viewMineral & Financial Investment Limited

Mineral & Financial - Quarterly Net Asset Value and Operational Update

RNS Number : 7438Y
Mineral & Financial Invest. Limited
13 May 2019


Quarterly Net Asset Value and Operational Update





·     NAV per share on March 31st, 2019 was 13.65p, up 88.3% y/y, and +9.8% vs Dec 31st 2018

·     Commodity markets continue to be sluggish due to global trade concerns

·     Zinc prices have recovered slightly, but continue to weigh down the Strategic Portfolio and NAV performance

·     Redcorp has initiated its 2019 drilling program on the Lagoa Salgada project

·      Several new investments made in the gold sector in Q4-2018 and Q1-2019


George Town, Cayman Islands - May 13th, 2019 - 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 March 31st, 2019. The Company's tactical portfolio continues to be challenged by the softness in virtually all commodity prices.


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



March 31 2016

March 31 2017

March 31 2018

Dec 31


March 31


2019/2018 % Ch.

CAGR (%)

2019 / 2016

Net Asset Value (Basic)








Cost of Exercising Options








Total NAV (FD)








Net Asset Value Per Share (Basic)








Net Asset Value Per Share (FD)








Number of Shares in Issue (Basic)








Unexercised Options








Number of Shares (FD)










As at March 31st, 2019, the fully diluted, unaudited, Net Asset Value per share was 13.65p, up 88.3% year on year. The Company's cash position, as at the quarter end is £401,544, while its working capital is £4,832,434[1]. We continue to have no long term debt.


Over the past four years M&FI's NAV has risen at a compounded rate of 74.2% per annum, from £912,938 to £4.832M. The increase in the NAV is largely due to the progress being achieved at our Portuguese investment, Redcorp Empreedimentos Mineiros Lda ("Redcorp"). We carry our 75% investment in Redcorp at £2.4[2]m. Our partner, Ascendant Resources ("Ascendant"; ASND:CN) acquired 25% of Redcorp for £2.31M in June 2018 and invested US$2.2M in exploration in 2018, and has announced plans to invest an additional US$5.17M in exploration programs in 2019. If Ascendant fulfills its planned exploration program in 2019, it will have invested US$7.35M, above and beyond the purchase price of its 25% of Redcorp. We have referenced in several press releases the progress made through exploration at Redcorp with the work and progress being achieved by our partner Ascendant's exploration and operatorship of Redcorp.


The NAV was positively impacted by the improvement in the share price of Ascendant and the weakening of the GBP vs the CAD[3]. Zinc prices have improved 19.1% from the end of 2018. LME Zinc inventories continue to decline, and are now lower than their cycle lows of Q4 2007. We remain optimistic for the outlook of Zinc, despite the current trading challenges of the economic environment. We believe that Zinc will continue to outperform the base metals M&FI tracks. In the past quarter Zinc's rise  (+19.1%) was just behind Rhodium's (+21.5%) and Nickel's (+20.2%).



M&FI uses the IMF Economic studies to assess global economic performance due to its consistent, disciplined and global span. After strong growth in 2017 and early 2018, global economic activity slowed notably in the second half of last year, reflecting a confluence of factors affecting major economies. The 2018/19 IMF Economic Study ("IMF Study[4]") showed that China's growth declined following a combination of needed regulatory tightening to rein in shadow banking and an increase in trade tensions with the United States. The same study showed that the euro area economy lost more momentum than expected as consumer and business confidence weakened and car production in Germany was disrupted by the introduction of new emission standards; investment dropped in Italy as sovereign spreads widened; and external demand, especially from emerging Asia, softened. Elsewhere, natural disasters hurt activity in Japan. The IMF Study supported the view that trade tensions increasingly took a toll on business confidence and so financial market sentiment worsened, with financial conditions tightening for vulnerable emerging markets in the spring of 2018 and then in advanced economies later in the year, weighing on global demand.The IMF Study reports that conditions have eased in 2019 as the US Federal Reserve signaled a more accommodative monetary policy stance and markets became more optimistic about a US-China trade deal, but they remain slightly more restrictive than in the fall.

