Kanon/CMoly Spinoffs will unlock $millionsNG recently announced a corporate restructuring whereby, a separate company, Pacific Kanon Gold Corp will be spun-off as a publicly traded company which will include 5 advanced gold projects of which Mt Penyk will be the major priority.
A second equity spin-off for the copper/moly projects will also be spun-off this fall.
Kanon Gold Spin-off
This spin-off is effectively an alternative method of financing five of the advanced gold properties owned by Kanon rather than issuing further shares in the parent companies. NGG will retain 25 to 50 % of these two new public companies, thereby assuring that NGG shareholders will continue to benefit from the exploration and development of these properties.
The Mt. Penck property is the key property at present in the Kanon and ultimately the Kanon portfolios, and a major exploration program to define a NI (National Instrument) 43-101 resource will recommence as soon as financing arrangements are completed.
A summary of the recent exploration results suggests that Kanon will be an advanced gold mining company with an excellent chance of proving up sufficient gold, as to move to early production....
... a very high-grade gold results were recently announced in a hand dug trench in a previously relatively unexplored part of Mt. Penck property. This trench, which is partly along strike of the mineralized zone returned 24 metres (m) at 34 g/t (grams per tonne) gold including a three-metre interval which averaged 180 g/t gold.
......Several zones of mineralization defined, all open in most directions;
.....Drill intercepts in 2005 of 72 m of 1.79 g/t gold, 14 m of 2.82 g/t gold, two m of 36.7 g/t gold and six m of 3.67 g/t gold;
Bulldozer trench intercepts in 2004-2005 of 18 m of 3.7 g/t gold, eight m of 7.72 g/t gold, 18 m of 1.72 g/t gold, three m of 16.32 g/t gold and 13 m of 2.65 g/t gold;.
.....Twenty-eight diamond core holes were completed during 2006 and early 2007, which defined widespread two-gram-per-tonne to three-gram-per-tonne gold mineralization at the Kavola East prospect.
With the conclusion of the financing for Kanon, exploration will be enhanced with the continuous operations of two diamond core drill rigs.
Judging by the advanced nature of the Kanon projects, an initial market cap in the $20 to $25 million range might be expected.
COPPER-MOLY Spin-Off
An excellent summary of the Copper/Moly projects ( 3 ) can be viewed at this web link............
https://www.newguineagold.ca/CopperMoly/CopperMoly%20Presentation%202007.pdf
As can be seen, the Copper/Moly project is quite advanced, with $20 million in exploration having already been completed.
The new Copper/Moly spin-off will rapidly complete all of the additional drilling necessary for a full 43-101 resource estimates and then immediately proceed to a feasability.
The intercepts are quite extended, and the moly credits will substantially reduce the cash costs and should enable the project to move to open pit production.
Judged by the consistent and extended drill intercepts and the strike dimensions, the copper/moly resource should be quite large and well within commercial dimensions.
Given its advanced nature, my rough reviews suggest that the copper/moly spin-off should have an initial market cap in the $30 to $40 million range.
Eventual market caps of these two new publicly traded equities would depend on exploration success and a move to production.
If that were the case, the resource size could mean a market cap above $500 million.
I took a position here after reviewing its excellent cash flow prospects from the new Sinivit gold mine.
However, as I look at the other dozen or so projects that are being spun-off over the next few months, I am convinced that those spin-offs will unlock substantial value that has yet to impact the current market cap of NGG...perhaps initially, of the order of $40 to $50 million net to NGG.
Based on my experience with other advanced spin-offs, the market cap of NGG will move forward agressively, not only on achieveing full gold production at Sinivit in Oct/07, but especially so when the 2 new spin-offs are publicly trading.
News on the spin-off details of Kanon should be coming out soon..