Kalamazoo Resources (ASX:KZR) has entered into a share agreement with Karora Resources (TSE:KRR) to spin out its Australian lithium projects through a demerger and concurrent initial public offering (IPO) of a new ASX-listed explorer, Kali Metals (proposed ASX code: KM1).
The company says the proposed transaction will see Karora vend its ‘highly prospective’ lithium mineral rights across an ‘extensive’ range of projects south of the township of Kalgoorlie in Western Australia into Kali.
Kalamazoo reports at listing, Kali will represent a leading Australian critical minerals exploration company with a consolidated and ‘significant’ lithium and critical minerals tenure totalling 3,833km-square, as well as an experienced management team and board led by Graeme Sloan as Managing Director and Kalamazoo Chairman/Chief Executive Officer (CEO) Luke Reinehr as Non-Executive Chairman.
This ‘extensive’ portfolio of projects will be located adjacent to world-class lithium mines and deposits in the Eastern Yilgarn (1,607km-square) and Pilbara (199km-square) regions of WA, as well as prospective greenfields lithium exploration projects in the Lachlan Fold Belt (2,027km-square) in New South Wales and Victoria.
The company notes Kali is expected to raise $10 million-$12 million at IPO, with the cash expected to fund exploration and drilling plans across the combined Australian lithium portfolio. Kalamazoo is also expected to hold the majority 55% stake in Kali, with Karora owning the minority 45% prior to IPO.
Speaking on the IPO, Kalamazoo Chairman and Chief Executive Officer (CEO) Luke Reinehr says: “With Kalamazoo’s primary focus on gold, we have contemplated spinning out our Pilbara and Lachlan Fold Belt lithium projects for quite some time now.
When the opportunity arose to join with Karora into what we consider will be a significant critical minerals exploration company in Australia, the rationale was compelling. We are delighted to have reached an agreement with Karora that will see our lithium portfolio combined with its highly prospective tenement package located in a Tier 1 lithium mining jurisdiction.
“We are delighted to have reached an agreement with Karora that will see our lithium portfolio combined with its highly prospective tenement package located in a Tier 1 lithium mining jurisdiction.”
The spin-out will result in the establishment of Kali as a well-funded ASX-listed lithium explorer, with an unrivalled portfolio of assets located in the hottest hard-rock lithium regions, not just in Australia, but globally.
The spin-out of Kali will provide our shareholders with ongoing exposure to these expanded assets and strategy via an initial in-specie distribution of its shares in Kali. In addition, Kalamazoo shareholders will have the right to subscribe for additional shares should they wish to participate in Kali’s IPO on a priority entitlement basis.”
The company also notes the IPO will provide its shareholders with an initial 25% in-specie distribution of its Kali shares and a priority entitlement to subscribe for shares in Kali, subject to final shareholder and regulatory approvals.
Additionally, Kalamazoo reports the spin-out of Kali will allow the company to focus its attention on the ongoing development of its gold assets in the Pilbara, specifically the Ashburton Gold Project, where a new 16.2Mt @ 2.8g/t Au for 1.44Moz resource was announced, comprising 9.7Mt @ 2.9g/t Au indicated resource and a 6.5Mt @ 2.5g/t Au inferred resource across its ‘highly prospective’ gold projects in Victoria.
Meanwhile, it is believed that Kali Metals intends to be carbon-neutral for its business operations under the Australian Government’s recognised climate active program, which will allow the company to establish its carbon footprint, as well as outline plans to measure and reduce its greenhouse gas emissions where feasible.
With the shareholder agreement with Karora now signed, Kalamazoo announces the in-specie distribution of Kali shares to eligible Kalamazoo shareholders is scheduled to occur in September 2023 ahead of the beginning of trading on the ASX.
Kalamazoo is an ASX-listed exploration company with a portfolio of ‘high quality’ gold and lithium projects in Victoria and Western Australia. The company’s lithium projects include the DOMs Hill and Marble Bar Lithium projects, held in an exploration joint venture (JV) with ‘major’ Chilean lithium producer Sociedad Química y Minera de Chile S.A. (NYSE:SQM), and the wholly owned Pear Creek Lithium Project.
The company also wholly owns the Jingellic and Tallangatta lithium projects in the Lachlan Fold Belt of southern New South Wales and Victoria.
Karora Resources is a multi-asset mineral resource company focussed primarily on the acquisition, exploration, evaluation and development of precious metal properties in order to become the next sustainable high-quality mid-tier producer. The company is currently executing its growth plan to double expected annual gold production to about 200,000 ounces by 2024 and reduce costs at its integrated Beta Hunt Gold mine and Higginsville Gold Operations in WA.
Images: Kalamazoo Resources Ltd