Chalice Mining (ASX:CHN) share price flops on demerger of gold assets

Chalice has taken a giant leap from its gold mining roots. It plans to remove the golden metal from its books completely.

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plummeting gold share price

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The Chalice Mining Ltd (ASX: CHN) share price is falling this morning after the company announced plans to demerge its gold assets.

The Chalice Mining share price is currently $7.31 ­– 0.41% lower than its previous closing price.

The fall is particularly noteworthy when compared to the broader market’s gains. Currently, the All Ordinaries Index‘s (ASX: XAO) has gained 0.79% today. The S&P/ASX 200 Index (ASX: XJO) is also in the green, having jumped 0.84%.

On top of its intent to demerge its gold assets, Chalice Mining released assay results from its Pyramid Hill Gold Project.

Let’s take a look at the news putting pressure on the Chalice Mining share price today.

What’s driving the Chalice Mining share price?

Golden demerger

The Chalice Mining share price is in the red following the company’s plan to spin off its gold assets into a new ASX-listed company.

The headline acts during the demerged company’s Initial Public Offering (IPO) would be Chalice Mining’s wholly-owned Pyramid Hill Gold Project and its up-and-coming Viking Project, where the company is earning up to a 70% joint venture interest.

Chalice Mining said the demerger would allow it to focus on its nickel, copper, and platinum group minerals projects.

Chalice Mining expects the demerger to occur during the final quarter of 2021, subject to shareholder and regulatory approval.

Commentary from management

Chalice Mining’s managing director Alex Dorsch commented on the demerger:

The proposed demerger provides an exciting opportunity for our shareholders to benefit from the creation of a standalone, well-funded Australian gold exploration company with a high-quality asset base in Victoria and WA.

The creation of a new gold-focused explorer would be the optimal structure to ensure that the full potential of the gold portfolio can be realised, while allowing Chalice to continue to focus on completing the resource drill-out and rapidly advancing studies at Julimar.

Pyramid Hill Gold Project

In other news potentially driving the Chalice Mining share price today, the company released assay results from its Pyramid Hill Project.

Assay results at the project’s Karri Prospect found high-grade gold intersected over more than 2.5 kilometres of strike length.

Additionally, a second phase of drilling found new shallow gold intersections at the project’s Ironbark Prospect.

Dorsch commented on the findings:

The recent results at Pyramid Hill are tantalising from a greenfield exploration perspective, given the immense regional endowment in the Bendigo Zone.

Chalice Mining share price snapshot

2021 has been a productive year so far for the Chalice Mining share price.

Currently, it has gained 86% year to date. It has also gained 517% since this time last year.

The company has a market capitalisation of around $2.5 billion, with approximately 346 million shares outstanding.

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The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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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