Gascoyne Resources and Firefly Resources have signed a binding documentation to demerge their copper-gold and lithium exploration assets into a newly incorporated wholly owned subsidiary of Firefly, Firetail Resources.

The subsidiary will mainly focus on the exploration of energy metals.

It will own assets such as the Paterson Copper-Gold Project, the Forrestania Gold Project, and lithium mineral rights over various tenements held by both companies.

The move follows the signing of a merger signed by Gascoyne and Firefly Resources last month.

At the time of signing the merger, the two firms agreed to demerge their Australian copper-gold and lithium exploration assets.

In a press statement, Gascoyne said: “Following the recent announcement of the merger between Gascoyne and Firefly, both companies believe the formation of Firetail creates a new exploration driven, energy metals focused business with a portfolio of copper-gold and lithium assets structured to unlock additional value for their respective shareholders.”

Upon completion of the demerger, shareholders of Firefly Resources and Gascoyne will respectively have 90.1% and 9.9%, stakes in Firetail Resources.

The demerger transaction is subject to approval by Firefly Resources’ shareholders.

In a statement, the firm said: “The demerger will be conducted by way of an equal capital reduction in Firefly and an in-specie distribution of shares in Firetail to Firefly shareholders.”

Firetail Resources will initially be a publicly unlisted company. It will pursue a listing on the Australian Securities Exchange (ASX) after the implementation of the merger.