Palisades Goldcorp (TSXV: PALI) has announced a plan to dividend out certain shares of New Found Gold (TSXV: NFG) as part of plan deemed to be a “return of capital” transaction for shareholders.
The arrangement will see $20 million worth of New Found Gold shares issued to shareholders on a pro-rata basis, with the transaction being subject to shareholder and court approval.
Palisades management all but said that the transaction was a result of wanting a payday, with CEO Collin Kettell stating, “With management and insiders collectively holding approximately 45% ownership, our interests are strongly aligned with those of our shareholders.”
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The issuance is said to bring total funds returned to shareholders to $76 million.
The transaction is substantial for Palisades, given that as of July 1 the company is indicated to have a total portfolio value of $120 million, although investments on the book as per their most recent financial filings indicate the company holds investments worth $102 million, alongside certain exploration and evaluation assets. New Found Gold makes up the bulk of that figure at $75.1 million, with the value of that investment believed to have since increased.
Palisades is currently believed to hold a 18.9% interest in New Found Gold, prior to this transaction being announced.
The transaction is said to be tax efficient for income tax purposes.
Palisades Goldcorp last traded at $1.67 on the TSX Venture.
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