Baker Steel Resources Trust Ltd Sale of Interest in Prognoz Silver Mine (1933F)
February 19 2018 - 2:00AM
UK Regulatory
TIDMBSRT
RNS Number : 1933F
Baker Steel Resources Trust Ltd
19 February 2018
BAKER STEEL RESOURCES TRUST LIMITED
(Incorporated in Guernsey with registered number 51576 under the
provisions of The Companies (Guernsey) Law, 2008 as amended)
19 February 2018
Polar Acquisition Limited ("PAL") agrees to sell its interest in
the Prognoz Silver Mine in Russia to Polymetal International
PLC.
-- Sale of 90% of Polar Silver Resources for US$72 million
-- PAL to retain a continued interest through royalty on future production from Prognoz
-- Transaction results in uplift in valuation of PAL of approximately 25%
Baker Steel Resources Trust Limited (the "Company") announces
that its largest investment, Polar Acquisition Limited ("PAL") has
agreed to sell its 90% interest in Polar Silver Resources Limited
("Polar Silver") to Polymetal International plc ("Polymetal") (LSE,
MOEX: POLY; ADR: AUCOY) for US$72 million to be satisfied in
Polymetal shares.
In January 2017, PAL sold a 10% stake in its subsidiary Polar
Silver to Polymetal, which committed to fund and undertake a
pre-feasibility study on the Prognoz silver project in Russia. As
part of that agreement Polymetal was granted an option to acquire
the remaining 90% of Polar Silver in March 2019 for a price based
on silver reserves and the silver price at that time. Following a
successful field season in 2017, during which 37km of diamond
drilling was undertaken, PAL and Polymetal have now agreed to
accelerate the exercise of the option such that Polymetal will upon
closing acquire PAL's 90% interest in Polar Silver for US$72
million to be satisfied in new Polymetal shares. 90% of the
consideration shares will be subject to a lock-up period of 180
days.
Polar Silver holds a 50% interest in Prognoz silver project
which has JORC-compliant Indicated and Inferred Resources
(estimated by Micon in 2009) of 292 million ounces of silver at a
grade of 586 g/t.
In order to retain exposure to Prognoz going forward, including
the attractive exploration potential, PAL will receive a royalty of
between 2% and 4% (pro rated by the net 45% stake being acquired)
on future production from the mine. The royalty has been valued
based on the current pre-development status of the Prognoz project
and it can be expected to appreciate as the project moves towards
production.
Taking into account the value of the Polymetal shares to be
received by PAL and the valuation of the royalty, the Company's
carrying value of PAL can be expected to increase to approximately
US$41 million at the next NAV date, a 25% increase on the carrying
value at 31 January 2018. On a pro forma basis this transaction
would have increased the Company's NAV by approximately 9% had the
agreement been signed prior to 31 January 2018. The Company has
invested a total of US$14.2 million over the past seven years into
PAL, realised US$6 million in cash during 2017, resulting in a
return on investment of in excess of 3 times.
Subject to the receipt of the required Russian regulatory
approvals, the transaction is expected to close in during the first
quarter of 2018
Polymetal is a major gold company listed on the London Stock
Exchange with a market capitalisation of approximately GBP3.5
billion. During 2017 it produced 1.43 million ounces of gold
equivalent. In 2017, Polymetal paid out US$138 million in
dividends, translating into a 2.7% dividend yield based on the
average share price for the year.
Further details of the Company and its investments are available
on the Company's website www.bakersteelresourcestrust.com
Enquiries:
Baker Steel Resources Trust Limited +44 20 7389 8237
Francis Johnstone
Trevor Steel
Numis Securities Limited +44 20 7260 1000
David Benda (corporate)
James Glass (sales)
The Net Asset Value ("NAV") figure stated is based on unaudited
estimated valuations of the underlying investments and not
necessarily based on observable inputs. Such estimates are not
subject to any independent verification or other due diligence and
may not comply with generally accepted accounting practices or
other generally accepted valuation principles. In addition, some
estimated valuations are based on the latest available information
which may relate to some time before the date set out above.
Accordingly, no reliance should be placed on such estimated
valuations and they should only be taken as an indicative guide.
Other risk factors which may be relevant to the NAV figure are set
out in the Company's Prospectus dated 26 January 2015.
This information is provided by RNS
The company news service from the London Stock Exchange
END
DISGGUWGPUPRGMQ
(END) Dow Jones Newswires
February 19, 2018 02:00 ET (07:00 GMT)
Baker Steel Resources (LSE:BSRT)
Historical Stock Chart
From Jun 2024 to Jul 2024
Baker Steel Resources (LSE:BSRT)
Historical Stock Chart
From Jul 2023 to Jul 2024