Saint Jean Carbon (SJL-V Halted) ASC pursues Saint Jean over supposed Panasonic deal
The Alberta Securities Commission has begun proceedings against TSX Venture Exchange listing Saint Jean Carbon Inc. and its chief executive officer, Paul Anthony Ogilvie, over misleading statements the company made in a supposed deal with Panasonic Corp. in 2017. The company claimed to have received a graphite order from Panasonic, but there was no such order, the ASC says. All that Panasonic received was a small sample, for which it paid nothing, according to the ASC.
The allegations are contained in a notice of hearing that the ASC released on Thursday, June 25. The case goes back to February and March, 2017, when Saint-Jean was touting itself as a "carbon science" company, with graphite and lithium claims in Quebec. Demand for graphite and lithium arises primarily from the production of batteries, particularly the larger ones used in electric cars. One of the largest producers of those batteries is Panasonic.
Much of the ASC's case stems from a news release that Saint Jean issued on Feb. 28, 2017. The company claimed to have received an order from Panasonic, with that order being part of an "offtake agreement to supply multiple tonnes of anode material monthly for a number of years." Mr. Ogilvie went on at some length about the supposed deal, calling it the company's "greatest accomplishment; to be recognized and awarded with an order to supply one of the world's best technology companies." Saint Jean said that it would make the first shipment within 90 days.
The problem, at least according to the ASC, is that the order never existed. Panasonic received a sample of material, for which it paid nothing, the notice states. (A customs form valued the sample at $6.64 (U.S.).) There was no "offtake agreement." The companies were discussing an agreement, but that agreement did not obligate Panasonic to buy any amount of graphite, the ASC says. In short, the deal, as described by Saint Jean, was "misleading or untrue," according to the notice.
In the days following the news release, Saint Jean became a heavy trader, with the stock going to 29.5 cents (up from 7.5 cents before the announcement of the deal). The company's daily volume reached a peak of 80 million shares. The activity quickly attracted the attention of the TSX-V, which requested the company clarify the Panasonic deal.
That request, however, simply resulted in more misleading statements, the ASC says. On March 3, 2017, the company issued a news release in which it said that the value of the order was nominal, but still referred to "anticipated monthly orders" and referred to an "anticipated" delivery date within 90 days. Saint Jean said that it had received many requests regarding the amount of material, but could not respond because the details of the deal were confidential.
As the ASC sees things, this second news release was also misleading. It still referred to an order from Panasonic and repeatedly called Panasonic a customer, neither of which was correct, according to the ASC. As for the "confidential" information, the ASC says that there simply was no information to release. The parties had no signed agreement.
As it turned out, the supposed "offtake agreement" went nowhere. On March 20, 2017, Saint Jean said that Panasonic did not intend to enter into any such deal. If Panasonic did make any mass purchase of material from Saint Jean, it would do so under its own form of standard purchasing agreement, Saint Jean said. After that release, Saint Jean fell to 9.5 cents.
The ASC has not yet set a hearing date, and Saint Jean has not yet filed a response. The company, which has been under an insider cease trade order since March 21, 2017, is somewhat inactive. It has been halted for nearly a year (since July 9, 2019), while the TSX-V reviews a deal it signed to acquire a mineral processing and metallurgical facility. When it last traded, the stock was at 3.5 cents.
Mike Caswell |
