Great Pacific Gold’s Walhalla Spinout: A Bold Move to Unlock Value in Australia’s Golden Belt

Great Pacific Gold Corp. (GPAC) has taken a decisive step to capitalize on its Australian assets by spinning out the Walhalla Gold Project into a new entity, Walhalla Gold Corp., in a 1:1 share exchange. This strategic move, announced on May 2, 2025, aims to unlock value for shareholders while retaining upside exposure to a project with rich historical production and promising exploration targets. Here’s why investors should pay attention.

The Transaction: Structure and Immediate Benefits

The spinout involves transferring Walhalla’s 1,400 km² land package to the new company, with shareholders of Great Pacific receiving one Walhalla share for each GPAC share held. Key terms include:
- A $1.5 million cash payment to Great Pacific from financier Finco, providing immediate liquidity.
- A 2% Net Smelter Royalty (NSR) retained by Great Pacific, ensuring ongoing revenue if the project moves into production.
- $4.5 million in financing from Finco to fund exploration, including imminent drilling at the high-priority Pinnacles Target.

The transaction’s completion hinges on regulatory approvals from the TSXV and the Canadian Securities Exchange (CSE), where Walhalla aims to list. A definitive agreement is expected by May 30, 2025.

The Walhalla Project: Gold Potential and Historic Context

Walhalla’s allure lies in its historic production of 1.5 million ounces of gold at an average grade of 33.6 g/t, per Victorian government data. The project’s three key targets—Pinnacles, Cohen’s Reef, and Longfellows Reef—highlight its exploration upside:
- Pinnacles Target: A greenfield zone with a 400m×1,100m gold-bearing dyke. Surface sampling returned grades like 81.6m @ 1.02 g/t Au and 18m @ 3.28 g/t Au. Permits are already in place, enabling drilling to begin quickly.
- Cohen’s Reef: Historic high-grade intersections, including 4.25m @ 11.15 g/t Au.
- Longfellows Reef: Grab samples showed 200m @ 4.95 g/t Au and 75m @ 4.1 g/t Au over a 1.5km strike.

The project’s scale and proximity to infrastructure (e.g., Fosterville Mine, operated by Agnico Eagle) position it well in a region experiencing a gold exploration renaissance.

Strategic Rationale: Focus and Value Creation

CEO Greg McCunn emphasized the timing of the spinout, citing Victoria’s resurgence as a gold hotbed. The separation allows Walhalla to attract specialized investors while freeing Great Pacific to concentrate on its Papua New Guinea assets, including the Kesar and Wild Dog projects. By retaining the NSR and cash payment, GPAC secures a financial safety net while Walhalla gains a fresh capital base to advance its exploration.

Risks and Considerations

• Regulatory Delays: TSXV and CSE approvals are critical. A missed deadline (e.g., missing the May 30 agreement target) could stall momentum.
• Financing Execution: Finco’s $4.5 million private placement must close before the spinout, a hurdle in today’s cautious financing environment.
• Exploration Uncertainty: Drilling at Pinnacles could underdeliver, though the project’s permitted status and high-grade surface samples offer optimism.

Conclusion: A High-Reward, High-Risk Play

The Walhalla spinout is a calculated gamble with significant upside potential. Historically, spinouts succeed when the parent company retains a meaningful stake or royalty, which GPAC achieves through its 2% NSR. With gold prices hovering near $2,000/oz and Victoria’s mining sector revitalized by discoveries like Fosterville, Walhalla’s targets are well-positioned.

Key data points reinforce the case:
- The Pinnacles Target’s grades (up to 3.28 g/t) align with commercial thresholds.
- Finco’s $6 million total commitment ($4.5M financing + $1.5M cash) signals confidence in the project.
- The NSR ensures GPAC benefits if Walhalla progresses to production, which could be accelerated by the imminent drilling.

However, execution risks remain. Investors should monitor three milestones:
1. TSXV/CSE approval by Q3 2025.
2. Completion of the Pinnacles drill program by early 2026.
3. Walhalla’s CSE listing, which would provide liquidity and visibility.

In a market hungry for gold exposure, the Walhalla spinout could be a catalyst for both GPAC and its spinoff. For now, the bet is on Victorian gold’s past glory to fuel its future.