Interim Management Statement

RNS Number : 5680U

Baker Steel Resources Trust Ltd

18 October 2010

 



BAKER STEEL RESOURCES TRUST LTD

www.bakersteelresourcestrust.com

September 2010 Quarterly Factsheet

At 30 September 2010	Price / Index Level	% Change in Quarter	% Change from Inception
Net Asset Value (pence/share)	93.7	-1.9%	-4.3%*
Ordinary Share Price (pence/share)	84.0	-13.6%	-16.0%**
Subscription Share Price (pence/share)	14.5	-42.0%	n/a
MSCI World Index	305.16	+13.8%	-1.0%†
HSBC Global Mining Index	1341.23	+21.1%	+3.1†
CRB Index	286.86	+11.0%	+5.0%†
Chinese Domestic Iron Ore - Hebei/Tangshan (US$/t)	181	+16.0%	-5.7%†
Copper (US$/t)	8006	+23.5%	7.4%†
Gold (US$/oz)	1308.35	+5.3%	12.0 %†

Source: Bloomberg                                                       † closing 27/4/10, **Issue price 28/4/10, * NAV 30/4/10 

This document constitutes an interim management statement for the period from 1 July 2010 to 15 October 2010 (the "Period"). Financial information has been drawn up as at 30/9/2010. There have been no material changes since that date.

Review

Baker Steel Resources Trust Limited ("BSRT") has now been trading for a little over 5 months and the Company is 67% invested. The NAV was down 1.9% to 30 September 2010, largely due to an appreciation in Sterling against the US dollar, in which the majority of the Company's investments are denominated.

During the Period, markets for commodities and mining equities have recovered strongly with the HSBC Global Mining Index rising 21.1% to 30 September 2010. Under the Company's valuation policy, carrying values for unlisted investments are not generally adjusted for short term movements in the prices of listed equities. However if this is perceived to be a longer term re-rating and is considered to be indicative of a change in the investments' fair value, then adjustments would be considered.

There has been corporate activity in a number of BSRT's investments. During August, seven directors of Ferrous Resources were replaced by eight shareholder appointed directors, representing over 75% of the shareholder base, following postponement of the IPO in July. The new board has appointed Deutsche Bank to examine financing options for the company going forward. This strategic process is expected to be completed during the fourth quarter.

Approval from the government of the Democratic Republic of Congo ("DRC"), for the purchase of Copperbelt by a Chinese consortium has taken longer than anticipated and following operational problems in China for one of the two original consortium members, it withdrew from the proposed acquisition. Copperbelt has signed a revised agreement with the other consortium member and the acquisition is now scheduled for completion during November 2010.

In July a new investment was made in Forbes & Manhattan Coal Corporation ("Forbes Coal") a private company in the process of listing through a reverse takeover. Forbes Coal duly listed on the Toronto Stock Exchange in September and was up 23.9% on BSRT's acquisition price at 30 September 2010.

Outlook

Although the listed equity markets for mining shares, in particular in the gold sector, have found renewed strength over the Period, it has remained difficult for new listings to come to the market. Combined with investors preferring more liquid investments, this has resulted in continued constraints on unlisted mining projects raising finance, which in turn continues to provide opportunities for BSRT. A number of negotiations for new investments are well advanced and the Company is moving forward to becoming fully invested.

Investment Objective

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.

Investment Strategy

Investing predominantly in attractively valued private companies with strong development projects and focused management and also in listed securities to exploit value inherent in market inefficiencies.

Asset Allocation Unlisted Equities    £37.5 M   60.6% Listed Equities        £  3.9 M     6.4% Net Cash &               £ 20.5 M  33.0 % Equivalents                           Net Assets               £ 61.9 M

Shares in Issue Trading:                    The London Stock Exchange Ordinary:              66,030,632 Code:                                               BSRT ISIN                                 GG00B6686L20 Subscription:                        13,197,051 Code:                                             BSRW ISIN                               GG00B64WLC23

Financial Calendar Listing Date:                   8 April 2010 Year End:                      31 December Interims:                                 August Finals                                           April

Largest Investments (at 30 September 2010)

Ferrous Resources Limited                                                            18.9% NAV 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 Joint Ore Resource Committee ("JORC") resources of 4.5 billion tonnes of iron ore at an average grade of 33.52% Fe.	Investment Manager Baker Steel Capital Managers LLP Investment Advisers AWR Lloyd Rock Capital Partners Ltd
Ivanhoe Nickel and Platinum Limited                                          17.6% NAV A private company with a major copper project in the Democratic Republic of Congo and a platinum project in South Africa, which is yet to publish JORC resources on either project.	Management Fees Monthly:                    1/12 of 1.75% of Market  Capitalisation Performance: 15% of NAV growth (if over 8% p.a. compound hurdle rate, with high watermark
Gobi Coal & Energy Limited                                                           10.6% NAV A private company with three thermal, pulverised coke injection ("PCI") and coking projects in Mongolia with a JORC compliant resource of 322 million tonnes.	Board Howard Myles (Chairman) Ed Flood Charles Hansard Clive Newall Chris Sherwell
Copperbelt Minerals Limited                                                           5.5% NAV A private limited company with a 68% interest in the Deziwa Copper-Cobalt Project in the Democratic Republic of Congo. Copperbelt completed a positive Definitive Feasibility Study on the project in January 2009.	Joint Brokers RBC Capital Markets [phone] Winterflood Investment Trusts [phone]
First Coal Corporation                                                                       4.3% NAV A private company with a coking and PCI coal project in British Columbia, Canada, containing NI-43-101 compliant resources of 78 million tonnes of coal.	Contact: Baker Steel Capital Managers LLP 86 Jermyn Street, London SW1Y 6JD [phone] [e-mail]
Forbes & Manhattan Coal Corporation (Forbes Coal)                 3.8% NAV A coal producer listed on the Toronto Stock Exchange with two mines in South Africa containing total reported resources of 106 million tonnes.	Baker Steel Resources Trust Ltd is incorporated in Guernsey Registration Number: 51576 Arnold House, St Julian's Avenue,            St Peter Port, Guernsey
South American Ferro Metals Limited ("SAFM")                          3.2% NAV A private company whose main asset is the Ponto Verde iron ore project in Minas Gerais in Brazil. The remainder of the Portfolio (excluding cash) comprises four holdings totalling 3.0% NAV.

Further information is available on BSRT's website: www.bakersteelresourcestrust.com

Important Information

This document is issued and approved by Baker Steel Capital Managers LLP (authorised and regulated by the Financial Services Authority). The information contained in this document  is not intended to and does not constitute an offer, solicitation, inducement, invitation or commitment to purchase, subscribe to, provide or sell any securities, service or product or to provide any recommendations which should be relied upon for financial, securities, investment or other advice or to take any decision based on such information. Individual advice should be sought from legal, financial, personal and other advisors before making any investment or financial decision or purchasing any financial, securities or investment-related service or product. As a registered collective investment scheme, shares in Baker Steel Resources Trust Ltd are not permitted to be directly offered to the public in Guernsey but may be offered to regulated entities in Guernsey or offered to the public by entities appropriately licensed under the Protection of Investors (Bailiwick of Guernsey) Law 1987 as amended.

 

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