TIDMMAFL
RNS Number : 6735Q
Mineral & Financial Invest. Limited
21 February 2019
MINERAL AND FINANCIAL INVESTMENTS LIMITED
Quarterly Net Asset Value and Operational Update
HIGHLIGHTS:
-- Acquisition of TH Crestgate completed - NAV positively and
materially impacted by the transaction.
-- NAVPS as at Dec 31 2018 was 12.54p, or GBP4,392,940, up 72.5%
from 1 yr ago, to a new all time high for M&FI
-- Lower Zinc Prices continue to weigh down the Stategic Portfolio and NAV performance
-- Redcorp's Lagoa Salgada's Resource update doubled the
resource tonnage to 20.7Mt [1]and increased Gross Zinc Eq.[2] metal
content by 89.5% during the period.
-- Several new investments initiated in the gold sector in Q4 and Q1
George Town, Cayman Islands - February 21, 2019 - Mineral and
Financial Investments Limited (LSE-AIM: MAFL) ("M&FI" "MAFL" or
the "Company") is very pleased to provide an unaudited quarterly
update of its Net Asset Value and also provide an operational
update for the quarterly period ending 31(st) December, 2018. The
Company's tactical portfolio continues to face headwinds due to the
continued softness in base metals prices generally, and zinc
specifically with its effect on our Ascendant Resources (TSE:ASND)
investment, but the Company looks forward to potential increases in
the value of the Company's investment in Redcorp as work on site
progresses. During the period the Company completed the acquisition
of 51% of TH Crestgate GmbH, which M&FI now owns 100%. TH
Crestgate's main asset is a 75% ownership in Redcorp Empredimentos
Mineiros while Ascendant Resources owns the remaining 25%.
NET ASSET VALUE[3]
As at 31(st) December, 2018, the fully diluted, unaudited, Net
Asset Value per share was 12.54p or GBP4,392,940. The increase in
the NAV is largely due to the completion of the acquisition of TH
Crestgate GmbH, which as disclosed, was accretive to NAV. Over the
past four years M&FI's NAV has risen from GBP908,476, at a
compounded rate of 68.2% per annum. We have referenced in several
press releases the progress made through exploration by TH
Crestgate, and subsequently through Ascendant's exploration and
operatorship of Redcorp. The completion of the acquisition now
requires us to attribute a value to our holding in Redcorp, and we
have done so cautiously, but we look forward to potential increases
in value as work on site progresses..
The NAV was impacted by the decline in the market value of the
Company's total holding of 2,052,546 shares of Ascendant Resources
in the period under review, against the previous period. The
decline in ASND's market cap has cost M&FI's NAVPS 1.96p in
performance. The Company's cash position, as at year end is
GBP425,779, while its working capital is GBP2,396,320[4].
The following is a summary of the NAV, updated to include this
unaudited NAV calculation:
Dec. Dec. Dec. Dec. CAGR (%)
31 2015 31 2016 31 2017 31
2018 2018 /
2015
NET ASSET VALUE (NAV) GBP908,476 GBP1,494,360 GBP2,546,875 GBP4,392,940 68.2%
----------- ------------- ------------- ------------- ---------
NET ASSET VALUE PER SHARE
(NAVPS) 6.47p 6.25p 7.25p 12.54p 24.4%
----------- ------------- ------------- ------------- ---------
ECONOMIC OVERVIEW
M&FI uses the IMF Economic studies to assess global economic
performance due to its consistent, disciplined and global span. The
global economic performance, as measured by economic output,
continues to be positive. Economic performance rose by 3.8%[5] in
2017 and is expected to have risen by 3.7% for 2018. The
International Monetary Fund's (IMF) World Economic Outlook,
released in January 2019 and contains a downward revision to the
IMF's expectations of 2019 forecast economic growth 3.5% in 2019
and to 3.6% in 2020. The report notes that the modest decline in
the forecast is twinned with a significant increase in economic
risk due to, amongst other matters, Europe's slowing german
economic performance and turbulent Brexit. Additionally there are
growing signs of economic decelaration in Asian economic
performance.
Although the US economy remains the world's largest economy,
unsurprisingly, its global dominance diminishes annually.
Nevertheless, its current economic trade policies to redress
perceived inequities through the initiation of a variety of
punitive trade tariffs have, in the observation of the directors,
been costly to global economic growth. It is the directors opinion
that the objective of the various trade disputes initiated in 2018
by the USA are to bring China and a few other countries to heal so
as to re-negotiate trade agreements. The IMF forecasts' US Economic
output growth to decline from +2.3% in 2018 to +2.0% in 2019 and to
1.7% in 2020. In the last quarter of 2018 virtually all bond yields
declined, as an aknowledement of of a slowing outlook, but US 10
Year government bond yields declined by 19% to 2.68%". The
directors have observed that the result has been a general slowing
of global economic activity and specifically causing pressure on
metal prices. Base metals were all down in the final quarter of
2018. Those which MAFL track, Copper, Nickel, Aluminium, Zinc and
Lead, were all down in the period, with an average price decline of
6.56% in the fourth quarter. The directors continue to believe that
global growth will be positive, but the directors do not have a
sense of when the US will relax its provocative trade position.
