Golden Prospect Precious Metals (LON: GPM), a closed-end investment trust that holds gold and silver mining shares, said its net asset value per share fell 13.6% to 100.80p at 30 June, as gold retreated from record highs. The shares rose 2.0% to 115.3p in early trade today.
The stock touched 115.957p intraday, just below its 52-week high of 116.06p, having recovered strongly in recent weeks and well above its 59.45p 52-week low. That recovery came even as NAV fell, as the discount between the share price and NAV narrowed from 19.4% to 7.5% over the period.
The NAV decline followed gold’s slide from a record above $5,500 an ounce to $4,017 an ounce by the end of June, down 6.7% in dollar terms, while silver fell 18.3% in dollar terms over the same period. Separately, portfolio managers Keith Watson and Robert Crayfourd resigned from Manulife CQS in March, prompting a board review of the trust’s management arrangements. Manulife Canada’s Diana Racanelli and Craig Bethune stepped in as interim managers from 18 May and said they “remain positive on precious metal equities” and believe “several structural drivers remain in place for the metals”.
The board used the disruption to negotiate better terms. In July it agreed heads of terms to appoint Baker Steel Capital Managers as the trust’s investment manager, cutting the annual management fee to 0.82% of net assets from 1.04%, a 21.3% reduction. It also introduced a new dividend policy targeting around 6% a year, paid quarterly, with a first interim payment of 1.51p per share due on 27 August. An active buyback programme has also helped narrow the discount and support the share price even as NAV fell. Net assets fell 34.6% to £82.2 million, partly reflecting the reduction in shares in issue from those buybacks.
Chair Monica Tepes said “it has been an eventful six months and post period end for the Company”, adding that as GPM approaches its twentieth anniversary, “the Board believes these initiatives will strengthen the Company’s competitive position and provide a solid platform from which to pursue attractive long-term returns in the smaller cap gold and precious metals mining sector”.
The board is also considering moving GPM’s listing to the Main Market from The International Stock Exchange, which would open the door to FTSE UK Index Series eligibility. The Baker Steel appointment is expected to complete in the third quarter.