TIDMGRIT
RNS Number : 5940L
Global Resources Investment Tst PLC
29 April 2015
To: RNS and the Channel Islands Securities Exchange Authority Limited
From: Global Resources Investment Trust plc
Date: 29 April 2015
The Chairman, Lord St John stated,
Introduction
Against a backdrop of another challenging six months in the
mining sector, while large cap resource companies have largely
remained stable underpinned by their yield, the junior resource
sector has remained vulnerable due to the lack of investor interest
and an illiquid market marked by wide bid/offer spreads. I am
pleased to report that your Company's net asset value ('NAV') has
stabilised since I last wrote.
Investment and Share Price Performance
At 28 February 2015 your Company's NAV was 52.0p, down 22.6%
since 31 August 2014, although flat since I wrote to you on 4
December 2014 when it stood at 51.1p.
The Company's ordinary share price underperformed declining
38.2% to 21.0p during this period. This decline has continued as
investor sentiment has remained depressed. The share price is
currently 16.0p.
Your Company's six months ended 28 February 2015 represented
almost exactly one year since its launch on 7 March 2014. During
that year the NAV fell by 48.0% and the share price by 79.0%. Your
Company has a solid diversified portfolio of mining assets with
limited exposure to iron ore and is well positioned for a recovery
in the sector. The Company does not have a benchmark, but the AIM
Basic Resources Index has declined by 31.5% since the Company's
launch.
Gearing and 9% Cumulative Unsecured Loan Stock 2018 ('CULS')
The Company issued GBP5 million nominal of CULS to provide
working capital. The CULS provide a degree of structural gearing
and the Company was 20.4% geared at 28 February 2015.
Outlook
While your Company's NAV has found a measure of stability over
recent months, its share price has not and the discount at which
its shares trade to their underlying NAV currently stands at an
extraordinary 67.4%.
Commodity markets appear to have stabilised with anticipation of
more infrastructure development programs in China and speculation
of consolidation in the sector. We are considering several options
both to support our portfolio of companies and to pro-actively
rationalise and consolidate the portfolio in anticipation of a
return to a growth cycle.
Lord St John
Chairman
28 April 2015
Investment Manager's Review
There was little respite for the resource markets over the past
six months, especially the bulk commodities, iron ore, coal and
oil. Prices for these have more than halved from their 2014 peaks,
with a price range of $50-60 per unit seemingly becoming the new
normal. This has already resulted in a number of more recent iron
ore and coal project companies being put into administration. Other
mineral commodities have fared less badly, while gold has proved
quite resilient in an uncertain financial world.
Prices of junior resource companies remained under pressure with
the result that the Company's NAV declined 22.6% to 52.0p during
the six months to 28 February 2015. The share price fell 38.2% to
21.0p over this period reflecting a widening of the discount to NAV
to 59.6%. The AIM Basic Resources Index declined 22.6% although
this index does not include as wide a range of companies as that to
which the Company is exposed.
The sector has now entered into its fourth year of a bear market
which is undoubtedly one of the severest over the past four
decades. The worst affected have been the pre-production
development companies, which are in the process of developing new
projects, necessary to replace declining reserves that are steadily
being mined out by the majors. In many cases quality projects are
being developed, but the smaller companies are struggling to raise
equity capital, putting undue pressure on their share prices.
Market capitalisations are unduly depressed in relation to the
value of resources in the ground for better quality companies.
Although the gold market has faced the headwind of a strong
Dollar the price has proved resilient, with strong support evident
below $1200. This masks the performance in most other currencies in
which gold has provided protection. The severing of the Swiss
Franc/Euro link caused a sharp drop in the Euro, but proved
beneficial to the gold price in Euros. Russians fortunate enough to
have some gold exposure were fully protected against the slump in
the Rouble, again underlining one of gold's main functions as a
currency hedge. The weakness in commodity related currencies such
as the Australian and Canadian Dollars has provided some protection
to the mining companies.
