Power Nickel Inc. [PNPN-TSXV, PNPNF-OTCQB] on Friday announced plans to spin out its British Columbia and Chilean projects into private subsidiary Consolidated Gold and Copper Inc. via a plan of arrangement.
The company is also hanging a for sale sign on a 3% NSR royalty interest on future production from the Copaquire copper-molybdenum deposit property in Chile.
Power Nickel said its aim is to optimize its non-core assets while maintaining its focus on the exploration and development of Nisk, a high-grade nickel platinum group metal project located near Nemaska, Que.
The company plans to allocate 25% of Consolidated shares to its existing shareholders and is seeking a fairness opinion on the transaction.
Aside from Nisk, Power Nickel has a 100% interest in the Golden Ivan project near the heart of British Columbia’s Golden Triangle area. This property hosts two known mineral showings (gold ore and magee) and a portion of the past-producing Silverado mine, which was reportedly exploited between 1921 and 1939.
The company is also the 100% owner of five properties comprising over 50,000 acres strategically located in the prolific iron-oxide-copper-gold-belt of northern Chile. It also owns a 3% NSR royalty interest on any future production from the Copaquire copper-molybdenum deposit property located on property that borders Teck Resources Ltd.’s (TECK.B-TSX, TECK.A-TSX, TECK-NYSE) producing Quebrada Blanca copper mine.
Teck has the right to buy the first 1.0% for US$3 million and the right of first refusal on a sale of the royalty.
In step one of the plan, Power Nickel will transfer its stake in the Golden Ivan property to Consolidated Gold and Copper Inc. in exchange for shares in that company. Consolidated, through various other wholly-owned subsidiaries, also holds the Chilean assets (other than the Copaquire royalty). Power will seek approval to spin out Consolidated via a plan of arrangement and distribute Consolidated shares to its shareholders.
“There is no immediate intention to list Consolidated’s shares on any stock exchange or quotation system,’’ the company said.
The expectation is that Power Nickel will hold 26 million common shares of Consolidated prior to the proposed plan of arrangement. For every 20 shares of Power Nickel that a shareholder owns, that shareholder will receive one share of Consolidated, resulting in the distribution of approximately 6.5 million common shares of Consolidated to its shareholders. It is expected that Power Nickel will retain approximately 19.5 million Consolidated shares.
Power Nickel said that while the long-term potential of the Copaquire copper-molybdenum royalty is excellent, the sale of the royalty will reduce dilution at Nisk.
Power has previously said exploration results indicate that company is in the process of confirming Canada’s next nickel sulphide mine in Quebec. The company is drilling its Nisk project in a bid to become a supplier of low-carbon class 1 nickel to the developing North American electric vehicle supply chain.
On June 20, 2023, Power Nickel shares were priced at 20.5 cents and currently trade in a 52-week range of 35 cents and $0.09.