TIDMMAFL
RNS Number : 3287F
Mineral & Financial Invest. Limited
20 February 2018
MINERAL & FINANCIAL INVESTMENTS LIMITED
("Mineral & Financial", "MAFL", or the "Company")
NET ASSET VALUE UPDATE
MAFL, the AIM quoted resources investment specialist, today
announces an NAV and operations update on its activities for the
period ended December 31, 2017.
-- Year end Net Asset Value up 18.9% to 7.43p per share, totalling GBP2,602,816 (unaudited)
-- TH Crestgate's Lagoa Salgada's LS-1 resource tonnage increased by 114% to 9.65Mt
-- Investment Portfolio now totals GBP2,200,061, up 72.7% from year end 2016.
-- Two new tactical investments initiated
-- TH Crestgate is now seeking to monetize the investment in Lagoa Salgada.
CHAIRMAN'S STATEMENT
As at year-end 2017, the fully diluted Net Asset Value per share
was 7.43p. an increase of 18.9%. Our cash position, as at year end
is robust at GBP456,095, while our total investment portfolio is
GBP2,200,061, up 72.7% from December 31, 2016.
The global economic performance, as measured by economic output,
continues to be positive, rising 3.7% in 2017, according to
International Monetary Fund's (IMF) economic analysis, after rising
3.2% in 2016. The stronger momentum experienced in 2017 is expected
to carry into 2018 and 2019, with global growth revised up to 3.9%
by the IMF for both years (0.2% point higher relative to the fall
forecasts). Additionally, the US Dollar Spot Index, which measures
the US dollar versus a trade-weighted basket of currencies, has
declined from 103.01 reached on December 23, 2017 to a current
level of 89.637, or down 13%. Both of these factors should foster a
fertile environment for natural resource investments. The likely
offsetting headwind, during the next 24 months, will be tightening
monetary conditions in most economies, most notably in the US
resulting in rising interest rates. As the US Federal Reserve
System begins to reverse its crisis era monetary policies, such as
Quantitative Easing (QE) and reduces its balance sheet from $4.4
trillion back to more normal levels (NB the Feds balance sheet in
2007 was $870B), interest rates will continue to increase.
The so-called "Trump Rally" is more of a local than global
phenomenon. The MSCI USA equity index is now at 2,529.3, up 14.6%
in the past year, while the MSCI (ex-USA) Index is up 4.95% in the
past year. During this same time period the Bloomberg Commodity
Index is down 0.97%. The S&P/TSX Global Mining index is down
2.12% during the past year to 70.98. The FTSE All Share Mining
Index is now 17,564, up 6.66% in the past year. Financial assets
have been inflated by central banks' actions in response to the
global financial crisis. We may be at a tipping point were physical
assets, such as commodities, are poised to benefit as QE is
reversed.
MAFL took the position 3 years ago that Zinc would outperform
other metals, and sought out a zinc investment. For the 2-year
period ending December 2017, zinc was the top-performing commodity
within the Bloomberg Commodity index, rising 104.2%. In the
12-month period ending in December 31, 2017 was up 29.7%, just
behind aluminium (+31.2%) and slightly ahead of copper (+29.2%).
Our conviction in zinc resulted in our investment in 49% of TH
Crestgate GmbH's equity. TH Crestgate owns 100% of the Lagoa
Salgada project in Portugal. They have taken Lagoa Salgada's
original 4.5Mt resource, located in what is called the LS-1 area
and increased it to 9.65Mt. There remains significant exploration
potential in the LS-1 area, and enormous potential elsewhere on
Lagoa Salgada's 16 other exploration targets. We believe that the
outlook for industrial base metals, such as zinc and copper will be
good in 2018. We should see an improvement in most bulk
commodities, even including thermal coal. We are cautious about
lithium, and although we are positive minded towards cobalt,
believe that cobalt prices are overheated at the moment. Precious
metals will likely be the best performing metals in the second half
of 2018.
Our outlook for mineral investments is positive, but as always,
the devil will be in the details. TH Crestgate has notified us that
they intend to monetize, or find a partner for the Lagoa Salgada
project. M&FI is working closely with TH Crestgate GmbH in
aiding to secure the most suitable transaction possible. We note
that our investment in TH Crestgate GmbH is recognized at our
investment cost.
Jacques Vaillancourt, CFA, Chairman
CHIEF OPERATING OFFICER'S STATEMENT
Having worked closely with Jacques Vaillancourt before, I would
firstly like to say how delighted I am to assume the role of Chief
Operating Officer of Mineral & Financial Investments.
