Dundee starts covering Nemaska Lithium with a 'buy'

(MENAFN- ProactiveInvestors)Broker Dundee has kicked off coverage of Nemaska Lithium (CVE:NMX OTCQX:NMKEF) with a 'buy' rating saying its Whabouchi deposit in Quebec is world-class. Lithium prices continue to rise notes analyst David Talbot who adds that lithium hydroxide is becoming the compound of choice by an emerging generation of battery plants created to supply high growth industries like electric vehicles. "Nemaska may be one of the first companies able to produce LiOH directly from spodumene rather than producing LCE (lithium carbonate equivalent) and converting it at extra cost. The firm will use a unique processing method which allows production of lithium hydroxide directly without consuming massive amounts of reagents or generating significant waste resulting in additional margin on a high purity battery grade product the broker added. The company plans to build and operate a Phase 1 demonstration plant (500 tpa (tons per annum) of lithium hydroxide ahead of the construction of a 28000 tpa operation. In addition the recent MOU (memorandum of understanding) with the battery subsidiary of Johnson Matthey opened up discussions for a long-term supply agreement and proposed a non-dilutive zero interest C$12 mln deal (essentially a pre-paid off-take) to fund Phase 1 said the broker. The deal unlocks an additional C$26mln in government funding/investment collectively covering capex and three years opex and working capital" notes analyst Talbot. The broker targets C$1 per share - which is a fair distance from the current price of C$0.36 a share.