Edison Lithium Corp. (TSX-V:EDDY, OTCQB:EDDYF) has provided an update on the proposed spin-out of its cobalt assets in northeastern Ontario, the Kittson Cobalt Property, into a newly incorporated subsidiary.
The proposed spin-out will be carried out through a statutory plan of arrangement under the Business Corporations Act (British Columbia). Under the plan, Edison shareholders will receive one share in the spin-out company for every eight common shares of Edison they hold.
There will be no change in Edison shareholders' holdings in the company and if the spin-out is completed, shareholders will own shares in both companies, Edison said.
READ: Edison Lithium says it is assessing opportunities for its Salar lithium properties in Argentina
"We are always looking at opportunities to unlock shareholder value and spinning out the cobalt asset makes perfect sense. Cobalt is an essential mineral that has strong demand in rechargeable batteries for electric vehicles, mobile phones, and other electronic devices. The new entity will present a compelling opportunity for further investment in the heated battery metals space,” Nathan Rotstein, CEO of Edison, said in a statement.
The company said it will continue to hold its interest in the Antofalla Salar and Pipanaco Salar lithium projects in Argentina.
The proposed spin-out will be subject to the terms of an arrangement agreement to be entered into between Edison and the spin-out company, approval of shareholders at a meeting of Edison shareholders, approval of the British Columbia Supreme Court, and approval of the TSX Venture Exchange.
The company intends to seek a listing of the spin-out company on the exchange.
The company said it expects the spin-out to increase shareholder value by allowing capital markets to ascribe value to the Kittson Cobalt Property independent of the company's lithium properties.
Private placement
When the spin-out is completed, the spin-out company intends to undertake a private placement of up to 15,000,000 units at $0.10 each for gross proceeds of up to $1,500,000. Each unit will consist of one spin-out company share and one warrant, with each warrant exercisable into one spin-out company share at an exercise price of $0.12 each, for a period of two years from the date of issuance. The placement is expected to close concurrently with listing on the exchange.
Edison Lithium is a Canadian-based junior mining exploration company focused on the procurement, exploration and development of cobalt, lithium, and other energy metal properties.
Contact the author at jon.hopkins@proactiveinvestors.com