(Alliance News) - Keras Resources PLC on Friday said it is planning a distribution of its 33.71% interest in Calidus Resources Ltd to shareholders.
Shares in Keras were up 16% at 0.46 pence in London during midday trading.
The firm will hold a general meeting October 14 to vote on the distribution, which Keras plans to make via a capital reduction and repayment of said capital in Calidus shares.
Keras will demerge its entire holding of 723.8 million Calidus shares, which is considered to be a fundamental change of business under AIM rules and thus necessitates the meeting.
As at Wednesday this week, these share were worth GBP11.0 million when calculates using Calidus's mid-market closing price on the Australian Stock Exchange, exceeding Keras' entire market capital at that time of GBP10.5 million.
Accoridng to Keras, "the demerger will release significant value to shareholders and represents the most efficient way to provide shareholders with direct exposure to both Keras's and Calidus's business interests."
Keras Chief Executive Russel Lamming said: "Today starts the release of approximately GBP11 million of value to shareholders with the proposed distribution of Keras's Calidus shares and provides visibility on the potential value of both companies. The board is pleased to participate in this distribution too and recommends that you vote in favour of the resolutions.
"Post the demerger, Keras will be transitioning from explorer to producer and, subject to the grant of an exploitation permit, it is well positioned to become a cashflow positive mining company with the flexibility to consider the payment of dividends."
Lamming added: "Furthermore, we are focused on identifying additional value accretive projects, which offer exposure to near-term cash generation and look forward to updating shareholders on a regular basis."
By Anna Farley; annafarley@alliancenews.com
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Keras Res (KRS)