The global economic performance set out in the IMF Study, which is measured by economic output, continues to be positive, but the out look has darkened with the possibility of continued trade tensions between the USA and many of it s trading partners. Economic performance rose by 3.8% in 2017 and by 3.6% for 2018. The International Monetary Fund's (IMF) World Economic Outlook update, released on April 8, 2019 contains a downward revision to the IMF's expectations of 2019 forecast economic growth of 3.3% in 2019 and maintains a forecast of 3.6% for 2020. The report notes that the modest decline in the forecast is twinned with a significant increase in economic risk due to, amongst other matters, slowing German economic performance and ta urbulent Brexit. Additionally there are growing signs of economic decelaration in Asian economic performance. 

Although the US economy remains the world's largest economy, unsurprisingly, its global dominance diminishes annually. The IMF forecasts of US Economic output growth has been revised downwards and now expect the US economic growth to decline from +2.2% in 2018 to +1.8% in 2019 and to + 1.6% in 2020. In the last quarter of 2018 virtually all bond yields declined, as an acknowledgement of a slowing outlook, but US 10 Year government bond yields declined by 19% to 2.68%. The directors have observed that the result has been a general slowing of global economic activity and specifically causing pressure on metal prices. Base metals were all down in the final quarter of 2018. Those which MAFL track, Copper, Nickel, Aluminium, Zinc and Lead, were all down in the period, with an average price decline of 6.56% in the fourth quarter. The directors  continue to believe that global growth will be positive, however, economic performance diminished by the turbulence caused by USA's volatile trade negotiation tactics. Therefore MAFL will continue to gradually favour precious metal investments over base metal investments.


M&FI have initiated several new positions in the precious metal sector during the period, including in Barrick Gold, Alamos Gold, Trevali and latterly Cabral Gold and Avrupa. Additionally M&FI have also added a Copper ETF to the tactical portfolio. We have also added a position in EnCana Corporation. EnCana is a leading North American energy producer that is focused on growing its strong portfolio of diverse resource plays producing natural gas, oil and natural gas liquids. We have also added to our Trevali Mining  position. Glencore, Trevali's largest shareholder, has taken an active role in the company's activities and led a renewal of Trevali's management team (new CEO, CFO and the COO). Trevali Mining just published Q1 results, it reported EPS of $0.02, above the consensus of $0.01. Adjusted EBITDA was ahead of consensus at $44m.

Our small position in Toro Gold has benefited from a valuation lift. Toro recently completed a financing at £1.50 p/s, above our carrying value of £1.00 p/s. Additionally, Toro has posted its first full year of production and earnings - both were above guidance. Additionally, our Platinum position saw a 11.2% lift in its valuation during the period.



Ascendant Resources, as the operator of Redcorp, has begun a new 2019 exploration program as part of its earn-in agreement. The US$5.17M 2019 exploration program calls for a 15,000m drill program,  Metallurgical Testwork, Geophysical and Structural Interpretation studies, and by year end, a Preliminary Economic Assessment (PEA). Cerrado Gold, an investment we initiated in Q4-2018 is closing in on a possible new strategic investor for the company. Lastly, the Company is in the final stage of completing its due diligence on a possible investment in a gold mine located in central America, and we look forward to updating you in due course on progress with this investment.

Additionally, M&FI are 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 private, but are nearer to a cash flow generative stage than most of the publicly listed opportunities we are reviewing.



James Lesser, Mineral & Financial Investments Ltd.          +44 780 226 8247

Katy Mitchell and Jessica Cave, WH Ireland Limited        +44 161 832 2174

Jon Belliss, Novum Securities Limited                               +44 207 382 8300




Note: All listed investments, including investments on NEX, are valued at the closing bid price as at 31st March 2019. The Company has an investments in unquoted companies which are valued at the price at which these companies in last raised money, although this is subject to review.


[1] Current Assets of £4,905,139 less Current Liabilities of £72,705 = Working Capital of £4,832,434.

[2] We carry our 75% investment in Redcorp at £2.4m.  This is calculated by discounting the agreed-to future consideration payable to MAFL and its subsidiaries by Ascendant, and incorporating MAFL's residual ownership of Ascendant's exploration spending commitments.

[3] The Company holds 2.66% of Ascendant Resources in it's Tactical Portfolio

[4] www.imf.org (April 8, 2019)

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Market: AIM
Market Cap: £3.16 m

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