Therefore MAFL will continue to gradually favour precious metals
investments over base metal investments.
TACTICAL PORTFOLIO
MAFL have initiated several new positions in the precious metal
sector in December 2018 and in January 2019 including in Barrick
Gold, Alamos Gold, Trevali and latterly Cabral Gold and Avrupa.
During the period MAFL sold its position in Imperial Metals.
Additionally MAFL have also added a Copper ETF to the tactical
portfolio. During the quarter, M&FI initiated an investment
position in a private company called Cerrado Gold Inc. Cerrado's
main project - Monte do Carmo is located in Brazil's province of
Tocantins. The project has an internal, unverified, estimated
resource of 581,470 oz. with a grade of 2.07 g/t (using a 0.5 g/t
cut-off) over a 17,000-hectare tenement at the Serra Alta zone.
Having completed a recent drill programme, the objective is to
publish a 43-101 technical report in which the formal resource
calculation is expected to demonstrate an increase to about 1.0M oz
of resource in the Q4 2018 period, although at this stage there can
be no guarantee what that resource calculation will show. Cerrado
is currently aiming to raise capital for further drilling to
increase the resource. The current indications from Cerrado is that
the fund raise will be at a 50% premium to our participation price
in the Q4-2018 period.
STRATEGIC PORTFOLIO
M&FI determined almost 4 years ago that Zinc would
outperform other metals and sought out a zinc investment. The
Company is now fully invested in zinc with 2,052,000 shares of
Ascendant Resources and 75% of Redcorp, which owns the Lagoa
Salgada project in Portugal. Ascendant has an earn-in that would
increase its interest to 80% of the Lagoa Salgada Project by
spending US$9.0M and paying M&FI a further US$5.75M (US$250K
received in December). Since announcing the earn-in, the Lagoa
Salgada project's resource estimate has benefited from an
aggressive exploration program. Ascendant has expended US$2.2M in
exploration costs during the first 6 months following their initial
investment. On 13 February 2019 M&FI & Ascendant announced
the results of an updated National Instrument 43-101 Mineral
Resource Estimate (CIM compliant resource) at the Lagoa Salgada
polymetallic VMS Project located on the Iberian Pyrite Belt ("IPB")
in Portugal. The new Mineral Resource Estimate demonstrates
material growth in both the North Zone (Main Massive Sulphide) and
the South Zone (Stockwork) deposits. Both zones sit on an estimated
geological strike length of 1.6km and have been delineated by less
than a total of 50 holes combined. The work completed by Redcorp
Empreedimentos Mineiros Lda. (Redcorp), is funded and guided by
Ascendant Resources (Ascendant) as part of Ascendant's previously
announced earn-in agreement with TH Crestgate, Mineral and
Financial's 100% owned subsidiary. The resource update, completed
by Micon International Limited defined 20.66Mt of Measured,
Indicated and Inferred ore with and average zinc equivalent(1)
grade of 7.13%. This update was announced to the market on February
13, 2019.
The share price of Ascendant Resources has declined from a high
of C$1.20 when the transaction was announced to a current price of
C$0.49. During that time, the price of zinc has declined from
US$1.45/lb to US$1.19/lb. The directors understand that the 100%
owned El Mochito mine in Honduras has successfully reduced its
operating costs by 31% and increased its production 81% during the
course of 2018. The directors remain confident in its investment as
they believe Ascendant has the potential to increase production,
reduce costs, and generate cash flow. Moreover, we are very pleased
to be working with Ascendant as our partner on Lagoa Salgada.
MAFL are currently reviewing several other investment
opportunities. The directors look forward to providing shareholders
with more information on all the investments, in due course if they
progress. Several of these opportunities are private.
FOR MORE INFORMATION:
Jacques Vaillancourt, Mineral & Financial Investments Ltd. +44 780 226 8247
Katy Mitchell and Jessica Cave, WH Ireland Group Limited +44 161 832 2174
Jon Belliss, Novum Securities Limited +44 207 399 9425
Notes: All listed investments, including investments on ISDX,
are valued at the closing bid price as at 31(st) December 2018. The
Company has an investments in unquoted companies which are valued
at the price at which these companies in last raised money,
although this is subject to review.
[1] Gross to Redcorp, Current Redcorp Ownership: TH Crestgate
75%, Ascendant 25%
[2] Zinc equivalent metal grade (ZnEq%) was calculated as
follows: ZnEq% = ((Zn Grade * 25.35) + (Pb Grade * 23.15) + (Cu
Grade * 67.24) + (Au Grade * 40.19) + (Ag Grade * 0.62)) / 25.35;
Metal prices used: US$1.15/lb Zn, US$1.05/lb Pb, $3.05/lb Cu,
US$19.40/oz Ag, and 1,250/oz Au; No recoveries were applied
[3] The net asset value calculation is subject to audit and is
made on the basis that the Company has 35,037,895 shares in
issue.
[4] Current Assets of GBP2,441,112 less Current Liabilities of
GBP44,792 = Working Capital of GBP2,396,320.
[5] 2017 Economic performance revised upward from 3.7% to
3.8%
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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