Baker Steel Resources Trust Ltd Net Asset Value(s) (7311U)
December 05 2013 - 2:01AM
UK Regulatory
TIDMBSRT
RNS Number : 7311U
Baker Steel Resources Trust Ltd
05 December 2013
BAKER STEEL RESOURCES TRUST LIMITED
(Incorporated in Guernsey with registered number 51576 under the
provisions of The Companies (Guernsey) Law, 2008 as amended)
5 December 2013
29 November 2013 Unaudited NAV Statement
Net Asset Values
Baker Steel Resources Trust Limited (the "Company") announces
its unaudited net asset value per share as at 29 November 2013:
Net asset value per Ordinary Share: 66.1 pence
During the month, the NAV per share decreased by 8.1% largely
due to a fall in the prices of the listed part of the portfolio, in
particular the share price of Ivanhoe Mines Limited on the Toronto
Stock Exchange as well as an increase in the value of Sterling
against the US Dollar and Canadian Dollar in which the majority of
the Company's investments are denominated.
At 29 November 2013, the Company had a total of 66,142,533
Ordinary Shares in issue.
The Company is fully invested with top 10 investments as follows
as a percentage of NAV:
Ivanhoe Mines Limited 20.2%
Bilboes Gold Limited 12.8%
Black Pearl Limited Partnership 12.5%
Ironstone Resources Limited 12.0%
Gobi Coal & Energy Limited 11.9%
Polar Silver Resources Ltd 8.3%
China Polymetallic Mining Limited 6.9%
Ferrous Resources Limited 6.0%
Metals Exploration plc 5.9%
South American Ferro Metals Limited 1.5%
Other Investments 2.3%
Net Cash, Equivalents and Accruals -0.3%
Investment Update
Ivanhoe Mines Limited ("Ivanhoe")
On 18 November 2013 Ivanhoe reported the findings of a
Preliminary Economic Assessment ("PEA") of its Kamoa copper
discovery in the Democratic Republic of Congo. The PEA, which
conforms with the requirements of Canada's National Instrument
43-101, was prepared by independent consultants AMC Consultants,
AMEC E&C Services, SRK Consulting, Stantec Consulting
International, Hatch and Golder Associates Africa.
The PEA reflects a two-phased approach to the development of
Kamoa. The first phase of mining will target high-grade copper
mineralization from shallow, underground resources mining at a rate
of 3 million tonnes per annum to yield a high-value concentrate and
generate early cashflows. The second phase will entail an expansion
of the mine and mill to 11 million tonnes per annum and
construction of a smelter with a capacity to produce 300,000 tonnes
per annum of blister copper. The two-phased approach has the
advantage of paring back pre-production capex requirements to
US$1.4 billion, a more manageable sum to finance, which will help
minimise potential equity dilution, one of the key concerns of the
market towards Ivanhoe given its impressive growth profile.
The preliminary economic analysis is based on a long-term price
assumption of US$3.00 per pound for copper and a sales price for
sulphuric acid of US$250 per tonne. The economic analysis returns
an after-tax Net Present Value of US$2.55 billion using an 8%
discount rate,. It has an after-tax internal rate of return (IRR)
of 15.2% and a payback period of 8.4 years. The life-of-mine
average total cash cost, after credits, is US$1.18 per pound of
copper.
The headline IRR of 15.2% may have disappointed some observers,
hence the fall in share prices, but it is notoriously difficult to
value large projects with significant infrastructure requirements,
especially, as is the case with Kamoa, where there is significant
capacity for further expansion but where the capital cost of the
initially scoped project needs to carry all the infrastructure
cost. Importantly the projected operating cost would put Kamoa in
the lowest cost quartile of global producers, which suggests a
robust project.
During the month Ivanhoe's share price on the Toronto Stock
Exchange fell 21.5% to C$2.05 per share. The majority of the
Company's holding is restricted by lock-up arrangements introduced
on Ivanhoe's IPO and is carried at a 10% discount to the market
price. Further information on Ivanhoe is available at
www.ivanhoemines.com.
Ferrous Resources Limited ("Ferrous")
On 14 October 2013 Ferrous completed a transaction with the
Correa Family, who were the original sellers of the mineral rights
relating to the Viga Mine, which supported Ferrous' creation in
2007. Under the transaction Ferrous repurchased 60 million of its
own shares from the Correa Family for US$81.0 million paid up front
and US$30.3 million payable in two equal tranches in November 2014
and 2015. As part of the transaction the Correa Family repaid a
loan from Ferrous of US$61.8 million.
Although the total value of the transaction of US$111.4 million
divided by the number of shares repurchased would suggest a price
of US$1.85 per Ferrous share, it appears that the transaction also
cancelled a number of obligations from Ferrous to the Correa Family
including a guaranteed minimum sale price for their shares. As
such, US$1.85 cannot be regarded as fair value for Ferrous shares
on an "arms length" basis and the Company continues to hold its
interest at US$0.75 per share, close to the purchase price paid by
Ferrexpo in acquiring its 14.4% interest (prior to cancellation of
the Correa Family shares) in September 2013.
Further details of the Company and its investments are available
on the Company's website www.bakersteelresourcestrust.com
Enquiries:
Baker Steel Resources Trust Limited +44 20 7389 8237
Francis Johnstone
Trevor Steel
Numis Securities Limited +44 20 7260 1000
David Benda (corporate)
James Glass (sales)
Pelham Bell Pottinger
Lorna Spears +44 20 7861 3883
Joanna Boon +44 20 7861 3867
The Net Asset Value ("NAV") figure stated is based on unaudited
estimated valuations of the underlying investments and not
necessarily based on observable inputs. Such estimates are not
subject to any independent verification or other due diligence and
may not comply with generally accepted accounting practices or
other generally accepted valuation principles. In addition, some
estimated valuations are based on the latest available information
which may relate to some time before the date set out above.
Accordingly, no reliance should be placed on such estimated
valuations and they should only be taken as an indicative guide.
Other risk factors which may be relevant to the NAV figure is set
out in the Company's Prospectus dated 31 March 2010.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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