Metalicity’s plan to sell its portfolio of zinc projects into upcoming Canadian-listed vehicle Kimberley Mining has taken a step forward after the explorer agreed to the terms for the sale with investors welcoming the news.
The ASX-listed explorer (ASX: MCT) is vending its Admiral Bay, Napier Range and Emanuel Range zinc projects into Kimberley Mining which will net the company around A$33 million in cash and scrip.
Subject to shareholder and regulatory approval, Metalicity will receive up to C$12.5 million cash and retain 25 million shares (~C$20 million) for the sale.
Metalicity will retain around 40% of the expanded capital of Kimberley Mining post the Initial Public Offering (IPO) on the TSX-V and the targeted C$25 million capital raising which will be used to advance drilling and feasibility studies at Admiral Bay.
“The terms agreed are a win-win for both Metalicity and Kimberley Mining,” Metalicity managing director Matt Gauci said.
“Following 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 agreed terms follow very strong market interest and engagement of leading North American mining investment firms, the appointment of a highly credible board, and endorsement of project stakeholders Resource Capital Funds (RCF) and China Minmetals (Minmetals).”
Kimberley Mining will be headed up by three Toronto based directors, including a President and Chief Executive Officer, and three Perth-based directors representing Metalicity.
On top of this, Kimberley Mining is exempt from stamp duty on the purchase of the zinc projects, saving around $2 million.
A Notice of Meeting (NOM) outlining resolutions to approve the transaction will be dispatched to Metalicity shareholders shortly.
Metalicity and Kimberley Mining have both been approached by numerous global investment banks to complete the broker syndicate for the IPO, which is forecast to take place in September 2018.
The company believes the spin-out of Admiral Bay will benefit its shareholders claiming it is fundamentally undervalued on the ASX with Enterprise Value Per Tonne (EV/T) of a peer group of base metals assets and companies (with ownership of Admiral Bay’s scale) listed on the TSX-V much higher than on the ASX.
The company has also received numerous reverse enquiries from North American investors regarding the project which hosts one of the world’s largest zinc deposits in development with a current JORC/NI-43101 mineral resource of 170Mt at 7.5% zinc equivalent.
A Scoping Study undertaken by SRK concluded the project to be technically feasible while a Memorandum of Understanding for offtake and project development has been signed with China Minmetals and China NFC, some of the world’s largest zinc participants.
Shares in Metalicity have gained 0.4c, or 17%, to 2.8c in morning trade on Tuesday.
