Canadian explorer Power Nickel (TSX-V:PNPN) is spinning out the Golden Ivan Property in British Columbia and its Chilean projects into a private new company.
The demerger will be done by way of a plan of arrangement slated for completion in the final quarter of 2024.
Power Nickel says the move will provide investors with an ownership stake in two separate specialised companies, with Power Nickel to continue focusing on advancing its flagship Nisk project, while the new company will focus on advancing the Golden Ivan Property and the Chilean assets.
CEO Terry Lynch says the aim is to “unlock value for Power Nickel shareholders”.
“Fundamentally we believe our shareholders are not receiving at the moment any benefit from the properties we are spinning out,” he says.
“We also believe the private nature of the spin out, and that Spinco will initially not seek a stock exchange listing, may prove problematic for the non-declared holders of what we believe is a naked short position in Power Nickel.”
The new company, which will be named Pan American Gold Equities or something similar, will acquire the Golden Ivan Property, which comprises 13 mineral claims spanning 797 hectares, as well as Power Nickel’s interests in the Zulema, Tierra de Oro, Palo Negro, Hornitos and Tabaco projects in Chile.
Power Nickel will, however, retain its royalty interest in the Chilean Copaquire Project.
Golden Ivan is located in the heart of the Golden Triangle, a major gold-producing region with reported past production and current resources totalling 67 million ounces of gold, 569 million ounces of silver and 27 billion pounds of copper.
The property hosts two known mineral showings (gold ore and magee), and a portion of the past-producing Silverado mine, which was reportedly exploited between 1921 and 1939. These mineral showings contain quantities of silver, lead, zinc, gold, and copper.
In the summer of 2021, prospecting and geologic mapping uncovered two new gold zones yielding high grades of 16.2 grams-per-tonne (g/t) and 15.1g/t gold in outcrop.
The Zulema Project spans 4,300 hectares in Chile’s Third Region, 30km from Lundin Mining’s (TSX:LUN) Candelaria Copper-Gold Mine in a similar geologic environment.
Drilling by Power Nickel in late 2017 indicated iron oxide-copper-gold style mineralisation. Initial drill results confirmed that the host rocks and alteration fit the Candelaria model.
Meanwhile, Tierra de Oro is an advanced stage exploration project located in the same region on the eastern flank of Chile’s Coastal iron oxide copper gold belt.
The property comprises 5,667 hectares, covering the historic Chanchero gold camp and numerous areas of historic oxide copper workings, about 50km south of the Candelaria Mine.
Power Nickel also owns additional mining concessions in Chile related to the Hornitos, Palo Negro and Tabaco properties.
“Whether by use of new technology or recent exploration success of nearby projects we believe both property packages have an exciting future,” Lynch says.
“We believe the investor base for these plays are quite different from the investor base interested in our polymetallic discovery at Nisk so it makes sense to spin it out now and allow them to grow on their own in the future.”
Prior to the spin-out, Power Nickel plans to complete an internal reorganisation under which the company will transfer its shares of Consolidated Gold and Copper – a wholly owned subsidiary – to Spinco in exchange for Spinco shares.
Power Nickel will then subscribe for C$1 million ($1.1 million) worth of further Spinco shares for cash.
Completion of the proposed arrangement is subject to approval by Power Nickel shareholders, the Supreme Court of British Columbia and the TSX Venture Exchange.
To complete the spin out, Power Nickel will issue each shareholder one new Power Nickel share and 0.05 of a Spinco share.
Option holders, meanwhile, will also receive one new Power Nickel option exercisable for one share and one Spinco option exercisable for 0.05 of a share.
The new company will be 50% owned by Power Nickel and 50% owned by shareholders on completion of the arrangement.
Power Nickel shares will continue trading on the TSX Venture Exchange and the new company will not be listed on any exchange.
The company plans to apply for an interim order from the Supreme Court of British Columbia allowing it to call a shareholder meeting to approve the arrangement.
Write to Angela East at Mining.com.au
Images: Power Nickel
