Annual Financial Report

RNS Number : 2771K

Baker Steel Resources Trust Ltd

15 April 2015

BAKER STEEL RESOURCES TRUST LIMITED

(Incorporated in Guernsey with registered number 51576 under the provisions of The Companies (Guernsey) Law, 2008 as amended)

15 April 2015

BAKER STEEL RESOURCES TRUST LTD

(the "Company")

Annual Report and Audited Financial Statements

For the year ended 31 December 2014

The Company has today, in accordance with DTR 6.3.5, released its Annual Audited Financial Report for the year ended 31 December 2014. The Report is available via www.bakersteelresourcestrust.com and will shortly be submitted to the National Storage Mechanism.

Further details of the Company and its investments are available on the Company's website www.bakersteelresourcestrust.com

Enquiries:

Baker Steel Resources Trust Limited +44 20 7389 8237

Francis Johnstone
Trevor Steel

Numis Securities Limited +44 20 7260 1000

David Benda (Corporate)

James Glass (sales)

HSBC Securities Services (Guernsey) Limited

Company Secretary + 44 (0)1481 717 851

DIRECTORS:		Howard Myles (Chairman)
		Edward Flood
		Charles Hansard
		Clive Newall
		Christopher Sherwell
		(all of whom are non-executive and independent)

REGISTERED OFFICE:		Arnold House
		St. Julian's Avenue
		St. Peter Port
		Guernsey
		Channel Islands

MANAGER:		Baker Steel Capital Managers (Cayman) Limited
		PO Box 309
		George Town
		Grand Cayman KY1-1104
		Cayman Islands

INVESTMENT MANAGER:*		Baker Steel Capital Managers LLP
		86 Jermyn Street
		London SW1Y 6JD
		England
		United Kingdom

STOCKBROKERS:		Numis Securities Limited
		10 Paternoster Square
		London EC4M 7LT
		United Kingdom

SOLICITORS TO THE COMPANY:		Norton Rose Fulbright LLP
(as to English law)		3 More London Riverside
		London SE1 2AQ
		United Kingdom

ADVOCATES TO THE COMPANY:		Ogier
(as to Guernsey law)		Ogier House
		St. Julian's Avenue
		St. Peter Port
		Guernsey GY1 1WA
		Channel Islands

ADMINISTRATOR & COMPANY SECRETARY:		HSBC Securities Services (Guernsey) Limited
		Arnold House
		St. Julian's Avenue
		St. Peter Port
		Guernsey GY1 3NF
		Channel Islands

*The Investment Manager was authorised as an Alternative Investment Fund Manager for the purposes of the Alternative Investment Fund Managers Directive ("AIFMD") on 22 July 2014.

SUB-ADMINISTRATOR TO THE COMPANY:		HSBC Securities Services (Ireland) Limited
		1 Grand Canal Square
		Grand Canal Harbour
		Dublin 2
		Ireland

CUSTODIAN TO THE COMPANY:		HSBC Institutional Trust Services (Ireland) Limited
		1 Grand Canal Square
		Grand Canal Harbour
		Dublin 2
		Ireland

SAFEKEEPING AND MONITORING AGENT		HSBC Institutional Trust Services (Ireland) Limited
		1 Grand Canal Square
		Grand Canal Harbour
		Dublin 2
		Ireland

AUDITOR:		Ernst & Young LLP
		Royal Chambers
		St. Julian's Avenue
		St. Peter Port
		Guernsey GY1 4AF
		Channel Islands

REGISTRAR:		Capita Registrars (Guernsey) Limited
		Longue Hougue House
		St. Sampson
		Guernsey GY2 4JN
		Channel Islands

UK PAYING AGENT AND TRANSFER AGENT:		Capita Registrars
		The Registry
		34 Beckenham Road
		Beckenham
		Kent BR3 4TU
		United Kingdom

RECEIVING AGENT		Capita Registrars
		Corporate Actions
		The Registry
		34 Beckenham Road
		Beckenham
		Kent BR3 4TU
		United Kingdom

PRINCIPAL BANKER:		HSBC Bank plc
		8 Canada Square
		London E14 5HQ
		United Kingdom

Investment objective

The investment objective of Baker Steel Resources Trust Limited (the "Company") is to seek capital growth over the long-term through a focused, global portfolio consisting principally of the equities, or related instruments, of natural resources companies. The Company invests predominantly in unlisted companies (i.e. those companies that have not yet made an initial public offering ("IPO")) but also in listed securities (including special situations opportunities and less liquid securities) with a view to exploiting value inherent in market inefficiencies and pricing anomalies.

Investment policy

The core of the Company's strategy is to invest in natural resources companies, predominantly unlisted, that the Investment Manager considers to be undervalued and 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.

The Company may take legal or management control of a company from time to time. The Company may invest in other investment funds or vehicles, including any managed by the Manager or Investment Manager, where such investment would be complementary to the Company's investment objective and policy.

There are no fixed limits on the allocation between unlisted and listed equities or equity-related securities and cash although, as a guideline, typically the Investment Manager will aim for the Company to be invested over the long-term as follows:

• between 40 and 100 per cent of the value of its gross assets in unlisted equities or equity-related securities;

• up to 50 per cent of the value of its gross assets in listed equities or equity-related securities;

• up to 10 per cent of the value of its gross assets in cash or cash-like holdings; and

• typically in 10 to 15 core positions to provide adequate diversification whilst retaining a focused core approach. Core positions will typically be between 5 per cent and 15 per cent of net asset value ("NAV") as at the date of acquisition.

The actual percentage of the Company's gross assets invested in listed and unlisted equities and equity-related securities and cash and cash-like holdings and the number of positions held may fall outside these ranges from time to time. For example, listed securities might exceed the above guideline following a significant number of IPOs or in certain market conditions and likewise cash balances may exceed the above guideline following the realisation of one or more investments or following the issue of new equity in the Company, pending investment of the proceeds.

The investment policy has the following limits:

• Save in respect of cash and cash-like holdings awaiting investment, the Company will invest or lend no more than 20 per cent in aggregate of the value of its gross assets in or to any one particular company or group of companies, as at the date of the relevant transaction.

• No more than 10 per cent in aggregate of the value of the gross assets of the Company may be invested in other listed closed-ended investment funds, except for those which themselves have stated investment strategies to invest no more than 15 per cent of their gross assets in other listed closed-ended investment funds.

Where derivatives are used for investment exposure, these limits will be applied in respect of the investment exposures so obtained.

The Company will avoid (a) cross-financing between the businesses forming part of its investment portfolio and (b) the operation of common treasury functions between it and the investee companies.

When deemed appropriate, the Company may borrow up to 10 per cent of NAV for temporary purposes such as settlement mis-matches. Borrowings will not however be incurred for the purposes of any Share repurchases.

The Investment Manager will not normally hedge the exposure of the Company to currency fluctuations.

Any material change in the investment objective, investment policy or borrowing policy will only be made with the prior approval of holders of Ordinary Shares by Ordinary Resolution.

CHAIRMAN'S STATEMENT

The bear market in the mining sector of the past few years continued during 2014, as illustrated by the Euromoney Global Mining 100 Index which fell 57.1% in Sterling terms during the four year period to 31 December 2014. The Company's investments were inevitably affected by this market background, and the Company has continued its policy of reviewing the valuation of its unlisted investments in relation to market movements at the half year and full year stages. As a result the Company's Net Asset Value per Ordinary Share ("NAV") fell 27.6% during the year.

The hardest hit sector was iron ore shares which fell sharply in response to an almost halving of the iron ore price during the year. The Company therefore marked down the value of its interests in Ferrous Resources and Ironstone Resources to reflect the falls of comparable iron ore companies. Although Black Pearl is also involved in producing iron ore it has maintained its value as the Company holds convertible debt rather than plain equity. Going forward, the Investment Manager where possible will seek to make new investments through structured instruments such as convertible debt which give a measure of downside protection whilst maintaining the equity exposure.

After the year end the Company successfully acquired a portfolio of assets which were approximately 90% common to the investments in the existing portfolio. This acquisition has not only increased the Company's interests in the majority of its investments at an attractive point in the mining cycle but should also increase the Company's influence over the management of the investee companies. The Investment Manager has identified further stakes in investments valued at approximately £60 million in which the Company already has an interest which might also be acquired in return for the issue of equity in the Company. One of the Board's aims in increasing the Company's net assets is to widen the universe of potential investors, thereby increasing the liquidity of the shares and potentially reducing the discount at which the shares might trade relative to net asset value.

The Board has also decided to introduce a discount management mechanism. From August 2015, the Company will set aside at least 50% of the aggregate net cash proceeds of realisations over the immediately preceding six month period and utilise this cash to buy back shares if they are trading at a discount in excess of 15 per cent. to NAV. In addition the Board intends to allocate 15 per cent. of the aggregate net realised cash gains achieved in the year for distribution to shareholders, which may be done through share buybacks, tender offers or dividend payments. This returns policy will commence following completion of the audit of the current financial year.

I would again like to thank all our shareholders for their continuing support of the Company, in particular those that subscribed during the recent Open Offer. The mining industry is particularly cyclical in its nature and the current downturn has been as long and as severe as any in recent history. Having experienced several such downturns, the Investment Manager is confident that the market is now close to or at the bottom of the current cycle.

Howard Myles

Chairman

13 April 2015

INVESTMENT MANAGER'S REPORT

FOR THE YEAR ENDED 31 DECEMBER 2014

Financial Performance

The audited undiluted Net Asset Value per Ordinary Share as at 31 December 2014 was 44.9 pence, a decrease of 27.6% in the year and a decrease of 54.1% from the Company's first net asset value ("NAV") calculated on 30 April 2010. During the year the Euromoney Global Mining 100 Index was down 15.4% (down 47.6% since 30 April 2010).

For the purpose of calculating the net asset value per share, unquoted investments are carried at fair value as at 31 December 2014 as determined by the Directors and quoted investments are carried at last quoted price as at 31 December 2014.

Net assets at 31 December 2014 comprised the following:

	£m	% net assets
Unquoted Investments	24.7	76.6
Quoted Investments	7.7	24.0
Net Cash Equivalents and Accruals	(0.2)	(0.6)
	32.2	100.0

Investment Update

Largest 10 Investments - 31 December 2014
Black Pearl Limited Partnership*	20.1%
Polar Silver Resources Limited/Argentum	17.2%
Bilboes Gold Limited	14.5%
Ivanhoe Mines Limited	10.1%
Gobi Coal and Energy Limited	8.5%
Metals Exploration Plc	8.1%
Global Oil Shale Group Limited	6.6%
China Polymetallic Mining Company Limited	5.0%
Ironstone Resources Limited	4.7%
Ferrous Resources Limited	3.0%
Other Investments	2.8%
Net Cash, Equivalents and Accruals	(0.6%)

Largest 10 Investments - 31 December 2013
Ivanhoe Mines Limited	18.9%
Black Pearl Limited Partnership	13.3%
Ironstone Resources Limited	12.6%
Gobi Coal & Energy Limited	12.5%
Bilboes Gold Limited	10.1%
Polar Silver Resources Limited/Argentum	8.7%
China Polymetallic Mining Company Limited	7.1%
Ferrous Resources Limited	6.3%
Metals Exploration plc	5.9%
South American Ferro Metals Limited	1.5%
Other Investments	2.3%
Net Cash, Equivalents and Accruals	0.8%

* less than 20% of the value of gross assets at the date of the last relevant acquisition

Investment Update

At the year end, the Company was fully invested, holding 16 investments of which the top 10 holdings comprised 97.7% of the portfolio by value. The portfolio is well diversified both in terms of commodity and geographical location of deposits. In terms of commodity the portfolio is focussed on the large liquid markets of iron ore, coal, copper, platinum group metals, nickel, silver, gold and oil. Its projects are located in Australia, Brazil, Canada, China, Democratic Republic of Congo, Indonesia, Mongolia, Morocco, the Philippines, Russia, South Africa and Zimbabwe.

The bear market in the mining sector continued during 2014 with the Euromoney Global Mining 100 Index falling 15.4% in Sterling terms and the FTSE Gold Mines Index falling 9.84% in Sterling terms. The Company's valuation policy for its unlisted investments takes into account the general market movements in comparable listed mining shares and the Net Asset Value fell 27.6% during the year largely as a result. The value of iron ore stocks was hit particularly hard following a sharp fall in the iron ore price during the year and as a consequence, Ferrous Resources and Ironstone Resources were marked down 63% and 73% respectively.

During the year, the Company made its first investment in the energy part of the mining sector through the acquisition of an interest in Global Oil Shale Group plc ("GOS"), a private oil shale explorer and developer whose key assets are the Julia Creek oil shale project in Queensland Australia and the Tarfaya project in Morocco. Oil shale is a fine-grained sedimentary rock containing organic matter that yields substantial amounts of oil and combustible gas upon destructive distillation. There is an important distinction between the type of projects that GOS has targeted and the hydraulic fracturing or "fracking", which has received so much publicity in recent years. Fracking is the process of drilling and injecting fluid into the ground at a high pressure in order to fracture shale rocks to release natural gas inside. The projects that GOS is seeking to develop are close to surface and are amenable to large scale strip mining methods. The mined shale is processed to release oil. One of the advantages of the process that GOS aims to use is that around half of the revenue generated will be from selling electricity to the local grid. Given that electricity prices tend to be much less volatile, the revenue stream will be less exposed to the major movements in the oil price as seen recently.

Despite the weak backdrop, the majority of the Company's investments made good operational progress on their projects although those at an earlier stage of development struggled to source funding to move their projects forward as fast as they would have liked. Black Pearl successfully completed the development of the first phase of its beach placer iron sands project in West Java, Indonesia but was then delayed by a new requirement for a permit to export its concentrate product. This permit was received in December 2014 and the first shipment was despatched that month. Despite the weakness of the iron ore price during the year, the Black Pearl project is expected to be one of the lowest cost operations in the world and its management estimates that it will be able to operate at around a 50% net margin even at current prices.

Metals Exploration plc is another investment that made good progress during the year. Construction of the 100,000 ounce per year Runruno gold mine has suffered a few months' delay but importantly the development remains within budget, is fully financed into production and is on course for commissioning and first gold production in the middle of 2015. This will mean that 6 of the top 12 investments in the portfolio will soon be in production and producing cash flow, which is particularly important for them to sustain activity during a downturn such as the one experienced recently.

