London, UK, 14 Mai 2024

Edison issues review on Baker Steel Resources Trust (BSRT): Potential to generate a 20%+ yield

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.

BSRT’s portfolio does not simply offer geared exposure to a basket of commodities, but provides the potential to generate returns from bringing junior mining projects up the development curve. Its current portfolio includes several maturing assets, many of which are already in production. BSRT’s manager estimates that upon full production ramp-up of its major projects, its portfolio could potentially generate total royalty and dividend income of £11–17m pa. This would represent a very healthy 19–30% annual yield on its current share price, though we note that this is still subject to project execution risks. Most of this potential comes from Futura Resources and Cemos Group, which plan to complete their production ramp-up/expansion in the next 12–24 months.

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