Invictus ordered to explain suspected ‘stock ramp-up’

THE Australian Stock Exchange (ASX) has demanded an explanation from Invictus Energy, which recently discovered large gas deposits in Zimbabwe, amid suspicion the company breached listing rules when it indicated as “market-sensitive” the announcement that its gas find had been identified by global research and consultancy group, Wood Mackenzie, as one of the largest discoveries in sub-Saharan Africa in 2023.

The ASX said it had noted the announcement was indicated by Invictus to be ‘market-sensitive’ when it was lodged on the exchange’s MAP (Material Announcements Platform) earlier this month, several weeks after the information was released.

According to the ASX, Invictus in its quarterly activities report lodged on MAP on January 21, 2024, stated in the highlights section that the Mukuyu condensate gas finding had been estimated by Wood Mackenzie to be the second-largest discovery made in Sub-Saharan Africa in 2023.

The Mukuyu gas find in Zimbabwe’s Mbire District of Mashonaland Central Province, is the first such petroleum discovery in the country.

Wood Mackenzie is a globally renowned research and consultancy group supplying data, written analysis and consultancy advice to the energy, chemicals, renewables, metals and mining industries.

In late January, the global research firm said Invictus’s gas find ranked second among a total of seven discoveries in sub-Saharan Africa in 2023 behind Namibia’s Jonker1, a multi-billion oil barrels discovery.

In a suspected “share price ramp-up” update, Invictus announced the information on ASX’s MAP roughly three after the survey published by Wood Mackenzie.

“The Mukuyu field has been identified as the second largest discovery in Sub-Saharan Africa in an upstream review published by global energy research firm Wood Mackenzie last month.

“Mukuyu’s placing as an estimated 230 million boe (1,3 TCF) resource follows two gas discoveries from the Upper and Lower Angwa reservoirs declared by Invictus in December 2023.

“The review also notes regional exploration yielded seven discoveries from a total of 17 wells drilled across the subcontinent in 2023, with Invictus accounting for two of the discoveries,” reads part of Invictus’s announcement on MAP.

The dual discoveries, Invictus said in the MAP announcement, confirmed the incredible potential of the Mukuyu gas field and defined a new petroleum province in the Cabora Bassa basin (Muzarabani/Mbire), where the company holds a dominant acreage position of 360 000 hectares in proximity to a high-demand energy market with established delivery infrastructure.

The regulator demanded to know when Invictus became aware of the information and why the company did not immediately inform the exchange when in fact it later announced the information as “market sensitive”.

According to the ASX, Listing Rule 3.1 requires a listed entity to immediately give to the ASX any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity’s securities.

The ASX cited provisions in its listing rules, including the definition of “aware” in Chapter 19 of the rules, which states that: “an entity becomes aware of information if, and as soon as, an officer of the entity (or, in the case of a trust, an officer of the responsible entity) has, or ought reasonably to have, come into possession of the information in the course of the performance of their duties as an officer of that entity”.

Only if there are regulatory exceptions to the requirement to disclose certain information under defined circumstances, the ASX said, would the company be exempted from making the disclosures to the regulator within the set timeframe.

The ASX said it was alive to listed entities making market announcements with a view to “ramping up” the price of their securities.

Ramping announcements come in many forms, including the release of a “business update” or something similar, which will typically be worded exuberantly, but which on closer examination contains little in the way of substance that has not already been disclosed to the market;” . . .

“ASX has observed instances of ramping announcements being made: (a) just before a capital raising, with the apparent intent of boosting the price for the capital raising; . . . ,” the exchange wrote in its query letter to Invictus.

“MAP should only be used to publish information that is appropriately given to ASX under the Listing Rules or the Corporations Act for publication to the market. It should not be used as a guise to publish material that is really promotional, political or tendentious in nature.”

The ASX queried whether Invictus considers the Information, or any other part of the announcement, to be information that a reasonable person would expect to have a material effect on the price or value of its securities.

It said if not, then the company should proffer an explanation why it lodged the announcement as ‘market-sensitive’ on MAP, providing further detail specifically on whether the company considers its actions to be misleading.

Further, the ASX said Invictus should explain the listing Rule or Corporations Act basis necessitating the disclosure of the announcement on MAP.

In its responses, Invictus said the company did not consider that the information it disclosed was such that a reasonable person would expect, on its own, to have a material effect on the price or value of its securities.

“However, the information was an independent report, to which the company had no involvement and engagement with the author, Wood McKenzie, on an overview of the status of exploration in Sub-Saharan Africa in 2023 and provided context to the activities of the company in the wider region,” Invictus said in a response lodged with ASX by company secretary Gabriel Chiapini.

The ASX-listed junior explorer added saying the announcement was inadvertently lodged as ‘market sensitive’ when it was not intended for it to be so.

“However, the intention was not to mislead the market on the company’s activities, and the board does not consider that it was misleading for the announcement to be marked as ‘market sensitive’ as it is independent information in the public domain relating to the relevance of the company’s activities in the region prepared by a credible independent third party who assessed the activities of various companies in the region,” Invictus said.

The company also said its board was of the view that the error, in this case, was a one-off error that occurred during the lodgement of the announcement and was not evidence of a systemic issue with the consideration of compliance with the listing rules around these matters.

“In addition, for the reasons outlined above, the board does not consider that the error in this case caused the market to be misled because of the nature of the content of the announcement,” Invictus said.-ebusineswweekly