Source - LSE Regulatory
RNS Number : 0338U
Mineral & Financial Invest. Limited
31 March 2021
 

Mineral & Financial Investments Limited

Interim Results (unaudited) for the Six Months Ended 31 December 2020

 

HIGHLIGHTS:

·    Unaudited fully diluted net earnings for the first 6 months of the fiscal 2021 period were 0.6p per share, compared to 0.7p for the same period last year.

·    NAV per share at 31 Dec 2020 up 6.0% vs. same period last year, to 16.1p

·    The 5 Year Compound Annual Growth Rate (CAGR) of the NAV per share is 26.7%

·    M&FI has outperformed the FTSE 350 Mining Index and GSCI during the past 5 years

·    Strong Improvement in Sterling neutralized £435K of NAV gains in the period

·     Company is debt free, with a good cash balance and a strong Working Capital position

GEORGE TOWN, CAYMAN ISLANDS, March 31, 2021 - Mineral and Financial Investments Limited (LSE-AIM: MAFL) ("M&FI" or the "Company") is very pleased to announce its unaudited interim results for the six months ended 31 December 2020.

CHIEF EXECUTIVE OFFICER'S STATEMENT:

The Company generated a profit after-tax of £207K and a fully diluted EPS gain of 0.6p per share compared to a profit after-tax of £247K and a fully diluted EPS gain of 0.7p per share for the same period last year.  The NAV per share increased 6.0% from 31 December 2019 to 16.1p or £5,681K, a new high for M&FI. 

The Company has increased its cash position to £578,000. The NAV growth was negatively affected by a corrective phase in precious metal prices and continued strength of the GBP versus the USD in the period. Although we reduced our precious metals weightings in the Tactical Portfolio, we did retain certain holdings which corrected along with the price of gold and silver.  Additionally, the British Pound was up 10.1% versus the US Dollar in the past six months, since our most recent year end (30 June 2020). Virtually all of our investments are directly, or indirectly, valued in US dollars and we report in British Pounds, thus the strong performance of the British Pound has caused significant headwinds to our NAV performance. Had the GBP remained unchanged from 30 September 30, 2020 our NAV would have been £250K higher, and had the June 30, 2020 Currency levels been maintained our NAV would be £435K higher.

One year ago, we stated that we remained optimistic that zinc markets would recover from the anaemic price levels of US$1,800/t reached in March of 2020. They have since reached US$2,900/t in February 2021. Additionally, and importantly, spot Tolling Charges (TC) at zinc refineries are down from a high of $300/t in February 2020 to US$65/t[1] in February 2021eriod due to a reduction on zinc production from China resulting in refineries scrambling to meet their capacity. These are all positives for our investment in zinc, particularly Redcorp, Ascendant and our recent investment in Rathdowney Resources. Ascendant and Redcorp (M&FI own 75%) continue to make progress on the Lagoa Salgada project, and they are completing a drilling program which should lead to drill results being available in the next 6 to 8 weeks.

Your company's portfolio is overweight in precious metals. As mentioned above, we reduced our weighting in the sector, but did not eliminate entirely and thus our performance was negatively affected by the correction in the gold price from the highs of US$2,068/oz. We have begun adding back to our precious metal holdings after the price of gold pierced through the 1,700/oz level.    

The following is a summary of the NAV, updated to include the unaudited NAV calculation:

 

31 Dec 2016

FYE

31 Dec 2017

FYE

30 Jun 2018

FYE

30 Jun 2019

FYE

31 Dec 2019

Q2

31 Dec 2020

Q2

CAGR (%)

2020/2016

NET ASSET VALUE (NAV) (,000)

£1,494

£2,603

£2,623

£5,114

£5,361

£5,681

39.6%

NAV Per Share (FD)

6.2p

7.4p

7.5p

14.5p

15.2p

16.1p

26.7%

FTSE 350 Mining Index

14,799

18,719

18,877

20,688

19,049

21,699

10.0%

Goldman Sachs Commodity Index

398.20

442.44

487.44

425.36

439.58

409.46

0.7%

 

Tactical Portfolio:

The purpose of the Tactical Portfolio is to allow M&FI flexibility to take advantage of short-term opportunities across asset classes in high quality names, whilst remaining liquid enough to deploy working capital in attractive investment opportunities when available. We took a firmly positive view on gold in early 2018. Any changes in our tactical holdings in precious metals are trading decisions around our long-term bullish attitude towards precious metals - which remains unaltered.

