West Perth’s AVZ Minerals and two directors sued by ASIC after years of turmoil over mammoth lithium find

Australia’s corporate cop has come down on one-time market darling AVZ Minerals, accusing the company and two directors of disclosure failures over the Manono lithium project. The Australian Securities and Investments Commission claimed in a fresh legal action on Tuesday that the delisted explorer failed to tell investors about mounting legal troubles in the Democratic Republic of Congo. ASIC’s action in the Federal Court adds another twist for a company that started as a much-vaunted West Perth exploration story, but has since found itself in wending arbitration, attempted takeovers and even an Australian Federal Police raid. ASIC has claimed that AVZ did not make reference to the legal issues brewing in the DRC over the explorer’s claimed stake in the Manono discovery to the ASX until May 2022, despite problems having allegedly started back in mid-2021. Managing director Nigel Ferguson and technical director Graeme Johnston have been named as defendants in the action, facing claims by ASIC that they breached their director’s duties, and authorised ASX announcements relating to AVZ that were false or misleading. The statement of claim has also brought in alleged forgery orders taken against Mr Johnston in a DRC court in late 2021 over the claimed transfer of shares in an AVZ subsidiary. AVZ has denied there was any forgery or evidence of it. In a statement, AVZ and its directors said they “strongly deny all allegations of wrongdoing and the proceedings will be vigorously defended”. AVZ shot to fame after staking its claim in a lithium deposit touted as one of the largest in the world, and as investors were in a frenzy over the battery metal’s place in a world trying to shift to electrification. The company had a market capitalisation of $2.7 billion before its shares were suspended in May 2022 over questions regarding its disclosures, leaving investors stranded in a company that never traded again and was eventually hauled off the ASX in 2024. Despite the legal mire over the project, Manono’s huge potential has become even more pertinent as countries clamour for control of strategic mineral deposits, and has managed to pique the interest of Bill Gates and Jeff Bezos-backed KoBold Metals. Per the latest reports, the US company has managed to secure rights for seven new permits — including four in Manono’s patch — to hunt for lithium. Commenting on the legal action, ASIC’s deputy chair Sarah Court said that proper disclosures, particularly when an asset is overseas, were “critically important to investors.” “In this case it was all but impossible for retail investors to travel to an overseas location in central Africa, in which the company’s operations are being conducted. In those circumstances, investors rely on the company to provide accurate and timely information,” she said. “We allege Mr Ferguson and Mr Johnston failed to inform investors of the ongoing issues in this matter for nearly 12 months.” ASIC is pursuing the pair for financial penalties and a declaration of contravention against AVZ.