,704 21.10
USD 57,577,068 0.6405 36,878,112 54.01
68,274,298 100.00
---------- ---------------
At 31 December 2011 and 31 December 2010, had any foreign
currencies strengthened by 10% relative to sterling, with all other
variables held constant, total equity would have increased by the
amounts shown below.
2011 2010
Currency Value Value
GBP GBP
AUD 264,294 365,590
CAD 962,176 1,334,557
EUR (993) (899)
USD 7,311,675 3,687,811
8,537,152 5,387,059
----------------- ---------
A 10% decrease in foreign currencies relative to sterling, with
all other variables held constant, would lead to a corresponding
decrease in the total equity by equal but opposite amounts as shown
in the above tables. The estimated movement is based on
management's determination of a reasonably possible change in
foreign exchange rates. In practice, the actual results may differ
from the sensitivity analysis above and the difference could be
material.
iii. Interest rate risk
Although the Company's interest-bearing financial assets and
liabilities expose it indirectly to risks associated with the
effects of fluctuations in the prevailing levels of market interest
rates on its financial position and cash flows, it is subject to
little direct exposure to interest rate fluctuations as the
majority of the financial assets are equity investments which do
not pay interest. Any excess cash and cash equivalents are invested
at short-term market interest rates which exposes the Company, to a
limited extent, to interest rate risk and corresponding
gains/losses from a change in the fair value of these financial
instruments.
The table below summarises the Company's exposure to interest
rate risk. It includes the Company's assets and liabilities at fair
values, categorised by the earlier of contractual re-pricing or
maturity dates.
At 31 December 2011 Up to More than Non-interest
1 month 6 months bearing Total
Assets GBP GBP GBP GBP
Cash and cash equivalents 1,629,044 - - 1,629,044
Financial assets held at fair value through profit or loss - 3,565,922 83,974,562 87,540,484
Receivables - - 1,414,753 1,414,753
Total Assets 1,629,044 3,565,922 85,389,315 90,584,281
========= ========= ============ ===========
Liabilities
Performance fees accrued - - 3,651,275 3,651,275
Other liabilities - - 209,356 209,356
Total Liabilities - - 3,860,631 3,860,631
========= ========= ============ ===========
Interest rate sensitivity gap 1,629,044 3,565,922
========= =========
At 31 December 2010 Up to Non-interest
1 month 1 - 3 months bearing Total
Assets GBP GBP GBP GBP
Cash and cash equivalents 1,013,506 - - 1,013,506
Financial assets held at fair value through profit or loss - 12,753,510 54,407,338 67,160,848
Receivables - - 330,561 330,561
Total Assets 1,013,506 12,753,510 54,737,899 68,504,915
========= ============ ============ ==========
Up to More than Non-interest
1 month 6 months bearing Total
Liabilities GBP GBP GBP GBP
Other liabilities - - 230,617 230,617
Total Liabilities - - 230,617 230,617
========= ============ ============ ==========
Interest rate sensitivity gap 1,013,506 12,753,510
========= ============
Interest rate sensitivity
At 31 December 2011, should interest rates have fallen between
10 and 25 basis points with all other variables remaining constant,
the decrease in net assets attributable to holders of Ordinary
Shares for the period would amount to approximately GBP1,629 (2010:
GBP1,014) and GBP4,073 (2010: GBP2,534) for assets up to 1 month
respectively and GBP3,566 (2010: GBP12,753) and GBP8,915 (2010:
GBP31,884) for assets more than 6 months respectively. If interest
rates had risen by between 10 and 25 basis points it would have an
equal but opposite effect as the decrease.
The income on the Company's cash assets is positively correlated
to interest rates. As interest rates rise, the interest earned
would follow (rise) thus increasing the value of the Company.
The Board reviews and agrees policies for managing these risks.
