Half-year Report

BAKER STEEL RESOURCES TRUST LIMITED

(Incorporated in Guernsey with registered number 51576 under the provisions of The Companies (Guernsey) Law, 2008 as amended)

13 September 2024

BAKER STEEL RESOURCES TRUST LIMITED

(the "Company")

LEI: 213800JUXEVF1QLKCC27

Half-Yearly Report and Unaudited Condensed Interim Financial Statements for the period

1 January 2024 to 30 June 2024

The Company has today, in accordance with DTR 4.2, released its Half-Yearly Report for the period ended 30 June 2024. The Report is available via www.bakersteelcap.com/baker-steel-resources-trust/ and the National Storage Mechanism.

Further details of the Company and its investments are available on the Company's website www.bakersteelcap.com/baker-steel-resources-trust/

Enquiries:

Baker Steel Resources Trust Limited             +44 20 7389 8237

Francis Johnstone
Trevor Steel

Deutsche Numis                                              +44 20 7260 1000

David Benda (corporate)

James Glass (sales)

Aztec Financial Services (Guernsey) Limited

Company Secretary                                         +44 1481 749771

BAKER STEEL RESOURCES TRUST LIMITED

Half-Yearly Report and Unaudited Condensed Interim Financial Statements

For the period from 1 January 2024 to 30 June 2024

CHAIRMAN'S STATEMENT

For the period from 1 January 2024 to 30 June 2024

Following several barren years in the funding market for junior mining development companies, we have noticed several green shoots appearing in the first half of 2024, and it is hoped that the market may have turned for the sector in which your company invests. The NAV per share increased by 4.9% to 81.0 pence with the share price rising by 34% to 53.0 pence at 30 June 2024. Nevertheless, although an encouraging improvement, this price still puts the shares on a 35% discount to NAV at 30 June.

The general market, as represented by the larger producers in the MSCI World Metals and Mining Index, rose 11.4% on the back of stronger commodity prices. As is often the case, this was led by gold which moved to an all-time high, up 12.8% on 30 June 2024. Since that date it has risen further to US$2,500 per ounce. Despite this, gold-based equities still trade at around two thirds of the share prices which they recorded when bullion was some US$700 per ounce lower. The underperformance of equities compared to metals prices, although most striking in the gold sector, also applies to the general mining market which has, in turn, lagged the overall stock market in recent years. Despite recent gains and growing M&A activity,  the junior mining equity market can only be regarded currently as one in recovery rather than in a bull market. History suggests that it is only once we enter a bull market, with mining equities outperforming general equities, that junior mining companies  strongly outperform established producers. This might be more pronounced than previously particularly for junior companies exposed to gold, silver and future facing metals, such as copper, as the major diversified miners have been underpinned by the strong iron ore price in recent years.

At the 2023 year-end, we highlighted Futura Resources' initial production at its first mine, Wilton, following the A$30 million convertible financing last September. Futura has since signed and drawn down a A$34 million pre-payment debt offtake and marketing facility with a major coal trading company. This has allowed it to commence development of its second mine, Fairhill, which is contiguous with Wilton. Wilton took approximately 3 months to bring into production and Fairhill is expected to take a similar amount of time: both mines are basic near-surface open pits with product trucked to the nearby Gregory Crinum Coal Handling and Preparation Plant. At full capacity the combined Wilton and Fairhill mines are projected to produce some 1.5 to 2 million tonnes of saleable coking coal for at least the next 15 years, at a current operating cost of around US$85 per tonne. During the first half of 2024, the price of hard coking coal has reverted towards the long-term consensus price of US$210 per tonne used in the Company's models but at even these lower levels the mines should still have healthy margins. Your Company owns a 1.5% gross revenue royalty on production from these licenses and therefore can shortly look forward to receiving its first royalty receipts.

During 2023, our second largest investment, CEMOS Group Plc, which produces cement in Morocco, experienced lower sales of 182,000 tonnes due to subdued economic activity in the area served by CEMOS. Market conditions have recovered somewhat in 2024 and CEMOS is on track for sales of over 200,000 tonnes this year. The construction of the calcination plant, announced in 2023, is progressing well, which will allow CEMOS to produce its own clinker by the end of this year. By generating its own clinker and Supplementary Cementitious Materials, the main ingredient in cement production, CEMOS expects to significantly reduce costs and enhance the operating margin as well as lowering associated carbon emissions. CEMOS has identified a site to construct the second grinding line which it acquired in 2022. This should allow it to double production at the new enhanced margins, and with installation planned to commence by the end of this year, first production is anticipated in the second half of 2025. CEMOS is expected to adopt a progressive dividend policy following the current investment phase.

In recent times, the first part of the classic "S" shape of the development risk curve has levelled out noticeably allowing a commensurate increase in project valuation upon successful financing of the production stage. Several of the smaller investments in the Company's portfolio, although in aggregate representing only around 20%, are at such a pre-financing, pre-step-up in valuation stage. A number of these made good progress on the project development and financing track during the first part of 2024, as outlined below.

