February 4, 2022
Mawson Gold Ltd. (TSX:MAW, BUY, C$0.50 target, David A. Talbot) announced that its Australian spinout company, Southern Gross Gold, has closed a private placement for total gross proceeds of A$2.725M, in addition to the C$8M raised in December 2021 (read more). Proceeds were raised through the issuance of 17,031,250 ordinary shares at A$0.16/sh. We note that these proceeds are to be used for exploration purposes in Australia, and for general and working capital purposes, including the funding of a proposed initial IPO on the ASX for Southern Cross. We believe that the spin out of an independent, dedicated exploration company is expected to be ideal for shareholders of both companies. Mawson will now redouble its focus to the exploration and pre-development of its flagship, 100%-owned Rajapalot Au-Co project in Finland, which already contains ~1Moz AuEq of inferred resources and has the EU’s 7th largest cobalt resource. Also, an 8,000m regional diamond drill program is ongoing at the project and expected to last during Q1-Q2/22. Moreover, we note that the Australian assets expected to be spun-out into Southern Cross include 1) its 100%-owned Sunday Creek project in Victoria and Mount Isa projects in Queensland, 2) Redcastle and Whroo joint ventures in Victoria, and 3) 10% shareholding of the ASX-listed Nagambie Resources Ltd. (TSXV:NAG, Not Rated), which includes its Right of First Refusal (ROFR) over a 3,300 km2 tenement package held by Nagambie in Victoria. Overall, we believe the Southern Cross spin-out is host to several key attributes which include 1) its all-Australian focus, 2) dedicated management team and board of directors, led by Mawson’s Executive Chairman, Michael Hudon, 3) an expectation to add value for MAW shareholders, and 4) a highly prospective, underexplored project portfolio. Read more
