Metalicity Limited will seek to extract fair value from its giant Admiral Bay zinc project in the Kimberley of W.A by vending all its zinc assets into a new company, Kimberley Mining Limited, to be listed on Canada’s TSX Venture exchange. The deal is worth up to CAD$32.5m for Metalicity and will advance its Admiral Bay project, whilst leaving the company cashed up to pursue its battery metals projects.
In what looks to be a remarkable revaluation of the company’s local zinc assets, Metalicity will pick up a bag of cash up front, potentially a trail of cash over the next two years and it will still hold around 38% of Kimberley Mining’s stock after it raises C$25m to list in Canada.
The deal involves Metalicity vending its giant, flagship, Admiral Bay zinc project near Broome into Kimberley Mining ahead of its listing on the TSX-V.
In a move that signals Metalicity’s new focus on its battery metals projects in W.A, the company will also vend in its Napier Range and Emanuel Range zinc projects to sweeten the deal.
The IPO aims to raise CAD$25m at CAD80c a share, with monies raised to be directed towards a reinvigorated drilling program at Admiral Bay initially. This will be followed by a detailed feasibility study at Admiral Bay and a new round of exploration at the promising Napier Range and Emanuel Range zinc projects in the western Kimberley in W.A.
Metalicity will hold some 25m shares in Kimberley Mining or around 38% of the company post listing.
Based on a listing price of C$80m, Metalicity’s equity in the newly listed company will be worth around C$20m on listing day.
It will also receive CAD$4.5m from the initial seed and IPO capital raisings with the listing tipped to take place in the September quarter after all approvals have been locked away.
Metalicity will potentially receive further cash payments 12 months and 24 months after Kimberley Mining’s listing on the TSX-V, based on Kimberley’s share price at those milestone dates.
If the company’s share price holds at its listing price of CAD80c over 24 months, Metalicity will be entitled to a further cash payment totalling CAD$5m, or if the share price has doubled to CAD$1.60 within 24 months, it will receive a further CAD$8m.
If Kimberley’s share price holds at the listing price for at least two years, the deal effectively values Metalicity’s interest in its W.A zinc projects in the new Canadian structure at CAD$29.5m or AUD$ 30.15m – not bad for a company with an ASX market cap of around $16m and a swag of promising looking battery metals prospects that will remain in-house.
Metalicity acquired its Admiral Bay zinc deposit from a wounded Kagara Ltd for just over A$3m in late 2015 and the spin out into Kimberley Mining now effectively fully values the project at close to A$54m.
Metalicity has spent the last 2 years proving up the massive resource at Admiral Bay that now boasts 170 million tonnes grading 7.5% zinc equivalent, more than double the mineral resource inventory it originally paid for.
The project is staggering in size and has in-situ metal resources of 7m tonnes of zinc, 4.6m tonnes of lead and 137m ounces of silver.
Metalicity has never been able to extract what it considers to be fair value for the project on the Australian bourse and the Canadian listing therefore looks the goods and will provide enough cash to get the massive West Australian project reinvigorated and on a pathway to production.
Metalicity’s Managing Director Matt Gauci said: “The terms agreed are a win-win for both Metalicity and Kimberley Mining. Following Metalicity shareholder approval, Kimberley Mining will be well established to rapidly progress the IPO process which will best allow the progression of Admiral Bay in a market of higher valuations for base metals projects of Admiral Bay’s scale and in an increasingly tight zinc market.”
“The agreed terms follow very strong market interest and engagement of leading North American mining investment firms, the appointment of a highly credible board, and endorsement of project stakeholders Resource Capital Funds (RCF) and China Minmetals (Minmetals).”
The deal will also see a now well-funded Metalicity get serious about exploring its prospective looking battery minerals projects in W.A. and run its eye over various M&A opportunities.
Existing projects include the prospective Yerrida cobalt project, located just west of Wiluna in the northern Goldfields, where the company has recently commenced an RC drilling program.
Metalicity also holds exploration licences for lithium in the Pilbara and is looking to expand into graphite.