16/12/2010 - 10:04

Navigator advances rare earths spin-off

16/12/2010 - 10:04

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Perth-based gold miner Navigator Resources has moved closer to cashing in on rampant investor appetite for rare earths exposure, finalising plans to spin-off its rich Cummins Range project in the Kimberley early next year.

Perth-based gold miner Navigator Resources has moved closer to cashing in on rampant investor appetite for rare earths exposure, finalising plans to spin-off its rich Cummins Range project in the Kimberley early next year.

Navigator said the new vehicle, to be named Kimberley Rare Earths Limited (KRE), would be granted a direct 25 per cent stake in the Cummins Range project ahead of its listing, in return for KRE shares to be distributed in-specie to Navigator shareholders.

KRE would also be granted a right to earn up to 55 per cent of the Cummins Range venture by spending $10 million on exploration and evaluation over four years.

The in-specie distribution to Navigator shareholders holding at least 10,000 shares on a 1-for-20 basis is expected to account for up to 30 per cent of KRE's pre-float capital.

To fund its activities, KRE will then look to raise $15 million from a public offer in March next year, with Navigator shareholders granted a priority entitlement to apply for KRE shares on a 2-for-1 basis.

Navigator said that depending on the level of uptake, Navigator shareholders were expected to hold 60-72 per cent of KRE's post-float capital.

While a search for a permanent managing director has begun, Navigator has appointed an interim three-man board to run KRE, comprising Navigator's deputy chairman Ian Macpherson, chief financial officer Gerry Kaczmarek and chairman Allan Trench.

The planned spin-off of the Cummins Range project comes amid unprecedented interest in potential suppliers of rare earths, a collection of 17 elements used in high-tech electronic and IT applications such as flat screen televisions, missile guidance systems and X-ray machines.

Currently, China accounts for over 90 per cent of the world's supplies, leaving major users in Europe, Japan, Korea and the United States highly exposed to any changes in China's export policy.

That risk has been magnified in recent months as China has drastically reduced exports, including an unofficial embargo on exports to Japan in September following a diplomatic row.

Cummins Range, 130km south west of Halls Creek, was originally discovered by Rio Tinto predecessor CRA in 1978, and is one of WA's largest untapped resources of rare earths.

Navigator shares were holding steady at 23 cents in mid-day trading.

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