Sylvania Platinum — Long-term PGM price upside

Sylvania Platinum (AIM: SLP)

Last close As at 09/10/2024

GBP0.48

−0.80 (−1.64%)

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Research: Metals & Mining

Sylvania Platinum — Long-term PGM price upside

Sylvania’s Q424 results were negatively affected by a delayed recovery in production following the 22-day strike during Q324. This resulted in 21% lower revenue than expected and EBITDA of only US$2.8m, 68% below our expectation. We have reduced our near-term platinum group metals (PGM) price assumptions on the back of elevated surface inventories and sustained South African production, but bolstered our long-term forecasts due to an expected higher demand for platinum and palladium on the back of fibreglass, hydrogen economy and hybrid vehicle demand. We forecast a recovery in production for Sylvania from FY25 with somewhat higher costs after the recent US dollar depreciation. We have cut our EPS estimates by 17.3% in FY25 and 25.7% in FY26, but see a positive impact from our higher long-term PGM forecasts thereafter. As a result, we have reduced our valuation by 6.5% from 120p/share to 112.2p/share. With exploration assets valued at book and conservatism in our Thaba joint venture (JV) valuation, our overall valuation offers upside as projects graduate from exploration to production over the coming years.

Metals & Mining

Sylvania Platinum

Q424 results

Metals and mining

14 August 2024

Price

58.3p

Market cap

£152m

US$1.29/£; ZAR17.87/US$

Net cash (US$m) at end Q424

97.8

Shares in issue

261.6m

Free float

88.4%

Code

SLP

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(6.5)

(18.3)

(19.4)

Rel (local)

(6.0)

(16.9)

(26.5)

52-week high/low

85.5p

50.4p

Business description

Sylvania Platinum focuses on the re-treatment and recovery of platinum group metals including platinum, palladium and rhodium, mainly from tailings dumps and other surface sources, but also lesser amounts of run-of-mine underground ore from Samancor chrome mines in South Africa.

Next events

FY24 results

September 2024

Analysts

René Hochreiter

+44 (0)20 3077 5700

Marius Strydom

+44 (0)20 3077 5700

Sylvania Platinum is a research client of Edison Investment Research Limited

Sylvania’s Q424 results were negatively affected by a delayed recovery in production following the 22-day strike during Q324. This resulted in 21% lower revenue than expected and EBITDA of only US$2.8m, 68% below our expectation. We have reduced our near-term platinum group metals (PGM) price assumptions on the back of elevated surface inventories and sustained South African production, but bolstered our long-term forecasts due to an expected higher demand for platinum and palladium on the back of fibreglass, hydrogen economy and hybrid vehicle demand. We forecast a recovery in production for Sylvania from FY25 with somewhat higher costs after the recent US dollar depreciation. We have cut our EPS estimates by 17.3% in FY25 and 25.7% in FY26, but see a positive impact from our higher long-term PGM forecasts thereafter. As a result, we have reduced our valuation by 6.5% from 120p/share to 112.2p/share. With exploration assets valued at book and conservatism in our Thaba joint venture (JV) valuation, our overall valuation offers upside as projects graduate from exploration to production over the coming years.

Year end

Revenue (US$m)

PBT*
(US$m)

EPS*
(c)

DPS**
(p)

P/E
(x)

Yield
(%)

06/23

130.2

67.0

17.0

8.0

4.4

13.7

06/24e

84.7

19.9

5.8

3.4

12.9

5.9

06/25e

106.4

29.8

7.7

4.2

9.8

7.2

06/26e

134.2

38.2

10.1

5.8

7.4

9.9

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Exclusive of windfall dividends.

Q424 results pressure due to lagging production

Q424 revenue faced pressure, due to a lagged recovery in production following the strike action in Q324 and lower by-product prices. Full-year 4E PGM production of 72,700oz missed guidance of 74,000–75,000oz, while ruthenium and iridium prices declined on Q324. The depreciation of the US dollar relative to the South African rand resulted in higher operating costs, which put further pressure on EBITDA (US$2.8m vs US$8.9m expected). The cash balance remained strong at US$97.8m.

Near-term PGM forecasts cut, but long-term upside

We have cut our near-term PGM price forecasts, affecting palladium and rhodium, while our long-term forecasts for platinum, palladium and gold have been increased on the back of fibreglass, hydrogen economy and hybrid vehicle demand. As a result, we have lowered our EPS estimate by 17.3% in FY25 and 25.7% in FY26 but lifted our longer-term forecasts, supported the Thaba JV starting production in FY25.