Our largest tactical holding is Barrick Gold, which is amongst the largest gold producers in the world. The value of our holding was down 22.6% in GBP, but only down 12.5% in USD. We initiated the position subsequent to the announced merger/acquisition of Randgold Resources. The acquisition of Randgold necessitated its removal from the FTSE indices, we understand that many institutional investors framed by investment mandate restrictions were forced to divest of their positions which we believe resulted in abnormal selling pressure. We believe that Barrick continues to improve its operations under the strong leadership of its new CEO, formerly of Randgold will continue to drive operational and strategic efficiencies resulting improvement relative to its history and that of its peers.

Also, part of Tactical Portfolio is Ascendant Resources. We are pleased to see the shares doubling in value in the quarter after Ascendant completed a financing. Additionally, Ascendant announced an update to their resource which aided in the upward valuation of the company.  We made a small investment in a company called Rathdowney Resources Ltd. It is a Canadian exploration/development company with an inferred resource of 24.4Mt with a Zinc Equivalent grade of 7.02% (5.53% Zinc; 1.49% Lead) at a project in Poland called Olza.

We were, and continue to be, concerned that there is a disconnect between overall equity market performance and the economic performance. As a defensive move to protect we initiated a copper put position which was meant as a hedge against broad market corrections. We believe that the concept was sound, but the timing was poor. We have since flattened the position, but it negatively affected performance in the period.

The Tactical Portfolio, as of December 31, 2020, includes:

Company

Development Stage

Type of Security

Primary Commodity

Geographic Area of Activities

Ascendant Resources

Exploration

Common Equity

Zn, Pb, Cu, Au, Ag

Portugal

Barrick Gold

Production

Common Equity

Gold, Copper

Global

Resolute Mining

Production

Common Equity

Gold

W.Africa, Australia

ZKB Gold ETF

Metal

ETF

Gold

N/M

ZKB Silver ETF

Metal

ETF

Silver

N/M

Barclays Bank

Food Commodities

Derivative

Food Commodities

N/M

IamGold Corporation

Production

Common Equity

Gold

Canada, West Africa, South America

Wisdom Tree

Metal

Derivative

Copper

N/M

Rathdowney Resources

Development

Common Equity

Zinc/Lead

Poland

Draegerwerk AG

Production

Common Equity

Medical & Safety Technology

Global

UBS Gold

Metal

ETF

Gold

N/M

 

Strategic Portfolio:

After the period end, we were pleased to announce the resource update at Lagoa Salgada South which is operated by Ascendant Resources and our 75% owned investee Redcorp Empreedimentos Mineiros Lda. (Redcorp) (see announcement dated 3 March 2021). The new Mineral Resource Estimate was prepared in accordance with Canadian National Instrument 43-101 ("NI 43-101") by Micon International (Micon) and resulted in a significant upgrade and expansion of the resources at the South Zone at the Lagoa Salgada Volcanogenic Massive Sulphide ("VMS") Project. The South Zone is less than 700m from the North Zone. The Lagoa Salgada North Zone hosts a zinc rich Measured and Indicated resource of 10.334M tonnes (using 2.9 % cut-off grade) at an Avg ZnEq[2] grade of 9.06% and an Inferred resource of 2.502M tonnes (using a 2.8% cut-off grade) grading 5.93% ZnEq2 (See RNS of January 14, 2020).

Golden Sun Exploration (Golden Sun) has succeeded in the re-instatement of its mining licences, which it voluntarily suspended 5 years ago, through application to the Costa Rican government. This licence re-instatement was a cornerstone of the business plan and will allow Golden Sun to expand its production from the self-funding "pilot plant' phase of production to a staged expansion and resumption of full mining and processing at the BellaVista Mine, located in West Central Costa Rica. Furthermore, we understand Golden Sun has built up a growing level of local and governmental support due to its operations and stakeholder engagement. This has resulted in Golden Sun being seen as an acceptable mine operator in environmentally sensitive Costa Rica. Due in large part to Golden Sun's status, exploration subsidiary Terra Sun, has secured the exploration rights from the government to a nearby project called Libano, which had been a Newmont Gold project. Additional exploration projects which have failed to meet work commitments expected by the Costa Rican Government are being reviewed by Golden Sun. Operationally, heap leach recoveries have been below target due to insufficient grind size and oxygenation, which management is addressing.