Notably in June 2024, Caledonia released the results of the Preliminary Economic Assessment on the Bilboes project indicating production of 1.5 million ounces of gold over a 10-year period. The economics, as summarised in the Investment Manager's report below, look attractive even at US$1,884 per ounce gold price which is used in Caledonia's model; at the current gold price the outlook is very exciting with the current NPV being a multiple of Caledonia's current market capitalisation which mostly reflects just its existing production from the Blanket mine. We look forward to Caledonia publishing its revised Feasibility Study in early 2025 together with details of its plans to finance the development of the mine.

Tungsten West plc made good progress in the first half of 2024, having been awarded the final two key operating permits which will allow the Hemerdon tungsten mine to return to production. An updated feasibility study is due before the end of the year followed by financing in early 2025. First Tin plc also maintained good momentum on its Taronga tin project in Australia, completing a positive feasibility study and attracting Australia's largest tin producer, Metals X Limited, as a strategic shareholder.

Kanga and Nussir are also at the pre-financing stage and progress on the main investments in the portfolio can be found in the Investment Manager's Report.

Outlook

The outlook for the global economy continues to look uncertain with concerns about a wide range of issues including the Chinese property sector, war continuing in Ukraine, heightened tension in the Middle East and the growth prospects in the developed world looking sluggish. However, inflationary pressures appear to be abating and interest rates are expected to be reduced during the second half of 2024. A decline in US interest rates would normally lead to a weaker dollar, which should be a  positive driver for commodity prices, led by precious metals.

The Company's performance in the next 12 months is going to be a function of how well Futura ramps up production from its two mines and CEMOS integrates its new calcination plant and commences development of its second line to double production. These two companies should start to generate significant cashflow from next year. In addition, the Company also has five investments in Bilboes, Tungsten West, Nussir, First Tin and Kanga which are ready to be financed into development and if that can be achieved could make an appreciable impact on NAV. The nature of these investments means that the timing and success of them is always difficult to predict, and we are fortunate to have in Baker Steel our Investment Manager a team of professionals who have experienced previous market cycles and are able to give us sound advice for both the short and long-term.

At the recent AGM, I am pleased to report that the vote to discontinue the Company was not passed and therefore a vote with regard to continuation will not be proposed by the Board until the AGM in three years' time as is required by the Company's Articles. I would like to thank our shareholders for their continuing support. The Board is always keen to engage with shareholders and can be contacted via the Company Secretary.

Corporate

I would like to welcome Patrick Meier to the Board. Patrick has a long and distinguished career in corporate finance with a focus on mining for most of his career. Under his Chairmanship of Ecora Resources plc he guided that company's transition towards future facing metals, and he has already made a positive contribution to our strategic thinking.

As previously announced, at the end of the year I will be stepping down from the Board, after 14 years as Chairman since the Company's listing, and Fiona Perrott-Humphrey will take the Chair on my retirement. Fiona has been advising in the natural resources sector for over 30 years and I am confident that I will be leaving the Company in good hands to guide its strategy. The Company is approaching an inflexion point where it expects to receive significant regular income from its two largest investments, and I believe that is in in a strong position as it moves into a positive future. 

Howard Myles

Chairman

12 September 2024

INVESTMENT MANAGER'S REPORT

For the period from 1 January 2024 to 30 June 2024

Financial Performance

The unaudited Net Asset Value per Ordinary Share ("NAV") as at 30 June 2024 was 81.0 pence (31 December 2023:77.2 pence), an increase of 4.9% in the period compared with the increase in the MSCI World Metals and Mining Index of 11.4% in Sterling terms.

For the purpose of calculating the NAV per share, unquoted investments were carried at fair value as at 30 June 2024 as determined by the Directors, based on reports received from the Investment Manager following a process detailed in the Annual Report and Account. Quoted investments were carried at their quoted prices as at that date.

Net assets at 30 June 2024 comprised the following:

Investment Update

Review

At 30 June 2024, the Company was fully invested, holding 15 investments of which the top 10 holdings comprised 95.5% of the portfolio by value. In terms of commodity the portfolio has exposure to cement, copper, gold, iron, lead, lithium, potash, silver, steel making coal, tin, tungsten, vanadium, and zinc. Its projects are located in Australia, Canada, Germany, Madagascar, Morocco, Norway, Peru, the Philippines, Republic of Congo, Russia, the UK and Zimbabwe.

During the first half of the year, the mining market started to show some recovery on the back of stronger commodity prices. The MSCI World Metals and Mining Index composed of large and mid-cap companies rose 11.4% in Sterling terms. The Company's NAV which is more exposed to developing companies rose 4.9% during the period.

All expressed in US dollar terms, gold rose 12.8% and silver was up 22.5% during the first half of 2024. Base metals prices were likewise stronger with copper up 11.7%, tin up 29% and tungsten up 11.9%. The exceptions were the steel making minerals: iron ore down 23.6% and metallurgical coal down 24.2%. Potash recovered 6.9% following a 42.0% fall in 2023.

The increase in the Company's NAV of 4.9% in Sterling terms during the period reflected rises in the carrying values of CEMOS and the Bilboes Gold Royalty outweighing a fall in the listed price of Caledonia Mining, a reduction in the carrying value of Kanga Investments, and the write off of Black Pearl.

