Why is the Chalice Mining (ASX:CHN) share price falling today?

Chalice shares are falling on Wednesday… but why?

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The Chalice Mining Ltd (ASX: CHN) share price is dropping on Wednesday afternoon.

At the time of writing, the mineral exploration company's shares are down 3% to $8.33.

Why is the Chalice Mining share price falling?

The good news for shareholders is that the weakness in the Chalice Mining share price is not because something bad has happened.

Rather, the decline has been caused by the completion of the demerger of its gold exploration business Falcon Metals Ltd (ASX: FAL) this morning.

Chalice decided to demerge its gold operations so it could focus on its core world-class Julimar Ni-Cu-PGE Project and the new West Yilgarn Ni-Cu-PGE Province in Western Australia.

The Falcon demerger

Earlier this month Chalice shareholders voted overwhelmingly in favour of the demerger of the Falcon Metals business. A total of 99.97% of the votes cast were for the resolution.

In light of the successful vote, eligible shareholders now own 1 Falcon share for approximately every 3.0341 Chalice shares held on the in-specie record date of 13 December.

Falcon also separately raised $30 million via an IPO at a price of 50 cents per new share. Unfortunately, the Falcon share price is currently trading at 36.5 cents after hitting the boards after lunch. This could be a sign that some Chalice shareholders weren't interested in gaining exposure to gold and have sold their shares today.

What now for Falcon?

Management notes that Falcon is a high-profile gold exploration specialist led by a highly decorated board and management team. It has a strong starting cash position, which gives it a unique platform to make a tier one gold discovery in Victoria and Western Australia.

Falcon Metals' Managing Director, Tim Markwell, commented: "Falcon Metals is excited by the opportunity to further explore the gold projects spun out by Chalice. All of them are in areas considered highly prospective for gold discoveries, with Pyramid Hill particularly noteworthy due to its location in the Bendigo goldfield and proximity to Fosterville, while Viking and Mount Jackson are also very promising. We believe our experienced team can help us further develop these assets and unlock their potential value."

Drilling activities are anticipated to commence at Pyramid Hill in January 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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