It's a similar strategy as that being pursued by Firefinch, which transformed from Mali Lithium last year to focus on West African gold, and in February announced plans to spin-out its Goulamina lithium project into a more supportive market.
As Graphex Mining, Marvel has spent around A$21 million to ready Chilalo for development, and it believes the market for graphite will support at least a $13 million initial public offer by mid-year.
The raising is so high because US fund Castlelake is owed $9.5 million, which is secured against Chilalo, and at least $6.5 million from the IPO is earmarked to pay down that debt, with up to $3 million to be paid in cash or shares in the spin-off.
The security over the deposit will be removed if EEM raises his minimum target.
Marvel will own 28-43% of EEM, depending on the size of the capital raising. Marvel shareholders will receive a priority entitlement to subscribe for up to $2 million of shares in the IPO.
Managing director Phil Hoskins said no value was being ascribed to Chilalo within Marvel, despite comparable projects in the graphite space trading at many multiples of Marvel's entire market capitalisation.
"The IPO of Evolution is the opportunity for Marvel to remove the historical debt encumbrance and unlock Chilalo's value potential," he said.
Marvel will appoint one non-executive director to EEM, expected to be Hoskins.
Walkabout Resources executive chairman Trevor Benson will lead EEM in the same role, to be supported by former project manager Syrah Resources' Balama graphite project in Mozambique Michael Bourguignon as executive director.
A definitive feasibility study on the $90 million Chilalo in early 2020 described a project that would produce "one of the coarsest flake size distributions in the world", with estimated cash costs of US$778 per tonne.
Some 500,000tpa would be mined for production of 50,000tpa over 18 years, with all output from reserves of 9.2Mt, within 20Mt of resources.
Pre-COVID optimism expecting production could take place by late 2021, after a 12-month construction period.
A meeting of shareholders to approve the spin-out is expected next month, with Marvel seeking an underwriter and lead manager.
The company intends to continue its West African gold focus, where it has been able to increase resources at Tabakorole in Mali by 54% to 910,000 ounces in nine months, increasing the grade by 20% to 1.2 grams per tonne, and tripling its land holding.
EEM is targeted for a listing on the Australian Securities Exchange by mid-year.
