Update: Almaden Defers The Vote On Spinning Off Certain Assets

| About: Almaden Minerals (AAU)
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Summary

Almaden has delayed the vote on spinning off its exploration properties and royalty business.

This is a surprise, and I'm not convinced the reason given by the company is the "real" reason for delaying this vote.

The investment thesis isn't impacted by this update, but it would be a good thing if Almaden could remove some uncertainty.

Almaden Minerals (NYSEMKT:AAU) has announced it has deferred the general meeting which was required to let the shareholders vote on a potential spin-off of a part of the company's assets. This is quite a surprising move, and I don't really buy the company's reason "to save the costs of an additional meeting". Even though it's obviously positive to see a company trying not to waste any money, I'm not sure an additional general meeting would have been that expensive, and it could easily have been funded with its existing working capital position of over $11.5M.

The plan was to spin off early-stage exploration assets as well as royalties into a new company; the Almaden management team thinks this is the best way to create additional value, as the market doesn't seem to care about anything else but the Tuligtic project in Mexico. I do believe a spin-off could create value, but Almaden's main corporate objective should be to advance all projects. A spin-off could be a good idea, but the SpinCo should be well-capitalized in order to be able to continue to conduct exploration activities at its assets. I do agree with the Almaden management that the Tuligtic project deserves some more attention, but I'm not sure a spin-off will increase the shareholder value in these difficult times.

I still think the creation of a SpinCo could be a positive thing, but maybe the Poliquins can improve the quality of the assets in the SpinCo. I hope to see more details about the timing of the business plan, as it could be interesting to pick up some Almaden shares right before the company spins off the company with the early-stage exploration assets.

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