Spin-Out Strategy Gingerich is taking a page from the playbook of another disastrous junior exploration play he was involved with as a director: East Asia Minerals (down 87.85% in the trailing 1-year period). East Asia had a bunch of assets no one cared about so they spun out 3 new companies onto the Venture exchange: Sangihe Gold, Barisan Gold, and East Asia Energy. https://www.eaminerals.com/s/NewsReleases.asp?ReportID=445783&_Type=News-Releases&_Title=East-Asia-Minerals-Announces-Intention-to-Spin-Out-Assets-to-Shareholders Not sure all the spin-outs were completed successfully, but the ones that were completed are performing just as badly as East Asia Minerals. Disastrous all around.
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It'll work something like this: for each 4 shares of AXI you own you'll be given a dividend of 1 share each of two new venture exchange companies, Tuktu Iron Ore and West Melville Nickel. Each company will complete a $5 to $10 million financing, in which the existing AXI shareholders will have a right to participate.
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This move is all about raising cash: brokers are more willing to support a new company with a blank slate, investment bankers like the fees that IPO's generate, and AXI has a wide retail shareholder base that can be pumped for more cash in a rights offering.
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AXI still doesn't have the cash from the debenture in its accounts. Another week or two?
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Tag-Along Right: I'm not sure AXI can assign its 49.9% interest in Tuktu or Roche Bay into a new vehicle without buying out Roche Bay plc's share. Roche Bay plc has a clear tag-along right in the 2009 agreement. We shall see.