IronRidge Resources Ltd (AIM:IRR) said Canaccord Genuity (TSX:CF, LSE:CF) (Australia) Ltd has been secured as the underwriter for the rights issue proposed as part of the spin-out of its gold assets, a move that will fast-track the demerger by a month.
IronRidge is planning to spin out its gold assets into newly created unlisted vehicle Ricca Resources Ltd, subject to shareholder approval at the AGM on 18 November. Following the demerger, IronRidge will change its name to Atlantic Lithium Ltd.
As part of the transfer of the gold assets, Ricca is to receive an initial cash subscription of A$7mln.
Eligible IronRidge shareholders will get an in-specie distribution of one Ricca share for every eight IronRidge shares held, and in addition will receive a priority offer to participate in a pro rata rights issue that will be undertaken by Ricca to raise a further A$7.1mln at A$0.10 cents per share.
Following the demerger and rights issue, Ricca will have a closing cash balance of A$14.2mln.
READ: IronRidge Resources to become Atlantic Lithium as it demerges gold assets at upcoming AGM
In a statement, IronRidge said lead manager and underwriter, Canaccord will fully underwrite the Ricca rights issue, which enables the company to fast-track the demerger by almost one month.
Completion of the demerger and distribution of the rights issue shares is now expected to take place on 22 December 2021. Completion had originally been anticipated on 18 January 2022.
"Canaccord's commitment allows us to fast-track the demerger in preparation for a fresh start to activity on the ground in 2022,” said IronRidge chief executive officer Vincent Mascolo.
“Significant opportunities exist for Ricca across a broad portfolio of West African gold projects as the precious metals complex looks to be entering a new phase of growth. We believe that Ricca offers a new and exciting separate investment opportunity for IronRidge shareholders to capitalise upon this growth.”
IronRidge will not retain any interest in Ricca following the proposed transaction.
Post the proposed demerger, IronRidge will maintain a strong cash position of around US$22mln.