TIDMMAFL
RNS Number : 7438Y
Mineral & Financial Invest. Limited
13 May 2019
MINERAL AND FINANCIAL INVESTMENTS LIMITED
Quarterly Net Asset Value and Operational Update
HIGHLIGHTS:
-- NAV per share on March 31(st) , 2019 was 13.65p, up 88.3% y/y, and +9.8% vs Dec 31(st) 2018
-- Commodity markets continue to be sluggish due to global trade concerns
-- Zinc prices have recovered slightly, but continue to weigh
down the Strategic Portfolio and NAV performance
-- Redcorp has initiated its 2019 drilling program on the Lagoa Salgada project
-- Several new investments made in the gold sector in Q4-2018 and Q1-2019
George Town, Cayman Islands - May 13(th) , 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 March 31(st) , 2019. The
Company's tactical portfolio continues to be challenged by the
softness in virtually all commodity prices.
The following is a summary of the NAV, updated to include this
unaudited NAV calculation:
March March March Dec 31 March 2019/2018 CAGR (%)
31 2016 31 2017 31 2018 31 % Ch.
2018 2019 2019 /
2016
Net Asset
Value (Basic) GBP912,938 GBP2,509,774 GBP2,536,875 GBP4,392,940 GBP4,832,434 90.5% 74.2%
----------- ------------- ------------- ------------- ------------- ---------- ---------
Cost of Exercising
Options GBP39,450 GBP84,450 GBP61,604 GBP61,604 GBP61,604 N/C 16.0%
----------- ------------- ------------- ------------- ------------- ---------- ---------
Total NAV
(FD) GBP952,388 GBP2,594,224 GBP2,598,479 GBP4,454,544 4,894,038 88.3% 72.5%
----------- ------------- ------------- ------------- ------------- ---------- ---------
Net Asset
Value Per
Share (Basic) 6.50p 7,22p 7.24p 12.54p 13.79p 90.5% 28.4%
----------- ------------- ------------- ------------- ------------- ---------- ---------
Net Asset
Value Per
Share (FD) 6.55p 7.24p 7.25p 12.43p 13.65p 88.3% 27.7%
----------- ------------- ------------- ------------- ------------- ---------- ---------
Number of
Shares in
Issue (Basic) 14,034,562 34,742,895 35,037,895 35,037,895 35,037,895
----------- ------------- ------------- ------------- ------------- ---------- ---------
Unexercised
Options 500,000 1,100,000 805,000 805,000 805,000
----------- ------------- ------------- ------------- ------------- ---------- ---------
Number of
Shares (FD) 14,534,562 35,842,895 35,842,895 35,842,895 35,842,895
----------- ------------- ------------- ------------- ------------- ---------- ---------
NET ASSET VALUE
As at March 31(st) , 2019, the fully diluted, unaudited, Net
Asset Value per share was 13.65p, up 88.3% year on year. The
Company's cash position, as at the quarter end is GBP401,544, while
its working capital is GBP4,832,434[1]. We continue to have no long
term debt.
Over the past four years M&FI's NAV has risen at a
compounded rate of 74.2% per annum, from GBP912,938 to GBP4.832M.
The increase in the NAV is largely due to the progress being
achieved at our Portuguese investment, Redcorp Empreedimentos
Mineiros Lda ("Redcorp"). We carry our 75% investment in Redcorp at
GBP2.4[2]m. Our partner, Ascendant Resources ("Ascendant"; ASND:CN)
acquired 25% of Redcorp for GBP2.31M in June 2018 and invested
US$2.2M in exploration in 2018, and has announced plans to invest
an additional US$5.17M in exploration programs in 2019. If
Ascendant fulfills its planned exploration program in 2019, it will
have invested US$7.35M, above and beyond the purchase price of its
25% of Redcorp. We have referenced in several press releases the
progress made through exploration at Redcorp with the work and
progress being achieved by our partner Ascendant's exploration and
operatorship of Redcorp.
The NAV was positively impacted by the improvement in the share
price of Ascendant and the weakening of the GBP vs the CAD[3]. Zinc
prices have improved 19.1% from the end of 2018. LME Zinc
inventories continue to decline, and are now lower than their cycle
lows of Q4 2007. We remain optimistic for the outlook of Zinc,
despite the current trading challenges of the economic environment.
We believe that Zinc will continue to outperform the base metals
M&FI tracks. In the past quarter Zinc's rise (+19.1%) was just
behind Rhodium's (+21.5%) and Nickel's (+20.2%).
ECONOMIC OVERVIEW
M&FI uses the IMF Economic studies to assess global economic
performance due to its consistent, disciplined and global span.
