Baker Steel Resources’ share price rises 63.5%, discount narrows from 40% to 5.5% – Baker Steel Resources (BSRT) released its final report for the full year to 31st December 2017. The chairman noted that commodity prices consolidated on the gains made the previous year and then moved forward again towards the end of the year on the back of positive supply/demand dynamics. Mining equities followed this with the Euromoney Global Mining Index slightly down in the first half of 2017 but rising 21.8% in the second half to end up 20.7% on the year.
The company’s NAV moved broadly in line with the Euromoney Global Mining Index, being up 18.6%. The company’s share price rose 63.5% and the discount to NAV narrowed from 40% to 5.5% as at 29 December 2017 and 16% at the time of writing.
The chairman went on to say that, generally, the current global recovery has been supportive of sentiment towards the mining sector. The sub-sector of the market enjoying the most investor interest is that associated with electrification of motor vehicles and battery technology. Although the BSRT is not interested in jumping on the latest bandwagon especially in commodities with volatile and unclear supply and demand, copper is likely to be one of the key beneficiaries of electric cars and the company already has significant exposure to copper through its investments in Ivanhoe and Nussir. On the “battery metal” front the company has exposure to lithium and vanadium through PRISM Diversified Limited (formerly Ironstone Resources Ltd). In addition, the increasing use of silver for photovoltaic reinforces silver as a “green” metal and should drive demand.
More on Baker Steel Resources
The company’s investment objective is to seek capital growth over the long-term through a focused, global portfolio consisting principally of the equities, loans or related instruments of natural resources companies. The company invests predominantly in unlisted companies (Unquoted investments represented 80.6% of net assets 31/12/17, with quoted investments at 18.0% and 1.4% in cash) but also in listed securities (including special situations opportunities and less liquid securities) with a view to making attractive investment returns through uplift in value resulting from development progression of the investee companies’ projects and through exploiting value inherent in market inefficiencies and pricing anomalies.
Investment Policy
The core of BSRT’s strategy is to invest in natural resources companies, predominantly unlisted, that the Investment Manager considers to be undervalued and that have strong fundamentals and attractive growth prospects. Natural resources companies, for the purposes of the investment policy, are those involved in the exploration for and production of base metals, precious metals, bulk commodities, thermal and metallurgical coals, industrial minerals, energy and uranium, and include single-asset as well as diversified natural resources companies.
It is intended that unlisted investments be realised through an IPO, trade sale, management repurchase or other methods.
The company focuses primarily on making investments in companies with producing and/or tangible assets such as resources and reserves that have been verified under internationally recognised standards for reporting, such as those of the Australasian Joint Ore Reserves Committee (“JORC”). The company may also invest from time to time in exploration companies whose activities are speculative by nature.
The company has flexibility to invest in a wide range of investments in addition to unlisted and listed equities and equity-related securities, including but not limited to commodities, convertible bonds, debt securities, royalties, options, warrants and futures. Derivatives may be used for efficient portfolio management, hedging and for the purposes of obtaining investment exposure. The company may also have exposure from time to time to other companies within the wider resources and materials sector, including services companies, transport and infrastructure companies, utilities and downstream processing companies.
BSRT : Baker Steel Resources’s share price rises 63.5%, discount narrows from 40% to 5.5%