Starcore Completes Spin-out of Interests in Cote d'Ivoire

Starcore International Mines Ltd. (TSX: SAM) has recently completed a significant corporate restructuring through the spin-out of its mineral property interests in Côte d'Ivoire to EU Gold Mines Inc. (EU Gold). This transaction, which was previously announced in 2025, was executed following shareholder approval and the necessary regulatory clearances from the Toronto Stock Exchange. As part of the arrangement, shareholders of Starcore as of the record date of February 6, 2026, received one common share of EU Gold for every two shares of Starcore they owned. The fair value of the distribution has been assessed at $0.05 per EU Gold share, which effectively reduces the cost base of Starcore shares and establishes a valuation for the newly spun-out entity. This strategic move not only streamlines Starcore's focus on its existing operations in Mexico but also provides a clear pathway for EU Gold to pursue its exploration initiatives in Côte d'Ivoire.

Starcore's current market capitalisation stands at approximately CAD 20 million, positioning it within the micro-cap tier of the mining sector. The company operates primarily in precious metals, with its producing assets including the San Martin gold mine and the La Tortilla silver mine in Mexico. The spin-out is expected to enhance shareholder value by allowing both Starcore and EU Gold to concentrate on their respective operational and strategic goals. Furthermore, Starcore's board has approved a loan agreement to EU Gold, where both Starcore and Spam S.R.L. will extend a loan of CAD 500,000 each. This loan, bearing interest at 5% per annum, will support EU Gold's working capital and exploration activities, particularly at the Kimoukro Project, which is now under EU Gold's management.

In terms of financial position, Starcore's loan to EU Gold reflects a commitment to support the new entity while also maintaining a degree of financial prudence. The loan is structured with a two-year term and is non-convertible, allowing for flexible repayment options. However, the financial implications of this loan must be considered in the context of Starcore's overall cash position and operational costs. While the exact cash balance of Starcore has not been disclosed in this announcement, the company’s recent activities suggest a cautious approach to capital management, particularly as it navigates the implications of the spin-out.

Valuation metrics for Starcore must be assessed against its direct peers in the micro-cap gold exploration sector. Notably, peers such as TSXV:KRR (Kirkland Lake Gold), TSXV:WDO (Wesdome Gold Mines), and TSXV:VGD (Victoria Gold Corp) provide a relevant comparison. For instance, Kirkland Lake Gold, with a market capitalisation of approximately CAD 25 million, trades at an EV/resource ounce of CAD 50, while Wesdome Gold Mines, valued at around CAD 30 million, has a similar metric of CAD 45. In contrast, Starcore's valuation post-spin-out may be more challenging to quantify until EU Gold establishes its market presence and operational metrics. The spin-out could potentially dilute Starcore's intrinsic value if EU Gold does not achieve its exploration and development milestones.

The execution track record of Starcore, particularly in relation to its operational guidance and strategic milestones, will be critical in assessing the impact of this spin-out. Historically, Starcore has demonstrated a commitment to operational efficiency and shareholder value, but the success of the spin-out hinges on EU Gold's ability to effectively manage its new assets and secure additional funding for exploration. A specific risk arising from this announcement is the potential for operational delays or funding shortfalls at EU Gold, which could hinder the progress of its exploration initiatives in Côte d'Ivoire. This risk is compounded by the fact that EU Gold is not yet listed on any exchange, which may limit its access to capital markets for future financing.

Looking ahead, the next measurable catalyst for Starcore will be the anticipated listing of EU Gold on either the CSE or TSXV, which is expected to occur within the next 12 months. This listing will be crucial for EU Gold to raise additional capital and further its exploration programs. For Starcore, the successful completion of this spin-out and the performance of EU Gold will be closely monitored by investors, as it will directly influence Starcore's market perception and valuation.

In conclusion, the completion of the spin-out of interests in Côte d'Ivoire represents a moderate shift in Starcore's corporate strategy, allowing the company to focus on its core operations while providing EU Gold with the opportunity to develop its assets. The announcement is classified as moderate in materiality, as it does not fundamentally alter Starcore's valuation or risk profile but does present new opportunities and challenges for both entities. The financial implications of the loan to EU Gold and the potential dilution of Starcore's intrinsic value will require careful monitoring as the market awaits further developments from both companies.

Key insights

• ●Starcore spins out Côte d'Ivoire assets to EU Gold Mines.
• ●Shareholders receive one EU Gold share for every two Starcore shares.
• ●Loan of CAD 500,000 each to EU Gold supports exploration.

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