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Mineral & Financial - Quarterly Net Asset Value and Operational Update

RNS Number : 8296M
Mineral & Financial Invest. Limited
14 May 2020


Quarterly Net Asset Value and Operational Update





·    Net Asset Value[1] as at 31 March 2020 was £5,333,187, up 10.4% yr/ yr from £4,832,434

·    Net Asset Value Per Share (FD) at 31 March 2020 was 15.1p, up 10.6% vs. 13.6p a yr. ago.

·    Global impact of COVID-19 affected NAVPS Q3 performance negatively by -0.6% vs Q2.

·    Significant overweight of precious metals partially helped protect the NAV performance.

·    Stronger US dollar protected portfolio performance despite market turmoil.


George Town, Cayman Islands - 14 May 2020 - 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 31 March 2020. At the end of the third quarter the NAV was £5,333,187, up 10.4%, from £4,832,434 one year ago. The Net Asset Value Per Share, as at 31 March 2020, was 15.11p, up 10.6% from one year ago. Earnings for the first 9 months of our fiscal year are £212,314, or 0.60p. The Company's working capital, as at 31 March 2020 was £5,375,187[2].

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



31 March 2016

31 March 2017

31 March 2018

31 March


Dec. 31


31 March


2020/ 2019

% Change

2020 / 2016

CAGR (%)

Net Asset Value


















FTSE 350 Mining Index









GS Commodity Index










Global sentiment and expectations have changed since our last update. In the previous quarter the Corona Virus was seen as a local health concern in remote Wuhan, China. Since then we have learned much: Where Wuhan is; What a Corona Virus and COVID 19 are; What a Pandemic is, and; What social and economic impact a Pandemic has. Since 31 December 2019, COVID-19 has caused a necessary and voluntary global recession. This would appear to be, by far, the most economically damaging pandemic in modern history. There are, as we write these comments, signs that partial lifting of the restrictions is beginning to be considered in certain quarters, despite concerns of a second wave of infection. The message of this update is to provide our shareholders an inventory of what our performance has been in the past quarter and provide some sense of the factors we are considering for how we position our investments for the near future.


As at 31 March 2020, the unaudited Net Asset Value was £5,333,187, equating to 15.11p per share on a fully diluted basis.  The Company's tactical portfolio broadly benefited from a 5.5% appreciation of the US dollar versus the British Pound (GBP).  Additionally, gradually increasing our weighting in precious metals from Q4 2018 was a net positive for our performance. Nevertheless, the favourable benefit of our precious metals' allocation decision was muted due to the quarter-end sell off of precious metals. Gold started the year, around $1,510/oz, by the second week of march it had reached $1,680/oz (+11.3%). During the next 10 days it sold down to $1,470 (-12.5%) as investors sold their gold holdings, when virtually all else sold off aggressively. Precious metals have since more than recovered and stand at $1705/oz, as have the underlying equities, which is not fully captured in this periodic performance measurement of the portfolio. Base metals have been severely affected by the economic slowdown. The Goldman Sachs Commodity index, which includes hydrocarbons, was down 39.4% on a year over year basis, but down a stunning 42.6% in the period between 31 March 2020 and 31 Dec 2019. During the quarter base metals were very badly hurt, copper was down 23%, Zinc down 20.4%, Aluminium down 18.8%.

The IMF's April 2020 World Economic Outlook, which we regularly turn to as a reliable measure of global economic activity, now expects global economic activity to decline by 3.0% in 2020. The previous IMF estimate of global economic activity, issued in January, called for global growth of 3.3%, a 6.3% reversal in 3 months. We believe that the economic impact may well be greater than these IMF forecasts. We believe there will be some marginal changes to consumption which will cause economic echoes well into next year. The IMF forecasts calls for strong economic growth in 2021. However, we note, the IMF forecasts "Emerging and Developing" economies to end 2021 ahead of where they began 2020, whilst the "Advanced Economies" will not have recouped these economic losses by the end of 2021. The recent marginal growth for commodities generally, and metals specifically has come from Emerging and developing economies.  


