Spruce Point shorts Nova Minerals, stock price drops 2%

Investing.com – Nova Minerals Ltd. (NASDAQ:NVA) fell 2% on Friday after investment research firm Spruce Point Capital Management disclosed that it had established a short position in the company.

In its report announcing the position, Spruce Point expressed concerns about Nova Minerals’ valuation and operational challenges. The firm pointed out that infrastructure limitations, community opposition, and harsh weather conditions in Alaska are obstacles facing the company’s antimony and gold mining operations.

The research firm stated that Nova Minerals lacks proof of concept for its mining activities. Spruce Point noted that some of Nova’s mining rights have been held by two other publicly traded companies since 2007. According to the report, Millrock Resources abandoned these mining rights in 2016 after owning and exploring them for eight years.

Spruce Point questioned the management team’s background and business relationships. The company said that Nova was previously named Quantum Resources, led by Joseph Gutnick, who was banned from managing companies by the Australian Securities and Investments Commission for four years.

The report states that former CEO Avrohom Kimelman was sentenced to prison for market manipulation and insider trading.

The research firm also questioned the qualifications of Nova’s consulting geologist, who, according to ASX listing rules and U.S. securities law, serves as both a qualified person and a competent person. Spruce Point said it attempted to verify the geologist’s claimed graduation from Kryvyi Rih National University in Ukraine in 1992 and a master’s degree in mining geology and engineering, but university records could not confirm the credential.

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