St Peter Port Capital suffering from commodity weakness

St Peter Port Capital has announced its interim results for the six months ended 30 September 2015. During the period, the company’s NAV has by 21% to 46.2p per share. The company says that, although some companies continue to make good progress, the resource related part of the portfolio has suffered from the weakness in the commodity markets – particularly oil and metals. The company realized cash of £378k during the period bringing cash realized, since its launch in 2007 to £65.9m. As at the period end, the company held investments in 25 companies (excluding companies written down to zero) and, as at 8 December 2015, held cash of £3.5m. The company says that they remain focused on trying to achieve liquidity wherever possible.

Since the period end, the Company has made further small disposals in two quoted holdings, realising a further £38,000. In addition, one of our companies made a capital distribution of £132,000 in November. Realisations are discussed further in the Investment Manager’s Report.

The company holds investments in several technology companies, including 3D TV, software for gaming on mobile devices, bio-technology and cleaner techniques for mineral extraction. In resources, it owns interests in companies in oil and gas (including enhanced recovery techniques); minerals including copper, nickel, uranium, rarer elements and coal. It also has soft commodity companies, including the largest farmland owner in Uruguay, a plantation company with fast-growing timber in Mozambique and a potash mine development in Brazil.

Most of the portfolio companies have their main activity outside of the UK and a significant proportion were sourced from brokers whose main business is outside the UK.  Some are now listed in Canada or Australia and SPPC has been disposing of part or all of these holdings where there is sufficient liquidity. The company say that many are now more likely to seek acquisition by a larger company rather than an IPO. Of the total portfolio, £0.6 million was invested in quoted companies as at 30 September 2015, representing 2.3 per cent of the invested portfolio at that date.

In terms of the outlook for individual companies,

Brazil Potash reported at the end of July that it had obtained its Preliminary Licence, one of the three key licences required to develop a mine in Brazil. It is now working on completing its bankable feasibility study, which it hopes to conclude by the end of the first quarter in 2016.The manager’s remain convinced by the commercial rationale underlying the project as well as its strategic importance.

During the period, the managers say that Stream TV continued to make good progress across multiple fronts. In particular, it resolved minor final issues relating to the mass manufacturing and mounting of the chip, successfully installed manufacturing plant in China and secured orders for its system. Following the period end, StreamTV made several announcements, including recently announcing a partnership with a subsidiary of China International Broadcasting Network to convert some of CIBN’s content/programming into Stream TV’s 3D format to be shown on screens using Stream TVs Ultra-D technology.

Red Flat Nickel has reported that the Bureau of Land Management issued a notice at the end of June that it proposed to withdraw certain lands from mineral extraction in South Oregon. This segregation notice covered lands over which Red Flat Nickel owned significant nickel claims.

Buried Hill has a Production Sharing Agreement with the government of Turkmenistan in relation to one of the largest oil blocks under the Caspian Sea.  However, the block lies beneath a disputed border between Turkmenistan and Azerbaijan. Although the diplomatic activity between the two countries has increased substantially over the last year, there is still no commercial resolution to the matter and as a result the company is unable to progress any drilling in the meantime.

Manabi Manabi, a Brazilian based company, announced to its shareholders in August that it was recommending a merger with Maverick Logistica, which leases oil spill recovery vessels and platform supply vessels to the oil and gas sector. A compelling impetus for the merger was the acknowledgment of the long term decline in the price of iron-ore and the unlikelihood of its iron-ore project generating any return in the near term.

Union Agriculture Group is the largest owner of agricultural land in Uruguay. The company is planning to list on the Toronto Stock Exchange at some point after its financial results for the year ending 31 December 2015 have been published.

iQur iQur, a London-based vaccine company, has designed a lead candidate vaccine which has so far been shown to provide 100% protection in mice from different lethal influenza challenges. The company anticipates manufacture of the vaccine in 2016 and a phase 1 trial in the second half of 2016.

St Peter Port Capital suffering from commodity weakness : SPPC


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