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Potential funding lifeline for Nemaska lithium development

Nemaska Lithium’s (TSX: NMX) over-budget Whabouchi development in Canada has received a potential funding lifeline.
Potential funding lifeline for Nemaska lithium development Potential funding lifeline for Nemaska lithium development Potential funding lifeline for Nemaska lithium development Potential funding lifeline for Nemaska lithium development Potential funding lifeline for Nemaska lithium development

Nemaska’s Whabouchi lithium mine in Quebec, pictured under development in May

Staff reporter

Shares in the developer surged almost 40% on Friday as it announced a C$600 million (US$459 million) funding proposal from London-based metals and mining investor, The Pallinghurst Group.

Nemaska has been considering all options for its Whabouchi lithium mine and Shawnigan electrochemical plant in Quebec, after a cost-to-complete review in February had revealed a $375 million funding shortfall.
 
In a joint statement on Friday, Nemaska said it had accepted a letter of intent from Pallinghurst to finance the project, which contemplated a C$200 million private placement at 25c per share and a stand-by purchase agreement to fully guarantee a $400 million rights offering at the same price.

Pallinghurst co-founder and managing partner Arne Frandsen said the company believed Nemaska's lithium salt would "rapidly become one of the most sought-after battery materials globally".

"The Nemaska Lithium investment is in line with Pallinghurst's desire to focus exclusively on the supply of critical battery and fuel-cell related materials," he said.

Nemaska's board said it believed it was now in the best interests of the company and stakeholders to finalise negotiations on an exclusive basis with Pallinghurst.

The transaction was expected to be put to shareholders in or before October and if it was terminated, Pallinghurst would be entitled to either a $12 million payment or warrants for the issue of 19.9% of Nemaska's shares.

The company's share price, which had hit a 52-week low of 21.5c on Thursday, closed up 38.6% to 30.5c on Friday to capitalise Nemaska at $258.5 million (US$198 million).