Valuation: 112.2p/share; SDO down 9% to 81.5p

We value the Sylvania Dump Operations (SDO) at 81.5p per share, which is down 9% on our previous valuation of 89.5p per share on the back of lower PGM price forecasts. We have slightly increased our valuation for the Thaba JV to 16.9p per share, with proximity of cash flows limiting the PGM downgrade impact. We continue to carry exploration assets at book value of 13.8p per share.

Delayed recovery in production and PGM prices

The investment case for Sylvania is mainly based on a low-risk dump retreatment operation to which we ascribe the bulk of the company’s valuation. It also has exploration assets in the northern part of the Bushveld Igneous Complex of South Africa. A preliminary economic assessment (PEA) is being conducted for Volspruit, following an updated mineral resource estimate (MRE), which was released recently. This will be followed by a preliminary feasibility study (PFS) over coming months. In August 2023, the company announced a Thaba JV with Limberg Mining Company (LMC), which will diversify Sylvania’s production to include chrome concentrate from H225.

Quarterly results below our expectations

Sylvania missed our Q424 forecasts as a result of a lower-than-expected production recovery following Q324 production pressures due to a 22-day wage strike at the company’s western operations in February 2024. The PGM basket price was in line with expectation during the quarter, while costs were slightly higher than expected. Exhibit 1 shows the quarterly results and the differences between them and our prior forecasts.

Exhibit 1: Comparison of Q424 results with Q324

 

Q324

Q424

Q424e

Q424 vs Q324

Q424 vs Q424e

Production

Plant feed (t)

580,572

600,058

670,000

3.4%

(10.4%)

Feed head grade (g/t)

2.07

1.89

1.87

(8.9%)

0.7%

PGM plant feed (t)

330,379

336,029

358,450

1.7%

(6.3%)

PGM plant feed grade (g/t)

3.06

3.03

3.03

(0.8%)

0.0%

Total 4E PGMs (oz)

17,232

17,067

19,374

(1.0%)

(11.9%)

Total 6E PGMs (oz)

21,857

21,896

24,801

0.2%

(11.7%)

Basket price ($/oz)

1,303

1,383

1,383

6.1%

0.0%

Financials

4E revenue (US$m)

16.1

17.0

20.9

5.5%

(18.8%)

By-product revenue (US$m)

3.1

2.8

3.7

(9.4%)

(23.7%)

Total revenue before sales adjustment (US$m)

19.2

19.8

24.6

3.1%

(19.6%)

Sales adjustment (US$m)

1.1

0.8

1.5

(25.3%)

(44.5%)

Total revenue (US$m)

20.3

20.6

26.1

1.5%

(21.0%)

Total operating costs (ZARm)

313.5

318.3

309.7

1.5%

2.8%

Total operating costs (US$m)

16.6

17.2

16.5

3.4%

3.9%

Other costs (US$m)

0.7

0.7

0.7

10.4%

(1.7%)

EBITDA (US$m)

3.1

2.8

8.9

(7.7%)

(67.9%)

Net interest (US$m)

1.4

1.3

1.3

(7.0%)

0.0%

Net profit (US$m)

2.5

2.8

8.9

8.0%

(69.1%)

Gross margin

18.4%

16.9%

36.8%

(8.3%)

(54.2%)

Basic EPS (c)

1.0

1.1

3.4

8.0%

Capex (US$m)

3.5

5.3

51.2%

Cash balance (US$m)

101.3

97.8

(3.5%)

Average ZAR/US$ rate

18.90

18.56

18.90

(1.8%)

(1.8%)

Spot ZAR/US$ rate

18.91

18.19

18.90

(3.8%)

(3.8%)

Unit costs (US$)

SDO cash cost /4E PGM oz

826

875

731

5.9%

SDO cash cost /6E PGM oz

651

682

571

4.7%

Group cash cost / 4E PGM oz

980

1027

890

4.8%

Group cash cost / 6E PGM oz

789

801

695

1.5%

All-in-sustaining cost (4E)

1008

1077

957

6.8%

All-In cost (4E)

1145

1161

888

1.4%

Source: Edison Investment Research, Sylvania Platinum accounts


Specific deviations from our Q424 expectations are as follows:

Q424 production was slightly lower than the depressed Q324 level with the expected recovery in the quarter being delayed, resulting in plant feed 10.4% lower and total 4E PGMs 11.9% lower than our expectations (17,067oz).