The Investment Manager assesses the exposure to market risk when
making investment decisions and monitors the overall level of
market risk on the investment portfolio on an ongoing basis.
b) Commodity price risk
The Company is exposed to the risk of fluctuations in prevailing
market commodity prices through its investment portfolio. Commodity
price risk is beyond the Company's control but will be mitigated to
a certain extent as a result of the Company's diversified portfolio
as long as commodity prices remain uncorrelated. It is not possible
to quantify within reasonable ranges the impact of commodity price
changes on the valuation of the Company's investments. However in
general, long term commodity price increases should give rise to an
increase in fair value of the Company's investments.
c) Liquidity risk
Liquidity risk is defined as the risk that the Company may not
be able to settle or meet its obligations on time or at a
reasonable price. The Company invests in unlisted equities for
which there may not be an immediate market. The Company seeks to
mitigate this risk by maintaining a cash and listed share position
which will cover its ongoing operational expenses.
The Company has the ability to incur borrowings of up to 10
percent of its Net Asset Value but the Company's policy is to
restrict any such borrowings for temporary purposes only, such as
settlement mis-matches.
The table below analyses the Company's financial assets and
liabilities into relevant maturity groupings based on the remaining
period at the Statement of Financial Position date to the
contractual maturity date. The amounts in the table are the
contractual undiscounted cash flows.
At 31 December 2011 Less than More than No contractual
1 month 1-3 months 3-12 months 12 months maturity Total
Assets GBP GBP GBP GBP GBP GBP
Cash and cash equivalents 1,629,044 - - - - 1,629,044
Financial assets held at fair value
through profit
or loss - 69,084 19,413 3,389,408 84,062,579 87,540,484
Receivables 1,414,753 - - - 1,414,753
--------- ---------- ----------- --------- -------------- ----------
Total Assets 3,043,797 69,084 19,413 3,389,408 84,062,579 90,584,281
========= ========== =========== ========= ============== ==========
Less than More than No contractual
1 month 1-3 months 3-12 months 12 months maturity Total
Liabilities GBP GBP GBP GBP GBP GBP
Other payables
and accrued expenses 148,078 21,278 40,000 - 3,651,275 3,860,631
--------- ---------- ----------- --------- -------------- ----------
Total liabilities 148,078 21,278 40,000 - 3,651,275 3,860,631
========= ========== =========== ========= ============== ==========
Net assets attributable to shareholders 86,723,650
==========
At 31 December 2010 Less than More than No contractual
1 month 1-3 months 3-12 months 12 months maturity Total
Assets GBP GBP GBP GBP GBP GBP
Cash and cash equivalents 1,013,506 - - - - 1,013,506
Financial assets held at fair value
through profit
or loss - 23,955,707 531,708 480,093 42,193,340 67,160,848
Receivables 330,561 - - - - 330,561
--------- ----------- ----------- --------- -------------- -----------
Total Assets 1,344,067 23,955,707 531,708 480,093 42,193,340 68,504,915
========= =========== =========== ========= ============== ===========
Less than More than No contractual
1 month 1-3 months 3-12 months 12 months maturity Total
Liabilities GBP GBP GBP GBP GBP GBP
Other payables
and accrued expenses 151,935 38,382 40,000 - - 230,617
--------- ----------- ----------- --------- -------------- -----------
Total liabilities 151,935 38,382 40,000 - - 230,617
========= =========== =========== ========= ============== ===========
Net assets attributable to shareholders 68,274,298
===========
d) Credit risk
Credit risk is the risk that a counterparty will be unable to
pay amounts in full as they fall due. The Company has exposure to
credit risk in relation to its cash balances, fixed income
instruments and trade receivables as stated in the Statement of
Financial Position.
