ASX Probe Exposes Disclosure Gaps in Advance Metals’ Investor Communications

Background to the ASX Query

Advance Metals Limited (ASX – AVM), a base metals exploration company, recently faced scrutiny from the Australian Securities Exchange (ASX) concerning its disclosure practices and marketing activities. The ASX's inquiry followed a series of marketing materials and reports released by third-party entities, including Next Investors and East Coast Research, which had influenced AVM’s share price and trading volumes.

Clarifying Disclosure and Compliance

AVM firmly stated that it did not provide any undisclosed information to either Next Investors or East Coast Research, affirming compliance with Listing Rule 15.7, which governs the timing and manner of market disclosures. The company acknowledged a brief telephone discussion with East Coast Research to clarify technical details from its corporate presentation but denied involvement in drafting or approving the content of the research report.

While AVM conducted only a high-level review of the technical information in the East Coast Research report, it did not verify opinions or assumptions within. Following further reflection, AVM now classifies the East Coast Research report as a 'public report' under the JORC Code, which sets standards for reporting mineral resources and reserves. Consequently, the company has requested the report’s removal from public platforms, cautioning investors against relying on it for investment decisions.

Funding Status and Capital Raise Update

The ASX also questioned statements in the East Coast Research report describing AVM as 'well-funded,' which appeared inconsistent with the company’s own quarterly cash flow report indicating only 1.15 quarters of funding available. AVM clarified that it did not approve the report’s content and emphasized that its capital raise plans remain in progress without any binding commitments yet secured. Discussions with potential investors continue as the company seeks to bolster its financial position to maintain exploration momentum.

Material Consideration and Transparency

Regarding payments for marketing services, AVM disclosed it will issue 8.5 million fully paid shares to Next Investors as consideration for investor relations services, a transaction deemed material and previously reported to the ASX. Payments to East Coast Research were described as immaterial relative to AVM’s overall financial standing and thus not requiring separate disclosure. The company confirmed that all responses to the ASX query were authorized by its board in line with its continuous disclosure policy.

Implications for Investors and Market Confidence

This episode highlights the delicate balance mining companies must maintain between promoting their projects and adhering to strict disclosure regulations. AVM’s proactive engagement with the ASX and willingness to retract potentially non-compliant reports may reassure investors about its commitment to transparency. However, the ongoing uncertainty around funding and the capital raise underscores the challenges faced by exploration companies in securing stable financial footing amid market scrutiny.