Baker Steel Resources Trust Ltd Sale of Bilboes Gold (2178T)
July 21 2022 - 01:00AM
UK Regulatory (RNS & others)
TIDMBSRT
RNS Number : 2178T
Baker Steel Resources Trust Ltd
21 July 2022
BAKER STEEL RESOURCES TRUST LIMITED
(Incorporated in Guernsey with registered number 51576 under the
provisions of The Companies (Guernsey) Law, 2008 as amended)
21 July 2022
Sale of Bilboes Gold to Caledonia Mining
Baker Steel Resources Trust Limited (the "Company") announces
that it and the other shareholders of Bilboes Gold Limited
("Bilboes") have signed an agreement to sell Bilboes to Caledonia
Mining Corporation Plc ("Caledonia") (NYSE: CMCL; AIM: CMCL; VFEX:
CMCL) for a total consideration of 5,123,044 Caledonia shares and a
1% net smelter royalty ("NSR") on Bilboes's gold project.
Completion of the transaction is subject to a number of conditions
precedent in particular Zimbabwean Government approvals which are
expected to be satisfied before the end of 2022.
The Company's share of the consideration for its 24.2%
shareholding in Bilboes will be 800,000 shares in Caledonia and
instead of receiving all its consideration in shares the Company
negotiated part of it in the form of a 1% NSR. Valuing the royalty
as if the Company is receiving the same value per Bilboes share as
the other Bilboes shareholders and the closing Caledonia share
price on the New York Stock Exchange on 18 July 2022 of US$10.40
values the Company's consideration at US$14.3 million. However, in
future the royalty will be valued based on the Company's policy of
a development risk adjusted economic model.
Caledonia is a profitable NYSE, AIM and Victoria Falls Exchange
listed gold producer whose primary asset is the Blanket Mine in
Zimbabwe which is on target to produce 73,000-80,000 ounces of gold
during 2022 and Caledonia currently pays a quarterly dividend of 14
cents a share (approx. 5.5% yield) and trades on a P/E of 6 times
prospective 2022 earnings (source: Bloomberg).
Earlier this year independent consultant DRA Africa Holdings
(Pty) Ltd ("DRA") completed a feasibility study on Bilboes'
Isabella/McCays/Bubi gold project in Matabeleland, Zimbabwe
indicating the potential for an open pit gold mine with average
annual production of approximately 168koz per annum with a 10-year
life at a projected all-in sustaining cost (AISC) of US$826/oz.
According to the study, the project has a Net Present Value at a
10% discount rate of US$323 million at a gold price of US$1,650/oz.
However, Caledonia has indicated that it will re-engineer the
feasibility study to a phased development approach which would
entail lower up-front capital and initial production.
Although the headline consideration for the Company's share of
Bilboes is approximately 10% lower than the Company's carrying
value at 30 June 2022, largely due to the recent fall in
Caledonia's share price in line with other gold producers, there
are significant synergies with the transaction. Not only will
financing the development of Bilboes' mine be easier in a larger
cash generative group but also Caledonia's technical team has
demonstrated its ability to operate successfully in Zimbabwe having
recently increased the production capacity at its Blanket mine from
50,000 ounces to 80,000 ounces gold per annum. With the acquisition
of Bilboes, there is now a clear path for Caledonia to move to
become a 250,000 ounce per annum gold producer with the potential
for a significant re-rating of its shares.
The Company believes that the Bilboes project has a very good
prospect of becoming a successful gold mine in the near term, with
potential to expand its reserves and extend its mine life over the
medium term. It has thus opted for an ongoing direct interest in
the mine through the NSR. This could start as early as next year
from initial oxide mining albeit at a considerably lower rate but
should the full production rate of 168,000 ounces per annum be
achieved the NSR would generate around US$2.6 million per annum for
the Company at current gold prices. Together with the other
royalties in the portfolio it is hoped that this will become the
basis for regular cashflow to the Company which in turn can be
passed on as dividends to shareholders
Further details of the proposed transaction can be found in
Caledonia's RNS made today available on its website
www.caledoniamining,com .
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 news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
PFUEAEXEASNAEAA
(END) Dow Jones Newswires
July 21, 2022 02:00 ET (06:00 GMT)
Baker Steel Resources (LSE:BSRT)
Historical Stock Chart
From Nov 2023 to Dec 2023
Baker Steel Resources (LSE:BSRT)
Historical Stock Chart
From Dec 2022 to Dec 2023
