According to Mr. Bennett, S2 will be ‘a new exploration company with a good ground position, an advanced gold project, $20 million in cash in what is otherwise a difficult market, an exploration team and also a fairly unique position in Finland and Sweden.’ The plan is for the company to have a diversified asset base including nickel, gold and other precious metals. Having some dry powder is definitely a good thing in this environment as prices should be down and competitors are much more in the ‘sell’ mode. Of course, $20m only goes so far. The new company will be listed on the Australian exchange.
Shareholders are set to vote on both the deal and the spinoff in early September, but there is little concern of it not obtaining approval. Both boards have urged shareholders to support the deal and some of their largest shareholders have also indicated support for the deal.
These mining plays are often considered lottery tickets and having good, experienced management is critical to success. The overall environment is certainly tough right now, but maybe that is the time to start putting money to work? Perhaps some locals can weigh in on this one…
Disclosure: Author holds no position in any stock mentioned.