Tanzania: Nyota Mulls Spinning Off Mineral Business, Investing In Other Sectors

Posted on : Tuesday , 1st December 2015

Nyota Minerals Ltd Monday said there is an opportunity “now more than ever” to acquire new projects and to pounce on opportunities that can generate near-term revenue and said it is considering investing in other sectors and potentially spinning off its mineral business in the future.

Nyota currently has a nickel and copper project in Italy and further exploration in Ethiopia but revealed the potential diversification plans ahead of its annual general meeting to be held later Monday.

“With the extended downturn in the mineral sector, particularly in the latter half of 2015, there has been a shift towards greater flexibility and a commensurately more compelling basis on which to secure acquisitive and developmental transactions,” said the company.

“In simple terms now more than ever there is an opportunity for a prudent acquisitive strategy to be implemented to build a stronger resource development business, including advanced exploration and development assets and/or assets already, or close to, producing revenues,” it added.

Nyota said that financing for any exploration projects “remains scarce” but reiterated that the company is debt free and has minimal exploration commitments, making it an “attractive potential partner” for companies looking to commercialise their projects in the current difficult climate.

However, it also said it is considering investing in “other sectors” without being more specific, which may lead to the company drastically restructuring the company.

“Alongside expanding our mineral resource interests, we are also considering other sectors which might enable the Company to use its market listings in London and Australia separately to rebuild shareholder value,” said Nyota.

“In particular there may be opportunities for separating an enlarged minerals business into a separately UK listed vehicle and then developing the remaining ASX entity in a different strategic direction,” it added.

The potential change in direction comes after the company had a very difficult financial year ended June 30, when its pretax loss narrowed to AUD3.2 million from AUD3.8 million a year earlier.

During that financial year, Nyota was focused on exploring the Brantham and Towchester exploration licenses in Ethiopia, but that exploration work was in vain because the mining licence application, submitted in April 2014, was rejected by the government in January, and the board decided not to appeal the decision. Nyota then withdrew financial support for Brantham and Towchester at the end of April.

Nyota was previously the majority owner of the Tulu Kapi gold project, but sold its stake in the last financial year and returned the proceeds to shareholders – leaving it with little in the form of assets.

Following that divestment from Tulu Kapi, which is now managed by fellow AIM-listed Kefi Minerals PLC, Nyota acquired 70% of the Ivrea nickel project in the Piemonte region of Italy, which it sees as its foundation to “rebuild the company in the mineral resource sector without causing financial stress” to itself.

Importantly, shareholders at the AGM Monday are also voting on a series of proposed incentives that the company wants to offer its board to ensure the company is heading in the right direction. Under those incentives, Nyota proposes giving away just under a 5% stake in the company to three directors, including its chief executive, for hitting certain targets over the next three years.