The spinout company will take ownership of a 2% net smelter return royalty on any future production, in addition to C$1 million in marketable securities and C$500,00 cash, which will form the new company’s initial assets.
The decision to spin out Great Bear Royalties allows shareholders to secure additional long-term value through royalty interest, the parent company said in a statement.
Great Bear Royalties will operate as a reporting issuer but will not list on a stock exchange at first, the company said. The new firm will “evaluate all strategic opportunities available to enhance value,” it told shareholders.
The spinout comes after a stellar year for Great Bear Resources that saw its stock soar nearly 300% after a series of exciting drill results.
Great Bear is advancing the Dixie gold project in the historic Red Lake mining district of Ontario with a massive 200,000-metre drill program currently taking place at the property.
The arrangement remains subject to shareholder approval of at least two-thirds of voting members at a special meeting yet to be announced.
Great Bear Resources also said it had granted 710,000 stock options to directors, employees, consultants and advisors at an exercise price of C$8.67 for a five-year period.
Shares of Great Bear last traded at C$8.67 in Canada and US$6.62 over the counter.