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Nemaska Lithium hits another finance hurdle

Embattled developer Nemaska Lithium (TSX: NMX) has announced another financing setback.
Nemaska Lithium hits another finance hurdle Nemaska Lithium hits another finance hurdle Nemaska Lithium hits another finance hurdle Nemaska Lithium hits another finance hurdle Nemaska Lithium hits another finance hurdle

The primary crusher under construction in July at Nemaska Lithium’s Whabouchi project in Quebec

Staff reporter

The company yesterday said it acknowledged the "set-off" of US$350 senior secured bonds, offered last year as part of a C$1.1 billion financing package for its now over-budget Whabouchi mine and Shawinigan plant, as the project completion date was delayed beyond June 2021 without the bond terms being amended.

However president and CEO Guy Bourassa pointed to the bright side.

"Since the proceeds were held in a trust account and the corporation could not access them at this stage, the set-off and related prescribed reimbursement of the bonds has certain positive implications for the corporation in the short term by allowing it to save payment of interests on the bonds," he said.

"The savings on interest, coupled with the capacity to eventually use the C$40 million of cash and cash equivalents that is sitting in a cost overrun account required under the bond terms, will allow us to continue advancing the project while we carry on our discussions and negotiations to attain a more suitable capital structure in light of the actual market conditions."

Nemaska Lithium had revealed a $375 million (US$283 million) funding shortfall to complete the mine and plant in Quebec in February.  

The company's potential funding white knight has not been deterred by the latest development.

Nemaska said London-based investor The Pallinghurst Group had been informed of the set-off and related reimbursement and had "confirmed that it remains willing" to continue due diligence on its proposed C$600 million funding lifeline proposed in July.

Nemaska's current strategic partners, including Investissement Québec and Softbank Group, had also been involved in discussions, the company said.
 
Meanwhile lithium prices have continued to soften, with US investment firm Bernstein this month predicting a "truly massive" oversupply would keep prices in freefall.

Nemaska shares have shed a third of their value over the past year.

They lost 7.9% yesterday to close at 29c, capitalising it about $246 million (US$186 million).