Australian Strategic Materials (ASM) would continue to pursue opportunities and financing for the shovel-ready $1 billion Dubbo Project after its planned separation from Alkane Resources, shareholders are being told.
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Alkane Resources is seeking a demerger of its wholly-owned subsidiary, ASM, and its separate listing on the Australian Securities Exchange (ASX).
The move requires the approval of the ASX and Alkane Resources shareholders who will vote at a virtual extraordinary general meeting on July 16.
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The Dubbo Project is based on a large in-ground polymetallic resource of zirconium, rare earths, niobium, hafnium, tantalum and yttrium at Toongi.
ASM reports of specialty metals and rare earths being "critical for advanced technologies in high-growth sectors, including electric vehicles, clean energy, healthcare and robotics".
The Dubbo Project is ready for construction, subject to financing.
This week a demerger booklet was released to the ASX.
It includes a letter to shareholders from chairman of the Alkane Resources board, Ian Gandel.
"ASM will be demerged with its cash reserves and no bank debt," he said.
"All interests in the Dubbo Project and associated assets, including land and water rights, together with ASM's investment in South Korean metals technology company RMR Tech Corporation, will be 100 per cent owned by ASM following the demerger.
"ASM will have a focused board and management team, a strategy to pursue the advancement of the 'clean metal' metallisation technology, potential value-enhancing opportunities in relation to the Dubbo Project and will continue to be involved in off-take and financing discussions, including those already underway in relation to the Dubbo Project."
In April, Alkane Resources boosted ASM's cash balance to $20 million.
Mr Gandel said the Alkane Resources board considered the demerger to have the potential to "unlock shareholder value", streamline its Australian gold business and create a newly- listed critical materials company, ASM.
The demerger booklet confirms the importance of shareholders in the process.
"If Alkane shareholders do not approve the demerger resolution or any of the other conditions precedent are not satisfied or waived, the demerger will not proceed," it states.
The booklet, which can be found at www.alkane.com.au, outlines the advantages, disadvantages and risks of the demerger.
It reports of "significant feedback" from people wanting to invest in one of Alkane Resources' divisions but not the other.
"Eligible shareholders will retain exposure to both businesses through the transaction," the booklet states.