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GRIT seeking to unlock value in resource juniors

GRIT seeking to unlock value in resource juniors

Global Resources Investment Trust (LON:GRIT) is unlocking value in junior resource stocks, notes research house Edison.

GRIT is a new fund, which invests in such firms and is managed by Sam Hutchins and Kjeld Thygesen, building on their success of the Resources Investment Trust, which was founded in 2002.

Edison Analyst Gavin Wood said the true value of the group, or discount compared to its share price, has not yet been established since there had been no trading in GRIT shares since it was admitted to the LSE, as all shares are held by portfolio companies that have agreed to a six-month lock-up.

But there are plans for a second placing, which should enable the portfolio companies to access the cash required to finance their projects.

"While NAV [net asset value] has declined since GRIT’s launch, investors should consider that acquiring shares in the planned secondary placing provides exposure to the potential re-rating of the portfolio once the companies access the cash required to finance their projects," he said.

"The managers seek to identify companies where factors such as size, funding requirements and political risk have created a valuation opportunity. The managers also look for businesses with growth opportunities comprising development of low cost reserves and application of new technologies to convert marginal deposits," he noted.

GRIT's top three holdings, representing 29% of its portfolio, are Arakan Resources (GXG:ARK), Anglo African Minerals (GXG:AAM) and Tirex Resources (CVE:TXX).

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December 05 2014

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