TIDMMAFL
RNS Number : 8296M
Mineral & Financial Invest. Limited
14 May 2020
MINERAL AND FINANCIAL INVESTMENTS LIMITED
Quarterly Net Asset Value and Operational Update
HIGHLIGHTS:
-- Net Asset Value [1] as at 31 March 2020 was GBP5,333,187, up 10.4% yr/ yr from GBP4,832,434
-- Net Asset Value Per Share (FD) at 31 March 2020 was 15.1p, up 10.6% vs. 13.6p a yr. ago.
-- Global impact of COVID-19 affected NAVPS Q3 performance negatively by -0.6% vs Q2.
-- Significant overweight of precious metals partially helped protect the NAV performance.
-- Stronger US dollar protected portfolio performance despite market turmoil.
George Town, Cayman Islands - 14 May 2020 - 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 March 2020. At the end of
the third quarter the NAV was GBP5,333,187, up 10.4%, from
GBP4,832,434 one year ago. The Net Asset Value Per Share, as at 31
March 2020, was 15.11p, up 10.6% from one year ago. Earnings for
the first 9 months of our fiscal year are GBP212,314, or 0.60p. The
Company's working capital, as at 31 March 2020 was GBP5,375,187 [2]
.
The following is a summary of the NAV, updated to include this
unaudited NAV calculation:
Dec. 2020/ 2020 /
31 March 31 31 March 2019 2016
31 March 31 March 31 March 2019
2016 2017 2018 2019 2020 % Change CAGR (%)
Net Asset
Value GBP912,938 GBP2,509,774 GBP2,536,875 GBP4,832,434 GBP5,360,762 GBP5,333,187 10.4% 55.5%
----------- ------------- ------------- ------------- ------------- ------------- ---------- ----------
NAVPS (FD) 6.50p 7.22p 7.24p 13.65p 15.19p 15.11p 10.7% 23.2%
----------- ------------- ------------- ------------- ------------- ------------- ---------- ----------
FTSE 350
Mining
Index 8,931 15,562 17,259 20,000 19,049 13,373 -33.1% 10.6%
----------- ------------- ------------- ------------- ------------- ------------- ---------- ----------
GS
Commodity
Index 316.40 388.22 452.13 434.13 374.98 261.54 -39.8% -4.6%
----------- ------------- ------------- ------------- ------------- ------------- ---------- ----------
Global sentiment and expectations have changed since our last
update. In the previous quarter the Corona Virus was seen as a
local health concern in remote Wuhan, China. Since then we have
learned much: Where Wuhan is; What a Corona Virus and COVID 19 are;
What a Pandemic is, and; What social and economic impact a Pandemic
has. Since 31 December 2019, COVID-19 has caused a necessary and
voluntary global recession. This would appear to be, by far, the
most economically damaging pandemic in modern history. There are,
as we write these comments, signs that partial lifting of the
restrictions is beginning to be considered in certain quarters,
despite concerns of a second wave of infection. The message of this
update is to provide our shareholders an inventory of what our
performance has been in the past quarter and provide some sense of
the factors we are considering for how we position our investments
for the near future.
NET ASSET VALUE [3]
As at 31 March 2020, the unaudited Net Asset Value was
GBP5,333,187, equating to 15.11p per share on a fully diluted
basis. The Company's tactical portfolio broadly benefited from a
5.5% appreciation of the US dollar versus the British Pound (GBP).
Additionally, gradually increasing our weighting in precious metals
from Q4 2018 was a net positive for our performance. Nevertheless,
the favourable benefit of our precious metals' allocation decision
was muted due to the quarter-end sell off of precious metals. Gold
started the year, around $1,510/oz, by the second week of march it
had reached $1,680/oz (+11.3%). During the next 10 days it sold
down to $1,470 (-12.5%) as investors sold their gold holdings, when
virtually all else sold off aggressively. Precious metals have
since more than recovered and stand at $1705/oz, as have the
underlying equities, which is not fully captured in this periodic
performance measurement of the portfolio. Base metals have been
severely affected by the economic slowdown. The Goldman Sachs
Commodity index, which includes hydrocarbons, was down 39.4% on a
year over year basis, but down a stunning 42.6% in the period
between 31 March 2020 and 31 Dec 2019. During the quarter base
metals were very badly hurt, copper was down 23%, Zinc down 20.4%,
Aluminium down 18.8%.
The IMF's April 2020 World Economic Outlook, which we regularly
turn to as a reliable measure of global economic activity, now
expects global economic activity to decline by 3.0% in 2020. The
previous IMF estimate of global economic activity, issued in
January, called for global growth of 3.3%, a 6.3% reversal in 3
months. We believe that the economic impact may well be greater
than these IMF forecasts. We believe there will be some marginal
changes to consumption which will cause economic echoes well into
next year. The IMF forecasts calls for strong economic growth in
2021. However, we note, the IMF forecasts "Emerging and Developing"
economies to end 2021 ahead of where they began 2020, whilst the
"Advanced Economies" will not have recouped these economic losses
by the end of 2021. The recent marginal growth for commodities
generally, and metals specifically has come from Emerging and
developing economies.