Ivanhoe Mines Limited ("Ivanhoe") continued to move forward strongly on all three of its main projects during 2014. At its Platreef project in South Africa it completed a positive pre-feasibility study into the mine with a first phase of development envisaging an annual production rate of 433,000 ounces of platinum, palladium, rhodium and gold, plus 31 million pounds of nickel and copper. Importantly, Ivanhoe also gained government approval for its broad based black economic empowerment plan and received the mining right to put the mine into production. In the Democratic Republic of Congo, Ivanhoe commenced construction on the box cut for the initial portal to planned decline ramps. This will provide underground access to the proposed Kamoa copper mine having identified a high grade area to give a boost to the first phase of production. It also commenced definition drilling of its Kipushi copper-zinc-germanium-lead mine and reported some exceptional drilling results.

The recent devaluation of many producer currencies against the US Dollar together with the fall in the oil price has had the effect of widening margins for operations in those countries. For example the approximate 60% fall in the Russian Ruble against the US Dollar and the almost halving of the oil price would be expected to lead to a significant reduction in costs for Polar Silver's 50% owned Prognoz project.

In February 2015, the Company completed the acquisition of a portfolio of assets of which 90% was in investments in which the Company already had an interest. The two largest investments which were not common to the existing portfolio were Red 5 Limited, an Australian Stock Exchange listed gold producer and MagIndustries Corporation, a Toronto Stock Exchange listed potash development company.

Further details of each of these investments and the Company's other significant holdings are provided below.

Description of Largest Investments at 31 December 2014

(representing 97.7% by value of the portfolio)

Black Pearl Limited Partnership ("Black Pearl")

Black Pearl is a special purpose vehicle formed to invest in the Black Pearl beach placer iron sands project in West Java, Indonesia. The Company's investment is in the form of a limited partnership interest in Black Pearl. Black Pearl holds an exchangeable loan note issued by a holding company of the mine group, Rui Tong Limited. The loan note is due for repayment in March 2015 and is expected to be received during the two month moratorium period thereafter.

The Black Pearl concession area is 15,000 ha of which 1,600 ha has been drilled. JORC compliant Mineral Resources stand at 572 million tonnes grading 10% Fe. Black Pearl received the export permit required following changes to the Indonesian mining regulations at the beginning of December 2014 and made its first shipment of concentrate later that month. Off-take agreements have been signed with a number of Chinese steel mills for the full planned production of 20 million tonnes per annum.

Polar Silver Resources Limited ("Polar Silver")

Polar Silver is a private company which holds a 50% indirect interest in the Prognoz silver project ("Prognoz"), 444km north of Yakutsk in Russia. The Company's investments are in the form of shares in Polar Silver and loan notes in Polar Silver and its 100% owned subsidiary, Argentum, both of which are convertible into Polar Silver Shares.

A NI 43-101 compliant report by independent consultant Micon International Limited ("Micon") in July 2009, estimated an Indicated Resource of 5.86 million tonnes of ore grading 773 g/t silver containing 146 million ounces of silver and Inferred Resources of 9.64 million tonnes of ore grading 473 g/t silver containing 147 million ounces of silver at Prognoz. A NI 43-101 compliant preliminary economic assessment (PEA) by Micon envisages a mine producing an average of 13 million ounces of silver per annum.

Bilboes Gold Limited ("Bilboes")

Bilboes is a private Zimbabwean based gold mining company which owns four previously producing oxide mines in Zimbabwe. The oxide mines which were restarted in 2013 produced 7,800 ounces of gold in 2014, and are scheduled to produce approximately 10,000 ounces of gold in 2015.

In addition Bilboes has JORC compliant Indicated Mineral Resources of 29.3 million tonnes grading 2.12 g/t gold in the underlying sulphide mineralisation and an Inferred Mineral Resources of 30.0 million tonnes grading 2.03 g/t gold. Contained gold in the combined Indicated and Inferred sulphide resources totals 3,964,000 ounces. The mineralisation is open along strike and at depth so there is good potential for these mineral resources to be increased. A pre-feasibility study is underway to investigate a mine producing 100,000 to 200,000 ounces per annum, initially from open pit.

Ivanhoe Mines Limited (formerly Ivanplats Limited) ("Ivanhoe" )

Ivanhoe is a company listed on the Toronto Stock Exchange which holds the Kamoa copper project (95% owned) and Kipushi zinc mine (68% owned) both in the Democratic Republic of Congo ("DRC") and the Platreef nickel, platinum, palladium, copper and gold project (64% owned) in South Africa.

The Kamoa Project is located in the Kolwezi District of Katanga Province, the DRC's copper mining hub. An NI 43-101 compliant report, using a 1% copper grade cut-off, estimated Indicated Mineral Resources at 739 million tonnes grading 2.67% copper containing 19.7 million tonnes of copper. The resource statement also included 4.4 million tonnes of copper in Inferred Mineral Resources providing combined contained copper of 24.1 million tonnes, establishing Kamoa as the largest high-grade copper discovery in Africa and one of the largest in the world.

The Platreef Project is located on the Northern Limb of the PGM-bearing Bushveld Complex in South Africa. A revised NI 43-101 compliant report was published in March 2013. Indicated Mineral Resources were estimated at 214 million tonnes grading 4.1 grams per tonne (g/t) 4PE (platinum, palladium, gold and rhodium), 0.34% nickel and 0.17% copper, at a 2.0 g/t 4PE cut-off grade and at a cumulative, average true thickness of 24 metres. In addition, the estimate included Inferred Mineral Resources of 415 million tonnes grading 3.5 g/t 4PE, 0.33% nickel and 0.16% copper, at an average true thickness of 18.0 metres. The combined Indicated and Inferred Resources amount to 75.7 million ounces of 4PE. The Mining Right was issued in November 2014. The results of a positive pre-feasibility study were published on 8 January 2015 which envisaged a first phase development to produce 433,000 ounces 4PE plus 31 million pounds of nickel and copper per annum.

The Kipushi zinc/polymetallic mine in the DRC previously produced 60 million tonnes of ore at 11% zinc and 6% copper together with 120 tonnes of germanium from 1925-1993. Ivanhoe dewatered the existing shaft and is undertaking a drilling programme to extend the known mineralisation and define the mineral resources to NI 43-101 standards.

Gobi Coal & Energy Limited ("Gobi")

Gobi is an emerging coking coal producer based in Mongolia, which owns 100% of three open-cut coal development projects in south western Mongolia. Gobi's projects contain approximately 322 million tonnes of JORC resources and include more than 500,000 hectares of tenements.

Gobi's first project, Shinejinst, contains approximately 95 million tonnes of JORC reserves and 229 million tonnes of JORC resources and has completed site works in anticipation of the start of production which will depend on a recovery of the price of coking coal delivered to the Mongolian/Chinese border. At full production, Shinejinst is planned to produce approximately 5 million tonnes per annum of high quality, semi-soft coking coal product.

Metals Exploration plc ("Metals Exploration")

Metals Exploration is an AIM listed company which owns the Runruno gold project in the Philippines. A JORC compliant report estimated mineral resources of 1.39 million ounces of gold, and 25.6 million pounds of molybdenum with 1,050,000 ounces of gold reporting to the Measured and Indicated categories of which 900,000 ounces of gold fall within the Mining Proven & Probable Reserve category. Development of the Runruno mine commenced mid-2013 and once in full production is scheduled to produce approximately 100,000 ounces of gold per annum. The project is fully financed with commissioning and first production scheduled for mid 2015.

Global Oil Shale Group plc (''GOS'')

GOS is a private oil shale explorer and developer whose key assets are the Julia Creek oil shale project in Queensland Australia which has a JORC Compliant Indicated Resource of 240 million barrels published in May 2013 and an Inferred Resource of 1.9 billion barrels of shale oil and the Tarfaya project in Morocco containing JORC compliant Measured resources of 308 million barrels of shale oil (November 2014). GOS has undertaken a preliminary economic assessment on Tarfaya for a first phase development producing 4,100 barrels of oil equivalent per day rising to 26,500 barrels of oil equivalent per day.

China Polymetallic Mining Limited ("CPM")

CPM is an emerging Chinese mining company listed on the Hong Kong Stock Exchange. The Company's investment is via a special purpose vehicle F.S.B.S. Limited Partnership. CPM has a number of development projects in Yunan province of China, the first of these, the Shizishan lead-zinc-silver mine started production in 2011 and reached its full production rate of 2,000 tonnes per day in December 2012. The Shizishan Mine has JORC compliant resources totalling 8.2 million tonnes grading 256g/t silver, 9.4% lead and 6.0% zinc for contained metal of 73 million ounces silver, 814,000 tonnes lead and 512,000 tonnes zinc.

In 2014 it produced 564,000 ounces of silver, 8,541 tonnes lead and 7,170 tonnes zinc in concentrate. CPM's second project, the Dakuangshan silver lead-zinc mine, started commercial production in December 2012 and produced 34,000 ounces of silver, 694 tonnes lead and 1,421 tonnes zinc in concentrate in 2014.

Ironstone Resources Limited ("Ironstone")

Ironstone is a private Canadian company which owns the Clear Hills Iron Ore/Vanadium Project ("Clear Hills") in Alberta, Canada. Clear Hills currently has Indicated Resources of 557.7Mt at 33.3% iron and 0.2% vanadium and an Inferred Resource of 94.7Mt at 34.1% iron.

In conjunction with pyrotechnology experts Hatch of Toronto, Ironstone is developing a proprietary metallurgical process to refine the ore into direct reduced iron. Once demonstrated commercially, this process could be applied not only to Clear Hills, but also to other significant iron ore deposits globally.

Ferrous Resources Limited ("Ferrous")

Ferrous is a private company with five iron-ore projects in the iron quadrilateral region in Minas Gerais state and one in Bahia state in Brazil. It has JORC resources of 5 billion tonnes of iron ore.

During 2014, Ferrous' Viga Mine produced 3.8 million tonnes and the Esperança Mine produced 1.8 million tonnes to give a total 5.6 million tonnes of iron ore product for the year, an 8% increase from 2013. In June 2013 Ferrous completed a positive feasibility to expand the production at Viga to 15 million tonnes per annum, for which it has already received the requisite development permits.

REMUNERATION DETAILS FOR INVESTMENT MANAGER'S STAFF

Pursuant to the FCA's Finalised Guidance on AIFMD reporting requirements, as Baker Steel Capital Managers LLP has not yet been authorised as an AIFM for a full performance period, AIFM remuneration disclosures are not included in this report as the available partial-year information would not be representative. Baker Steel Capital Managers LLP will disclose AIFM remuneration data in line with AIFMD requirements, including ESMA guidance, for the first full performance year available, which will be the year ending 31 December 2015.

DIRECTOR'S REPORT

FOR THE YEAR ENDED 31 DECEMBER 2014

The Directors of the Company present their fifth annual report and the audited financial statements for the year ended 31 December 2014.

Principal activity and business review

Baker Steel Resources Trust Limited (the "Company") is a closed-ended investment company with limited liability incorporated on 9 March 2010 in Guernsey under the Companies (Guernsey) Law, 2008 with registration number 51576. The Company is a registered closed-ended investment scheme registered pursuant to the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended ("POI Law") and the Registered Collective Investment Scheme Rules 2008 issued by the Guernsey Financial Services Commission ("GFSC"). On 28 April 2010 the Ordinary Shares and Subscription Shares of the Company were admitted to the Official List of the UK Listing Authority and to trading on the Main Market of the London Stock Exchange.

The Company's investment objective is to seek capital growth over the long-term through a focused, global portfolio consisting principally of the equities, or related instruments, of natural resources companies. The Company will invest predominantly in unlisted companies (i.e. those companies that have not yet made an initial public offering ("IPO")) but also in listed securities (including special situations opportunities and less liquid securities) with a view to exploiting value inherent in market inefficiencies and pricing anomalies.

The Company's investment policy is detailed on pages 3 and 4.

From 22 July 2014, Baker Steel Capital Managers LLP (the "Investment Manager") is authorised to act as an Alternative Investment Fund Manager ("AIFM") of Alternative Investment Funds ("AIFs"). On 14 November 2014, the Investment Manager signed an amended Investment Manager agreement with the Company, to take into account AIFMD regulations. AIFMD focuses on regulating the AIFM rather than the AIFs themselves, so the impact on the Company is limited.

Portfolio analysis

A detailed analysis of the Portfolio has been provided on pages 22 and 23.

The Investment Manager's report on pages 6 to 9 includes a review of the main developments during the year together with information on investment activity within the Company's Portfolio and on the market outlook.

Performance

In the year to 31 December 2014, the Company's undiluted NAV per Ordinary Share decreased by 27.6% (2013: decrease of 43.2%). This compares with a fall in the Euromoney Global Mining 100 Index (capital return in Sterling terms) of 15.4% (2013: fall of 25.7%).

Results and dividends

The results for the year are shown in the Statement of Comprehensive Income on page 28 and 29 and the Company's financial position at the end of the year is shown in the Statement of Financial Position on page 27.

Dividend policy

It is not envisaged that any income or gains will be distributed by the Company by way of dividend in respect of the year ended 31 December 2014. Commencing with the year to 31 December 2015, the Board intends to allocate no less than 15% of the aggregate net realised cash gains achieved during the year for distribution to shareholders. The Board will retain discretion for determining the most appropriate manner to make such distribution which may include share buybacks, tender offers and dividend payments. To the extent that any dividends are paid, they will be paid in accordance with any applicable laws and the regulations of the UK Listing Authority.

Subsequent Events

On 25 February 2015, the Company issued 3,368,488 New Ordinary Shares at a price of 36.2p per share pursuant to valid applications under an Open Offer to shareholders.

On 25 February 2015, the Company issued a total of 38,819,601 New Ordinary Shares in respect of the acquisition of assets as outlined in a Circular to Shareholders and Prospectus both dated 26 January 2015. This issue comprised 30,468,522 New Ordinary Shares issued at 42.6p per New Ordinary Share as consideration for the acquisition of unlisted investments and 8,351,079 New Ordinary Shares issued at 36.2p per New Ordinary Share as consideration for the acquisition of listed investments.

Following the year end, Black Pearl Limited Partnership agreed an extension to its loan note to Rui Tong Limited from 25 November 2014 to 25 March 2015 and repayment is expected to be received during the two month moratorium period thereafter. As compensation for this extension, the interest rate on the loan increased retrospectively from 20% to 25%. This will increase interest receivable by the Company at 25 March 2015 by approximately US$854,499 (£548,283).

