Lithium Ionic jumps as Brazil mineral rights affirmed

Lithium Ionic (TSXV: LTH) reaffirmed the validity of its mineral rights in Brazil, including those for its flagship Bandeira project, amid regulatory scrutiny into parties with ties to the company. The stock jumped.

The update follows allegations by Ontario’s securities regulator last Friday that a group of mining executives at another issuer, Emerita Resources (TSX-V: EMO; US-OTC: EMOTF), had defrauded investors by diverting certain mining claims into Lithium Ionic.

Specifically, the Ontario Securities Commission alleged that these executives created Lithium Ionic to pursue the Falcon project in Brazil, which Emerita acquired in 2018, and made several “misleading statements” between 2017 and 2023 during the commission’s investigative process.

Lithium Ionic, in a subsequent statement, said it was not a respondent in this matter, and no orders have been sought against the company.

On Monday, the lithium developer said it holds “valid and registered title” to these mineral rights, and its interest in the claims is supported by independent legal title opinions and publicly available records maintained by Brazil’s National Mining Agency.

Records also did not indicate prior ownership by Emerita as referenced in the regulatory proceeding, it added.

A hearing on the matter is scheduled for May 8.

“We want to be clear that our title is well established, supported by independent verification, and does not indicate prior ownership by the issuer referenced in the recent regulatory proceeding,” CEO Blake Hylands said in Monday’s press release.

Fully focused

Investors seemed ressured by the company’s statement, as evidenced by Lithium Ionic’s 16% surge to 90.5¢ Monday in Toronto. The company has a market capitalization of about $176 million (US$127 million).

Lithium Ionic remains fully focused on advancing its Bandeira project, part of the Itinga group of properties situated in Brazil’s Lithium Valley, Hylands said. Located near existing producers CBL and Sigma Lithium, Bandeira is considered a key part of Lithium Ionic’s strategy of becoming a near-term lithium producer.

The project is in the final stages of review and approval. In September, Lithium Ionic completed a new feasibility study for the project that outlined an 18.5-year mine life capable of producing 177,000 tonnes of high-quality spodumene concentrate annually.

Emerita on Monday received a takeover proposal from Denarius Metals (CBOE: DMET; US-OTC: DNRSF) at a 15% premium. The deal would consolidate assets in Spain’s Iberian Pyrite Belt while adding scale to a platform that includes production in Colombia.