Power Nickel Inc (TSX-V:PNPN, OTCQB:PNPNF) announced that it has entered into an agreement to spin out its interest in the Golden Ivan property and certain Chilean exploration assets and liabilities through a wholly owned subsidiary Chilean Metals.
The company said it will continue to focus on advancing the Nisk polymetallic project in Quebec.
The spin-out company will advance the Golden Ivan property, located in Terrace British Columbia and comprising 13 mineral claims across 797 hectares.
It will also acquire the company’s interests in the Zulema, Tierra de Oro, Palo Negro, Hornitos and Tabaco projects located in Chile, with Power Nickel retaining its royalty interest in the Chilean Copaquire project.
“We are doing this 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,” Power Nickel CEO Terry Lynch commented.
He added that he believes both packages of properties being spun out have "interesting pathways forward."
“Whether by use of new technology or recent exploration success of nearby projects we believe both property packages have an exciting future,” Lynch said.
“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.”
The spin-out is being completed by way of a statutory plan of arrangement, which involves distributing spin-out company shares to existing Power Nickel shareholders.
For every Power Nickel share held, shareholders will receive one new Power Nickel share and 0.05 spin-out shares. Option holders will receive replacement options reflecting the new share distribution.
The spin-out company will acquire Power Nickel's assets in Consolidated Gold and Copper, approximately $1 million in cash and will be co-owned by spin-out company shareholders (50%) and Power Nickel (50%).
The reorganization is expected to be completed by the end of 2024, with more details to be provided to shareholders at Power Nickel’s annual meeting in November.