Directors

The Directors of the Company who served during the year and subsequently to the date of this report were:

Howard Myles (Chairman)

Edward Flood

Charles Hansard

Clive Newall

Christopher Sherwell

Attendance at the Board and Audit Committee meetings during the year was as follows;

	Board Meetings		Audit Committee Meetings		Ad hoc Committee Meetings
	He Held	Attended	Held	Attended	Held	Attended
Howard Myles	4	4	4	4	6	5
Christopher Sherwell	4	4	4	4	6	5
Charles Hansard	4	4	N/A	N/A	6	4
Clive Newall	4	4	4	2	6	4
Edward Flood	4	2	N/A	N/A	6	4

In addition to formal meetings, all Directors contribute to a significant ad hoc exchange of views between the Directors and the Investment Manager on specific matters, in particular in relation to developments in the portfolio.

The Directors are remunerated for their services at such rate as the Directors determine provided that the aggregate amount of such fees may not exceed £200,000 per annum (or such sum as the Company in general meeting shall from time to time determine).

For the year ended 31 December 2014 the total remuneration of the Directors was £140,000 (2013: £140,000), with £35,712 (2013: £36,000) payable at year end.

The Directors' interests in the share capital of the Company were:

	Number of Ordinary Shares 2014	Number of Ordinary Shares 2013
Edward Flood	65,000	65,000
Christopher Sherwell	25,000	25,000
Clive Newall	25,000	25,000

Mr Sherwell also had an indirect interest in the shares of the Company through an investment in another Fund which is also managed by the Manager.

During February 2015, these shares were compulsorily redeemed and Mr. Sherwell was issued with 71,821 additional shares as part of the acquisition of assets referred to in Note 13 on page 50 (Subsequent Events).

Significant Shareholdings

The significant shareholdings in the Company at 31 December 2014 were:

Ordinary Shareholder	Number of Ordinary Shares	% of Total Shares in issue
Harewood Nominees Limited*	14,171,300	20.48
The Bank of New York (Nominees) Limited*	11,902,725	17.20
State Street Nominees Limited*	8,944,777	12.93
Nortrust Nominees Limited*	7,808,210	11.29
HSBC GC*	6,593,409	9.53

* Custodian accounts held on behalf of individual shareholders. These holdings are aggregated.

CF Ruffer Baker Steel Gold Fund ("CFRBSGF") had an interest in 6,080,000 Ordinary Shares in the Company at 31 December 2014. These shares are held in a custodian account with The Bank of New York (Nominees) Limited. CFRBSGF shares a common Investment Manager with the Company.

Genus Dynamic Gold Fund ("GDG") had an interest in 3,000,000 Ordinary Shares in the Company at 31 December 2014. These shares are held in a custodian account with HSBC GC. GDG shares a common Manager and Investment Manager with the Company.

Genus Natural Resources Master Fund ("GNRMF") had an interest in 1,727,308 Ordinary Shares in the Company at 31 December 2014. These shares are held in a custodian account with HSBC GC. GNRMF shares a common Manager and Investment Manager with the Company.

The Manager, Baker Steel Capital Managers (Cayman) Limited, had a direct interest in 504,832 Ordinary Shares. The Investment Manager, Baker Steel Capital Managers LLP had an interest in 10,000 Management Ordinary Shares at 31 December 2014, and an indirect interest in 150,000 Ordinary Shares at 31 December 2014 through its wholly owned subsidiary Ironman Investment Company Limited.

Authorised Share Capital

The share capital of the Company on incorporation was represented by an unlimited number of Ordinary Shares of no par value. The Company may issue an unlimited number of shares of a nominal or par value and/or of no par value or a combination of both.

Issue of Shares

The Company was admitted to trading on the London Stock Exchange on 28 April 2010. On that date, 30,468,865 Ordinary Shares and 6,093,772 Subscription Shares were issued pursuant to a placing and offer for subscription and 35,554,224 Ordinary Shares and 7,110,822 Subscription Shares were issued pursuant to a Scheme of Reorganisation of Genus Capital Fund.

In addition 10,000 Management Ordinary Shares were issued.

Following in specie transactions on 28 June 2014 and 1 July 2014, a total of 5,561,243 Ordinary Shares were issued and as a result, the Company had a total of 71,703,776 Ordinary and 10,000 Management Shares in issue as at 31 December 2014. Of the 5,561,243 Ordinary Shares issued in 2014, 2,259,357 were issued to acquire US$2.5 million nominal amount of convertible loans in ZAO Argentum, the wholly owned subsidiary of Polar Silver Resources Limited and 500 shares in Polar Silver Resources Limited for a total consideration of £1.32 million, and 3,301,886 to acquire 5,000,000 Ordinary Shares of Global Oil Shale for a consideration of £1.75 million.

Following the exercise of Subscription Shares at the end of September 2010, March 2011, March 2012, June 2012 and September 2012, a total of 119,444 Ordinary Shares were issued and as a result, the Company had a total of 66,142,533 Ordinary and 10,000 Management Shares in issue as at 31 December 2013.

The final exercise date for the Subscription Shares was 2 April 2013. No Subscription Shares were exercised at this time and all residual Subscription Shares were subsequently cancelled.

Going Concern

The Directors have made an assessment of the Company's ability to continue as a going concern and are satisfied that it has the resources to continue in business for the foreseeable future. Although the Company had net current liabilities at 31 December 2014 of £180,272 it held listed securities that could be realised to meet liabilities as they became due; as at 31 December 2014, approximately 17.2% of the Company's assets were represented by cash and unrestricted listed and quoted investments. The Directors are not aware of any material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern. Therefore, the financial statements have been prepared on a going concern basis.

Corporate Governance Compliance

The Company is committed to maintaining high standards of corporate governance. The Board has put in place a framework for corporate governance which it believes is suitable for an investment company and which enables the Company to comply with the relevant provisions of the Finance Sector Code of Corporate Governance issued by the GFSC and the UK Corporate Governance Code released in September 2012 which became effective 1 January 2013.

The Board has made the appropriate disclosures in this report to ensure that the Company meets its continuing obligations. The Company considers that it has complied with the respective corporate governance provisions throughout the accounting year, except where disclosed below.

Details of the Company's corporate governance arrangements may be found on its website Bakersteelresourcestrust.com. The UK code can be found at http://www.frc.org.uk/our-work/Publications/Corporate-Governance/UK-Corporate-Governance-Code-September-2012.pdf.

Information and training

The Board receives full details of the Company's assets, liabilities and other relevant information in advance of Board meetings. Typically, the Board meets formally four times a year; however, the Investment Manager and Company Secretary stay in more regular, less formal contact with the Directors. Individual Directors have direct access to the Company Secretary and may, at the expense of the Company, seek independent professional advice on any matter that concerns them in the furtherance of their duties. New Directors will receive an induction from the Investment Manager and Company Secretary on joining the Board, and all Directors receive other relevant training as necessary.

Independence

The Board consists solely of independent non-executive Directors among whom Howard Myles is the Chairman.

Senior Independent Director

In view of its non-executive nature, the Board considers that it is not appropriate for a Senior Independent Director to be appointed.

Appointment and re-election

All the Directors are responsible for reviewing the size, structure and skills of the Board and considering whether any changes are required or new appointments are necessary to meet the requirements of the Company's business or to maintain a balanced Board. The Directors are not required to retire by rotation at each annual general meeting of the Company. The Board's policy on tenure is that continuity and experience are considered to add significantly to the strength of the Board and, as such, no limit on the overall length of service of any of the Company's Directors, including the Chairman, has been imposed.

Performance appraisal

The performance of the Board and the Audit Committee are evaluated through an assessment process led by the Chairman. The performance of the Chairman is evaluated by the other Directors.

Audit committee

The Board has established an Audit Committee. The Audit Committee meets at least three times a year and is responsible for ensuring that the financial performance of the Company is properly reported on and monitored and provides a forum through which the Company's external auditor may report to the Board. The Audit Committee operates within established terms of reference. These are available on the Company's website www.bakersteelresourcestrust.com. The Directors consider there is no need for an internal audit function because the Company operates through service providers and the Directors receive control reports on service providers.

Christopher Sherwell is Chairman of the Audit Committee.

Nomination, Remuneration and Management Engagement Committees

Given the size and nature of the Company and the fact that all the Directors are independent and non-executive it is not deemed necessary to form separate Nomination, Remuneration, and Management Engagement Committees. The Board, as a whole, will consider new Board appointments, remuneration and the engagement of service providers. The Directors recognise the benefits of diversity in terms of gender and ethnicity and will take these into account when considering future appointments to the Board. However their principal criteria will remain skills and experience with the objective of maximising shareholder value.

Board meetings

The Board generally meets at least four times a year, at which time the Directors review the management of the Company's assets and all other significant matters so as to ensure that the Directors maintain overall control and supervision of the Company's affairs. The Board is responsible for the appointment and monitoring of all service providers to the Company. Between these quarterly meetings there is regular contact with the Investment Manager. The Directors are kept fully informed of investment and financial controls and other matters which are relevant to the business of the Company and which should be brought to the attention of the Directors. The Directors also have access to the Company Secretary (through its appointed representatives who are responsible for ensuring that Board procedures are followed and that applicable rules and regulations are complied with) and, where necessary in the furtherance of their duties, to independent professional advice at the expense of the Company.

Internal Controls

The Board recognises the need for effective high-level internal controls. The principal controls to address financial, operational and compliance risks are embedded in the operational procedures of the Investment Manager, the Administrator, the Safekeeping and Monitoring Agent and the Custodian.

High-level controls in operation in relation to the Company include segregation of duties between relevant functions and departments within the Administrator and the Investment Manager. At every quarterly meeting, the Board considers the compliance reports, administration reports, depository reports and portfolio valuations provided by the Administrator, and the Investment Manager's reports and analyses.

The Administrator has a number of internal control functions including a dedicated Compliance Officer who is appointed as a statutory requirement and whose role is determined by the Guernsey Financial Services Commission which includes the maintenance of a log of errors and breaches which are reported to the Board at each quarterly Board meeting. The Administrator also undertakes an independent annual review of its internal control functions in accordance with International Standard on Assurance Engagements 3402, "Assurance Reports on Controls at a Service Organisation", issued by the International Auditing and Assurance Standards Board. The Administrator makes this report available to the Board for review and assessment of the control objectives and activities in place.

The Board reviews the effectiveness of the Company's internal control systems on an ongoing basis. Procedures are in place to ensure that necessary action is taken to address any significant weaknesses identified in the control framework. The Board is not aware of any significant failings or weaknesses in the Company's internal controls in the year under review. The Board recognises that the internal controls framework is designed to manage rather than to eliminate relevant risks. The key risks faced by the Company are set out below. The Board reviews the policies for managing each of these principal risks as summarised below. Please also refer to note 5 on pages 41 to 45.

Investment Manager Assessment

The Investment Manager prepares regular reports to the Board to allow it to review and assess the Company's activities and performance on an ongoing basis. The Board and the Investment Manager have agreed clearly defined investment criteria, exposure limits and specified levels of authority. Regular reports on these matters, including performance information and portfolio valuations, are submitted to the Board at each meeting. Based on the information provided to it, it is the view of the Board that the continuation of the appointment of the Investment Manager is in the best interests of shareholders of the Company.

Relations with Shareholders

The Board believes that the maintenance of good relations with shareholders is vital for the long-term prospects of the Company. The Board receives feedback on the views of shareholders from the Company's stockbrokers, Numis Securities Limited, and from the Investment Manager. The Chairman and the Board are also available to meet with shareholders at the Company's Annual General Meeting or otherwise.

General Meetings

All general meetings of the Company are held in Guernsey. The Company holds an Annual General Meeting each year.

Principal risks & uncertainties

Performance risk

The Board is responsible for determining the investment strategy to allow the Company to fulfil its objectives and also for monitoring the performance of the Investment Manager which has been delegated day-to-day discretionary management of the Company's portfolio. An inappropriate strategy may lead to poor performance. The investment policy of the Company is for a highly focused portfolio which can lead to a concentration of risk. To manage this risk the Investment Manager provides to the Board, on an ongoing basis, an explanation of the significant stock selection recommendations and the rationale for the composition of the investment portfolio. The Board mandates and monitors an adequate diversification of investments, both geographically and sectorally, in order to reduce the risks associated with particular sectors, based on the diversification requirements inherent in the Company's investment policy.

Market risk

Market risk arises from volatility in the prices of the Company's underlying investments which, in view of the Company's investment objectives, in turn are particularly sensitive to commodity prices. Market risk represents the potential loss the Company might suffer through holding investments in the face of negative market movements. The Board has set investment restrictions and guidelines which are monitored and reported on by the Investment Manager on a regular basis. Further details are disclosed in note 5 on pages 41 to 45.

Financial risk

The Company's investment activities expose it to a variety of financial risks that include market price risk, foreign currency risk and interest rate risk. Further details are disclosed in note 5 on pages 41 to 45.

Operational risk

In common with most other investment vehicles, the Company has no employees. The Company therefore relies upon the services provided by third parties and is dependent on the control systems of the Investment Manager and the Company's other service providers. For example, the security of the Company's assets, the valuation advice related to those assets, dealing procedures, accounting records and compliance with regulatory and legal requirements depend on the effective operation of these third party control systems.

Business/Other risks

The Company invests in companies whose projects are located in emerging markets. In such countries governments can exercise substantial influence over the private sector and political risk can be a significant factor. In adverse social and political circumstances, governments have been involved in policies of expropriation, confiscatory taxation, nationalisation, intervention in the securities markets and imposition of foreign exchange controls and investment restrictions. The Investment Manager and the Board take into account specific political risks when entering into an investment and seek to mitigate them by diversifying geographically.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the financial statements in accordance with applicable Guernsey law, Listing Rules, Disclosures and Transparency Rules, UK Corporate Governance Code and generally accepted accounting principles.

The Guernsey Company Law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that year. In preparing these consolidated financial statements the Directors should:

- select suitable accounting policies and then apply them consistently;

- make judgments and estimates that are reasonable;

- state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business;

- confirm that there is no relevant audit information of which the Company's auditor is unaware; and

- confirm that they have taken reasonable steps they ought to have taken as directors to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and which enable the Directors to ensure that the financial statements comply with the Companies (Guernsey) Law, 2008. The Directors are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors confirm that to the best of their knowledge:

- the financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") and give a true and fair view of the assets, liabilities and financial position and profit or loss of the Company;

- the Annual Report includes a fair review of the development and performance of the business and position of the Company together with the description of the principal risks and uncertainties that the Company faces, as required by the Disclosure and Transparency Rules of the UK Listing Authority;

- the Directors confirm that the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance and strategy; and

- so far as each of the Directors is aware, there is no relevant audit information of which the Company's auditor is unaware and each Director has taken all the reasonable steps he ought to have taken as a director to make himself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

Retail Distribution of Unregulated Collective Investment Schemes

The Board of BSRT notes the changes to the FCA rules relating to the restrictions on the retail distribution of unregulated collective investment schemes and close substitutes which came into effect on 1 January 2014. The Company conducts its affairs so that the shares issued by the Company can be promoted by authorised persons to ordinary retail investors in accordance with the FCA's rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future. Following the receipt of legal advice, the Board confirms that it conducts the Company's affairs, and intends to continue to conduct the Company's affairs, such that the Company would qualify for approval as an investment trust if it were resident and listed in the United Kingdom.

