The U.S.-stated shares of Canadian enterprise Common Lithium Ltd. slid 22% Thursday, after short seller Hindenburg Investigate printed a report alleging the company’s know-how does not get the job done and which is it is in search of to revenue from the hype about lithium batteries for electrical automobiles.
Vancouver-centered Standard Lithium “is a zero-revenue mining organization that uplisted to the NYSE in July 2021 with a excellent-sounding story of staying a initial mover in immediate-lithium-extraction (DLE), a technology that aims to revolutionize lithium mining,” the report states.
The corporation claims that engineering will allow it to extract lithium in several hours, as an alternative of the months the method commonly calls for, using considerably significantly less land and groundwater than conventional extraction methods. That has produced it beautiful to companies, these as Koch Industries, which grew to become its most important shareholder final yr via a $100 million expense.
“Koch missed pink flags and failed in its thanks diligence in its haste to deploy money,” Hindenburg said.
Koch responded with this assertion: “As with all of our investments, Koch has executed extensive owing diligence and identified Standard Lithium’s engineering a promising shiny place on the route to lithium production listed here in the U.S. We remain fired up to proceed fostering innovation and growing the battery price chain across the Koch organization.”
promises an Arkansas undertaking is the “largest and most advanced” lithium brine project in the U.S. But it has not yet developed or bought business quantities of lithium, which is also employed in cellphones and laptops.
Hindenburg cites gurus who say about 100 tries have been built by mining providers since the 1970s to get DLE to perform and none have succeeded. Its companion in Arkansas, Lanxess reported lately “that Standard’s extraction technologies has nevertheless not demonstrated “proof of thought.” Lanxess says it has “no timeline” for progress and is no lengthier mentioning Common Lithium on its earnings phone calls,” reported the report.
Irrespective of its highflying statements for DLE, Conventional Lithium has used just C$1.7 million on R&D since likely general public, but has spent C$5 million on “advertising and investor relations.” In fiscal 2021, it used zero on R&D, according to its annual report submitted with the Securities and Exchange Fee.
The company’s auditor, Manning Elliott LLP, notes in its audit view that the company has not created profits or cash flow from operations since inception and has an accumulated deficit of C$68.6 million.
“These situations elevate substantial question about the company’s capacity to carry on as a likely issue,” claims the submitting.
Hindenburg further more alleges that the company’s chief govt Robert Mintak has a lousy track history from at least 9 public corporations he has been concerned with, none of which are lucrative and most of which made use of comprehensive stock promotion.
The record consists of Environmental Manage Corp., a business that said it was aiming to build emission management equipment for gas engines. The stock rose 868% immediately after a lot of paid out promotions in mid-2000s, but the organization in no way developed revenue and finally collapsed and became a distinctive-function acquisition corporation through a reverse merger with Yong Bai Chao New Retail (Shenzhen) Co. Ltd. in 2021, in accordance to a regulatory filing.
“Standard Lithium appears to us to be a regurgitation of Mintak’s prior business, Pure Power Minerals, using the identical Vancouver stock playbook as Mintak’s a lot of other unsuccessful ventures,” said the report.
Conventional Lithium did not respond to a request for comment.
The Canadian-mentioned shares have received 73% in the previous 12 months, even though the S&P 500
has received 20%.