TIDMARCL
RNS Number : 4484H
Altus Resource Capital Limited
19 May 2014
ALTUS RESOURCE CAPITAL LIMITED
Interim Management Statement for the period 1 January 2014 to 19
May 2014 (the "Period").
Overview
Altus Resource Capital Limited (LSE:ARCL) (the "Company") is a
Guernsey registered, closed-ended investment company which listed
on the Specialist Fund Market of the London Stock Exchange on 30
June 2009 and the Channel Islands Securities Exchange on 22
December 2009.
The Company announces that the unaudited net asset value at 30
April 2014 was GBP30.7 million, representing a rise of 5.6% from 1
January 2014.
Investment Objectives and Policy
The Company's objective is to realise capital growth from a
concentrated portfolio of junior resource equities and to generate
a significant capital return to shareholders.
The Company invests in companies engaged in the exploration,
development and mining of metals and minerals with a focus on
companies that operate in the gold sector. Portfolio companies will
be predominantly, but not exclusively, listed or quoted on either
UK markets or other recognised stock exchanges including the
Canadian and Australian markets.
Financial Highlights and Investment Review by Altus Capital
Limited
The unaudited net asset value of the Company was GBP30.7 million
or GBP0.77 per share at the end of April 2014, representing a 5.6%
gain from the start of the Period.
At the end of April, the Company's portfolio comprised 26
holdings in junior mining and exploration companies, exposure to
gold, silver, platinum and palladium metals via exchange traded
funds (ETFs) and an investment in Altus Global Gold Limited which
is an open-ended vehicle seeded by the Company and focused on the
mid-tier gold sector. The Company has acquired its positions in the
market and through participating in new equity issues.
Gold and gold equities have both performed positively during the
Period following a prolonged period of contraction in 2012 and
2013. After gaining approximately 15% to US$1,382 per ounce in
mid-March, the price of gold price declined to US$1,292 per ounce
at 30 April representing an increase of 7.1% from the start of the
Period. Gold equities outperformed the gold price, with the FTSE
Gold Mines Index and S&P/ TSX Gold Index rising approximately
30% to mid-March and ending up 13.3% and 11.5% respectively at the
end of April. The sector's focus on cutting costs and re-optimising
assets, in order to deliver returns attractive to the broader
investment community, has started to bear fruit with the global
average cash cost of producing gold trending downwards in the
fourth quarter of 2013 and so far in 2014. The outperformance of
gold equities relative to the gold price reflects this cost cutting
by the industry and improving margins as well as the oversold
nature of the industry at the end of 2013.
During the Period the Company also benefited from the strong
performance of platinum and palladium, which gained 4.1% and 13.0%
respectively to the end of April as a result of ongoing industrial
action in South Africa and the escalation of tensions over the
Ukraine. South Africa, which accounts for over 70% of global mined
platinum supply and close to 40% of global mined palladium supply,
has faced prolonged industrial action and strikes at a number of
its platinum mines as unions seek to negotiate higher salaries for
miners. With close to 40% of global mined palladium coming from
Russia, in addition to over 10% of platinum supply, the ongoing
instability in Ukraine and potential imposition of sanctions by the
West against Russia, creates further supply-side concerns,
particularly for palladium.
The strong performance of the gold and precious metals sector
was offset by the underperformance of copper and key bulk
commodities including iron ore, coal and mineral sands, on the back
of the potential slow-down of the Chinese economy and weakness
across many other emerging market economies.
As a result the Company underperformed the major precious metals
indices although outperformed the diversified mining indices such
as the FTSE 350 Mining Index which gained 2.7% to the end of April.
