“We have 153 employees, 149 of those based in South Africa; we also have three manufacturing plants based in South Africa. We’ve invested most of our capital into South Africa. So, while our investor base may be in the US, the heartbeat of our company is in South Africa, so we owe it to the population to be able to invest in our company and benefit from what we’re doing.”
This is the message that ASP Isotopes CEO Paul Mann has broadcast in several media interviews since announcing the company’s plans to list on the JSE later this year, likely between July and September.
Nasdaq-listed ASPI would be a rare beast: a company aiming to go public on the JSE, which has seen only a handful of listings amid a torrent of delistings over the past five years.
“A lot of South African institutions have reached out to us asking for a JSE listing,” he says, including the state-owned development finance institution, the Industrial Development Corporation, and hedge funds.
It sounds enticing: a company involved in the production of isotopes for applications in cancer medicine, semiconductors and nuclear fuel, using the nuclear technology developed at South Africa’s Pelindaba facilities. But a report released by activist US short seller Fuzzy Panda Research in November last year may be reason to pause.
ASPI, says Fuzzy Panda, “is using old, disregarded laser enrichment technology to masquerade as a new, cutting-edge uranium enrichment company. Unbeknownst to investors, we discovered a crew tied to the most notorious ‘Microcap Fraudsters’ (Barry Honig & John Stetson) behind the scenes.”
These two individuals, says Fuzzy Panda, “were previously charged by the SEC for defrauding retail investors with misleading stock promotions and ‘pump-and-dump’ schemes”.
A “pump and dump” is a scam where fraudsters hype up a stock to inflate its price, then sell their shares for a profit before the price crashes, leaving others with losses.
Short sellers like Fuzzy Panda profit from having a stock they’ve shorted decline in value. Bad news, you could argue, is good news for them.
“That’s not a research report,” says Mann. “That’s a cheap report written by a hedge fund who illegally paid for someone to write it. Basically, almost everything is wrong.”
‘Pretty big institutions’
First, there’s Fuzzy Panda’s claim that ASPI can’t enrich uranium economically. But “South Africa built six nuclear weapons, of course, they can enrich uranium. It’s a ridiculous thing to say,” Mann adds.
According to Fuzzy Panda, multiple ASPI subsidiaries share the same office address, but when its local investigator visited, they found none of these companies at the Melrose Arch location. What they did find was a crypto fund for retail investors, Jaltech. In a detailed rebuttal posted on ASP Isotopes’ website in December however, ASPI clarified that Jaltech had been engaged “to provide certain corporate advisory operations for the Company’s South African subsidiaries, including local accounting, tax and payroll services.” Asked about this, Mann then referred to the company’s manufacturing facilities.
“They sent a local journalist around to try and gain access to our plant, and obviously they weren’t allowed access, so they said we don’t have any plants; well, that’s ridiculous. If some random person turns up, they’re not coming in – they’ve got to have the right permits and permissions. So, it’s a ridiculous article to have written, and that’s been proven.”
He tells Currency that when ASPI invited investors in January to inspect its plants, “27 investors turned up”.
Initially rather vague about who the company’s original backers were (“mainly myself and some investors from Florida and New York. Family offices initially and hedge funds”), Mann then clarifies that ASPI’s three largest investors now are the Tees River Critical Resources Fund, French bank BNP Paribas and BlackRock.
“So, we have some pretty big institutions following us who’ve been to our plants and seen what we do. The guy who wrote that report manages less money than I have in my cheque account,” he says.
Asked whether Barry Honig and John Stetson are involved, Mann says: “No, they are not.”
Intriguingly, however, Honig’s brother Jonathan was one of ASPI’s larger initial shareholders, with 6.2% of ASPI stock through his Titan Multi-Strategy Fund, according to an SEC filing in 2022.
In an interview with investment bank Canaccord Genuity, after the Fuzzy Panda report was released, Mann said: “I don’t think I’ve spoken to any of the original investors for quite a while. I’m guessing most of them are out. They’ve made a good return on their investment, and they’ve probably moved on.”