The rise in Net Asset Value to 7.43p came in part as a result of
a revaluation of our investment in Cap Energy. The overall
investment portfolio rose 72.7% to GBP2,200,061. We currently own
1.3% of Cap Energy, which we now value at 195p, being the most
recent price level at which it raised capital by issuing equity.
This revaluation was undertaken as part of our annual review of our
unquoted holdings. Cap Energy holds three large offshore oil &
gas exploration blocks. The Cap Energy exploration blocks are
summarized below:
COUNTRY GUINEA-BISSAU GUINEA-BISSAU SENEGAL
------------------ ------------------ ----------------- ---------------
Name Block 1 Block 5B Djiffere
------------------ ------------------ ----------------- ---------------
Net Ownership 24% 31.5% 44.1%
------------------ ------------------ ----------------- ---------------
Features Shallow Deep Water Shallow
water (20m-100m) (200m to 4000m) Water (<100m)
------------------ ------------------ ----------------- ---------------
2D Seismic - 950M Bbls 3,200M Bbls 220M Bbls
50P Prospective
Recoverable
Resources
------------------ ------------------ ----------------- ---------------
During the period the mining equity markets continued with their
modest and more selective recovery and it was pleasing to see zinc
at the forefront of this. Your company has significant exposure to
zinc through its 49% holding in TH Crestgate, a Swiss investment
company. TH Crestgate owns the 100% of the Lagoa Salgada
poly-metallic project in Portugal. TH Crestgate has succeeded in
expanding the resource by 114%. AGP Mining Consultants Inc. of
Canada completed a Technical Report (43-101) resource evaluation.
The deposit's resource tonnage was increased from an initial 4.5Mt
(grades of 2.85% zinc, 2.8% lead, 0.34 g/t copper, 53.4 g/t silver,
0.81 g/t gold) to 9.62Mt (grades of 2.6% zinc, 2.6% lead, 0.30%
copper, 45.7 g/t silver, and 0.62 g/t gold).
Our investment in Glencore, has appreciated 40.6% during the
course of 2017. This is in part due to Glencore's de-leveraging
through some selective assets sales, a rise in commodity prices,
and improvement in its overall financial performance. A hidden
benefit is, although not well known, that Glencore is the largest
producer of cobalt in the world.
We added 2 positions to the Tactical Portfolio during the
period: 1) Artemis Resources, which is listed on the Australian
exchange. Artemis is an explorer of gold, Cobalt and copper in the
Pilbara. The particular attraction is that Artemis is a 50% partner
with Novo Gold on a series of conglomerate gold prospects, notably
Purdy's Reward. The Artemis/Novo JV along with the rest of the
tenements held by Novo Resources and their JV partners, means this
affiliation basically controls much of the mineral exploration
south of Karratha. This JV is specifically for conglomerate and
paleoplacer gold deposits on 82% of Artemis Resources' tenure.
Artemis' market cap is A$106.5M, while Novo Resources has a market
cap of C$462M. We see Artemis as a cheaper way of playing the
Karratha conglomerate gold prospect; 2) The second addition to the
Tactical Portfolio is Imperial Metals, listed in Canada. Imperial
Metals is a copper producer with three mines in British Columbia
and a market cap of C$260.6 million. In 2017 Imperial Metals
produced 74.6 Million lbs. of Cu, 33,416 oz. of Au and 133,157 oz.
of Ag. Imperial is recovering from the operational and financial
impact of a tailings damn spill. It has been refinanced, its debt
levels improved, and the market is awaiting the uplift in financial
returns. Its 9-month revenues were C$312.6M and net income was
$43.2M. The shares are trading at 4.5x trailing earnings, and we
believe that there should be improved financial performance post
re-financing.
We continue to assess opportunities at all levels, both in terms
of the strategic and the tactical portfolio.
James Lesser, Chief Operating Officer
For more information:
Katy Mitchell, WH Ireland Group Limited +44 161 832 2174
Jon Belliss, Beaufort Securities Limited +44 207 382 8300
Jacques Vaillancourt, Mineral & Financial Investments Ltd. +44 780 226 8247
Notes: The net asset value calculation is subject to audit and
is made on the basis that the Company has 34,842,895 shares in
issue. All listed investments, including investments on ISDX, are
valued at the closing bid price as at December 31, 2017. The
Company has investments in unquoted companies that are currently
valued at the price at which they last raised capital, although
this is subject to review. The Company also has an investment in TH
Crestgate, the valuation of which is subject to quarterly review
and is currently recognized at cost.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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