Nemaska Lithium Inc. (“
Nemaska Lithium” or the
“
Corporation”) (TSX: NMX) (OTCQX: NMKEF)
(Frankfurt: N0T) releases the results of its updated National
Instrument (NI) 43–101 Technical Report (the
“
Report”) on the Whabouchi mine
(“
Whabouchi”) and Shawinigan electrochemical plant
(the “
Plant”) (together, the
“
Project”). Nemaska Lithium’s management team
retained the services of engineering firms to make this Report (as
defined in NI 43–101), following the Corporation’s funding gap
announcement of February 13, 2019.
“We are pleased to inform our shareholders that
the Project’s economics remain very robust after a thorough review
of the capital investment (‘CAPEX’) and overall operating costs
(‘OPEX’) by the Qualified Persons (“QP”) working closely with our
strengthened owner’s team, as reflected by the Report. It was
produced using the most recent detailed engineering designs for
both sites that provide significant insight into key operational
estimates,” said Guy Bourassa, President and CEO of Nemaska
Lithium. “Now that we have an updated timeline and budget, and that
we have received and accepted a letter of intent from Pallinghurst
for an equity investment of up to CAD 600 M, we are
confident that we have in hand a solid plan for the future as well
as a strong team in place to resume construction and successfully
deliver the Project once the required financing is completed.”
Assuming a 100% Project equity financing, the
Report shows a before-tax IRR % and NPV (@ 8% discount) of 30.3%
and CAD 3.1 B, respectively and an after-tax IRR % and
NPV (@ 8% discount) of 27.4% and CAD 2.3 B,
respectively. These NPV and IRR calculations exclude sunk
costs of ~CAD 340 M, as per NI 43–101 standards. It
is assumed that the financing would be in place in order for
construction to resume in November 2019, which would lead to a
start of production in June 2020 for Whabouchi and in November 2021
for the Plant.
Updated Report at a Glance
Following an update of the geological model and
detailed mine planning, the Report confirms a revised estimated
annual production of approximately 205,000 tonnes of concentrate
from Whabouchi and an annual production of approximately 37,000
tonnes of high-quality lithium hydroxide monohydrate at the Plant;
assuming Nemaska Lithium will purchase lithium sulfate monohydrate
(LSM) and/or concentrate when needed to achieve nameplate
capacity.
The Corporation has made the decision to focus
on lithium hydroxide production at its Plant; however, the
Corporation will have the capacity in the future to add, as needed,
the equipment required to also produce lithium carbonate should the
market demand justify it.
The advancement of detailed engineering since
June 2018 and the optimizations performed during the preparation of
the Report have significantly de-risked the Project.
Including the costs related to the ramp-up and
start-up of operations, the updated overall Project average OPEX
are estimated to total CAD 5,223 (USD 4,018) per tonne of
lithium hydroxide monohydrate (LiOH-H2O) produced from the
Whabouchi concentrate. The OPEX per tonne of concentrate (6.25%
Li2O) delivered at the Plant is estimated at CAD 452
(USD 347) on average during the life of mine (LOM). For the
Plant, the overall estimated OPEX for the conversion of concentrate
from the Whabouchi mine would be of CAD 2,513 (USD 1,933)
per tonne of lithium hydroxide monohydrate (LiOH-H2O) on average
over the life of the Project.
“We are proud of the efforts our renewed
owner’s team has put forward over the past few months to strengthen
control over engineering and construction activities. With the
precious support of the whole organization, we will always be
looking for ways to continuously improve our cost structure once we
reach production level, thus strengthening Nemaska Lithium’s
competitive position as a preferred low-cost producer of
high-quality battery grade lithium hydroxide monohydrate” added
Robert Beaulieu, Vice President, Operations and Construction. “The
completion of this update provides us with the highest possible
degree of visibility on key operational imperatives for the
completion of construction, commissioning and ramp-up of our
Project.”
