Nemaska Lithium Inc. (“Nemaska Lithium” or the "Corporation")
(TSX: NMX) (OTCQX: NMKEF) (Frankfurt: N0T) is pleased to announce
that an external and independent audit conducted, at the request
and under the supervision of the Board of Directors’ Special
Committee, by multidisciplinary Canadian engineering firm BBA, has
validated Nemaska Lithium’s internal cost-to-complete construction
assessment as of February 13, 2019, based on the information that
was then available to the Corporation. Following the February 13,
2019 project update, the Corporation retained BBA as Owner’s
Engineer to perform an independent audit of the quantitative
estimate of the expected project CAPEX and a validation of the
estimate class as of that date. This audit also comprises a
qualitative assessment of the Project Execution Plan (PEP) and
recommendations for potential improvements.
BBA's independent cost assessment is slightly
lower than the Corporation’s prior cost-to-complete internal
estimate as of February 13, 2019 and therefore validates the
Corporation’s conclusion that additional net funds of approximately
$375 million are required to meet the cost to complete drawdown
conditions provided in the streaming agreement with Orion Mine
Finance and the senior secured bonds. BBA also confirms that the
Corporation has acted diligently to implement the necessary
internal changes and assigned the appropriate supplementary
resources in order to strengthen control over construction
activities and optimize its existing resources pending the
completion of the required additional financing or any other
available strategic alternative.
"The decision to appoint a third-party to review
our internal reassessment was the first of many actions that were
undertaken for a more prudent approach to conducting our project
construction. We are pleased to confirm that the Corporation has
already proactively implemented a number of BBA’s recommendations
while others are in the process of being implemented. We are
resolutely looking towards the future to achieve our goal of
completing construction and entering into commercial production as
soon as possible. Meanwhile, the quality of our spodumene
concentrate and lithium hydroxide product continues to be noticed
and recognized globally." said Guy Bourassa, President and CEO of
Nemaska Lithium.
A series of measures implemented to
improve control over construction activities
In addition to bringing in new, seasoned experts
to the construction project team, the Corporation has streamlined
and improved its project control processes. It has fully
internalized the entire project contract and procurement management
function and is currently evaluating agreements with suppliers to
ensure that contracting strategies are adapted to the current
reduced pace of construction. Previously, a portion of these
responsibilities were contracted to an external firm.
In-house expertise has also been enhanced with
the appointment of specialist engineers in key positions for
project delivery in Whabouchi and detailed engineering oversight in
Shawinigan. Finally, a new risk assessment exercise for the
completion of the project was launched in collaboration with
external peers to identify, anticipate and limit potential
consequences of any unforeseen events on project execution.
“We believe our revised construction and project
execution plan, which factors the current reduced construction
pace, allows us to advance our detailed engineering work and
improve our planning and cost control, in order to be ready when
the funds will be available. We are proud to see all our team
members and partners join forces to advance the project. We are
working diligently to meet the objectives set forth in our plan,"
added Robert Beaulieu, Vice President, Operations &
Construction of Nemaska Lithium.
Next Steps
As previously announced on March 25, 2019,
Clarksons Platou Securities and National Bank Financial have been
mandated by the Corporation to lead a dual-track financing action
plan – equity raise and/or consider M&A opportunities – to
carry the project through the production stage at the mine and the
electrochemical plant. The independent BBA Audit Report is an
important data point and key validation of Nemaska Lithium’s
financial requirements and internal controls to complete the
project. The financing/strategic process is ongoing and various
parties are currently involved at different stages. The Management
Team is actively working with the qualified persons in charge of
updating the NI 43-101 Technical Report – Feasibility Study on
the Whabouchi Lithium Mine and Shawinigan Electrochemical Plant,
which is expected to be filed during the month of June 2019.
Nemaska Lithium intends to hold its quarterly
construction update call in the second half of the month of May
2019, in line with the filing of its quarterly financial
statements.
About Nemaska Lithium
Nemaska Lithium Inc. is a developing chemical
company whose activities will be vertically integrated, from
spodumene mining to the commercialization of high-purity lithium
hydroxide and lithium carbonate. These lithium salts are mainly
destined for the fast-growing lithium-ion battery market, which is
driven by the increasing demand for electric vehicles and energy
storage worldwide. With its products and processes, the Corporation
intends to facilitate access to green energy, for the benefit of
humanity.
The Corporation will be operating the Whabouchi
mine in Québec, Canada, one of the richest lithium spodumene
deposits in the world, both in volume and grade. The spodumene
concentrate produced at the Whabouchi mine will be processed at the
Shawinigan plant using a unique membrane electrolysis process for
which the Corporation holds several patents.
The Corporation is a member of the S&P/TSX
SmallCap Index, S&P/TSX Global Mining Index, S&P/TSX Global
Base Metals Index, S&P/TSX Equal Weight Global Base Metals
Index, and the MSCI Canada Small Cap Index. For more information,
visit www.nemaskalithium.com or twitter.com/Nemaska Lithium.