Most corporate merger and acquisition activity in the junior
sector has taken place in the gold industry, where rationalisation
and consolidation have gathered momentum. Over the past six months
over seventeen acquisitions or mergers have taken place, all at
reasonable premiums to the prevailing share prices. Larger
producers are finding it more effective to acquire ounces in the
ground through the market, rather than through lengthy and costly
exploration programmes. In this respect the Company is well
positioned with over 40% exposure to gold stocks. We have had
stellar performance from our two largest gold holdings, Inca One
and Merrex - more detailed comments are highlighted in the Top Ten
holdings section.
The overall outlook for the world economy remains muted, but
some stability appears to have returned to the resource sector, as
commodity prices are finding support at levels which are close to
the marginal cost of production. Apart from the few companies with
robust project economics it remains difficult for most companies to
raise equity capital, and many are struggling to survive. We
continue to work with a number of our investee companies assisting
with corporate activity in advancing projects and adding value
where possible. There is likely to be further rationalisation of
the portfolio with increasing focus on core holdings with sound
growth prospects.
David Hutchins and Kjeld Thygesen
RDP Fund Management LLP
28 April 2015
Top Ten Review
Arakan Resources (19.9%)*
Through its subsidiary, Posit Coal, the company is developing
and expanding the Kara-Keche thermal coal deposit in the Kyrgyz
Republic. Arakan is forming a 50/50 joint venture with the
government. The company is currently exploring financing options to
allow the staged expansion of the Kara Keche resource holding
approximately 120 million tonnes, from the current small scale
production to 500,000 tonnes per annum. This remains a large scale
project with strong economics and attractive payback. Arakan also
has four signed copper/gold exploration leases in Myanmar.
Alhambra Resources (11.8%)*
Canadian listed gold exploration/development company operating
in Kazakhstan, where it has a 100% working interest in the 2.4
million acre Uzboy Project, located in the prolific gold belt in
north central Kazakhstan, which hosts numerous world class gold
deposits. The company is currently trying to arrange finance to
re-start a small scale heap leach project, while also reinstating
its exploration program. The deposit was previously explored during
the Soviet period and is reported to have a potential resource of
over 12 million ounces based on the Soviet C1 and C2 resource
categories.
Anglo African Minerals (11.2%)*
AAM is an Irish company that is currently listed on the GXG
market. AAM is looking to be amongst the world's leaders in the
bauxite industry, and currently owns the rights to 4 bauxite
licences in Guinea and is focused on developing its assets to
provide near, medium and long term production. The company recently
announced a JORC compliant inferred mineral resource of 43 million
tonnes for its FAR deposit and a favourable scoping study based on
a 3 million tonne per annum bauxite export operation.
Siberian Goldfields (9.5%)*
Private company developing the Zhelezny Kryazh gold and iron ore
deposit in the Chita region of Russia, where a significant high
grade resource has already been outlined and a feasibility study
commenced. The project has recently suffered some delays as a
result of the Russian political situation.
Tirex Resources (6.5%)*
Having been formed to conduct mineral exploration and
development activities in Albania, the company is now making the
transition into production with the approval of 6 separate 25 year
mining licenses within the Mirdita VMS District. The company is
also targeting new discoveries through district scale exploration.
The company is about to commence confirmation drilling within the
Rehova licence area to update the historic resource into a
compliant NI43-101 resource. The company continues to have the
support and financial backing of the European Bank for
Reconstruction and Development ('EBRD').
Inca One Resources (6.0%)*
A Canadian mineral resource and ore processing company with a
gold milling facility in Peru, servicing government permitted small
scale miners. The company's objective is to become the 'processor
of choice' for the local miners, by offering long lasting and
reliable relationships and superior service. The company has
recently achieved commercial production and also completed a
financing to expand the mill to 100 TPD.