As at 31 December 2011, the Company's financial assets were held
with the following weight:
Financial Assets Counterparty Credit 2011
Rating % of net assets
Fixed income instruments
- Convertible Loan Note ZAO Argentum NR 3.78
- Convertible Loan Note Polar Silver Resources Limited NR 0.33
Cash and cash equivalents HSBC Bank plc AA- 1.88
Total 5.99
===============
As at 31 December 2010, the Company's financial assets were held
with the following weight:
Financial Assets Counterparty Credit 2010
Rating % of net assets
Fixed income instruments
- Short dated gilts UK Government AAA 18.68
Cash and cash equivalents HSBC Bank plc AA- 1.58
Total 20.26
===============
6. TAXATION
The Company is a Guernsey Exempt Company and is therefore not
subject to taxation on its income under the Income Tax (Exempt
Bodies) (Guernsey) Ordinance, 1989. An annual exempt fee of GBP600
has been paid. The acquisition of First Coal by Xstrata Coal during
the period gave rise to Canadian withholding tax of 25% of the
gross proceeds of sale. The Company's withholding tax obligation
has been reduced as it has filed a Canadian tax return. The tax
refund receivable of GBP1,402,642 represents the Canadian tax
refund that is due to the Company.
7. ADMINISTRATION FEES
The Administrator, HSBC Securities Services (Guernsey) Limited,
is paid fees for acting as administrator of the Company at the rate
of 7 basis points of gross asset value up to US$250 million; the
rate reduces to 5 basis points of gross asset value above US$250
million. The Administrator is also reimbursed by the Company for
reasonable out-of-pocket expenses. These fees accrue and are
calculated as at the last Business Day of each month and paid
monthly in arrears.
The Administrator is also entitled to a fee for its provision of
corporate secretarial services provided to the Company on a time
spent basis and subject to a minimum annual fee of GBP40,000. The
Company is also responsible for any sub-administration fees as
agreed in writing from time to time, and reasonable out-of-pocket
expenses. The Administrator is also entitled to fees of EUR5,000
for preparation of the financial statements of the Company.
The administration fees paid for the year ended 31 December 2011
were GBP87,671 (2010: GBP74,773) of which GBP27,443 (2010:
GBP10,193) was payable at 31 December 2011. HSBC Securities
Services (Ireland) Limited, the sub-administrator, is paid a
portion of these fees by the Administrator.
8. 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% of the total market capitalisation of the Company
per month. The management fee is calculated and accrued as at the
last Business Day of each month and is paid monthly in arrears.
The Manager may in certain circumstances also be entitled to be
paid a performance fee if the Net Asset Value at the end of any
Performance Period exceeds the Hurdle as at the end of the
Performance Period. The first performance period commenced on the
date of Admission and ended 31 December 2010 and thereafter, is
each 12 month period ending on 31 December in each year (the
"Performance Period"). In respect of the first Performance Period
which was less than a full 12 months, the Hurdle was applied pro
rata. For this purpose the "Hurdle" means an amount equal to the
Issue Price of GBP1 per Ordinary Share multiplied by the number of
Shares in issue as at Admission, as increased at a rate of 8% per
annum compounded to the end of the relevant Performance Period. In
respect of the first Performance Period and any other Performance
Period which is less than a full 12 months, the Hurdle will be
applied pro rata. The performance fee is subject to adjustments for
any issue and/or repurchase of Ordinary Shares.
The amount of the performance fee (if any) is 15 per cent of the
total increase in the Net Asset Value, if the Hurdle has been met,
at the end of the relevant Performance Period over the highest
previously recorded Net Asset Value as at the end of a Performance
Period in respect of which a performance fee was last accrued, (or
the Issue Price multiplied by the number of shares in issue as at
Admission, if no performance fee has been so accrued) having made
adjustments for numbers of Ordinary Shares issued and/or
repurchased as described above. In addition, the performance fee
will only become payable if there have been sufficient net realised
gains. The Manager has agreed not to seek payment of the
performance fee until the Company has sufficient cash.
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.
