VANCOUVER — Quebec City-based Nemaska Lithium (TSX: NMX; US-OTC: NMKEF) is thinking bigger at its development-stage Whabouchi hard-rock lithium deposit and chemical plant after what it calls a “considerable strengthening” in the market for lithium-ion battery chemicals.
On Jan. 9, the company released an updated feasibility study on the project showing a 20% jump in overall commercial capacity. The biggest change is a boost in lithium carbonate capacity from 3,250 tonnes to 16,000 tonnes annually.
The upsized scenario will increase project capital expenses nearly 50% to $801 million. Nemaska’s 33-year mine plan involves 7 million tonnes spodumene concentrate converted into 770,000 tonnes battery-grade lithium hydroxide and 361,000 tonnes lithium carbonate.
The site of Nemaska Lithium’s hydro-metallurgical (hydromet) facility in Shawinigan, Quebec. Credit: Nemaska Lithium.
“The decision to expand production capacity reflects our vision and understanding of the market following discussions with customers globally for both lithium carbonate and hydroxide,” Nemaska president and CEO Guy Bourassa said during a conference call. “There’s been an unprecedented interest for the products now that we have successfully shipped high-quality, battery-grade hydroxide from our own concentrate to a cathode producer.”
Nemaska spent the past 18 months building and operating a 610-tonne-per-year trial hydrometallurgical (hydromet) plant in Shawinigan, Que., which culminated in a 1,050-tonne bulk sample of above 6% spodumene concentrate.
Nemaska Lithium president and CEO Guy Bourassa (left) and chairman Michel Baril stand on outcropping green spodumene mineralization at the Whabouchi lithium project in Quebec, 175 km southeast of James Bay. Photo by Trish Saywell.
The company concluded it would benefit from an ore-sorting circuit at the Whabouchi mine site, 280 km northwest of the municipality of Chibougamau. It also plans to expand the capacity of the commercial hydromet processing facility in Shawinigan from 27,400 tonnes to 33,000 tonnes lithium carbonate equivalent per year.
“We’ve increased the ratio of lithium carbonate we’ll be producing to meet our existing contracts, though I’d point out our system remains completely flexible in terms of producing more hydroxide,” Bourassa said.
“We’ve adjusted the capital requirements to expand overall capacity and carbonate production. Both products are in high demand and the sales prices are now very similar.”
Nemaska has offtake agreements with Johnson Matthey (LON: JMAT) and FMC (NYSE: FMC) for half of the company’s lithium carbonate equivalent in contracts that run three to five years long.
The feasibility study assumes an average life-of-mine sales price for lithium hydroxide of US$14,000 per tonne. Meanwhile, the average selling price for lithium carbonate is pegged at US$9,500 per tonne for the first five years, and US$12,000 per tonne thereafter.
The study models a hybrid open-pit and underground mine with a 33-year life. The open-pit component accounts for the initial 24-year timeline based on proven and probable reserves of 24 million tonnes at 1.53% Li2O. Whabouchi’s 9.4-year underground phase is based on 13 million proven and probable tonnes at 1.16% Li2O.
The feasibility study base case yields a $2.4-billion after-tax net present value at an 8% discount rate and a 30.3% internal rate of return.
Bourassa said he intends to put together a “60-40” debt to equity project financing by the end of March. The company is in discussions with potential downstream consumers and lenders, and has not ruled out bringing in a partner to buy part of the project.
The Whabouchi mine and $531-million hydromet plant could hit commercial production by the end of 2020.
Ground works at the Whabouchi hard-rock lithium project in Quebec. Credit: Nemaska Lithium.
Nemaska shares have traded in a 52-week range of 95¢ to $2.44 per share, and last closed at $2.19.
The company has 378 million shares outstanding for an $828-million market capitalization, and reported $33 million in working capital at the end of September.
The Quebec government is Nemaska’s largest shareholder. Ressources Québec holds 29.4 million shares.
HOW DO I FGIND OUT THE EXPIRY OF THE WARRENT ON THIS OR ANY OTHER COMPANY
Ron, we publish information on Canadian-listed mining warrants in every issue of our bi-weekly print edition. Have a look there for warrants, strike prices, expiry dates, etc.
Hello Ron,
You should check out your shareholder documentation, or you can head over to sedar.com and check the company’s various corporate filings.
For example, Nemaska’s “Annual information form – English” was filed in Oct. 2017 and contains outstanding warrant information.
Cheers,
Matt