Signed on behalf of the Board of Directors by:

Howard Myles Christopher Sherwell 13 April 2015

Report of the Audit Committee

For the year ended 31 December 2014

The Audit Committee's main function is to ensure that the Company maintains high standards of integrity in its financial reporting and internal controls. The Audit Committee is appointed by the Board and it meets at least three times a year for the purposes of audit planning and for consideration of the interim and final statements. The Audit Committee is chaired by Christopher Sherwell and it operates within clearly defined terms of reference which are available on the Company's website. Its other members are Howard Myles and Clive Newall. Only independent directors can serve on the Audit Committee and members of the Audit Committee must have no links with the Company's external auditor and must be independent of the Investment Manager.

The Board is satisfied that the Audit Committee is properly constituted with members having recent and relevant financial experience, and in particular, one member having a background as a chartered accountant.

Responsibilities

The main duties of the Audit Committee are:

(a) monitoring the integrity of the Company's financial statements and any other financial information published by the Company;

(b) reviewing the Company's investments, and in particular, the valuation of its unquoted investments. The Audit Committee carefully assesses the recommendations of the Investment Manager in this respect;

(c) meeting the external auditor to review its proposed audit programme, reviewing its annual report and discussing any matters arising from its audit, assessing the effectiveness of the overall audit process and reviewing the levels of fees paid to the auditor in respect of its audit and non-audit work;

(d) monitoring the Company's accounting and internal control systems and making recommendations on any improvement to such systems; and

(e) monitoring the Company's procedures for ensuring compliance with statutory, regulatory and other financial reporting requirements and its relationship with the relevant regulatory authorities.

The Audit Committee has ample opportunity to meet the external auditor without the Manager or Investment Manager present. The Chairman of the Audit Committee has access to the audit partner, if he requires, at any meeting. After each audit, the Audit Committee reviews the audit process and considers its effectiveness.

The Audit Committee also provides a forum through which the Company's auditor reports to the Board. The objectivity and independence of the auditor are reviewed by the Audit Committee. The Board approves all non-audit work carried out by the auditor in advance and the fees paid to the auditor in this respect.

External Audit

The Company's external auditor is Ernst & Young LLP ("EY"). EY has been the Company's auditor since its incorporation in 2010.

The Company's auditor is advised of the timing of Audit Committee meetings to consider the Company's annual and semi-annual accounts.

During 2014 the Audit Committee reviewed the services provided by the auditor, and the related fees, and concluded that it was not necessary to conduct a competitive tender at that stage. However, the Audit Committee does keep this matter under consideration and is cognisant of the Corporate Governance provisions relating to audit tenure.

The audit fees during the year were £42,800 (2013: £49,875). In 2013, there was an additional once-off fee of £6,000 for assistance with the new corporate governance requirements and £5,000 for assistance with the new IFRS 13 requirements.

The fees for non-audit services carried out by the auditor for the financial year ended 31 December 2014 were £34,750 (2013: £7,000). These services consisted of advice to the Board on FATCA with fees of £7,500 (2013: £Nil) and Agreed Upon Procedures in relation to the interim financial statements principally comprising the checking of disclosures in the interim report not subject to statutory audit with fees of £7,250 (2013: £7,000). Also in 2014, work began on providing advice and comfort in relation to the revised prospectus with fees of £45,000 (2013: £Nil), of which £20,000 was accrued at year end*.

* Part of this work was completed in 2015 and will be billed and paid in 2015.

The external auditor provides a planning report in advance of the annual audit, a report on the annual audit and a report on their review of the half year financial statements. The Committee has an opportunity to question and challenge the auditor in respect of each of these reports. Based on levels of interaction with the auditor, and the assessment of auditor reporting the Committee is satisfied that the reappointment of the external auditor should be proposed at the Annual General Meeting of the Company.

The Audit Committee confirms that it has reviewed the non-audit services provided by EY and received confirmation from EY that due to the type of services provided there was no risk or any threat to its independence and is satisfied that they do not compromise EY's independence or objectivity. The Audit Committee is also satisfied that fees for non-audit services are proportionate in relation to the fees for audit services. In conclusion, the Audit Committee is satisfied that EY remains independent. The Audit Committee has assessed the effectiveness of the external auditors and concluded that it is appropriate to reappoint EY as external auditors.

Internal Audit

The Audit Committee believes that the Company does not require an internal audit function because it delegates its day-to-day functions to third party service providers although the Audit Committee oversees these operations and receives regular reports in this respect.

Risk Management and Internal Controls

The Board is responsible for the Company's system of internal controls and risk management. The Audit Committee has been delegated the responsibility for reviewing the effectiveness of the Company's internal controls on an ongoing basis and it discharges its duties in this area by determining the nature and extent of the significant risks it is willing to accept in achieving the Company's objectives and ensuring that effective systems of risk identification, assessment and mitigation have been implemented.

The Company delegates its day to day operations to third parties therefore it relies on the internal control arrangements of its outsourced service providers in respect of a number of key controls. It is the Audit Committee's responsibility to ensure that suitable internal control systems are implemented by the Company's third party service providers and to review the effectiveness of these controls on an ongoing basis.

The key risks faced by the Company, and the controls in place to mitigate such risks, are set out in a Risk Matrix which is regularly reviewed by the Board. The Risk Matrix identifies the likelihood and severity of the impact of each identified risk factor and the mitigating controls in place to minimise the probability of such risks occurring.

The Audit Committee considers that valuation of the Company's unquoted investments at fair value through profit or loss is a key risk, in the context of the judgements necessary to determine the fair values of these holdings as there is no observable market price.

By their nature, the control mechanisms can only provide reasonable rather than absolute assurance against misstatement or loss. The Board seeks continual improvement of its internal controls mechanisms. The Audit Committee is not aware of any significant failings or weaknesses in the Company's internal controls in the year under review.

Financial Reporting

The primary role of the Audit Committee in relation to financial reporting is to review the annual accounts with the Administrator and the Investment Manager and assess their appropriateness. It focuses in this respect, amongst other matters, on:

· the clarity of the disclosures in the financial reporting and compliance with statutory, regulatory and other financial reporting requirements;

· the quality and acceptability of accounting policies and practices;

· material areas where significant judgements have been applied or where there has been discussion with the auditor; and

· taken as a whole, whether the financial statements are fair, balanced and understandable and provide shareholders with the necessary information to assess the Company's performance and strategy although the Board retains overall responsibility in this respect.

Primary Areas of Judgement

As part of its review, the Audit Committee takes account of the most significant issues and risks, both operational and financial, likely to impact on the Company's financial statements and the mitigating controls to address these risks. The Audit Committee has determined that the key risk of misstatement of the Company's financial statements is valuation of investments for which there is no readily observable market price. Such investments are recorded at fair value which is the price that would be expected to be received to sell an asset in an orderly transaction between market participants at the measurement date. Significant judgements are required in respect of the valuation of the Company's investments for which there is no observable market price. The Company bases most of its valuations on the most recent observable transactions for each investment and other comparable companies and adjusts these for changes in company specific performance and comparable company performance for which there is observable data. This performance information, by its nature, takes into account market expectations of future commodity prices. Further information on the Company's methodologies is provided in Note 3 to the financial statements.

The risk is mitigated through the review by the Board of detailed reports prepared by the Investment Manager on portfolio valuation including valuation methodology, the underlying assumptions and the valuation process.

The Investment Manager also provides information to the Board on relevant market indices, recent transactions in similar assets and other relevant information to allow an assessment of appropriate carrying value having regard to the relevant factors.

The responsibility for ensuring that investments are carried at fair value lies with the Board.

Going Concern

The Audit Committee has made an assessment of the Company's ability to continue as a going concern. Particular regard has been given to the factors described below:

· The Company holds listed securities that can if necessary be realised to meet liabilities as they become due; as at 31 December 2014, approximately 17.2% of the Company's assets were represented by cash and unrestricted listed and quoted investments.

On the basis of its review, the Audit Committee is satisfied that the Company has the resources to continue in business for the foreseeable future and it is not aware of any material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern. The Audit Committee is of the opinion that the financial statements should be prepared on a going concern basis and has accordingly recommended its opinion to the Board.

Christopher Sherwell

Audit Committee Chairman

BOARD OF DIRECTORS

Howard Myles (aged 65): Howard Myles currently acts as a non-executive director of a number of investment companies. Howard was a partner in Ernst & Young from 2001 until 2007 and was responsible for the Investment Funds Corporate Advisory team. He was previously with UBS Warburg from 1987 to 2001. Howard began his career in stockbroking in 1971 as an equity salesman and joined Touche Ross in 1975 where he qualified as a chartered accountant. In 1978 he joined W. Greenwell & Co. in the corporate broking team and in 1987 moved to SG Warburg Securities where he was involved in a wide range of commercial and industrial transactions in addition to leading UBS Warburg's corporate finance function for investment funds. He is a fellow of the Institute of Chartered Accountants and of The Chartered Institute for Securities and Investments.

R. Edward Flood (aged 69): From March 2007 to December 2009, Edward Flood acted as Managing Director of Investment Banking at Haywood Securities (UK) Limited. He currently serves as Co-Chairman of Western Lithium USA Corp. Following graduation from university Edward enjoyed a career as an economic geologist with several different companies in the mining industry over a 20-year period. In the 1980's at Nerco Minerals he was a member of the Company's acquisition team during a period of rapid growth fuelled by the purchase of a number of operating precious metal mines. This experience enabled him to make a transition to the financial community as a principal at Robertson Stephens investment bank in San Francisco in 1992. He initially worked as a securities analyst following the gold mining industry before becoming a member of the firm's investment management team for the Contrarian Fund, a public mutual fund concentrated on natural resource opportunities in emerging markets around the world and the Orphan Fund, a similarly structured hedge fund. The funds managed a portfolio of approximately US$2 billion. He was then a founder and President of Turquoise Hill Resources Limited (formerly Ivanhoe Mines) from 1994 to 1999 when he joined Haywood Securities in Vancouver as a senior mining analyst. He returned to Ivanhoe in 2001 where he served as Deputy Chairman until 2007 but remained on the Ivanhoe board until 2012 when Rio Tinto assumed control of the company. Edward holds a Masters' of Science (Geology) degree from the University of Montana and is a member of the Geological Society of London and the Society of Economic Geologists.

Charles Hansard (aged 67): Charles Hansard has over 30 years' experience in the investment industry as a professional and in a non-executive capacity. He currently serves as a non-executive director on a number of boards which include the Moore Capital group of funds, AAA- rated Deutsche Bank Global Liquidity Fund, and Electrum Ltd., a privately owned gold exploration company. He formerly served as a director of Apex Silver Mines Ltd., where he chaired the finance committee during its capital raising phase and as chairman of the board of African Platinum Plc, which he led through reorganisation and feasibility prior to its sale to Impala Platinum. He commenced his career in South Africa with Anglo American Corporation and Fleming Martin as a mining analyst. He subsequently worked in New York as an investment banker for Hambros before returning to the UK to co-found IFM Ltd., one of the earliest European hedge fund managers. Charles holds a B.B.S. from Trinity College Dublin.

Clive Newall (aged 65): Clive Newall graduated from the Royal School of Mines, University of London, England in 1971 with an honours degree in Mining Geology, and was awarded an MBA from the Scottish Business School at Strathclyde University. He has worked in mining and exploration throughout his career, having held senior management positions with Amax Exploration Inc. and the Robertson Group plc. Clive has been a director of a number of public companies in the United Kingdom and Canada. He is the founder of First Quantum Minerals Ltd and has been its President and a director since its incorporation.

Christopher Sherwell (aged 67): Christopher Sherwell has worked since 2004 as a senior Non-Executive Director based in Guernsey with roles in the offshore finance industry and is a director of a number of listed investment companies. Prior to January 2004, Christopher was a Managing Director of Schroders' offshore investment and private banking operations in the Channel Islands. Christopher was previously Investment Director from 1993-2000 and also served on the boards of various Schroder group companies and funds during his period there. Prior to Schroders he worked at Smith New Court as a research analyst specialising in asset allocation for Asian markets. Christopher is a Rhodes Scholar with degrees in science and in economics and politics. He has worked as a university lecturer and was for sixteen years a journalist, most of them working for the Financial Times.

PORTFOLIO STATEMENT

AS AT 31 DECEMBER 2014

Shares	Investments	Fair value	% of Net
/Warrants/		£ equivalent	assets
Nominal
	Listed equity shares

	Australian Dollars
20,560,122	South American Ferro Metals Limited	97,181	0.30

	Australian Dollars Total	97,181	0.30

	Canadian Dollars
1,931,667	Aquila Resources Inc	107,024	0.33
676,667	BacTech Environmental Corporation	9,373	0.03
1,100,000	Buffalo Coal Corporation	45,709	0.14
4,306,502	Ivanhoe Mines Limited (restricted)*	2,287,704	7.11
1,654,995	Ivanhoe Mines Limited	935,285	2.91

	Canadian Dollars Total	3,385,095	10.52

	Great Britain Pounds
48,202,024	Metals Exploration Plc	2,590,859	8.06

	Great Britain Pounds Total	2,590,859	8.06

	United States Dollars
6,576,192	China Polymetallic Mining Company Limited*	1,622,697	5.04

	United States Dollars Total	1,622,697	5.04

	Listed warrants
	Canadian Dollars
660,000	Ivanhoe Mines Limited Warrants 10/12/2015	25,597	0.08

	Canadian Dollars Total	25,597	0.08

	Total investment in listed equity shares and warrants	7,721,429	24.00

	Convertible debt instruments

	Canadian Dollars
250,500	Ironstone Resources Limited Convertible Note	138,789	0.43
150,000	Aquila Resources Unsecured Convertible Debenture	83,107	0.26

	Canadian Dollars Total	221,896	0.69

	United States Dollars
7,600,000	Argentum Convertible Note	4,876,484	15.16
440,000	Bilboes Holdings Convertible Loan Note	282,323	0.88
7,000,000	Black Pearl Limited Partnership	6,469,037	20.11
1,010,000	Polar Silver Convertible Notes	648,059	2.01

	United States Dollars Total	12,275,903	38.16

	Total investments in Convertible debt instruments	12,497,799	38.85
	*Classified as Level 2 (Refer Note 3)

Shares	Investments	Fair value	% of Net
/Warrants/		£ equivalent	assets
Nominal
	Unlisted equity shares and warrants

	Canadian Dollars
10,250,000	Aquila Resources Inc Warrants 17/06/2015	-	-
2,400,000	Aquila Resources Inc Warrants 11/10/2016	-	-
6,282,341	Ironstone Resources Limited	1,357,479	4.22
38,400	Ironstone Resources Limited Warrants 09/01/2016	3	-
143,143	Ironstone Resources Limited Warrants 22/02/2018	277	-

	Canadian Dollars Total	1,357,759	4.22

	Great Britain Pounds
1,594,646	Celadon Mining Limited	143,518	0.45
5,285,715	Global Oil Shale Group Limited	2,114,286	6.57

	Great Britain Pounds Total	2,257,804	7.02

	United States Dollars
3,034,734	Archipelago Metals Limited	438,123	1.36
451,445	Bilboes Gold Limited	4,397,135	13.67
5,713,642	Ferrous Resources Limited	953,190	2.96
4,244,550	Gobi Coal and Energy Limited	2,723,484	8.47
1,722	Polar Silver Resources Limited	1,105	0.01
	United States Dollars Total	8,513,037	26.47

	Total unlisted equity shares and warrants	12,128,600	37.71

	Financial assets held at fair value through profit or loss	32,347,828	100.56

	Other assets & liabilities	(181,272)	(0.56)

	Total equity	32,166,556	100.00

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BAKER STEEL RESOURCES TRUST LIMITED

Opinion on financial statements

In our opinion the financial statements:

► give a true and fair view of the state of the Company's affairs as at 31 December 2014 and of its loss for the year then ended;

► have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"); and

► have been prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008 ("the Companies Law").

