Power Nickel confirms spin-out of Golden Ivan Property and key Chilean assets

FULL DISCLOSURE: The Deep Dive has long been Power Nickel’s equity.

Power Nickel Inc. (TSXV:PNPN) has announced a strategic reorganization of its operations, transferring the company’s interests in the Golden Ivan property and Chilean exploration assets to shareholders through a newly created subsidiary. This development represents a major shift for the company, allowing it to focus on its flagship Nisk project while giving investors ownership stakes in two separate companies with different objectives.

Under the new agreement, Power Nickel will spin its interests in the Golden Ivan property, a mining asset located in British Columbia’s famed Golden Triangle region, along with its Chilean assets into a subsidiary (Spinco) that will focus on independently advancing of these projects. .

As part of the spin-out, Power Nickel shareholders will receive shares in both Power Nickel and Spinco, with the latter’s shares being privately held and not listed on any stock exchange.

According to Terry Lynch, CEO of Power Nickel, the reorganization is intended to unlock value for shareholders that is not currently reflected in the company’s stock.

“We believe that our shareholders are not currently receiving any benefit from the properties we are producing,” Lynch said in a statement. He emphasized that the move will allow Power Nickel to focus on its core business, the Nisk nickel sulphide project, which is expected to benefit from growing demand in the electric vehicle (EV) sector.

The Golden Ivan estate, which covers approximately 797 hectares, is located near Stewart, British Columbia, in the Golden Triangle. This area is known for its abundant mineral resources, including gold, silver and copper. The property itself is home to two well-known mineral exhibits and is part of a region with a rich mining history dating back to the early 20th century. In particular, the nearby Golden Triangle has produced more than 67 million ounces of gold, 569 million ounces of silver and 27 billion pounds of copper.

In recent years, Power Nickel has carried out exploratory work at Golden Ivan, including a successful 2021 prospecting and geological mapping program that led to the discovery of two new high-grade gold zones. These findings include analyzes of up to 16.2 grams per tonne (g/t) gold from the Lone Goat show and 15.1 g/t from the Molly B. East show. Such discoveries underline the property’s potential for future development.

The spin-out of Golden Ivan allows Spinco to independently continue further research and development of this property. Spinco will also manage other Chilean assets, including the Zulema and Tierra de Oro projects.

The decision to spin off these assets is rooted in Power Nickel’s belief that the market has not fully appreciated its exploration properties, especially given the company’s focus on its flagship Nisk project. The Nisk project, located in Quebec, is a high-grade nickel sulfide deposit that has become increasingly valuable as global demand for nickel increases, especially for its use in electric vehicle batteries. The spin-out allows Power Nickel to streamline its operations and fully focus on advancing Nisk, while Spinco takes the lead on exploration projects in British Columbia and Chile.

The move also addresses what Power Nickel sees as a problem with naked short positions – unreported short selling – on its shares. By transferring its assets to a private entity, Power Nickel hopes to make it more difficult for these short positions to negatively impact the stock price.

The spin-out process is expected to be completed by the end of 2024, pending approval by Power Nickel shareholders and the Supreme Court of British Columbia. Shareholders will vote on the arrangement at a special meeting scheduled for November 22, 2024. If approved, each shareholder will receive shares in Spinco in proportion to their holdings in Power Nickel.

Upon completion, Spinco will operate as a reporting issuer in British Columbia and Alberta, but will not be publicly listed. According to Power Nickel, this private structure will provide shareholders with continued exposure to the exploration potential of the Golden Ivan property and Chilean assets, while allowing Power Nickel to focus on its core nickel activities.

Power Nickel last traded at $0.76 on the TSX Venture.

FULL DISCLOSURE: Canacom Group, the parent company of The Deep Dive, is the long-time owner of Power Nickel. No recommendation to buy or sell. Always do additional research and consult a professional before purchasing any effect.