Merrex Gold (5.7%)*
The company is in joint venture with IAMGOLD Corporation on the
Siribaya Gold Project in Mali, West Africa, which is an advanced
stage exploration project with an indicated NI43-101 resource of
just over 300,000 ounces at 2.34 g/t. The Siribaya Project is on
the same geological trend and only 20 kilometres from Papillion
Resources project which has recently agreed a takeover by Canadian
gold producer B2 Gold. Recent drill results have been positive and
a significant on-going exploration program is scheduled for the
balance of this year.
NuLegacy Gold (4.2%)*
A Canadian listed company that was formed with the objective of
discovering Carlin-type gold deposits in Nevada, proving them up
and selling to a major to bring into production. The company has a
strong management team that is now working to complete the earn-in
to a 70% working interest in the Iceberg gold deposit and further
expand it to establish a threshold resource of 1.0+ million
NI43-101 compliant ounces. The Iceberg deposit is located in the
prolific Cortez gold trend in Nevada.
Saturn Minerals (3.2%)*
An oil and gas, exploration and development company focused in
Saskatchewan, Canada. The Williston Basin, located in North Dakota,
Montana and Saskatchewan hosts some of the largest reserves of oil
and potash as well as significant reserves of coal and natural gas.
Since mid-2000, exploration and development of the central parts of
the basin has resulted in the basin becoming the second largest oil
producing basin in North America. Saturn Minerals has a 95%
interest in over 370,000 acres of oil and gas rights in the
Northern Williston Basin, which are some of the largest oil and gas
permits in Saskatchewan. The company has completed initial seismic
programs on the permits and is currently planning the next stage of
exploration, which will include drilling.
InCoR Holdings (2.4%)*
InCoR Holdings is a GXG listed venture capital and holding
company in the natural resource sector looking to identify and
acquire developing projects and distressed assets identified by its
experienced management team.
* % of total investments as at 28 February 2015.
Enquiries:
RDP Fund Management LLP
David Hutchins
Tel +44 (0) 207 290 8541
Beaumont Cornish Limited
Roland Cornish
Tel: +44 (0) 207 628 3396
Felicity Geidt
Tel: +44 (0) 207 628 3396
R&H Fund Services Limited
Martin Cassels
Tel: +44 (0) 131 524 6140
Condensed Income Statement
Six months ended Year ended
27 February 2015 31 August 2014
(unaudited) (audited)
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- -------- -------- --------- --------- -------- ---------- ----------
Losses on
investments 3 - (5,227) (5,227) - (10,117) (10,117)
Income 2 (141) - (141) 590 - 590
Investment
management
fee (165) - (165) (204) - (204)
Other expenses (266) - (266) (357) - (357)
-------------------- -------- -------- --------- --------- -------- ---------- ----------
Net return before
finance costs and
taxation (572) (5,227) (5,799) 29 (10,117) (10,088)
-------------------- -------- -------- --------- --------- -------- ---------- ----------
Interest payable
and similar
charges (220) - (220) (213) - (213)
-------------------- -------- -------- --------- --------- -------- ---------- ----------
Net return on
ordinary
activities before
taxation (792) (5,227) (6,019) (184) (10,117) (10,301)
-------------------- -------- -------- --------- --------- -------- ---------- ----------
Tax on ordinary - - - - - -
activities
-------------------- -------- -------- --------- --------- -------- ---------- ----------
Net return
attributable
to equity
shareholders (792) (5,227) (6,019) (184) (10,117) (10,301)
-------------------- -------- -------- --------- --------- -------- ---------- ----------
Loss per ordinary
share 4 (2.00)p (13.21)p (15.21)p (0.47)p (25.86)p (26.33)p
-------------------- -------- -------- --------- --------- -------- ---------- ----------
Comparative figures for the six months ended 28 February 2014
are not included as the Company did not trade and received no
income and incurred no expenditure and therefore did not make a
profit or loss.
The 'total' column of this statement represents the Company's
profit and loss account, prepared in accordance with IFRS.
All revenue and capital items in this statement derive from
continuing operations. All of the loss for the period is
attributable to the owners of the Company.
No operations were acquired or discontinued in the year.
