Golden Prospect Precious Metals (GPM) has released its annual results for the 12 months ending 31 December 2023.
- Over the 12 month period GPM’s net assets fell from £30.6m to £32.0m. This was primarily due to a fall in the fair value of its investments, with GPM reporting a £0.5m loss over 2023. Despite this fall its decline in investment value was materially less then that of 2022, when it reported a loss of £11.7m. On a per share basis, GPM reported a NAV per share of 35.81p, as of 31 December 2023, down from 37.44 for the prior year.
- The largest contributor to GPM’s returns was Emerald Resources, which reported a 140% rise in its share price over the year. Another notable contributor was Calibre, which saw a 50% rise over the year. Notable detractors included Mag Silver and Calidus. Generally speaking, the managers commented that while the price of gold remained firm over 2023, thanks to geopolitical risks and central bank purchasing activity, the equity prices of the associated companies lagged. They attribute part of this underperformance to upward trends in the costs gold miners are facing.
- 2023 was the first year that the board offered the subscription rights programme to shareholders. Shareholders were able to exercise their rights on 30 November 2023, but given that the exercise price of 38.31p was above the then share price, no shares were taken up. The next opportunity will be on 30 November 2024, with an exercise price of 35.94p.
- Over the 12 months GPM’s discount narrowed to 17%, with the board commenting that PM’s discounts has typically traded at a discount of more than 20% over the last decade.
- The board is conscious of the trust’s total expense ratio, with GPM reporting total costs of £682,453 over 2023, equal to 2.2% of year-end net assets.
- Over the year GPM’s investment advisers, CQS, announced that they will be acquired by Manulife Investment Management of Canada in a move that both parties describe as mutually beneficial.
New City Investment Managers (part of CQS), GPM’s investment manager, commented:
“As outlined at the interim report, valuation differentials are extreme. This is particularly the case for non-producing mining equities unable to self-fund operations, which continue to trade at some of the largest discounts we have known given the lack of investor appetite, accentuated by anticipated dilution. Such heavily discounted valuations present an opportunity, but we are approaching this with caution as the timing of any equity rerating is uncertain. They will need an improvement in sentiment towards the sector, and with additional funding providing a more certain entry point. In this regard it is encouraging that M&A activity has continued following B2 Gold’s February all-stock acquisition of Canadian developer Sabina at a 47% premium. Importantly, Calibre’s opportunistic all-stock acquisition took place at a premium a little over 50%, using their strong balance sheet to support development of the acquired Labrador asset, offering medium-term rerating potential as it derisks. Prior to this the project AISC were projected to be around $1,050/oz with an NPV, based on a $1,700/oz gold price, of C$650m. Out of favour gold equities appear a good hedge for portfolios at present, particularly with approaching elections in the US and also relevant for Fund shareholders in the UK.”