Ban short-selling inthe ‘national interest’, Chalice boss pleads
Chalice Mining chief executiveAlex Dorschclaimed short-selling of critical minerals stocks should be banned “in the national interest” to ensure “geopolitical opponents” cannot hold back the development of Australian mines.
His plea to replicate a similar ban adopted by South Korea’sregulator in November, which was met with consternation from marketparticipants, follows Chalice shares falling 72.9 per cent this year after thecompany disappointed the market with the results of a scoping study into itsGonneville project north of Perth.
Chalice hasfound a critical minerals clusterthat contains palladium, platinum, nickel, copper, cobalt and gold. It will need to raise close to $2 billion to build the mine at Gonneville, making it a prime target for hedge funds given its reliance on the capital markets for funding.
Chalice has 5.9 per cent of its register in the hands ofshort-sellers, according to the latest data from the market regulator. Five ofthe top-10 biggest ASX hedge fund targets are critical minerals producers andhopefuls.
Mr Dorsch said South Korea had taken “exactly the rightapproach”
He said short-selling could helpcreate an efficient market for mature, revenue generating companies, butpre-revenue companies needed more protection from market forces.
“There really is no place for it inthe critical minerals space or any sort of growth businesses where you aretrying to do something very much in the national interest,” he said. “Byallowing short selling you are just allowing your geopolitical opponents torestrict and basically put barriers to entry up to those newer growth players.
“If you allow short selling of thosetypes of pre-revenue companies you are disincentivising entrepreneurialism, youare stymying people who are trying to grow real businesses, people who aretrying to create economic wealth and strategically important projects andsources of revenue for the country.”
Palladium hits $US1240.70
Short-selling is an accepted practicein advanced markets, including Australia, where investors can profit by bettingon the value of a stock falling. Only covered shorts are permitted underAustralian Securities and Investments Commission rules, meaning hedge fundsmust borrow stock from investors willing to lend their shares out.
The federal treasurer’s officedeclined to comment.
Enthusiasm for Chalice’s Gonnevilledeposit near Toodyay was dealt a blow after the release of thescoping study based onpalladium prices averaging $US2000 ($2958) an ounceover the life of the mine.
Palladium is fetching $US1240.70 anounce on the most actively traded futures contract, leading many investors toconclude that abnormally high prices are required to make the asset viable.
Mr Dorsch has defended the priceassumed in the study, suggesting he is more bullish on the outlook for platinumand palladium, particularly if Russian supply of those commodities wereblacklisted.
Metal markets got a reminder of howpowerful a full-scale Russian blacklisting could be for the global economy onDecember 14, when prices for palladium and platinum rallied strongly inresponse to tighter British sanctions on Russia. Palladium advanced 26.4 percent last week after sinking to a low of $US940.30.
An amended sanctions bill introducedto the United Kingdom parliament effective December 15 bans British citizensfrom acquiring, importing, supplying or delivering Russian-origin metal. Russiahas traditionally supplied about 40 per cent of the world’s palladium.
It triggered a rush to buy equivalentmetals from other jurisdictions.
“It is a reminder I think thatgeopolitical elements are very important in trying to navigate commoditymarkets,” said Mr Dorsch. “It is a very tight market so any reversing of shortpositions creates significant volatility in the price.”
Palladium is expected to provide about55 per cent of the revenue from Chalice’s Gonneville mine, and news of theRussian sanctions drove a 9.4 per cent surge in Chalice shares last Friday.
Post #:
71547385Chalice story in this post (appeared in Liontown threads) referring to short selling
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