Vulcan Share Price Down — Sues Short Seller J Capital (ASX:VUL)

The Vulcan Energy Resources Ltd [ASX:VUL] is suing J Capital after the short seller’s report questioned the viability of VUL’s lithium project.

Vulcan’s lawsuit has led the Federal Court to ban J Capital from sharing its report for a week.

Vulcan Energy Resources Ltd [ASX:VUL] shares were exchanging hands for $10.94 cents a share.

ASX VUL - Vulcan Energy Share Price ChartSource: Tradingview.com

Vulcan launches legal action

Last month, short seller J Capital released a critical report on Vulcan, claiming the lithium developer made unrealistic assumptions about the commercial viability of its Upper Rhine Valley project.

The report’s publication triggered a sell-off as some investors got spooked. VUL shares are down about 25% since JCap published its report.

After releasing a detailed rejoinder to the market on 28 October, Vulcan today decided to take it one step further and engage the courts.

Yesterday, Western Australia Federal Court Justice Katrina Banks-Smith ordered J Capital and its founder Tim Murray to refrain from sharing or republishing its report on Vulcan.

J Capital is also prevented from helping others republish its assertions, risking punishments that include imprisonment.

Justice Banks-Smith’s order warned that breaching the stipulations can make one ‘liable to imprisonment, sequestration of property or other punishment.’

Vulcan’s law firm — Bennett + Co — applied to the Western Australia Federal Court citing consumer protection laws that protects against misleading or deceptive conduct.

How to Limit Your Risks While Trading Volatile Stocks. Learn more.

What happens now for the Vulcan Share Price?

Vulcan did not disclose today’s developments to the market. The matter was picked up by the Australian Financial Review after the court order was made public yesterday.

The order itself doesn’t include much further information. Investors will likely have to wait at least a week for more details.

Additionally, as part of the injunction order, the Federal Court decided that no document lodged with the court yesterday as part of Vulcan’s proceedings against J Capital will be made available for public inspection without leave of the Court.

Since VUL’s lawsuit cites consumer protection against misleading and deceptive conduct, it will be interesting to see how the Court assesses J Capital’s claims.

If you want extra information on evaluating and comparing lithium miners, I suggest reading our lithium guide released last week.

It’s thorough and takes you through vital factors to consider when pondering the lithium sector.

Additionally, if you’re inclined to read a report analysing a few ASX lithium stocks, check out Money Morning’s report on three exciting lithium miners.

Regards,

Kiryll Prakapenka,

For Money Morning

PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here


Kiryll Prakapenka is an investing autodidact who is passionate about conducting in-depth research on investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from The University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding of the fundamentals behind companies.


Money Morning Australia