Baker Steel Resources Trust
Key takeaways from the Cemos site visit
30 October 2024
We recently visited the Tarfaya cement grinding line of Cemos Group, one of the two largest holdings of Baker Steel Resources Trust (BSRT), which made up 30.8% of the trust’s NAV as of end-September 2024. The facility’s location in Southern Morocco allows it to benefit from the extensive public infrastructure investments in the region. Cemos’s two major investment projects (a compact calcination unit (CCU) and second grinding line) offer the prospect of a significant increase in earnings from 2025. The business is considering, on successful completion of these investments, an IPO on the Casablanca Stock Exchange, where we believe it could command an attractive valuation. MORE »
Interim revaluations bring H124 NAV TR to c 5%
18 July 2024
Baker Steel Resources Trust (BSRT) has released its end-June 2024 NAV (following the usual half-year valuation review of its unlisted holdings), posting a 1.8% NAV increase versus end-May 2024, which resulted in an H124 NAV total return (TR) of 4.9%. Major positive drivers included Cemos, a Morocco-based cement producer, and BSRT’s royalty over the Bilboes gold project in Zimbabwe (owned by Caledonia Mining Corporation, CMCL). This was partly offset by the fair value reduction of Kanga Investments and share price declines of some listed holdings. Importantly, BSRT’s half year revaluations did not capture some recent positive developments at Futura Resources, its largest holding. BSRT’s shares currently trade at a c 34% discount to NAV. MORE »
Potential to generate a 20%+ yield
14 May 2024
Baker Steel Resources Trust (BSRT) offers the potential for regular dividend and royalty income, as well as realisation proceeds, from its maturing portfolio of natural resources companies. Despite the multiple headwinds recently affecting junior mining projects, its largest holding (Futura Resources) was able to successfully close a financing round in September and advance one of its coking coal mines to production. Moreover, Cemos Group is eyeing the deployment of a second grinding line and clinker plant to significantly increase its earnings. Despite the recent share price rally, BSRT’s shares trade at a 33% discount to NAV. MORE »
Strong revaluation boost from Futura
23 January 2024
Baker Steel Resources Trust (BSRT) has reported a strong 16.3% NAV increase in its end-December 2023 monthly update (reducing the FY23 NAV decline to 6.3%), following its year-end portfolio valuations update. The key driver was a c 47% revaluation of Futura Resources, BSRT’s largest holding, which owns two coking coal mines in Australia. This follows the successful financing in September 2023, which allowed Futura to advance its Wilton mine to production. At the last closing price, BSRT shares are trading at a 44% discount to its unaudited end-2023 NAV. MORE »
Annual review results in a strong NAV uplift
21 January 2021
Baker Steel Resources Trust (BSRT) reported an impressive NAV total return (TR) of 29.2% for 2020, visibly ahead of the EMIX Global Mining Index (22.2% TR in sterling). This largely resulted from a yearend valuation review of unlisted portfolio holdings and was driven by a combination of projects moving up the development curve, the rebound in commodity prices (CRB Commodity Index up by 21% in H220) and higher market multiples of listed peers (vs end-June). Key contributors include Cemos reaching full production capacity and Tungsten West being revalued after recent first closing of its £5.0m funding round. Their carrying value almost doubled, adding 8.9pp and 8.0pp to portfolio NAV TR, respectively. MORE »
NAV yet to reflect latest project developments
17 November 2020
Baker Steel Resources Trust (BSRT) recorded a solid 10.8% NAV total return in the 12 months ended 30 October 2020, assisted by the progress of several projects and its precious metals exposure. Looking ahead, potential positive NAV triggers for Q420 and Q121 relate in particular to BSRT’s three major projects (Bilboes, Tungsten West and Futura), which made up 45% of its NAV at end October 2020. On the other hand, the recently published pre-feasibility study (PFS) on the Prognoz mine assumes lower annual output than the preliminary economic assessment (PEA). However, this should be partially offset by a lower discount rate applied in the valuation due to the move to PFS, as well as the current favourable silver price. MORE »
Business as usual despite pandemic outbreak
10 August 2020
Baker Steel Resources Trust (BSRT) carried out an additional review of its unlisted holdings as at end-March 2020 to better reflect the impact of the COVID-19 crisis on its portfolio valuation. By the regular interim review at end-June 2020, however, the pandemic-related NAV declines had been fully offset. Consequently, the year to date NAV total return (as at 31 July) sits at 2.2%, which already reflects the subsequent equity markets rebound, which started in April. Moreover, we note that with several NAV triggers expected to materialise in the current year (described in detail below), BSRT seems well-placed to improve its NAV TR in the next few months. MORE »
Several potential NAV triggers ahead
2 March 2020
Baker Steel Resources Trust (BSRT) offers a unique approach to investment in the natural resources sector, with early-stage (pre-IPO) engagement and specialist listed opportunities. In FY19, BSRT posted a solid NAV return of c 30%, driven by the revaluations of unlisted holdings and Polymetal’s share price increase. It reduced its Polymetal position to finance a share tender offer and a £5m investment in Tungsten West. Management aims to maintain this momentum in FY20 with handful of potential NAV triggers as holdings move along the development curve and hence increase in value. MORE »
Pre-IPO focused natural resources specialist
24 June 2019
Baker Steel Resources Trust (BSRT) is unique in offering UK investors access to early-stage (pre-IPO) and specialist listed opportunities in the natural resources sector, which can be higher-risk but offer the prospect of outsize potential returns. The highly experienced investment team is very selective and aims to generate gains through specific risks being mitigated as projects progress along the development curve, rather than relying on commodity price rises. Investments are typically made via convertible loan notes, often in stages, to limit downside risk. BSRT proactively works with investee companies to unlock value and investments can take a number of years to mature. Performance has varied since its launch (although ahead of most peers over one and three years), but BSRT’s investment team sees a number of near-term catalysts for potentially significant valuation gains. MORE »
