Orefinders gets green light for cobalt spin-out plan

Orefinders Resources Inc. [ORX-TSXV; OTC-ORFD] on Friday May 25 said its shareholders have approved a plan that will see the spin-out of its Ontario silver-cobalt assets into a new company, Power Ore Inc.

Orefinders shares advanced on the news, rising 5% or $0.005 to 10.5 cents. The 52-week range is 17 cents and 0.05 cents.

On March 26, 2018, Orefinders said Power Ore Inc. is set up to acquire Orefinders’ past-producing silver-cobalt Mann Mines and MacMurchy properties via a court-approved plan of arrangement.

The properties are located in the Cobalt-Gowganda District of northeastern Ontario, and form part of the company’s plan to create a pure play battery metals company.

Under a plan of arrangement, Orefinders said it would sell the Mann Mine and MacMurchy properties in consideration for Power Ore issuing 11 million shares to Orefinders. Under the plan of arrangement, Orefinders would then distribute 5.5 million of those shares to existing Orefinders shareholders, pro rata.

Based on the current issued and outstanding shares of Orefinders, Orefinders shareholders will receive approximately one Power Ore share for every 16.4 Orefinders shares currently held. Orefinders will retain the balance of the 5.5 million shares on its balance sheet.

Now that the plan has been approved, Orefinders said Friday it will seek final Court approval of the plan of arrangement and thereafter Power Ore will proceed with its final filings with the TSX Venture Exchange, with a view to closing the spin-off by May 31, 2018 and listing the shares of Power Ore on the TSX Venture as soon as possible after closing.

“We see this transaction as a win-win for Orefinders balancer sheet as this is akin to a non-dilutive financing,” Orefinders CEO Stephen Stewart said.

“Additionally, all Orefinders shareholders who will be receiving distributed shares in Power Ore, and the new shareholders coming into Power Ore will have direct exposure to a series of acquisitions in Canada’s cobalt and battery metal sector,” Stewart said.

While Orefinders is a gold-focused company, it happens to own one of the most prospective silver and cobalt assets in what is a very hot district due to the demand for battery and energy storage metals.

Companies like Orefinders hope to benefit from predictions that the price of cobalt will continue to rise after a 120% increase in 2017. BMO Capital Markets, for example, has said a doubling of the cobalt spot price over the coming years is not out of the question.

The aim is also to capitalize on the electric vehicle revolution which is expected to boost demand for cobalt, a key ingredient in the production of cathodes used to manufacture lithium-ion batteries.

“The new company will act as an acquisition and development vehicle for Abitibi battery metal projects. Our team is very knowledgeable in the geology of the Gowganda-Cobalt Ontario District and we also have established relationships at the asset ownership level,” Orefinders said.

The Mann Mines properties host nine historic shafts and a ramp that was driven to the 210-foot level. The former Mann Mine, along with other adjacent prospects, reported produced nearly 500,000 ounces of silver, Orefinders said.

Orefinders said it views the Mann Project as a highly promising advanced development project which is drill ready for future work.

The company hopes to realize significant value for its shareholders from the Mann Project and additional assets which the new company would acquire to complement its battery metals portfolio.