• A first agreement (the deposit agreement) contemplates an up-front payment of CDN$12M by JMBM in exchange for services and products of the same value from the Nemaska Lithium Phase 1 Plant. At completion, the total amount of $12M will be deposited in an escrow account and will be disbursed to Nemaska Lithium according to certain milestones.

• A second agreement provides for a long-term supply relationship for lithium salts between Nemaska Lithium and JMBM. This is Nemaska Lithium’s first commercial offtake agreement.

The closing of the JMBM agreement completes the financing of the Phase 1 Plant. The total budget to build and operate the Phase 1 Plant for two years is $38 million, of which $12 million comes from JMBM’s up-front payment; $13 million from a grant from Sustainable Development Technologies Canada (SDTC); $3 million from Technoclimat program through the Bureau de l’efficacité et de l'innovation énergétiques of the Ministère de l’Énergie et des Ressources naturelles; and finally a $10 million equity investment by Ressources Québec Inc.

To date, progress payments have been received from SDTC and Technoclimat for a total of $2.85 million. With the new closing, Nemaska Lithium will receive a further installment of $2.1 million from SDTC.

We are very pleased to be moving forward with our Phase 1 Plant and to having negotiated our first commercial offtake agreement with JMBM. To date, we have made significant progress on the detailed engineering of the Phase 1 Plant and have ordered some of the long-lead items, including the core electrolysis stacks and rectifiers. We expect to complete construction of the Phase 1 plant by the end of 2016 and to be engaging potential clients with commercial samples of lithium hydroxide as early as Q2 2017. This strategy of engaging customers with commercial samples from the Phase 1 Plant is intended to save us time and money as we expect to shorten the time it typically takes to qualify lithium products with customers. We are currently in discussions with other potential customers and we will update shareholders on future commercial offtake agreements as they are negotiated and signed.

—Guy Bourassa, President and CEO of Nemaska Lithium

Nemaska Lithium has developed proprietary processes that use electrolysis to produce high-purity lithium hydroxide and lithium carbonate for the lithium battery market. The technology virtually eliminates costly soda ash—used as a reagent to produce carbonate in traditional processes—from the process. The price of soda ash fluctuates considerably and the increase in the price of lithium carbonate and lithium hydroxide in recent years has been a direct result of increasing prices of soda ash. By using electrolysis, Nemaska Lithium’s main input cost is electricity, which in Québec is highly predictable and cost-effective.

Nemaska takes a 6% spodumene concentrate (produced from a hard rock lithium mine) and process it into a lithium sulfate. After several stages of impurity removals, the lithium sulfate solution is transformed through electrolysis into a high-purity liquid lithium hydroxide.

The lithium hydroxide is then transformed into a lithium monohydrate (solid) or bubbled with carbon dioxide and changed into lithium carbonate.

Because no impurities such as soda ash are used in Nemaska Lithium’s process, the company can produced very high purity lithium hydroxide or lithium carbonate at a very competitive price.