Gindalbie Metals shares jumped over 100% after the company announced two significant transactions including the demerger of its wholly owned Coda Minerals via a capital reduction and the acquisition of Gindalbie’s 100% shares by Ansteel for cash consideration. At the time of writing, 11 March 2019 (12: 34 PM AEST), GBG is trading at $0.025, up massively by 108.33% or $0.013.
In today’s announcement to Australian Securities Exchange, Gindalbie Metals Ltd (ASX: GBG) told that it has executed a Scheme Implementation Agreement with its largest shareholder Angang Group Hong Kong (Holdings) Limited, commonly known as Ansteel, which has agreed to acquire the remaining shares in Gindalbie for a cash consideration of $0.026 per share. Ansteel currently holds 35.71% interest in Gindalbie Metals, representing 535,492,521 of its total shares.
Iron Ore Explorer, Gindalbie, stated the acquisition offers represents a highly attractive cash premium as its shares have not traded at or above the proposed price of $0.026 in more than past 12 months. But after watching GBG’s today performance on ASX, it seems bulls will override the price proposed by Ansteel.
The investors also seemed to favour the demerger decision of the company which includes the separation of its wholly owned subsidiary, Coda Minerals Ltd, via a capital reduction. That means once the demerger gets implemented Gindalbie shareholders will be entitled to receive Coda Shares in exchange of their holding in Gindalbie on a pro-rata distribution basis at a ratio that is yet to be confirmed.
The aftermath of both the transactions explains the separation of two flagship projects of the company that include, Gunson Copper-Cobalt Project located in South Australia and Karara Iron Ore Project located in Western Australia. It’s because Coda Minerals Ltd holds the rights to a significant and strategic portfolio of tenements in South Australia and after this demerger, it would be empowered to further exploit exploration opportunities led by the Mt Gunson Copper-Cobalt Project without uncertainty created by Gindalbie’s $231 million worth of contingent liabilities.
While on the other hand, Ansteel which is a partner to the Gindalbie’s Karara Iron Ore Project, holding 52.16% of the project, can solely run the project post-Gindalbie’s acquisition and its demerger with Coda.
Let’s have a look at some facts and figures to the transaction.
The report read that both, the Acquisition Scheme and the Demerger Scheme, as well as the capital reduction to effect the Demerger are subject the approval of Gindalbie shareholders. However, Gindalbie’s Independent Directors, the autonomous body of Expert and the company’s major shareholder Ansell have already given their Aye to the demerger transaction.
If the demerger goes through, Coda will hold the Mt Gunson Assets and $10.64 million in cash along with the Gindalbie’s current leaders, including Non-Executive Chairman Keith Jones and CEO Chris Stevens.
To assure the shareholders about the profitability of the transaction, Gindalbie’s Independent Directors stated that as per their belief the Demerger would enable Gindalbie shareholders to retain exposure to the exploration and development of the Mt Gunson assets, via their shareholding in Coda, without the legacy issues of Gindalbie. The Independent Directors believe the structure of the Demerger is the best and most value-creating way to achieve this objective.
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