A Statement of Total Recognised Gains and Losses is not required
as all gains and losses of the Company have been reflected in the
above Income Statement.
Reconciliation of Movements in Shareholders' Funds
Six months Six months ended Year ended
ended
28 February 28 February 31 August
2015 (unaudited) 2014 (unaudited) 2014
GBP'000 GBP'000 (audited)
GBP'000
------------------------------ ------------------- ------------------- ------------
Opening equity shareholders'
funds 26,599 50 50
Losses on investments (5,227) - (10,117)
Net return attributable to
ordinary shareholders (792) - (184)
Issue of ordinary shares - - 39,520
Expenses of issue - - (2,670)
------------------------------ ------------------- ------------------- ------------
Closing equity shareholders'
funds 20,580 50 26,599
------------------------------ ------------------- ------------------- ------------
Condensed Balance Sheet
As at As at As at
28 February 28 February 31 August
2015 2014 2014
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Fixed assets
Investments 24,780 - 30,410
Current assets
Debtors 485 50 845
Cash at bank and on deposit 491 - 450
-------------------------------- ------ ------------- ------------- -----------
976 50 1,295
Creditors: amounts falling due
within one year (176) - (256)
Net current assets 800 50 1,039
-------------------------------- ------ ------------- ------------- -----------
9% Convertible Unsecured Loan
Stock 2017 5 (5,000) - (4,850)
-------------------------------- ------ ------------- ------------- -----------
Net assets 20,580 50 26,599
-------------------------------- ------ ------------- ------------- -----------
Stated capital and reserves
Called up share capital 396 1 396
Share premium 6 36,504 49 36,504
Capital reserve 6 (15,344) - (10,117)
Revenue reserve 6 (976) - (184)
-------------------------------- ------ ------------- ------------- -----------
Equity shareholders' funds 20,580 50 26,599
-------------------------------- ------ ------------- ------------- -----------
Net asset value per share 7 52.01p 100.00p 67.22p
-------------------------------- ------ ------------- ------------- -----------
Condensed Cash Flow Statement
Six months Year
ended ended
28 February 31 August
2014 2014
(unaudited) (audited)
GBP'000 GBP'000
Operating activities
Loss before finance costs and taxation (5,799) (10,088)
Loss on investments 5,227 10,117
Decrease / (increase) in other receivables 306 (791)
(Decrease) / increase in other payables (27) 157
-------------------------------------------- ------------- -------------
Net cash outflow from operating activities
before interest and taxation (293) (605)
Interest paid (246) (114)
Withholding tax paid (27) -
-------------------------------------------- ------------- -------------
Net cash outflow from operating activities (566) (719)
-------------------------------------------- ------------- -------------
Investing activities
Purchases of investments - (40,651)
Sales of investments 457 70
-------------------------------------------- ------------- -------------
Net cash inflow/ (outflow) from investing
activities 457 (40,581)
-------------------------------------------- ------------- -------------
Financing
Issue of ordinary shares - 39,570
Expenses of issue - (2,670)
Issue of CULS 150 4,850
-------------------------------------------- ------------- -------------
Net cash inflow from financing 150 41,750
-------------------------------------------- ------------- -------------
Increase in cash and cash equivalents 41 450
-------------------------------------------- ------------- -------------
Net cash at the start of the period / year 450 -
-------------------------------------------- ------------- -------------
Net cash at the end of the period / year 491 450
-------------------------------------------- ------------- -------------
No comparatives are shown for six months ended 28 February 2014
as the Company was dormant throughout that period.
Notes to the Condensed Financial Statements
1. Interim results
The unaudited condensed financial statements have been prepared
in accordance with International Accounting Standard 'IAS' 34
'Interim Financial Reporting' and the accounting policies set out
in the statutory accounts of the Company for the year ended 31
August 2014. The condensed financial statements do not include all
of the information required for a complete set of International
Financial Reporting Standards ('IFRS') financial statements and
should be read in conjunction with the financial statements of the
Company for the year ended 31 August 2014, which were prepared
under full IFRS requirements.
