Nemaska Lithium

Near-term Lithium Production in Quebec

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Overview

Nemaska Lithium Inc. (TSX:NMX,OTCQX:NMKEF) is building one of North America’s richest and  largest hard rock lithium mines and lithium salts (LiOH and Li2CO3) processing facilities through a unique deposit in Nemaska and a state-of-the-art electrochemical plant in Shawinigan, both  located in the province of Quebec, Canada. The project is permitted making it one of the next fully integrated lithium salts suppliers in the world.

Once in commercial production, Nemaska Lithium is projecting to be one of the world’s lowest cost producers of lithium hydroxide and lithium carbonate (source – NI 43-101 compliant feasibility study of January 8, 2018).

Having finalized its project financing, Nemaska Lithium has a 12 to 15 month construction and commissioning time for the mine and 27 months for the electrochemical plant. Qualification of Nemaska Lithium’s lithium salts with key customers began in 2017 through its Phase 1 Plant which is producing commercial lithium hydroxide samples for customers.

Company Highlights

 

  • Vertically integrated lithium project
    • High-quality spodumene concentrate produced at the mine site is transported directly to the electrochemical plant in Shawinigan, which generates high-purity lithium hydroxide and lithium carbonate.

 

  • North America’s richest and one of the largest reserves of Lithium Spodumene in the world
    • 37 MT Proven and Probable Reserves for an initial 33 year mine life
  • Forecasted to be the lowest cost producer of lithium hydroxide worldwide
    • Proprietary chemical process uses electrolysis. With electricity being the main input cost, which is $0.05 kWh in Quebec, the costs low and predictable
    • Vertical integration is a key factor in keeping costs minimal

 

  • Closest near-term lithium hydroxide/lithium carbonate producer (fully permitted)
    • Phase I Plant: on-going operations to produce commercial lithium salts samples
    • 12 to 15 month constructing and commissioning of Commercial Mine, Concentrator
    • 27 month construction and commissioning of electrochemical plant
  • In-house experienced management, technical, construction and plant start-up teams
  • Key stakeholder support
    • Supported by the Quebec and Canadian governments through $26M in funding and future project investment.
    • The Cree Nation of Nemaska has independently acquired approx. 3% of the outstanding common shares.
  • World-class customers – offtake agreements with Johnson Matthey, LG Chem, Northvolt and FMC in place
  • Right of First Offer agreements in place with SoftBank Group
  • Excellent lithium market macros — demand outpacing limited supply
    • Lithium hydroxide is the chemical compound of choice for battery manufacturers such as Tesla and Panasonic due to higher power density, longer lifecycle and enhanced safety features

 

Whabouchi Project

Whabouchi Lithium Mine

Nemaska Lithium will mine its own source of lithium, which is the 100% owned. The Whabouchi Lithium mine is located in northern Quebec Canada. Controlling the raw material provides a cost advantage over the Chinese producers who are sourcing their concentrate from mines in Australia through contracted prices, not at cost, as is the case for Nemaska Lithium.

Location

Located roughly 300 kilometers from Chibougamau, Quebec, the Whabouchi Property is made up of one block totaling 33 claims over 1,761.9 hectares. The property features significant grades and volumes of spodumene hard rock lithium. Nemaska Lithium plans to develop the project as a combined open pit and underground. The underground mine will be developed at the end of the open pit life around year 24.

Infrastructure:

Whabouchi benefits from its proximity to existing infrastructure, as there has been a significant amount of development by Hydro-Quebec in the area. The site has year-round road access via the Route du Nord, the daily serviced Nemiscau Airport, the Relais routier Nemiscau camp (lodging facility) and a local workforce comprised of Cree community members. Whabouchi is also in close proximity to a network of powerlines with two hydro-electric power stations within 20 km.

 

Exceptional characteristics:

  • High grade proven and probable reserve in the world
    • The Whabouchi project contains proven and probable reserve of 24 million tonnes of 1.53% lithium oxide (Li2O) for the open pit and proven and probable reserves of 13 million tonnes at 1.16% Li2O for the underground mine. This is the highest grade proven and probable reserve in North America, second highest in the world, as well as the largest proven reserve known.
  • Easily mined open pit
  • Low strip ratio

2016 Feasibility Study conclusions:

  • Expected Mine Life and Payback Period: 33 years with 2.9 year payback period
  • NPV: $3.3B (US$2.5B) 8% Discount (pre-tax) / $2.4B (US$1.8B) 8% Discount (after tax)
  • Life of Mine Revenue: $19.2B (US$14.8B) (average of $581M/yr for 33 years)

Mine Site Progress To Date:

The mine will consist of an open pit, crushing plant, the concentrator, mobile shops, laboratory, warehousing, and administrative offices. Thirteen kilometers of electrical line from substation has been built and the hook up to the mine is complete. The commercial concentrator building has been erected and on-site access roads are built. Detailed engineering and site mine plan are complete.

