Power Nickel updates on asset spin-out, highlights concerns over market manipulation
Power Nickel Inc (TSX-V:PNPN, OTCQB:PNPNF) has revealed more details about the upcoming spin-out of its Golden Ivan property and Chilean exploration assets to Chilean Metals Inc.
The arrangement is expected to take effect before the end of January 2025.
As part of the plan, Power Nickel shareholders will receive one new common share of Power Nickel and 0.05 of one Spinco common share for each Power Nickel share held.
The company will also adjust outstanding stock options, with holders receiving new options for both New Power Nickel Shares and Spinco Shares.
Naked short selling
In a shareholder letter accompanying the news, the company also raised significant concerns regarding potential market manipulation, specifically naked short selling of its shares, and stated that the evidence it has gathered has been filed with regulatory authorities.
In the letter, Power Nickel management outlined their concerns, stating, “The only logical assumption is some way, somehow, millions of Power Nickel Shares in this seven-month period alone have been sold but have not landed in any brokerage account.”
They further explained that, based on data from Generation IACP, approximately 29.5% of trading on the TSX Venture Exchange (TSXV) could be linked to potential naked short selling.
Power Nickel CEO Terry Lynch also highlighted that the company has worked with Save Canadian Mining, an advocacy group founded by notable industry figures like Eric Sprott and Rob McEwen, to address broader concerns over market manipulation.
“We believe this is accomplished through brokers allowing improper use of the Short Market Exempt (SME) Status,” the CEO noted. “This status allows non-market makers to hit any bid with a sales order and not mark it as a short sale.”
Management has expressed dissatisfaction with the responses from regulators, stating that the review process has not been transparent or thorough. “It is management’s view that FINRA and CIRO have not properly investigated the complaints and the evidence submitted to them regarding improper trading activities,” the letter said.
“We believe this is something that Save Canadian Mining, along with thousands of disgruntled investors, is desperately trying to change.”
Additionally, Power Nickel has pointed to a study conducted by Digital BD, Inc., which analyzed US trading data for the company’s shares. The company believes that the evidence points to “counterfeit shares being traded,” suppressing the stock price despite positive news and successful exploration results, such as drilling at the Lion Zone.
The CEO of Power Nickel explained: “Our shareholders ask us quite fairly: ‘Why is there so much selling when the news is so good? Why doesn’t our stock perform better?’ To us, the black and white of it is somehow our system of trading is allowing the manufacture of counterfeit shares.”
Despite these concerns, the company remains optimistic about its future, citing significant backing from legendary investors such as Robert Friedland, Rob McEwen, and Gina Rhinehart, who have shown confidence in the company’s exploration efforts.
“When we beat these malicious predatory naked short sellers, we will see, in our view, the greatest mining boom in history,” the letter concluded.