The Company's main investments at the end of the period:

Futura Resources Ltd ("Futura")

Futura owns the Wilton and Fairhill steel making coal projects in the Bowen Basin in Queensland, Australia which hold Measured and Indicated resources of 843 million tonnes of coal.

Investment:          11,309,005 ordinary shares (26.9% - undiluted) valued at £10.9 million

                                1.5% Gross Revenue Royalty valued at £15.8 million

                                A$4.7 million convertible loan valued at £2.8 million (23.4% fully diluted)

Futura commenced production from its Wilton mine in March 2024. By the end of June 2024, Futura had washed in excess of 70,000 tonnes at the nearby Gregory Crinum plant. Results on steel making coal quality and recoveries have been encouraging but more data is required before a reduction can be considered in the development risk discounts applied to the models. Accordingly, the valuations of both the equity and royalty for Futura were left unchanged at 30 June 2024.

Once in full production, Futura anticipates that the two mines will produce approximately 1.5 to 2 million tonnes per annum in saleable primary and secondary coking coal products from its two mines at a cost of around US$85 per tonne.

Coking coal prices have weakened during the first half of 2024 towards the long term consensus price of US$210 per tonne. Once both mines are in full production in 2025, Futura forecasts generating an EBITDA of around A$90m, based on forward coal price expectations.

CEMOS Group Plc (''CEMOS'')

CEMOS is a private cement producer with production operations at Tarfaya in Morocco.

Investment:          24,004,167 ordinary shares (24.3%) valued at £12.6 million

                                1,045 Convertible Loan Units valued at £13.8 million

                                Percentage of Company owned at full conversion 31.1%

The cement market in CEMOS's southern area of Morocco normalized with a strong first quarter cement sales in line with budgeted annual sales of 220,000 tonnes for 2024 against the 182,000 tonnes achieved in 2023. Southern Morocco is one of the fastest growing regions in Morocco, due mainly to new infrastructure developments in a relatively large and undeveloped part of the country.

Towards the end of 2023, CEMOS commenced the development of a Compact Calcination Unit (CCU) at the Tarfaya cement plant site to produce its own clinker and supplementary cementitious materials (SCMs), the principal raw materials in cement production. This will not only provide security of supply of clinker but should materially reduce costs as well as lowering the carbon footprint associated with cement production. Commissioning of the calcination plant remains on track for the fourth quarter of 2024 with the benefit realised from 2025 onwards.

During 2022 CEMOS acquired a second grinding plant essentially identical to the existing operation which will allow it to double its production. A site for this second plant has been identified and installation is planned to be undertaken during 2025. The commissioning of this second plant is anticipated to take place after the CCU plant has been established in order to manage the impacts on both financial and human resources. 

Cemos' growth strategy is focussed on the development and marketing of low CO₂ "green cement" products. The Moroccan standards agency is currently following the European Union initiative of establishing a low CO₂ cement category which is expected to be approved in the coming months. The main feature of low CO₂ cements are a reduced clinker content through the use of alternative hydraulic binders. The green cement clinker content can be as low as 45%, compared to current levels around 70%. These alternative binders include industrial and natural pozzolans, blast furnace slags, and fly ash. Cemos has continued extensive development work in relation to the new type of binders complemented by its CCU investment.

Bilboes Gold Royalty

The Company holds a 1% Net Smelter Royalty ("NSR") over future production from the Bilboes' gold project in Zimbabwe owned by Caledonia Mining Corporation Plc ("Caledonia").  (See below for details of the Company's equity investment in Caledonia).

Investment:          1% NSR valued at £6.8 million

The Bilboes properties host a JORC compliant Proved and Probable Reserve containing 1.8 million ounces of gold out of a total Mineral Resource of 3.8 million ounces of gold.

In June 2024, Caledonia released the results of the Preliminary Economic Assessment ("PEA") into the Bilboes project indicating production of 1.5 million ounces of gold over a 10 year period. Caledonia concluded that a single-phase development of the project will provide the best economic return having considered alternative development options for the Project, including multi-phase development and changes to certain other aspects of the Project. At a gold price of US$1,884/oz used in the PEA, the economic model calculated an NPV10% of US$309 million with an IRR of 34%. At a gold price of US$2,400 per ounce the project would achieve approximately US$75 million in additional revenue over the PEA figures each year with the Company receiving in excess of US$3 million per annum from its 1% Net Smelter Royalty on the Bilboes mine.

Tungsten West Plc (''Tungsten West'')

Tungsten West owns the Hemerdon Tungsten Mine in Devon, United Kingdom and is quoted on the AIM market of the London Stock Exchange.

Investment:          28,846,515 ordinary shares (15.4%) valued at £1.44 million

                                £1,200,000 convertible loan valued at £2.27 million

                                1,657,195 second options valued at £0.04 million

                                1,657,195 third options valued at £0.02 million

On 16 January 2023 Tungsten West announced the results of its updated feasibility study on the Hemerdon tungsten and tin mine in Devon. The feasibility study detailed a mine with average annual production of 2,900 tonnes of tungsten (WO₃) and 310 tonnes of tin in concentrate over 27 years. The economics showed a post-tax NPV5% of £297 million with an Internal Rate of Return (IRR) of 25%. It also highlighted an upside case post-tax NPV5% of £416 million with an IRR of 32%. Total pre-production capex, corporate commitments and working capital was estimated at £54.9 million.

