Jindalee Resources Ltd (ASX:JRL) is looking to reposition itself as a pure-play US lithium developer.
The company has undertaken a strategic review of its portfolio, including its Australian assets, and concluded that in order to maximise shareholder value, it should separate its Australian assets into a standalone vehicle, NewCo, which will be listed on the ASX.
The demerger will include all Australian assets, including the large landholding at Widgiemooltha, and will allow Jindalee to focus its efforts exclusively on the acceleration of exploration and development activities at its world-class McDermitt Lithium Project, one of the largest lithium deposits in the United States.
Jindalee shares are up 12.3% following the news, trading at $4.89 per share.
Huge array of development pathways
Jindalee chairman Justin Mannolini said the time was right for Jindalee to reposition itself as a pure-play US lithium developer.
"The board believes that the favourable political climate in the United States following bipartisan expressions of support for the development of an integrated domestic lithium-ion battery value chain, coupled with the well-known electric vehicle thematic, create the ideal backdrop for the proposed demerger.
“As one of the largest lithium projects in the United States, McDermitt presents a huge array of potential development pathways.
"Critically, the project is 100% owned and entirely unencumbered by offtake or legacy strategic ownership arrangements, creating a high degree of optionality in a market that is increasingly starved of opportunities to deliver a meaningful volume of lithium credits from a single source in a tier-one jurisdiction.
“We also believe there is tremendous potential in our under-explored West Australian landholding, which will benefit from the renewed focus that will be facilitated by the demerger.”
What will happen to the Aussie assets?
Jindalee’s Australian assets will roll into one Australian entity led by current Jindalee CEO Karen Wellman, who will be appointed as managing director.
“I am delighted that Karen Wellman, the current CEO of Jindalee, will lead NewCo as managing director,” Mannolini said.
“Under Karen’s leadership, the Jindalee technical team has done an excellent job in assembling the projects which will form the core of NewCo’s portfolio, creating a well-funded ASX listed exploration company with a significant land position. Jindalee Shareholders will retain exposure to these assets via an in-specie distribution of NewCo shares.”
The Aussie assets include Jindalee’s large landholding in the Widgiemooltha district and the Lake Percy Project, which are both highly prospective for nickel, gold and lithium. It also includes an interest in the Prospect Ridge joint venture in Tasmania.
The new company’s board will comprise Justin Mannolini (non-executive chairman), Lindsay Dudfield (non-executive director) and Trish Farr (executive director and company secretary), providing a high degree of continuity in the stewardship of the Australian portfolio.
US entity focused on lithium
Jindalee is currently in the process of strengthening its leadership team in the US, as it looks to accelerate development activity at McDermitt.
The McDermitt lithium project is in southeast Oregon and was generated by Jindalee after an extensive search across the western US. Just three weeks ago, it delivered its best lithium intersections to date.
The recent drill results are expected to increase confidence in areas of inferred mineral resources adjacent to indicated mineral resources.
The company’s wholly-owned US subsidiary, HiTech Minerals Inc, has appointed Brett Marsh as vice president, exploration and development, to co-ordinate in-country efforts to advance the McDermitt Lithium Project.
Marsh is a US-qualified geologist and has held a range of senior leadership roles covering project and change management, technology innovation, project evaluation, and technical advice.
Jindalee has also recently brought in consultants to start baseline environment and heritage activities.
The company expects to publish an updated mineral resource estimate for McDermitt in the current quarter, while a further drill program is planned for the second half of the calendar year, with permitting already in place for 28 additional holes.
The demerger is subject to final board, regulatory and shareholder approvals.