Snow Lake Resources (NASDAQ:LITM) received a notification letter from NASDAQ, stating that the company is no longer in compliance with NASDAQ’s audit committee requirement (Listing Rule 5605). This is due to the removal of Nachum Labkowski from the company’s audit committee on September 7. Labkowski was also removed as a member of the nominating and corporate governance committee but remains an independent director on Snow Lake’s board. Snow Lake shares tanked nearly 41% to $1.88 in Monday’s regular trading session.
Snow Lake, which is focused on creating and operating a fully renewable and sustainable lithium mine, received the warning letter on September 19 and announced the same after the closing of financial markets on September 23. The company can regain compliance within a “cure period,” which expires at the earlier of its next annual shareholders’ meeting or September 7, 2023.
Separately, in an SEC filing, Snow Lake revealed its plans for a common stock offering of 10 million shares at $3 per share. The company intends to use the net proceeds of $27.5 million from the offering for “resource development activities, technical studies and reports, working capital and general corporate purposes.”
Is LITM Stock a Buy?
On Friday (September 23), Snow Lake shares surged over 38% following the company’s announcement of a deal with LG Energy Solution to build a domestic supply chain for the North American electric vehicle market. The two companies will collaborate to establish one of Canada’s first lithium hydroxide processing plants in Winnipeg, Manitoba. Under the agreement, Snow Lake will supply lithium to LG Energy over a 10-year period once production commences in 2025.
Following Monday’s decline, LITM stock is down 71% year-to-date. Given the NASDAQ non-compliance issue and the volatility associated with this penny stock, it will be better for risk-averse investors to avoid LITM shares for the time being.
