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Power Metal Resources proposes process to enable potential dividend payments

Published: 21:57 16 Feb 2021 AEDT

Power Metal Resources -

Power Metal Resources PLC (LON:POW) said it is taking steps to enable distributions such as special dividends to be made to shareholders in future.

The company said that within its project portfolio there are a number of business interests where the board is considering disposals, joint ventures or other commercial agreements, including business interests that may become spun out into separate listed vehicles.

As payment for these potential transactions, Power Metal said it would expect to receive a financial return which will likely include a combination of cash, shares, warrants, royalties or similar.

But as the AIM-listed company has carried forward losses, under UK company law it cannot undertake distributions unless it undertakes a capital reduction exercise, which will require shareholder approval at a general meeting and High Court approval.

“Power Metal continues to advance its business model centred around two key objectives, namely, to seek large scale metal discoveries through project exploration and to pursue financial self-sufficiency by building the company's ‘balance sheet’ working capital,” said chief executive Paul Johnson in the statement.

As of close of business last Friday, 12 February, working capital including cash and listed investments stood at roughly £2.98mln, with no debt.

The company is either on track or ahead of schedule with project funding requirements, Johnson added.

“We now have ground exploration underway across multiple projects and expect to deliver a series of technical findings to the market, including the results of drill programmes, in the near future,” he said.

“With extensive exploration now underway we are also undertaking corporate work that we expect will see some of the Power Metal interests spun-out into their own vehicles listed on recognised stock exchanges in North America and the UK. 

“This will help us to organically build our working capital by exchanging certain project interests for a blend of shares and warrants in the listed entities, and various project level financial interests such as royalties in spun out projects.

“Alongside building corporate working capital, and dependent on the quantum of any proposed spin out transactions the company may wish to undertake distributions to shareholders.”

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