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CYN Cqs Natural Resources Growth And Income Plc

167.50
0.00 (0.00%)
Last Updated: 11:41:17
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Cqs Natural Resources Growth And Income Plc LSE:CYN London Ordinary Share GB0000353929 ORD 25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 167.50 167.50 168.00 167.50 167.50 167.50 117,837 11:41:17
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Unit Inv Tr, Closed-end Mgmt 9M 5.23M 0.0782 21.42 112.04M
Cqs Natural Resources Growth And Income Plc is listed in the Unit Inv Tr, Closed-end Mgmt sector of the London Stock Exchange with ticker CYN. The last closing price for Cqs Natural Resources Gr... was 167.50p. Over the last year, Cqs Natural Resources Gr... shares have traded in a share price range of 151.50p to 187.00p.

Cqs Natural Resources Gr... currently has 66,888,509 shares in issue. The market capitalisation of Cqs Natural Resources Gr... is £112.04 million. Cqs Natural Resources Gr... has a price to earnings ratio (PE ratio) of 21.42.

Cqs Natural Resources Gr... Share Discussion Threads

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DateSubjectAuthorDiscuss
19/11/2010
14:36
Outlook – as provided by a rival Investment Manager, Altus Capital Limited on their similar fund -ARCL



"The outlook for the Company remains positive with further strength anticipated in metals prices and related junior mining equities.



It is anticipated that the gold price will remain strong for at least the next eighteen months, given continued concerns over the speed of the global economic recovery, further quantitative easing in the US and fears over Euro-zone sovereign debt. In addition, central banks have become net buyers of gold and retail investment demand continues to rise particularly in Asia and the Middle East. A year ago, the Manager forecast a gold price of US$1,450 per ounce for the end of 2010 and, while there will be volatility and profit-taking which will cause pull backs in the commodity and related mining equities, we expect the price of gold to breach the US$1,500 per ounce level and rise as high as US$1,600 per ounce over the next twelve to eighteen months.



Other commodities also have a positive outlook. The primary driver behind this outlook is the continued strong demand for raw materials from China and other developing economies. Chinese groups have made significant investments over recent years in industrial metal and mineral projects, and particularly in iron ore, copper and coal assets, but also increasingly in Western gold companies. Notably, portfolio company Kryso Resources, which is developing a three million ounce in Tajikistan, is negotiating a strategic 29.9% investment by China Nonferrous Metals.



Uranium has also become an increasingly attractive commodity with the price rising over 10% in recent weeks to US$58.5 per pound. As with other commodities, much of this interest is being driven by demand from China. The French integrated nuclear group, Areva, recently announced a deal to supply 20,000 tonnes of uranium to the Chinese over a ten year period. This deal, worth US$3.5 billion, implies a uranium price of close to US$80 per pound of uranium which is well above the previous norms for long-term contracts of between US$70 and US$75 per pound.



Rare earth elements, which are essential for many emerging and high-tech applications including the permanent magnets used in electric and hybrid cars, have also seen significant price gains in recent months. This price gain has again been influenced by China which controls over 90% of supply of rare earths and has been reducing export quotas. The Chinese have also been investing directly in the more advanced rare earth projects globally and look set to maintain their monopoly on this increasingly important mineral group.



The platinum group metals market is also dominated by a single country with South Africa accounting for over 80% of global supply of platinum. Demand for platinum group metals is set to increase, driven by the rapid increase in the number of new cars in China and developing economies as well as an anticipated increase in the use of diesel engines (which require larger amounts of platinum) in the US. South Africa poses a number of issues for platinum group metals producers with power costs increasing by 25% this year and similar rises expected in 2011 and 2012. In addition, increasing industrial action is causing disruption at mines and other organisations throughout the country. The Manager therefore believes this creates an interesting tension in the platinum group metals market and anticipates that while the miners may struggle, metal prices will rise. The Manager has therefore invested directly in the metal through an exchange traded fund (ETF) but has also invested in Eastern Platinum, a junior producer with a very significant resource that offers leverage to a rising platinum price.



Merger and acquisition activity across the whole mining sector is increasingly becoming a driver of value. Higher profile deals have been dominated by the mid-tiers and majors although this deal flow is beginning to impact the junior sector. An increasing number of the Company's portfolio holdings are either the subject of speculation about possible takeovers or have received takeover approaches. Recent deals in the gold space include the acquisition of Red Back Mining by Kinross for C$8.0 billion and the likely take-over of Andean Resources by Goldcorp for US$3.4 billion valuing its current resource at US$1,000 per ounce and pricing-in further expected resource growth. The Manager anticipates further takeovers of a number of its portfolio holdings and that M&A activity elsewhere in the sector will drive up the value of its holdings.