All amounts are in Canadian dollars, except where otherwise
indicated, and some amounts are also rounded for
presentation. |
2019 Technical Report |
Total CAPEX 1 (CAD in M, including
contingency) |
|
Total |
Incurred as at May 31, 2019 |
Remaining |
Whabouchi 1: |
448 |
223 |
225 |
Plant 1: |
821 |
117 |
704 |
Total: |
1,269 |
340 |
929 |
Spodumene Concentrate Average OPEX per Tonne of
6.25%Li2O (Transformation at Whabouchi + transportation to
the Plant) |
CAD 452 (USD 347) |
Lithium Hydroxide Average OPEX per Tonne of
LiOH-H2O (Transformation at the
Plant) |
CAD 2,513 (USD 1,933) |
Total OPEX per Tonne of LiOH-H2O
(Whabouchi + Plant) |
CAD 5,223 (USD 4,018) |
Before-Tax Net Present Value (NPV)2 |
@ 8% Discount Rate |
CAD 3.1 B (base case) |
@ 10% Discount
Rate |
CAD 2.3 B |
Before-Tax Internal Rate of Return
(IRR) 2 |
30.3% |
After-Tax NPV2 |
@ 8% Discount Rate |
CAD 2.3 B (base case) |
@ 10% Discount
Rate |
CAD 1.7 B |
After-Tax (IRR) 2 |
27.4% |
Average Selling Price Lithium Hydroxide per tonne over Life
of Mine |
USD 14,000 (CAD 18,200) |
Open pit Mine Proven and Probable Reserves |
27.9 M tonnes at 1.33% Li2O |
Underground Mine Proven and Probable Reserves |
8.7 M tonnes at 1.21% Li2O |
Combined Open pit and Underground Proven and Probable
Reserves *The Updated NI 43–101 Technical Report confirms
that more resources were identified below the mineral reserves
level but are not considered Proven and Probable Reserves. |
36.6 M tonnes at 1.30% Li2O |
Life of Mine Production |
6.6 M tonnes of spodumene concentrate to be converted into
≈1.1 M tonnes of battery-grade lithium hydroxide and
368 k tonnes of spodumene concentrate to be sold on the
market. |
Expected Mine Life |
33 years |
Life of Mine Revenue |
CAD 20.25 B |
Exchange rate used for CAD to USD |
1.30 : 1.00 |
1The total CAPEX includes amounts for corporate
owners’ costs, which are ≈CAD 42 M for Whabouchi and
≈CAD 29 M for the Plant.
2 The NPV and IRR exclude sunk
costs of ~CAD 340 M from calculations. This is the NI
43–101 standard.
Qualified Persons
Met-Chem, a division of DRA Americas Inc.
(“DRA/Met-Chem”) has provided engineering and integration services
for all aspects of the Updated NI 43-101 Technical Report on the
Whabouchi Lithium Mine and Shawinigan electrochemical plant with
the participation of other companies. The Technical Report includes
the Resource Estimation (by SGS Geostat “SGS”), Open Pit Mine
Design and Mineral Reserve Estimation (by BBA Inc. “BBA”),
Underground Mine Design (by DRA/Met-Chem), concentrator (by
DRA/Met-Chem), Electrochemical plant (by Hatch and NORAM),
infrastructure (by Hatch for Shawinigan and DRA/Met-Chem
elsewhere), waste rock and tailings disposal and water management
(by SNC-Lavalin “SNC”), capital and operating costs (by Hatch for
Shawinigan and DRA/Met-Chem elsewhere), and economic analysis (by
DRA/Met-Chem). The complete NI 43–101 Technical Report will be
posted on www.sedar.com within 45 days, and will be available to
consult on Nemaska Lithium’s website. The technical information in
this press release has been reviewed and approved by the Qualified
Persons as relevant to their areas of responsibility and
expertise.
Conference Call
Nemaska Lithium will host a conference call on
August 1, 2019 at 11:00 AM ET. The Corporation’s President and CEO,
Mr. Guy Bourassa, Chief Financial Officer, Mr. Steve
Nadeau and Vice-president Operations and Construction,
Mr. Robert Beaulieu, will discuss the Updated NI 43-101
Technical Report. The call can be accessed at the following:
Online:
https://edge.media-server.com/mmc/p/xcasimzn
Dial information:
US/CANADA Participant Toll-Free Dial-In Number:
(866) 353-6129
US/CANADA Participant International Dial-In
Number: +1 (409) 217-8084
Conference ID: 6868859
About Nemaska Lithium
Nemaska Lithium Inc. is a developing chemical
company whose activities will be vertically integrated, from
spodumene mining to the commercialization of high-purity lithium
hydroxide. These lithium salts are mainly destined for the
fast-growing lithium-ion battery market, which is driven by the
increasing demand for electric vehicles and energy storage
worldwide. With its products and processes, the Corporation intends
to facilitate access to green energy, for the benefit of
humanity.
The Corporation will be operating the Whabouchi
mine in Québec, Canada, one of the richest lithium spodumene
deposits in the world, both in volume and grade. The spodumene
concentrate produced at the Whabouchi mine will be processed at the
Shawinigan plant using a unique membrane electrolysis process for
which the Corporation holds several patents.
The Corporation is a member of the S&P/TSX
SmallCap Index, S&P/TSX Global Mining Index, S&P/TSX Global
Base Metals Index, S&P/TSX Equal Weight Global Base Metals
Index, and the MSCI Canada Small Cap Index. For more information,
visit www.nemaskalithium.com or twitter.com/Nemaska
Lithium.
