Evolving Gold (TSX: EVG) (FSE: EV7) said Wednesday that its board has decided the company will spin out its option to acquire the Kiyuk Lake gold property in Nunavut through a dividend transaction.
The Nunavut claims will be transferred to a new company, to be called Prosperity Goldfields Corp, Evolving Gold said. The new entity has already been approved to trade on the TSX Venture Exchange under the symbol "PPG", subject to customary conditions.
Under the terms of the transaction, each Evolving Gold shareholder will receive one Prosperity share for every ten Evolving Gold shares held on the record date, February 16, 2011. After the deal is complete, Evolving Gold expects to hold a rough 48.5% stake in Prosperity.
The deal will allow Evolving Gold to focus on exploring its gold discovery at Rattlesnake Hills, Wyoming, and on its four gold properties in northern Nevada.
According to the company, it believes the fair market value of Prosperity shares to be distributed, at the date of completion, will be $0.15 per share.
Evolving Gold shares bought on February 14th or later will not be entitled to receive Prosperity shares, the company said.
In addition to the spin out, Prosperity also closed a $1.5 million private placement with Evolving Gold, under which Prosperity issued 10.0 million units at a price of $0.15 per unit.