IMF-WORLD ECONOMIC OUTLOOK
(April 2020)
2021
2019 2020 (E) 2021 (E) 2020 (E) (E)
Actual Current Current Previous Previous
World Output 2.0% (3.0%) 5.8% 3.3% 3.1%
-------- --------- --------- ---------- ----------
Advanced Economies 1.7% (6.1%) 4.5% 1.6% 1.6%
-------- --------- --------- ---------- ----------
Emerging & Developing
Economies 3.7% (1.0%) 6.6% 4.4% 4.6%
-------- --------- --------- ---------- ----------
The impact of the global lockdown will not solely be limited to
the economic slowdown. There will also be structural and
behavioural changes that will impact the economy for years to come,
not the least on "bricks and mortar" businesses. Additionally,
businesses that finance and/or support these impacted economic
segments will also be affected. The directors continue to believe
that there are significant investment opportunities within the
metals and mining sectors. In the face off such a uncertain
outlook, we will remain on course, but begin to ensure that we are
as nimble as possible.
TACTICAL PORTFOLIO
M&FI closed certain positions in the quarter, notably we
profitably sold our holdings in ProShares UltraPro Short QQQ ETF's,
Newmont Gold and Victoria Gold. We booked losses on the sale of
Encana (now called Onintiv) and Avrupa. We have added Mandalay
Resources, a gold producer with 4 mines (Chile (2), Sweden and
Australia) which has been a strong performer. The investment thesis
here is that it is a gold producer which will have both a
production lift and cost reduction in 2020. We also added Endeavour
Mining, a west African gold producer during the period. Since we
acquired our investment the company has announced that it plans to
merge with Canadian SEMAFO mining company also focused in West
Africa. Should it complete, the resulting combined company will be
the largest gold producer in West Africa holding 6 gold mines and 4
projects producing about 1.0 M oz of gold per year.
Additionally, the NAV was negatively impacted by the decline in
the market value of the Company's shareholding in Ascendant
Resources (ASND) during the period. Ascendant announced after the
period end that it had sold the loss making El Mochito Mine, and
all of its associated liabilities. The mine was most currently
losing US$2.0M per month due to low zinc prices. The prospect of
the $290/tonne refining tolling charges made the prospects for El
Mochito in the short term unsustainable. The decision, though
disappointing, was necessary. The share performance of ASND in the
portfolio cost us GBP269,848 in performance this quarter.
STRATEGIC PORTFOLIO
The operator of the Lagoa Salgada has informed us that they plan
to complete 7,700m of drilling on the project this year with the
objectives of upgrading the resource from "indicated" to "measured"
in the North section, expanding the resource in the south section
and completing a metallurgical testing program. This program is
expected to cost US$2.7M.
We increased our investment in Cerrado at US$0.50 per share,
prior to it successfully acquiring the Don Mario Mine in Argentina.
The acquisition of the mine for a total of US$45.0M was
non-dilutive to the shareholder base, as it was achieved through
the sale of a royalty which covered the US$15.0M initial payment to
acquire 100%. The remaining US$30.0M to be paid is in three
payments of US$10.0M every 24 months. Cerrado is now in control of
the Don Mario mine and is fully benefitting from the rise in the
price of gold. The company continues to plan for a listing over the
next 6 months, when capital markets have stabilized.
Golden Sun continues to meet mining targets, however gold
production is lagging a little behind plan due to lower than
planned gold recoveries from the heap leach pads. Metallurgical
solutions are beginning to yield results and recoveries are
improving. The company is now planning to introduce Carbon in Leach
tanks which will get the recoveries up in to the >90% range.
Golden Sun has been cash flow positive, helped by the price of gold
offsetting the lower than planned leach pad recoveries. Our secured
convertible note continues to accrue its 20% annual interest
payments.
M&FI is 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 privately owned.
FOR MORE INFORMATION:
Jacques Vaillancourt, Mineral & Financial Investments Ltd. +44 780 226 8247
Katy Mitchell and Matt Chan, WH Ireland Limited +44 207 220
1666
Jon Belliss, Beaufort Securities Limited +44 207 382 8300
[1] All financial resutls reported for the period are unaudited.
[2] Current Assets of GBP5,464,589 less Current Liabilities of
GBP89,402 = Working Capital of GBP5,375,187.
[3] The NAV calculation is subject to audit and is made on the
basis that the Company has 35,135,395 shs. O/S (basic) and
35,465,395 shs. O/S (FD) in issue.
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END
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