Timeline:

From the point of financing, construction and commissioning of mine and concentrator will be completed in 12 to 15 months.

Electrochemical Plant

Nemaska Lithium has constructed and developed a Phase 1 Plant in 2016/17. The plant is a 1/65 scale demonstration plant. The facility transforms spodumene concentrate from the Whabouchi Mine into high-purity lithium hydroxide. Commercial samples are then sent to large end users in the lithium battery industry for qualification process.

The goal of Nemaska Lithium’s Phase 1 plant is to qualify its products with end users and sign offtake agreements while constructing of the commercial electrochemical plant, which will also be located in Shawinigan next to the Phase 1 Plant.

Proprietary Lithium Hydroxide Production Process

The commercial plant will use Nemaska Lithium’s proprietary, patent-pending membrane electrolysis process to produce high-purity lithium hydroxide and lithium carbonate at a rate of 33,000 tonnes per year. This process was modified from an industrial process used for years in the chlorine alkali industry. The key operating cost of this method of production is electricity, which in Quebec is contracted long term for $0.05 kWh, giving Nemaska Lithium visibility into its cost structure over the life of the project.

Phase 1 Plant Progress to Date:

The operating Phase 1 Plant has successfully produced lithium hydroxide from Whabouchi spodumene concentrate, demonstrating Nemaska Lithium’s ability to produce lithium hydroxide and also enabling the qualification of products with customers and offtakers.

Battery grade lithium hydroxide solution has been delivered to Johnson Matthey.

Timeline

From the point of financing construction and commissioning of commercial electrochemical plant will be completed in 27 months.

Social and Environmental Impact

Nemaska Lithium is committed to a low carbon footprint, environmentally responsible production model throughout its process from concentrate to finished lithium salts.

At both the electrochemical plant and mine site, Nemaska Lithium has designed a project that takes into account the goal of minimizing the project footprint and recycling where possible.

Initiatives include:

  • Co-disposal of filter-pressed tailings with waste rocks at the mine site;
  • Almost-100% process water reuse at both sites,
  • Low GHG emissions due to use of electrolysis with hydroelectricity
  • Valorization of all side products with the result of having no waste at the electrochemical

In addition to a fly-in, fly-out program for mine workers, Nemaska Lithium is looking to employ local members of the Cree nation in order to increase economic benefits for the local community.

Importantly, Nemaska Lithium’s mine plan does not encroach on any lakes or rivers. Overall, the small pit size and low-strip ratio of the project will make Whabouchi a relatively low-impact mine.

Whabouchi is expected to be a low-cost producing mine due to its low-strip ratio. This low amount of waste material will allow for a smaller mining pit and waste pile, keeping Nemaska Lithium’s environmental footprint small and respecting the environmental wishes of the nearby Cree population.

With regards to tailings and waste rock management, best economically and technically available technologies have been integrated to project design so that filter-pressed tailings will be produced at the mine site to be co-disposed with waste rocks on a dedicate pile. Such method enables high process water and reagents reuse rates in the concentrator as well as the absence of dyke/dam required to store tailings and therefore no risk of dam failure. Moreover, filtered tailings can be progressively revegetated, i.e. before mine closure, as the mine is still in operation.

Nemaska Lithium’s processing method for converting spodumene concentrate into lithium hydroxide uses electrolysis. Quebec’s energy comes from low-cost, renewable hydro-electricity, making Nemaska’s lithium products one of the greenest in the industry. The deposit at Whabouchi also features fewer impurities such as mica, sodium and potassium than amounts commonly found in other lithium deposits. This translates into a simpler processing for a higher quality end product.

