Australian exploration company Metalicity is vending some of its most valuable assets to Kimberley Mining for a spot on the TSXV.
In a move to branch out to the TSX Venture Exchange, Australian exploration company Metalicity (ASX:MCT) will be vending its Admiral Bay, Napier Range and Emanuel Range zinc projects into Kimberley Mining.
Metalicity will receive C$32.5 million in cash and shares, and will retain around 40 percent of Kimberley Mining’s expanded capital after the company does an initial public offering (IPO) on the Venture.
The goal is for Kimberley Mining to raise C$25 million via the IPO. The money will be put toward drilling and feasibility studies, with the priority being the Admiral Bay asset.
Part of the reason Metalicity decided on the spin out is that it believes Admiral Bay is “fundamentally undervalued in an absolute and relative sense.” According to the company, the enterprise value per tonne of base metals assets and companies listed on the TSXV is higher than it is on the ASX.
“The terms agreed are a win-win for both Metalicity and Kimberley Mining,” Metalicity Managing Director Matt Gauci said in a statement.
He added, “[f]ollowing Metalicity shareholder approval, Kimberley Mining will be well established to rapidly progress the IPO process which will best allow the progression of Admiral Bay in a market of higher valuations for base metals projects of Admiral Bay’s scale and in an increasingly tight zinc market.”
The Admiral Bay project was acquired by Metalicity in 2015 from Kagara for AU$3 million. Its JORC compliant resource estimate currently stands at 170 million tonnes at 7.5 percent zinc equivalent, and a scoping study shows that the project is technically feasible.
Kimberley Mining is set to undertake the IPO in the September quarter of 2018.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.