How will Chalice Mining (ASX:CHN) shares be impacted by the Falcon spin off?

Chalice is spinning off an asset…

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Chalice Mining Ltd (ASX: CHN) shares will be on watch in the coming weeks when the mineral exploration company spins off its Falcon Metals business.

What is Falcon Metals?

Falcon Metals will be a new gold focused company with exploration assets located in Victoria and Western Australia. The company notes that with a strong starting cash position, Falcon Metals will have a unique platform to make a tier one gold discovery in Victoria and Western Australia. Drilling activities are anticipated to commence at Pyramid Hill in January 2022.

Management also advised that it believes demerging the business will allow the Chalice team to focus on its world-class Julimar Ni-Cu-PGE Project and the new West Yilgarn Ni-Cu-PGE Province in Western Australia.

What will happen with your Chalice shares?

When the demerger occurs, it is quite likely that Chalice Mining shares will trade notably lower on the day to reflect the fact that Falcon Metals is no longer part of the business.

But don’t worry, because this should be offset with the Falcon Metals shares that shareholders will be distributed.

The company intends to issue Falcon Metals shares to eligible Chalice shareholders by way of a pro-rata in-specie distribution. This is on the basis of 1 Falcon share for approximately 3.0341 Chalice shares held on the in-specie record date of 13 December.

After which, if everything goes to plan, Chalice Mining shares and Falcon Metals shares will each be trading separately at the commencement of trade on 22 December.

Is Chalice Mining a buy?

One leading broker that is very positive on Chalice Mining shares is Macquarie Group Ltd (ASX: MQG).

Last week the broker retained its outperform rating and lifted its price target to $10.70. This implies potential upside of almost 15% for Chalice Mining’s shares over the next 12 months.

Should you invest $1,000 in Chalice right now?

Before you consider Chalice, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Chalice wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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