Nemaska Lithium, the junior building a hard-rock lithium mine in Quebec, has established a special committee to review “all strategic alternatives” for the company, which needs another $375-million to complete its mine and electrochemical plant projects.
The committee, along with several advisers, will investigate “alternatives which may be available to secure the additional funding required to complete the Whabouchi mine and Shawinigan plant”.
These include, but are not limited to, common stock, preference shares, debt instruments permitted under the stream and the senior secured bonds, other sources of funds and merger and acquisition alternatives.
The special committee comprises independent members of the board, being François Biron, Vanessa Laplante and Paul-Henri Couture - the latter chairing the committee.
Clarksons Platou Securities has been engaged as financial adviser to Nemaska and the board, National Bank Financial and PricewaterhouseCoopers have been engaged as financial advisers to the special committee and the board and McCarthy Tétrault has been engaged as legal adviser to the special committee and the board.
The initial capital cost estimate for the Whabouchi mine and Shawinigan plant was C$874.4-million, but eight months into construction, Nemaska announced that it would need an additional C$375-million.
Over the life-of-mine, the mine is expected to produce seven-million tonnes of spodumene concentrate, which will be converted into 770 000 t battery-grade lithium hydroxide and 361 000 t of battery-grade lithium carbonate.
Earlier this month, Nemaska terminated a supply agreement with Livent, which it was supposed to start supplying in April at a rate of 8 000 t/y, after failing to renegotiate a revised schedule of supply, NYSE-listed Livent has said that it will enforce its rights and resume arbitration.
Nemaska’s stock has been under pressure ever since it announced the cost blowout on February 13. In the days following the announcement, the stock lost about 58% of its value, hitting a 52-week low of C$0.27 a share. It has since bounced off that level and closed at C$0.39 a share on Wednesday – down 3.7% on the previous day’s closing price.