Lexpert Magazine

LEXPERT MAGAZINE | JANUARY 2019 5 PETER DANNER, Torys LLP, for Orion Mine Finance: e financing package included the world's first lithium stream agreement. Stream agreements are complex even in their simplest form. Where you are also dealing with a commodity or sales structure for the first time, it raises a host of novel legal and commercial issues that need to be worked through. In this case, we had to do that all within the context of a broader, multi-faceted financing package. LEXPERT: What was the most challenging aspect of working on this? NANCY CHOI, Cassels Brock & Blackwell LLP, for the Underwriters on the public offer- ing, and the Bondholders' Agents and Trust- ee on the bond offering: Likely the timing — lining up each element of the financing package, ensuring the bond and equity of- ferings could be undertaken during favour- able market conditions and also negotiating deal points throughout a fluid transaction process to ensure that the deal terms being settled between parties on any one element of the financing package — would not compromise our clients' position. RICHARD PROVENCHER, Stein Monast LLP, for Nemaska Lithium (public offering, Res- sources Québec private placement and bond offering): Making consensus on every step, as well as aligning and coordinating all aspects of this complex financing package with the idea that it had to close on one specific date. Many professionals from the mining sector but also from the intellectual property and surety fields were involved, all of whom had requests specific to their field of expertise that had to be satisfied. DAGENAIS: e coordination of different teams involved in negotiating, draing and finalizing very complex arrangements, from confidentiality agreements, term sheets, MOUs up to the very detailed definitive documentation, all the while negotiating and concluding oake agreements, which was done internally, and also working with senior management colleagues to build the organizational structure and enhance our corporate governance practices to foster a proper transition from a junior exploration outfit towards a producing company. In addition, all this needed to happen within a relatively tight window of opportunity. FORTIER: One of the most challenging por- tions was ensuring that the pieces of this fi- nancing puzzle all fit together. Each source of funds had its own complexities and re- quirements, which at times could conflict with each other. At the same time, we were trying to complete one of the largest and most complex project financings in what had become an increasingly volatile mar- ket. ere was a window to complete the financings that could not be missed. It was therefore a delicate balancing act to focus the real value drivers for Nemaska while maintaining the momentum. … With re- gards to the streaming agreement, the fact that lithium is not traded on a liquid mar- ket with indexed pricing created some chal- lenges and charted new territory. LEXPERT: Can you go into more detail about the various elements? DAGENAIS: For the public offering, it is no small feat for a resource company not gen- erating any revenue to raise that amount of equity proceeds through a bought deal. is challenge was increased by having to final- ize Ressources Québec's private placement simultaneously. e Nordic bond offering was essentially realized outside Canada and its mechanics were challenging. We also se- cured a strategic investment from SoBank Group Corp., with an agreement granting it a right of first offer on future sales, which also proved quite a challenge to negotiate. PROVENCHER: We decided with the Cor- poration to proceed with the public of- fering through a prospectus supplement to a short-form base shelf prospectus to facilitate and speed up the closing process. e bond offering has been made on a pri- vate placement basis through an Offering Memorandum and the $80-million private placement through a subscription agree- ment. All common shares were electron- ically issued using electronic registration method in Canada and a similar process was used for the bonds in Norway. FORTIER: We initially closed the strategic investment with SoBank, together with an oake arrangement, by way of subscrip- tion receipts and also executed the stream financing with Orion. ese financing ar- rangements — conditional upon Nemaska completing the remaining equity and bond financings — with two highly recognized strategic investors brought credibility to Nemaska's financing strategy and facilitated the completion of the subsequent equity and bond financings. DAGENAIS: While the final financing struc- ture involves several components, we had examined a much higher number of finan- cing options. roughout this lengthy pro- cess, we covered the whole gamut of alterna- tives, from plain vanilla bank credit facility to private equity investments and strategic partnerships. ese endeavours involved — among other things — numerous due diligence reviews which, in turn, brought us to undertake and file with Sedar a new 43-101 feasibility study that extended the mine life and increased the overall mine and plant production. FORTIER: e objective of the overall fi- nancing was to finance the construction of the electrochemical plant and the mine construction, two very different operations with different risk profiles. roughout this process, Nemaska's financing efforts attracted significant interest from numer- ous investors across the globe, so Nemaska engaged actively with many different po- tential investors internationally. e inter- est in Nemaska's product was significant and it had to consider numerous potential sources of financings to determine which combination of financings was the best for its shareholders. PROVENCHER: In-house counsel Marc Dagenais made tremendous efforts for a complete year to finally come to this deal. On our end, most of the work was done on a really tight schedule, with the kick-off in February [2018]. We worked around the clock with the management team and McCarthy Tétrault to coordinate all five transactions of the financing package. A staggering number of agreements of all kinds and due diligence sessions had to be custom-made for all parties involved given the stakes were different from one to an- other. We also had many work sessions with the Toronto Stock Exchange and the Au- torité des marches financiers to make sure all strings were perfectly attached.

• Cover
• back