The price has consolidated at a firm 50.5p following news of a US$72mln transaction on a major silver investment held by the company in Russia.
Under the terms of this transaction Baker Steel will end up coming in for a significant chunk of that US$72mln, which will be payable in shares of Polymetal (LON:POLY), one of Russia’s largest precious metals miners.
In turn, Polymetal consolidates control over the Prognoz silver mine, and its 292mln ounces of silver at 536 grams per tonne.
Trevor Steel, the driving force behind the Trust, is more than happy with this outcome.
“I think it’s a creditable return on an investment period of six or so years,” he says.
“It’s a big tick in the box and it’s not been easy.”
Along the way, markets first recovered before taking a turn for the worse and that necessitated a more hands on approach at Prognoz.
“At that point,” continues Steel, “we rolled up our sleeves and sorted it out. We brought in Polymetal and demonstrated the ability of our team to do quite complex transactions.”
So now Baker Steel gets to exit at a significant return, and retains its exposure to Prognoz via a royalty and via its Polymetal shares, which are likely to reflect the value of Prognoz too, given its size.
And is Steel a long-term holder of Polymetal?
He’s a man with considerable experience in the Russian resources sector, which is how and why this deal got done in the first place.
And he points out that the benefits of holding Polymetal are there for all to see.
“It has a dividend yield of 3%,” he says, “and since it listed in 2010 it’s paid out more than US$1bn in dividends.”
What’s more, Polymetal is serious about Prognoz, which is good news for Baker Steel since it retains what could turn out to be quite a rich royalty on the project.
Last year, Polymetal undertook 37 kilometres of drilling across the property, and this year a further 40 kilometres is planned.
So all told, although Baker Steel is likely to balance up its portfolio in the long-term and scale back its position in Polymetal, there won’t necessarily be a rush to the door when the lock-in period expires.
After all, 10% of the shares are freely tradeable now, and Baker Steel also has a sizeable position in Ivanhoe Mines (TSE:IVN), a very tradeable asset which it could always sell down if there was a requirement for ready cash.
How likely such a requirement might be remains to be seen.
Certainly there is a more active market in mining now than has prevailed in recent years.
But Baker Steel has already been taking advantage.
Late last year, it took a position in a privately-held coal company in Australia, that needs about A$20mln to get into production and ought to be able to produce at a margin of around US$100 per tonne when it does so.
There’s also Bilboes in Zimbabwe, which has suddenly assumed a greater significance following the recent change of regime there. Baker Steel owns slightly shy of 22% of Bilboes, which boasts a total JORC resource of nearly five million ounces of gold.
The plan is to put together an initial 100,000 ounce per year mining operation, and then to increase production to 200,000 ounces in due course.
And there’s also the possibility that Bilboes could act as consolidator in the Zimbabwean gold industry.
With Zimbabwe coming back and mining on the turn, this could end up providing the perfect combination of maximum upside to Baker Steel.