A further driver of value is expected to come from the fact that resource equities and gold miners in particular have not performed as strongly thus far as would have been anticipated on the back of the metal price gains. Further value is expected to be realised as these higher metal prices flow through to increased margins and enhanced earnings in mining equities.



For example, gold has gained 46% or US$428 per ounce since the Company's launch in June 2009 when the price was US$930 per ounce to the end of October level of US$1,358 per ounce, Major gold mining indices, the FTSE Gold Mines Index and the S&P/ TSX Gold Index, have risen 44.3% and 29.4% respectively therefore performing in line with and underperforming the metal. If we assume mine operating costs are US$550 per ounce (close to the industry average) and attribute a further US$200 per ounce for corporate overhead and non-mining costs, the total cost is US$750 per ounce. This cost structure would have realised an operating margin of US$180 per ounce based on the June 2009 gold price rising to US$608 per ounce based on the gold price at the end of October 2010, representing a 238% increase. We therefore anticipate that mining equities will continue to perform strongly even if there are no further advances in metals prices as these enhanced earnings are realised".

End of Investment Managers Outlook report.

davebowler
16/11/2010
11:57
This article mentions three of CYN's strategic holdings - precious metals , uranium and rare earth metals.

Global opportunities - Shining a light on the gold story

* Story by: Ed Bowie
* Magazine: InvestmentAdviser
* Published Monday , November 15, 2010

Gold has been a top-performing asset class in the past decade and this trend is set to continue. There are very few global market opportunities as compelling right now as the junior gold explorers and miners.



Gold remains 35 per cent below its peak inflation-adjusted price of a little more than $2,000 per ounce, which was reached in January 1980. At this time gold and gold equities were estimated to have represented approximately 26 per cent of global assets. Today, following the equity bull markets of the early 1980s, this has now dropped to less than 1 per cent.

If gold holdings were to be increased to just 2 per cent (less than one-tenth of historic norms) a total of 85,000 tonnes of yellow metal would be required. This, however, represents more than 30 years' production.

It is estimated that total historic gold production - and therefore the amount of gold currently available to the market - is 165,000 tonnes. This means that if stacked in one place, the gold available today would create a cube with sides of less than 25 metres. Of this, 52 per cent is tied up in jewellery, with the remainder being held by central banks, by retail and institutional investors and with a small proportion in industrial uses or being unaccounted for.

The most significant demand for gold typically derives from the jewellery sector - an industry very sensitive to movements in price as well as seasonal effects. For example, gold purchases soar in the lead up to certain religious festivals in India (the largest market for gold jewellery) and in the Christmas period in the US.

Central bank holdings amount to almost 1bn ounces, close to 20 per cent of gold currently in circulation. Western nations typically hold larger proportions of gold as a proportion of their financial reserves, although some developing economies have been increasing their holdings. Indeed, following a decade of being net sellers of gold, central banks are becoming net buyers.

The retail investment market, which is approximately a quarter of the size of the jewellery market, has also experienced strong growth over the past decade. The introduction of exchange traded funds (ETFs) has had a dramatic affect on the ability of investors to access gold, without the costs and issues associated with owning, transporting and storing the physical metal.

The world's largest gold ETF, SPDR Gold trust, has grown from less than 10m ounces five years ago to almost 45m ounces today, with a doubling of the holdings taking place since the onset of the financial crisis in mid 2008.

As frequently cited, gold is no-one's liability, meaning its value cannot be eroded by the credit worthiness of its issuer. The latter point has made gold an excellent wealth preserver; retaining its purchasing power over long periods of time, and acting as a safe haven during times of social and economic crisis. Gold is arguably benefiting from a perfect storm at present; with investment demand being driven by both fears over the deflationary and recessionary impacts on the credit worthiness of sovereign states, as well as the potential for significant money supply induced real inflation.

Currently the reported unmined gold reserves on mining companies' inventories stand at approximately 1.5bn ounces - less than 30 per cent of total historically mined gold or 18 years of global production at current levels.

Discoveries of new resources have declined steadily in the past 25 years. The net result means current production levels are only sustained from older or lower-quality mines, where operating costs are typically increasing as the assets are mined at greater depths or lower grades.

The discovery cost of gold is set to increase dramatically, as will merger and acquisition activity, over the next 18 months. Junior miners will be acquired by major and mid-tier companies in order to replenish their dwindling reserves, as well as improve the quality of their resource base.

The fundamentals for the gold market are robust and will remain so for the next 2-3 years. High quality gold equities offer the best means of gaining exposure. While the gold price has gained more than 25 per cent over the past 12 months, operating costs at gold mines have only grown a fraction and therefore operating margins and asset values have increased significantly. Furthermore, investors in successful junior gold companies will benefit from the growth of the companies' resource bases and production profiles.

In addition to gold, platinum group metals are expected to perform well on the back of increasing autocatalytic demand and the fact 60-70 per cent of these metals come from South Africa, which presents a supply side risk due to potential labour and energy issues.

