Nemaska Cements Funding of C$402 Million for Lithium Production

Nemaska Lithium (TSX:NMX) has secured up to C$402 million from investors to fund the creation of a lithium mine and processing plant, the company announced on Tuesday (May 22).

According to a press release, Nemaska has entered into an agreement under which National Bank Financial, BMO Capital Markets and Cantor Fitzgerald Canada will purchase 280,000,000 common shares of the corporation on a bought-deal basis at a price of C$1 per share for gross proceeds of C$280 million.

They have the option to boost their investment by C$42 million.

“Today marks a big day in the life of Nemaska Lithium, as we are announcing the last piece of financing required to start the commercial development of the Whabouchi lithium mine project,” said Guy Bourassa, president and CEO of Nemaska Lithium.

“This project financing package, which covers capital expenditures of both the Whabouchi mine and Shawinigan electrochemical plant, project contingencies, working capital requirements and financing costs will ensure the future of Nemaska Lithium,” he added.

In addition to the deal secured on Tuesday, Nemaska has also agreed to do a private placement of 80 million shares at C$1 each with an unnamed institutional investor.

This equity raise comes on the heels of C$99.1-million strategic investment that Nemaska gained from Japan’s SoftBank Group (TSE:9984) in mid-April. In total, the company has raised more than C$1.1 billion for its proposed operations this year.

As mentioned, Nemaska will use the money to advance its Whabouchi mine and Shawinigan plant in Quebec, with the goal of becoming a lithium hydroxide and lithium carbonate supplier to the emerging lithium battery market. The plan is for spodumene concentrate mined at Whabouchi to be transformed into high-purity lithium hydroxide and lithium carbonate using the company’s proprietary methods.

Nemaska’s actions have caught the attention of market insiders, many of whom see its progress as an encouraging step forward in the lithium sector.

Chris Berry, founder of House Mountain Partners, addressed Nemaska’s moves earlier this month, calling its fundraising “another potential catalyst in the lithium space.” He commented, “[it’s] on everyone’s mind right now, literally all over the world.”

In his opinion, “a successful fundraising there, whether or not it’s equity, debt, streaming, all of these different components, I think will also set a benchmark or set the stage for successful lithium investing going forward.”

As of 11:05 a.m. EST on Wednesday (May 23), Nemaska was trading at C$0.98.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.  

Editorial Disclosure: Nemaska Lithium is a client of the Investing News Network. This article is not paid-for content.