Usha Resources Ltd (TSX-V:USHA) said it has sent shareholders a circular for an annual general and special meeting on December 16, 2022, to consider and approve, among others, the proposed plan of arrangement between the company and a wholly-owned subsidiary, Formation Metals Inc (FMI).
The plan of arrangement envisages that Usha shareholders will receive one share of FMI for every five shares of Usha they hold while continuing to own the same number of Usha shares as they did on the share distribution record date. When the arrangement is completed, FMI will hold the company’s interest in the Nicobat Nickel Project and will focus on the advancement of this project, the mineral acquisition and exploration company said.
Subject to approvals and completing the arrangement, FMI is expected to add new exploration-stage projects to its portfolio over time. Usha will retain and focus on the advancement of its exploration projects in the US, including the Jackpot Lake Lithium Brine Project where drilling starts next week.
READ: Usha Resources says drill contractor completes site visit at Jackpot Lake lithium brine project in Nevada
Usha said its board of directors has determined that the arrangement is fair and in the best interests of the company and the company’s shareholders and recommends that shareholders vote in favour of the arrangement.
“The arrangement is expected to allow Usha to focus on the further advancement of its exploration projects in the USA and minimize dilution of those interests,” the company said. “In addition, the arrangement is expected to allow the market to value the company’s mineral interests in the USA independently of the Nicobat Nickel Project, permit the independent development of both portfolios, and provide capacity for new acquisitions.”
Upon completion of the arrangement, Usha shareholders will ultimately own shares in two public companies. Namely, Usha, which will be focused on its US-based assets, including the Jackpot Lake Lithium Brine Project; and Formation Metals, which will be focused on nickel at the Nicobat Project in Ontario.
The company said the completion of the arrangement is subject to a number of conditions, including the following conditions which must be met:
- the approval by the shareholders of Usha at a special general meeting
- the approval of the Supreme Court of British Columbia
- the acceptance of the arrangement by the TSX Venture Exchange
Vancouver-based Usha focuses on the development of quality battery and precious metal properties that are drill-ready with high-upside and expansion potential. Its portfolio of strategic properties provides target-rich diversification and consist of Jackpot Lake, a lithium project in Nevada; Nicobat, a nickel-copper-cobalt project in Ontario; and Lost Basin, a gold-copper project in Arizona.
Contact the author at jon.hopkins@proactiveinvestors.com