Key to the economics of the project is the production of secondary aggregates, a by-product from mining which, once sold, will provide an early revenue stream and reduce the storage of barren rock and associated operating expenditure at site. To enable the delivery of the aggregates business, and to optimise the core tungsten and tin business, in December 2023 Tungsten West's Section 73 application, to vary the tonnage cap associated with the existing permission for 50 truck movements per day from the site, was approved by Devon County Council.

In June 2024 Tungsten West announced that the Environment Agency had granted the permit to operate the Mineral Processing Facility. This was the final permit required for Tungsten West to restart operations at Hemerdon With the permitting process complete, Tungsten West is currently updating the feasibility study which is expected to be complete in the second half of 2024   with a view to raising the capital for redevelopment in the first half of 2025. This will enable  it to recommence production of tungsten and tin in 2026.

Caledonia Mining Corporation Plc ("Caledonia")

Caledonia is a NYSE, AIM and Victoria Falls Exchange listed gold producer whose primary assets are the producing Blanket Mine and the Bilboes gold project (outlined above) both in Zimbabwe.

Investment:          455,000 ordinary shares (2.4%) valued at £3.5 million

During the first half of 2024 Caledonia produced 37,823 oz from its Blanket gold mine in Zimbabwe and reiterated guidance of 74,000 to 78,000 ounces of gold for the full year 2024. Profit after tax for the period was reported to be US$13.1 million compared to a loss of US$4.1 million the previous year.

Caledonia currently pays a dividend of US$0.14 per quarter. It is expected that at least this level of dividend will continue until the Bilboes project can be brought into production.

Nussir ASA ("Nussir")

Nussir is a Norwegian private company whose key asset is the Nussir copper project in northern Norway.

Investment:          12,785,361 ordinary shares (12.1%) valued at £3.1 million

                                NOK 2,000,000 Loan Note valued at £0.17 million

In 2023, Nussir completed the update of the DFS on its Nussir copper project in northern Norway changing the operations from diesel based to one based on a fully electrified mine producing around 14,000 tonnes of copper per year over a 14 year mine life. The updated DFS economics gave a NPV8% of US$191 million with an IRR of 22% based on a copper price of US$8,000 per tonne. Nussir is currently in a formal process of seeking an industry partner to assist with financing the development of the mine. Following the period end the Company was the main subscriber to a deeply discounted rights issue by Nussir to fund ongoing working capital and as a result increased its interest in Nussir to 21.6%.

Metals Exploration plc ("Metals Ex")

Metals Ex is an AIM listed company which owns the Runruno gold mine in the Philippines.

Investment:          63,860,000 ordinary shares (3.0%) valued at £3.1 million

During the first half of 2024 Metals Ex produced of 42,535 ounces from its Runruno gold mine in the Philippines at an All-in-Sustaining-Cost of US$1,066 per ounce. This generated positive free cash flow of US$46.4 million, which allowed it to pay down the remainder of its debt during the period.

In June 2024, Metals Exploration plc announced agreement to buy back the 18.6% interest in the company held by Runruno Holdings Limited for aggregate consideration of £19.7 million. This will allow it to pursue a strategy to continue life of the company within the Philippines, once the Runruno Mine is exhausted in around two years' time.  During Q1 2024, the Company announced the proposed acquisition of an extensive exploration tenement in the prospective Abra area of the Philippines, covering 16,200 hectares, which is approximately 200km north of the Company's Runruno mine.

Metals Ex has forecast production for 2024 of 74,000 - 80,000 ounces of gold at an AISC of between US$1,175 and US$1,275 per ounce of gold.

Silver X Mining Corporation ("Silver X") 

Silver X is a TSX-V listed company whose Recuperada silver/lead/zinc project in Peru comprises 11,261 Ha of mining concessions centred around a 600 tonne per day processing plant.

Investment:          19,502,695 ordinary shares (11.7%) valued at £2.9 million

During the first half of 2024 Silver X produced 582,074 ounces of silver equivalent ("AgEq") (2023H1 566,714 AgEq ozs) at its Nueva Recuperada Silver mine in Peru. This generated a positive EBITDA of US$1.1 million (2023 loss US$1.1 million) and an overall loss of US$1.0 million (2023 US$1.5 million loss).

In 2023 Silver X released the results of a Preliminary Economic Assessment ("PEA") under Canadian National Instrument 43-101 Standards for the expansion of the Tangana Mining Unit at Nueva Recuperada. The PEA outlined the potential to increase annual production to 4.2 million ounces silver equivalent by constructing an additional recovery plant at a capital cost of US$61 million to give a post-tax NPV10% of US$175 million.

In May 2024 Silver X signed a 15-year social agreement with the Community of Carhuapata in Huancavelica in Peru which covers the Plata mining area. Silver X is currently undertaking a further PEA to incorporate Plata.

