Red Metal spins out Maronan share bounty for holders

Red Metal Limited has delivered a high-value Easter surprise, rewarding its loyal backers with a direct slice of one of Australia’s most promising silver and copper-gold development plays. The company has unveiled plans for a major in-specie distribution of its ASX-listed Maronan Metals shares, a tactical move aimed at unlocking the full potential of both entities.

Maronan currently hosts an impressive mineral resource estimate of 121.9 million ounces of silver,271,000 tonnes of copper and 760,000 ounces of gold.

Red Metal currently controls 88.5 million shares in Maronan, representing a chunky 35.2 per cent stake in the total shares on issue. Under the proposed plan, subject to shareholder approval, Red Metal will distribute the lion's share of that holding directly to its own investors.

If approved, eligible Red Metal shareholders will bag one Maronan Metals share for every 5.25 Red Metal shares held at the record date on May 14. Following the distribution, Red Metal will retain a smaller, residual interest of approximately 15.4 million shares.

The board has unanimously recommended the deal, viewing it as a genuine win-win. By handing the shares directly to investors, the distribution is expected to diversify Maronan’s shareholder base and beef up trading liquidity. The move will also make it a far more appealing investment for larger funds, as it nears a development decision.

Notably, the spin-off clears the decks for Red Metal to accelerate its primary objective, the giant Sybella rare earth element discovery near Mount Isa in Queensland. Management believes the move will allow the true value of Sybella to be realised in the market without any of the valuation confusion often associated with its Maronan equity stake.

Managing director Rob Rutherford said: “ Maronan is gaining recognition as the standout early development opportunity for silver in Australia.”

Sybella is a unique granite-hosted system, with a target area stretching over 12 kilometres long and 3 kilometres wide, offering massive tonnage potential starting from surface. 

The project boasts a sizable maiden inferred mineral resource of 4.795 billion tonnes at 302 parts per million(ppm) neodymium-praseodymium and 28 ppm dysprosium-terbium. Importantly, the resource includes a high-grade weathered granite component of 788 million tonnes at 297 ppm neodymium-praseodymium.

Recent metallurgical tests, using ion exchange, have efficiently enriched the rare earth content and separated impurities from the pregnant leach liquor derived from weak-acid leaching of the Sybella ores. 

Additional optimisation studies leading to the precipitation of an even higher purity mixed rare earth carbonate are now in preparation as the project moves towards pre-feasibility work during the year. 

While Sybella is clearly the flagship project, Red Metal is maintaining a high-impact exploration pipeline across Australia’s premier mineral provinces.

This includes a recent joint venture with Chalice Mining at the Callabonna copper-gold project in South Australia. Additionally, a maiden diamond drilling program at the Pulkarrimarra project in the Paterson Province in WA, partly funded by BHP under the Greenfields Alliance, is awaiting assay results. Pulkarrimarra is located along trend from Rio Tinto’s giant Winu copper gold discovery.

The company is also active at its Pardoo gold and lithium project in the Pilbara, where recent wide-spaced drilling revealed intriguing gold values in sedimentary cover sequences. Furthermore, a new joint venture with Artemis Resources is set to test the standout Sharon Dam gravity and magnetic target in the Nullarbor.

Backed by $4.3 million in cash, Red Metal is sharpening its focus through an in-specie distribution. By handing Maronan’s upside directly to shareholders, the company should now be able to dedicate its full attention to proving up the Sybella rare earths project into a global province, whilst pursuing its other main objective – to find Australia’s next Tier-1 copper deposit.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au