Cautionary Statement on Forward-Looking
Information
All statements, other than statements of
historical fact, contained in this press release including, but not
limited to, those relating to the Project’s updated timeline and
budget, the CAD 375M funding gap and additional capital required to
enable the Corporation to complete construction, the estimated
additional costs for completing the construction of the Whabouchi
mine and the Shawinigan plant, the Project’s anticipated robust
economics, the expected unfolding of construction and commissioning
as well as the anticipated start of production at the Whabouchi
mine and Shawinigan plant sites, constitute “forward-looking
information” and “forward-looking statements” within the meaning of
certain securities laws and are based on expectations and
projections as of the date of this press release. Certain important
assumptions by the Corporation in making forward-looking statements
include, but are not limited to, the obtaining of the additional
capital required to fulfill the conditions precedent to receive the
remaining proceeds from the Project financing being the second
tranche payment under the Streaming facility and the Bonds offering
proceeds.
Forward-looking statements contained in this
press release include, without limitation, those related to (i) the
ability of the Corporation to secure additional funds, (ii) the
eventual definitive agreements to implement Pallinghurst’s
investment proposal, (iii) the Corporation having a solid plan for
the future and a strong team to resume construction once financing
is in place, (iv) the expected increased level of operational
efficiency and de-risking of the Project, (v) the CAPEX and OPEX
estimates, (vi) the construction resuming in November 2019 leading
to a start of production in June 2020 for the mine and in November
2021 for the plant,, (vii) the focus on production of lithium
hydroxide and the Corporation’s capacity to eventually add
equipment to produce lithium carbonate, (viii) the Corporation’s
expectations as regards the eventual strengthening of its
competitive position as a low-cost producer of high-quality battery
grade lithium hydroxide, (ix) the anticipated more efficient
construction and ramp-up schedule (and schedule to reach commercial
production), (x) the strengthened control over construction
activities, (xi) the refining of the Corporation’s processes to
eventually improve OPEX; (xii) the Corporation’s ability to bring
the mine and the plant to commercial production, (xiii) the
Corporation having the highest possible degree of visibility on key
operational imperatives for the completion of construction,
commissioning and ramp-up of our Project, and (ix) generally, the
above “About Nemaska Lithium” paragraph which essentially describes
the Corporation’s outlook. Forward-looking statements are based on
expectations, estimates and projections as of the time of this
press release. Forward-looking statements are necessarily based
upon a number of estimates and assumptions that, while considered
reasonable by the Corporation as of the time of such statements,
are inherently subject to significant business, economic and
competitive uncertainties and contingencies. These estimates and
assumptions may prove to be incorrect.
Many of these uncertainties and contingencies
can directly or indirectly affect, and could cause, actual results
to differ materially from those expressed or implied in any
forward-looking statements. There can be no assurance that the
Pallinghurst investment will close or that other funding /
strategic alternatives can be available, that the Corporation will
meet conditions under the streaming facility and the bonds and that
the Whabouchi mine and/or the electrochemical plant in Shawinigan
will be commissioned and will begin production, as future events
could differ materially what is currently anticipated by the
Corporation. In addition, there can be no assurances that the
Project’s after-tax NPV or IRR will end up as set out in the
Report; likewise, there are no assurances that the production,
CAPEX or OPEX estimates outlined in the Report will prove
accurate.
By their very nature, forward-looking statements
involve inherent risks and uncertainties, both general and
specific, and risks exist that estimates, forecasts, projections
and other forward-looking statements will not be achieved or that
assumptions do not reflect future experience. Forward-looking
statements are provided for the purpose of providing information
about management’s expectations and plans relating to the future.
Readers are cautioned not to place undue reliance on these
forward-looking statements as a number of important risk factors
and future events could cause the actual outcomes to differ
materially from the beliefs, plans, objectives, expectations,
anticipations, estimates, assumptions and intentions expressed in
such forward-looking statements. All of the forward-looking
statements made in this press release are qualified by these
cautionary statements and those made in our other filings with the
securities regulators of Canada including, but not limited to, the
cautionary statements made in the “Risk Factors” section of the
Corporation’s Annual Information Form dated October 10, 2018, and
the “Risk Exposure and Management” section of the Corporation’s
quarterly Management Discussion & Analysis. The Corporation
cautions that the foregoing list of factors that may affect future
results is not exhaustive, and new, unforeseeable risks may arise
from time to time. The Corporation disclaims any intention or
obligation to update or revise any forward-looking statements or to
explain any material difference between subsequent actual events
and such forward-looking statements, except to the extent required
by applicable law.
Further information regarding Nemaska Lithium is
available in the SEDAR database (www.sedar.com) and on the
Corporation’s website at: www.nemaskalithium.com.
FOR FURTHER INFORMATION, PLEASE
CONTACT:
Victor CantoreInvestor
Relations514 831-3809victor.cantore@nemaskalithium.com |
Wanda Cutler Investor Relations416 303-6460
wanda.cutler@nemaskalithium.com |
|
|
Gabrielle TellierMedia
Relations514 348-0466gabrielle.tellier@nemaskalithium.com |
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