ASX launches salvo at Magnis Energy Technologies over disclosure failures

The ASX has told battery and graphite company Magnis Energies it was failing to prove why it was appropriate to continue to be listed on the exchange.

Magnis US managing director Hoshi Daruwalla, left, and chair Frank Poullas. Picture: John Feder

Another Magnis Energy Technologies director has left the teetering company, as the ASX-listed graphite and energy play revealed new delays and an excoriation by the market operator over its repeated disclosure failures.

In an extraordinary intervention on Monday, the Australian Securities Exchange has told Magnis it was failing to show it was even an appropriate company to remain listed, amid escalating frustration from the ASX Compliance team over answers from the battery and graphite company.

The 35-pages of back-and-forth between the ASX and Magnis unveils the market operator’s anger after attempts to force Magnis to reveal key elements of its business plans and explain why it had resoundingly failed to keep the market informed.

The reams of responses also reveals Magnis’ attempts to return to the trading boards, begging the ASX to accept its pitch spruiking the merits of its Tanzanian graphite mine as its new focus.

This came as Magnis director Claire Bibby resigned from the teetering company’s board on Monday, the second senior leader of the firm to leave since the start of the year.

The Imperium3 New York factory has been revealed by Magnis to have produced no new cells in December. Picture: Supplied

Magnis told investors Ms Bibby had resigned from its board due to “a change in her personal circumstances”.

But, Ms Bibby, who joined the group’s board in January 2022, remains an independent director at Sydney investment house Clime Investment Management, run by funds management heavyweight John Abernethy.

Ms Bibby had become embroiled in the scandal surrounding Magnis, with allegations she engineered a call between directors on Magnis’ battery gigafactory Imperium3 New York before muting the directors and ramming through a series of motions to gain control of the operation.

The documents reveal the ASX demanding Magnis reveal why it told the market its battery gigafactory iM3NY produced no cells and made no sales in December, despite telling investors at its annual general meeting they were set to bank 300 cells a day.

ASX Listings Compliance senior advisor Angel He demanded Magnis explain its disclosure failures, despite telling the market in May 2023 it had “effectively real-time” information from the battery gigafactory in Endicott, in upstate New York.

This saw Magnis admit to the ASX it took no steps to “track progress against the Forecast” from its factory, telling the market operator the production and sales from iM3NY were “not, of itself, considered to be material to Magnis shareholders”.

Magnis told the ASX despite no cells being produced in December, the company did not find out until January 4 and did not disclose the flop for six days.

This was despite meetings with directors appointed by the lenders on iM3NY, who seized the factory from Magnis after it defaulted on payments, with Magnis noting “there was no comment about production … until Magnis received advice on 4th January”.

But as revealed in The Australian, key Magnis backers were aware of production failures at iM3NY, with one X user “Bexley Ray” noting on December 16 that “IM3 has not sold any batteries yet”, also warning the cells produced by iM3NY had “failed certification”.

Ms He took issue with Magnis’ responses, noting they “do not indicate to the ASX that MNS can promptly receive information at any time”, warning the company over “seemingly selective disclosure” to the market.

The Australian Securities and Investments Commission is well advanced in an investigation probing Magnis’ market disclosures, as well as closely examining key shareholders who may have benefited from market sensitive information before its disclosure.

Major shareholder and Gladiator Resources director Matthew Boysen has previously noted “key shareholders” of Magnis had benefited from investments in companies which, as revealed in The Australian, received undisclosed support from Magnis.

However, when The Australian sought to speak with Mr Boysen, who previously attempted to assault this journalist at Magnis’ AGM, the Melbourne-based timber furniture store owner said: “If you ever contact me again I will be contacting the police to make a complaint for harassment”.

The letters from the ASX reveal the market operator took issue with Magnis’ disclosures, which saw the company trading for days while key information was withheld from the market, noting the company failed to disclose key elements of a $4.6m lifeline.

Magnis revealed the $4.6m loan on January 31, but in response to questioning, company secretary Duncan Glasgow revealed the energy company actually tapped the cash on December 1.

Magnis revealed key breaches of iM3NY’s $US100m ($147m) loan on December 1, the same day the energy company tapped its lenders for a $4.6m lifeline, with the company remaining on trading boards until it was pulled five days later.

This came after The Australian revealed the lenders had stripped it of control of iM3NY.

But Mr Glasgow told the ASX Magnis did not consider disclosures of the loan material noting it was not price sensitive.

Magnis told shareholders 10 days ago its loan, which has been funded by “32 parties” and was secured against “all assets of the company” in the event of a default, would see its due date extended to the end of the month amid a search for new funding.

The ASX also sought to force Magnis to reveal the state of a number of deals with both its battery factory iM3NY and Tanzanian graphite mine Nachu.

Magnis told the ASX it would attempt to regain control of iM3NY, but it was “unclear whether such refinancing activities will ultimately be successful”.

However, Magnis’ triggered a warning from the ASX compliance team, warning the market operator did not accept its accounting changes given the “substantial monetary investment made by MNS”.

Ms He warned, in her final notice to Magnis, that the company had “made it clear to ASX that it does not intend to take any further steps to improve its disclosure regime”.

The letters reveal Magnis begged the ASX to accept its characterisation it was now a graphite focused company, after removing iM3NY from its consolidated accounts.

In response to warnings Magnis was failing to show it was meeting the ASX’s “level of operations” test, the company said its Nachu project was “significantly more advanced (and is of a significantly greater size and scale) than the main project of many of its ASX-listed exploration and development peers”.

The documents reveal Magnis sought to raise concerns with the ASX over its “determination to ignore the Nachu Graphite project as not being material”.

However, Magnis was also forced to reveal a heavily revised timeline for Nachu, with the expected start date of the mine kicked out two years from its original date of the fourth quarter in 2022.

This will now see Magnis unlikely to deliver its first ore to mill until at least the end of 2026.

However, Magnis told the ASX this would not affect its deals with commodities brokers Traxys which “remains on foot” as well as its deal with “the tier 1 EV manufacturer”, with Magnis noting it intended to apply for a 12-month extension to its deal which requires the company to start supplying graphite from February 2025 for a minimum of three years.