The Hawkstone Mining Ltd (ASX: HWK) share price slipped into the red shortly after market open this morning, and that's where it's stayed.
Hawkstone shares are currently exchanging hands at 4.2 cents apiece, a 8.7% drop out of the money from the open.
Despite today's loss, Hawkstone shares are still 40% into the green over the past month. Let's uncover why.
Image source: Getty Images
First – more on Hawkstone Mining
Hawkstone is in the minerals exploration and mining business, exploring for lithium, gold and copper.
It holds a diversified portfolio of US gold, gold/copper and lithium assets. Hawkstone has two flagship interests, the Lone Pine gold project and the Western Desert gold/copper project.
As a result, Hawkstone trades at a market capitalisation of $78 million at the time of writing.
What's behind the Hawkstone share price lately?
Most of the gains in Hawkstone's share price of late have occurred from the end of July.
To illustrate, Hawkstone released its activities report for the second quarter on 30 July. In it, the company outlined it is to "spin out" its interests in three major projects to Diablo Resources Ltd, including:
- the Devil's Canyon gold/copper project
- the Western Desert gold/copper project
- the Lone Pine gold project, including the King Solomon Mine
For the spinout, Hawkstone will receive 40 million vendor shares, which will be distributed via a pro-rata distribution to existing shareholders "upon the successful ASX IPO (initial public offering) of Diablo."
Moreover, Hawkstone shareholders will have an option to "participate in the $3.5 million priority offer" in Diablo's listing.
Afterwards, Hawkstone is set to become a "dedicated lithium company," focused on its Big Sandy lithium project in Arizona. The project's name will be "Arizona Lithium" thereafter.
Furthermore, on 4 August, the company released a short form prospectus for an offer to transfer Diablo shares to Hawkstone shareholders, pursuant to a "capital reduction". The proposal is structured as an "in-specie distribution," which means all securities will transfer in their current state, versus Hawkstone receiving their fair value in cash.
As a result of the distribution, the company will transfer the 40 million Diablo shares to its own shareholders. Consequently, Hawkstone's capital will reduce by an amount "to be assessed by HWK directors".
Hawkstone Mining share price snapshot
The Hawkstone Mining share price has climbed 366% into the green year to date, extending the previous 12 month's gain of 147%.
Moreover, in the past week, Hawkstone shares have gained a further 23.5%.
As such, these results have beaten the S&P/ASX 200 Index (ASX: XJO)'s return of around 25% over the past year.
