Why Is Strickland Metals Distributing 1.2 Billion Gateway Shares to Investors?

• 1.2 billion Gateway Convertible Preference Shares to be distributed in-specie
• Strickland’s holding in Gateway reduced from 1.5 billion to 300 million shares
• Shares initially unquoted on ASX but expected to convert into tradable Gateway Shares
• Offer subject to shareholder approval and asset sale agreement conditions
• Investment considered speculative with outlined risk factors and no dividend guarantee

Capital Return via In-Specie Distribution

Strickland Metals Limited has announced a significant capital return proposal involving the in-specie distribution of 1.2 billion Gateway Convertible Preference Shares to its shareholders. This move, detailed in a transaction-specific prospectus lodged on 18 July 2025, would reduce Strickland’s holding in Gateway from 1.5 billion shares to 300 million, representing a substantial shift in ownership structure.

The distribution is structured as a pro rata return of capital, offering approximately 53 Gateway shares for every 100 Strickland shares held by eligible shareholders as of the record date. This capital return is contingent on shareholder approval at the upcoming general meeting scheduled for 18 August 2025 and the satisfaction or waiver of conditions under an associated asset sale agreement.

Implications for Shareholders and Market

Notably, the in-specie shares will not be initially quoted on the ASX, though they are expected to convert into fully tradable Gateway Shares shortly after distribution. This conversion is a critical step for liquidity and market participation. The prospectus warns shareholders that the investment is speculative, emphasizing the inherent risks and the absence of any guarantee regarding dividends from Gateway, which is focused on developing the Yandal Gold Project.

Strickland’s directors have highlighted that the transaction will not alter the company’s overall capital structure but will significantly reduce its direct exposure to Gateway. Post-distribution, Strickland is anticipated to hold approximately 15.7% of Gateway’s issued capital, while the remaining shares will be held by the wider shareholder base.

Regulatory and Advisory Framework

The prospectus incorporates extensive regulatory disclosures, including risk factors, tax implications, and rights attaching to the Gateway shares. It also confirms that Gateway is a disclosing entity subject to continuous reporting obligations, providing transparency for investors. Legal and corporate advisory roles have been fulfilled by Hamilton Locke and Longreach Capital respectively, with all consents duly obtained and disclosed.

Shareholders outside Australia, including in New Zealand and the United Kingdom, face specific eligibility criteria for participation, reflecting compliance with international securities laws. Ineligible shareholders will have their entitlements sold on their behalf, with proceeds remitted accordingly.

Looking Ahead

The proposed in-specie distribution represents a pivotal moment for Strickland Metals and its shareholders, marking a strategic realignment of assets and shareholder interests. The outcome of the shareholder vote and the fulfillment of asset sale conditions will be closely watched by the market, as they will determine the transaction’s completion and the future trajectory of both Strickland and Gateway.

Bottom Line?

Strickland’s capital return via Gateway shares sets the stage for a reshaped shareholder landscape and a speculative new chapter in its investment journey.

Questions in the middle?

• Will shareholder approval be secured to proceed with the in-specie distribution?
• How will the market value and liquidity of the converted Gateway Shares evolve post-distribution?
• What are the detailed risk factors that could materially impact Gateway’s financial performance?