International Battery Metals Sees Major Shareholder Unload $23.3 Million In Shares

International Battery Metals (CSE: IBAT) has seen a major shareholder unload roughly a third of their stake in the company over the last two months. The transactions, however, were filed just last night despite the significant changes in ownership.

EVL Holdings, whom prior to the transactions owned a 15.64% stake in the company, has evidently unloaded millions of shares of the issuer. On a post transaction basis, that position now sits at 10.88%, just barely above the reporting threshold of 10.00% ownership in the issuer.

The transactions began on March 4, when the company sold 2.5 million shares of International Battery at a price per share of US$2.00, or roughly C$2.55, generating the firm gross proceeds of US$5.0 million. The asset sale is said to have been carried out privately, however it is notable that the lowest trading price on March 4 was $4.01, while the close sat at C$4.37, indicating someone had an immediate gain of 71.4% as of the close of the transaction.

The transaction was the only one that occurred during March, however it was not filed with the regulator until April 29.

Further sales occurred in April, with 3,125,000 shares being sold in a single transaction on April 18 at a price per share of C$4.04, the same day during which the stock hit a high of $6.30 per share before settling at $5.95 on the day, a 47.3% immediate gain for the purchaser.

A second transaction also occurred on this date for 100,000 shares at C$5.05 per share, providing the purchaser with an immediate 17.8% gain. Notably, April 18 marked the most recent high, with the equity seeing a sell-off thereafter.

The final transaction filed by EVL saw a sale of 750,000 shares at a price of C$5.10 per share, which occurred on April 25. The equity traded as high as $5.66 on the day, before settling at $5.14, marking a paltry 0.8% gain on the day for the purchaser. After April 25 however, the equity sunk as low as $3.43, before closing at $3.95 on Friday.

Within the early warning press release filed by EVL, they attempt to address the strong discrepancies in the price per share that the shares were sold at, relative to the then current trading price. They comment, “EVL entered into a purchase and sale agreement with the respective seller at a point in time prior to completion of the transaction, and the respective sales prices were negotiated based on the price of IBAT’s shares on or about the dates of such agreements.“

While this justification may work for the first sale, it hardly works for the sales conducted on April 18, unless a significant discount to the trading price was intentionally provided. Rather than something nefarious, it likely points to a little discussed aspect of investing in small cap equities – positions of size are often extremely difficult to get out of in low liquidity environments, even if on paper the gains are substantial.

Despite the discounts provided, EVL appears to have made significant multiples on its original investment. The company in 2020 invested $2.5 million at a price per share of $0.10 to take a 21.94% stake in International Battery Metals. In the most recent sales, they disposed of 6,475,000 shares in aggregate, for gross proceeds of US$18.4 million, or roughly C$23.3 million, while still retaining 14.8 million shares in the issuer, which is good for a 10.88% stake in the firm.

The shares are said to have been sold to institutional investors “with similar long-term investment views.”

International Battery Metals last traded at $3.95 on the CSE.

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Information for this briefing was found via Sedar, Sedi and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.