9. OTHER EXPENSES
2011 2010
TOTAL TOTAL
GBP GBP
Legal and professional fees 92,916 27,749
Marketing costs 37,531 11,044
Investor servicing fee 22,680 3,596
Consulting fees 18,925 19,859
Board meeting expenses 19,632 12,860
Insurance fees 13,841 12,000
Guernsey regulatory fees 13,748 2,250
Listing fees 12,920 10,891
Compliance fees 7,500 10,000
Website expenses 735 2,040
Valuation agent's fees - 25,000
Miscellaneous expenses 96,919 31,329
-----------
337,347 168,618
=========== ========
10. CASH AND CASH EQUIVALENTS
2011 2010
GBP GBP
Deposits at HSBC Bank plc 1,629,044 1,013,506
========== ==========
11. 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 vale and/or of no par value or a combination of
both. The Company raised GBP30,468,865 through the issue of
30,468,865 Ordinary Shares and 6,093,772 Subscription Shares via a
Placing and Offer. In addition, the Company issued 35,554,224
Ordinary Shares and 7,110,822 Subscription Shares to the holders of
shares in Genus Capital Fund pursuant to a scheme of reorganisation
of Genus Capital Fund, in exchange for substantially all the
non-cash assets of Genus Capital Fund which are detailed as
follows:
Transfer
Quantity Investments value
GBP
Listed equity shares
358,333 MBAC Fertilizer Corporation 567,717
567,717
------------
Unlisted equity shares and warrants
500 BacTech Mining 328,699
1,594,646 Celadon Mining 297,720
268,889 Copperbelt Minerals 3,545,594
6,123,642 Ferrous Resources 14,130,705
2,571,429 First Coal Corporation 2,315,920
3,350,285 Gobi Coal and Energy 4,417,716
500,000 Ivanhoe Nickel and Platinum 2,884,457
Ivanhoe Nickel Platinum warrants 1 for 1.2
791,666 ordinary 5,480,463
306,980 Ivanhoe Nickel Platinum warrants 1 for 1 ordinary 1,770,941
6,500,000 South American Ferro Metals 2,024,889
37,197,104
------------
Total assets transferred 37,764,821
Less Cash (2,210,597)
Value of shares issued 35,554,224
------------
With effect from 30 September 2010, 7,543 Ordinary Shares were
issued as a result of the exercise of Subscription Shares. With
effect from 31 March 2011, 2,429 Ordinary Shares were issued as a
result of the exercise of Subscription Shares. The Company has in
issue 66,033,061 Ordinary Shares and 13,194,622 Subscription Shares
denominated in sterling. In addition, the Company has 10,000
Management Ordinary Shares in issue, which are held by the
Investment Manager.
The subscription rights conferred by the Subscription Shares are
exercisable every six months from 30 September 2010 until 31 March
2013 (inclusive). Each Subscription Share carries the right to
subscribe for one Ordinary Share at a price of 100 pence.
On 28 April 2010 the Ordinary Shares and Subscription Shares
were admitted to the Official List of the UK Listing Authority and
to trading on the Main Market of the London Stock Exchange. No
application has been or will be made to have the Management
Ordinary Shares admitted to listing on the Official List or to
trading on the London Stock Exchange's Main Market for listed
securities.
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.
Holders of Management Ordinary Shares have the right to receive
notice of and to attend and vote at general meetings of the
Company, except that the holders of Management Ordinary Shares are
not entitled to vote on any resolution relating to certain specific
matters, including a material change to the Company's investment
objective, investment policy or borrowing policy. Each holder of
Management 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 Management Ordinary Shares present in person or
by proxy will have one vote for each Management Ordinary Share held
by him.
Holders of Subscription Shares are not entitled to attend or
vote at meetings of Shareholders.
Holders of Ordinary Shares and Management Ordinary Shares are
entitled to receive, and participate in, any dividends or other
distributions out of the profits of the Company available for
dividend and resolved to be distributed in respect of any
accounting period or other income or right to participate therein.
The Subscription Shares carry no right to any dividend or other
distribution by the Company.
