Jindalee share price rockets 13% on USA lithium demerger news

The mineral exploration company had some big news for the market today.

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Key points

  • The Jindalee Resources share price closed 9% higher on Tuesday
  • The company was in a trading halt earlier today 
  • Jindalee delivered some huge lithium news to the market 

The Jindalee Resources Ltd (ASX: JRL) share price soared today amid demerger news.

After emerging from a trading halt, Jindalee shares gained 13% in intraday trading before closing at $4.75 each, a 9.2% rise. In comparison, the S&P/ASX 200 Resources Index (ASX: XJR) closed 0.19% lower today.

Let's take a look at what is happening at Jindalee.

US lithium focus

The mineral exploration company will position itself as a pureplay US lithium developer working on the McDermitt Lithium Project in Oregon.

Jindalee will separate its Australian assets and list as NewCo on the ASX.

Eligible Jindalee shareholders will receive a pro-rata distribution of NewCo shares at the record date.

The company said a strategic review of Jindalee's portfolio found separating its Australian assets would maximise value for shareholders.

Jindalee also wants to accelerate exploration and development at the McDermitt Lithium Project, one of the biggest lithium deposits in the US.

Commenting on the news, chairman Justin Mannolini said:

The time is right for Jindalee to reposition itself as a pure-play US lithium developer. The board believes that the favourable political climate in the United States following bipartisan expressions of support for the development of an integrated domestic lithium-ion battery value chain, coupled with the well-known electric vehicle thematic, create the ideal backdrop for the proposed Demerger.

The new company

Newco will focus on exploring nickel, gold, and lithium at projects in Western Australia and Tasmania.

The current Jindalee CEO, Karen Wellman, will lead the NewCo team in the position of managing director.

The company hopes to complete the demerger in the September quarter, subject to approval.

Jindalee share price snapshot

The Jindalee share price has gained 70% in the past year while it has soared 115% year to date.

In the past month, the company's shares have surged 67% although they have fallen 28% in the last week.

For perspective, the ASX 200 Resources Index has returned nearly 17% in the past year.

Jindalee has a market capitalisation of $270 million based on its current share price

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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