PERTH (miningweekly.com) – Junior Nova Minerals is looking to unlock value from its lithium projects through the spin-off of Snow Lake Resources into a C$24-million initial public offering (IPO) on the TSX-V.
Following a restructure, the subsidiary will have the right to earn an 80% interest in the Thompson Brothers lithium project and 100% of the adjoining Crowduck lithium project, in Canada.
The Thompson Brothers project has an inferred mineral resource of 6.3-million tonnes, containing 86 940 t of lithium oxide, and has an additional exploration target of between three-million to seven-million tonnes, with grades of between 1.3% and 1.5% lithium oxide.
“Given the recent activity in the lithium market with higher prices and strong demand from the electric vehicle and battery storage markets, we think that Nova and its shareholders will benefit from a spin-off of its lithium assets with our Canadian peers valuations sitting at many multiples higher than what is prescribed for Nova on the ASX, while maintaining a majority interest in the company and project,” said Nova MD Avi Kimelman.
Nova will hold a 77% interest in Snow Lake, post the IPO, which is expected to raise between C$4-million and C$5-million to further advance the projects.
“Nova considered an in-specie distribution for its shareholders as part of the arrangement, although after tax and legal advice, the company was unable to get the desired tax relief for its shareholders.
“In light of that, with Nova maintaining a majority equity position, we believe this will flow through to benefit the Nova shareholders by unlocking the project’s intrinsic value and continue to benefit as Snow Lake moves the project to eventual production and ultimate cash flow,” Kimelman said.
With a clear development pathway, Nova was hoping that Snow Lake would develop into an independent and viable lithium supplier for the emerging lithium battery market.
The spin-off will be subject to shareholder approval.
With Snow Lake spinning out, Nova will be able to tighten its focus on its District Scale gold/copper project, which has a current 1.1-million- to 2.3-million-ounce exploration target, on less than 1% of the project area, said Kimelman.
Exploration drilling programmes are set to start within the next four weeks, following drilling approvals, with preparation and mobilisation now under way.