A vertically integrated lithium investment opportunity
Many lithium projects have foundered by the wayside. However Nemaska Lithium have been one of the success stories of 2018. In this interview, Wanda Cutler, IR, Nemaska Lithium, explains what sets them apart from the crowd. Nemaska Lithium are speaking at Mines and Money London
Wanda Cutler, Investor Relations, Nemaska Lithium
Andrew Thake, Mines and Money
Nemaska Lithium (NMX.T) intends to become a lithium hydroxide supplier and lithium carbonate supplier to the emerging lithium battery market that is largely driven by electric vehicles, cell phones, tablets and other consumer products. Nemaska Lithium is developing in Quebec one of the most important spodumene lithium hard rock deposit in the world, both in volume and grade. The spodumene concentrate produced at Nemaska Lithium's Whabouchi mine will be shipped to the Corporation's lithium compounds processing plant to be built in Shawinigan, Quebec. This plant will transform spodumene concentrate into high purity lithium hydroxide and carbonate using the proprietary methods developed by Nemaska Lithium, and for which patent applications have been filed.
Mines and Money (MM): How have the last 12 months been for you?
Wanda Cutler (WC): During the last 12 months we focused on delivering key milestones for the company which were predominantly around commissioning the Phase 1 lithium hydroxide plant in Shawinigan Quebec. To date we have delivered 24 tonnes of battery grade lithium hydroxide produced from our clients raw material as well as from our own spodumene concentrate. We published the specifications of the lithium hydroxide produced from the Whabouchi ore/concentrate and we demonstrated that Nemaska Lithium’s lithium hydroxide meets or exceeds generally accepted battery grade lithium hydroxide specifications today. Our client Johnson Matthey is very pleased with the product received to date and already begun to qualify our product in their cathode material with their clients. This qualification step is very important as any new supplier of lithium salts must be qualified for commercial sales. Qualification of our products in advance of building the commercial scale mine and electrochemical plant was the main purpose of the Phase 1 Plant. Operating the Phase 1 Plant and producing more than 1,100 tonnes of spodumene concentrate at the mine site also provided us with significant operating data which we used to increase the accuracy of our 2018 Feasibility Study which was released in January 2018. With this financial model in had we are now focused on delivering our project financing in Q1 2018.
MM: What opportunities do you see for the next 12 months? How is your company positioned to take advantage of them?
WC: The lithium market for both processed battery grade lithium salts and the spodumene concentrate remains very tight and new suppliers are needed. Our goal is to complete the project financing in Q1 2018 and begin construction of both the mine site and the electrochemical plant. Construction of the mine site has a 9 to 12 month schedule with electrochemical plant expected to take around 18 to 24 months for construction and commissioning. This will give us approximately one year when the mine will be producing a concentrate ahead of the electrochemical plant being ready to receive it for processing into lithium salts. Nemaska Lithium is currently in discussions to sell spodumene concentrate to Chinese buyers putting Nemaska Lithium into revenue generation starting as early as Q1 2019.
MM: You’ve recently acquired the Sirmac property – can you tell us a little bit more?
WC: Sirmac is a highly prospective property and we launched a small exploration program in 2012 as an additional source of ore to process at the Whabouchi mine site. Back in 2012 equity financings were very dilutive and difficult to complete due to the market conditions. Therefore we made a corporate decision to develop the Whabouchi asset as it was further along and showed great potential. Sirmac was put on the shelf until very recently when we were approached by ABE Resources (the name is soon to be changed to Vision Lithium) to purchase this asset. We decided it was in the best interest of our shareholders to sell this asset predominantly for shares (15 M shares of TSX.V: ABE), making Nemaska Lithium the largest shareholder of ABE Resources. ABE (Vision Lithium) will get to work exploring Sirmac and hopefully will unlock the potential at that property. Our shareholders continue to have upside to the story.
MM: There are lots of lithium mining projects out there. What makes you stand out from the rest?
WC: Nemaska Lithium is one of the very few companies that are vertically integrated from the mine to processing plant. By owning our own source of lithium we have a significant cost advantage over the Chinese processers that buy their lithium from mines in Australia. In doing so, the Chinese are forced to pay a margin on the lithium concentrate significantly increasing their raw material cost vs Nemaska Lithium’s costs. Being vertically integrated and having the entire project Iocated in the safe mining friendly jurisdiction of Quebec Canada, allows us to become the lowest cost producer of lithium hydroxide and a very competitive producer of lithium carbonate globally.
MM: What are the biggest challenges you are facing right now?
WC: The biggest challenge is project financing. We are considering some very creative structures that will minimize shareholder dilution through debt, streaming agreements. Q1 2018 is our target for delivering this project financing.
MM: How has the mining investment landscape changed over the last few years?
WC: In general I would say that the investment community has come up the learning curve on the lithium space and the battery materials sector in general. We are seeing more and more institutions coming into the sector including generalist which in the past stayed away due to a lack of understanding. The investment community has generally accepted that batteries are moving to lithium ion technology and electric vehicles are on a mass adoption curve. All current auto makers have EV platforms and all use lithium battery technology. This is driving the demand for lithium salts now and in the future.