LONDON: Baker Steel Resources Trust Ltd. said Wednesday that it expects to receive approximately $5.16 million in cash in the third quarter, following the divestment of a key royalty interest in a Russian silver project.
The company announced that PAL, in which it holds a 49.99% interest, has signed a binding agreement to sell its net smelter royalty related to the Prognoz silver project for $11 million or its euro equivalent. The buyer is a private Omani-registered entity, and payment is due within five business days.
Solidcore Resources PLC, formerly Polymetal International PLC and the sole counterparty to the royalty agreement, declined to exercise its right of first refusal.
BSRT said PAL intends to distribute the proceeds after deducting transaction expenses and provisions tied to its expected wind-up. The anticipated payout to BSRT is more than four times the $1.24 million carrying value of its PAL stake as of May 30.
The Prognoz Royalty originated from PAL’s 2017 sale of its 50% interest in the Prognoz silver asset to Polymetal. BSRT had previously sold its Polymetal shares at favorable valuations and retained the royalty through PAL. Cumulative returns from the deal — including the earlier share sale — total roughly $48.9 million on an investment of $15.9 million, the company said.
BSRT called the monetization a prudent move, citing valuation challenges and geopolitical uncertainties related to the Russian-based project.
The board said it continues to review capital allocation options, aiming to narrow the discount between share price and net asset value. A further update is expected later this year.