Junior resource equities also generally underperformed over the
Period highlighting investors' continued cautious approach with the
FTSE AIM Basic Resources and the ASX Small Cap Resources indices
declining 11.9% and 3.2% respectively to the end of April. However,
the Manager is confident that focusing on quality small- and
mid-cap developers and producers in preferred commodity groups with
the potential to generate very significant near-term cash flow,
such as Nevsun Resources, OceanaGold and Base Resources, will
result in superior gains over the course of 2014. In line with this
strategy, the Manager increased the Company's exposure to Nevsun
Resources and OceanaGold early in the Period and, following strong
share price appreciation on the back of excellent operating
results, realised significant profit from OceanaGold which has
gained approximately 70% over the Period.
Outlook - As provided by the Investment Manager, Altus Capital
Limited
The Manager anticipates that over the medium term the gold price
will continue to strengthen given the broader macro-economic
outlook in the West and surging demand for the metal from the East.
However, short term price volatility can be expected as the US
Federal Reserve continues its QE tapering in the near term and
threatens to raise interest rates during 2015. Critically
therefore, with approximately 50% of large and mid-tier gold
producers being marginal at less than US$1,100 per ounce, the
Company remains focused on investing in financially robust equities
and projects that have the lowest operating costs or the
flexibility within their mining operations to adapt to a changing
market environment.
Raising new capital for mine development will remain challenging
in the short term, most particularly for exploration, so earlier
stage companies are only considered where the project offers robust
returns and therefore has clear acquisition potential. The Manager
therefore believes that improving margins and further M&A will
continue to drive up the valuations of quality gold equities
helping to further differentiate them from their peers.
The demand outlook of the broader suite of metals and minerals,
in particular diamonds and base metals, continues to be dominated
by China which accounts for typically 40% of global consumption.
Large capital projects are being delayed, mature mines being closed
down and, with too few new discoveries, the supply-side for many
metals and minerals is expected to come under pressure in the
medium term and should support strengthening metals prices.
Investment Allocation
At 30 April 2014, the Company's assets were allocated in the
following approximate proportions:
Asset Allocation by Asset Allocation by
Commodity Geography
Gold 46.2% Africa 37.0%
Silver 0.7% Europe 0.0%
Bulk Minerals 13.6% North America 17.0%
Base Metals 14.4% South America 16.3%
Central Asia
Energy Minerals 4.8% & Russia 0.0%
Platinum Group
Metals 5.3% Asia - Other 6.4%
Diamonds 7.3% Australasia 1.1%
Other (incl.
Other 0.0% commodity exposure) 14.4%
Cash 7.7% Cash 7.7%
Asset Allocation by
Development Stage
Production 31.4%
Development 37.8%
Exploration 16.1%
Commodity Exposure 6.9%
Cash 7.7%
Note: There may be overlap between the holdings of the Company
and Altus Global Gold Ltd. These common holdings are not
consolidated in the asset allocation splits above.
Material events
Other than the information set out above, the Board is not aware
of any events during the Period, which would have had a material
impact on the financial position of the Company.
Investor Information
The latest available information on the Company can be accessed
via www.altrescap.com.
This document has been issued by, and is the sole responsibility
of, the Company and is for information purposes only. It is not,
and is not intended to be an invitation, inducement, offer, or
solicitation, to deal in the shares of the Company. The price of
shares in the Company and the income from them may go down as well
as up and investors may not get back the full amount invested on
disposal of shares in the Company. An investment in the Company
should be considered only as part of a balanced portfolio of which
it should not form a disproportionate part. Prospective investors
are advised to seek expert legal, financial, tax and other
professional advice before making any investment decision.
By order of the Board
Altus Resource Capital Limited
Administrative Enquiries: Investment Manager: Shareholder Enquiries:
JTC Fund Managers Altus Capital Limited Nimrod Capital LLP
(Guernsey) Limited
Tel: +44 (0) 1481 702400 Tel: +44 (0) 1235 511767 Tel: +44 (0) 20 7382 4565
info@altus-cap.com info@nimrodcapital.com
E&OE - In Transmission
END OF ANNOUNCEMENT
This information is provided by RNS
The company news service from the London Stock Exchange
END
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