Financing and Off-take Agreements

Offtake Agreements

Nemaska Lithium has secured world-class off-take partners by entering into agreements with FMC, Johnson Matthey, Northvolt, LG Chem and Softbank. These companies have given the project key endorsements through off-take contracts, product qualification and financial support. To date this is what each company has signed agreements for:

  • FMC, a US chemical manufacturing company, has paid a lump sum of US$10 million to Nemaska.
  • Johnson Matthey, a global specialty chemicals company, has made an up-front payment of C$12 million to Nemaska for services and product produced from the Phase 1 plant.
  • Northvolt, a battery manufacturing company, has agreed on a take-or-pay basis where Nemaska will supply up to 5,000 tonnes per year of lithium hydroxide over a five-year period upon commercial production at the Shawinigan Plant.
  • In addition to the C$94 million private placement in Nemaska, Softbank, a global technology player, has signed an agreement to be allowed to purchase up to 20 percent of the lithium hydroxide and lithium carbonate produced at the Shawinigan plant before Nemaska can go to anyone else.
  • LG Chem, Korea’s largest diversified chemical company and world-leading lithium-ion manufacturer, has agreed on a take-or-pay basis where Nemaska will supply 7,000 tonnes per year of lithium hydroxide to LG Chem over a five-year period starting in October 2020.

The contracts for supply account for approximately 90 percent of Nesmaka’s anticipated annual production.

Project Financing

Nemaska Lithium launched its project financing in April 2018, with a plan to raise up to US$775-825M to fund the construction, commissioning, working capital and reserve funds for its Whabouchi lithium mine and Shawinigan electrochemical plant. By May 2018, the company surpassed its goals, reaching US$849 million (C$1.1 billion) in financing.

To meet the goal, the following was launched and or completed:

  • Signed a US$150 million streaming agreement with Orion Mine Finance
  • Closed a bond offering of senior secured callable bonds on a private placement basis of up US$350 million
  • Signed private placement for C$80 million with Ressources Quebec Inc.
  • Signed private placement for C$93.8 million with SoftBank Group Corp.
  • Closed public offering of C$280 million

“In the past 12 months, we have developed and delivered a comprehensive Project Financing Package that we believe will allow Nemaska Lithium to realize its long-term potential while ensuring sufficient reserves for its future development,” said Bourassa.

Use of Proceeds

  • Project financing: C$801 million
  • Interest payments: C$128 million
  • Working capital: C$87 million
  • Cost overrun account: C$40 million
  • Transaction costs: C$48 million

Managment and Board of Directors

Guy Bourassa – President and Chief Executive Officer, Board Member

Mr. Bourassa is President and CEO of Nemaska Lithium Inc. since the Company’s inception in 2008, bringing more than 30 years of experience in the mining industry to this role. Among other things he was instrumental in identifying and negotiating the acquisition of the Whabouchi lithium property and securing over $150 million through different types of financing to develop the Whabouchi project. Through his leadership, the Company brought an historical lithium showing to a world class deposit and has developed new innovative processes of producing high purity lithium hydroxide and lithium carbonate, which should allow Nemaska Lithium to become a world leader in these lithium salts markets. Mr. Bourassa is a recognized industry expert on lithium exploration and development and has spoken at numerous national and international conference. Throughout his career, Mr. Bourassa has been involved in exploration and mining companies as President and CEO, legal counsel and in-house corporate counsel and director. These companies were producers of gold, copper, calcite and dolomite. Mr. Bourassa holds a law degree from Université Laval.

Steve Nadeau, CPA, CGA – Chief Financial Officer

Professional accountant for more than 22 years, Steve Nadeau is a member of the CPA, CGA Association of Québec as well as the CGA Association of Canada since October 1998. Prior to joining the company as Chief Financial Officer in May 2008, Nadeau held several senior financial positions at companies producing products related to the granite industry, electronics and automotive field as well as companies involved in the maritime transport and warehousing. He is also Chief Financial Officer of Monarques Resources since March 2011.

Marc Dagenais – Vice President, Legal Affairs & Corporate Secretary

With more than 25 years of national and international mining experience, Mr. Dagenais is responsible for the leadership and management of the overall legal affairs and corporate governance matters of Nemaska Lithium. In addition, Mr. Dagenais actively contributes to strategic planning and other key corporate functions. Prior to joining Nemaska Lithium, he headed legal affairs for Graymont Limited and Cambior Inc. (now part of Iamgold Corporation), as well as for the African Region of Kinross Gold Corporation (being based overseas). He holds bachelor degrees in Law from Université de Montréal and Management Accounting from UQAM.

