BAKER STEEL RESOURCES TRUST LIMITED
(Incorporated in Guernsey with registered number 51576 under the provisions of The Companies (Guernsey) Law, 2008 as amended)
16th April 2018
Completion of previously announced Transaction with Polymetal International plc ("Polymetal")
Baker Steel Resources Trust Limited (the "Company") is pleased to announce that the previously disclosed sale by Polar Acquisition Limited ("PAL") of its 45% ownership in the Prognoz silver property in Russia completed on 13th April 2018 following receipt of all required regulatory approvals.
PAL will continue to retain a 2-4% royalty on its 45% pro rata share of production from the Prognoz silver project.
The total consideration paid for the 45% stake in Prognoz at completion comprised US$72 million paid through the issue of 6,307,000 new ordinary shares of Polymetal (the "Consideration Shares"). The number of Consideration Shares issued was determined by dividing US$72 million by the arithmetic average closing price of ordinary shares in Polymetal on the Main Market of the London Stock Exchange in the six months ending two trading days before Completion being US$11.42 per share. 90% of the Consideration Shares will be subject to a lock-up period of 180 days. In March 2018, Polymetal declared a final dividend of US$0.30 per share, to which the Consideration Shares will be eligible. Accordingly PAL is due to receive a dividend of US$1.89 million in May 2018.
Over the last 12 months Polymetal shares have traded in a range between £10.95 and £5.91, and we anticipate them to remain volatile, particularly with current investor sentiment towards Russia, which in turn is likely to increase the volatility in the Company's NAV given PAL's carrying value will continue to be adjusted in line with the Polymetal share price.
Using the closing price of Polymetal`s shares on 12 April 2018 of £6.62, the value of the Polymetal shares received by PAL equates to approximately US$59.4 million. The carrying value of PAL (including the royalty interest) has decreased by 1.1% during April in line with this.
PAL plans to undertake a distribution of all the Polymetal shares it has received to its shareholders and as such the Company will monitor its holding of PAL and Polymetal shares going forward taking into consideration the requirement to maintain portfolio diversification whilst maximising potential returns.
Information on Prognoz (relevant to the Company's indirect interest through PAL in the Prognoz royalty interest)
Prognoz is a very large world-class deposit and the largest undeveloped primary silver deposit in Eurasia with JORC compliant Indicated and Inferred Resources (estimated by Micon in 2009) of 292 Moz at 586 g/t silver.
Polymetal has stated that it will provide further guidance on its near and long-term plans for Prognoz in the second half of 2018,
• Project activities for 2018 include 46 km of diamond drilling and extensive in-house metallurgical test work. The updated JORC-compliant resource estimate is expected in Q4;
• PFS and JORC-compliant reserve estimate in Q4 2019;
• FS and Reserve update in Q4 2020 paving the way for potential investment decision in H1 2021;
• Subject to the positive investment decision, full run-rate of production can be achieved in 2024.
Further details of the Company and its investments are available on the Company's website www.bakersteelresourcestrust.com
Baker Steel Resources Trust Limited +44 20 7389 8237
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