Almaden’s early stage exploration projects, royalty interests and certain other non-core assets will be transferred to a newly incorporated company ("Spinco"). Shareholders of the Company will receive shares in Spinco in proportion to their shareholdings in Almaden. There will be no change to shareholders’ existing interests in the Company.
Spinco will hold the following key assets:
a 2% Net Smelter Return ("NSR") royalty on the Company’s Tuligtic property in Mexico, which hosts the Company’s Ixtaca gold-silver development project;
a 1.5% NSR on the Caballo Blanco gold deposit in Mexico, a development project currently operated by Goldgroup Mining Inc.;
a 2% NSR on the Elk gold deposit in Canada, an advanced exploration project currently operated by Gold Mountain Mining Corp.;
a portfolio of 21 additional NSR royalties on exploration projects in Mexico, Canada and the United States identified through the Company’s past prospect generator activities;
a 100% interest in the El Cobre copper-gold porphyry exploration project in Mexico and the Willow copper-gold porphyry exploration project in Nevada, in addition to a portfolio of 20 other exploration projects, many of which are located in eastern Mexico in geological environments similar to the recent Ixtaca and Caballo Blanco discoveries; and
sufficient working capital to satisfy stock exchange requirements.
The Ixtaca gold/silver project will remain in Almaden.
It is intended that, as part of the reorganization, Almaden’s current shareholders will receive shares of Spinco by way of a share exchange, pursuant to which each existing share of Almaden is exchanged for one "new" share of Almaden and 0.6 of a share of Spinco. This exchange is intended to be taxed in a manner similar to a return of capital on the shares of Almaden. Warrantholders of Almaden will receive warrants of Spinco which are proportionate to, and reflective of the terms of, their existing warrants. The reorganization will be effected by way of a plan of arrangement under the Business Corporations Act (British Columbia), and must be approved by the Supreme Court of British Columbia and by the affirmative vote of 66 2/3% of Almaden’s shareholders in attendance at a shareholders’ meeting. The Company intends to apply for a listing of the shares of Spinco on the TSX Venture Exchange ("TSX-V"). Any such listing will be subject to Spinco fulfilling all of the requirements of the TSX-V.
The Company is undertaking the reorganization in order to focus on the development of its Ixtaca gold-silver deposit. The Ixtaca deposit is part of the Tuligtic project, comprising approximately 15,000 hectares, located in the state of Puebla, Mexico. The spin-out transaction should also maximize shareholder value by allowing the market to value the Company’s flagship Ixtaca gold-silver deposit independently of its early stage mineral exploration and royalty business. In addition to allowing the Company to continue to focus efforts on developing Ixtaca, the Company is confident that having a separately funded and managed mineral exploration and royalty business will accelerate development of these exploration projects and give scope for new acquisitions.
Spinco will be managed by Almaden’s current team of officers. Its board will include directors who are independent of Almaden.
The strategic reorganization remains conditional on the approval of final documentation by the Board of Directors of Almaden, approval of the strategic reorganization by the TSX, approval of shareholders of Almaden, and approval of the Supreme Court of British Columbia, among other things.
Additional details of the spin-out transaction will be included in an information circular to be mailed to shareholders of Almaden by mid-November 2014 in connection with the Company’s shareholders meeting referred to above. That shareholders’ meeting is expected to be held in mid-December 2014 and the strategic reorganization is expected to close before the end of December 2014.
