US1 Critical Minerals Faces Legal Risks as It Seeks Shareholder Nod for Options

Options Offer Overview

US1 Critical Minerals Limited (ASX, USC) has issued a detailed prospectus dated 5 February 2026, outlining a multi-faceted options offer designed to reward existing shareholders, satisfy placement obligations, and compensate consultants. The company is offering a non-renounceable bonus issue of New Options to eligible shareholders at a ratio of one option for every five shares held, alongside a placement offer to institutional investors who subscribed for shares in a recent $1.5 million capital raise. Additionally, 50 million New Options are proposed as a fee to Emes Corporate LLC for their capital-raising consultancy services.

Each New Option carries an exercise price of $0.015 and expires on 31 March 2029. While no immediate funds will be raised from the issue of these options, full exercise could inject approximately $5.89 million into the company’s coffers, providing a vital capital boost for ongoing operations and exploration activities.

Strategic Purpose and Capital Structure Impact

The Bonus Offer aims to reward loyal shareholders and potentially strengthen the company’s capital base if options are exercised. The Placement Offer fulfills commitments made during the December 2025 placement, and the Fee Options Offer settles consultancy fees without cash outlay. Together, these offers will significantly increase the number of options on issue from 219.5 million to over 612 million, substantially expanding the company’s capital structure.

Importantly, the issuance of New Options is conditional on shareholder approval at a general meeting scheduled for 9 March 2026. The company also plans to seek official quotation of these options on the ASX, subject to regulatory confirmation.

Ongoing Litigation and Risk Factors

US1 Critical Minerals is currently engaged in two significant legal proceedings that could materially affect its assets and financial position. The first involves a Federal Court dispute over ownership of US tenements rich in Rare Earth Elements (REE), where the company seeks transfer of tenements or damages for alleged breaches of contract and misleading conduct. The trial is set for April 2026, with uncertain outcomes that could delay or derail US project development.

The second legal matter concerns defamation proceedings against Andrew John Price, who is alleged to have made false and damaging statements about the company on social media. The litigation aims to protect the company’s reputation and recover damages for lost commercial opportunities.

These legal challenges, combined with the company’s current going concern qualification and need for further funding, underscore the speculative and high-risk nature of investing in US1 Critical Minerals.

Management and Operational Considerations

The company’s board currently comprises four non-executive directors, with plans to bolster management as projects advance. However, the absence of executive management presents operational risks, particularly in overseeing exploration and potential development activities. The company also faces typical mining sector risks, including tenement tenure, environmental compliance, commodity price volatility, and climate-related uncertainties.

Notably, Snow Lake Resources Ltd., a substantial shareholder holding over 10% of shares, could increase its influence to nearly 20% if it exercises all its New Options, potentially impacting corporate governance dynamics.

Investor Implications

For investors, the options offer presents an opportunity to participate in potential future capital appreciation if the company’s projects progress and the share price exceeds the exercise price. However, the speculative nature of the company’s operations, ongoing litigation, and funding uncertainties warrant careful consideration. The prospectus explicitly cautions that the New Options carry no guarantee of value or return.