Snow Lake Lithium facing internal squabble

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This article was published 16/12/2022 (1330 days ago), so information in it may no longer be current.

On Wednesday morning, Philip Gross the CEO of Snow Lake Resources Ltd. appeared as part of a panel discussion at a sold out Manitoba Chambers of Commerce event enthusiastically describing the potential impact of his company’s activities in Manitoba.

Later in the day his company postponed its annual general meeting that was to be held on Thursday where it was going to face a vote initiated by dissident shareholders to replace the entire board of directors.

The company (which does business as Snow Lake Lithium (SLL)) has been very active since an initial public offering a year ago. It is attempting to build the world’s first all-electric lithium mine near Snow Lake, Man., but for several months it has had to deal with an ongoing effort from Australian shareholders to supplant the board and its chairman and CEO, Gross.

Lithium is one of the critical minerals required for the production of energy storage technologies like batteries. Demand for lithium is expected to triple by 2025 as the world’s automobile manufacturers transition to electric cars.

Late Wednesday, the company stated the meeting postponement was necessary because of potential illegal solicitation of proxies on the part of the dissidents, misrepresentations regarding relationships between dissidents and a request for information from the Australian Securities and Investment Commission regarding actions from some of the dissidents.

Walied Soliman, chair of the Toronto law firm Norton Rose Fulbright Canada, has been appointed special independent counsel to SLL.

He said the company has worked tireless to try to get the dissidents shareholders to provide appropriate disclosure to the market on their shareholder group and its joint actors.

“We worked for many weeks to try to achieve this,” Soliman said in an interview with the Free Press. “The board, on the eve of the meeting, frankly gave up and determined the information in the market was incomplete and needed to be corrected in advance of the meeting.”

The meeting has been rescheduled to Jan. 17, 2023.

SLL was formed in 2018, after being spun out of its parent company, Australian exploration company Nova Minerals Inc. It went public on the Nasdaq Exchange in November, 2021 with Nova retaining a majority stake.

The company raised $27 million in the IPO and the stock price spiked 75 per cent in the first few days and then lost 50 per cent of the gain in the following days.

Nova subsequently sold off one-third of its SLL shares in April, 2022 at $6.00 per share for proceeds of $18 million.

Nova still owns 37 per cent of SLL and its shares have been pledged to the dissident proxy battle which has been led by a former CEO of Nova named Avi Kimelman.

Kimelman was convicted of insider trading in Australia last year and among other things was banned from being involved in the management of public companies.

Shareholders of SLL who are related to Kimelman are also part of the dissident effort to install a new board of directors.

Gross has previously characterized the proxy battle as a nuisance and had sought and received support from the Manitoba courts to delay a special meeting earlier this year requested by the dissidents.

In a release published on Wednesday Concerned Shareholders of Snow Lake said it would have more than 80 per cent of votes in favour of replacing the incumbent board with its own nominees.

Their grievances include lack of accountability from management, exorbitant executive pay — Gross received total compensation of more than $4 million in 2022 (but only $94,000 in 2021) — and concern about execution since the company’s share price has dropped by about 50 per cent. While they claim that the share prices of other lithium exploration companies have done much better they do not provide any evidence of that.

Soliman said, “Ultimately this is an important project for the people of Manitoba and the governance structure adopted for this company has been deemed the most appropriate by its board of directors given the importance of the project for the people of Manitoba.”

In addition to planning to build a lithium mine near Snow Lake, an undertaking that would require an investment in excess of $100 million, the company has a memorandum of understanding with the South Korean battery company LG Energy Solutions to investigate the possibility of building a lithium processing plant in Manitoba.

Currently the Tanco Mine near Lac du Bonne, Man., is the only lithium producing mine in North America. Internationally, the vast majority of the processing of the mineral — including the lithium mined by Tanco — is done in China and there is a concerted effort by many stakeholders to establish a North American supply chain.

A senior official in the Manitoba government said it was working closely with LG as it studies the potential to build a lithium hydroxide plant here.

martin.cash@freepress.mb.ca