Pan American Energy intends to spin out its Green Energy Lithium Project in Utah, US into a wholly owned subsidiary (Subco), following a careful review.
The move is expected to allow Pan American to focus on advancing its other projects, including the Horizon Lithium Project and the Big Mack Lithium Project.
Upon transfer of the property to Subco, Pan American intends to distribute the majority or all of the common shares of Subco to its existing shareholders on a pro-rata basis.
It will also pursue a listing of common shares of Subco on a Canadian stock exchange.
Pan American said the transaction would proceed via a plan of arrangement under the Business Corporations Act (British Columbia).
Planned to be completed on or about 15 March 2023, the arrangement will be subject to signing a definitive arrangement agreement, and regulatory and shareholder clearances, among others.
In a press statement, Pan American said: “Pan American believes that its current share price does not fully recognise the value of the property, and that by completing the proposed arrangement, the shareholders of the company will benefit from unlocking the value of the property.”
Pan American CEO Jason Latkowcer said the spin-out will allow the firm to ‘more acutely’ focus human capital and other resources.
Latkowcer commented: “By narrowing our focus to two assets, we believe that we will be able to more effectively advance our exploration pursuits at the Big Mack Lithium and Horizon Lithium Projects.”
“We feel that our Utah assets are not well reflected in the value of the company, and believe that the spin-out will create additional potential value for our shareholders through the recognition of the value of these assets in Subco.”
Pan American, however, said there is no assurance it will proceed with the arrangement.