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In a move that has confused at least two shareholders on HotCopper, Green Critical Minerals (ASX:GCM) has announced it’s taking Hexagon Energy Materials (ASX:HXG) to the Supreme Court of WA.
Investors appear to be unconvinced that the company’s suit can move forward, if share price movements are any indication.
Green Critical Minerals has fallen -25% in afternoon trades to a third of a cent – down from a fourth of a cent. The penny stock has a market cap of just $3.4M.
At least one shareholder holding GCM stocks asked the question on HotCopper how, exactly, Green Critical Minerals expects to pay the costs of launching a civil proceeding in the first place. The question isn’t without merit.
At the end of March, the company held only $514K in cash. At that time, it expected that cash to last another 1.94 quarters.
If the company was trying to avoid a lawsuit, that was clearly stated by GCM on Wednesday. According to its comments, it’s only because Hexagon has stopped responding to the company’s e-emails that now it’s forced to go to the Supreme Court of WA.
“GCM alleges that HXG has materially breached certain warranties provided under [a] earn-in agreement, including in relation to previous metallurgical studies undertaken by HXG,” Critical Green Minerals wrote on Wednesday.
The project being earned-in-on in question is the McIntosh Graphite Project.
“Despite the Company’s best efforts to resolve this dispute through negotiation, HXG has ceased meaningful engagement, leaving GCM no option but to pursue legal redress,” Critical Green Minerals added.
But definitely worth noting is that the company hasn’t really clarified, at all, what breaches have exactly occurred.
This perception was also shared by at least two users on HotCopper. One went further to allege questionable management choices – no doubt informed, in part, by low cash.
“Now what money are they going to use to fight this case? Out of their own pockets?,” one wrote. “No results in months,” they added, referring to GCM’s own projects.
Another user wondered whether or not GCM are exiting the earn-in entirely. This finance journalist would love to explain more to the reader on why exactly GCM is resorting to court action, but that isn’t entirely clear.
According to its Wednesday announcement, the company has already paid for drilling associated with the earn-in, and if that claim is true, the company’s understandable in lamenting a breakdown in “meaningful” communication.
However, it alleged that Hexagon has breached a contract with regards to metallurgical studies that Hexagon itself undertook. Further detail is lacking.
As for Hexagon Energy, it’s made no announcements to the market as of 1.15pm AEST, and so what exactly is going on here will likely be a revelation only legal transcript can clarify at a later date.
GCM last traded at 0.3cps.
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