Spin-Outs in Mining Sector The Emergence of Independent Growth-Oriented Ventures
FN Media Group Presents USA News Group News Commentary
VANCOUVER, B.C., March 17, 2023 /PRNewswire/ -- USA News Group - Spin-out opportunities in the mining sector can generate mixed reactions from the market when they arise, depending on how they're handled. And this year is no different as multiple opportunities are arising, with much of the headlines going towards talk of Teck Resources Limited (NYSE:TECK) (TSX:TECK-A) exploring splitting off its steelmaking coal operations into a spin-out company worth an estimated $11 billion, in order to focus on copper and other "future-friendly" metals. Now other miners large and small are exploring their spin-out playbooks, including Usha Resources Ltd. (TSXV:USHA) (OTCQB:USHAF), Vale S.A. (NYSE:VALE), and Hecla Mining (NYSE:HL) with Atac Resources Ltd. (TSXV:ATC) (OTCQB:ATADF).
On the heels of identifying evaporite crystallization and more than tripling its land position at its Jackpot Lake Lithium Brine Property in Nevada, Usha Resources (TSXV:USHA) (OTCQB:USHAF) is bringing market attention back to its own spin-out opportunity which is set to be known as Formation Metals Inc. or FMI.
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Shareholders of Usha Resources are set to receive shares of Formation Metals on a 1:5 pro rata basis. In simpler terms, for each 10,000 common shares of USHA owned by the share distribution date of on or around April 3, 2023, they get also own 2,000 common shares of FMI.
Essentially, it's like a 20% dividend of another interesting mining opportunity, as FMI will then hold USHA's interest in the Nicobat Nickel Project, and will focus on the advancement of this project, while USHA continues to press onwards in the lithium space, especially the Jackpot Lithium Brine Project, where they're working toward defining a 43-101 resource.
Soon-to-be FMI's Nicobat is a nickel-copper-cobalt project in the Rainy River District in northwest Ontario, Canada—a region known to already have active mine development with excellent road and rail access, power, and water.
Back in December, the spin-out was overwhelmingly approved by USHA's shareholders, garnering support from 99.76% of the votes cast. By January, USHA obtained its final court order approval of the spin-out, which officially started the transaction in motion. However, with the April Share Distribution Record Date set for early April, the opportunity to partake in the spin-out opportunity is still in play for the next little while.
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