Nemaska Lithium Inc. has entered into an investment agreement with SoftBank Group Corp. for a private placement of common share subscription receipts at a price of CAD 1.12 (USD 0.88) per receipt for aggregate gross proceeds of up to CAD 99,075,000 (USD 75,000,000). Under the investment agreement, SoftBank will acquire up to 9.9% of Nemaska Lithium’s outstanding common shares.
As outlined in its January 2018 Feasibility Study, Nemaska plans to raise between USD 775 million and USD 825 million to fund the construction and commissioning of its Whabouchi Mine and Shawinigan Plant project and for general working capital. The Softbank investment proceeds will therefore be an important component of the equity portion of the project financing as Nemaska continues to work on various complementary financing alternatives, including a USD 300-350 million debt financing and a USD 150-million streaming facility.
The lithium in the Whabouchi deposit is almost exclusively in spodumene. Spodumene crystals are light-green and can reach 30 cm in size. The average content of spodumene in the Whabouchi deposit represents 20% in volume. Another lithium-containing mineral, petalite, can be observed and represents less than 2% in average.
The Whabouchi Property is composed of one block totaling 33 claims covering an area of 1,761.9 ha. Claims are 100%-owned by Nemaska Lithium Inc. Nemaska envisions a a combined open pit and underground lithium mine plan at Whabouchi and contemplates a mine life of 33 years.
The final mineral resource estimates within the open pit are reported at a cut-off of 0.3% Li2O and totals 16.953 Mt, with an average grade of 1.57% Li2O in the Measured category, 20.403 Mt, with an average grade of 1.41% Li2O in the Indicated category, with an additional 6.687 Mt, with an average grade of 1.37% Li2O in the Inferred category.
The underground mineral resource estimates are reported at a cut-off of 0.60% Li2O and totals 12,000 t of measured resources at an average grade of 1.87% Li2O, 233,000 t of indicated resources with an average grade of 1.59% Li2O and 9.376 Mt of inferred resources with an average grade of 1.39% Li2O.
During the first 20 years, production will be derived from an open-pit developed to a maximum depth of 190 meters and with an average strip ratio of 2.2 to 1. The open pit will be mined using a standard fleet of off-road mining trucks and hydraulic excavators at a rate of 2,740 tonnes of ore per day.
The electrochemical plant will be located in Shawinigan, QC. This site will host both phase 1 and the commercial phase plants and has been selected for its excellent infrastructure. The electrochemical plant will use Nemaska Lithium’s proprietary process to convert the spodumene concentrate into the purest lithium hydroxide on the market. Proximity to the Hydro-Québec network, as the plant will use close to 50 MW once in full operation, and access to the natural gas network were also deciding factors.
Nemaska Lithium is building a Phase 1 demonstration plant that utilizes the company’s proprietary lithium hydroxide and lithium carbonate processes. The Phase 1 plant will have an average combined capacity of 610 tonnes per year.
This investment in Nemaska is of monumental importance to the SoftBank Group’s strategy. We are extremely pleased to be further accelerating the Mobile Revolution, an era of IoT (Internet of Things) and electric vehicles enabled by the fusion of technology and energy storage.—Masayoshi Son, Chairman & CEO of SoftBank Group Corp.
Completion of the placement is subject to customary escrow release conditions for this type of transaction, including approval of the Toronto Stock Exchange. The closing of the placement is expected to occur on or about 10 days following the announcement.
If, after giving effect to the placement, SoftBank holds less than 9.9% of the shares then outstanding, it will be entitled to purchase additional shares upon the same terms as the equity offerings forming part of the project financing to maintain its shareholdings up to 9.9% of the outstanding shares.
If SoftBank would hold more than 9.9% of the Shares outstanding on the escrow release date, the receipts that would result in such excess will be cancelled such that SoftBank will hold no more than 9.9% of the Shares outstanding at such time (and the corresponding proceeds will revert to SoftBank).
Upon release of the placement proceeds to Nemaska, and for so long as SoftBank holds at least 5% of the outstanding shares, an agreement providing SoftBank with a right of first offer to purchase up to 20% of the lithium hydroxide and lithium carbonate produced at the Shawinigan Plant from the spodumene concentrate coming from the Whabouchi Mine, will be effective and all purchases will be at pre-agreed discounts applicable to a pre-determined market price-based formula.
SoftBank will also be entitled to one nominee as director of Nemaska Lithium and has been granted a pre-emptive right to participate in any further equity offering as long as it holds at least 5% of the shares then outstanding.