NSGold Corporation (NSX – $0.46) has finally obtained all the necessary documents from the securities commissions to proceed with the spin-out of its Mexican silver assets into NSX Silver Inc.
The TSX Venture Exchange has already approved the listing of the new NSX Silver shares, but an exact date for the first quotation still hasn’t been set, although this will only be a matter of days.
In April 2011, NSGold signed a definitive option agreement to acquire 100% ownership of the Dios Padre Property, including the historic Dios Padre Silver Mine, located in the State of Sonora, Mexico.
Three months later, NSGold initiated the process to split its silver assets, located in Mexico, and its gold, base metals and rare earths properties, located in Nova Scotia, Canada. NSGold’s management took this decision for two main reasons. First, the share price of NSGold at the time only reflected its cash position and its Nova Scotian assets, which made it difficult to execute corporate transactions at a fair price. And secondly, some potential investors were only interested in investing in either a silver company or a gold company and not both.
As a result, NSX Silver Inc. was incorporated in August 2011 as a wholly-owned subsidiary of NSGold. Prior to the distribution record date of the new shares, NSX Silver will acquire all the Mexican mining concessions and silver exploration activities from NSGold.
On the distribution record date, NSGold’s shareholders will receive one share of NSX Silver Inc. for every share of NSGold Corp. they own at that moment. The Board of Directors and management team of both companies will be identical, with overheads and total cash split equally.
NSGold recently completed a Phase I exploration program at Dios Padre through mapping and sampling on the surface as well as through conducting geophysics and geochemical work. First results identified, next to the Santa Gertrudis open pit, four more potential gold-silver-copper zones.
During Phase II, a drill program will be initiated aimed at determining the geometry and grade of these zones. An NI 43-101 compliant resource estimate is expected to be completed during the second half of this year.
After the spin-out, NSX Silver will have approximately $4 million in the bank, which is enough to complete the Phase II program and to further advance Dios Padre in the coming quarters.
Based on historic exploration programs, sampling and historic resource estimates, the Company targets to get a resource estimate of at least 60 million ounces of silver at Dios Padre’s primary zone, which can be mined relatively easily, and thus cheaply, as an open pit. Moreover, it potentially holds millions of ounces more in the underground and other high potential zones.
The spin-out is a significant event, because once it’s completed, both Companies will again be able to fully concentrate on developing their assets.
We look forward to the first results from the Phase II program at Dios Padre and to the further developments at the Mooseland Gold Project.
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