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That year, it released exploration results on a copper, zinc, lead and gold property it had under development in Spain and was also pursuing the right to develop a former zinc-copper-lead mine in that country.

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But the company’s share price by 2022 had fallen back below $1 against a backdrop of falling commodity prices, rising interest rates and global recession fears.

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Meanwhile, lithium prices had been rising in 2021 and hit a record in 2022.

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Emerita in 2018 had told shareholders it had acquired the Falcon Project, located in the Aracuai district of Minas Gerais, Brazil, also known as Lithium Valley.

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The prospective property is about 500 metres from what was Brazil’s only operating lithium mine, and is also near what would become the largest hard rock lithium mine in the Americas.

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“This is an exceptional opportunity to add value at a low cost,” Gower said in 2018.

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But the company in 2021 told shareholders that it had “relinquished” the Falcon Project, though it offered no details as to why.

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Emerita’s lawsuit against its former executives now offers one view of what allegedly happened inside the company.

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According to the company’s lawsuit, Emerita had paid 1.5 million shares between 2016 and 2018 to acquire the Falcon Project.

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Former CEO Gower and others allegedly told the board that Emerita lacked the money to keep the project’s permits in good standing with Brazilian authorities and defaulted on its deal to acquire title to the property, the lawsuit states.

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The board accepted their explanation, according to the lawsuit.

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But the company’s lawsuit claims the explanation “came into serious question” after the OSC this April accused the executives of fraudulently diverting the project to Lithium Ionic, where they held shares and served in management and on the board.

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Emerita then launched an investigation and concluded it had not defaulted on the purchase agreement and that “there was no convincing evidence it had ‘relinquished’ the Falcon Project,” according to its lawsuit.

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“In early 2021, Emerita’s rights to the Falcon Project were still intact,” the company’s lawsuit alleges. “At that time, Emerita clearly had the financial resources to pay the limited amounts (less than $10,000) required to keep the Falcon Project in good standing.”

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Instead, Lithium Ionic has spent the past few years advancing the Falcon Project, which has become part of what it calls its Bandeira project. The company has raised more than $83 million through equity financings since 2022.

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Now, the lawsuits, one filed in Ontario Superior Court in Toronto by Emerita and an application for an enforcement action filed by the OSC at the Capital Markets Tribunal, raise questions about who will ultimately control the prospective lithium property in Brazil.

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PM Super Fund, an Australia-based investor that owns around 3.9 per cent of Emerita, has also filed a motion to intervene in Emerita’s lawsuit.

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Wayne Peters, the director for the trustee for PM Super Fund, said that would give it a type of oversight role to ensure the lawsuit against the former executives and Lithium Ionic is not settled in a way that benefits some shareholders over others.

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He said his main concern is that the Falcon Project, or a large portion of it, should be returned to Emerita.