Baker Steel Resources Trust Delivers Stellar NAV Growth Amid Commodity Rollercoaster
While most mining investors were white-knuckling their way through 2024’s commodity swings, Baker Steel Resources Trust (BSRT) quietly delivered a masterclass in selective resource investing. Today’s annual report reveals a 16.2% NAV surge to 89.7p per share – a performance that left the MSCI Metals & Mining Index eating dust with its 13.5% decline.
The Great Commodity Divergence: Winners vs. Losers
2024 wasn’t a uniform “rising tide” year. The market cleaved sharply between:
- 🟢 Precious metals gang: Gold (+27%), Silver (+21.5%)
- 🟡 Base metals crew: Copper (+2%), Tin (+14.6%)
- 🔴 Bulk commodity casualties: Iron ore (-27%), Coking coal (-40%)
The trust’s secret sauce? Heavy exposure to the energy transition metals complex while maintaining strategic positions in cash-generative industrial plays.
Portfolio Powerhouses: The 65% Duo Driving Returns
Futura Resources (33.4% of NAV)
This Australian metallurgical coal play delivered 83% growth since initial investment, now producing 1Mtpa from Queensland’s Bowen Basin. But here’s the rub – current coking coal prices at $170/tonne are testing industry margins. The board remains bullish on long-term demand from India’s steel growth, but I’m watching working capital needs like a hawk.
CEMOS Group (31.4% of NAV)
Morocco’s cement dark horse saw 90% growth, with EBITDA doubling to €9m. The upcoming clinker plant (Q2 2025) could be transformative – vertical integration typically unlocks 15-20% margin improvements in cement plays. With World Cup 2030 infrastructure spending looming, this could become BSRT’s cash cow.
The Discount Dilemma: 37% Gap Raises Eyebrows
Despite the NAV fireworks, shares trade at a chunky 37% discount. Chairman Fiona Perrott-Humphrey isn’t hitting the panic button yet, noting sector-wide discounts. But the appointment of Shore Capital as broker signals action is coming:
- 💷 Potential share buybacks/tender offers
- 📈 Improved liquidity initiatives
- 💰 Future distributions from 2025 cash flows
My take? The discount reflects illiquidity concerns rather than asset quality. Royalty streams from Bilboes Gold (8.8% NAV) could be the catalyst for re-rating when production starts in 2028.
Strategic Chess Moves: Portfolio Reshaping Ahead
The Investment Manager isn’t resting on laurels:
- ♟️ Nussir exit: Vended into Blue Moon Metals at 77% premium
- 🎯 Energy transition focus: Building exposure to copper, tin, tungsten
- ⚖️ Concentration risk management: Targeting disposals in top holdings
New board member Patrick Meier (ex-Ecora chair) brings royalty expertise that could prove crucial in monetising assets.
Storm Clouds & Silver Linings: The 2025 Outlook
The trust faces twin headwinds:
- 🌪️ US-China trade wars disrupting commodity flows
- ⛏️ China’s slowing steel demand
But hidden tailwinds abound:
- 🔋 Energy transition metals entering structural deficit
- 🏗️ Moroccan infrastructure boom (CEMOS’ playground)
- ⚡ Electrification of mining (Nussir’s zero-carbon copper project)
The Bottom Line: Contrarian Play With Catalyst Potential
BSRT isn’t for the faint-hearted – its concentrated portfolio and illiquid holdings demand strong conviction. But for investors comfortable with natural resource cycles, this trust offers:
- 🎯 Pure-play exposure to underfollowed commodities
- 🔄 Multiple paths to NAV realisation (royalties, dividends, M&A)
- 📉 Margin of safety through persistent discount
As Fiona Perrott-Humphrey notes: “We’re harvesting value while planting seeds for the next commodity cycle.” In a world scrambling for critical minerals, BSRT’s portfolio might just be holding several skeleton keys to the energy transition.
