C$600m Pallinghurst backing for lithium junior Nemaska
A June 2019 site photo of the Shawiginan plant that Nemaska Lithium is building in Quebec.
Junior miner Nemaska Lithium has potentially raised fresh capital to build the Whabouchi lithium mine and Shawinigan electrochemical, in Quebec, which faces cost overruns of about C$375-million.
Global investor Pallinghurst Group is contemplating a C$200-million private placement, at C$0.25 a share, and a standby purchase agreement to fully guarantee the successful completion of a rights offering of up to C$400-million, at the same price.
The announcement, on Friday, sent Nemaska’s stock soaring 39% to C$0.30 a share.
The company’s share price has been under pressure since February, which it announced that it needed more money to complete the Whabouchi mine and the Shawinigan electrochemical plant. Prior to the cost blowout, Nemaska traded at about C$0.55 a share and its 52-week high is C$0.94 a share.
The ultimate size of the offering would be determined once a due diligence review by Pallinghurst was completed. Nemaska said that it was Pallinghurst’s intention that the project would be fully financed. In April, it estimated that C$375-million would be required to complete the project.
Nemaska president and CEO Guy Bourassa commented that Pallinghurst was a “prime partner” for the project, as it was a “renowned financier with a unique vision and a deep knowledge of the lithium and battery material sector”.
Pallinghurst is positioning itself as a key investor in the battery materials and energy storage market. The firm has earmarked $1-billion for investments in battery and fuel-cell related materials.
“It is a pleasure to announce Pallinghurst’s intention to become a key partner of Nemaska Lithium, a corporation that truly embodies the future of supplying premium quality lithium products to the rapidly growing battery industry. The corporation’s sustainable approach to the mining of its world-class deposit combined with the use of innovative value-adding technology sets Nemaska Lithium apart. In our view, Nemaska Lithium’s lithium salt will rapidly become one of the most sought-after battery materials globally," said Pallinghurst cofounder and managing partner Arne Frandsen.
He added that the Nemaska investment was in line with Pallinghurst’s desire to focus exclusively on the supply of critical battery and fuel-cell related materials.
In April, Pallinghurst invested in Canadian graphite company Nouveau Monde Graphite, which is positioning itself to supply battery materials to North America. It is also the largest shareholder in Sedibelo Platinum Mines, in South Africa, and in the Australian-listed Jupiter, which operates the opencast Tshipi Borwa manganese mine, in the Northern Cape.
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