Impact: Positive
Power Nickel (PNPN) has agreed to spin-out its Golden Ivan property and certain Chilean exploration assets (Zulema and Tierre de Oro) through Chilean Metals Inc., a wholly-owned subsidiary. PNPN will continue to own the other mining concessions in Chile related to the Hornitos, Palo Negro and Tabaco properties. Deal terms include the transfer of one new Power Nickel share and 0.05 of a Spinco share to each existing PNPN shareholder. The spin-out would provide investors with an ownership stake in two separate companies. We give a value of C$20M, or ~C$0.11 per PNPN share, for the Spinco assets, based on current market valuations for companies with similar exploration assets, and this is already included in our PNPN NAV and target price. In our view, this is a positive, albeit expected transaction for Power Nickel (read initiation report). The spin-out should allow Power Nickel to remain focused on advancing exploration efforts at Nisk, while allowing investors to retain exploration upside potential across the other exploration projects. Looking ahead, we anticipate the receipt of further positive assays results from the ongoing drill program at Nisk as broad intersections of high grade Cu continue to demonstrate that the zone hosts a significant expansion potential (read note).