4E PGM basket prices increased by 6.1% compared to Q324, in line with our expectation. However, iridium and ruthenium prices were slightly down on Q324 and also relative to our expectations.

4E revenue of US$17.0m was 5.5% higher than in Q324, but 18.8% below our expectation, due to the lower-than-expected production. By-product revenue declined by 9.4% on Q324 due to the lower prices and missed our Q424 expectation by 23.7% due to a combination of lower-than-expected prices and production. The combined impact on total revenue was 21% lower than our forecast.

Operating costs were reasonably well controlled, ending the quarter 1.5% higher in South African rand terms but, due to a weaker dollar over the quarter, in US dollar terms the increase was more pronounced at 3.4%. US dollar-based expenses were 3.9% higher than our expectation, largely driven by the weaker exchange rate.

EBITDA was 7.7% down on Q324 due to cost growth exceeding revenue growth and missed our expectation by a wide 67.9% due to the lack of recovery in production and the lower iridium and ruthenium prices.

Cash levels reduced from US$101.3m at end Q324 to US$97.8m following the payment of a US$3.0m ordinary dividend and a US$3.0m special dividend during the quarter.

Changes to PGM price forecasts

We have updated our commodity price forecasts (Exhibit 2) as a result of fairly large surface stocks of platinum, palladium and rhodium, in our view, compounded by continued production from South African mines, which will likely have the effect of keeping prices flat until these stocks are run down and/or mine supply reduces. We think this may take several years.

Compared to our previous forecasts in February 2024, we have increased our platinum price assumptions because of greater demand from the fibreglass sector as a result of it using 100% platinum in its bushings, and eliminating rhodium mainly because of the high price of the latter metal in the last three years. As a result, the durability of the bushings has dropped significantly, needing a far greater amount of platinum to be replaced than it did previously in the next few years. Over the longer term, demand for the hydrogen economy is likely to increase with the large number of new entrants into the hydrogenation and fuel cell markets, benefiting platinum and iridium prices.

Exhibit 2: Edison updated PGM price forecasts (average June year-end prices)

US$/oz

FY23

FY24

FY25e
old

FY25e new

FY26e
old

FY26e new

FY27e

FY28e

FY29e

FY30e
old

FY30e new

Platinum

1,000

906

1,007

1,010

1,085

1,111

1,252

1,405

1,580

1,200

1,743

Palladium

1,711

1,073

940

960

1107

981

1,066

1,175

1,286

1,112

1,358

Rhodium

11,778

4,285

5,163

4,641

6,492

4,580

4,894

5,349

5,673

8,764

5,903

Gold

1,868

2,310

1,837

2,170

1,860

1,935

1,966

1,890

1,726

1,661

1,727

Ruthenium

480

444

418

412

398

411

413

411

410

448

408

Iridium

4,406

4,863

5,025

4,726

5,094

4,709

4,747

4,786

4,798

5,460

4,808

Source: Edison Investment Research, ALG, LSEG Data & Analytics

Palladium prices are likely to remain broadly flat until around 2028, when higher demand from hybrid vehicles, which are taking away market share from sharply falling sales of battery electric vehicles and also gasoline vehicles, will almost certainly have a positive effect on palladium prices. For rhodium, the same applies with the added negative effect of thrifted rhodium as mentioned above, adding to surface stocks of the metal. Therefore, for the next few years, we think that these surface stocks could the depress prices and we have lowered our forecasts as a result.

Forecast revisions

Our forecast revisions are shown in Exhibit 3. We have maintained our FY25 PGM plant feed, 4E PGM production and 2E PGM production forecasts. As a result of our lower PGM price forecasts, we have moderated our revenue forecast by 3.8%. Due to the depreciation of the US dollar relative to the South African rand and our constant currency valuation approach, we have lifted our FY25 expense forecasts by 2.6%. The net impact of these two changes is a 16% reduction in our FY25 EBITDA forecast to US$30.8m and a 17.1% cut in our FY25 EPS forecast from 9.3c to 7.7c.

