Vizsla Silver plans to spin out NSR royalty to shareholders

Vizsla Silver Corp. [VZLA-TSXV] said it is planning to spin out the shares of its Vizsla Royalties Corp. unit to the company’s shareholders. Vizsla Royalties currently holds, indirectly a net smelter royalty on any potential future mineral production from Vizsla’s 100% owned Panuco silver-gold project in Sinaloa, Mexico.

The royalty consists of a 2.0% net smelter return royalty on certain unencumbered Panuco concessions, and an 0.5% net smelter return royalty on certain unencumbered concessions on the project, which have a pre-existing 3.0% net smelter royalty.

Vizsla Silver is also expected to:

• Transfer to Vizsla Royalties the right to purchase one half of the 3.0% underlying royalty:
• Grant Vizsla Royalties the right to acquire a royalty on any future projects acquired by Vizsla Silver for two years after the spinout is completed, which would automatically terminate upon a change of control Vizsla Royalties or Vizsla Silver.
• Make a cash injection into Vizsla Royalties.

Under the plan, Vizsla Silver is expected to hold approximately a 49% interest in Vizsla Royalties, with the remaining shares of Vizsla Royalties being distributed to shareholders of Vizsla Silver on a pro-rata basis at a time to be determined by the board of directors of Vizsla Silver. There will be no change in shareholders’ holdings in Vizsla Silver as a result of the spinout, which is to be completed via a plan of arrangement.

The spinout would be subject to shareholder, court, stock exchange and regulatory approval as well as management’s discretion.

However, there is no certainty that Vizsla Silver will proceed with the spinout. Subsequent to completion, the board of directors of Vizsla Royalties may decide to pursue a listing on the TSX Venture Exchange if it determines that such a move is in the best interests of shareholders.

Vizsla shares eased 5.5% or 10 cents to $1.71. The shares trade in a 52-week range of $2.24 and $1.26.

The newly-consolidated Panuco gold-silver project is an emerging high-grade discovery located in southern Sinaloa, near the city of Mazatlan.

The Panuco project hosts an estimated in-situ indicated resource of 104.8 million ounces of silver equivalent (AgEq). On top of that is an in-situ inferred resource of 114.1 million ounces of AgEq.

This year, the company budgeted for 90,000 metres of resource/discovery-based drilling designed to upgrade and expand the mineral resource, as well as test other high priority targets across the district.