Nemaska Lithium Releases Updated NI 43-101 Technical Report

by ahnationtalk on August 2, 2019180 Views

  • Before-Tax Internal Rate of Return (IRR) at 30.3% and Net Present Value (NPV) @ 8% of CAD 3.1 B
  • After-Tax IRR at 27.4% and NPV @ 8% of CAD 2.3 B
  • CAPEX assessment for Whabouchi and Shawinigan confirms the Corporation’s February 2019 estimate

QUEBEC CITY, July 31, 2019 — Nemaska ​​Lithium Inc. (“Nemaska Lithium” or the “Corporation”) (TSX: NMX) (OTCQX: NMKEF) (Frankfurt: N0T) releases the results of its updated National Instrument (NI) 43–101 Technical Report (the “Report”) on the Whabouchi mine (“Whabouchi”) and Shawinigan electrochemical plant (the “Plant”) (together, the “Project”). Nemaska Lithium’s management team retained the services of engineering firms to make this Report (as defined in NI 43–101), following the Corporation’s funding gap announcement of February 13, 2019.

“We are pleased to inform our shareholders that the Project’s economics remain very robust after a thorough review of the capital investment (‘CAPEX’) and overall operating costs (‘OPEX’) by the Qualified Persons (“QP”) working closely with our strengthened owner’s team, as reflected by the Report. It was produced using the most recent detailed engineering designs for both sites that provide significant insight into key operational estimates,” said Guy Bourassa, President and CEO of Nemaska Lithium. “Now that we have an updated timeline and budget, and that we have received and accepted a letter of intent from Pallinghurst for an equity investment of up to CAD 600 M, we are confident that we have in hand a solid plan for the future as well as a strong team in place to resume construction and successfully deliver the Project once the required financing is completed.”

Assuming a 100% Project equity financing, the Report shows a before-tax IRR % and NPV (@ 8% discount) of 30.3% and CAD 3.1 B, respectively and an after-tax IRR % and NPV (@ 8% discount) of 27.4% and CAD 2.3 B, respectively. These NPV and IRR calculations exclude sunk costs of ~CAD 340 M, as per NI 43–101 standards. It is assumed that the financing would be in place in order for construction to resume in November 2019, which would lead to a start of production in June 2020 for Whabouchi and in November 2021 for the Plant.

Updated Report at a Glance

Following an update of the geological model and detailed mine planning, the Report confirms a revised estimated annual production of approximately 205,000 tonnes of concentrate from Whabouchi and an annual production of approximately 37,000 tonnes of high-quality lithium hydroxide monohydrate at the Plant; assuming Nemaska Lithium will purchase lithium sulfate monohydrate (LSM) and/or concentrate when needed to achieve nameplate capacity.

The Corporation has made the decision to focus on lithium hydroxide production at its Plant; however, the Corporation will have the capacity in the future to add, as needed, the equipment required to also produce lithium carbonate should the market demand justify it.

The advancement of detailed engineering since June 2018 and the optimizations performed during the preparation of the Report have significantly de-risked the Project.

Including the costs related to the ramp-up and start-up of operations, the updated overall Project average OPEX are estimated to total CAD 5,223 (USD 4,018) per tonne of lithium hydroxide monohydrate (LiOH-H2O) produced from the Whabouchi concentrate. The OPEX per tonne of concentrate (6.25% Li2O) delivered at the Plant is estimated at CAD 452 (USD 347) on average during the life of mine (LOM). For the Plant, the overall estimated OPEX for the conversion of concentrate from the Whabouchi mine would be of CAD 2,513 (USD 1,933) per tonne of lithium hydroxide monohydrate (LiOH-H2O) on average over the life of the Project.

“We are proud of the efforts our renewed owner’s team has put forward over the past few months to strengthen control over engineering and construction activities. With the precious support of the whole organization, we will always be looking for ways to continuously improve our cost structure once we reach production level, thus strengthening Nemaska Lithium’s competitive position as a preferred low-cost producer of high-quality battery grade lithium hydroxide monohydrate” added Robert Beaulieu, Vice President, Operations and Construction. “The completion of this update provides us with the highest possible degree of visibility on key operational imperatives for the completion of construction, commissioning and ramp-up of our Project.”

