The last time Nemaska Lithium stock (NMX:TSXV) traded less than a million shares was on May 16th. The company, which boasts “the 2nd largest and richest global lithium reserve” according to the company’s website, has plans to become a lithium hydroxide supplier and lithium carbonate supplier to the emerging lithium battery market.
The market has taken notice as the company has averaged more than 1 million shares traded per day in May and is now the largest lithium-related issuer on the TSX Venture by market cap.
Nemaska has remained not only one of the, if not, the most liquid lithium stock on the TSX Venture in recent weeks. More impressive than the tens of millions of shares traded are the dollar value exchanging hands. On May 25th, a whopping $10.85 million exchanged hands as Nemaska traded up to a new all-time high of $1.97 per share, before closing down 10% to $1.71.
After trading over 3 million shares in the $1.60s to $1.70s, Nemaska is back on the rise Monday morning. Its shares were up 3% to $1.80 after hitting $1.85 earlier in the day.
In an article from September 8th 2015, titled Nemaska Lithium tops junior lithium explorers; I detailed Nemaska’s position in the lithium space and its goals:
“Why do some projects get approved while others fail? How does one junior resource company gain attention, interest and respect from the markets when others go unnoticed and fade away? While the answer is multi-pronged and not always clear, three necessary components are timing, location and strong management.
Nemaska has advanced its key asset, despite the worst bear market in Canada’s small-cap sector due, in part, to 3 key reasons: strong communication, an ‘in vogue’ commodity and a mining supportive jurisdiction in Quebec.”
Click here to read my Nemaska article from almost one year ago.
Nemaska traded between a low of $0.315 and $0.35 per share on that day.
Nemaska Lithium – 6 Month Chart
Nemaska Lithium has risen more than 500% since my original article documenting the company’s potential in September of 2015. What’s more, the company has benefited from the three fundamental characteristics, I specifically outlined way back in September, including:
- strong communication
- an ‘in vogue’ commodity
- a mining supportive jurisdiction in Quebec
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Nemaska Lithium breaks out in May after securing plant facilities
May has been a great month for Nemaska Lithium. The company’s shares have risen from the $1.10-$1.15 range to a high of $1.85 this morning; and, in the process added more than $150 million to its market cap.
Even before the month began, the public mining company was giving the public a lot to think about. On April 29th, Nemaska purchased a new self-contained dense media separation (DMS) portable mill to be located at the Whabouchi mine site. The goal?
“…process a mine-representative bulk sample of about 29,000 t from the Whabouchi lithium mine during the summer and fall of 2016,” according to a company press release.
On May the 10th, Nemaska completed the acquisition of Shawinigan facilities, which will house the company’s Phase 1 Plant and the future Commercial Hydromet Plant that will convert spodumene concentrate into high purity lithium hydroxide and lithium carbonate. Considering the company’s market cap, the purchase price of $2 million to acquire the facility seems reasonable.
On May 11th, Nemaska reported that it had signed a definitive agreement with Johnson Matthey Battery Materials for a $12 million up-front payment for the Phase 1 plant. In conjunction, Johnson Matthey signed a commercial offtake agreement for lithium salts.
Then, less than two weeks later, on May 24th, Nemaska announced that it had received the first $5M tranche from Ressources Québec Inc., a subsidiary of Investissement Québec,, acting as a mandatary for the government of Québec. When governments begin not only backing, but investing in resource projects, it gives investors a serious boost in confidence. Each one of these steps, be it an acquisition or a commitment to finance has transformed this hopeful junior with big dreams into a soon to be producing lithium company which has executed on one goal after the other.
In May 10th’s press release, following the acquisition of the Shawinigan Facilities, Simon Thibault, Director of Environmental and Social Responsibility, chimed in that, “We expect to create approximately 100 skilled jobs in Shawinigan starting with the Phase 1 Plant and then the Commercial Hydromet Plant to follow.” With a direct economic impact such as 100 high paying jobs, it’s easy to see why the government has put up capital to be involved.
The private placement with Ressources Québec totalling $10M was announced on March 11, 2016 and was held in escrow until the closing of the Johnson Matthew Battery Materials transaction (announced on May 11, 2016), according to the company.
Nemaska also confirmed that, “The remaining balance of $5M is being held in escrow and will be released to Nemaska Lithium upon achievement of certain project milestones for the Phase 1 Plant.”
Guy Bourassa, President and CEO of Nemaska Lithium, had this to say:
“This new cash installment allows us to continue on schedule with the development of the Phase 1 Plant, with a goal of commissioning the plant by the end of this year and delivering commercial samples of battery grade lithium hydroxide to customers in 2017.”
Click here to read the entire quote and press release.
According to Nemaska, the Corporation is developing one of the most important spodumene lithium hard rock deposit in the world, both in volume and grade.
While production in 2017 might seem like a lofty goal to some, particularly for a junior lithium company, which are known for delays, Nemaska Lithium‘s market (which is hovering at $400 million in market capitalization) seems to think otherwise at the moment. Nemaska is thriving due to its ability to execute, strong communication, being in the lithium space and being located in a supportive jurisdiction: Quebec. These factors, have led to Nemaska’s success as it prepares to become a Canadian lithium producer by 2017.
This article represents solely the opinions of Alexander Smith. Alexander Smith is not an investment advisor and any reference to specific securities in the list referred to in the article does not constitute a recommendation thereof. Readers are encouraged to consult their investment advisors prior to making any investment decisions. The information in this article is of an impersonal nature and should not be construed as individualized advice or investment recommendations.
