Hindenburg, which did not disclose the size of its short position, alleged that Standard’s technology is “struggling out of the gate” and based on patents that were previously rejected by US officials.
The short seller also alleged that Standard is part of a “long-running stock promotion scheme” by its chief executive Robert Mintak, who previously led another lithium company that failed to commercialize its touted “proprietary DLE technology.”
“Standard Lithium appears to us to be a of Mintak’s prior company, Pure Energy Minerals, using the same Vancouver stock playbook as Mintak’s numerous other failed ventures,” the report said.
Shares in Standard plunged as much as 27% during Thursday’s session, erasing over $300 million from the company’s market value. Roughly 2.6% of Standard’s 154.4 million outstanding shares were being used to short, according to Refinitiv data.
Pushing back these allegations, Standard stated it has been operating a pilot facility in Arkansas to test its technology for more than 20 months and given regular public updates.
Standard added in a statement that it is “confident in its lithium extraction technology” and that all of its patent applications are “active and continue to be prosecuted in the ordinary course.”
It also defended Mintak in its press release, stating that its chief executive “has built a large and dynamic team with a broad and diverse skill set.”
The company said it believes the report is “clearly intended to benefit Hindenburg,” which itself has disclosed that it stands to profit in the event that the stock price of Standard declines.
Since Standard’s issuance of its statement, the stock has rebounded sharply, up 14.7% on the TSX Venture Exchange as of 12:45 p.m. ET on Friday.
Koch Industries, which invested $100 million in Standard last fall and is its largest shareholder, also defended the company’s technology and disagreed with Hindenburg’s allegations. The short seller claimed that Koch had “missed red flags and failed in its due diligence in its haste to deploy capital.”
“We conducted extensive due diligence and found Standard Lithium’s technology a promising bright spot on the path towards lithium production here in the US,” a Koch spokesperson told Reuters.
Last November, short seller Blue Orca also published a similar report casting doubts over Standard’s technology, allegations that the company denied categorically at the time.
(With files from Reuters)
