Play the precious metals rally with this leveraged trust

Aim-traded investment company Mineral & Financial Investments (MAFL) was formed via a restructuring in 2013 when a new investor, chief executive and president Jacques Vaillancourt, joined the board. Vaillancourt has 35 years’ experience in global financial markets, during which time he has been involved in over $35bn (£26bn) of financings for the resources sector. He is also president of Mount Everest Finance, which invests in natural resource companies, and was previously managing director and global head of metals and mining at HSBC. He holds 18.4 per cent of the shares, so is a significant shareholder.

The composition of the board and management changed under the guidance of the new lead shareholder and the company thereafter adopted a more disciplined approach to investing. The best part of 18 months was needed to restructure the portfolios.

Incorporated in the Cayman Islands, Mineral & Financial’s main operating subsidiary is Mineral & Financial Investments AG, a Swiss incorporated and domiciled company. Mineral & Financial’s purpose is to provide a financially efficient platform for investment in the natural resources sector, with a particular focus on mining and mineral assets, and to generate above-average returns from its investment activities. Its business model is to invest, finance and advise the investee companies in its “strategic portfolio”. The company also has a “tactical portfolio” where capital is deployed to produce risk-adjusted returns above those available on cash.

The strategy has worked out well. In the five years to 30 September 2025, net asset value (NAV) increased by 270 per cent to £15.1mn and NAV per share rose 240 per cent to 37.9p, representing a compound annual growth rate (CAGR) of 19.1 per cent. It is likely to have risen substantially in the past four months given the composition of the investment portfolio, hence why the shares trade on a premium to the last reported NAV.

A cornerstone of the investment team’s financial expectations that underpin the portfolio’s asset allocation is that the US dollar has entered a long-term corrective period and that the US’s relative economic performance will be impaired by (understated) inflation and relatively higher interest rates. These issues, coupled with a continued expansion of the overall debt burden of the US, are “setting a challenging environment for any government to navigate, let alone the current US administration”.

Mineral & Financial’s investment team also believes that the US debt debate focuses far too narrowly on the US government’s obligation. They note that while this is an important consideration, the current debate does not take into account social security, Medicare and Medicaid obligations, or county and municipal debt, and rarely touches on the gigantic burden of underfunded pension obligations. The US government’s deficit alone is estimated at $1.9tn in 2025, or $5,428 per capita, representing 6.2 per cent of the country’s GDP. US sovereign borrowing is rising at over $6bn every day and the debt burden now stands at $38.5tn.

The net result is that Mineral & Financial’s investment team believes that the US dollar is unlikely to outperform other currencies in 2026. An underperforming US currency will continue to be positive for commodity prices generally and precious metals in particular. Recent geopolitical tensions resulting from President Donald Trump’s intervention in Venezuela and manoeuvres over Greenland, his combative stance towards the US Federal Reserve chair and tariff threats to both Canada and the EU add further weight to this thesis.

On this basis, Mineral & Financial’s investment manager has been overweight gold, a key driver of NAV growth in recent years, and believes that the yellow metal should continue to generate positive gains. However, from a trading standpoint, the company believes that silver and copper should outperform gold.

This explains why precious metals represented 53.7 per cent of the company’s £15.6mn investable capital at the last reporting date (30 September 2025). It also explains why the company’s NAV increased by 31 per cent in the 12-month period.

Furthermore, silver and gold prices have still surged by 75 per cent and 22 per cent to $81 an oz and $4,690 an oz, respectively, even after the recent correction. The company’s exposure to precious metals includes listed holdings in:

• Sprott Physical Silver Trust (PSLV), an unencumbered closed-ended trust

• Agnico Eagle Mines (CA:AEM), a Canadian gold mining company

• Newmont Corporation (US:NEM), the largest producer of gold in the world

• Orla Mining (CA:OLA), a $4.6bn market cap company that acquires, develops and operates three mineral properties including the Musselwhite mine in Ontario

• McEwen (US:MUX), a gold mining and exploration company that has projects in Canada, Argentina, the US and Mexico

Since Mineral & Financial’s last reporting date, shares in the above holdings have risen sharply. Sprott Physical Silver is up 68 per cent, Agnico Eagle 10 per cent, Newmont Corporation 33 per cent, Orla Mining 37 per cent and McEwen 41 per cent.

A well-timed investment

In addition, Mineral & Financial has exposure to the gold price through a bridge financing agreement with one of the investee companies in its strategic portfolio, Golden Sun Resources, having acquired 1,210 oz of gold via deferred gold delivery contracts (DGDC). The financing is secured by 66.6 per cent ownership of Agro Parque, a company that holds the title to 220 hectares of land adjacent to the Bellavista Mine in Costa Rica. The land overlooks the Pacific Ocean and has multiple potential commercial applications, notably real estate and wind farm development.

The DGDC was based on acquiring the gold at $1,750 an oz, with repayment being satisfied by either physical delivery, the financial equivalent, or by converting the contracts, at their then value, into Golden Sun Resources shares at $1.75. The DGDC has a minimum weighted repayment value of $2,564 an oz, floated with the gold price for six months, then locked into the spot price. The contracts accrue interest at 20 per cent a year, compounded quarterly, until redeemed.

The point is that the above investments, which accounted for the vast majority of Mineral & Financial’s tactical portfolio, have risen significantly in value since the last reporting date (30 September 2025). I estimate that the tactical portfolio’s spot valuation could now be closer to £8mn, up from the £5.4mn in the 2025 annual accounts. As noted, these assets consist of listed precious metal miners, the Sprott Physical Silver Trust and the DGDC assets, so are liquid. In addition, the company held cash of £0.75mn at its last reporting date.

Moreover, there is hidden value in the £8.5mn strategic portfolio, too. That’s because £7.4mn of investments have not been revalued even though many were made at the bottom of the cycle. When the company released its 2025 annual results on 22 December 2025, the directors highlighted potential for liquidity events that could be materially beneficial for shareholders across several of its private holdings. It’s worth noting that the majority of the strategic portfolio is held as current assets.

So, with precious metal markets rampant and hidden value likely to be released from a conservatively valued unlisted portfolio of strategic investments, Mineral & Financial’s shares have potential to perform well this year. Buy.