(April 2020)




2020 (E)


2021 (E)


2020 (E)


2021 (E)


World Output






Advanced Economies






Emerging & Developing Economies







The impact of the global lockdown will not solely be limited to the economic slowdown. There will also be structural and behavioural changes that will impact the economy for years to come, not the least on "bricks and mortar" businesses. Additionally, businesses that finance and/or support these impacted economic segments will also be affected. The directors continue to believe that there are significant investment opportunities within the metals and mining sectors. In the face off such a uncertain outlook, we will remain on course, but begin to ensure that we are as nimble as possible.


M&FI closed certain positions in the quarter, notably we profitably sold our holdings in ProShares UltraPro Short QQQ ETF's, Newmont Gold and Victoria Gold.  We booked losses on the sale of Encana (now called Onintiv) and Avrupa.  We have added Mandalay Resources, a gold producer with 4 mines (Chile (2), Sweden and Australia) which has been a strong performer. The investment thesis here is that it is a gold producer which will have both a production lift and cost reduction in 2020.  We also added Endeavour Mining, a west African gold producer during the period. Since we acquired our investment the company has announced that it plans to merge with Canadian SEMAFO mining company also focused in West Africa. Should it complete, the resulting combined company will be the largest gold producer in West Africa holding 6 gold mines and 4 projects producing about 1.0 M oz of gold per year.

Additionally, the NAV was negatively impacted by the decline in the market value of the Company's shareholding in Ascendant Resources (ASND) during the period. Ascendant announced after the period end that it had sold the loss making El Mochito Mine, and all of its associated liabilities. The mine was most currently losing US$2.0M per month due to low zinc prices. The prospect of the $290/tonne refining tolling charges made the prospects for El Mochito in the short term unsustainable. The decision, though disappointing, was necessary. The share performance of ASND in the portfolio cost us £269,848 in performance this quarter.


The operator of the Lagoa Salgada has informed us that they plan to complete 7,700m of drilling on the project this year with the objectives of upgrading the resource from "indicated" to "measured" in the North section, expanding the resource in the south section and completing a metallurgical testing program. This program is expected to cost US$2.7M.

We increased our investment in Cerrado at US$0.50 per share, prior to it successfully acquiring the Don Mario Mine in Argentina. The acquisition of the mine for a total of US$45.0M was non-dilutive to the shareholder base, as it was achieved through the sale of a royalty which covered the US$15.0M initial payment to acquire 100%. The remaining US$30.0M to be paid is in three payments of US$10.0M every 24 months.  Cerrado is now in control of the Don Mario mine and is fully benefitting from the rise in the price of gold. The company continues to plan for a listing over the next 6 months, when capital markets have stabilized.

Golden Sun continues to meet mining targets, however gold production is lagging a little behind plan due to lower than planned gold recoveries from the heap leach pads. Metallurgical solutions are beginning to yield results and recoveries are improving. The company is now planning to introduce Carbon in Leach tanks which will get the recoveries up in to the >90% range. Golden Sun has been cash flow positive, helped by the price of gold offsetting the lower than planned leach pad recoveries. Our secured convertible note continues to accrue its 20% annual interest payments.    


M&FI is 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 privately owned.



Jacques Vaillancourt, Mineral & Financial Investments Ltd.                        +44 780 226 8247

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

Jon Belliss, Beaufort Securities Limited                                                       +44 207 382 8300





[1] All financial resutls reported for the period are unaudited.

[2] Current Assets of £5,464,589 less Current Liabilities of £89,402 = Working Capital of £5,375,187.

[3] The NAV calculation is subject to audit and is made on the basis that the Company has 35,135,395 shs. O/S (basic) and 35,465,395 shs. O/S (FD) in issue.

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