2. Income
Six months ended Year ended
28 February 31 August
2015 2014
GBP'000 GBP'000
--------------------------- ------------------- -------------
Income from investments
Overseas interest (141) 590
Total income (141) 590
---------------------------- ------------------- -------------
Total income comprises:
Fixed interest securities (141) 590
(141) 590
--------------------------- ------------------- -------------
Income for the six months ended 28 February 2015 was in a net
negative position as a result of accrued interest income recognised
in the year ended 31 August 2014 relating to Alhambra Resources,
Arakan Resources, Siberian Goldfields and Archer Petroleum being
receivable in the form of shares rather than cash as initially
anticipated. The value of the shares to be received is expected to
be at a lower level than the cash receivable and therefore a
reduction to interest accrued on the securities was made to reflect
this change. The level of income earned for the six months ended 28
February 2015 was GBP226,000 and the write back of income accrued
in the year ended 31 August 2014 amounted to GBP(367,000).
3. Losses on investments
Included within losses on investments for the six months ended
28 February 2015 were realised losses of GBP335,000 and unrealised
losses of GBP4,892,000.
4. Return per ordinary share
The revenue loss per ordinary share is based on a net loss after
taxation of GBP792,000 (31 August 2014: GBP184,000) and on a
weighted average of 39,570,012 (31 August 2014: 39,122,895)
ordinary shares in issue during the period.
The capital loss per ordinary share is based on a net capital
loss after taxation of GBP5,227,000 (31 August 2014: GBP10,117,000)
and on a weighted average of 39,570,012 (31 August 2014:
39,122,895) ordinary shares in issue during the period.
5. 9% Convertible Unsecured Loan Stock 2017
Nominal value of
CULS
GBP'000
------------------------------------- -----------------
Opening balance at 1 September 2014 4,850
Issue of CULS 150
------------------------------------- -----------------
Balance at the end of the period 5,000
------------------------------------- -----------------
On 7 March 2014, the Company issued GBP4,850,000 9% Convertible
Unsecured Loan Stock 2017 ('CULS') and 4,850,000 warrants (for nil
consideration on the basis of one warrant for every GBP1 of CULS
subscribed). A further GBP150,000 CULS and 150,000 warrants were
issued on 28 November 2014.
As at 28 February 2015, the Company had issued GBP5,000,000 CULS
and 5,000,000 warrants.
On 30 October 2014, the Company's CULS were admitted to listing
on the Channel Islands Securities Exchange Authority Limited.
The CULS are convertible in amounts of multiples of GBP50,000
nominal of loan notes into ordinary shares at the option of the
holder of the CULS at the conversion price per ordinary share,
which for the period from 7 March 2015 (the first anniversary) to
the business day preceding the second anniversary is the higher
of:
(i) the 15-day Volume Weighted Average Price ('V WAP') for the
ordinary shares calculated on the first anniversary of the CULS
capped at GBP1.00 per ordinary share and
(ii) the sum of GBP0.75, from the first anniversary of the CULS
until the business day preceding the second anniversary of
CULS.
The 15-day V WAP based on the mid-market share price calculated
on the first anniversary was GBP0.2089. The conversion rate will
therefore be GBP0.75 for the year to 6 March 2016.
From 7 March 2016 (the second anniversary) until the redemption
of the CULS the conversion price per ordinary share will be the
higher of:
(i) the 15-day V WAP for the ordinary shares calculated on the
second anniversary of CULS capped at GBP1.00 per ordinary share
and
(ii) the sum of GBP0.50.
V WAP is the volume weighted average price and is a measure of
the average price within a time period.
Warrant instrument
The warrants are unlisted and are exercisable up to the fifth
anniversary of admission in amounts or multiples of 50,000 warrants
at GBP1.00 per ordinary share.