Exhibit 3: FY25 and FY26 forecast changes

Old FY25e

New FY25e

FY25e vs old FY25e

Old FY26e

New FY26e

FY26e vs old FY26e

Production

Plant feed (t)

2,698,007

2,797,434

3.7%

2,642,826

3,039,182

15.0%

PGM plant feed (t)

1,447,204

1,447,428

0.0%

1,387,484

1,537,103

10.8%

Total 4E PGMs (oz)

77,718

77,683

0.0%

81,643

83,872

2.7%

Total 2E PGMs (oz)

23,791

23,795

0.0%

22,393

22,395

0.0%

Basket price ($/oz)

1,499

1,444

-3.7%

1,751

1,505

-14.0%

Financials (US$m)

4E revenue

90.9

87.5

-3.8%

113.5

100.2

-11.7%

Total revenue

110.5

106.4

-3.7%

148.2

134.2

-9.4%

Total operating costs

72.0

73.9

2.6%

92.2

92.1

-0.1%

Group EBITDA

36.7

30.8

-16.0%

52.8

38.9

-26.3%

Net profit

24.6

20.7

-15.9%

35.7

26.4

-25.9%

Gross margin

29.8%

27.1%

35.7%

28.7%

Basic EPS (c)

9.3

7.7

-17.1%

13.6

10.1

-25.7%

Capex

9.8

9.8

0.0%

5.7

5.7

0.0%

Cash balance

99.5

100.6

1.1%

102.2

102.2

-0.1%

Source: Edison Investment Research

In FY26, we forecast a meaningful 14.5% increase in 4E revenue relative to FY25 and an even more meaningful 26.1% increase in total revenue as the Thaba JV starts contributing. This pick-up is lower than our previous forecast due to a 14% reduction in our PGM basket price forecast.

After allowing for US dollar operating costs in line with our previous forecast, we have pulled back our FY26 EBITDA forecast by 26.5% and our FY26 EPS by 25.7% from 13.6c to 10.1c.

Our cash balance forecast has increased slightly for FY25 and is flat for FY26 on the back of a weaker spot US dollar exchange rate, affecting the conversion of sizeable cash held in rand and sterling.

While our new near-term PGM forecasts have had a negative impact on our explicit EPS forecasts to FY26, the longer-term forecasts have improved, with higher platinum, palladium and gold forecasts being very material towards FY30. As a result of these improved forecasts, the impact of near-term EPS cuts have been moderated as they relate to our valuation for Sylvania.

Valuation

On the back of our lower near-term PGM price forecasts, we have lowered our EPS forecasts, which has resulted in a 6.5% reduction in our valuation for Sylvania from 120p/share to 112.2p/share. Our valuation is made up of an SDO valuation, a valuation for Sylvania’s 50% share of the Thaba JV and a value for its exploration assets (carried at book value).

Our PGM forecast changes have resulted in an 8.9% reduction in the SDO valuation to 81.5p/share. In the case of our Thaba JV valuation, the impact of our more conservative near-term PGM forecasts is outweighed by our more aggressive long-term forecast and the increased proximity of cash flows, with the JV forecast to start producing in FY26 with dividends forecast to flow from FY29. The exploration asset carrying value is unchanged at 13.8p/share.

Exhibit 4: Valuation downgrade on PGM forecasts

Current

Previous

Change

Combined valuation (p/share)

112.2

120.0

-6.5%

SDO (p/share)

81.5

89.5

-8.9%

Exploration (p/share)

13.8

13.8

0.0%

Thaba JV (p/share)

16.9

16.7

1.2%

FY24 EPS (p/share)

5.8

7.2

-19.8%

Implied P/E (x)

19.3

16.6

FY25 EPS (p/share)

7.7

9.3

-17.3%

Implied P/E (x)

14.6

12.9

FY26 (p/share)

10.1

13.6

-25.7%

Implied P/E (x)

11.1

8.8

Source: Edison Investment Research

The implied forward P/E multiple of our new valuation has increased based on our explicit FY24, FY25 and FY26 EPS forecasts relative to our previous valuation, but becomes more attractive based on FY26 EPS with a P/E multiple of 11.1x, especially in the light of forecast uplifts in PGM prices thereafter and to FY30.

Exhibit 5: Financial summary

US$m

2022

2023

2024e

2025e

2026e

Year ending 30 June

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

 

 

 

 

 

Revenue

151.9

130.2

84.7

106.4

134.2

Cost of Sales

(61.6)

(63.2)

(65.6)

(73.9)

(92.1)

Royalties Tax

(6.9)

(4.9)

(3.6)

(5.3)

(6.7)

Gross Profit

83.4

62.1

15.5

27.2

35.4

EBITDA

82.8

67.9

17.0

30.8

38.9

Operating Profit (before amort. And except.)