First Tin PLC ("First Tin")

First Tin is a company listed on the London Stock Exchange which owns the Taronga tin project in Australia and the Tellerhäuser and Gottesburg tin projects in Germany.

Investment:          37,128,014 ordinary shares (14.0%) valued at £1.8 million

On 2 May 2024 First Tin PLC announced the results of the Definitive Feasibility Study ("DFS") for its 100% owned Taronga open pit tin project located in New South Wales, Australia. The DFS outlines an open pit mine mining 5 million tonnes of ore per annum followed by a crushing and a gravity processing facility. This is forecast to produce an average of 3,600 tonnes of tin per annum at an All-In-Sustaining costs of US$15,843 per tonne of tin sold. Pre-production capex is estimated at US$116 million with the economic model based on US$30,000 per tonne of tin (currently approximately US$ 31,000/tonne) showing an NPV8% of US$120 million and an IRR of 28%. In December 2023 tin was recognised by the Australian Government as a Strategic Material, which should help with future licencing requirements. The results of the DFS show significant optionality to further rises in the tin price.

Whilst the main focus of First Tin is on Taronga, it also continues to make progress on its second project, the Tellerhäuser tin project in Saxony, Germany. The review of a large amount of additional historic drilling data discovered in the Saxony archives closed gaps in the mineral resource statement and provided additional resource volume, without additional cost. This led to a 35% increase in total Indicated plus Inferred Mineral Resources in April 2024 to 138,600 tonnes of contained tin.

Kanga Investments Ltd ("Kanga")

Kanga is a private company which holds the Kanga potash project, in the Republic of the Congo.

Investment:          56,042 ordinary shares (6.7%) valued at £1.3 million

Kanga completed a positive Feasibility Study in 2020 on its Kanga Potash project in the Republic of Congo for a mine producing 600,000 tonnes per annum of Muriate of Phosphate ("MOP"). The DFS economic model gave a Net Present Value at a 10% discount rate of US$511 million with an IRR of 22% based on an MOP price of US$282 per tonne compared to the current price of around US$300 per tonne. There has continued to be good interest in attracting potential partners to acquire or finance the Kanga potash project but negotiations have been protracted and in the meantime Kanga has struggled to attract short term financing to fund working capital. As a result the carrying value was reduced by 46% until such time as a definitive transaction is achieved.

Polar Acquisition Limited ("PAL")

PAL is a private company which holds a 1.8% to 0.9% (reducing over 10 years) net smelter royalty over the Prognoz silver project ("Prognoz"), 444km north of Yakutsk in Russia, from Solidcore Resources Plc (formerly Polymetal International plc). Prognoz has a 267-million-ounce silver equivalent Indicated and Inferred Mineral Resource at a grade of 755 g/t silver equivalent.

Investment:          16,352 ordinary shares (49.99%) valued at £1.0 million

In March 2024 Solidcore, sold off its Russia business which included the Prognoz silver project. However, the liability to pay the net smelter royalty to PAL remains with Solidcore (which is now domiciled in Kazakstan) and the royalty contract has no Russian entities as parties to the Agreement. Ore has been transported to the Nezhda mine concentrator (part of the business sold) and is due to be processed in the third quarter 2024 so that the first royalty payment will be due in the fourth quarter 2024.

Baker Steel Capital Managers LLP

Investment Manager

12 September 2024

DIRECTORS' REPORT

For the period from 1 January 2024 to 30 June 2024

The Directors of the Company present the Half-Yearly Report and Unaudited Condensed Interim Financial Statements for the six months ended 30 June 2024.

The Directors' Report contains information that covers this period and the period up to the date of publication of this Report. Please note that more up to date information is available on the Company's website www.bakersteelcap.com/baker-steel-resources-trust/.

Status

Baker Steel Resources Trust Limited (the "Company") is a closed-ended investment company with limited liability incorporated on 9 March 2010 in Guernsey under the Companies (Guernsey) Law, 2008 with registration number 51576. The Company is a registered closed-ended investment scheme registered pursuant to the Protection of Investors (Bailiwick of Guernsey) Law, 2020, ("POI Law") and the Registered Collective Investment Scheme Rules and Guidance, 2021 issued by the Guernsey Financial Services Commission ("GFSC"). On 28 April 2010 the Ordinary Shares and Subscription Shares of the Company were admitted to the Official List of the UK Listing Authority and to trading on the Main Market of the London Stock Exchange, Premium Segment.

Investment Objective

The Company's investment objective is to seek capital growth over the long-term through a focused, global portfolio consisting principally of the equities, loans or related instruments of natural resources companies. The Company invests predominantly in unlisted companies (i.e. those companies that have not yet made an initial public offering ("IPO")) but also in listed securities (including special situations opportunities and less liquid securities) with a view to making attractive investment returns through the uplift in value resulting from the development progression of the investee companies' projects and through exploiting value inherent in market inefficiencies and pricing anomalies.

Performance

During the period ended 30 June 2024, the Company's unaudited NAV per Ordinary Share increased by 4.9% and the share price increased by 34.2 % on the London Stock Exchange. This compares with a rise in MSCI World Metals and Mining Index of 11.4% in Sterling terms. A more detailed explanation of the performance of the Company is provided within the Investment Manager's Report on pages 4 to 8.

