Hannans rewards shareholders with new company
THE BOURSE WHISPERER: ASX listed resources company Hannans Reward is seeking shareholder support for the creation of a new iron and manganese focussed company.
The new company, to be christened Newco, will be fashioned using Hannans’ existing iron and manganese projects as foundation assets.
Hannans shareholders on the register as at 5pm on Friday 24 June 2011 (Record Date) will own 100% of the soon to be incorporated company.
Hannans will provide Newco with funding to implement its strategy.
Hannans Reward director Damian Hicks explained the reasons behind the transaction in the company’s ASX announcement saying, “The incubation of a focussed iron and manganese company is an exciting development.
“Importantly if you were a Hannans shareholder as at close of business last Friday (24 June 2011) you still own 100% of the Hannans assets however they will now be housed in two companies.
“For example, if you owned one Hannans share last Friday you will now own one Hannans share and one Newco share.”
Hicks continued saying the company’s new vision is to build a major iron and manganese business.
This will be done initially within Australia and later through the pursuit of overseas opportunities.
“We believe the demand for steel input materials such as iron and manganese will remain strong over the long term,” Hicks said.
“If the Newco assets are high quality and well located with regard to infrastructure Newco will perform well for shareholders.
“Once Newco has reached a critical scale it will likely raise additional capital through an Initial Public Offering on the ASX, TSX or AIM.”
One of the foundation projects for Newco will be the 3,000 square kilometre Jigalong manganese project located in the South East Pilbara manganese province of Western Australia adjacent to FerrAus’ iron ore project.
Hicks pointed to the ASX announcement by Atlas Iron that it intends to purchase FerrAus to extract additional benefits by combining their respective assets highlights the themes behind the Newco formation are sound
“You need to scale up to build a meaningful presence in the iron and manganese business,” he explained.
“It’s not that long ago that Hannans and Warwick Resources commenced this consolidation process in the SE Pilbara in June 2009 and this latest takeover by Atlas Iron a continuation of that theme.”
The Hannans announcement noted Atlas Iron owns the iron rights on the majority of the Jigalong project tenements.
The Jigalong manganese project is located 5kms from Consolidated Minerals
Coobina chromite mine, 40 kilometres south of Minerals Resources Nicholas Downs manganese mine and 150km south of Consolidated Minerals Woodie Woodie manganese mine.
The company anticipates the next round of drilling to test manganese targets at the Jigalong project will take place this September.
The company identified one of the driving reasons behind this proposal to be strategies to successfully develop a precious & base metals company are quite different to those required to build a successful bulk minerals business.
The latter must have a port and rail infrastructure solution to transport a saleable product to the coast.
Deals required for companies to access that infrastructure are quite different to deals associated with exploring for high grade nickel and gold deposits.
Hannans said it has separated the two businesses to simplify that process.