79.7

61.8

12.1

24.0

32.2

Intangible Amortisation

0.0

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

0.0

0.0

Other

(6.7)

(8.1)

(8.0)

(10.0)

(10.1)

Operating Profit

79.7

61.8

12.1

24.0

32.2

Net Interest

1.3

5.2

7.8

5.8

6.0

Profit Before Tax (norm)

80.9

67.0

19.9

29.8

38.2

Profit Before Tax (FRS 3)

80.9

67.0

19.9

29.8

38.2

Tax

(24.8)

(21.6)

(4.7)

(9.4)

(11.8)

Profit After Tax (norm)

56.1

45.4

15.2

20.5

26.4

Profit After Tax (FRS 3)

56.1

45.4

15.2

20.5

26.4

Average Number of Shares Outstanding (m)

272.3

266.6

262.6

261.6

261.6

EPS – normalised (c)

20.6

17.0

5.8

7.7

10.1

EPS – normalised fully diluted (c)

20.4

16.7

5.8

7.7

10.1

EPS – (IFRS) (c)

20.4

16.7

5.8

7.7

10.1

Dividend per share* (p)

8.0

8.0

2.4

4.2

5.8

Gross Margin (%)

55%

48%

18%

26%

26%

EBITDA Margin (%)

54%

51%

20%

29%

29%

Operating Margin (before GW and except.) (%)

52%

47%

14%

23%

24%

BALANCE SHEET

Fixed Assets

92.7

101.5

153.3

159.1

160.8

Intangible Assets

46.1

46.5

42.1

42.5

46.5

Tangible Assets

46.3

48.7

65.6

68.6

67.6

Investments

0.3

6.4

45.5

47.9

46.8

Current Assets

186.7

168.2

133.7

142.4

142.4

Stocks

4.3

5.1

1.6

1.9

2.0

Debtors

52.9

35.7

27.9

32.8

34.9

Cash

121.3

124.2

96.5

100.6

102.2

Other

8.3

3.3

7.6

7.2

3.3

Current liabilities

11.2

13.9

5.9

6.9

7.3

Creditors

11.2

13.9

5.9

6.9

7.3

Short-term borrowings

0.0

0.0

0.0

0.0

0.0

Long-term liabilities

17.6

16.5

19.3

20.1

18.7

Long-term borrowings

0.0

0.4

0.0

0.0

0.0

Other long-term liabilities

17.6

16.2

19.3

20.1

18.7

Net Assets

250.7

239.4

261.8

274.5

277.2

CASH FLOW

Operating Cash Flow

91.9

77.7

19.1

26.3

37.1

Net Interest

1.5

5.1

9.3

6.1

6.3

Tax

(23.8)

(19.8)

(3.6)

(9.2)

(11.6)

Capex

(16.4)

(14.5)

(21.8)

(9.8)

(5.7)

Acquisitions/disposals

0.0

0.0

(18.5)

0.0

2.4

Financing

(20.1)

(10.6)

(0.8)

0.0

0.0

Dividends

(22.7)

(35.5)

(17.4)

(7.7)

(23.8)

Net Cash Flow

19.7

6.6

(33.3)

6.1

4.8

Opening net (debt)/cash

106.1

121.3

124.2

96.5

100.6

HP finance leases initiated

0.0

0.0

0.0

0.0

0.0

Other

(4.5)

(3.7)

5.6

(2.1)

(3.2)

Closing net (debt)/cash

121.3

124.2

97.8

100.6

102.2

Source: Company accounts, Edison Investment Research. Note: *Excludes windfall dividend.

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

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United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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BlackRock Greater Europe Investment Trust — High-quality fund in underappreciated region

BlackRock Greater Europe Investment Trust’s (BRGE’s) co-managers Stefan Gries and Alexandra Dangoor remain positive on the trust’s prospects despite a mixed macroeconomic backdrop. Although the Chinese economy is weaker than forecast (China is an important European export market), and there are some weaker US economic indicators, European purchasing managers indices are rising and employment data is strong. The managers are selective, seeking high-quality European-based companies. Hence, investors do not have to have a positive view on the economy to consider BRGE, which has the highest returns in the AIC Europe sector over the last 10 years.

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