Join our daily newsletter At The Bell to receive exclusive market insights
- Firefly Resources (FFR) has revealed plans to sever its Oakover Manganese Project in WA and turn it into its own separate ASX-listed business
- The new business will be named Firebird Metals and will have a separate board and management team to Firefly
- Under the demerger plan, 25 million Firebird shares will be distributed to Firefly shareholders
- Firefly Managing Director says the demerger gives the company the opportunity to unlock the value of the Oakover project without shifting its focus of gold exploration in WA
- Firefly investors will have first dibs at the Firebird IPO, which is slated for the first quarter of 2021
- The demerge still remains subject to investor approval and a short-form prospectus to be issued by Firefly for the new project
- Firefly shares closed 6.25 per cent higher today at 17 cents each
Firefly Resources (FFR) has revealed plans to sever its Oakover Manganese Project in WA and turn it into its own separate ASX-listed business.
The gold explorer said the decision to demerge from the non-core manganese asset comes after consultation with the ASX. The new business will be called Firebird Metals and will have a separate board and management team to Firefly.
Under the demerger plan, 25 million shares in the new company will be distributed among Firefly shareholders. On top of this, FFR investors will have first dibs at the Firebird Initial Public Offering (IPO), which is slated for the first quarter of 2021.
Why the break-up?
The Oakover project was once Firefly’s flagship project, back when the company was known as Brumby Resources. Between 2009 and 2016, Firefly invested over $4 million into Oakover.
However, while manganese has remained a valuable global element, Firefly has since shifted focus to its Yalgoo Gold Project in Western Australia.
Still, with all the work completed at Oakover over the last decade, the project has an inferred resource of 64 million tonnes at 10 per cent manganese.
Now, South Africa — the world’s current largest manganese exported, is facing major logistical, supply, and fiscal regime challenges. Moreover, demand for manganese is growing as the world shifts to greater demand and understanding of how the element is used in the supply of lithium-ion batteries.
As such, the opportunity is now present for Oakover to become an even more valuable mining asset.
Firefly Managing Director Simon Lawson said today’s proposed demerge means shareholders can still receive value from the Oakover project without the Firefly management team needing to shift its focus off gold exploration.
“With the market currently ascribing little or no value to Firefly on the Oakover Manganese Project, this demerger represents an outstanding opportunity to release substantial value to Firefly shareholders as a standalone ASX-listed vehicle,” Simon said.
“The demerger will enable shareholders to retain exposure to this high-quality manganese exploration and development opportunity, while also allowing Firefly management to focus its efforts on the flagship Yalgoo Gold Project and drilling of our exciting Paterson Province assets in early 2021,” he said.
Nevertheless, while Firefly has justified its decision to demerge the Oakover project, the deal still remains subject to investor approval and a short-form prospectus to be issued by Firefly for the new project.
Of course, the demerger is also contingent on the Firebird IPO being successful.
Firefly shares closed 6.25 per cent higher today at 17 cents each. The company has a $51 million market cap.
