IronRidge announces intention to split gold assets
Following a strategic portfolio review, the board of IronRidge Resources Ltd (IRR) concluded that the Cape Coast Lithium portfolio is materially undervalued in the current structure of IronRidge and requires separate and distinct attention to clear its true value. The Council therefore announces its intention to advance a split of the company’s gold assets in Côte d’Ivoire and Chad into a new gold-focused entity structured to allow listing on a recognized stock exchange (NewGoldCo), subject to regulatory and shareholder approvals, if applicable.
- Intention to split the company’s suite of gold assets into a separate listed entity (NewGoldCo). The Board believes that creating a new gold-focused company in a robust gold market is the optimal way to achieve full shareholder value.
- Restructuring to unlock more value in Cape Coast’s lithium portfolio following the scoping study, which confirmed the Ewoyaa Lithium project as a lithium asset that stands out in the industry.
- The Board believes that the proposed spin-off will provide shareholders with an investment in two high quality companies; each with a clear focus on lithium or gold.
Although the company intends to proceed with a spin-off of its gold assets, a number of steps and conditions will need to be addressed as part of the finalization of the split structure and there can be no assurance that the split will end. The company will make further announcements to shareholders accordingly.
Vincent Mascolo, CEO of IronRidge, said: “The proposed spin-off is part of IronRidge’s growth strategy, and today’s news represents a truly unique opportunity for shareholders to profit from the rise of two companies. distinct and diverse at an opportune time for gold and lithium. , respectively.
“The Board expects today’s vision to unlock meaningful shareholder value, help mitigate commodity risk, as well as enable the Board to operate more effectively.” and to focus on two very attractive commodity markets.
Overview and rationale
The Board considers the Cape Coast Lithium portfolio to be significantly undervalued at the current share price and in the current structure of IronRidge and considers that the portfolio requires a distinct and distinct focus to unlock its true value.
The Board believes that building a new gold-focused company in a strong gold market is the optimal way to achieve more shareholder value.
Under IronRidge ownership, Cape Coast’s lithium portfolio, which includes the Ewoyaa Lithium project, has been positioned as a standout project in the industry, ready to move from development to production.
The scoping study confirmed that Ewoyaa was a long-lasting, large-scale, low-cost open-pit project with excellent returns, as shown below:
- The scoping study supports a business case for a 2 million tonne per year production operation with Life of Mine (LOM) revenues exceeding US $ 1.55 billion, with significant potential for extension of the LOM.
- Eight-year LOM operation, producing an average of 295,000 tpa of 6% lithium oxide (Li2O) spodumene concentrate.
- The study produces exceptional financial results:
- LOM revenues above $ 1.55 billion, NPV after tax8 of 345 million USD, IRR of 125% over 8 years.
- Capital cost of US $ 68 million with an industry-leading payback period of
- C1 Cash operating costs of US $ 247 / t 6% lithium spodumene concentrate free on board (FOB) Port of Ghana.
- NPV before tax8 of US $ 539 million and EBITDA of US $ 854 million for LOM.
- Average EBITDA of 105 million USD / year.
- Significant upward exploration potential for the historic Egyasimanku Hill deposit (1.5 million t at 1.66% Li2O) and its surroundings 684 km2 wallet.
Since the completion of the Ewoyaa scoping study, there has been significant interest in Ewoyaa regarding potential partnership and leveraging opportunities.
Benefits of the proposed split
- Separation of IronRidge’s gold and lithium projects into separate targeted entities with the goal of unlocking greater value for IronRidge shareholders.
- Allows each separate entity to have appropriate resources and focus on its projects, while developing opportunities for organic growth and other value-creating growth opportunities in their respective sectors.
- Allows IronRidge to focus all of its resources on its three-step scale-up strategy to production at Ewoyaa, following a dramatic increase in interest in the project.
- Provides IronRidge shareholders with investment asset diversification and commodity risk mitigation.
- Allows IronRidge shareholders to better share the expected rise in lithium and electric vehicles by attracting investors seeking this exposure.
- Provides quick and clean separation of assets, providing a more direct path to recognizing value in the business asset base.
Read the article online at: https://www.globalminingreview.com/finance-business/01062021/ironridge-announces-intention-to-demerge-gold-assets/