After months of funding uncertainty, Nemaska Lithium Inc. on Friday announced a tentative agreement to secure as much as $600 million to build its proposed hard rock lithium mine and electrochemical plant in Quebec.
Now, London-based Pallinghurst Group, whose managing partner Arne Frandsen is betting on “an electric vehicle revolution,” has proposed a deal that could make it Nemaska’s largest shareholder: It signed a letter of intent to buy $200 million worth of the company’s shares at 25 cents apiece, plus an additional $400 million, if necessary, to ensure the project is fully funded.
“This give us a good cushion and a good partner with deep pockets,” said Guy Bourassa, Nemaska chief executive. “But more importantly, it’s somebody with the same vision as us, as far as the market for lithium is concerned.” Bourassa says rising steel costs — a side effect of the global trade war — contributed to the cost of the project, but were mainly a result of mistakes about labour and other indirect costs.The company’s proposed open pit Whabouchi mine, located in the James Bay region of Quebec, near the cree community of Nemaska, would produce spodumene concentrate.
Investissement Quebec holds 13 per cent of the roughly 850 million outstanding shares, and remains the company’s largest shareholder for the moment. The drop in investment has been wide-ranging: In the first half of 2018, lithium companies on the TSX and TSX-V raised approximately $828 million but raised only about six per cent of that amount, $49.6 million, in the second half of 2018.