With demand for clean energy increasing, the price of uranium should also perform well. To ensure continued competitive domestic supply, the advancing economies seem likely to impose tariffs on the import and export of commodities. India has already imposed of a 5 per cent duty on iron ore exports and China has restricted the export of rare earth elements which are so crucial to green and high tech sectors.

Ed Bowie is investment manager of Altus Resource Capital Limited

davebowler
15/11/2010
12:24
Basic NAV 332.44
davebowler
09/11/2010
10:20
RNS 9/11/10 Basic NAV 330.75
davebowler
08/11/2010
16:47
11% of this is in Uranium linked shares so should help turbocharge the NAV - as if it needed any.
davebowler
08/11/2010
08:40
Thanks for that, CYN certainly at an average historical discount.
What I was looking for was more of an overall picture, in the way I tend to watch THRG as an indicator of small investor activity.
There still seem to be enough pundits out there saying the big switch from bonds to shares has yet to come, so enjoy the ride.

glentimon
05/11/2010
21:14
Thanks glentimon. I hold CYN, JRS, SST, HPI, TEM and therefore know what you mean about market euphoria. So your statistic is an interesting one and, I agree, doesn't suggest overheating in the IT market.
hoggetwood
05/11/2010
15:00
has an analysis of recent discount to NAV on the top right hand side of the downloaded doc.
davebowler
05/11/2010
08:22
On a general investment trust note, I begin to sense excessive market euphoria, and was wondering about warning signals. I was trying to find a historical graph of average trust discount to NAV, but was unsuccessful. However the AIC publish monthly stats, so I guess I'll have to collect the data manually. For the past 6 mths the average discount has narrowed from 10.4% in Apr to a low of 8.7% in Jun, but is now widening to the last stats of 9.3% in Sep, which I understand is generally around the long-term average.
So on this basis, no worries yet, and current widening reflects re-rating increasing NAVs as recovery continues?

glentimon
27/10/2010
21:38
NAV up to 328p so share price represents good discount at 273p
melody9999
21/10/2010
10:47
Sorry hazl- I was in a flippant mood!
davebowler
20/10/2010
14:49
For me, an enormous advantage of an investment trust over a unit trust ('fund') is that it is a SHARE and is traded as such: I can buy or sell virtually instantly. With a unit trust I have to put in a buy or sell order, which is likely to be executed hours hence (maybe next day) at a price which may have changed significantly. [Maybe it's possible to countermand the order; I've never tried.]
Trustnet.com is an invaluable site.

hoggetwood
19/10/2010
21:13
thanks appreciated
hazl
19/10/2010
21:07
Hi Hazl,

Investment Trusts such as CYN are closed ended investment companies (CEIC), with a limited number of shares in existence. As such, they can trade at a premium or discount to their net asset value (NAV). Your more typical funds are open ended investment companies (OEIC), which regularly create new units/shares to issue to new investors in the company/fund. As such, they always trade at net asset value (NAV).

The CEIC premium/discount to NAV can provide the mildly savvy investor with a useful, but basic, valuation tool for the associated trust. More on this can be found here:



Once I got my head around how they work, I quickly became an investment trust convert. I would only consider buying into an OEIC if there was an associated investment trust that traded at a premium to its NAV. The only one I can think of right now, off the top of my head, is the closed ended Ruffer Investment Company (Epic: RICA). Its equivalent OEIC is the Ruffer Total Return Fund.

I hope the above proves helpful anyway. You should not buy into any Investment Trust/Closed Ended Investment Company until you've got your head around the NAV concept.

Cheers.

Jimbo

jimbo55
19/10/2010
20:54
as opposed to fund!!
hazl
19/10/2010
11:28
It might fall in value!
davebowler
18/10/2010
11:21
can anyone tell me the disdvantage with holding this in equity form if there is any
hazl
16/10/2010
09:26
Extract from above;

Despite providing a good performance the manager continues to like the 'rare earths'
sector. Typically used in the manufacture of electrical components, continued strong
demand is expected from the Far East, particularly Japan. At present China controls
c 95% of existing output and the manager expects that strong domestic demand will see
a reduction in Chinese exports.

davebowler
16/10/2010
09:22
Basic NAV 320.72
davebowler
13/10/2010
10:36
i have it at 318 giving a circa 16% discount to NAV. A discount to NAV here is a gift when you consider the costs to build such a diverse portfolio (trades etc) and also that a lot of the gems here are not available to joe q. i.e high yielding convertibles and off market shares. It should rightly trade at a premium and will as this bull matures.

Its a bargain.

jonnyboy1
13/10/2010
10:27
Basic NAV 312.00
davebowler
08/10/2010
14:56
NAV now 302p
davebowler
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