Baker Steel Resources' largest investment offloads Russian silver mine

Guernsey-based investment company Baker Steel Resources advised investors that Polar Acquisitions (PAL), its largest investment, has agreed to sell its interest in the Prognoz silver mine in Russia to its Channel Island neighbour, Jersey-based Polymetal International, in a deal worth more than $70m.

After selling a 10% stake in PAL to Polymetal back in January 2017, the group decided to pick up the remaining 90% for a total of $72m following a successful field season.

In order to retain exposure to Prognoz going forward, including the attractive exploration potential, PAL was set to collect a royalty of around 2% to 4% on future production from the mine.

"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 $41m at the next NAV date, a 25% increase on the carrying value at 31 January 2018," Baker said in its Monday morning update.

Baker Steel invested a total of $14.2m into PAL since 2011, realising $6m in cash during 2017, resulting in a return on investment of more than 3 times.

As of 1040 GMT, shares had gained 4.17% to 50.00p.