The details of issued share capital of the Company are as
follows:
2011 2010
Issued and fully paid share capital
Ordinary Shares of no par value* 66,033,061 66,030,632
Subscription Shares of no par value 13,194,622 13,197,051
=========== ===========
The issue of Ordinary Shares during the year ended 31 December
2011 took place as follows:
Subscription
Ordinary Shares Shares
Balance at 1 January 2011 66,040,632 13,197,051
Conversion of Subscription Shares 2,429 (2,429)
Balance at 31 December 2011 66,043,061 13,194,622
================ =============
The issue of Ordinary Shares during the period ended 31 December
2010 took place as follows:
Subscription
Ordinary Shares Shares
Issued during the period via Placing
and Offer 30,468,865 6,093,772
Conversion of Subscription Shares 7,543 (7,543)
Issue of Management Ordinary Shares* 10,000 -
Issued during the period to holders
of Genus Capital Fund 35,554,224 7,110,822
---------------- -------------
Balance at 31 December 2010 66,040,632 13,197,051
================ =============
* On 9 March 2010, 1 Management Ordinary Share was issued and on
26 March 2010, 9,999 Management Ordinary Shares were issued.
Capital Management
The Company regards capital as comprising its issued Ordinary
Shares and Subscription Shares. The Company does not have any debt
that might be regarded as capital. The Company's objectives in
managing capital are:
-- To safeguard its ability to continue as a going concern and
provide returns to shareholders in the form of capital growth over
the long-term through a focused, global portfolio consisting
principally of the equities or related instruments of natural
resources companies;
-- To allocate capital to those assets that the Directors
consider are most likely to provide the above returns; and
-- To manage, so far as is reasonably possible, the discount
between the Company's share price and its NAV per Ordinary
Share
As described in the Directors' Report, the Company does not
currently intend to pay dividends or other distributions.
Subscription Shareholders have the right to subscribe for Ordinary
Shares as described in Note 11.
The Directors monitor the extent to which capital has been
deployed and the manner in which capital has been invested using,
inter alia, sectoral and geographic analyses. The Directors also
consider whether the Company should undertake further share issues
or arrange buy-backs or other capital management programmes
consistent with the above objectives although no such action has
been taken so far.
The Company has authority to make market purchases of up to
14.99% of its own Ordinary Shares in issue. A renewal of such
authority is sought from Shareholders at each Annual General
Meeting of the Company or at a General Meeting of the Company, if
required. Any purchases of Ordinary Shares will be made within
internal guidelines established from time to time by the Board and
within applicable regulations.
The Company is not subject to any externally imposed capital
requirements.
12. RELATED PARTY TRANSACTIONS
On 10 May 2010, the Company acquired 1,384,059 shares in Gobi
Coal & Energy Limited from CF Ruffer Baker Steel Gold Fund
("CFRBSGF") at a cost of US$2,325,219. At that time, CFRBSGF was a
related party to the Company by virtue of its holding of 7,100,000
Ordinary Shares in the capital of the Company, equivalent to
10.75%.
The Directors' interests in the share capital of the Company at
both 31 December 2011 and 31 December 2010 were:
Number of Number of
Ordinary Shares Subscription Shares
Edward Flood 65,000 13,000
Christopher Sherwell 25,000 5,000
Clive Newall 25,000 5,000
Mr Sherwell also has an indirect interest in the shares of the
Company through an investment in another fund managed by the
Manager.
The Manager, Baker Steel Capital Managers (Cayman) Limited, had
an interest in 504,832 Ordinary Shares and 100,876 Subscription
Shares at 31 December 2011.
The Investment Manager, Baker Steel Capital Managers LLP, had an
interest in 10,000 Management Ordinary Shares at 31 December
2011.
13. SUBSEQUENT EVENTS
On 6 January 2012, the Company announced an unaudited NAV for 30
December 2011 of 130.3 pence per share. During December 2011 and
early January 2012, Ironstone Resources Limited undertook a placing
of stock equivalent to around 2.7% of the shares in issue of
Ironstone. At the time the year end NAV was being finalised, the
Company was not aware of the conclusion of this placing so it was
not taken into account in determining the unaudited year end NAV.
It has subsequently become apparent that this placing reflected a
change in fair value at 31 December 2011. This increase in carrying
value has been included in these financial statements and has also
led to adjustments in both the 31 January 2012 unaudited NAV and 29
February 2012 unaudited NAV statements.
There have been no other significant subsequent events since the
year end.
14. APPROVAL OF ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS
The Annual Report and Audited Financial Statements for the year
end 31 December 2011 were approved by the Board of Directors on 25
April 2012.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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