Here is Joe Lowry's (lithium expert) view on the Nemaska’s MOU...

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    Here is Joe Lowry's (lithium expert) view on the Nemaska’s MOU with Johnson Matthey Battery Materials

    Does Nemaska Matter?

    Nov 23, 2015

    Last week there was a fair amount of buzz about Nemaska’s MOU with Johnson Matthey Battery Materials for “an up-front payment of CDN$12M by JMBM in exchange for services and products of the same value from the Nemaska Lithium”
    An “investment” by JMBM is certainly welcome news for this long struggling project but the question remains – where will the additional funds to move the project forward come from? An investment of less than USD 10 million is significant to Nemaska in the short run but as the press release goes on to say:

    While it is the Corporation's intention to build its Phase 1 Plant and the subsequent commercial plant, the construction and operation are subject to financing. The Phase 1 plant will be built in the recently acquired Laurentide Plant in Shawinigan (see press release of September 8, 2015). It will have a capacity to produce about 500t/y of high purity lithium hydroxide and lithium carbonate.”

    From my perspective, the odds of the 500 MT pilot plant getting built are still in the “50-50” range.  The most recent corporate presentation outlining the project is available on the Nemaska website. The numbers are very optimistic in my opinion but this is certainly not the first time capital and cost numbers for a lithium project feasibility study have fallen into the “stuff dreams are made of” category.

    What does the fact that Nemaska is able to receive even minimal additional funding show us?
    • The lack of adequate capacity additions by the “Big 3” that enabled the steady increase of high cost capacity in China continues to create opportunity for new projects due to the run up in market price that is likely to last until the end of the decade. Obviously higher price equals more attractive project economics.
    • The province of Quebec continues to support lithium development by Nemaska and others. My assumption is that JMBM got more than a “wink and a nod” from the government to make the deal with Nemaska. I am not making a value judgement just stating my opinion that government support is very likely a critical element in enabling commercial lithium production in Quebec. The first commercial lithium producer in Quebec may NOT be Nemaska but government support will be critical for any project.
    • Nemaska’s CEO and supporters have shown admirable perseverance especially during the past few years when the appetite for lithium investment has been less than voracious. Clearly, the long awaited lithium demand boom is finally here as evidenced by solid gains in pricing. Given the current scenario of limited supply and higher pricing, it is very likely that in the next two years a few viable lithium projects will find favor in the eyes of investors. Let's hope so.
    In any case, Nemaska still faces significant challenges in moving their project to the next level. Among them:
    • Additional “non Talison” spodumene coming online in Australia that will enable excess carbonate and hydroxide conversion capacity in China to supply growing demand. Specifically, Galaxy’s Mt Cattlin, Neometal’s Mt. Marion, and Pilbara which is still in the early stages but shows potential to be "another Talison". More production in China (especially hydroxide) will make Nemaska's business case less compelling even if they have lower costs than their counterparts in the Middle Kingdom.
    • Yesterday’s election in Argentina may begin a move to the right bringing economic policies that make it much more likely that investment will flow to brine projects like Sal de Vida and LAC. A currency devaluation would help the economics of new projects and also enable long suffering FMC to return to at least “second class” cost status as a brine producer. ORE would also benefit assuming they move out of “start-up” to true commercial production.
    Does Nemaska matter? At this point it is still too early to tell. If I was pressed for an answer I would say the factors of resource location and quality combined with execution risk in employing new technology will make Nemaska a footnote in the history of lithium. But I have been wrong before and will be wrong again. I wish them luck

    https://www.linkedin.com/pulse/does-nemaska-matter-joe-lowry
 
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