London fund stakes $100m on WA gold plays

London-listed fund manager Baker Steel Capital Managers has more than $100 million riding on the profitability of WA's gold junior gold sector after an acquisitive 12 months.

Long-regarded as a gold bull, Baker Steel has spent millions securing stakes in a handful of small to mid-tier gold players, among them Norton Gold Fields, Resolute Mining and Gryphon Minerals.

The London-based group, which also has offices in Sydney, has emerged as a key player in the consolidation that appears to be have begun in the State's gold sector.

In August, Baker Steel handed Avoca Resources effective control of Dioro Exploration by accepting its scrip bid, picking up about 4.1 per cent of the suitor in the process. It remains unclear if it has since offloaded any or the entire stake.

It also has an 8.32 per cent stake in Allied Gold, which is poised for a friendly $300 million tie-up with the Toronto-listed Australian Solomons Gold and a 6.82 per cent stake in Norton, which said yesterday it had hired corporate advisers to help assess what it described as a handful of "investment proposals". Norton shares jumped 3.5¢ to 26.5¢ on the news.

Baker Steel is far from the only international fund manager to have an eye on WA bullion - Switzerland's Pala Investments has a cornerstone stake in Avoca and recently emerged with just over 5 per cent of Integra Mining - but it is the most active.

Calculations by _The West Australian _show Baker Steel has stakes in at least eight of WA's junior gold miners or explorers. In addition it holds shareholdings in some non-WA companies with local assets, such as Saracen Minerals (10 per cent), which has a project near Kalgoorlie-Boulder.

Combined, these investments are valued at $100.5 million, based on yesterday's closing share prices. Sharemarket regulations require an investor to disclose its stake in a company only on reaching 5 per cent.

The spending spree looks likely to continue, with Baker Steel's chief investment officer, Trevor Steel, indicating this year that he believed that gold's bull run had further to go.

With bullion viewed as a safe investment, gold prices have soared since the onset of the global financial crisis. It was changing hands at $US1004.27 an ounce at the Sydney close last night.

According to Baker Steel's website, it favours gold because it believes the commodity "shows all the signs of a long-term secular bull market" as well as being a proven hedge against inflation and deflation. The group has also spoken about the opportunities in the mid-tier sector where, it argues, many miners are trading on very low price-to-earnings ratios compared with the sector's big miners.

Baker Steel's gold arm, Genus Dynamic Gold Fund, is a Cayman Island-based long-only group with a minimum investment of $US100,000.