The results for the period are shown in the Unaudited Statement of Comprehensive Income on pages 16 and 17 and the Company's financial position at the end of the period is shown in the Unaudited Statement of Financial Position on page 15.

Dividend and distribution policy

During the year ended 31 December 2015, the Board introduced a capital returns policy whereby, subject to applicable laws and regulations, it will allocate cash for distributions to shareholders. The amount to be distributed will be calculated and paid following publication of the Company's audited financial statements for each year and will be no less than 15% of the aggregate net realised cash gains (after deducting losses) in that financial year. The Board will retain discretion for determining the most appropriate manner to make such distribution which may include share buybacks, tender offers and dividend payments. In the longer term the Board intends to formulate a more regular dividend policy once it starts to receive income and dividends from its royalty interests.

Directors and their interests

The Directors of the Company who served during the period and up until the date of signing of the financial statements are:

Patrick Meier (appointed 25 June 2024)

Biographical details of each of the Directors who were on the Board of the Company at the time of signing the annual report and financial statements for the year ended 31 December 2023 ("the Annual Report") are presented on page 17 of that report.

Each of the Directors is considered to be independent in character and judgement.

Each Director is asked to declare their interests at each Board Meeting. No Director has any material interest in any other contract which is significant to the Company's business.

John Falla holds 100,000 shares in the Company (31 December 2023: 100,000). Patrick Meier holds 82,261 shares in the Company. No other director has a beneficial interest in the Company.

Attendance at the quarterly Board and Audit Committee meetings during the period was as follows:

*Appointed on  25 June 2024, therefore, was only eligible to attend one Board Meeting and one Audit Committee Meeting

In addition to the quarterly meetings, ad hoc Board and committee meetings are convened as required. All Directors contribute to a significant ad hoc exchange of views between the Directors and the Investment Manager on specific matters, in particular in relation to developments in the portfolio.

The Directors are remunerated for their services at such rate as the Directors determine provided that the aggregate amount of such fees may not exceed £200,000 per annum (or such sum as the Company in a general meeting shall from time to time determine). The Chairman receives a supplement of £10,000 per annum and the Chairman of the Audit Committee a supplement of £5,000 per annum.

For the period ended 30 June 2024 the total remuneration of the Directors was £73,526 (30 June 2023: £72,500) of which £1,026 remains outstanding as at 30 June 2024 (31 December 2023: £36,250).

Authorised share capital

The share capital of the Company on incorporation was represented by an unlimited number of Ordinary Shares of no-par value. The Company may issue an unlimited number of shares of a nominal or par value and/or of no par value or a combination of both.

Shares in issue

The Company was admitted to trading on the London Stock Exchange on 28 April 2010. The Company has a total of 106,453,335 (31 December 2023: 106,453,335) ordinary shares outstanding with an additional 700,000 (31 December 2023: 700,000) held in treasury. The Company has 9,167 (31 December 2023: 9,167) Management Ordinary shares in issue, which are held by the Investment Manager.

Going concern

Having reassessed the principal and emerging risks described on pages 13-14 of the 31 December 2023 Annual Report, and the other matters discussed in connection with the viability statement as set out on page 14 of the said report, the Directors consider it is appropriate to adopt the going concern basis in preparing these interim Financial Statements. As at 30 June 2024, approximately 17% of the Company's assets were represented by cash and unrestricted listed and quoted investments which are readily realisable. The Board are satisfied that the Company has the resources to continue in business for at least 12 months following the signing of these financial statements.

At the recent AGM, the vote to discontinue the Company was not passed and therefore a vote with regard to continuation will not be proposed by the Board until the AGM in three years' time as is required by the Company's Articles.

The Directors are not aware of any material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern.

Related party transactions

Transactions with related parties are based on terms equivalent to those that prevail in an arm's length transaction and are disclosed in Note 9.

Principal and emerging risks

The principal and emerging risks facing the Company, which include market and financial risk and portfolio management and performance risk, are considered in detail, on pages 13 and 14 of the 31 December 2023 Annual Report which is available on the Company's website www.bakersteelresourcestrust.com. The Directors do not consider that these risks have materially changed during the period ended 30 June 2024 and do not expect any changes in the second half of 2024.

Directors' responsibility statement

The Directors confirm that to the best of their knowledge:

-          the condensed set of financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

-            the Interim Report and Accounts includes a fair review of the information required by 4.2.7R and 4.2.8R of the FCA's Disclosure and Transparency Rules.

Corporate governance compliance

The Company is a member of the Association of Investment Companies.

The Board has therefore considered the Principles and Provisions of the AIC Code of Corporate Governance (AIC Code). The AIC Code addresses the Principles and Provisions set out in the UK Corporate Governance Code (the UK Code), as well as setting out additional Provisions on issues that are of specific relevance to the Company.

The Board considers that reporting against the Principles and Provisions of the AIC Code, which has been endorsed by the Financial Reporting Council and the Guernsey Financial Services Commission, provides more relevant information to shareholders.

