Edison Lithium Corp. (TSX-V:EDDY, OTCQB:EDDYF) revealed it is poised to spin out its cobalt assets in Ontario, namely the Kittson Cobalt property, into a newly incorporated subsidiary in a bid to unlock value.
The move, which has been unanimously approved by the board, will be carried out via a plan of arrangement. There will be no change in Edison shareholders' holdings in the company, and if completed, shareholders will own shares in both firms.
Edison will be focused on Argentinian lithium, while SpinCo will be focused on cobalt exploration in Canada.
"It is our intention to build shareholder value by providing investors with an ownership stake in two separate specialized companies," said Nathan Rotstein, CEO of Edison, in a statement.
"Both companies will be in the hot battery metals sector. Each company will operate as a separate entity and will enjoy distinction in the exponential growth of the EV market," he added.
READ: Edison Lithium moves forward with exploration plan for Argentinian lithium properties
In connection with the spin-out, Edison also said it aims to undertake a private placing of up to 60 million subscription receipts at $0.05 each to raise gross proceeds of up to $3 million, which will be held in escrow, subject to the satisfaction or waiver of certain release conditions.
On release, SpinCo is expected to use the escrowed proceeds to fund exploration of the Kittson Cobalt asset and for general working capital, including potential future acquisitions.
The proposed spin-out will be subject to the terms of an arrangement agreement between Edison and SpinCo, approval of Edison shareholders and the British Columbia Supreme Court and the TSX Venture Exchange. The timing of the spin-out and placing will be based on prevailing market conditions.
The Kittson property includes three historical producing cobalt-silver mines, namely the Kittson-Cobalt mine, Shakt-Davis and Edison (also known as Darby) mine. These mines were developed primarily for their cobalt content, and interestingly also housed significant gold content.
In 2021, Edison acquired an Argentinian corporation that owns or controls the rights to over 148,000 hectares (365,708 acres) of prospective lithium brine claims in the province of Catamarca, Argentina.
Canada-based Edison is building a portfolio of quality assets capable of supplying critical materials to the battery industry and intends to capitalize on and have its shareholders benefit from the renewed interest in the battery metals space.
Contact the author at giles@proactiveinvestors.com