Magnis Energy in limbo after auditor queries solvency

afr.com:

The ASX says it will not allow Magnis Energy Technologies to trade on the exchange after auditors raised concerns about the company’s finances.

The market operator said it will keep Magnis’ shares halted until the company can reassure the bourse that it is solvent after it posted a $72.7 million loss and cash outflows of $58.6 million in the 12 months to June 30.

Magnis – which owns a large stake in an electric vehicle battery manufacturer in the United States and is developing a graphite project in Tanzania – has net current assets of just $30 million including cash reserves of $22 million, according to accounts filed earlier this week.

The ASX has suspended Magnis until it can reassure the bourse it is solvent.  Oscar Colman

Magnis’ directors insist the firm can raise additional funds via either borrowing more cash or issuing new shares, to keep the company in business, the auditors observed.

But the auditors, Hall Chadwick, concluded if the director’s claims are incorrect, “there is material uncertainty that may cast significant doubt over whether the group will continue to operate as a going concern”.

If Magnis can’t secure the extra cash or debt, Hall Chadwick warned the group may be required to sell its assets and settle liabilities at “amounts different to those stated in the financial statements”.

The company had raised $10 million in a placement through Evolution Capital only three months ago, and another $25 million in March. It had signed an offtake agreement with Tesla earlier this year, although that deal is highly contingent on a series of milestones Magnis must meet.

Two years ago, the company told the ASX, in response to queries about its finances, that its iM3NY subsidiary, which operates the plant in