Proactive Investors - Power Nickel Inc has announced a plan to optimize its non-core assets while maintaining its focus on the development of its high-grade nickel PGM Project, Nisk, near Nemaska in Quebec.
As a first step, the company said it intends to transfer the beneficial interest in its Golden Ivan property to Consolidated Gold and Copper Inc in exchange for common shares of Consolidated. A spin-out of Consolidated is then planned, with the company seeking approval to distribute Consolidated shares to its shareholders.
The expectation is that Power Nickel Inc (TSXV:PNPN) will hold 26,000,000 common shares of Consolidated prior to the proposed plan of arrangement. For every 20 shares of Power Nickel that a shareholder holds, that shareholder will receive one share of Consolidated resulting in the distribution of approximately 6,500,000 common shares of Consolidated to its shareholders and Power Nickel will retain approximately 19,500,000 Consolidated shares
While the process is unfolding the company said it plans to continue to evaluate options, including the sale of all or part of the assets, listing of Consolidated, and the vending of the assets into another entity for cash or shares.
"We believe splitting off the non-core assets into Consolidated will be beneficial for Power Nickel shareholders. It will enable the new entity to separately finance and pursue growth opportunities ...This will take the burden off the Power Nickel balance sheet and instead allow these assets to be separately valued by the market," commented Power Nickel CEO Terry Lynch in a statement.
In a second step, Power Nickel is putting its 3% royalty on the Copaquire Project, owned by Teck Resources (TSX:TECKa), up for sale. Teck has the right to buy the first 1% for US $3 million and has the right of first refusal. Power Nickel sees this sale as an opportunity to reduce dilution at Nisk and provide benefits to shareholders.
"We have held onto the Copaquire Royalty for a very long time ... we are confident it will find its way into production and confirm the value of our royalty," added Lynch.
Power Nickel, a Canadian junior exploration company, is committed to developing the high-grade Nisk project into Canada's first carbon-neutral nickel mine. The company expects to hold the Annual and Special Meeting in October to move forward with its plans.