The Company has complied with the Principles and Provisions of the AIC Code and therefore the UK Code except as where explained in the Annual Report on pages 21 to 24.

There is no change in compliance since the Annual Report.

Signed for and on behalf of the Directors:

12 September 2024

UNAUDITED PORTFOLIO STATEMENT

AS AT 30 JUNE 2024

UNAUDITED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2024

UNAUDITED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD FROM 1 JANUARY 2024 TO 30 JUNE 2024

UNAUDITED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD FROM 1 JANUARY 2023 TO 30 JUNE 2023

UNAUDITED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD FROM 1 JANUARY 2023 TO 30 JUNE 2023

 * As permitted under IFRS, purchases and sales of financial assets at fair value through profit or loss are classified as investing activities due the nature and intention to generate future income and cash flows from these investments

NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD FROM 1 JANUARY 2024 TO 30 JUNE 2024

1.   GENERAL INFORMATION

Baker Steel Resources Trust Limited (the "Company") is a closed-ended investment company with limited liability incorporated and domiciled on 9 March 2010 in Guernsey under the Companies (Guernsey) Law, 2008 with registration number 51576. The Company is a registered closed-ended investment scheme registered pursuant to the Protection of Investors (Bailiwick of Guernsey) Law, 2020 and the Registered Collective Investment Scheme Rules and Guidance, 2021 issued by the Guernsey Financial Services Commission ("GFSC"). On 28 April 2010 the Ordinary Shares and Subscription Shares of the Company were admitted to the Official List of the UK Listing Authority and to trading on the Main Market of the London Stock Exchange. The Company's Ordinary and Subscription Shares were admitted to the Premium Listing Segment of the Official List on 28 April 2010.

The final exercise date for the Subscription Shares was 2 April 2013. No Subscription Shares were exercised at this time and all residual/unexercised Subscription Shares were subsequently cancelled.

The Company's portfolio is managed by Baker Steel Capital Managers (Cayman) Limited (the "Manager"). The Manager has appointed Baker Steel Capital Managers LLP (the "Investment Manager") as the Investment Manager to carry out certain duties. The Company's investment objective is to seek capital growth over the long-term through a focused, global portfolio consisting principally of the equities, or related instruments, of natural resources companies. The Company invests predominantly in unlisted companies (i.e. those companies which have not yet made an Initial Public Offering ("IPO")) and also in listed securities (including special situations opportunities and less liquid securities) with a view to exploiting value inherent in market inefficiencies and pricing anomalies.

Baker Steel Capital Managers LLP was authorised to act as an Alternative Investment Fund Manager ("AIFM") of Alternative Investment Funds ("AIFs") on 22 July 2014. On 14 November 2014, the Investment Manager signed an amended Investment Management Agreement with the Company, to take into account AIFM regulations. AIFMD focuses on regulating the AIFM rather than the AIFs themselves, so the impact on the Company is limited.

The Half-Yearly financial report has not been audited or reviewed by the auditors. However, the Board did procure the independent external auditor to undertake certain agreed upon procedures to assist the Audit Committee and Board with its review of this report.

2.   MATERIAL ACCOUNTING POLICY INFORMATION

The unaudited condensed interim financial statements in the half year report for the six months ended 30 June 2024 have been prepared in accordance with International Accounting Standard (IAS) 34, 'Interim Financial Reporting' as adopted by the European Union. This half year report and condensed financial statements should be read in conjunction with the Company's annual report and financial statements for the year ended 31 December 2023, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and are available at the Company's website (www.bakersteelresourcestrust.com).

The accounting policies adopted and methods of computation followed in the condensed interim financial statements are consistent with those applied in the preparation of the Company's annual financial statements for the year ended 31 December 2023 and are expected to be applied to the Company's annual financial statements for the year ending 31 December 2024.

3.     FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

The following table analyses net gains on financial assets at fair value through profit or loss for the period/year ended 30 June 2024, 31 December 2023 and 30 June 2023.

The following table analyses investments by type and by level within the fair valuation hierarchy at 30 June 2024.

The following table analyses investments by type and by level within the fair valuation hierarchy at 31 December 2023.

The table below shows a reconciliation of beginning to ending fair value balances for Level 3 investments and the amount of total gains or losses for the period included in net gain on financial assets and liabilities at fair value through profit or loss held at 30 June 2024.

The table below shows a reconciliation of beginning to ending fair value balances for Level 3 investments and the amount of total gains or losses for the year included in net loss on financial assets and liabilities at fair value through profit or loss held at 31 December 2023.

It is the Company's policy to recognise a change in hierarchy level when there is a change in the status of the investment, for example when a listed company delists or vice versa, or when shares previously subject to a restriction have that restriction released. The transfers between levels are recorded either on the value of the investment immediately after the event or the carrying value of the investment at the beginning of the financial year.

In determining an investment's position within the fair value hierarchy, the Directors take into consideration the following factors:

Investments whose values are based on quoted market prices in active markets are classified within Level 1. These include listed equities with observable market prices. The Directors do not adjust the quoted price for such instruments, even in situations where the Company holds a large position, and a sale could reasonably impact the quoted price. The Company does not currently hold a sufficiently large position in any listed company that it could impact the quoted price via a sale of its investment.

