Australia’s largest tin producer Metals X (ASX:MLX)
has established a binding draft agreement to sell the company’s nickel subsidiary to prospective ASX debutant NICO Resources.
The decision to spin out nickel assets, on the back of the company’s offload of copper assets, will allow Metals X to concentrate effort and resources on developing its benchmark tin production.
Metals X explained the rationale behind the sale, “Metals X’s 50 per cent joint venture at the Renison Tin Operation in Tasmania remains the company’s primary focus, and it looks forward to working with shareholders as it continues to progress the spin out of the nickel assets and to enhance its position as Australia’s largest tin producer.”
Under the binding term sheet for the transaction, Metals X will relinquish 100 per cent of its stake in Metals Exploration, in exchange for a direct interest in NICO Resources.
One of the main conditions enables eligible Metals X shareholders to acquire an interest in NICO Resources. The proposed scrip consideration will entitle these individuals to 25 million shares in the future ASX-listed entity, which constitute over a third of NICO’s total issued capital.
The remaining shares acquired from the sale will be added to Metals X’s portfolio, making up 29 per cent of NICO’s total issued shares. The proposed transaction is due to proceed before or at the time of NICO’s IPO.
NICO is currently at the preparation stage to float shares on the ASX. The company plans to issue a total of 40 million shares in a two-pronged equity raising to generate $8 million.
The company is conducting a placement of 20 million shares at 20 cents per security to Metals X. The rest will be offered to public and private investors through the IPO.
Shares in Metals X are trading 4.08 per cent lower at $0.24