Usha Resources Ltd (TSX-V:USHA) said it is poised to spin out its Nicobat nickel-copper-cobalt property in Ontario to subsidiary Formation Metals Corp (FMC) following unanimous approval by its board.
When complete, Usha shareholders will own stock in two public companies, Formation Metals, which will be focused on Nicobat, a nickel-copper-PGE project in Dobie Township, and Usha Resources, which will focus on the US-based assets, including the Jackpot Lake lithium property.
"Formation Metals was conceived with the idea of expanding our investor base while creating additional shareholder value," said Deepak Varshney, CEO of Usha Resources. "Both USHA and FMC will be better positioned to execute on their respective strategic business plans and have the required flexibility to allocate resources and deploy capital as each see fit."
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Under the arrangement, Usha shareholders will be issued one share of FMC for every five they own on a date to be determined. Holders of USHA options and warrants, who exercise their options and/or warrants before the share distribution record date, will also be entitled to receive one FMC share for every five USHA shares.
Completion of the deal is subject to a number of conditions, including approval by USHA shareholders at a special general meeting and the go-ahead from the Supreme Court of British Columbia.
The Nicobat property lies 21 kilometres (km) south of New Gold's Rainy River mine, which hosts the Zone 34 nickel discovery, and historic exploration between 1952 and 1972 identified a non-compliant historic resource of 5.3 million tonnes (Mt) grading 0.24% nickel that contained a high-grade zone of around 225,000 tons grading 0.87% nickel (Ni).
Recent exploration has included over 4,000m of drilling that has confirmed high-grade nickel-copper shoots do exist and are considerably better than previously recorded in the historical drilling,
Vancouver headquartered Usha has a portfolio of strategic properties, which comprise Jackpot Lake, a lithium project in Nevada, Nicobat, a nickel-copper-cobalt project in Ontario along with Lost Basin, a gold-copper project in Arizona.
Contact the author at giles@proactiveinvestors.com