About BBA
BBA has been providing a wide range of
consulting engineering services for nearly 40 years. Its
engineering, environmental and commissioning experts team up to
quickly and accurately pinpoint the needs of industrial and
institutional clients. The firm’s expertise is recognized in the
fields of energy, mining and metals, biofuels and oil and gas. With
12 offices across Canada to provide clients with local support and
field presence, BBA is recognized for providing some of the
industry’s most innovative, sustainable and reliable
solutions. www.bba.ca.
Cautionary Statement on Forward-Looking
Information
All statements, other than statements of
historical fact, contained in this press release including, but not
limited to, those relating to preserve cash on hand and to obtain
the additional capital required to enable the Corporation to
complete construction, the estimated additional costs to complete
the construction of the Whabouchi mine and the Shawinigan plant,
the ability to meet funding and other conditions under the
streaming agreement and the senior secured bonds, the expected
unfolding of construction and commissioning, the ability to adapt
agreements with suppliers and contracting strategies to the current
or ultimate pace of construction as well as the anticipated start
of production at the Whabouchi mine and Shawinigan plant sites,
constitute “forward-looking information” and “forward-looking
statements” within the meaning of certain securities laws and are
based on expectations and projections as of the date of this press
release. Certain important assumptions by the Corporation in making
forward-looking statements include, but are not limited to, the
obtaining of the additional capital required in a timely fashion to
fulfill the conditions precedent to receive the remaining proceeds
from the project financing being the second tranche payment under
the Streaming facility and the Bonds offering proceeds.
Forward-looking statements contained in this
press release include, without limitation, those related to (i) the
ability of the Corporation to implement BBA’s recommendations, (ii)
the outcome of BBA’s recommendations, (iii) the outcome of the new
risk assessment exercise, (iv) the ability of the Corporation to
secure additional funds or identify any available strategic
alternative, (v) the ability of the Corporation to meet funding and
other conditions under the Streaming agreement and the senior
secured bonds, (vi) the outcome of the evaluation of several
options that would enable existing and new shareholders and project
partners to provide funding, (vii) the ability of the Corporation
to complete the mine construction and the Shawinigan facility and
restart construction at full pace within a timeline in order for
estimated additional net funds of about $375 million financing to
be sufficient, (viii) the outcome of the internalization of the
project contract and procurement management function, (ix) the
project execution plan allowing the Corporation to improve planning
and cost control, and (x) generally, the above “About Nemaska
Lithium” paragraph which essentially describes the Corporation’s
outlook. Forward-looking statements are based on expectations,
estimates and projections as of the time of this press release.
Forward-looking statements are necessarily based upon a number of
estimates and assumptions that, while considered reasonable by the
Corporation as of the time of such statements, are inherently
subject to significant business, economic and competitive
uncertainties and contingencies. These estimates and assumptions
may prove to be incorrect.
Many of these uncertainties and contingencies
can directly or indirectly affect, and could cause, actual results
to differ materially from those expressed or implied in any
forward-looking statements. There can be no assurance that
additional funding or any other strategic alternatives can be
available, that the estimated net funds of $375 million required to
complete the project and to reach commercial production will be
sufficient depending on the construction timeline and any related
delays, that the Corporation will meet conditions under the
streaming facility and the bonds in light of rights of secured
creditors thereunder and that the Whabouchi mine and/or the
electrochemical plant in Shawinigan will be commissioned and will
begin production, as future events could differ materially what is
currently anticipated by the Corporation. For greater certainty,
any delay to secure the required additional financing or other
available strategic alternative may impact the construction
timeline and previously estimated required funds to complete
construction.
By their very nature, forward-looking statements
involve inherent risks and uncertainties, both general and
specific, and risks exist that estimates, forecasts, projections
and other forward-looking statements will not be achieved or that
assumptions do not reflect future experience. Forward-looking
statements are provided for the purpose of providing information
about management’s expectations and plans relating to the future.
Readers are cautioned not to place undue reliance on these
forward-looking statements as a number of important risk factors
and future events could cause the actual outcomes to differ
materially from the beliefs, plans, objectives, expectations,
anticipations, estimates, assumptions and intentions expressed in
such forward-looking statements. All of the forward-looking
statements made in this press release are qualified by these
cautionary statements and those made in our other filings with the
securities regulators of Canada including, but not limited to, the
cautionary statements made in the “Risk Factors” section of the
Corporation’s Annual Information Form dated October 10, 2018, and
the “Risk Exposure and Management” section of the Corporation’s
quarterly Management Discussion & Analysis. The Corporation
cautions that the foregoing list of factors that may affect future
results is not exhaustive, and new, unforeseeable risks may arise
from time to time. The Corporation disclaims any intention or
obligation to update or revise any forward-looking statements or to
explain any material difference between subsequent actual events
and such forward-looking statements, except to the extent required
by applicable law.
Further information regarding Nemaska Lithium is
available in the SEDAR database (www.sedar.com) and on the
Corporation’s website at: www.nemaskalithium.com.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Victor
CantoreInvestor Relations514
831-3809victor.cantore@nemaskalithium.com |
Wanda
Cutler Investor Relations416 303-6460
wanda.cutler@nemaskalithium.com |
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Media
Relations514 348-0466gabrielle.tellier@nemaskalithium.com |
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