Today, Standard Lithium (NYSEMKT:SLI) is receiving increased attention, although not the good kind. Shares of SLI stock are down over 17% after Hindenburg Research released a short report on the company. Standard Lithium is a Canadian-based lithium tester and extractor.
In the report, Hindenburg addresses CEO Robert Mintak’s track record, alleged improper allocation of capital, and false company claims. For example, Hindenburg highlights that Mintak has been involved with at least nine publicly traded companies in the past. Out of those nine companies, five have been delisted. Several have faced regulatory scrutiny. In addition, Hindenburg questions Standard’s claim of having a first-mover advantage in direct lithium extraction (DLE). Mintak previously served as CEO at Pure Energy Minerals (OTCMKTS:PEMIF) and touted its proprietary DLE methods. Pure Energy eventually failed in commercializing DLE and its stock plummeted 98%.
On top of that, Standard’s CEO, COO, chairman, and vice president of exploration all came from Pure Energy. Hindenburg alleges that some of Standard’s executives and board have ties to companies whose stocks accelerated due to paid stock promotions.
With the short report in mind, SLI stock investors are growing increasingly nervous. Let’s dive into the details on Hindenburg’s latest short.
SLI Stock: 8 Things to Know About Hindenburg’s Short Report
- Hindenburg alleges that Standard has used over 15 stock promotion programs. Since going public, Hindenburg says Standard has spent over 5 million CAD on advertising and investor relations. In contrast, Standard has only spent 1.7 million CAD on research and development.
- Mintak previously worked at a small stock promotion firm. One of his partners at the firm is now facing a British Columbia Securities Commission investigation. The Commission alleges that the partner was involved in an undisclosed stock promotion at another failed lithium mining company.
- In addition, Standard boasts that its DLE process, LiSTR, is superior to competitors. However, LiSTR is based off of three patent applications that Standard purchased in 2018 “from an apparent one-man engineering shop.”
- Hindenburg says that two of these applications have been deemed “unpatentable” by the U.S. Patent and Trademark Office.
- Importantly, Standard came public through a reverse merger. The SEC has charged the former president of the merger partner with allegations of “helping insiders secretly dump large quantities of stock in at least 45 companies through the use of opaque entities.”
- Standard’s flagship project has been delayed for nearly a year and a half. Lanxess, a key partner for Standard, admitted that there is “no timeline” for the project, and that Standard’s extracting technology has not shown “proof of concept.”
- Finally, Hindenburg disclosed that it has taken a short position in SLI stock.
- Investors should note that Blue Orca released a short report on SLI stock in November 2021.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
