Nemaska Lithium looks to produce lithium carbonate and hydroxide in Quebec by August 2020

Posted by on October 3, 2018 6:34 pm
Categories: NEN Exclusives

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[PLEASE NOTE: This article was originally written by Guy Veillette for The Nouvellist in French and is being translated into English here at New Energy Narrative for the reading pleasure of our English-speaking readers. All rights of Mr. Veillette and The Nouvellist are reserved.]

SHAWINIGAN – Even though the last few months have enabled Nemaska ​​Lithium to complete a demanding financial package for the realization of its projects at the Whabouchi mine and the Shawinigan production plant, investors are still getting their ears and this reserve explains the timidity of the title, which has lost more than 60% of its value since the beginning of the year. Nevertheless, management is staying the course and says that the construction of the Shawinigan commercial plant will be completed in August 2020.

President and CEO Guy Bourassa presented a conference call with financial analysts late Tuesday morning. The first exercise was to review the timelines and budgets of these projects, now estimated at $ 875 million.

Of this amount, no less than $ 272.4 million had been invested or committed as of September 1, 2018, of which $ 126.1 million was in Shawinigan. Ultimately, the electrochemical plant project will result in disbursements of nearly $ 471 million on the site of the former Laurentide paper mill. These amounts do not include the completion of the Phase I plant, in operation since spring 2017, which required an investment of $ 38 million.

At the end of May, Nemaska ​​Lithium announced the finalization of its $ 1.1 billion financing structure. Mr. Bourassa now considers himself well equipped to specify the various deadlines, which have moved a lot since the announcement of the Shawinigan project in September 2015. The commissioning of the commercial plant is expected to occur in the fourth quarter of 2020 and at that moment, a hundred people will work there. “We are in control,” assures Mr. Bourassa. “There are always things that can happen, but the critical timeframe involved ordering our equipment with long lead times. We now have dates that allow us to be firmer in our schedule.”

In Shawinigan, construction of the building that will house the administrative offices is going smoothly. The team should integrate its new neighborhoods before the end of the current year. In addition, the area of ​​the calcining furnace is being prepared and the old concrete slab of the stationery has been removed. Interior work continues to receive the equipment of the electrochemical plant. At the Whabouchi mine site as well, Nemaska ​​Lithium is pleased with the progress of the work. Its commissioning is scheduled for the end of 2019.

Yet despite the progress of the project, title purrs around $ 0.80 to the TSX Venture Toronto Stock Exchange, after peaking at $ 2.33 at the beginning of the year. Bourassa acknowledges that the market in general and Morgan Stanley’s pessimistic report on global supply play into the equation, but he believes that Nemaska ​​Lithium’s strengths are not sufficiently taken into account in this assessment.

“We think there is still a lot of education to do in the financial market,” he admits. “We strive to find ways to be as active as possible in the various investor forums to meet them, participate in the days organized by the brokerage firms to talk to institutional clients. We want people to understand the distinction between our company and others in the same industry.”

For example, the degree of purity of the lithium hydroxide to be produced in Shawinigan should not be confused with the general market for lithium carbonate, explains Bourassa. “There is not much manufacturing of hydroxide and even less battery quality,” he notes. “And there is phenomenal growth in the demand for hydroxide for batteries. In general, markets report production capacity in carbonate equivalent. By not making the distinction, people are not able to realize that there is not enough new capacity to meet this demand.”

The Shawinigan commercial plant is to produce 36,000 tonnes of lithium hydroxide equivalent per year. “The global demand must be 250,000 tons in 2021 and 550,000 tons in 2026. There is room!” Says the leader.

Finally, note that in the health and safety component, Nemaska ​​Lithium did not report any loss of time caused by an injury during the 149,367 engineering and construction hours worked at the Whabouchi and Shawinigan sites. “In fact, since November 2016, we have lost time in our non-construction activities and none in our construction activities,” says Bourassa. “We are immensely proud of that.”

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Disclosure: I am long NMKEF.

I did not write this article myself, but simply translated it into English from French, and it expresses none of my own opinions, but rather those of its original author. I am not receiving compensation for the translation or re-posting of the article (other than from/through New Energy Narrative.

Please note: This article discusses small-cap stocks trading at less than US $1 per share and/or with less than a US $100 million market cap. Please be aware of the risks associated with these stocks.

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