What we have audited

We have audited the financial statements of Baker Steel Resources Trust Limited for the year ended 31 December 2014 which comprise the Statement of Financial Position, Statement of Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flows and related notes 1 to 14. The financial reporting framework that has been applied in their preparation is applicable law and IFRS.

This report is made solely to the company's members, as a body, in accordance with Section 262 of the Companies Law. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and auditor

As explained more fully in the Statement of Directors' Responsibilities set out on page 17, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Our assessment of risks of material misstatement

We identified the following risk that we believed would have the greatest effect on the overall audit strategy, the allocation of resources and directing the efforts of the engagement team:

► valuation of the Company's unlisted investments, because valuations of level 3 investments require significant judgement and estimation.

Our application of materiality

We determined planning materiality for the Company to be £643k (2013: £820k), which is approximately 2 per cent of equity. This provided a basis for determining the nature, timing and extent of risk assessment procedures, identifying and assessing the risk of material misstatement and determining the nature, timing and extent of further audit procedures. We used equity as a basis for determining planning materiality because the Company's primary performance measures for internal and external reporting are based on net asset value.

On the basis of our risk assessments, together with our assessment of the Company's overall control environment, our judgement was that overall performance materiality (i.e. our tolerance for misstatement in an individual account or balance) for the Company should be 50 per cent of materiality, namely £322k (2013: £410k). Our objective in adopting this approach was to ensure that total uncorrected and undetected audit differences in the financial statements did not exceed our materiality level.

We agreed with the Audit Committee that we would report to them all audit differences in excess of £32k (2013: £41k), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.

We evaluated any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations.

An overview of the scope of our audit

We adopted a risk-based approach in determining our audit strategy. This approach focuses audit effort towards higher risk areas, such as management judgments and estimates.

The audit was led from Guernsey and utilised valuations and other industry experts from Ernst & Young LLP. We operated as an integrated audit team and we performed audit procedures and responded to the risk identified as described below.

We addressed the risk of incorrect valuation of the Company's unlisted investments as set out below.

► We confirmed our understanding of the Company's processes, inputs and methodologies, including the use of industry specific measures, and policies for valuing unlisted investments held by the Company;

► We vouched valuation inputs that did not require specialist knowledge to independent sources and we tested the arithmetical accuracy of the Company's calculations; and

► We engaged our own internal mining industry valuation experts to:

a) assist us to determine whether the methodologies, inputs and assumptions used to value investments were in accordance with methods, particularly those specific to the industry, usually used by market participants; and

b) for the more complex investments, use their knowledge of the market to corroborate and challenge management's market related judgements and valuation inputs including discount rates, forward prices, production values and recent relevant transaction data;

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the Director's report is:

► materially inconsistent with the information in the audited financial statements; or

► apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Company; or

► is otherwise misleading.

In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the directors' statement that they consider the Annual Report is fair, balanced and understandable and whether the Annual Report appropriately discloses those matters that we communicated to the Audit Committee which we consider should have been disclosed.

Under the Companies Law we are required to report to you if, in our opinion:

► proper accounting records have not been kept; or

► the financial statements are not in agreement with the accounting records; or

► we have not received all the information and explanations we require for our audit.

Under the Listing Rules we are required to review the part of the Corporate Governance Report relating to the company's compliance with the nine provisions of the UK Corporate Governance Code specified for our review.

Michael Bane

For and on behalf of Ernst & Young LLP

Guernsey, Channel Islands

13 April 2015

⁽¹⁾ The maintenance and integrity of the Company's website is the sole responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditor accepts no responsibility for any changes that may have occurred to the Financial Statements since they were initially presented on the website.

⁽²⁾ Legislation in Guernsey governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.

STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2014

			2014	2013
		Notes	£	£
Assets
Cash and cash equivalents		10	94,217	477,495
Other receivables			93,294	26,746
Financial assets held at fair value through profit or loss		3	32,347,828	40,657,467
Total assets			32,535,339	41,161,708

Equity and Liabilities

Liabilities
Legal fees payable		13	167,806	-
Directors' fees payable			35,712	36,000
Management fees payable		8	34,335	42,297
Audit fees payable			35,308	38,625
Administration fees payable		7	27,563	13,671
Other payables			68,059	40,410
Total liabilities			368,783	171,003

Equity
Management Ordinary Shares		11	10,000	10,000
Ordinary Shares		11	66,945,285	64,767,056
Profit and loss account			(34,788,729)	(23,786,351)
Total equity			32,166,556	40,990,705

Total equity and liabilities			32,535,339	41,161,708

Net asset value per Share (in Pence) - Basic and diluted		4	44.9	62.0
These financial statements on page 27 to 31 were approved by the Board of Directors on 13 April 2015 and signed on its behalf by:




Howard Myles	Christopher Sherwell

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2014

		Year ended 2014	Year ended 2014	Year ended 2014
		Revenue	Capital	Total
	Notes	£	£	£

Income
Interest income		77,998	-	77,998
Net loss on financial assets and liabilities at fair value through profit or loss	3	-	(9,955,713)	(9,955,713)
Net foreign exchange loss		-	(3,461)	(3,461)
Net income/(loss)		77,998	(9,959,174)	(9,881,176)

Expenses
Management fees	8	472,295	-	472,295
Legal fees		168,185	-	168,185
Directors' fees		140,000	-	140,000
Administration fees	7	88,642	-	88,642
Audit fees		41,125	-	41,125
Custody fees		32,112	-	32,112
Director's expenses		8,273	-	8,273
Other expenses	9	170,570	-	170,570
Total expenses		1,121,202	-	1,121,202

Total comprehensive loss for the year		(1,043,204)	(9,959,174)	(11,002,378)

Net loss for the year per Ordinary Share:
Basic and diluted (in pence)	4	(1.5)	(14.4)	(15.9)

In the year ended 31 December 2014 there were no gains or losses other than those recognised above.

The Directors consider all results to derive from continuing activities.

		Year ended 2013	Year ended 2013	Year ended 2013
		Revenue	Capital	Total
	Notes	£	£	£

Income
Interest income		13,194	-	13,194
Net loss on financial assets and liabilities at fair value through profit or loss	3	-	(29,934,397)	(29,934,397)
Net foreign exchange loss		-	(24,368)	(24,368)
Other income		8,028	-	8,028
Net income/(loss)		21,222	(29,958,765)	(29,937,543)

Expenses
Management fees	8	740,205	-	740,205
Directors' fees		140,000	-	140,000
Administration fees	7	94,618	-	94,618
Audit fees		42,052	-	42,052
Custody fees		37,609	-	37,609
Legal fees		8,351	-	8,351
Director's expenses		6,731	-	6,731
Other expenses	9	201,841	-	201,841
Total expenses		1,271,407	-	1,271,407

Total comprehensive loss for the year		(1,250,185)	(29,958,765)	(31,208,950)

Net loss for the year per Ordinary Share:
Basic and diluted (in pence)	4	(1.9)	(45.3)	(47.2)

In the year ended 31 December 2013 there were no gains or losses other than those recognised above.

The Directors consider all results to derive from continuing activities.

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2014

	Management Ordinary Shares	Ordinary Shares	Profit and loss account	Year ended 2013
	£	£	£	£

Balance as at 1 January 2013	10,000	64,767,056	7,422,599	72,199,655
Net loss for the year	-	-	(31,208,950)	(31,208,950)
Balance as at 31 December 2013	10,000	64,767,056	(23,786,351)	40,990,705
Issue of Ordinary Shares in specie	-	2,178,229	-	2,178,229
Net loss for the year	-	-	(11,002,378)	(11,002,378)
Balance as at 31 December 2014	10,000	66,945,285	(34,788,729)	32,166,556
Note	11	11

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2014

		Year ended 2014	Year ended 2013
	Notes	£	£
Cash flows from operating activities
Net loss for the year		(11,002,378)	(31,208,950)
Adjustments to reconcile income for the year to net cash used in operating activities:
Interest income		(77,998)	(13,194)
Net loss on financial assets at fair value through profit or loss	3	9,955,713	29,934,397
Net decrease/(increase) in other receivables		5317	(7,633)
Net increase/(decrease) in other payables		197,780	(3,647,675)
		(921,566)	(4,943,055)
Interest received		6,133	51,752
Net cash used in operating activities		(915,433)	(4,891,303)

Cash flows from investing activities
Purchase of financial assets at fair value through profit or loss	11	(1,127,370)	(1,655,154)
Sale of financial assets at fair value through profit or loss		1,659,525	6,422,778
Net cash provided by investing activities		532,155	4,767,624

Net decrease in cash and cash equivalents		(383,278)	(123,679)

Cash and cash equivalents at the beginning of the year		477,495	601,174

Cash and cash equivalents at the end of the year	10	94,217	477,495

Supplemental disclosure of non-cash flow information
Purchase of financial assets at fair value through profit or loss	11	(2,178,229)	-
Issue of Ordinary Shares in specie	11	2,178,229	-

NOTES TO THE FINANCIAL STATEMENTS

1. GENERAL INFORMATION

Baker Steel Resources Trust Limited (the "Company") is a closed-ended investment company with limited liability incorporated on 9 March 2010 in Guernsey under the Companies (Guernsey) Law, 2008 with registration number 51576. The Company is a registered closed-ended investment scheme registered pursuant to the POI Law and the Registered Collective Investment Scheme Rules 2008 issued by the Guernsey Financial Services Commission ("GFSC"). On 28 April 2010 the Ordinary Shares and Subscription Shares of the Company were admitted to the Official List of the UK Listing Authority and to trading on the Main Market of the London Stock Exchange. The Company's Ordinary and Subscription Shares were admitted to the Premium Listing Segment of the Official List on 28 April 2010. Effective 1 June 2012 the Subscription Shares were assigned to the Standard Segment of the Official List.

The final exercise date for the Subscription Shares was 2 April 2013. No Subscription Shares were exercised at this time and all residual/unexercised Subscription Shares were subsequently cancelled.

The Company's portfolio is managed by Baker Steel Capital Managers (Cayman) Limited (the "Manager"). The Manager has appointed Baker Steel Capital Managers LLP (the "Investment Manager") as the Investment Manager to carry out certain duties. The Company's investment objective is to seek capital growth over the long-term through a focused, global portfolio consisting principally of the equities, or related instruments, of natural resources companies. The Company invests predominantly in unlisted companies (i.e. those companies which have not yet made an Initial Public Offering ("IPO")) and also in listed securities (including special situations opportunities and less liquid securities) with a view to exploiting value inherent in market inefficiencies and pricing anomalies.

From 22 July 2014, Baker Steel Capital Managers LLP (the "Investment Manager") is authorised to act as an Alternative Investment Fund Manager ("AIFM") of Alternative Investment Funds ("AIFs"). On 14 November 2014, the Investment Manager signed an amended Investment Manager agreement with the Company, to take into account AIFM regulations. AIFMD focuses on regulating the AIFM rather than the AIFs themselves, so the impact on the Company is limited.

2. SIGNIFICANT ACCOUNTING POLICIES

a) Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The financial statements have been prepared on a historical cost basis except for financial assets at fair value through profit or loss, which are designated at fair value through profit or loss.

The Company's functional currency is the Great Britain pound Sterling ("£"), being the currency in which its Ordinary Shares and Subscription Shares are issued and in which returns are made to shareholders. The presentation currency is the same as the functional currency. The Company invests in companies around the world whose shares are denominated in various currencies. Currently the majority of the portfolio is denominated in US Dollars but this will not necessarily remain the case as the portfolio develops.

The Statement of Comprehensive Income is presented in accordance with the Statement of Recommended Practice ("SORP") 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in January 2009 by the Association of Investment Companies, to the extent that it does not conflict with IFRS.

Income encompasses both revenue and capital gains/losses. For a listed investment company it is necessary to distinguish revenue from capital for the purpose of determining the distribution. Revenue includes items such as dividends, interests, fees, rent and other equivalent items. Capital is the return, positive or negative, from holding investments other than that part of the return that is revenue. SORP provides guidance on the items that should be recognised as capital/revenue. Where specific guidance is not given an item is recognised in accordance with its economic substance.

b) Significant accounting judgements and estimates

The preparation of the Company's financial statements requires the Directors to make judgements, estimates and assumptions that affect the reported amounts recognised in the financial statements and disclosure of contingent liabilities. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in future periods.

(i) Judgements

In the process of applying the Company's accounting policies, management has made the following judgements, which has the most significant effect on the amounts recognised in the financial statements:

Assessment as Investment Entity

As per IFRS 10, an entity shall determine whether it is an investment entity. An investment entity is an entity that:

Ø It obtains funds from one or more investors for the purpose of providing those investors with investment services.

Ø It commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both.

Ø It measures and evaluates the performance of substantially all of its investments on a fair value basis.

The Company meets these criteria in order to be considered as an investment entity.

(ii) Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets liabilities within the next financial year, are discussed below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. However, existing circumstances and assumptions about future developments may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur. Please refer to Note 3 and 5 for further information.