6. Reserves
Share premium Capital reserve Revenue reserve
GBP'000 GBP'000 GBP'000
-------------------------------- ---------------- ------------------ ------------------
Opening balance as 1 September
2014 36,504 (10,117) (184)
Losses on investment - (5,227) -
Retained net revenue expense
for the period - - (792)
At 28 February 2015 36,504 (15,344) (976)
-------------------------------- ---------------- ------------------ ------------------
7. Net Asset Value per ordinary share
The net asset value per ordinary share is based on net assets of
GBP20,580,000 (28 February 2014: GBP50,000, 31 August 2014:
GBP26,599,000) and on 39,570,012 (28 February 2014: 50,000, 31
August 2014: 39,570,012) ordinary shares, being the number of
ordinary shares in issue at the period end.
8. Related Party Transactions and fees paid to RDP Fund Management LLP
The Board of Directors is considered to be a related party. No
Director has an interest in any transactions which are, or were,
unusual in their nature or significant to the nature of the
Company.
Mr N Paris is an employee of LIM Advisors which is a manager of
LIM Asia Multi-Strategy Fund ('LIM'). LIM is the largest holder of
the Company's CULS and is authorised to appoint a director to the
Board to represent its interest. Mr N Paris is the representative
appointed on behalf of LIM.
The Directors of the Company received fees for their services.
Total fees for the period were GBP36,000 (31 August 2014:
GBP43,000) of which GBP16,000 (31 August 2014: GBP22,000) remained
payable at the period end.
RDP Fund Management LLP ('RDP') received GBP165,000 (31 August
2014: GBP204,000) during the period of which GBP52,000 (31 August
2014: GBP50,000) remained payable at the period end.
9. Post Balance Sheet Events
Following the first anniversary of the CULS the Company has
written to all CULS holders reminding them of the change to the
conversion terms which are detailed in Note 5 above.
10. Accounts
The results for the six months ended 28 February 2015 and 28
February 2014, which have not been reviewed by the Company's
auditors pursuant to the Auditing Practices Board guidance on
'Review of Interim Financial Information', constitute non-statutory
accounts in terms of Section 434 of the Companies Act 2006. The
latest published accounts which have been delivered to the
Registrar of Companies are for the year ended 31 August 2014; the
report of the auditors thereon was unqualified and did not contain
a statement under Section 498 of the Companies Act 2006. The
abridged financial statements shown above for the year ended 31
August 2014 are an extract from those accounts.
The interim report and accounts for the six months ended 28
February 2015 will be posted to shareholders and made available on
the website www.grit.london. Copies may also be obtained from the
Company Secretary, R&H Fund Services Limited, 15-19 York Place,
Edinburgh, EH1 3EB.
Directors' Statement of Principal Risks and Uncertainties
The risks, and the way in which they are managed, are described
in more detail in the Strategic report contained within the Annual
Report and Financial Statements for the year ended 31 August 2014.
In the opinion of the Director's the Company's principal risks and
uncertainties have not changed materially since the date of the
report and are not expected to change materially for the rest of
the Company's financial year.
Statement of Directors' Responsibilities in respect of the
Interim Report
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting' and gives a
true and fair view of the assets, liabilities, financial position
and profit of the Company;
-- the Chairman's Statement and Investment Manager's Review
(together constituting the Interim Management Report) include a
fair review of the information required by the Disclosure and
Transparency Rules ('DTR') 4.2.7R, being an indication of important
events that have occurred during the period and their impact on the
financial statements;
-- the Statement of Principal Risks and Uncertainties referred
to above is a fair review of the information required by DTR
4.2.7R; and
-- the condensed set of financial statements includes a fair
review of the information required by DTR 4.2.8R, being related
party transactions that have taken place in the period and that
have materially affected the financial position or performance of
the Company during the period.
On behalf of the Board
Lord St. John
Chairman 28 April 2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUMCCUPAGAR
Grafico Azioni Grit Investment (LSE:GRIT)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni Grit Investment (LSE:GRIT)
Storico
Da Lug 2023 a Lug 2024
