Why the Metalstech (ASX:MTC) share price has rocketed today

The Metalstech (ASX: MTC) share price rocketed higher today on news the miner would spin off its lithium assets.

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The Metalstech Ltd (ASX: MTC) share price opened nearly 18% higher today after the mineral exploration company announced it was spinning off its lithium assets into a new, publicly-listed company.

Shares in the miner retreated through the course of the day but rallied in the closing moments of trading to an intraday high of 21 cents before closing at 19.5 cents, up 14.7%. In comparison, the All Ordinaries Index (ASX: XAO) is down 0.52%.

Let’s take a closer look at what Metalstech announced.

Metalstech recycles its lithium

In today’s release, Metalstech advised it would spin out its Québécois lithium projects into a new, yet to be named company.

Metalstech foreshadowed the spinoff in a statement released to the market 6 days ago. The company said it would reorganise the assets into one Australian-owned subsidiary. From there, 22 million shares in the new company will be created and held by Metalstech.

Metalstech will then seek shareholder approval for the spinoff. Once approved, shares in the new company will be distributed to shareholders on a pro-rata basis.

After the distribution of shares, the new company will have its initial public offering (IPO). Metalstech hopes the new company will raise between $5 million – $8 million for the listing. Shares in the new company will be sold at a rate of 20 cents each.

The company is selling its lithium assets to focus on its gold and cobalt operations.

Words from the chair

Speaking on today’s announcement, Metalstech chair Russell Moran said:

… our portfolio of high-grade lithium assets [is] valuable. A spinout of the lithium assets into a separate listing provides a non-dilutive and ‘off balance sheet’ solution for accelerated development in what is now a booming battery metals sector.

Metalstech share price snapshot

This time almost 1 year ago, the Metalstech share price hit a 52-week low of 3.2 cents. Since then, the company’s value has increased by 462.5%. However, the share price is 37.9% lower than its 52-week high of 29 cents in July 2020.

Metalstech has a market capitalisation of $26.4 million.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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