The London-based fund is contemplating a C$600 million investment in the Canadian company, which is developing its Whabouchi mine in Quebec.
Shares of Quebec-focused Nemaska Lithium (TSX:NMX,OTCQX:NMKEF) jumped 9 percent on Tuesday (October 8) after the company said it hopes to reach an investment deal with Pallinghurst Group by the end of the year.
The fund is contemplating a C$600 million investment in the Canadian company, which is developing its Whabouchi mine in Quebec. In July, Pallinghurst said it will provide C$200 million in a private placement at C$0.25 per share and also back a rights issue of up to C$400 million at the same price.
“We remain fully committed to continue working cooperatively with Nemaska Lithium in pursuing our proposed investment,” said Arne H. Frandsen, co-founder and managing partner of London-based Pallinghurst. “Furthermore, (we) are open to explore with the corporation’s largest shareholders an additional capital injection to potentially substitute certain elements of the current financing structure.”
After raising C$1.1 billion in 2018, Nemaska’s share price was hurt earlier this year after news that the company will need an extra C$375 million to develop its project in Quebec.
In July, the company released an updated technical report estimating that the completion of the mine and Shawinigan electrochemical plant will be delayed to beyond June 2021. The original date for completion was October 2019.
As a result of the delay, in September, Nemaska announced US$350 million in bonds would be repaid, as the terms of the deal were not amended — allowing bondholders to walk away.
But the Quebec-focused company has been working with Pallinghurst for the past several weeks, and, according to President and CEO Guy Bourassa, it has every reason to believe that all the fund’s technical and due diligence requirements have been met.
“We are working closely with our partners and advisors to examine the best options on the table to ensure the corporation’s sustainability and maximize the use of cash on hand pending financing,” Bourassa said in a press release.
As of August 31, the company’s capital investment on the project came in at C$377 million, from a total budget of C$1.269 billion. Nemaska has spent about 53 percent of the money at the Whabouchi site and approximately 16 percent at the Shawinigan site.
“We are confident that we have the right partners in place to complete a more favorable capital structure for the project that will allow us to bring it to commercial production in time to benefit from the market expansion anticipated in the years to come,” Bourassa added.
The most recent technical report estimates a mine life of 33 years for Whabouchi, with total production reaching 6.6 million tonnes of spodumene concentrate to be converted into about 1.1 million tonnes of battery-grade lithium hydroxide and 368,000 tonnes of spodumene concentrate.
On Tuesday (October 8), shares of Nemaska Lithium closed up 6.82 percent in Toronto, at C$0.24.
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Securities Disclosure: I, Priscila Barrera, 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-far content.