All amounts are in Canadian dollars, except where otherwise indicated, and some amounts are also rounded for presentation. 2019 Technical Report

Total CAPEX 1

(CAD in M, including contingency)

Total Incurred as at
May 31, 2019
Remaining
Whabouchi 1: 448 223 225
Plant 1: 821 117 704
Total: 1,269 340 929
Spodumene Concentrate Average OPEX per Tonne of 6.25%Li2O
(Transformation at Whabouchi + transportation to the Plant)
CAD 452 (USD 347)
Lithium Hydroxide Average OPEX per Tonne of LiOH-H2O
(Transformation at the Plant)
CAD 2,513 (USD 1,933)

Total OPEX per Tonne of LiOH-H2O

(Whabouchi + Plant)

CAD 5,223 (USD 4,018)
Before-Tax Net Present Value (NPV)2 @ 8% Discount Rate CAD 3.1 B (base case)
@ 10% Discount Rate CAD 2.3 B
Before-Tax Internal
Rate of Return (IRR) 2
30.3%
After-Tax NPV2 @ 8% Discount Rate CAD 2.3 B (base case)
@ 10% Discount Rate CAD 1.7 B
After-Tax (IRR) 2 27.4%
Average Selling Price Lithium Hydroxide per tonne over Life of Mine USD 14,000 (CAD 18,200)
Open pit Mine Proven and Probable Reserves 27.9 M tonnes at 1.33% Li2O
Underground Mine Proven and Probable Reserves 8.7 M tonnes at 1.21% Li2O

Combined Open pit and Underground Proven and Probable Reserves

*The Updated NI 43–101 Technical Report confirms that more resources were identified below the mineral reserves level but are not considered Proven and Probable Reserves.

36.6 M tonnes at 1.30% Li2O
Life of Mine Production 6.6 M tonnes of spodumene concentrate to be converted into ≈1.1 M tonnes of battery-grade lithium hydroxide and 368 k tonnes of spodumene concentrate to be sold on the market.
Expected Mine Life 33 years
Life of Mine Revenue CAD 20.25 B
Exchange rate used for CAD to USD 1.30 : 1.00

1The total CAPEX includes amounts for corporate owners’ costs, which are ≈CAD 42 M for Whabouchi and ≈CAD 29 M for the Plant.

2 The NPV and IRR exclude sunk costs of ~CAD 340 M from calculations. This is the NI 43–101 standard.

Qualified Persons

Met-Chem, a division of DRA Americas Inc. (“DRA/Met-Chem”) has provided engineering and integration services for all aspects of the Updated NI 43-101 Technical Report on the Whabouchi Lithium Mine and Shawinigan electrochemical plant with the participation of other companies. The Technical Report includes the Resource Estimation (by SGS Geostat “SGS”), Open Pit Mine Design and Mineral Reserve Estimation (by BBA Inc. “BBA”), Underground Mine Design (by DRA/Met-Chem), concentrator (by DRA/Met-Chem), Electrochemical plant (by Hatch and NORAM), infrastructure (by Hatch for Shawinigan and DRA/Met-Chem elsewhere), waste rock and tailings disposal and water management (by SNC-Lavalin “SNC”), capital and operating costs (by Hatch for Shawinigan and DRA/Met-Chem elsewhere), and economic analysis (by DRA/Met-Chem). The complete NI 43–101 Technical Report will be posted on www.sedar.com within 45 days, and will be available to consult on Nemaska Lithium’s website. The technical information in this press release has been reviewed and approved by the Qualified Persons as relevant to their areas of responsibility and expertise.

Conference Call

Nemaska Lithium will host a conference call on August 1, 2019 at 11:00 AM ET. The Corporation’s President and CEO, Mr. Guy Bourassa, Chief Financial Officer, Mr. Steve Nadeau and Vice-president Operations and Construction, Mr. Robert Beaulieu, will discuss the Updated NI 43-101 Technical Report. The call can be accessed at the following:

Online: https://edge.media-server.com/mmc/p/xcasimzn

Dial information:

US/CANADA Participant Toll-Free Dial-In Number: (866) 353-6129

US/CANADA Participant International Dial-In Number: +1 (409) 217-8084

Conference ID: 6868859

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. 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.

FOR FURTHER INFORMATION, PLEASE CONTACT:

Victor Cantore
Investor Relations
514 831-3809
victor.cantore@nemaskalithium.com

Wanda Cutler
Investor Relations
416 303-6460
wanda.cutler@nemaskalithium.com

Gabrielle Tellier
Media Relations
514 348-0466
gabrielle.tellier@nemaskalithium.com

NT4

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