Another Vancouver miner plans to split its assets into two companies to boost shareholder value.
Earlier this morning, gold explorer International Tower Hill Mines Ltd. (TSX:ITH) said it would spin a number of its Alaskan and Nevadan assets into a separate company this summer.
The new company would be called Corvus Gold Inc., and management plans to take it public with an initial public offering (IPO) at some point in the future, though it didn’t say when.
Tower Hill, on the other hand, will retain its flagship Livengold gold project in Alaska.
"The separation of Corvus as an independent company will provide shareholders with significant leverage to ITH’s current exploration assets," said president and CEO Jeff Pontius. “The proposed spinout enables ITH’s mine development team to fully focus on moving the Livengood project towards a potential production decision.”
With more than seven million ounces of gold in the ground, Livengood could live up to its name if it becomes a mine.
The market responded well to the news this morning, and Tower Hill’s stock jumped $0.26 to $7.55 in initial trades.
Although the move would be Tower Hill’s first spinout since it began trading on the Toronto Stock Exchange, it is more evidence of a trend that Ernst & Young’s Canadian mining leader Tom Whelan pointed to earlier this year.
“I think the unique trend you’ll see [this year] is the return of the single mine IPO,” said Whelan. The division of assets into separate publicly traded entities allows them to be more focused and increase shareholder value, he added.
It’s exactly what giant Barrick Gold Corp. (TSX:ABX) did with its African assets in February when it announced the creation of African Barrick Gold plc.
Exeter Resource Corp. (TSX:CRX), another Vancouver company, did the same thing this year when it spun gold assets into a new explorer called Extorre Gold Mines Ltd. (TSX:XG).
Tower Hill’s share price range during the last week: between $6.76 and $7.29; 52-week high: $8.35; 52-week low: $2.81.