Brought to you by COW AND BEAR
Murray Ward
Red Metal Limited has released a high-value Easter surprise, rewarding its loyal followers with a direct slice of Australia’s silver and copper-gold development game. The company has revealed plans for a mass distribution of its ASX-listed Maronan Metals shares, a strategic move aimed at unlocking the full potential of both entities.
Currently, Maronan hosts an impressive mineral resource estimate of 121.9 million ounces of silver, 271,000 tons of copper and 760,000 ounces of gold.
Red Metal currently controls 88.5 million shares in Maronan, including 35.2 percent of the total issued shares. Under the proposed plan, subject to shareholder approval, Red Metal will distribute a majority of its holdings directly to its investors.
If approved, eligible Red Metal shareholders will carry one Maronan Metals share for every 5.25 Red Metal shares outstanding on the record date of May 14. Following the distribution, Red Metal will retain a minority interest of approximately 15.4 million shares.
The board has unanimously recommended the plan, seeing it as a real win. By handing shares directly to investors, the divestment is expected to diversify Maronan’s shareholder base and increase the liquidity of the business. The move will also make it a more attractive investment for big money, as it nears a development decision.
In particular, the change cleans up Red Metal’s ranks to accelerate its ultimate goal, the massive discovery of the rare element Sybella near Mt Isa in Queensland. Management believes that the move will allow Sybella’s real value to be realized in the market without any valuation confusion associated with its Maronan equity stake.
CEO Rob Rutherford said: Maronan is gaining recognition as the best early stage finance development opportunity in Australia.
Sybella is a unique granite-hosted system, with a target area of more than 12 km long and 3 km wide, providing a large tonnage capacity starting at surface.
The project boasts an estimated mineral resource of 4.795 billion tons at 302 parts per million (ppm) neodymium-praseodymium and 28 ppm dysprosium-terbium. Most importantly, this resource includes a high quality granite section of 788 million tons at 297 ppm neodymium-praseodymium.
Recent metallurgical experiments, using ion exchange, have effectively improved the content of rare earths and separated impurities from the pregnant liquor of the leach resulting from the filtration of the weak acid of the Sybella mineral.
Additional optimization studies leading to the world’s highest precipitation of mixed and rare earth carbon are now being prepared as the project moves into feasibility work this year.
Although Sybella is a flagship project, Red Metal maintains a high-impact exploration pipeline in Australia’s major mining states.
This includes a recent joint venture with Chalice Mining in the Callabonna copper-gold project in South Australia. Additionally, a proposed diamond drill at the Pulkarrimarra project in the Paterson Region of WA, which is partly funded by BHP under the Greenfields Alliance, is awaiting test results. Pulkarrimarra is on the horizon from Rio Tinto’s massive Winu copper gold discovery.
The company is also working on its Pardoo gold and lithium project in the Pilbara, where recent extensive drilling revealed interesting gold values in the sedimentary cover sequence. Additionally, a new joint venture with Artemis Resources is set to test the Sharon Dam gravity and magnetic target in the Nullarbor.
Backed by $4.3 million in cash, Red Metal is improving its focus through in-spec distribution. By handing Maronan’s profits directly to shareholders, the company should now be able to devote its full attention to proving the Sybella rare earths project in the international region, while pursuing its other main goal – finding Australia’s next Tier-1 deposit.
Is your ASX listed company doing something interesting? Address: mattbirney@bullsnbears.com.au