The Strategic Portfolio allows M&FI to assess the three key fundamentals to a successful investment in the sector: management, finance and geology.  We can change the first two of these and so we exercise in depth due diligence on geology.  As such we are constantly reviewing potential investments filtering through the many underfunded projects left struggling by 10yrs of underperformance.  The Board continues to like zinc and gold which is well represented in both portfolios and is reviewing investments in other commodities, notably copper, with the potential to outperform.

The Strategic Portfolio, as at December 31, 2020, includes:

Company

Development Stage

Type of Security

Primary Commodity

Geographic Area of Activities

Redcorp Empreedimentos Mineiros Lda.

Exploration

Common Equity

Zn, Pb, Cu, Au, Ag

Portugal

Cap Energy

Exploration

Common Equity

Oil & Gas

Senegal & Guinea Bis.

Cerrado Gold

Production / Exploration

Common Equity

Gold

Argentina / Brazil

Golden Sun Mining

Production

Convertible loan

Gold

Costa Rica

Ideon Technologies

Development

Common Equity

Mineral Explo. Tech.

Global

 

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.

 

On behalf of the Board

Jacques Vaillancourt

 

FOR MORE INFORMATION:

Jacques Vaillancourt, Mineral & Financial Investments Ltd.                        +44 777 957 7216

Katy Mitchell and Matthew Chan, WH Ireland Limited                  +44 207 220 1666

Jon Belliss, Novum Securities Limited                                          +44 207 399 9400

Dominic Baretto - Yellow Jersey PR Limited                                +44 203 004 9512

 

Statement of comprehensive Income

for the 6 months ended 31 December 2019

 

 

UNAUDITED

UNAUDITED

AUDITED

 

 

6 months to

31 December

2020

6 months to

31 December

2019

12 months to

30 June

 2020

 

Note

£'000

£'000

£'000

Continuing operations:

 

 

 

 

Investment income

 

2

1

3

Net gains on investments

 

372

399

723

 

 

 

 

 

Total income

 

374

400

726

Operating expenses

 

(152)

(144)

(321)

Other gains and losses

 

(4)

(9)

(24)

 

Profit before taxation

 

218

247

381

 

Taxation expense

 

 

 

(11)

 

-

 

(28)

Profit for the period attributable to owners of the Company

 

207

247

353

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to owners of the Company during the period

3

 

pence

 

pence

 

pence

Basic:

 

0.6

0.7

1.0

Diluted:

 

0.6

0.7

1.0

 

 

 

Statement of Financial Position

as at 31 December 2020

 

 

 

UNAUDITED

UNAUDITED

AUDITED

 

 

31 December

2020

31 December

2019

30 June

2020

 

 

£'000

£'000

£'000

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

Financial assets

 

5,311

5,105

5,315

Trade and other receivables

 

81

70

81

Cash and cash equivalents

 

578

364

275

 

 

5,918

5,539

5,671

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

Trade and other payables

 

156

126

127

Convertible unsecured loan notes

 

10

10

10

 

 

166

136

137

NET CURRENT ASSETS

 

5,752

5,403

5,534

NON-CURRENT LIABILITIES

 

 

 

 

Deferred tax provision

 

(71)

(42)

(60)

 

 

 

 

 

 

 

 

 

NET ASSETS

 

5,681

5,361

5,474

 

 

 

 

 

EQUITY

 

 

 

 

Share capital

 

3,096

3,095

3,096

Share premium

 

5,892

5,886

5,892

Loan note equity reserve

 

6

6

6

Share option reserve

 

23

23

23

Other reserves

 

15,736

15,736

15,736

Retained earnings

 

(19,072)

(19,385)

(19,279)

SHAREHOLDERS' EQUITY

 

