TIDMARCL
RNS Number : 4408X
Altus Resource Capital Limited
19 November 2014
ALTUS RESOURCE CAPITAL LIMITED
Interim Management Statement for the period 1 July 2014 to 19
November 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 31
October 2014 was GBP24.0 million, representing a fall of 24.2% from
1 July 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 GBP24.0 million
or GBP0.60 per share at the end of October 2014, representing a
24.2% fall from the start of the Period.
At the end of October, the Company's portfolio comprised 23
holdings in junior mining and exploration companies, exposure to
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.
After a positive finish to the financial year on 30 June, both
gold and gold equities have faced strong downward pressures. The
gold price declined 11.6% to US$1,173 per ounce, its lowest level
for four years and the FTSE Gold Mines Index and the S&P/TSX
Gold Index fell 33.3% and 32.8% respectively over the four months
to the end of October. Gold was negatively impacted by a
strengthening US Dollar which itself resulted from the formal end
of the US Federal Reserve's quantitative easing programme and
increasing expectation of an interest rate rise in 2015. At the
same time the Bank of Japan increased its asset purchasing
programme causing the Yen to weaken and further strengthening the
US Dollar.
Platinum and palladium were also weak during the Period.
Palladium initially rose to a high of over US$900 per ounce during
August but the strengthening US Dollar combined with the ending of
industrial action in South Africa pushed the price to US$792 per
ounce at the end of October, a decline of 6.0% since the beginning
of July, whereas platinum declined 16.7%.
The strong US Dollar drove other commodities down with copper
and silver falling 4.0% and 23.2% respectively, and, despite
continuing tensions in the Middle East, Brent crude oil declined
over 23% from the beginning of July to the end of October.
Diversified mining equities also declined with the FTSE 350 Mining
Index down 8.7% and the FTSE AIM Basic Resources and the ASX Small
Cap Resources indices of junior resource equities declining 19.0%
and 17.0% respectively to the end of October.
Against this backdrop and with a weighting of approximately 50%
of the portfolio towards precious metals, the Company's NAV
declined 24.2% to the end of October. With the Ebola crisis
threatening to bring parts of West Africa to a standstill the
Company's exposure to the region was reduced and holdings with
operations in countries directly impacted by the virus were exited
entirely. The Investment Manager increased the Company's cash
backing in October ahead of the precipitous market falls at the end
of the month and has subsequently been selective redeploying into
core portfolio positions.
Outlook - As provided by the Investment Manager, Altus Capital
Limited
The Investment Manager expects short-term volatility to persist
with the strength of the US Dollar impacting commodity prices. The
longer-term fundamentals remain supportive of higher commodity
prices with continuing demand for precious and industrial metals
from China and other emerging economies and a recovery of western
economies.
Resource equities, and in particular junior and gold equities,
are trading at historic low valuations. With the paucity of world
class discoveries in recent years and the cuts made to exploration
budgets across the board, major and mid-tier companies will
increasingly look to replenish their depleting resources through
acquisitions. High quality projects are therefore expected to
command a premium and receive a rerating by a more discerning
market.
The Manager maintains a focus on well-managed companies with
high quality projects and robust balance sheets. These companies
are well-positioned to survive a prolonged market downturn and,
with low-cost and high-margin assets, will likely become take-over
targets. The Investment Manager remains confident that the
Company's strategy of maintaining a concentrated portfolio of
quality junior resource equities, offers the potential to deliver
significant returns.
The Company's Articles incorporate a provision that requires a
continuation vote to be proposed at a meeting of the Company's
Shareholders (by way of an ordinary resolution). In accordance with
Article 154A, a continuation vote will be put to Shareholders at
the next Annual General Meeting of the Company on 4 December 2014.
Further details about the continuation vote, the Annual General
Meeting and a more in depth review of the market and investment
opportunity presented by the Investment Manager are available in
the Shareholder Circular at: ARCL Shareholder Circular.
Investment Allocation
At 31 October 2014, the Company's assets were allocated in the
following approximate proportions:
Asset Allocation by Commodity Asset Allocation by Geography
Gold 40.2% Africa 30.9%
Silver 1.9% Europe 0.0%
Bulk Minerals 7.8% North America 18.6%
Base Metals 20.0% South America 16.3%
Energy Minerals 4.6% Central Asia & Russia 0.0%
Platinum Group Metals 8.6% Asia - Other 5.9%
Diamonds 7.6% Australasia 1.1%
Other (incl. commodity
Other 0.0% exposure) 17.8%
Cash 9.3% Cash 9.3%
Asset Allocation by Development
Stage
Production 34.5%
Development 26.3%
Exploration 19.4%
Commodity Exposure 10.5%
Cash 9.3%
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 (Guernsey) Limited Altus Capital Limited Nimrod Capital
LLP
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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