On second thoughts, Magnis not worth $10bn after all

Sharemarket darling Magnis has been forced to withdraw its claims of a potential $10bn ‘potential value’ after the ASX queried its AGM presentation.

Magnis Energy chairman Frank Poullas, above, had said there were ‘significant upsides that exist from where we are now’. Picture: Britta Campion / The Australian

Magnis Energy has been forced to retract its claim that the EV battery player could be worth $10bn – four days after it disclosed the figure at its annual general meeting.

Magnis, which owns a controlling stake in New York-based batteries manufacturer Imperium3, has been under intense regulatory scrutiny after the Australian Securities and Investments Commission began making inquiries about the possible artificial inflation of the company’s share price.

Magnis, with a market value of $523m, told investors on Monday that its Imperium3 business had a “potential value” of $4bn. Charge CCCV, which owns the patents on which the batteries are based and in which Magnis has a 9.7 per cent holding, was worth $2bn, it said.

The company’s anode materials business, including a graphite project in Tanzania, had a potential value of $4bn, it said.

In all, the “sum of the parts … excluding synergies” meant Magnis was worth $10bn, it claimed.

In his presentation, the company’s chairman Frank Poullas said the potential value was “really interesting” and that there were “significant upsides that exist from where we are now”.

“As shareholders or potential shareholders I think you should be quite excited about it as I am myself,” Mr Poullas said.

But in a statement released on Thursday, Magnis said it would retract the figures “and inform investors that they should not rely on that information as the basis for any investment decision”.

That view was formed “following consultations with the ASX”.

An ASX spokesman said the market operator could not “comment on compliance matters beyond what the company has already disclosed to the market”.

It is not the first time Magnis has clarified statements made to investors. In early October, the company was forced to respond to ASX queries about the size of contracts signed with Sukh Energy after The Australian reported that financial reports showed the Magnis customer had few assets and little revenue. That is despite Magnis claiming Sukh Energy had signed a deal projected to provide $US243m ($337m) by 2026.

Despite providing no detail, Magnis claimed in its response to ASX queries that the Imperium3 business in New York would have yearly revenues of $80m in 2022 rising to $1.8bn in 2027.

The ASX also queried a Magnis announcement in July, when it warned the company directors about “ramping” announcements which include updates “worded in an exuberant fashion but which on closer examination contains little in the way of substance”.

Mr Poullas on Monday told investors that the corporate regulator had required the production of documents “from a number of sources relating to some share trades which have not been identified except by reference to a range of dates in the first half of 2020”. Sources close to ASIC inquiries, however, say the queries are focused on posts about Magnis on messaging platform Telegram and sharemarket trading discussion board HotCopper.

ASIC officials entered at least one group on Telegram in late October to warn its members about attempting to artificially increase the Magnis share price.

Magnis was the subject of earlier queries from the ASX in October 2020 after it announced the results of studies into batteries which had been published at least one month earlier.

The market operator also raised queries about how Magnis had arrived at the description of Imperium3-produced batteries as the “greenest in the marketplace”. Magnis said its executive team “did not have the expert skills to be able to read a technical report … so quickly and discern all relevant points being made to be able to draw our own conclusions and hence the reason why the company relied on the author of the article with his conclusions on both accounts”.

The ASX made an earlier six-page query with Magnis relating to a number of announcements from the company in early 2020.

Despite regulator concerns, Magnis’ share price has jumped 194 per cent this year – from 19c in January to close at 56c on Thursday. It had traded at more than 70c earlier this month.

Magnis and Mr Poullas did not respond to requests for comment on Thursday.

Mr Poullas has previously said that no company director was involved in the Telegram group discussing Magnis shares.

ASIC officials entered at least one group on Telegram in late October to warn its members about attempting to artificially increase the Magnis share price.

“Remember – you run the risk of a criminal record, including fines and prison time by being involved in pump-and-dump campaigns,” the regulator warned.

ASIC, however, had created at least 174 documents in relation to its queries about the “pump and dump” activity on the Telegram groups.