Risks galore
When Currency spoke to the founder of Fuzzy Panda, who asked to remain anonymous, he said: “That wouldn’t be too surprising to me if they had sold all of [their shares] when ASPI got to $9.” The shares currently trade at $5.83 apiece, putting the company on a market cap of $420m – or almost R8bn.
It’s possible that Honig and Stetson are simply acting of their own accord as arms-length buyers and sellers of the stock.
However, Mann is invested in another Honig-related entity; a company called Unusual Machines in which Jonathan Honig’s Titan Multi-Strategy was a key investor.
The report would be especially disturbing if ASPI were looking to tap local investors for capital, but Mann says it isn’t at this stage, having raised $100m from investors at the start.
ASPI has ploughed about $40m into its plants and currently has about $60m in the bank. “We’ve never been financially stronger. The company should start generating free cash flow in the second half of this year,” Mann says.
However, the day after Currency’s interview, ASPI filed a prospectus on April 30 for a $100m stock offering, which included $25m to be sold in an at-the-market (ATM) offering by Canaccord Genuity. According to Fuzzy Panda, an ATM “is a very dilutive way of fundraising for shareholders because that means there is an investment bank actively selling shares in the open market every single day”.
The prospectus is a dense document that sets out ASPI’s plans in detail.
ASPI plans to ship its first commercial batches of enriched carbon-14 by mid-2025 and silicon-28 in the second quarter of the same year. According to Mann, the company has signed agreements with US semiconductor giant Intel for its ultra-pure silicon-28 (“an indispensable isotope in cutting-edge technology”), and with German industrial gases group Linde.
But the company’s own prospectus lays out risks that seem at odds with its public messaging. It notes that ASPI has “not yet produced any commercial quantities of isotopes”, nor demonstrated the ability to do so using its own technology.
It also concedes that the company has “no products approved for commercial sale, has not generated any revenue to date, and continues to incur significant R&D and operational expenses”. Since launching in September 2021, ASPI has remained unprofitable.
On ASPI’s more ambitious goal – producing high-assay low-enriched uranium for the next generation of small modular reactors – Fuzzy Panda argues that ASPI would need a US Nuclear Regulatory Commission (NRC) licence to enrich uranium, a process that could take 10 to 15 years.
ASPI itself acknowledges it “has not yet sought any regulatory approval” for the production of isotopes necessary to create U-235, the uranium fuel used in reactors. In its December rebuttal it wrote that the NRC would not be the licensing authority for a uranium enrichment facility in South Africa. “Therefore, the Company would not need to apply for an NRC license in the United States for such a facility operated by a South African affiliate of the Company.”
Instead, it says the South African nuclear regulatory licensing regime will apply to ASPI’s uranium enrichment activities, and it will apply for all required permits and licenses to enrich U-235 in South Africa.
Fuzzy Panda’s central contention is that the technology touted by ASPI “has been around for a really long time and it’s been shown consistently that it doesn’t work economically for uranium”. Obviously, a view not shared by ASPI.
Mann is a chemical engineer by background but spent most of his career in finance, working for Morgan Stanley and George Soros, among others.
Asked how ASPI came about, he says: “The opportunity ended up on our chief operating officer’s desk – he was a debt-restructuring person and … he showed it to me, and I thought, yeah, this is very interesting, and so we decided to acquire the assets.”
These assets were bought from two South African businesses: Molybdos and Klydon
Fuzzy Panda says it stands by its report and remains short ASPI.
The company’s track record is compelling.
In a Bloomberg news report published in April 2024, citing data tracking company Breakout Point, Fuzzy Panda was the best-performing activist short seller in 2023. Short positions it’s taken include on US firms AppLovin and Globe Life.
“Even if Fuzzy Panda is not as well known as Muddy Waters, Gotham City or Hindenburg, their track record is one of the most impressive. This has made them almost an insider tip in the community of activist short sellers,” said Ivan Cosovic, Breakout Point founder.
This article was updated to include details from ASP Isotopes’ December statement, which can be found here.
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