The Firefly Resources Ltd (ASX: FFR) share price is down 6.9% at 13.5 cents in early trade today, chopping into its gains of more than 11% at close yesterday.
The Firefly share price movement follows the gold miner’s announcement yesterday that it had received conditional approval to spin off its manganese focused subsidiary, Firebird Metals Ltd.
At its current share price, Firefly has a market capitalisation of $43.5 million.
What was in Firefly’s announcement?
The company expects shares in Firebird to begin trading under the ticker FRB in the week beginning 15 March 2021.
The pro-rata distribution of Firebird shares to Firefly shareholders will occur at 5pm (Western Standard Time) on 5 March. Registered shareholders will receive 1 share in Firebird for every 12 shares in Firefly they own. Anyone who holds fewer than 2500 shares in Firebird will see those shares automatically sold, commission-free.
Words from the managing director
Firefly managing director Simon Lawson welcomed the move, saying:
Firebird takes the Oakover Manganese Project, a non-core Firefly project with an established historic resource that will represent a low market capitalisation on [initial public offering] IPO…
The successful demerger and IPO of Firebird creates a standalone ASX-listed company with an EV of just over $10 million, offering huge upside as it unlocks the value of this high-quality manganese asset.
Manganese commodity price and forecast
According to the Royal Society of Chemistry, manganese is too brittle to be used as a metal on its own. As such, it is mostly used as an alloy to reinforce steel. Manufacturers use manganese steel for railway tracks, safes, rifle barrels, and prison bars.
The website Trading Economics lists the current commodity price of manganese ore at USD 31.25. Over the past year, manganese reached a low of US$27.90 in December and a high of US$46.39 in May. The website is forecasting the price of the ore to slightly decrease over the course of the year.
Firefly share price snapshot
This time last year, the Firefly share price was trading at 3 cents a piece. At its current price of 13.5 cents, that’s a 366% increase.
Historically, the picture is a little different, however. In January 2017, shares in the company were swapping hands for $1.17. In fact, in January 2011, the share price was an incredible $10.24.
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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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