Great Bear Resources (GBR.V) has provided an update on its plans to spin off a 2% NSR on the Dixie gold project in Ontario’s Red Lake District as the company has entered into an agreement with a newly incorporated subsidiary Great Bear Royalties. Great Bear Royalties will have C$1M in shares, C$0.5M in cash and a 2% NSR as its only assets and Great Bear Resources plans to distribute the shares in the RoyaltyCo to its own shareholders.
The Plan of Arrangement (which will have to be approved by Great Bear shareholders in a special shareholders meeting on a later date) will see the distribution of 100% of the shares of Great Bear Royalties to the GBR shareholders in a 4:1 ratio. Per 4 shares of Resources, shareholders will end up owning 1 share of Royalties, which will remain a private company (for now). Keeping Royalties private means that anyone who wants to get a piece of it must own Great Bear Resources to get the private SpinCo and this should help to keep the share price strong as anyone who is selling before the distribution date will not be eligible to receive shares in Great Bear Royalties.
Disclosure: The author has a long position in Great Bear. Great Bear is a sponsor of the website.