Metalstech (ASX:MTC) share price sinks further 8% on lithium update clarification

It's been a rough week for MetalsTech shareholders.

| More on:
man bending over to look at red arrow crashing down through the ground

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The MetalsTech Ltd (ASX: MTC) share price is plummeting during early afternoon trade on Friday. This comes after the gold explorer provided the ASX with a clarification update on its previously disclosed lithium spinout announcement.

At the time of writing, MetalsTech shares are down 7.89% to 52.5 cents. This means that its shares have lost around 20% in value in the past week, reversing October's gains.

Why is MetalsTech shares nosediving?

On Wednesday, MetalsTech advised that its wholly-owned subsidiary Winsome Resources signed a binding agreement with leading fibreglass manufacturer, China Jushi.

However, today's updated release informed that the entity which executed the binding subscription agreement was a subsidiary of Zhenshi.

The Chinese company will subscribe for up to 9.9% of all shares issued in the proposed Winsome float. This equates to around $2.7 million in value, bringing the total float amount to $5.7 million. The remaining $3 million is being committed by North America's Lithium Royalty Corp.

Zhenshi is the second largest shareholder of the $15 billion market capitalised, China Jushi. Furthermore, Zhenshi has a diversified investment in fibreglass products, stainless steel, wind energy, composites minerals, logistics and real estate.

The issue price for each share is listed at 20 cents apiece which equates to roughly 13.5 million shares.

Metalstech shareholders are expected to receive about $9 million worth of shares in Winsome by a way of distribution. This translates to 45 million Winsome shares (1 free share held for every 3.68 Metalstech shares held).

More on MetalsTech's subsidiary, Winsome

A lithium-focused exploration and development company, Winsome operates three project areas in the James Bay Region of Quebec Province, Canada. It's worth noting that all three projects – Cancet, Adina and Sirmac-Clappier are 100% owned by the company.

Cancet is the Company's most advanced lithium asset, comprising of an area of over 20,000 hectares. The project sits on a favourable geological setting with a well-mineralised spodumene bearing pegmatite.

Winsome is currently undertaking an initial public offering (IPO) to list on the ASX under the ticker code of WR1. It is expected that the company will begin trading on the ASX around mid-November this year.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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.

More on Resources Shares

A miner in a hardhat and high visibility clothing makes a thumbs up symbol.
Resources Shares

4 reasons to buy Rio Tinto shares today

A leading expert forecasts strong growth potential for Rio Tinto shares.

Read more »

Man with rocket wings which have flames coming out of them.
Resources Shares

Why Macquarie expects this ASX All Ords copper stock could surge 38%

With costs coming in below expectations, this ASX All Ords copper stock could rocket higher over the coming months.

Read more »

Iron ore price Vale dam collapse ASX shares iron ore, iron ore australia, iron ore price, commodity price,
Resources Shares

Major miners up as China announces new mega project

Can a new mega-dam absorb iron ore oversupply?

Read more »

A young man sits at his desk with a laptop and documents with a gas heater visible behind him as though he is considering the information in front of him. about the BHP share price
Broker Notes

Leading broker has just downgraded BHP shares. Is it time to sell?

Macquarie sees little upside. But why?

Read more »

A young woman wearing a blue blouse with white polkadots holds her phone up with an intrigued and happy look on her face as she reads some news.
Resources Shares

3 reasons why the BHP share price could be a buy

Here are my optimistic thoughts on BHP.

Read more »

mining asx shares represented by miner writing report on clipboard
Resources Shares

This ASX 200 miner is ramping up copper output as prices reach all-time highs

Copper production leads quarterly update.

Read more »

Miner looking at a tablet.
Resources Shares

Should I buy the dip in BHP shares today?

BHP shares are back in the green for 2025. Now what?

Read more »

An executive in a suit smooths his hair and laughs as he looks at his laptop feeling surprised and delighted.
Resources Shares

Kaboom! Syrah Resources shares jump 26% on Trump tariff news

Changing market dynamics?

Read more »