The new entity, Widgie Nickel Limited, will seek ASX-listing post demerger.
At the time of writing, the Neometals share price is up 7.29% trading at 52 cents.
Neometals engages mainly in mineral exploration, extracting valuable metals, including lithium and titanium.
Why is the Neometals share price up today?
According to the announcement, Neometals shareholders will receive new Widgie Nickel shares at no cost, but on a pro rata basis in proportion to their existing shareholdings.
The company said the share distribution was an ‘in-specie’, which involves the transfer of shares rather than in the equivalent amount of cash. The demerger is subject to shareholder approval.
Neometals said that Widgie Nickel shareholders would be entitled to participate in an entitlement offer to acquire more Widgie Nickel shares.
Neometals managing director Chris Reed had this to say about the news:
The demerger and return of our Mt Edwards asset offers existing Neometals shareholders the opportunity to realise the inherent long-term value of this exciting development story in a discrete, nickel focussed corporate vehicle.
Potential of Widgie Nickel
Located on the Widgiemooltha Dome, Widgie Nickel has 7 “world-class nickel mines and hosts Australia’s newest high-grade nickel mine”, according to the release.
Reed described the assets as “highly deserving of their own time and attention, and the recent metallurgical results from just one of the deposits that revealed high grade palladium reporting to concentrate, demonstrates just some of what can be achieved with a dedicated focus”.
The company said it was expected that Widgie Nickel would be able to realise Mt Edwards long-term latent value, as it would engage dedicated resources allowing Neometals to focus on its core battery materials projects.
Subject to the demerger going ahead, the company will apply for a possible ASX listing of Widgie Nickel by the fourth quarter in 2021, with further information to be released in the coming weeks.
The Neometals share price has continued to outperform, finishing FY21 with a 200% gain.