PERTH (miningweekly.com) – ASX-listed Marvel Gold on Tuesday announced plans to spin out and separately list its Chilalo graphite project, in Tanzania, into a wholly owned subsidiary called Evolution Energy Minerals.

Marvel told shareholders that the proposed initial public offering (IPO) would raise a minimum of A$13-million, with the potential to accept over-subscriptions.

“There is no doubting the quality of the fully permitted and construction ready Chilalo graphite project. Since the re-brand to Marvel and the focus on our Mali gold projects, there has been no value contributed to Chilalo despite Chilalo’s peer comparison trading at many multiple of Marvel’s entire market capitalisation,” said Marvel MD Phil Hoskins.

“The IPO of Evolution is the opportunity for Marvel to remove the historical debt encumbrance and unlock Chilalo’s value potential. Evolution has attracted three directors with significant graphite development, construction and marketing expertise, and will be well placed to add value for its shareholders through Chilalo’s development.”

A 2020 definitive feasibility study into the project was based on throughput of 500 000 t/y to produce around 50 000 t/y of graphite and found that the project would require a pre-production capital investment of some $87.4-million.

The study estimated a post-tax net present value of $331-million and a post-tax internal rate of return of 36%, with Chilalo anticipated to generate average annual earnings before interest, tax, depreciation and amortization of $74-million over its 18-year mine life.

To facilitate the proposed transaction, Marvel and Evolution will enter into a share exchange agreement, which will result in Marvel retaining a 28% to 43% shareholding in Evolution’s issued capital post IPO.

Marvel will have the right to appoint one director to the Evolution board, as long as the company’s shareholding exceeds 10%.

The proposed spin-out and IPO were subject to a number of conditions, including shareholder approval and Evolution receiving applications for at least the minimum subscription under the IPO, as well as the successful completion of the IPO, including approval for listing in the ASX.

Hoskins said on Tuesday that completion of the spin out and IPO would allow Marvel to focus on its existing gold exploration.

“In the nine months since acquisition, we have increased Tabakorole’s resource by 54%, increased the grade of the resource by 20%, de-risked the metallurgy and grown the landholding by 300%. Resource expansion drilling is continuing as Tabakorole continues to emerge as a significant West African gold deposit.”