Baker Steel Resources Trust (BSRT ) has enjoyed a 16% uplift in asset value after Futura Resources raised cash to bring a coal mine into production.

The £46m portfolio of natural resources stocks reported a December net asset value (NAV) increase of 16.3% to 77.2p following its semi-annual revaluation of its unlisted holdings.

The growth was primarily driven by the increased valuation of Futura, which is the second-largest position in the fund at 11.2% of the portfolio, after it raised AUD30m (£15.5m) through a convertible loan to bring its Wilton steel-making coal mine into production.

Coal has been exposed in the mine and inaugural sales from the first mined tonnage is expected in the first half of February, which will trigger royalty payments to Baker Steel. Futura is also in negotiations over AUD35m of ‘offtake finance’ for the development of a second mine, which could be brought into production within six months of Wilton.

The position in Futura takes three forms, a 1.5% gross revenue royalty on all future production from both mines, a AUD6.4m nominal investment in a convertible loan, and an equity stake amounting to 23.4%.

Deutsche Numis analyst Gavin Trodd said the royalty model has been updated to take into account higher coal prices and remove the development risk discount given the move into production.

‘This has resulted in an increase to the valuation of the royalty by 16% from December 2022 and a 43% increase since November 2023,’ Trodd said.

The value of the equity stake has also increased 16% since December 2022 and by 64% since November 2023.

The portfolio, run by managers Trevor Steel and David Baker, also enjoyed an upward move in cement producer Cemos after it built a ‘compact calcination unit’ that transforms limestone into calcium oxide, or lime, which reacts with other materials to form a new mineral called clinker, which is used to produce cement.

The calcination unit allows Cemos to supply its own cement production plant in Morocco and is ‘budgeted to significantly increase the margin of the current operations’, potentially doubling earnings, said Trodd.

The facility is expected to come into production later this year and full benefits will be realised in 2025, increasing the value of Cemos by 25% since December 2022 and 14% since November 2023. Cemos is currently 29.3% of NAV.

Trodd said Baker Steel is a ‘unique mandate’ which provides exposure to unlisted companies and specialist listed businesses.

‘We rate the management team but performance has suffered on the back of several portfolio company issues and challenging macroeconomic conditions have also been a headwind, presenting financing issues for smaller company projects,’ Trodd explained.

‘We believe the worst of the issues are behind the company and it is positive to see developments at the fund’s two largest portfolio companies.’

The fund currently trades at a 34% discount after the shares slid 18.7% versus a 19.4% fall in the NAV over the past year. Over three years, the fund has seen its value slide 31.7% and the shares have dropped 47%.