The timing of NSGold’s (NSX – $0.48) announcement that it was going to split the Company in two, couldn’t have been better as we had an interview planned with Mr. Hans van Hoof, the Company’s Chairman and Chief Executive Officer, the very next day.
Obviously, we first discussed the big news that NSGold is going to spin-out its Mexican silver assets into a separate Company called NSX Silver Inc. At the same time it will keep its Nova Scotia gold and rare elements assets into the current NSGold Corp.
The reasoning behind this is simply to increase shareholder value. You see, NSGold’s current valuation doesn’t reflect all its assets. At 51 cents, the market only takes the cash and Mooseland into account, and not Dios Padre’s tremendous potential. All of this makes it more difficult to execute corporate transactions, or raise money, at a fair price for investors. Additionally, the spin-out is also a solution for institutional investors that only want to invest in either gold or silver companies and not both.
The Board of Directors and management team at both companies will initially will be identical, with overheads and cash expected to be split equally between the two companies.
NSGold’s management aims to complete the spin-out by the end of September after the Company receives final approval from the TSX Exchange. Mr. van Hoof indicated this would be an ideal timing as several events could take place in the fourth quarter. Current NSGold Corp. shareholders will receive one new share of NSX Silver Inc. for every share they currently own of NSGold.
During the interview Mr. van Hoof and I also talked about the short term development plans for the Company’s two most advanced projects, Mooseland and Dios Padre. While talking about Dios Padre, Mr. van Hoof explained why he believes that First Majestic Resource, the previous owner of Dios Padre, abandoned the property in 2006, even though NSX now has a substantial resource estimate target on the property.
Mr. van Hoof also sheds some light on whether the Company will need to raise more money in the short term.
Enjoy our informative interview by clicking the play button below to listen to the interview or by downloading your copy of the transcript.
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