Fair value of financial instruments

When the fair values of financial assets and financial liabilities recorded in the statement of financial position cannot be derived from active markets, their fair value is determined using a variety of valuation techniques that include the use of valuation models. The inputs to these models are taken from observable markets where possible, but where this is not feasible, estimation is required in establishing fair values. The estimates include considerations of liquidity and model inputs related to items such as credit risk, correlation and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments in the statement of financial position and the level where the instruments are disclosed in the fair value hierarchy. The models are tested for validity by calibrating to prices from any observable current market transactions in the same instrument (without modification or repackaging) when available. To assess the significance of a particular input to the entire measurement, the Company performs sensitivity analysis or stress testing techniques.

c) Financial assets at fair value through profit or loss

The Company designates its investments as at fair value through profit or loss, at initial recognition. All derivatives are classified as held for trading and are included in financial assets at fair value through profit or loss.

Recognition and derecognition

The Company recognises financial assets and financial liabilities on the date it becomes a party to the contractual provisions of the instruments. Routine purchases and sales of investments are accounted for on the trade date.

Financial assets at fair value through profit or loss are initially recognised at fair value. Transaction costs are expensed in the Statement of Comprehensive Income. Subsequent to initial recognition, all financial assets at fair value through profit or loss are re-measured at fair value. Gains and losses arising from changes in fair value are recognised in the Statement of Comprehensive Income in the year in which they arise.

A financial asset is derecognised when the Company no longer has control over the contractual rights that comprise that asset. This occurs when the rights are realised, expired or are surrendered. A financial liability is derecognised when it is extinguished or when the obligation specified in the contract is discharged, cancelled or expired.

Financial assets may be acquired for a consideration in the form of an issue of the Company's own shares.

A contract that will be settled by the entity (receiving or) delivering a fixed number of its own equity instruments in exchange for a fixed amount of cash or another financial asset is accounted for as an equity instrument.

The cost of the assets acquired is determined as at the fair value of the consideration given, being the fair value of the equity instruments issued or the asset received, if that is more easily measured, together with directly attributable transaction cost on the transaction date.

Determination of the fair value is set out in note 3.

Basis of designation of fair value

Designation of the investments in this way is consistent with the Company's documented risk management policy and investment strategy, and information about the investments is provided to the Board on this basis.

After initial recognition, investments are measured at fair value, with unrealised gains and losses on investments recognised in the Statement of Comprehensive Income. Investments are derecognised on sale. Gains and losses on sale of investments are recognised in the Statement of Comprehensive Income.

Determination of fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value for financial instruments traded in active markets at the reporting date is based on their last quoted price or binding dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.

For all other financial instruments not traded in an active market, fair value is determined by using appropriate valuation techniques. Valuation techniques include: using recent arm's length market transactions; reference to the current market value of another instrument that is substantially the same; discounted cash flow analysis and option pricing models making as much use of available and supportable market data as possible. An analysis of fair values of financial instruments and further details as to how they are measured are provided in Note 3.

d) Other financial assets and liabilities

Other receivables, measured at amortised cost, include the contractual amounts for settlement of trades and other obligations due to the Company. Amount due to brokers, investment management fees payable, directors' fees payable, audit fees payable, administration fees payable and other payables represent the contractual amounts and obligations due by the Company for settlement for trades and expenses.

e) Interest income and expense

Bank interest income, convertible debt instruments interest income and interest expense are recognised on an accruals basis based on the effective interest method.

f) Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash balances held at banks. Initially accounted for at fair value and subsequently measured at amortised cost.

g) Expenses

All expenses are recognised on an accruals basis.

h) Translation of foreign currencies

Foreign currency transactions during the year are translated into Sterling at the rate of exchange ruling at the date of the transaction. Assets and liabilities denominated in foreign currencies are translated into Sterling at the rate of exchange ruling at the Statement of Financial Position date. Exchange differences including those arising from adjustment to fair value of financial instruments during the year, are included in the Statement of Comprehensive Income. The foreign exchange movements relating to financial assets form part of the fair value movement in the Statement of Comprehensive Income.

i) Segment information

The Directors are of the opinion that the Company is engaged in a single segment of business, being investing in natural resources companies.

j) Net asset value per share

Net Asset Value per share disclosed on the face of the Statement of Financial Position is calculated in accordance with the Company's Prospectus by dividing the net assets of the Company on the Statement of Financial Position date by the number of Ordinary Shares (including the Management Ordinary Shares) outstanding at that date.

k) New accounting pronouncements

The following amendments were applicable for the first time this year but had no impact on the financial position or performance of the Company.

- IFRS 10 Consolidated Financial Statements - Amendments (effective 1 January 2014)

- IFRS 11 Joint Arrangements (effective 1 January 2014)

- IFRS 12 Disclosure of Interests in Other Entities - Amendments (effective 1 January 2014)

- IAS 27 Separate Financial Statements - Amendments (effective 1 January 2014)

- IAS 28 Investments in Associates and Joint Ventures - Amendments (effective 1 January 2014)

l) New accounting pronouncements not yet effective

At the date of authorisation of these financial statements, the following standards and interpretations, which have not been applied, were in issue but not yet effective. The Company does not expect that the adoption of these standards will have a significant impact on its financial statements.

- IFRS 8 Operating Segments - Amendments (effective 1 July 2014)

Amendments to some disclosure requirements regarding the judgements made by management in applying the aggregation criteria, as well as those to certain reconciliations.

- IFRS 9 Financial Instruments - Amendments (effective 1 January 2018)

A finalised version of IFRS 9 has been issued which replaces IAS 39 Financial Instruments: Recognition and Measurement. The completed standard comprises guidance on Classification and Measurement, Impairment Hedge Accounting and Derecognition.

IFRS 9 carries forward the derecognition requirements of financial assets and liabilities from IAS 39.

- IFRS 10 Consolidated Financial Statements - Amendments (effective 1 January 2016)

Narrow-scope amendments to IFRS 10, IFRS 12 and IAS 28 introduce clarifications to the requirements when accounting for investment entities. The amendments also provide relief in particular circumstances, which will reduce the costs of applying the Standards.

- IFRS 11 Joint Arrangements - Amendments (effective 1 January 2016)

Amendments add new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business which specifies the appropriate accounting treatment for such acquisitions.

- IFRS 12 Disclosure of Interests in Other Entities - Amendments (effective 1 January, 2016)

- IFRS 13 Fair Value Measurement - Amendments (effective 1 January 2015)

Amendments clarifies the measurement requirements for those short-term receivables and payables. Amendments also clarifies that the portfolio exception applies to all contracts within the scope of, and accounted for in accordance with, IAS 39 or IFRS 9.

- IFRS 14 - Regulatory Deferral Accounts (effective 1 January, 2016)

IFRS 14 permits first-time adopters to continue to recognise amounts related to its rate regulated activities in accordance with their previous GAAP requirements when they adopt IFRS. However, to enhance comparability with entities that apply IFRS and do not recognise such amounts, the Standard requires that the effect of rate regulation must be presented separately from other items. An entity that already presents IFRS financial statements is not eligible to apply the Standard.

- IFRS 15 - Revenue from Contracts with Customers (effective 1 January, 2017)

New standard that requires entities to recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This core principle is achieved through a five step methodology that is required to be applied to all contracts with customers.

- IAS 1 - Presentation of Financial Statements (effective 1 January, 2016)

This amendment is designed to encourage entities to apply professional judgement in determining what information to disclose in their financial statements. For example, the amendments make clear that materiality applies to the whole of financial statements and that the inclusion of immaterial information can inhibit the usefulness of financial disclosures. Furthermore, the amendments clarify that entities should use professional judgement in determining where and in what order information is presented in the financial disclosures.

- IAS 24 - Related Party Disclosures- Amendments (effective 1 July, 2014)

Amendments provides the definitions and disclosure requirements for key management personnel.

- IAS 27 Consolidated and Separate Financial Statements (effective 1 January, 2016)

Amendments to IAS 27 will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements.

IFRS 9 and 15 has not yet been endorsed by the European Union.

The Board currently intends to adopt the standards on the mandatory adoption dates. The Board anticipates that the adoption of these standards and interpretations in the future period will not have a material impact on the financial statements of the Group.

2. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

31 December 2014	Listed equity shares	Unlisted equity shares	Convertible debt instruments	Warrants	Total
	£	£	£	£	£
Financial assets at fair value through profit or loss
Cost	21,113,026	29,647,588	9,847,648	-	60,608,262
Unrealised (loss)/gain	(13,417,194)	(17,519,268)	2,650,151	25,877	(28,260,434)
Market value at 31 December 2014	7,695,832	12,128,320	12,497,799	25,877	32,347,828

31 December 2013	Listed equity shares	Unlisted equity shares	Convertible debt instruments	Warrants	Total
	£	£	£	£	£
Financial assets at fair value through profit or loss
Cost	23,391,498	28,192,871	8,533,524	-	60,117,893
Unrealised loss/(gain)	(9,429,958)	(10,794,264)	722,419	41,377	(19,460,426)
Market value at 31 December 2013	13,961,540	17,398,607	9,255,943	41,377	40,657,467

The following table analyses net (losses)/gains on financial assets at fair value through profit or loss for the year ended 31 December 2014 and 31 December 2013.

	Year ended 2014	Year ended 2013
	£	£
Financial assets at fair value through profit or loss
Realised (losses)/gains on:
- Listed equity shares	(1,155,705)	296,988
- Unlisted equity shares	-	240,541
- Convertible debt instruments	-	11,155
	(1,155,705)	548,684
Movement in unrealised (losses)/gains on:
- Listed equity shares	(3,987,236)	(23,290,798)
- Unlisted equity shares	(6,725,004)	(7,666,428)
- Convertible debt instruments	1,927,732	452,472
- Warrants	(15,500)	21,673
	(8,800,008)	(30,483,081)

Net loss on financial assets at fair value through profit or loss	(9,955,713)	(29,934,397)

The following table analyses investments by type and by level within the fair valuation hierarchy at 31 December 2014.

	Quoted prices in active markets	Quoted market based observables	Unobservable inputs
	Level 1	Level 2	Level 3	Total
	£	£	£	£
Financial assets at fair value through profit or loss
Listed equity shares	3,785,431	3,910,401	-	7,695,832
Unlisted equity shares	-	-	12,128,320	12,128,320
Warrants	25,597	-	280	25,877
Convertible debt instruments	-	-	12,497,799	12,497,799
	3,811,028	3,910,401	24,626,399	32,347,828

The following table analyses investments by type and by level within the fair valuation hierarchy at 31 December 2013.

	Quoted prices in active markets	Quoted market based observables	Unobservable inputs
	Level 1	Level 2	Level 3	Total
	£	£	£	£
Financial assets at fair value through profit or loss
Listed equity shares	3,609,480	10,352,060	-	13,961,540
Unlisted equity shares	-	-	17,398,607	17,398,607
Warrants	-	-	41,377	41,377
Convertible debt instruments	-	-	9,255,943	9,255,943
	3,609,480	10,352,060	26,695,927	40,657,467

During the year the only transfer between levels related to the release of the locked up Ivanhoe Mines Limited ("Ivanhoe") shares, from Level 2 to Level 1. The total number of Ivanhoe shares released during year was 3,131,996 (782,999 per quarter) total amounting to £2,371,125 (2013: There were no transfers).

The table below shows a reconciliation of beginning to ending fair value balances for Level 3 investments and the amount of total gains or losses for the year included in earnings attributable to the change in unrealised gains or losses relating to assets and liabilities held at 31 December 2014 and at 31 December 2013.

	Listed and	Convertible debt
	Unlisted Equities	instruments	Warrants	Total
	£	£	£	£

Opening balance 1 January 2014	17,398,607	9,255,943	41,377	26,695,927
Purchases of investments	1,454,717	1,314,124	-	2,768,841
Change in net unrealised (losses)/gains	(6,725,004)	1,927,732	(41,097)	(4,838,369)
Closing balance 31 December 2014	12,128,320	12,497,799	280	24,626,399

	Listed and	Convertible debt
	Unlisted Equities	instruments	Warrants	Total
	£	£	£	£

Opening balance 1 January 2013	28,107,083	9,018,210	19,704	37,144,997
Purchases of investments	-	256,669	-	256,669
Sales of investments	(3,282,586)	(482,563)	-	(3,765,149)
Change in net unrealised (losses)/gains	(7,666,431)	452,472	21,673	(7,192,286)
Realised gains	240,541	11,155	-	251,696
Closing balance 31 December 2013	17,398,607	9,255,943	41,377	26,695,927

In determining an investment's position within the fair value hierarchy, the Directors take into consideration the following factors:

Investments whose values are based on quoted market prices in active markets are classified within Level 1. These include listed equities with observable market prices. The Directors do not adjust the quoted price for such instruments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.

Investments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs, are classified within Level 2. These include certain less liquid listed equities. As Level 2 investments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. The Company held such investments at 31 December 2014 amounting to £3,910,401 (31 December 2013: £10,352,060).

Investments classified within Level 3 have significant unobservable inputs. They include unlisted convertible debt instruments, unlisted equity shares and warrants. Level 3 investments are valued using valuation techniques explained in the Company's accounting policies. The inputs used by the Directors in estimating the value of Level 3 investments include the original transaction price, recent transactions in the same or similar instruments if representative in volume and nature, completed or pending third-party transactions in the underlying investment of comparable issuers, subsequent rounds of financing, recapitalisations and other transactions across the capital structure, offerings in the equity or debt capital markets, and changes in financial ratios or cash flows. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Directors in the absence of market information.

Valuation methodology of Level 3 investments

Where an unquoted investment has been acquired during the past six months it will be carried at cost unless there are changes or events which suggest cost is not equivalent to fair value.

For each core unlisted investment, the Company maintains a weighted average basket of listed companies which are comparable to the investment in terms of commodity, stage of development and location ("IndexVal"). IndexVal is used as an indication of how an investment's share price might have moved had it been listed. Movements in commodity prices are deemed to have been taken into account by the movement of IndexVal.

The Investment Manager also prepares discounted cash flow models for the Company's core investments annually and also for significant new information and decision making purposes when required. From these, Development Risk Adjusted Values ("DRAVs") are derived. The computations are based on consensus forecasts for long term commodity prices and investee company management estimates of operating and capital costs. The Investment Manager takes account of market, country and development risks in its discount factors. The DRAVs are not a primary determinant of Fair Value but are instead a tool that the Investment Manager uses to evaluate potential investments as well as to provide underlying valuation references for the Fair Value already established.

