MetalsTech decides to hang onto its Canadian cobalt project
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Junior explorer MetalsTech has changed its mind about spinning out its Canadian cobalt project into a separate company.
MetalsTech (ASX:MTC) told investors after market close on Thursday it had “recognised the strategic value” of keeping its Bay Lake cobalt project in Ontario — and the planned demerger was now off the agenda.
Shareholders were due to vote on a spin-out of the project into “iCobalt Limited” at a general meeting today.
MetalsTech was undertaking the demerger to accelerate exploration of Bay Lake as well as complete the acquisition of the Rusty Lake silver, cobalt and nickel mine, which is also in Ontario.
The company originally listed as a lithium explorer, but in March last year came across the Bay Lake project, which executive chairman Russell Moran previously told Stockhead was “too good to turn down”.
But MetalsTech had not had success in lifting its market value on the back of the acquisition and decided to demerge the cobalt assets to return to its original sole focus of lithium.
The company has entered a trading halt this morning pending the release of announcement on its corporate restructure and capital raising.
Newly appointed managing director David Riekie told Stockhead that the decision to cancel the spin-out was largely due to the rising cobalt price and the prospectivity of the projects.
“The value metric that they came back with, and I couldn’t disagree with, is the fact that when they first looked at doing this some time ago, a lot of these prices for cobalt were substantially less,” he said.
The price of cobalt recently hit a decade-high of $US95,000 ($123,729).
MetalsTech will also still go ahead with the acquisition of the Rusty Lake project, Mr Riekie said.
“From our perspective that would be something we would definitely want in the portfolio,” he said.
Now that MetalsTech is not demerging the cobalt assets, the company expects to complete the acquisition within the next month.
“In any other scenario we would have seen the company not listed until probably early June,” Mr Riekie said. “We’re in advance of that. So I think that the vendors would be happy with the certainty that they’ve got with listed paper and cash in the hand.”
MetalsTech has expanded its technical management team and restructured the board to focus on cobalt and lithium exploration.
Executive director Gino D’Anna will step back to a non-executive role and Mr Moran will become non-executive chairman. Shane Uren and Mike Valetta will give up their board seats.
Mr Riekie has been named managing director and Cherie Leeden has been appointed as technical director (Canada). Mrs Leeden was previously appointed as the vice president of exploration for iCobalt.
As a result of the change in corporate strategy, MetalsTech also won’t be issuing performance rights to Mr Moran, Mr D’Anna and Mr Uren.
The resolutions were also due to be put to a shareholder vote at today’s meeting, but the company is instead implementing updated performance rights hurdles.