IronRidge Resources Ltd (LON: IRR) share price fell 9.47% after announcing the proposed spinoff of its gold assets into a separate entity to unlock shareholder value.
The board noted that the mining company is currently undervalued based on its lithium projects and resources only, with the markets largely ignoring its extensive gold holdings.
The miner noted that the demerger would allow shareholders to profit from the formation of two companies that separately focus on lithium and gold assets.
IronRidge Resources noted that both commodities were in a situation with rising demand, which should benefit its shareholders. As a result, Ironridge Resources would be renamed Atlantic Lithium Limited.
The new gold company will be known as Ricca Resources Limited and will not be listed at this stage. Ricca will receive a cash transfer of A$7 million as part of the transfer of gold assets to the company from IronRidge.
Eligible shareholders will receive 1 Ricca share for every 8 IRR shares they hold once the demerger is approved. In addition, the shareholders will also get a chance to participate in a A$7.1m pro-rata rights issue to be conducted by Ricca, where they can subscribe at A$0.10 per Ricca share.
After closing the rights issue, Ricca will have a cash balance of A$14.1 million before costs and issued capital of 143,436,062 Shares.
Ironridge Resources share price fell on the announcement,w which will see the company give up some of its current valuations following the demerger, hence, today’s decline.
Vincent Mascolo, IronRidge Resources’ CEO, said: “The last 12 months has been the strongest performing period on record in the Company's history and the upcoming AGM will set a new marker as the Company proposes to reposition its assets to deliver shareholders a far more attractive investment into two newly branded companies.”
Adding:
“The proposed demerger of IronRidge's gold assets follows on from IronRidge's July statement regarding the Company's agreement with Piedmont Lithium Inc. (“Piedmont”), a Nasdaq listed lithium exploration and development company, to fully fund and fast track the Ewoyaa Lithium Project (“Ewoyaa” or “the Project”).”
*This is not investment advice.
IronRidge Resources share price.
IronRidge Resource share price plunged 9.47% to trade at 16.73p, falling from Monday’s closing price of 18.48p.
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