Australian gold company, Rox Resources (ASX: RXL) today confirmed its intention to spin-out its Fisher East and Collurabbie nickel and base metal assets to focus on the development of the Youanmi gold project near Mt Magnet, WA.
Fisher East and Collurabbie nickel and base metal assets to be spun out (via a demerger) into a new company “Cannon Resources Limited”.
Eligible Rox shareholders to receive new Cannon Resources shares via an in-specie distribution, subject to Rox shareholder approval.
1 for 15 consolidation of the equity securities in Rox to be completed prior to demerger, subject to Rox shareholder approval.
Rox shareholders are expected to receive 1 ordinary share in Cannon Resources Limited for every 4.3 shares (approximately) held in Rox on a post-consolidation basis.
The nickel and base metal assets will be demerged into a new company, Cannon Resources Limited (Cannon). The Company proposes a 1 for 15 share consolidation prior to the Cannon transaction to simplify its share structure.
Rox Resources Managing Director Alex Passmore commented:
“The demerger of Rox’s nickel and base metal assets will allow a crystal-clear focus for Rox to develop Youanmi into a high-grade producing mine, while allowing Rox investors to retain exposure to the nickel and base metal assets through a pro-rata holding in Cannon.”
Nickel Spin Out – Cannon Resources Limited
Rox holds substantial nickel assets via its Fisher East and Collurabbie Projects in Western Australia. These projects are also highly prospective for base metals. With the Company’s focus shifting to the advanced exploration and development of Youanmi, the Company has been seeking to unlock the value inherent within its nickel and base metal assets.
After careful consideration, Rox has determined that a demerger of these assets via an in-specie distribution to Rox shareholders offers the most efficient and direct delivery of value. Specifically, Rox intends to transfer the Fisher East and Collurabbie Projects into a newly formed subsidiary, Cannon Resources Limited, which will subsequently seek listing on the ASX in an initial public offering (IPO) following an equal capital reduction of Rox (Capital Reduction) to be affected by the in-specie, pro-rata distribution of 81% of Cannon’s issued capital to eligible Rox shareholders (In-specie Distribution). Rox shareholders are expected to receive 1 ordinary share in Cannon Resources Limited for every 4.3 shares (approximately) held in Rox on a post-consolidation basis.
The IPO will include a public offer to new investors and a priority offer to eligible existing Rox shareholders. Further details regarding the IPO will be provided in a prospectus to be lodged by Cannon for the IPO.
The Company has sought demerger relief advice from the Australian Tax Office (ATO) pursuant to Division 125 of the Income Tax Assessment Act 1997 (ITAA 1997) among other matters. The launch of the proposed demerger remains subject to Rox having completed satisfactory engagement with the ATO. There can be no assurance that demerger relief will be obtained.