PERTH (miningweekly.com) – Junior Astro Resources on Friday announced plans to spin-off its Lower Smoke Creek diamond project, in Western Australia.
The company told shareholders that the spin-off would be in the form of an initial public offering (IPO) on the ASX, and would comprise Astro’s East Kimberly project, together with a collection of other projects in Australia and potentially overseas.
Astro said that the spin-off into a special purpose vehicle that was dedicated to diamonds, with a clear focus and its own management team, was in the best interests of Astro’s shareholders in creating value.
It is envisaged that the spin-off will occur via Astro’s recently incorporated subsidiary, Argyle Resources. Astro shareholders will be provided a priority allocation in the IPO. Astro will retain a minority shareholding in Argyle based on the value of its East Kimberly project.
The company is planning to complete and finalise the IPO, including a fund-raising process, by the end of the second quarter or early in the third quarter of 2022. The IPO will be subject to Argyle meeting the conditions of admission set by the ASX.
Meanwhile, Astro said on Friday that the company was looking at further investment opportunities in Nevada, and was engaged in discussions with a number of companies.
The discussions have included a potential strategic alliance with Pediment Gold LLC, a wholly owned subsidiary of TSX-V listed Nevada Exploration, to provide a partnership framework for the purpose of working together to identify, review, and advance epithermal gold targets in Nevada.
At this stage, the likely terms of a transaction with Pediment will involve Astro contributing approximately $1.5-million or A$2-million over a two-year period to earn a 70% interest in a special joint venture company (SPV), and Pediment holding the balance 30% interest in return for contributing one or more of its current or future epithermal gold targets.
The SPV will be expected to hold a 90% to 100% interest in projects advanced under the alliance.
Present discussions have been around Pediment’s gold project in Slumbering Hills, Humboldt County, Nevada, but no project has been agreed.
At the end of the two-year period, Astro will be able to review its position in the SPV, with one of the options available to Astro being to terminate. Alternatively, it is anticipated that Astro may remain in the SPV but elect not to participate in future funding of the joint venture and thereby dilute its interest in the SPV, or Astro may elect to continue to provide some level of funding having regard to the exploration results achieved by the end of the two-year period and the business plan and funding requirements of the SPV.
Astro is expected to have board control of the SPV during the two-year period, while Pediment will provide the operational and project generation support for the SPV as the main operator of the SPV's projects.