Nemaska Lithium Receives C$99.1-million Strategic Investment

Nemaska Lithium‘s (TSX:NMX) share price shot up Friday (April 6) morning after news of a strategic investment from Japan’s SoftBank Group (TSE:9984). 

According to a press release from Nemaska, SoftBank has entered into an agreement under which it will invest up to C$99,075,000 in the company via a private placement of common share subscription receipts. Receipts will be priced at C$1.12 each.

Once the deal is complete, global technology player SoftBank will hold up to a 9.9-percent stake in Nemaska. The lithium-focused company’s share price was up 12.82 percent, changing hands at $1.32, as of 2:20 p.m. EST on Friday.

“Upon the completion of this transaction, SoftBank will be a new esteemed shareholder and customer for Nemaska Lithium and we are very pleased to welcome its team to our shareholder base and eventually welcome its nominee to our Board,” said Guy Bourassa, president and CEO of Nemaska.

He added, “[a]s a global technology pioneer and leader, SoftBank’s culture of innovation melds very well with our own corporate values and is a clear endorsement of our approach to producing environmentally friendly, low-cost lithium compounds.”

Nemaska is currently advancing its Whabouchi mine and Shawinigan plant in Quebec, and its goal is to become 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.

In March, Nemaska provided an overview of how it intends to finance those activities, explaining that it needs to raise US$775 to US$825 million for construction, commissioning, working capital and reserve funds. At the time, the company explained that it:

• had signed a non-binding term sheet for a US$150-million streaming facility;
• was in advanced discussions for debt financing aggregating US$300 to US$350 million; and
• would be raising the remaining money via private and/or public equity or debt offerings.

The SoftBank investment will be “an important component of the equity portion of the Project Financing as the Corporation continues to work on various complementary financing alternatives, including a USD 300-350M debt financing and a USD 150M streaming facility for which the Corporation expects to provide further details in the short-term, both combined with additional private and/or public equity offerings.”

Sources familiar with the matter told Reuters on Friday that the streaming deal is with Orion Mine Finance Group. However, both Nemaska and Orion have declined to comment.

Completion of the SoftBank private placement is subject to customary escrow release conditions and TSX approval. It is expected to close on or about 10 days from Friday’s announcement.

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Securities Disclosure: I, Charlotte McLeod, 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.