Mineral and Financial Investments Limited (LON:MAFL) said its net asset value (NAV) per share at the end of September 2020, was 15.77p, up 4.1% year-on-year.
The company, which as its name implies invests in natural resource companies, said its financial performance was hampered by sterling’s appreciation against the US and Canadian currencies; had those foreign exchange rates remained unchanged, NAV per share would have been 16.33p, up 7.9% on a year earlier.
The investment company’s “tactical portfolio” (excluding its cash holdings) increased in value by 17.1% in the year to the end of September.
As the price of gold headed towards US$2,000 an ounce the company took the opportunity to cream off some profits in overweighted gold positions.
The “strategic portfolio” rose in value by 2.2% from a year earlier, with the performance hit by a £480,000 provision it took regarding its holding in CAP Energy as the price of oil slumped during the coronavirus pandemic.
The price of Brent crude has since recovered from around US$42 a barrel at the end of September to around US$56 now but the company said it would wait until CAP has a “financing event” to review the valuation of its CAP stake.
Global sentiment and expectations continue to be in optimistic, in the opinion of Mineral and Financial Investments (M&FI).
“We believe that the full economic impact and ramifications of the altered corporate and individual practices and consumption patterns resulting from the global COVID 19 restrictions will be long lasting and financially disruptive. The debt markets are reflecting a changed environment - since June 30, 2020, US 10-year treasury yields have increased by 83.1% to 1.16% (from 0.63%), and yet the US dollar, as measured by the trade-weighted DXY Index is down 7.4% in the same period,” M&FI said in its operational update.
“Additionally, the financial aid being provided by governments around the world will need to be funded. This creates a real risk of higher taxes and higher interest rates which would negatively impact real disposable income. We do not believe that these issues are fully priced into capital markets. Nevertheless, we are optimistic that commodity pricing will benefit from constrained commodity production in 2020, some very modest global growth in 2021 and a weaker US dollar,” it added.
Earnings for the three months to the end of September – the first quarter of the company’s fiscal year – were £95,993p, equivalent to 0.27p per share.
The company’s working capital at the end of September stood at £5.63mln.