BAKER STEEL RESOURCES TRUST LIMITED
(Incorporated in Guernsey with registered number 51576 under the provisions of The Companies (Guernsey) Law, 2008 as amended)
23 January 2024
29 December 2023 Unaudited NAV Statement
Net Asset Value
Baker Steel Resources Trust Limited (the "Company") announces its unaudited net asset value per share at 29 December 2023.
Net asset value per Ordinary Share: 77.2 pence.
The NAV per share has increased by 16.3% versus the unaudited NAV at 30 November 2023 following the usual review of unlisted holdings at the year-end as outlined below. Over the full year 2023, the NAV per share has fallen by 6.3%.
The Company had a total of 106,462,502 Ordinary Shares in issue with a further 700,000 shares held in treasury as at 31 December 2023.
Investment Update
The Company's top 10 investments were as follows as a percentage of NAV:
| | 29 December 2023 | 31 December 2022 |
| Futura Resources Ltd | 36.3% | 27.8% |
| Cemos Group plc | 29.3% | 22.8% |
| Bilboes Royalty | 7.2% | 6.9%* |
| Caledonia Mining Corporation Plc | 5.4% | 9.2%* |
| Kanga Investments Ltd | 3.6% | 5.6% |
| Silver X Mining Corporation | 3.5% | 5.4% |
| Nussir ASA | 4.1% | 4.1% |
| Metals Exploration Plc | 3.0% | 1.7% |
| First Tin plc | 2.1% | 4.8% |
| Tungsten West Plc | 1.7% | 5.4% |
| Other Investments | 3.4% | 6.1% |
| Net Cash, Equivalents and Accruals | 0.4% | 0.2% |
*pro forma - Caledonia Mining shares and Bilboes royalty received from sale of Bilboes Gold
Full Year Adjustments to Carrying Values
The Company has carried out its normal review of its unlisted holdings, which it performs at the half-year and full year-ends. This review takes into account general market movements in mining equities, as well as specific factors, and an assessment of whether these should impact the carrying values of the Company's unlisted holdings. In addition, the Investment Manager updates its royalty models for the royalty interests it owns through Futura Resources, Bilboes and Polar Acquisition Limited ("PAL") to take account of the latest estimated production profiles of the underlying projects and commodity prices. The net present values produced by these royalty models are then discounted for development risk to arrive at a valuation.
The following is a summary of the key results of this review and the main changes to carrying values of the unlisted investments since 30 November 2023:
Futura Resources Ltd ("Futura")
The largest impact on the NAV has come as a result of a review of the valuation of Futura. In September 2023, Futura raised A$30 million through a convertible loan to bring its Wilton steel making coal mine into production. Development of the open pit at Wilton has exposed coal and first mined tonnage is expected to be shipped to the neighbouring Gregory Crinum wash plant in the first half of February, for processing and inaugural coal sales, also triggering the obligation for royalty payments to the Company. In addition, Futura is in advanced negotiations for A$35m of offtake finance for development of its second mine, Fairhill, which could then be brought into production within 6 months of Wilton.
The Company's investment in Futura takes three forms: a 1.5% gross revenue royalty on all future production from both mines; a A$4.6 million nominal investment in the September 2023 convertible, and an equity stake amounting to 23.4% of Futura on a fully diluted basis assuming conversion by all convertible holders.
The Company's royalty model has been adjusted for updated forecast coal prices and the development risk discount has been reduced to take account of the imminent move into production. This has resulted in an increase to the valuation of the royalty by 16% from December 2022 and a 43% increase since November 2023 (in Sterling terms).
The Company has examined a number of ways to value Futura's equity, including the pricing of the recent convertible, and comparison to listed Australian coal producers in terms of both forecast EBITDA and net present value, discounted for development status and being private. The value of the equity has been increased by 16% from December 2022 and a 64% increase since November 2023 (in Sterling terms). This values Futura at 2.9 times 2024 EBITDA (adjusted for debt and fully diluted) and 1.2 times 2025 EBITDA as forecast by Futura.
The value of the convertible is increased by 16% from November 2023 as a result of the increase in the equity value.
CEMOS Group Plc ("Cemos")
During the second half of 2023 Cemos commenced the construction of a compact calcination unit ("CCU") to enable it to produce its own clinker, the main consumable for Cemos's cement production facility in Morocco. The CCU plant is budgeted to significantly increase the margin of the current operations, potentially doubling EBITDA whilst also providing better security of supply of clinker. The CCU facility is expected to come into production later this year although the full benefit of it will not be realised until 2025. The Company has therefore decided to take a portion of the future benefits of the CCU into account in its valuation of Cemos. This has increased the carrying value at December 2023 by 25% since December 2022 and 14% from November 2023 (Sterling terms).
Kanga Investments Ltd ("Kanga")
The only other material change in the unlisted holdings is a 37% reduction in the value of Kanga since December 2022 due to a reduction in the market value of listed potash companies as a result of a weaker potash price (fall of 19% from November 2023).
Further details of the Company and its investments are available on the Company's website www.bakersteelresourcestrust.com
Enquiries:
Baker Steel Resources Trust Limited +44 20 7389 8237
Francis Johnstone
Trevor Steel
Deutsche Numis +44 20 7260 1000
David Benda (corporate)
James Glass (sales)
The Net Asset Value ("NAV") figure stated is based on unaudited estimated valuations of the underlying investments and not necessarily based on observable inputs. Such estimates are not subject to any independent verification or other due diligence and may not comply with generally accepted accounting practices or other generally accepted valuation principles. In addition, some estimated valuations are based on the latest available information which may relate to some time before the date set out above.
Accordingly, no reliance should be placed on such estimated valuations and they should only be taken as an indicative guide. Other risk factors which may be relevant to the NAV figure are set out in the Company's Prospectus dated 26 January 2015.
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