After strong growth in 2017 and early 2018, global economic
activity slowed notably in the second half of last year, reflecting
a confluence of factors affecting major economies. The 2018/19 IMF
Economic Study ("IMF Study[4]") showed that China's growth declined
following a combination of needed regulatory tightening to rein in
shadow banking and an increase in trade tensions with the United
States. The same study showed that the euro area economy lost more
momentum than expected as consumer and business confidence weakened
and car production in Germany was disrupted by the introduction of
new emission standards; investment dropped in Italy as sovereign
spreads widened; and external demand, especially from emerging
Asia, softened. Elsewhere, natural disasters hurt activity in
Japan. The IMF Study supported the view that trade tensions
increasingly took a toll on business confidence and so financial
market sentiment worsened, with financial conditions tightening for
vulnerable emerging markets in the spring of 2018 and then in
advanced economies later in the year, weighing on global demand.The
IMF Study reports that conditions have eased in 2019 as the US
Federal Reserve signaled a more accommodative monetary policy
stance and markets became more optimistic about a US-China trade
deal, but they remain slightly more restrictive than in the
fall.
The global economic performance set out in the IMF Study, which
is measured by economic output, continues to be positive, but the
out look has darkened with the possibility of continued trade
tensions between the USA and many of it s trading partners.
Economic performance rose by 3.8% in 2017 and by 3.6% for 2018. The
International Monetary Fund's (IMF) World Economic Outlook update,
released on April 8, 2019 contains a downward revision to the IMF's
expectations of 2019 forecast economic growth of 3.3% in 2019 and
maintains a forecast of 3.6% for 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, slowing
German economic performance and ta urbulent 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. The IMF
forecasts of US Economic output growth has been revised downwards
and now expect the US economic growth to decline from +2.2% in 2018
to +1.8% in 2019 and to + 1.6% in 2020. In the last quarter of 2018
virtually all bond yields declined, as an acknowledgement 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, however,
economic performance diminished by the turbulence caused by USA's
volatile trade negotiation tactics. Therefore MAFL will continue to
gradually favour precious metal investments over base metal
investments.
TACTICAL PORTFOLIO
M&FI have initiated several new positions in the precious
metal sector during the period, including in Barrick Gold, Alamos
Gold, Trevali and latterly Cabral Gold and Avrupa. Additionally
M&FI have also added a Copper ETF to the tactical portfolio. We
have also added a position in EnCana Corporation. EnCana is a
leading North American energy producer that is focused on growing
its strong portfolio of diverse resource plays producing natural
gas, oil and natural gas liquids. We have also added to our Trevali
Mining position. Glencore, Trevali's largest shareholder, has taken
an active role in the company's activities and led a renewal of
Trevali's management team (new CEO, CFO and the COO). Trevali
Mining just published Q1 results, it reported EPS of $0.02, above
the consensus of $0.01. Adjusted EBITDA was ahead of consensus at
$44m.
Our small position in Toro Gold has benefited from a valuation
lift. Toro recently completed a financing at GBP1.50 p/s, above our
carrying value of GBP1.00 p/s. Additionally, Toro has posted its
first full year of production and earnings - both were above
guidance. Additionally, our Platinum position saw a 11.2% lift in
its valuation during the period.
STRATEGIC PORTFOLIO
Ascendant Resources, as the operator of Redcorp, has begun a new
2019 exploration program as part of its earn-in agreement. The
US$5.17M 2019 exploration program calls for a 15,000m drill
program, Metallurgical Testwork, Geophysical and Structural
Interpretation studies, and by year end, a Preliminary Economic
Assessment (PEA). Cerrado Gold, an investment we initiated in
Q4-2018 is closing in on a possible new strategic investor for the
company. Lastly, the Company is in the final stage of completing
its due diligence on a possible investment in a gold mine located
in central America, and we look forward to updating you in due
course on progress with this investment.
Additionally, M&FI 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, but are nearer to a cash flow generative stage than most
of the publicly listed opportunities we are reviewing.
FOR MORE INFORMATION:
James Lesser, Mineral & Financial Investments Ltd. +44 780 226 8247
Katy Mitchell and Jessica Cave, WH Ireland Limited +44 161 832 2174
Jon Belliss, Novum Securities Limited +44 207 382 8300
Note: All listed investments, including investments on NEX, are
valued at the closing bid price as at 31(st) March 2019. 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] Current Assets of GBP4,905,139 less Current Liabilities of
GBP72,705 = Working Capital of GBP4,832,434.
[2] We carry our 75% investment in Redcorp at GBP2.4m. This is
calculated by discounting the agreed-to future consideration
payable to MAFL and its subsidiaries by Ascendant, and
incorporating MAFL's residual ownership of Ascendant's exploration
spending commitments.
[3] The Company holds 2.66% of Ascendant Resources in it's
Tactical Portfolio
[4] www.imf.org (April 8, 2019)
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END
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