These guys got the one-two punch of bad news today with notice, from their legal advisors, that they could be required to do a minimum work requirement of $1.8 million annually which is not a small issue for a junior lithium company. The second punch was from Tim Oliver, their recently appointed top guy who resigned effective immediately. They just recently joined my website sponsorship program, I went ahead with the announcement that they had joined on a verbal agreement and I have yet to receive payment.
There is a fair bit to unravel here, they are currently under a trading halt so let’s start there. They put out a news release earlier today about the likely need to do considerable amount of work annually to keep the projects in good standing. The stock immediately got hammered and was down 53% when it was halted and had traded 10 million shares, which is around 25% of their issued stock. In the news release, there was a fair amount of spin, they tried to present it in a way that the exchange likely halted them to make them tone down the optimistic statements about future moves.
My first response when I read the news was are they kidding me. This is supposed to be a company building asset, $1.8 million a year is nothing if you are fast-tracking a lithium project forward that could take advantage of the high lithium price and become a money maker fairly quickly at a very low CapEx relative to mines in other commodities. All this hype about lithium and $1.8 million a year in expenditures on a company making project is a burden. Come on guys.
Tim Oliver jumped ship upon finding out that the company dropped the ball in the due diligence phase which happened prior to him arriving. Sure they screwed up on the due diligence, but they still have an option on the project that is supposed to be a company building asset. That is the way Tim presented it to me. I still think it is true. So I don’t completely understand him jumping ship so quickly. Personally, I would be looking at how to refocus and fix the problem.
Sure they don’t have any money, but the projects still have company building potential. They just washed out all of the hot money that was in the stock and now they are down to just over a $10 million valuation which is one of my cutoffs for Zombie Junior Mining Stock valuation. I don’t think they are a Zombie Junior Mining Stock. Sure they have made some serious mistakes, the leadership that just left and the old ones that are now back running the show.
I’ve reached out to them to speak with them about two things. Are they going to honour the sponsorship agreement and if so what are the immediate plans to turn this thing around.
I’m stuck in a pickle you might say, I don’t know if they are or aren’t a sponsor. Plus they have driven the company into the ditch but I don’t think it is a dead duck. I would like to talk to management about them getting their shit together and figure out how to fund this project that could be a company builder. I don’t want to see this sucker turn into a stock on my Zombie Stock show.
That’s all I have for now.
All the best,
Allan Barry Laboucan
P.S. my reports are for information purposes only, before making any investment decisions it is important to do your homework and speak with your financial advisers.