Chantal Francoeur – Vice President, Human Resources and Organizational Development

Ms. Francoeur brings more than 25 years of human resources experience in the mining industry, both in Canada and internationally. During her career, Ms. Francoeur attracted and assembled the necessary teams required to build three mines. Most recently she was Vice President of Human Resources and Communications for Koniambo Nickel, a large scale nickel operation in New Caledonia. At Nemaska Lithium, Ms. Francoeur leads the development, implementation and execution of all aspect of HR services; including attracting, developing and retaining the necessary talent to achieve Nemaska Lithium’s goal of becoming a lithium salts producer.

Michel Baril, Eng. – Chairman

A mechanical engineer with over 30 years of experience in management, Michel Baril is the former President and Chief Operating Officer of Bombardier’s Recreational Products division and former Executive Vice-President of Bombardier Transportation. He currently serves as a senior executive at Raymor Industries Inc., and as a director of numerous public and private companies.

Paul-Henri Couture – Director

Paul-Henri Couture has over 35 years of experience as a financial management and investment professional. He has held senior positions at the Caisse de dépôt and placement du Québec and at Sentient Asset Management Canada. During his tenure at the Caisse, Couture led a team responsible for a $3-billion investment portfolio with a focus on financial institutions and natural resources sectors. While at the Caisse, Couture also launched two innovative mining funds: Groupe Sodémex and MinQuest Capital. He built and developed a $3-billion portfolio in turnarounds and corporate restructurings. Couture is President of Minvest Capital, a business providing management and investing consulting services.

François Biron—Director

François Biron is a senior professional mining engineer with 40 years of experience in the mining industry. His extensive experience in mining operations has been developed through acting in several senior site-based positions with well-known international mining companies, and recently he has acquired experience in the executive management of a Canadian industrial minerals company. Biron has an entrepreneurial vision oriented towards business development and a perspective of industry growth with respect to the environment. He participated in the management of major open pit mines with the best operating standards to achieve goals and corporate objectives. Biron elaborate recently a new mining project in introducing the social acceptability concept and public consultations in the local communities where the project will be implement, based on the latest automation mining technologies and to improve the mining process.

René Lessard – Director

René Lessard is an independent sales consultant. He was the Sales Manager of Campagna Motors and also of T-Rex Vehicles for over 4 years. He also acts as a director of Monarques Resources.

Technical Team

Jean Francois Magnan, Eng. M.Sc. – Technical Manager

Jean Francois Magnan is a professional engineer with more than 20 years of experience in the metallurgical industry. During his career, he held several positions within the lithium industry including: R&D Advisor, R&D Project Manager, Consultant and Quality Control Metallurgist. He also acted as Project Manager for Phostech Lithium in 2000 and 2001. He will work closely with Nemaska Lithium’s technical consultant, Gary Pearse, on the technology implementation as well as playing an active role in securing new contracts for Nemaska’s lithium products. Magnan is the author/inventor of several patents in the lithium rechargeable batteries field. He holds a Master’s Degree in Materials Engineering from Laval University (2000).

Bertin Ouellet – Senior Process Engineer

Mr. Ouellet is a professional chemical engineer, who graduated from Sherbrooke University, with more than 30 years of experience in various manufacturing industries, mainly the industrial chemical sector: production of sodium chlorate, phosphorus, phosphoric acid and phosphate salts, chlorine, sodium hydroxide, hydrochloric acid, electrolytic magnesium and magnesium alloys. His previous roles include process engineer, health, safety and environmental manager, and senior process safety engineer. He has been a HAZOP leader since 1985 with over 200 safety reviews performed.

Nicolas Laroche –Electrochemical Process Optimization Engineer

Mr. Laroche is specialized in Electrochemical Engineering and Technologies from masters studies at both Université de Sherbrooke and McGill University. Since joining Nemaska Lithium in January 2014 as a process optimization engineer, he has played an active role in the Company’s pursuit of patents covering its innovative technologies, of which he is a co-inventor.

Gary Pearse – Consultant

Professional engineer with more than 40 years of experience, largely as a rare metals and industrial minerals consultant. During his career, he managed scoping studies, pre-feasibility and feasibility studies, authored numerous technical papers and managed or consulted on significant pegmatite projects.

 


 

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