SCHEDULE 13D/A: Major Shareholder NTEC Directors Resign from Texas Mineral Resources Board Amid Strategic Misalignment and Project Delays

Navajo Transitional Energy Company (NTEC) has announced the resignation of its two designated directors from the Texas Mineral Resources Corp. board, citing deferred development timelines for the Round Top Deposit and TMRC's new focus on unrelated silver exploration, prompting NTEC to review the disposition of its significant investment.

Summary

• Navajo Transitional Energy Company, LLC (NTEC), along with its CEO LaVern K. Lund and Management Committee Member Peter Denetclaw, Jr., filed an Amendment No. 1 to their Schedule 13D regarding their beneficial ownership in Texas Mineral Resources Corp. (TMRC).
• NTEC holds 10,111,883 shares of TMRC Common Stock, representing 13.6% of the outstanding shares, acquired for $3,640,278 from available working capital.
• LaVern K. Lund beneficially owns 10,274,945 shares (13.7%) and Peter Denetclaw, Jr. beneficially owns 10,262,149 shares (13.7%), including shares held by NTEC and shares received as compensation.
• The aggregate beneficial ownership reported by the group is 10,422,311 shares, constituting approximately 14% of TMRC's outstanding Common Stock.
• The filing states that the timeframe for the development of the Round Top Deposit, a joint venture between TMRC and USA Rare Earth, LLC (in which NTEC also has membership interests), has been deferred beyond NTEC's acceptable timeline.
• TMRC has initiated exploration and development activities for silver deposits in New Mexico, which NTEC considers outside its principal business and strategic focus.
• Due to these reasons, LaVern K. Lund and Peter Denetclaw, Jr. resigned from TMRC's Board of Directors effective January 28, 2025, and will not stand for re-election.
• NTEC currently has no intention to exercise its right to nominate replacement directors.
• NTEC is reviewing the disposition of its investment in TMRC but currently has no plans or proposals for selling its Common Stock.
• The total outstanding Common Stock of TMRC was 74,588,426 shares as of November 18, 2024.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the resignation of key directors from a major strategic investor, citing significant project delays and strategic misalignment. The investor (NTEC) is also reviewing the disposition of its substantial stake, indicating potential future selling pressure and a loss of strategic support for Texas Mineral Resources Corp.

Negatives

• The timeframe for the development of the Round Top Deposit has been deferred beyond NTEC's acceptable timeline.
• Texas Mineral Resources Corp. has begun exploration and development activities for silver deposits in New Mexico, which is outside of and wholly unrelated to NTEC's principal business and strategic focus.
• LaVern K. Lund and Peter Denetclaw, Jr., NTEC's designated directors, resigned from the TMRC board due to strategic misalignment and project delays.
• NTEC has no present intention to nominate replacement directors, indicating a reduced strategic interest in TMRC's governance.
• NTEC is reviewing the disposition of its investment in TMRC, which could lead to a significant sell-off of shares by a major shareholder.

Risks

• Potential divestment of a significant equity stake (13.6%) by Navajo Transitional Energy Company (NTEC), which could exert downward pressure on Texas Mineral Resources Corp.'s (TMRC) stock price.
• Strategic misalignment between a major investor (NTEC) and TMRC's current business direction, particularly TMRC's new focus on silver exploration, which is unrelated to NTEC's core energy business.
• Delays in the development of the Round Top Deposit, a key project that was the original basis for NTEC's investment and joint venture participation.
• Loss of board representation from a strategic investor, potentially impacting TMRC's access to NTEC's expertise or resources.

Future Outlook

Navajo Transitional Energy Company (NTEC) is currently reviewing the disposition of its investment in Texas Mineral Resources Corp. (TMRC) due to the deferred timeframe for the Round Top Deposit development and TMRC's new strategic focus on silver exploration, which is unrelated to NTEC's core business. NTEC has no present intention to nominate replacement directors to TMRC's board and currently has no specific plans for selling its shares.

Management Comments

• "The time frame for development of the Round Top has been deferred, beyond what NTEC had found acceptable when it made its investment and had relied upon."
• "[Texas Mineral Resources Corp.'s] initiative [in silver deposits in New Mexico] is outside of and wholly unrelated to the principal business of NTEC and strategic focus."
• "NTEC has no present intention to exercise its right to nominate replacement directors or director nominees to the Board of Directors of Issuer."
• "NTEC currently is reviewing the disposition of its investment in the Issuer. It, however, currently does not have any plans or proposals relating to the disposition of the Common Stock that it owns."

Industry Context

This announcement highlights a strategic divergence between a significant investor, Navajo Transitional Energy Company (NTEC), primarily focused on coal and energy, and Texas Mineral Resources Corp. (TMRC), which is shifting its focus from rare earth elements (Round Top Deposit) to silver exploration. NTEC's original investment was tied to the rare earth joint venture, and the deferral of this project coupled with TMRC's new, unrelated venture has led to a strategic misalignment, prompting NTEC to reconsider its investment and board representation. This reflects the challenges companies face in maintaining investor alignment when strategic priorities evolve or project timelines extend significantly.

Management Changes

Corporate Governance

Related Party Transactions

• LaVern K. Lund and Peter Denetclaw, Jr. received shares of Common Stock as compensation paid by Texas Mineral Resources Corp. for their service on the Board of Directors. Specifically, on January 6, 2025, Mr. Lund was issued 32,407 shares and Mr. Denetclaw was issued 27,778 shares, both at a price of $0.30 per share, for service during Q4 2024.

Stakeholder Impact

• **Shareholders:** Potential negative impact due to the resignation of directors from a major strategic investor and the possibility of NTEC divesting its significant stake, which could lead to stock price volatility.
• **Navajo Transitional Energy Company (NTEC):** Reviewing its investment, indicating a potential shift in its portfolio strategy away from Texas Mineral Resources Corp. due to strategic misalignment and project delays.
• **Texas Mineral Resources Corp. (TMRC):** Faces the loss of board representation from a key strategic investor and the potential for a large block of shares to be sold, which could affect its market valuation and future strategic partnerships.
• **USA Rare Earth, LLC:** The deferral of the Round Top Deposit development may impact the joint venture's progress and future prospects.

Next Steps

• Navajo Transitional Energy Company (NTEC) will continue to review the disposition of its investment in Texas Mineral Resources Corp. (TMRC).
• TMRC is expected to continue its exploration and development activities related to silver deposits in New Mexico.
• TMRC will need to address the implications of the director resignations and the potential divestment by a major shareholder.

Key Dates

Recommendation

Keywords

Texas Mineral Resources Corp, TMRC, Navajo Transitional Energy Company, NTEC, Schedule 13D, beneficial ownership, director resignation, Round Top Deposit, rare earth, silver exploration, joint venture, strategic misalignment, investment review