Delta Lithium (ASX:DLI) is spinning out its Mt Ida Gold Project in Western Australia into a new standalone gold-focused company that it plans to list on the Australian Securities Exchange (ASX).
While still subject to shareholder and ASX approval, the junior explorer has executed legally binding documents and formally agreed to demerge all of its rights, entitlement and interests in the Mt Ida Project into newly created Ballard Mining.
Delta (ASX:DLI), which has a market capitalisation of $136.1 million, is aiming to unlock value in the project for shareholders and separate its gold and lithium assets into two companies.
The spin-out will involve an initial public offer to raise between $25 and $30 million at an issue price of $0.25 per Ballard share, which suggests a market capitalisation of $80 to $85 million on debut.
Bell Potter Securities and Argonaut will run point for the IPO as joint lead managers, while Thomson Geer is acting as Australian legal advisor for the demerger and IPO.
Delta will also undertake an in-specie distribution to existing shareholders of one Ballard share for every 11.25 Delta shares held.
On completion of the demerger and IPO, Delta will own about 49% of Ballard if the minimum raising is achieved, or around 46% if the full $30 million is raised.
Delta says the demerger allows the company to continue focusing on its primary business of the development of its lithium assets at the Mt Ida Project and the Yinnetharra Lithium Project, both in Western Australia.
Mt Ida hosts a gold indicated and inferred resource of 10.3 million tonnes @ 3.33 grams per tonne for 1.1 million ounces of contained gold.
Delta believes the scale of the Mt Ida Gold Project will be better served in a separate company with dedicated resources to develop the project.
Managing Director James Croser says the proposed demerger is being done at an “opportune time” in the gold price cycle.
“Momentum is crucial to a new listing and the pricing of the gold asset is compelling with significant potential to create investor returns and shareholder value,” he says.
Gold is currently fetching around US$3,180 ($4,946) an ounce, having edged back from recent highs.
If Delta gets the green light from shareholders, it anticipates the demerger will be completed by early July.
The Mt Ida Project is a shovel-ready lithium and gold project covering about 170km2 of the Mt Ida-Ularring Greenstone Belt, located 100km west of Leonora in the Eastern Goldfields Province of Western Australia.
Write to Angela East at Mining.com.au
Images: Delta Lithium