5,681

5,361

5,474

 

 

 

Statement of Changes in equity

for the 6 months ended 31 December 2020

 

 

Share

capital

Share

premium

Loan note

reserve

Share option reserve

Other reserves

Accumulated

losses

Total

equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

At 30 June 2019

3,095

5,886

6

23

15,736

(19,632)

5,114

Profit for the 6 months to

31 December 2019

-

-

-

-

-

247

247

At 31 December 2019

3,095

5,886

6

23

15,736

(19,385)

5,361

Profit for the 6 months to

30 June 2020

106

106

Share issues

1

6

7

At 30 June 2020

3,096

5,892

6

23

15,736

(19,279)

5,474

Profit for the 6 months to

31 December 2020

-

-

-

-

-

207

207

 

At 31 December 2020

3,096

5,892

6

23

15,736

(19,072)

5,681

                                                                               

 

Statement of Cash flows

for the 6 months ended 31 December 2020

 

 

 

UNAUDITED

UNAUDITED

AUDITED

 

 

6 months to

31 December

2020

6 months to

31 December

2019

12 months to

30 June

 2020

 

 

£'000

£'000

£'000

 

 

 

 

 

OPERATING ACTIVITIES

 

 

 

 

Profit/(loss) before taxation

 

218

247

381

Adjustments for:

 

 

 

 

Net gains on investments

 

(372)

(399)

(723)

Investment income

 

(2)

(1)

(3)

Tax paid

 

-

-

(10)

Operating cashflow before working capital changes

 

(156)

(153)

(355)

(Increase)/decrease in trade and other receivables

 

52

8

(3)

Increase/(decrease) in trade and other payables

 

29

38

39

Net cash outflow from operating activities

 

(75)

(107)

(319)

INVESTING ACTIVITIES

 

 

 

 

Purchase of financial assets

 

(906)

(474)

(1,279)

Disposal of financial assets

 

1,282

720

1,639

Investment income

 

2

1

3

Net cash (outflow)/inflow from investing activities

 

378

247

363

 

FINANCING ACTIVITIES

 

 

 

 

Proceeds of share issues

 

-

-

7

 

 

-

-

7

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

303

140

51

Cash and cash equivalents at start of period

 

275

224

224

 

 

 

 

 

Cash and cash equivalents at end of period

 

578

364

275

 

 

Notes to the unaudited interim statement

for the 6 months ended 31 December 2020

 

1. General information

The Company is a limited company quoted on AIM, a market of the London Stock Exchange, and is registered in the Cayman Islands.

The address of its registered office is One Nexus Way, Camana Bay, Grand Cayman, KY1-9005, Cayman Islands.  The financial statements are presented in Pounds Sterling which is the Company's functional and presentational currency.

 

 

2. Basis of preparation

The interim financial statements of Mineral & Financial Investments Limited have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and on the historical cost basis using the accounting policies which are consistent with those set out in the Company's Annual Report and Accounts for the year ended 30 June 2020.

This interim financial information for the 6 months to 31 December 2020 was approved by the board on 30 March 2021.

The unaudited interim financial information for the 6 months to 31 December 2020 does not constitute statutory accounts. The comparative figures for the year ended 30 June 2020 are extracted from the statutory financial statements which contain an unqualified audit report.

 

3. Earnings per share

 

The basic and diluted earnings per share is calculated by dividing the profit/(loss) attributable to owners of the Company by the weighted average number of ordinary shares in issue during the year.

 

 

6 months to

31 December

2020

6 months to

31 December

2019

12 months to

30 June

 2020

 

 

£'000

£'000

£'000

 

Weighted average number of shares for calculating basic earnings per share

35,135,395

35,037,895

35,080,784

 

Weighted average number of shares for calculating fully diluted earnings per share

35,192,285

35,064,391

35,146,295

 

4. The interim report is available to view and download from the Company's website: www.mineralandfinancial.com

 

 

 

[1] Wood Mackenzie & BMO Capital Markets

[2] ZnEq% = ((Zn Grade*25.35)+(Pb Grade*23.15)+(Cu Grade * 67.24)+(Au Grade*40.19)+(Ag Grade*191.75))/25.35

 

 

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