Artemis explains why it wants more cash: ‘You can’t build companies with bottle tops’
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Artemis Resources is selling its shareholding in Novo Resources to mid-tier Canadian gold producer Kirkland Lake Gold for $20.7 million.
Artemis (ASX:ARV) and Novo are partners in the Purdy’s Reward conglomerate gold project south of Karratha in Western Australia’s Pilbara region.
The company flagged the impending sale when it went into a trading halt earlier this week.
Artemis isn’t short of cash though, with roughly $17.4 million in the kitty and no debt at the end of the last quarter.
So why did it want more cash?
As executive director Ed Mead told Stockhead “you can’t build companies with bottle tops”.
“We could sit back and not expand, but we’ve been presented with an opportunity whereby Kirkland Lake Gold takes a bigger stake in the conglomerate story,” he explained.
“It funds us to get into production plus heavily expand exploration and it’s not dilutionary to shareholders.
“I don’t think we were getting any value in our stock for the fact that we had 4 million Novo shares. Nobody cared.”
Shares added 5.3 per cent to trade at 20c on Friday.
Artemis has about five different projects on the go outside of its JV with Novo.
“Between our strategy to go into gold production in July with a number of our gold projects, we really want to push forward with a number of our other nickel, copper and cobalt projects,” Mr Mead said.
“So we’ve grown the business by raising money and putting it into the ground. All our quarterly reports show that we have been spending money to grow the business and that’s why we’ve got a market cap of over $120 million.”
Artemis is selling the shares at $C5 ($5.20) each, which is below Novo’s closing price of $C5.30 on the TSX Venture Exchange on Thursday.
“You could argue that they’ve been trading lower than that too,” Mr Mead said when queried over why Artemis settled on a price of C$5 when they had been trading higher.
“It’s just negotiation about where Novo is trading.”