Proxy battle could affect future of Snow Lake prospector
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Phil Gross, the CEO of Snow Lake Lithium (SLL), is passionate about the possibility of building the world’s first all-electric mine in Snow Lake.
The native New Yorker also believes that Manitoba is the place to launch the North American lithium supply chain with the continent’s first lithium processing plant in Winnipeg to feed the giga battery plants that are starting to sprout up in North America and are needed to supply the electric vehicle boom.
As it stands now, all of the lithium processing and most of the battery manufacturing in the world is done in China.
But his passion — that is being supported by LG Energy Solutions, the South Korean company that is the largest battery maker in the world — may come to a crashing halt if he is not successful in the proxy battle being waged for control of his company’s board of directors.
The dissident shareholders control about 42 per cent of the equity in SLL. They include the shares owned by Nova Minerals, an Australian company from which SLL was spun out of in an IPO in 2021.
The dissident group is asking shareholders to vote at the company’s annual meeting next week for an alternative slate of directors who would be installed and perhaps change the direction of the company.
In a filing with the U.S. Securities and Exchange Commission — SLL is listed on the Nasdaq Exchange — they say, among other things, the current directors and management are “recklessly burning” money while “grossly enriching themselves”.
But there may be another reason for Nova and others to gain control of the board.
In 2019, before SLL was formed as a stand-alone company, Nova Minerals signed a memorandum of understanding (MOU) with Tanco that envisioned Tanco handling the lithium ore extracted from SLL’s as yet unbuilt lithium mine.
The MOU with Tanco was signed shortly after Sinomine Resource Group Co., Ltd. acquired Tanco from a private company out of Boston that had owned the mine for years.
It is not clear what the intentions of Nova and dissident shareholders are, but Gross said, “At the end of the day I believe very much in Snow Lake, in Manitoba and in what we are trying to achieve.”
As for Tanco, Bill Curry, Sinomine’s vice-president and senior Canadian official, the MOU with Nova is not in effect.
“As it stands right now there is an MOU but from our perspective it is not legally binding and at this point we have no interest in going through with it,” Curry said.
Tanco recently did sign an agreement with Grid Metals, an exploration company in close proximity to Tanco. That agreement proposes Tanco would mill Grid Metal’s ore for a fee and it would take a small royalty payment.
But Tanco has its hands full with a major investment to beef up its milling capacity as it increases its lithium production. It is also investigating the possibility of building its own lithium hydroxide processing facility that Curry said would support a North American supply chain.
Tanco currently ships its lithium concentrate to a sister company in China.
It is also under the watchful eyes of the federal government which recently came out with guidelines preventing state-owned entities from owning critical minerals in Canada. It subsequently ordered the divestiture of Sinomine’s investment in another lithium exploration company.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.