HighGold Mining Inc (TSX-V:HIGH, OTCQX:HGGOF) told investors it has entered into an arrangement agreement with wholly-owned subsidiary Onyx Gold Corp under which they intend to complete a spin-out of the company's Ontario and Yukon exploration properties.
The company said the deal will result in its existing shareholders receiving one common share in the capital of Onyx Gold for every four shares held in HighGold.
The spin-out into Onyx Gold will be completed by way of a court-approved plan of arrangement (PoA) under the Business Corporations Act (British Columbia), it added.
READ: HighGold Mining initiates plans to spin-out its Ontario and Yukon exploration properties on the TSX-V
“The board of directors of the company has determined that the PoA is in the best interests of the company. Among other things, the separation of the properties into a separate public company will position such assets to be valued on a standalone basis,” HighGold Mining said in a statement. “In addition, the transaction will allow the company's management to focus their efforts on the development of certain other exploration properties with Onyx Gold's management focused on exploring and developing the properties.”
Arrangement details
Under the PoA, among other things:
- HighGold will transfer all of the outstanding common shares of Epica Gold Inc, the wholly-owned subsidiary of HighGold, which owns the properties, to Onyx Gold;
- In consideration, Onyx Gold will transfer to HighGold: (i) the respective number of Onyx Gold shares equal to the number of HighGold shares outstanding at the time of the spin-out, multiplied by 0.25; and (ii) 5,000,000 Onyx Gold shares. The company will retain the Onyx Gold spin-out shares as well as its remaining assets and working capital, and continue as a mineral exploration company; and
- Upon closing of the spin-out, HighGold shareholders will receive 0.25 of an Onyx Gold share for each HighGold share.
HighGold said it intends to apply for a listing of the Onyx Gold shares on the TSX Venture Exchange, with the listing subject to Onyx fulfilling all of the requirements of the TSX-V. It said it is also anticipated that Onyx Gold will complete a concurrent non-brokered private placement of its shares to fund work programs and for general working capital.
The company said the PoA remains subject to customary conditions, including, among other things, the approval by the TSX-V, approval by an affirmative vote of two-thirds of shareholders at a meeting of HighGold's shareholders, and approval of the Supreme Court of British Columbia.
It cautioned that there can be no assurance that such approvals will be obtained or that the PoA will be completed on the terms contemplated, or at all.
Additional details of the PoA will be included in the information circular to be mailed to its shareholders in connection with the meeting which will be available on its SEDAR profile, HighGold said. It currently anticipates the meeting to be held at the end of May 2023. The effective date for determining the shareholders of HighGold who are eligible to receive Onyx Gold shares under the spin-out will be determined and announced in due course, it added.
HighGold is a mineral exploration company focused on high-grade gold projects located in North America. HighGold's flagship asset is the high-grade Johnson Tract Gold-Zinc-Copper Project located in accessible Southcentral Alaska.
The company also controls one of the largest junior gold miner land positions in the Timmins, Ontario gold camp. This includes the Munro-Croesus Gold property, which is renowned for its high-grade mineralization, and the large Golden Mile and Timmins South properties.
HighGold also has 100% ownership of a group of properties in Yukon's emerging new Selwyn Basin Reduced Intrusive Related Gold district.
Contact the author at stephen.gunnion@proactiveinvestors.com