Nemaska Lithium Looking for Other Financing Options After Bondholders Withdraw Support

Quebec-focused Nemaska Lithium (TSX:NMX,OTCQX:NMKEF) is facing another financing challenge after announcing US$350 million in bonds would be repaid due to a delay in construction at its Whabouchi mine.   

The bonds were part of Nemaska’s C$1.1 billion financing efforts last year to develop its project in Quebec, with mine construction originally set to be completed in October 2019.

But after announcing a financing shortfall of C$375 million earlier this year, the company released an updated technical report in July estimating the completion of the Whabouchi mine and Shawinigan electrochemical plant would be delayed to beyond June 2021, allowing bondholders to walk away as the terms of the deal were not amended.

Despite the news, CEO and President Guy Bourassa remained optimistic and said the set-off and related prescribed reimbursement of the bonds, money which the company could not access at this time, has some positive implications in the short-term — it allows Nemaska to save payment of interests, which were set at 11.25 percent per year.

“We have solid relationships with our strategic partners and stakeholders and are confident that we should be able to put everything in place to successfully complete the construction and commissioning of the project as expected,” Bourassa said.

In July, Pallinghurst Group said it was contemplating a C$600 million investment in the Canadian company to develop its mine in Quebec. Nemaska said on Tuesday (September 17) that the London-based investment fund remains willing to continue the due diligence for the proposed investment.

“(The company) is working to ensure that the Whabouchi mine and Shawinigan plant will be fully funded through a financing package that provides reasonable financial flexibility in order to allow the project to reach nameplate capacity,” the company said. Its current partners, Investissement Québec and Softbank Group (OTC Pink:SFTBY,TSE:9984), have also been involved in discussions.

The most recent technical report estimates Whabouchi will have a mine life of 33 years, 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 to be sold on the market.

On Wednesday (September 18), shares of Nemaska Lithium closed up 5.17 percent in Toronto at C$0.30.

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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-for content.