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Chlormet Technologies (V.CMT): Punished by the Venture for being honest?

Gaalen Engen
0 Comments|April 9, 2014

Chlormet Technologies has been keeping shareholders informed of its exploratory work in looking at a potential shift to medical marijuana. Seems they should have kept their mouth shut.

Chlormet Technologies (TSX:V.CMT, Stock Forum) investors are furious that the company appears to have been punished by the TSX Venture Exchange for open communication with shareholders about their new marijuana-focused business explorations.

The company has been trade halted since April 4 by the Venture due to concerns that “the LOI entered into between the company and [private medical marijuana company] AAA Heidelberg on March 27, 2014, may constitute a change of business, as such term is defined by the exchange,” according to a company news release.

Chlormet expects to remain halted “until filings prescribed by the COB policy are accepted by the exchange or such time as dictated by the exchange.”

The company has not finalized the transaction with Heidelberg, but is engaging in extensive due diligence and has told shareholders no transaction will take place unless the company receives an MMPR (Marihuana for Medical Purposes Regulations) license from Health Canada, so no change of business has yet taken place.

The Chlormet LOI is not the only one out there. Dozens of other Venture-listed companies are in heated negotiations with medical marijuana growers, IP owners, distributors, laboratories, inhaler makers and even child-proof baggy sellers, with many having announced they have agreed to option arrangements dependent on license acquisition.
But where Chlormet differed from the rest is that it was clear and open about its plans, naming the company it was talking to and the plans it was hoping to lock in at some future date, while others are largely keeping quiet.

Because of the trade halt, daytraders now have their money locked away and long holders are missing out on significant sector-wide price increases as the company misses potential opportunities to raise finance at higher prices.

Many on the Stockhouse Bullboards are recommending the company switch to the CSE as a result of the halt.
Right now, there are some 30+ Venture-listed companies in various stages of medical marijuana exploration, with some clearly at advanced stages of business and others simply tossing their hat into the ring to get a cheap share bump. Others still have made no public announcement of their desire to jump in, while engaging in ongoing behind the scenes activity to do just that.

One struggles to see how exactly the Venture’s actions in this case benefit investors in any way. Instead of asking companies playing in the shadows to demonstrate legitimacy in their proposed strategic alternative exploration of the MMJ space, the Venture has shown that companies who are open with shareholders will be punished for doing so, and their shareholders will have their funds tied up for an unknown period of time.

At the time of writing, Chlormet remains trade halted. Terra Firma Resources, on the other hand, trades freely.

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