Magnis reveals dire outlook as finances, mining plans falter

As ASIC prepares for its court battle with Magnis next year over disclosure breaches, the troubled battery firm reveals mounting losses and threats to its Tanzanian graphite asset.

Magnis Resources Nachu graphite project in Tanzania

Magnis Energy Technologies has revealed the dire state of its books, finally filing its 2024 accounts almost a year late, warning shareholders its only remaining mining asset in Tanzania was at risk.

Publishing its June 2024 accounts late on Friday Magnis, a former ASX-listed market darling worth more than $770m at its peak, disclosed a $6.4m blowout despite booking a windfall benefit from shunting away its interests in an American battery “gigafactory” that has since slipped into bankruptcy.

Magnis, which boasted to shareholders about its fast charging lithium battery technology coupled with a world leading graphite mine, has slipped from its lofty peaks to penny dreadful territory last trading at just 4c.

Thousands of shareholders now see their savings trapped in the company, unable to trade, while the corporate regulator is seeking to make an example of it over its market disclosures.

The company has been banned from trading since November 2023, when The Australian revealed Magnis and its management had kept secret from investors a blow-up with lenders who had seized its battery factory Imperium New York, in which the company invested more than $95m.

iM3NY has since been sold by bankruptcy receivers in a fire sale after lenders on a $US100m ($154m) loan called in the debts, sinking the project.

Magnis is still to file its half-year accounts due in March despite assuring shareholders in February it would do so “on the same day it lodges its June 2024 annual financial report”

But the company revealed in its historic filings its last remaining asset, the graphite mine Nachu in Tanzania’s harsh interior, is now under threat after facing a breach action from the African nation’s government last year.

Tanzania told Magnis in April last year it was non-compliant with the country’s Special Mining License, granted to its subsidiary in 2015 and renewed in 2021, warning it had failed to commence development within the stated 18-month period mandated.

Magnis told shareholders it had responded to the notice “to address this matter and ensure compliance”.

However, Magnis did not tell investors about the serious breach at the time.

“Currently, there are no indications of issues affecting the validity of the license,” the company said.

Frank Poullas - Chair, Magnis Energy Technologies, is facing court action from ASIC over allegations he allowed the company to withhold critical information from investors. Britta Campion / The Australian

But Magnis also noted it was aware that the Tanzanian minerals minister Anthony Mavunde told 95 other large and medium scale mining companies they were in breach.

The company told investors after the end of the 2024 financial year its new Chinese director David Wang visited Nachu “with interested counter-parties who wish to work with the Company”.

“Discussions and activities are continuing in a positive manner, with the intention being the entry into definitive agreements in due course,” Magnis said.

“Discussions for offtake are also progressing with Chinese based end-users of Jumbo and Super Jumbo graphite products”

This would be the latest in a string of deals that Magnis has touted to sell graphite from Nachu, after spruiking an offtake deal with commodities dealer Traxys in 2021, the latest in at least six touted plans to sell production from the mine.

The filing of the accounts comes after months of delays, with auditors Hall Chadwick warning its financial future was still seriously in peril, despite a financial lifeline from lenders.

Hall Chadwick warned Magnis faced a “material uncertainty that may cast significant doubt over whether the Group will continue to operate as a going concern”.

As of June last year Magnis was sitting on $8.5m in interest bills.

On Friday Magnis told shareholders its lenders had again extended a $8m financial lifeline, but warned they had cautioned this largesse only had a further $5m headroom over the coming 12 months.

Magnis also told investors the company had not renewed its directors and officers insurance, after the policy came due in July last year.

This is despite Magnis and its chair Frank Poullas facing down the Australian Securities and Investments Commission in the Federal Court.

ASIC is alleging Mr Poullas and Magnis repeatedly and deliberately withheld critical market information from investors about the dire state of the company and its investments.

Mr Poullas and Magnus deny the allegations they misled investors.

The case is due to go to trial in February next year.

Originally published as Magnis reveals dire outlook as finances, mining plans falter