SHAWINIGAN – Confirmation of Nemaska Lithium’s internal assessment by an independent firm of the additional funds needed to complete the Whabouchi mines and Shawinigan production plant will reassure the market and potential investors, says Guy Bourassa, President and CEO of the company.
In a statement released yesterday morning, the company revealed that the Canadian firm BBA “concludes at a slightly lower estimate” of the $ 375 million announced last February. This sum, let us remember, must be added to the $ 1.1 billion already raised to complete the two major investments. Mr. Bourassa did not want to reveal exactly how much BBA was coming.
“Their mandate was to validate our estimation methods,” he explains. “It confirmed that they were appropriate. In the end, they arrive with a little significant difference, but inferior. With tighter control, we can get into that amount. It reassures investors that we have already approached. This is the cornerstone to continue and close the additional funding we need. This report was very important, and we are happy that a third party confirms all this. ”
Beyond the numbers, Mr. Bourassa adds that this independent audit confirms the credibility of the corrections made since February, which should reduce the possibilities of such an unpleasant surprise in the coming months. In fact, a new risk assessment process has just been launched with external partners in order to “minimize the possible consequences of possible unforeseen events”.
Nemaska Lithium also announced that contract management and procurement have been repatriated internally, while before the start of the year, some of these responsibilities were attributed to an external consulting firm. .
The company also analyzes its agreements with its suppliers to ensure that they are adapted to the pace of construction. In Shawinigan, for example, the interruption of at least three months in the development of the production plant makes it possible to advance the engineering of the project and thus, to specify specifications.
“We had bids for some contracts that had not started yet,” says Bourassa. “But when you go to bidding with 40% or 45% of retail engineering, entrepreneurs are protecting themselves and there are opportunities for additional costs. For some contracts, we decided to go back to bidding when we are more advanced in detail engineering. It will have an impact on the price. There will not be much room for the unknown. ”
In his press release, Mr. Bourassa talks about starting commercial production “as soon as possible”. Nemaska Lithium is still targeting the start-up of its Shawinigan division in the second half of 2020, but the suspension of work may drag this schedule a few months. The businessman can not yet give a more precise horizon for the moment.
“Most likely we will shift at least a quarter,” he says. “But as long as we do not have the final date of financing and the resumption of construction, it’s impossible to give an approximate date a little believable.”
Management will hold its construction update conference call in the second half of May. It will publish the results of its third quarter in the same horizon. Mr. Bourassa can not yet say whether new business partners will be announced at this time. Management even analyzes merger or acquisition assumptions.
“No stone will not be returned,” he says.
Since the release of its February 13 press release announcing a new $ 375 million financing search, the title of Nemaska Lithium has struggled to recover. That day, its value had risen from $ 0.55 to $ 0.36. It closed Monday at $ 0.285, up 5.6% from Friday. Last week, the stock had dropped to $ 0.25, its last year’s low.
“All lithium titles, including major producers, are on the decline,” notes Bourassa. “In addition, we have additional pressure to know how we will finance ourselves.”