The valuation technique for Level 3 investments can be divided into four groups:

i. Transactions

Where there have been transactions within the past 6 months either through a capital raising by the investee company or known secondary market transactions, representative in volume and nature and conducted on an arm's length basis, this is taken as the primary driver for valuing Level 3 investments.

ii. IndexVal

Where there have been no known transactions for 6 months, at the Company's half year and year end, movements in IndexVal will generally be taken into account in assessing Fair Value where there has been at least a 10% movement in IndexVal over at least a six month period. The IndexVal results are used as an indication of trend and are viewed in the context of investee company progress.

iii. Warrants

Warrants are valued using a simplified Black & Scholes model taking into account time to expiry, exercise price and volatility. Where there is no established market for the underlying shares an assumed volatility of 40% is used.

iv. Convertible loans

Convertible loans are valued at par, taking into account credit risk, except when there is a clear path towards conditions for conversion such as an IPO, when the equity value of the investment on conversion is also taken into account when determining Fair Value.

Quantitative information of significant unobservable inputs - Level 3

Description		2014	Valuation technique	Unobservable input	Range (weighted average)
		£

Unlisted Equity		12,128,320	Transactions & IndexVal	Private transactions. Change in IndexVal	n/a
Convertible Debt Instruments
Argentum Convertible & Polar Silver Loan Notes	5,524,543		Valued at par with reference to credit risk and value on conversion	Credit Risk	n/a
Black Pearl Limited Partnership	6,469,037		Valued at par plus interest accrued with reference to credit risk and value on conversion	Credit Risk	n/a
Other Convertible Debentures/Loans	504,219		Valued at par	Credit Risk	n/a
Warrants	280		Simplified Black & Scholes Model	Volatilities	40%

Information on third party transactions in unlisted equities is derived from the Investment Manager's market contacts. The change in IndexVal for each particular unlisted equity is derived from the weighted average movements of the individual baskets for that equity so it is not possible to quantify the range of such inputs. A sensitivity of 70% has been used in the analysis below as this was the greatest amount that IndexVal moved for any single investment during any six month period.

Sensitivityanalysis to significant changes in unobservable inputs within Level 3 investments

The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value hierarchy together with a quantitative sensitivity analysis as at 31 December 2014 are as shown below:

Description	Input	Sensitivity used*	Effect on Fair Value (£)

Unlisted Equity	Change in IndexVal	+/-70%	+/-8,489,824
Convertible Debt Instruments
Argentum Convertible & Polar Silver Loan Notes	Credit Risk	+20%	-1,104,909
Black Pearl Limited Partnership	Credit Risk	+20%	-1,293,807
Other Convertible Debentures/Loans	Credit Risk	+20%	-100,844
Warrants	Volatility of 40%	+/-20%	+1,862/-280

*The sensitivity analysis refers to a percentage amount added or deducted from the input and the effect this has on the fair value

The Company has not disclosed the fair value for financial assets such as cash and cash equivalents and short-term receivables and payables, because their carrying amounts are a reasonable approximation of fair values.

4. NET ASSET VALUE PER SHARE AND LOSS PER SHARE

Net asset value per share is based on the net assets of £32,166,556 (31 December 2013: £40,990,705) and 71,713,776 (31 December 2013: 66,152,533) Ordinary Shares, being the number of shares in issue at the year end. The final exercise date for the Subscription Shares was 2 April 2013. No Subscription Shares were exercised at this time and all residual Subscription Shares were subsequently cancelled and were anti-dilutive. The calculation for basic and diluted net asset value per share is as below:

	31 December 2014	31 December 2013
	Ordinary Shares	Ordinary Shares
Net assets at the year end (£)	32,166,556	40,990,705
Number of shares	71,713,776	66,152,533
Net asset value per share (in pence) basic and diluted	44.9	62.0
Weighted average number of shares	69,121,434	66,152,533

The basic and diluted loss per share for 2014 is based on the net loss for the year of the Company of £11,895,873 and on 69,121,434 Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.

The basic and diluted loss per share for 2013 is based on the net loss for the year of the Company of £31,208,950 and on 66,152,533 Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year. As the Subscription Shares were cancelled on 2 April 2013 no diluted calculations are required.

5. RISK MANAGEMENT POLICIES AND DISCLOSURES

The Company's principal financial instruments comprise financial assets, primarily unlisted equity investments in natural resources companies. These investments reflect the core of the Company's investment strategy.

The Company's financial liabilities principally comprise fees payable to various parties and arise directly from its operations.

Risk exposures and responses

The Company manages its exposure to key financial risks in accordance with the Company's financial risk management policy. The objective of the policy is to support the delivery of the Company's core investment objective whilst maintaining future financial security. The main risks that could adversely affect the Company's financial assets, or future cash flows are market risk (comprising market price risk, currency risk and interest rate risk), commodity price risk, liquidity risk and credit risk.

The Company's Board of Directors oversees the management of financial risks, each of which is summarised below.

a) Market risk

Market risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: market price risk, currency risk and interest rate risk.

i. Market price risk

Market price risk is the risk that the fair value of future cash flows will fluctuate because of changes in the market prices of the Company's investment portfolio.

The following illustrates the sensitivity of the income to an increase or decrease of 10% in the fair value of the Company's investment portfolio. The level of change is considered to be reasonably possible based on observations of current market conditions in 2014. The sensitivity analysis assumes all other variables are held constant.

The impact of a 10% decrease in the value of investments on the net assets and income of the Company as at 31 December 2014 would have been a decrease of £3,234,783 (31 December 2013: £4,065,747). An increase of 10% would increase the net asset value by £3,234,783 (31 December 2013: £4,065,747). In practice, the actual results may differ from the sensitivity analysis above and the difference could be material.

ii. Currency risk

The majority of the Company's financial assets and liabilities are denominated in US Dollars. The functional currency of the Company is Sterling. Currency risk is the risk that the value of non-£ denominated financial instruments will fluctuate due to changes in foreign exchange rates. The table below shows the currencies and amounts the Company was exposed to at 31 December 2014 and 31 December 2013.

31 December 2014

Currency	Amount in	Conversion rate	Value	% of net assets
	local currency	(based on £)	£
AUD	185,042	0.5252	97,181	0.30
CAD	9,157,075	0.5540	5,073,456	15.78
EUR	(7,417)	0.7766	(5,760)	(0.02)
GBP	4,590,042	1.0000	4,590,042	14.27
USD	34,928,536	0.6416	22,411,637	69.67
			32,166,556	100.00

31 December 2013

Currency	Amount in	Conversion rate	Value	% of net assets
	local currency	(based on £)	£
AUD	1,130,806	0.5399	610,481	1.49
CAD	23,388,725	0.5681	13,286,855	32.42
EUR	(5,123)	1.2032	(6,164)	(0.02)
GBP	2,888,426	1.0000	2,888,426	7.05
USD	40,115,383	0.6035	24,211,107	59.06
			40,990,705	100.00

At 31 December 2014 and 31 December 2013, had any foreign currencies strengthened by 10% relative to Sterling, with all other variables held constant, total equity would have increased by the amounts shown below.

	2014	2013
Currency	Value	Value
	£	£
AUD	9,718	61,048
CAD	507,346	1,328,686
EUR	(576)	(616)
USD	2,241,164	2,421,111
	2,757,652	3,810,229

A 10% decrease in foreign currencies relative to Sterling, with all other variables held constant, would lead to a corresponding decrease in the total equity by equal but opposite amounts as shown in the above tables. The estimated movement is based on management's determination of a reasonably possible change in foreign exchange rates. In practice, the actual results may differ from the sensitivity analysis above and the difference could be material.

iii. Interest rate risk

Although the Company's interest-bearing financial assets and liabilities expose it indirectly to risks associated with the effects of fluctuations in the prevailing levels of market interest rates on its financial position and fair value, it is subject to little direct exposure to interest rate fluctuations as the majority of the financial assets are equity investments or similar investments which do not pay interest. Any excess cash and cash equivalents are invested at short-term market interest rates which expose the Company, to a limited extent, to interest rate risk and corresponding gains/losses from a change in the fair value of these financial instruments.

The table below summarises the Company's exposure to interest rate risk. It includes the Company's assets and liabilities at fair values, categorised by the earlier of contractual re-pricing or maturity dates.

At 31 December 2014		Up to	More than	Non-interest
		1 month	6 months	bearing	Total
Assets		£	£	£	£
	Cash and cash equivalents	94,217	-	-	94,217
	Financial assets held at fair value through profit or loss	-	11,849,740	20,498,088	32,347,828
	Receivables	-	-	93,294	93,294
	Total Assets	94,217	11,849,740	20,591,382	32,535,339

	Liabilities
	Other liabilities	-	-	368,783	368,783
	Total Liabilities	-	-	368,783	368,783

	Interest rate sensitivity gap	94,217	11,849,740

At 31 December 2013		Up to	More than	Non-interest
		1 month	6 months	bearing	Total
Assets		£	£	£	£
	Cash and cash equivalents	477,495	-	-	477,495
	Financial assets held at fair value through profit or loss	-	8,755,007	31,902,460	40,657,467
	Receivables	-	-	26,746	26,746
	Total Assets	477,495	8,755,007	31,929,206	41,161,708

	Liabilities
	Other liabilities	-	-	171,003	171,003
	Total Liabilities	-	-	171,003	171,003

	Interest rate sensitivity gap	477,495	8,755,007

Interest rate sensitivity

At 31 December 2014, should interest rates have fallen by 25 basis points with all other variables remaining constant, the decrease in net assets attributable to holders of Ordinary Shares for the year would amount to approximately £236 (2013: £1,194) for assets up to 1 month respectively and £29,624 (2013: £9,516) for assets more than 6 months respectively. If interest rates had risen by 25 basis points it would have an equal but opposite effect as the decrease.

The income on the Company's cash assets is positively correlated to interest rates. As interest rates rise, the interest earned would follow (rise) thus increasing the value of the Company.

The Board reviews and agrees policies for managing these risks. The Investment Manager assesses the exposure to market risk when making investment decisions and monitors the overall level of market risk on the investment portfolio on an ongoing basis.

b) Commodity price risk

The Company is exposed to the risk of fluctuations in prevailing market commodity prices through its investment portfolio. Commodity price risk is beyond the Company's control but will be mitigated to a certain extent as a result of the Company's diversified portfolio as long as commodity prices remain uncorrelated. It is not possible to quantify within reasonable ranges the impact of commodity price changes on the valuation of the Company's investments. However, in general, long term commodity price increases should give rise to an increase in fair value of the Company's investments.

c) Liquidity risk

Liquidity risk is defined as the risk that the Company may not be able to settle or meet its obligations on time or at a reasonable price. The Company invests in unlisted equities for which there may not be an immediate market. The Company seeks to mitigate this risk by maintaining a cash and listed share position which will cover its ongoing operational expenses.

The Company has the ability to incur borrowings of up to 10% of its Net Asset Value but the Company's policy is to restrict any such borrowings for temporary purposes only, such as settlement mis-matches.

The table below analyses the Company's financial assets and liabilities into relevant maturity groupings based on the remaining period at the Statement of Financial Position date to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows.

At 31 December 2014	Less than			More than	No contractual
	1 month	1-3 months	3-12 months	12 months	maturity	Total
Assets	£	£	£	£	£	£
Cash and cash equivalents	94,217	-	-	-	-	94,217
Financial assets held at fair value through profit or loss	-	-	25,597	12,498,079	19,824,152	32,347,828
Receivables	93,294	-	-	-	-	93,294
Total Assets	187,511	-	25,597	12,498,079	19,824,152	32,535,339

	Less than			More than	No contractual
	1 month	1-3 months	3-12 months	12 months	maturity	Total
Liabilities	£	£	£	£	£	£
Other payables and accrued expenses	97,610	235,865	35,308	-	-	368,783
Total Liabilities	97,610	235,865	35,308	-	-	368,783

Net assets attributable to shareholders						32,166,556

At 31 December 2013	Less than			More than	No contractual
	1 month	1-3 months	3-12 months	12 months	maturity	Total
Assets	£	£	£	£	£	£
Cash and cash equivalents	477,495	-	-	-	-	477,495
Financial assets held at fair value through profit or loss	-	16,753	5,591,757	3,688,810	31,360,147	40,657,467
Receivables	26,746	-	-	-	-	26,746
Total Assets	504,241	16,753	5,591,757	3,688,810	31,360,147	41,161,708

	Less than			More than	No contractual
	1 month	1-3 months	3-12 months	12 months	maturity	Total
Liabilities	£	£	£	£	£	£
Other payables and accrued expenses	91,968	40,410	38,625	-	-	171,003
Total Liabilities	91,968	40,410	38,625	-	-	171,003

Net assets attributable to shareholders						40,990,705

d) Credit risk

Credit risk is the risk that a counterparty will be unable to pay amounts in full as they fall due. The Company has exposure to credit risk in relation to its cash balances, Convertible debt instruments and trade receivables as stated in the Statement of Financial Position. The maximum credit risk for the Company is £12,592,016 (2013:£9,733,438).

As at 31 December 2014, the Company's financial assets exposed to credit risk were held with the following weight:

Financial Assets	Counterparty	Credit	2014
		Rating	% of net assets
Convertible debt instruments
- Convertible Loan Note	Black Pearl Limited Partnership	NR	20.11
- Convertible Loan Note	ZAO Argentum	NR	15.16
- Convertible Loan Note	Bilboes Holdings	NR	0.88
- Convertible Loan Note	Ironstone Resources Limited	NR	0.43
- Convertible Loan Note	Polar Silver Resources Limited	NR	2.01
- Unsecured Convertible Debenture	Aquila Resources Inc	NR	0.26
Cash and cash equivalents	HSBC Bank plc	AA-	0.29
Total			39.14

As at 31 December 2013, the Company's financial assets exposed to credit risk were held with the following weight:

Financial Assets	Counterparty	Credit	2013
		Rating	% of net assets
Convertible debt instruments
- Convertible Loan Note	Black Pearl Limited Partnership	NR	13.29
- Convertible Loan Note	Argentum Convertible Note	NR	7.51
- Convertible Loan Note	Ironstone Resources Limited	NR	0.35
- Convertible Loan Note	Polar Silver Resources Limited	NR	1.22
- Unsecured Convertible Debenture	REBgold Corporation	NR	0.21
Cash and cash equivalents	HSBC Bank plc	AA-	1.16
Total			23.74

6. TAXATION

The Company is a Guernsey Exempt Company and is therefore not subject to taxation on its income under the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989. An annual exempt fee of £600 has been paid.

