Ken Brissy has spoken.
![https://hotcopper.com.au/data/attachments/5411/5411068-30b10a863be44ee8ae3c2e9cfb6c5845.jpg](https://hotcopper.com.au/data/attachments/5411/5411068-30b10a863be44ee8ae3c2e9cfb6c5845.jpg)
Shares in Canadian lithium explorer Patriot Battery Metals have taken a hit from a damning short seller’s report criticising resource delays and attributing the stock’s meteoric rise to questionable promotion deals.
The report, by Night Market Research, also noted the appointment of former Pilbara Minerals boss Ken Brinsden as non-executive chairman had buoyed Patriot shares, which have rocketed about 120 per cent since the start of the year.
The dual-listed Patriot started trading on the Australian Securities Exchange in early December and shares have rallied on strong drilling results at the company’s flagship Corvette Property in the James Bay region of Quebec, one of the largest and highest-grade hard rock lithium projects being explored.
The stock was down over 9 per cent at one point but rallied to close 7.4 per cent, or 13¢, lower at $1.63.
Night Market Research, which revealed a short position in Patriot, described the explorer as a “rare mining ‘unicorn’ . . . ascending to a $2bn valuation despite having acquired its core asset for $8m only 16 months ago (a 250x return) and lacking an established maiden resource”.
There is little information on the short seller, a North American investor which claims to provide “fundamentals-based equity research” but does not list an address or contact.
“Based on our analysis of drilling data we estimate a current resource below 100Mt (even with generous assumptions), over 40 per cent below figures recently touted by Patriot’s CEO (Blair Way),” it said, adding resource speculation had flourished under Patriot’s “opaque disclosures.
“Announcement of the initial resource has been repeatedly delayed … with the highly anticipated resources estimate approaching, we think Patriot is near a speculative peak.”
Patriot last month said it was on track to deliver an initial mineral resource announcement for Corvette in July.
While estimates are for the project to be producing lithium in under five years, the short seller argued a “more realistic timeframe is 7-10+ years” considering the tendency for delays in new lithium projects and permitting in Quebec.
Night Market Research said “fake buyout rumours” had distracted from seven resource estimate delays, referencing a story from The West Australian in February reporting Chris Ellison’s Mineral Resources could be buying Patriot shares.
The short seller also claimed Patriot’s rally could in part be attributed to stock promotion with questionable marketing outlets, alleging it struck a $1.5m promotion deal with an obscure entity based in a suburban Vancouver home.
It warned Patriot investors who had jumped on the stock after Mr Brinsden was appointed chairman in August to remember what happened to Atlas Iron, where Mr Brinsden was MD from 2012 to 2015, saying it served as a “cautionary tale”.
“Like Patriot, Atlas soared on a pivot to a hyped metal but eventually restructured and sold at a 90 per cent discount to its peak valuation,” it said.
“Sector risk and falling commodity prices can sink even the most promising miners with effective leadership.”
Mr Brinsden said the report was not factually correct.
The lithium veteran said he was drawn to Corvette because it was an outstanding discovery backed by a talented team and showed huge potential in the North American supply chain.
“As much as this report has been written with a lot of speculation and potentially an objective in mind, I would counter that by saying that I’ve been in the industry, developed a successful company and looked at this project and thought, this has so many merits about it — I’ve got to get involved,” Mr Brinsden said.