As at 30 June 2024, the Investment Manager prepared the valuations and considered whether there were any changes to performance or the circumstances of the underlying investments which would affect the fair values. Methods, assumptions, and data were consistently applied period on period except for certain private equity investments where a change in assumption is deemed appropriate to reflect the change in the market conditions or investment-specific factors. The Investment Manager then made recommendations to the Board of the fair values as at 30 June 2024.

Investments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs, are classified within Level 2. These include certain less-liquid listed equities. Level 2 investments are valued with reference to the listed price of the shares should they be freely tradable after applying a discount for illiquidity if relevant. As Level 2 investments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. The Company held one Level 2 investment at 30 June 2024 (31 December 2023: one).

Investments classified within Level 3 have significant unobservable inputs. They include unlisted debt instruments, royalty rights, unlisted equity shares and warrants. Level 3 investments are valued using valuation techniques explained below. The inputs used by the Directors in estimating the value of Level 3 investments include the original transaction price, recent transactions in the same or similar instruments if representative in volume and nature, completed or pending third-party transactions in the underlying investment of comparable issuers, subsequent rounds of financing, recapitalisations and other transactions across the capital structure, offerings in the equity or debt capital markets, and changes in financial ratios or cash flows. Level 3 investments may also be adjusted with a discount to reflect illiquidity and/or non-transferability in the absence of market information.

Valuation methodology of Level 3 investments

The primary valuation technique is of "Latest Recent Transaction" being either recent external fund raises or transactions. In all cases the valuation considers whether there has been any change since the transaction that would indicate the price is no longer fair value. Where an unquoted investment has been acquired or where there has been a material arm's length transaction during the past six months it will be carried at transaction value, having taken into account any change in market conditions and the performance of the investee company between the transaction date and the valuation date. If it is assessed that a recent transaction is not at an arm's length or there are other indicators that it has not been executed at a price that is indicative of fair value, then the transaction value will not be used as the carrying value of the investment. Where there has been no Latest Recent Transaction the primary valuation driver is IndexVal. For each core unlisted investment, the Company maintains a weighted average basket of listed companies which are comparable to the investment in terms of commodity, stage of development and location ("IndexVal"). IndexVal is used as an indication of how an investment's share price might have moved had it been listed. Movements in commodity prices are deemed to have been taken into account by the movement of IndexVal.

A secondary tool used by Management to evaluate potential investments as well as to provide underlying valuation references for the Fair Value already established is Development Risk Adjusted Value ("DRAV"). DRAVs are not a primary determinant of Fair Value. The Investment Manager prepares discounted cash flow models for the Company's core investments annually taking into account significant new information, and for decision making purposes when required. From these, DRAVs are derived. The computations are based on consensus forecasts for long term commodity prices and investee company management estimates of operating and capital costs. Some market analysts incorporate development risk into the discount rate in arriving at a net present value ("NPV"). Instead, the Investment Manager establishes an NPV discounted purely for cost of capital and country risk and then applies a further overall discount to the project economics dependent on where such project sits on the development curve per the DRAV calculations.

The valuation technique for Level 3 investments can be divided into seven groups:

i. Transactions & Offers

Where there have been transactions within the past 6 months either through a capital raising by the investee company or known secondary market transactions, representative in volume and nature and conducted on an arm's length basis, this is taken as the primary driver for valuing Level 3 investments, having taken into account of any change in market conditions and the performance of the investee company between the transaction date and the valuation date. This includes offers, binding or otherwise from third parties around the year end which may not have completed prior to the year-end but have a high chance of success and are considered to represent the situation at year end.

ii.  IndexVal

Where there have been no known transactions for 6 months, at the Company's half year and year end, movements in IndexVal will generally be taken into account in assessing Fair Value where there has been at least a 10% movement in IndexVal over at least a six-month period. The IndexVal results are used as an indication of trend and are viewed in the context of investee company progress and any requirement for finance in the short term for further progression.

iii. Royalty Valuation Model

The rights to receive royalties are valued on projected cashflows taking into account expected time to production and development risk and adjusted for movement in commodity prices.

iv. EBITDA Multiple

In the case of CEMOS Group plc, which moved to full production during 2020 and so could reflect maintainable earnings, its main asset is a cement plant with no defined life like a mining project and therefore has been valued on the basis of a multiple of a blend of historical and forecast earnings before interest, tax, depreciation and amortisation ("EBITDA") when compared to listed comparable cement producers.

v. Market Comparison

In the case of Futura Resources Ltd which moved into production in early 2024, it was valued with reference to comparable listed coal producers both in terms of EBITDA multiple and Net Present Value duly discounted for its stage of development.

vi. Warrants

Warrants are valued using a simplified Black Scholes model taking into account time to expiry, exercise price and volatility. Where there is no established market for the underlying shares the average volatility of the companies in that investment's basket of IndexVal comparables is utilised in the Black Scholes model.

vii. Convertible loans

Convertible loans are valued taking into account the value of the conversion option based on a binomial model along with the associated credit risk of the instrument.

Quantitative information on significant unobservable inputs - Level 3