7. ADMINISTRATION FEES

The Administrator, HSBC Securities Services (Guernsey) Limited, is paid fees for acting as administrator of the Company at the rate of 7 basis points of gross asset value up to US$250 million; the rate reduces to 5 basis points of gross asset value above US$250 million. The Administrator is also reimbursed by the Company for reasonable out-of-pocket expenses. These fees accrue and are calculated as at the last business day of each month and paid monthly in arrears.

The administration fees paid for the year ended 31 December 2014 were £88,642 (2013: £94,618) of which £27,563 (2013: £13,671) was payable at 31 December 2014. HSBC Securities Services (Ireland) Limited, the sub-Administrator, is paid a portion of these fees by the Administrator.

The Administrator is also entitled to a fee for its provision of corporate secretarial services provided to the Company on a time spent basis and subject to a minimum annual fee of £40,000. The Company is also responsible for any sub-administration fees as agreed in writing from time to time, and reasonable out-of-pocket expenses. The Administrator is also entitled to fees of €5,000 for preparation of the financial statements of the Company.

8. MANAGEMENT AND PERFORMANCE FEES

The Manager was appointed pursuant to a management agreement with the Company dated 31 March 2010 (the "Management Agreement"). The Company pays to the Manager a management fee which is equal to 1/12th of 1.75 per cent of the total market capitalisation of the Company per month. The management fee is calculated and accrued as at the last business day of each month and is paid monthly in arrears.

The Performance Period is each 12 month period ending on 31 December in each year (the "Performance Period"). The Manager may in certain circumstances also be entitled to be paid a performance fee if the Net Asset Value at the end of any Performance Period exceeds the Hurdle as at the end of the Performance Period. The performance fee is subject to adjustments for any issue and/or repurchase of Ordinary Shares.

The amount of the performance fee is 15 per cent of the total increase in the Net Asset Value, if the Hurdle has been met, at the end of the relevant Performance Period, over the highest previously recorded Net Asset Value as at the end of a Performance Period in respect of which a performance fee was last accrued, (or the Issue Price multiplied by the number of shares in issue as at Admission, if no performance fee has been so accrued) having made adjustments for numbers of Ordinary Shares issued and/or repurchased as described above. In addition, the performance fee will only become payable if there has been sufficient net realised gains.

There were no performance fees for the current or prior period.

If the Company wishes to terminate the Management Agreement without cause it is required to give the Manager 12 months prior notice or pay to the Manager an amount equal to: (a) the aggregate investment management fee which would otherwise have been payable during the 12 months following the date of such notice (such amount to be calculated for the whole of such period by reference to the Market Capitalisation prevailing on the Valuation Day on or immediately prior to the date of such notice); and (b) any performance fee accrued at the end of any Performance Period which ended on or prior to termination and which remains unpaid at the date of termination which shall be payable as soon as, and to the extent that, sufficient cash or other liquid assets are available to the Company (as determined in good faith by the Directors), provided that such accrued performance fee shall be paid prior to the Company making any new investment or settling any other liabilities; and (c) where termination does not occur at 31 December in any year, any performance fee accrued at the date of termination shall be payable as soon as and to the extent that sufficient cash or other liquid assets are available to the Company (as determined in good faith by the Directors), provided that such accrued performance fee shall be paid prior to the Company making any new investment or settling any other liabilities.

No further performance fee will be accrued or paid until the Net Asset Value exceeds £94,720,839 (132.0p per share) as adjusted for further issues and repurchases of shares.

The management fee for the year ending 31 December 2014 was £472,295 (2013: £740,205) out of which £34,335 (2013: £42,297) was outstanding at the year end.

9. OTHER EXPENSES

	2014	2013
	TOTAL	TOTAL
	£	£
Professional/Consulting fees	50,275	44,142
Brokerage fee	27,806	34,745
Marketing costs	855	30,855
Registrar fees	20,980	30,790
Board meeting expenses	8,311	17,990
Compliance fees	10,000	11,667
Listing fees	25,876	10,569
Other regulatory fees	5,500	5,465
Guernsey regulatory fees	3,165	3,165
Website expenses	270	1,095
Miscellaneous expenses	17,532	11,358
	170,570	201,841

10. CASH AND CASH EQUIVALENTS

	2014	2013
	£	£
Deposits at HSBC Bank plc	94,217	477,495

11. SHARE CAPITAL

The Company has a total of 71,703,776 (2013: 66,142,533) Ordinary Shares in issue. In addition, the Company has 10,000 (2013: 10,000) Management Ordinary Shares in issue, which are held by the Investment Manager.

On 28 June 2014, the Company entered into an agreement to acquire US$2.5 million nominal amount of convertible loans in ZAO Argentum, the wholly owned subsidiary of Polar Silver Resources Limited, and 500 shares in Polar Silver Resources Limited for a consideration of £1.32 million. The consideration was settled through the issue of 2,259,357 Ordinary Shares of the Company at the unaudited net asset value of 58.5 pence per share on 31 May 2014. Under IFRS the consideration of this transaction has to be valued at listed price of 40.875 pence per share as at 28 June 2014. Therefore the consideration for this transaction is £0.92 million which is recognised in the financial statements.

On 1 July 2014, the Company entered into an agreement to acquire 5,000,000 Ordinary Shares of Global Oil Shale for a consideration of £1.75 million. This consideration was settled through the issue of 3,301,886 Ordinary Shares of the Company to the vendor at the unaudited net asset value of 53 pence per share on 30 June 2014. Under IFRS the consideration of this transaction has to be valued at listed price of 38 pence per share as at 1 July 2014. Therefore the consideration for this transaction is £1.25 million which is recognised in the financial statements.

The fair values of the loan notes and shares received were determined by reference to the valuation techniques as outlined in Note 3.

The above transactions had no impact on the profit or loss for the current financial year.

The final exercise date for the Subscription Shares was 2 April 2013. No Subscription Shares were exercised at this time and residual/unexercised Subscription Shares were subsequently cancelled.

The Ordinary Shares are admitted to the Premium Listing segment of the Official List.

Holders of Ordinary Shares have the right to receive notice of and to attend and vote at general meetings of the Company. Each holder of Ordinary Shares being present in person or by proxy at a meeting will, upon a show of hands, have one vote and upon a poll each such holder of Ordinary Shares present in person or by proxy will have one vote for each Ordinary Share held by him.

Holders of Management Ordinary Shares have the right to receive notice of and to attend and vote at general meetings of the Company, except that the holders of Management Ordinary Shares are not entitled to vote on any resolution relating to certain specific matters, including a material change to the Company's investment objective, investment policy or borrowing policy. Each holder of Management Ordinary Shares being present in person or by proxy at a meeting will, upon a show of hands, have one vote and upon a poll each such holder of Management Ordinary Shares present in person or by proxy will have one vote for each Management Ordinary Share held by him.

Holders of Ordinary Shares and Management Ordinary Shares are entitled to receive, and participate in, any dividends or other distributions out of the profits of the Company available for dividend and resolved to be distributed in respect of any accounting period or other income or right to participate therein. The Subscription Shares carried no right to any dividend or other distribution by the Company.

The details of issued share capital of the Company are as follows:

	2014		2013
	Amount	No. of shares	Amount	No. of shares
	£		£
Issued and fully paid share capital
Ordinary Shares of no par value*	67,848,780	71,713,776	64,777,056	66,152,533
(including Management Ordinary Shares)

The issue of Ordinary Shares during the year ended 31 December 2014 took place as follows:

	Ordinary Shares		Subscription Shares
	Amount	No. of shares	Amount	No. of shares
	£		£
Balance at 1 January 2014	64,777,056	66,152,533	-	-
Issue of Ordinary Shares	3,071,724	5,561,243	-	-
Balance at 31 December 2014	67,848,780	71,713,776	-	-

The issue of Ordinary Shares during the year ended 31 December 2013 took place as follows:

	Ordinary Shares			Subscription Shares
	Amount	No. of shares		Amount	No. of shares
	£		£
Balance at 1 January 2013	64,777,056	66,152,533		-	13,085,150
Cancellation of Subscription Shares	-	-		-	(13,085,150)
Balance at 31 December 2013	64,777,056	66,152,533		-	-

* On 9 March 2010, 1 Management Ordinary Share was issued and on 26 March 2010, 9,999 Management Ordinary Shares were issued.

Capital Management

The Company regards capital as comprising its issued Ordinary Shares. The Company does not have any debt that might be regarded as capital. The Company's objectives in managing capital are:

· To safeguard its ability to continue as a going concern and provide returns to shareholders in the form of capital growth over the long-term through a focused, global portfolio consisting principally of the equities or related instruments of natural resources companies;

· To allocate capital to those assets that the Directors consider are most likely to provide the above returns; and

· To manage, so far as is reasonably possible, any discount between the Company's share price and its NAV per Ordinary Share.

From August 2015, the Company will set aside at least 50% of the aggregate net cash proceeds of realisations over the immediately preceding six month period and utilise this cash to buy back shares if they are trading at a discount in excess of 15 per cent. to NAV. In addition the Board intends to allocate 15 per cent of the aggregate net realised cash gains achieved in the year, for distribution to Shareholders which may be done through share buybacks, tender offers or dividend payments. This will commence following completion of the audit of the current financial year.

As described in the Directors' Report on page 11, the Company does not currently intend to pay dividends or other distributions. The Directors monitor the extent to which capital has been deployed and the manner in which capital has been invested using, inter alia, sectoral and geographic analyses. The Directors also consider whether the Company should undertake further share issues or arrange buy-backs or other capital management programmes consistent with the above objectives although no such action has been taken so far.

The Company has authority to make market purchases of up to 14.99% of its own Ordinary Shares in issue. A renewal of such authority is sought from Shareholders at each Annual General Meeting of the Company or at a General Meeting of the Company, if required. Any purchases of Ordinary Shares will be made within internal guidelines established from time to time by the Board and within applicable regulations.

The Company is not subject to any externally imposed capital requirements.

12. RELATED PARTY TRANSACTIONS

The Directors' interests in the share capital of the Company were:

	Number of Ordinary Shares 2014	Number of Ordinary Shares 2013
Edward Flood	65,000	65,000
Christopher Sherwell	25,000	25,000
Clive Newall	25,000	25,000

Mr Sherwell also had an indirect interest in the shares of the Company through an investment in another Fund which is also managed by the Manager.

The Manager, Baker Steel Capital Managers (Cayman) Limited, had an interest in 504,832 Ordinary Shares at 31 December 2014 (2013: 504,832).

The Investment Manager, Baker Steel Capital Managers LLP, had an indirect interest in 150,000 ordinary shares in the Company through Ironman Investment Company Limited at 31 December 2014 (2013: 150,000). Ironman Investment Company Limited is a company set up by the Investment Manager for co-investment purposes.

The Investment Manager, Baker Steel Capital Managers LLP, had an interest in 10,000 Management Ordinary Shares at 31 December 2014 (2013: 10,000).

CFRBSGF had an interest in 6,080,000 Ordinary Shares in the Company at 31 December 2014. These shares are held in a custodian account with The Bank of New York (Nominees) Limited. CFRBSGF shares a common Investment Manager with the Company (2013: 6,080,000).

GDG had an interest in 3,000,000 Ordinary Shares in the Company at 31 December 2014. These shares are held in a custodian account with HSBC GC. GDG shares a common Manager and Investment Manager with the Company (2013: 3,000,000).

GNRMF had an interest in 1,727,308 Ordinary Shares in the Company at 31 December 2014. These shares are held in a custodian account with HSBC GC. GNRMF shares a common Manager and Investment Manager with the Company (2013: 1,727,308).

The Management fees and Director's fees accrued for the year were:

	2014	2013
Management fees	472,295	740,205
Director's fees	140,000	140,000

The Management fees and Director's fees outstanding at the year end were:

	2014	2013
Management fees	34,335	42,297
Director's fees	35,712	36,000

13. SUBSEQUENT EVENTS

On 25 February 2015, the Company issued 3,368,488 New Ordinary Shares at a price of 36.2p per share pursuant to valid applications under an Open Offer to shareholders.

On 25 February 2015, the Company issued a total of 38,819,601 New Ordinary Shares in respect of the acquisition of assets as outlined in a Circular to Shareholders and Prospectus both dated 26 January 2015. This issue comprised 30,468,522 New Ordinary Shares issued at 42.6p per New Ordinary Share as consideration for the acquisition of unlisted investments and 8,351,079 new Ordinary Shares issued at 36.2p per New Ordinary Share as consideration for the acquisition of listed investments. The legal fees payable as at 31 December 2014 of £167,806 relates to this event.

Following the year end, Black Pearl Limited Partnership agreed an extension to its loan note to Rui Tong Limited from 25 November 2014 to 25 March 2015 and repayment is expected to be received during the two month moratorium period thereafter. As compensation for this extension, the interest rate on the loan increased retrospectively from 20% to 25%. This will increase interest receivable by the Company at 25 March 2015 by approximately US$854,499 (£548,283).

14. APPROVAL OF ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS

The Annual Report and Audited Financial Statements for the year end 31 December 2014 were approved by the Board of Directors on -13 April 2015.

GLOSSARY OF TERMS

4PE - Platinum, Palladium, Gold and Rhodium

CFRBSGF - CF Ruffer Baker Steel Gold Fund

DRAVs - Development Risk Adjusted Values

DRC -- Democratic Republic of Congo

GFSC - Guernsey Financial Services Commission

g/t - Grams per tonne

IFRS - International Financial Reporting Standards as adopted by the European Union

IndexVal - Where there have been no known transactions for 6 months, at the Company's half year and year end, movements in IndexVal will generally be taken into account in assessing Fair Value where there has been at least a 10% movement in IndexVal over at least a six month period. The IndexVal results are used as an indication of trend and are viewed in the context of investee company progress.

IPO - Initial Public Offering (stock market launch)

JORC - AUSTRALASIAN JOINT ORE RESERVES COMMITTEE

The Code for Reporting of Mineral Resources and Ore Reserves (the JORC Code) of the Australasian Joint Ore Reserves Committee (JORC) is widely accepted as a standard for professional reporting of mineral resources and ore reserves. Mineral resources are classified as 'Inferred', 'Indicated' or 'Measured', while ore reserves are either 'Probable' or 'Proven'.

Mt - million tonnes

NI 43-101 - CANADIAN NATIONAL INSTRUMENT 43-101

Canadian National Instrument 43-101 is a mineral resource classification instrument which dictates reporting and public disclosure of information in Canada relating to mineral properties.

NR - Not rated

PEA - Preliminary Economic Assessment

PGM - Platinum Group Metals - Platinum, Palladium, Rhodium, Iridium, Ruthenium and Osmium

POI Law - Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended

SORP - Statement of Recommended Practice issued by The Association of Investments Companies dated January 2009

This information is provided by RNS

The company news service from the London Stock Exchange

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