Building the Future - Nemaska Lithium · all efforts are focused on the commissioning of our...

Annual Report

2018

Building the Future

Annual Report 2018 - 03

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A Word from the Chairman of the Board

A Word from the President and Chief Executive Officer

A Word from the Chief Financial Officer

Selected Financial Information

A Favourable Outlook for the Lithium Market

The Strategic Advantage of the Phase 1 Plant

From Construction to Commissioning

Innovating Further to Shape the Future

The Culture of a World-Class Industry Leader

Doing More and Better for the Future of our Communities

A Seasoned Board of Directors

A Committed Management Team

A Vision That Projects Us, Values That Anchor Us

Cautionary Statement on Forward-Looking Information

All statements, other than statements of historical facts, contained in this Annual Report constitute “forward-looking information” and “forward-looking statements” within the meaning of certain securities laws and are based on expectations, estimates and projections as of the date of this Annual Report. Forward-looking statements contained in this Annual Report include, without limitation, those related to:

• the construction and commissioning of the mine in the second half of 2019, and of the electrochemical plant in the second half of 2020;

• the recruitment of all necessary human resources to carry out the project, including within the surrounding communities;

• our vision of a production that is respectful of the environment, occupational health and safety, and surrounding communities;

• the strong growth in demand for battery-grade lithium;

• our goal of acquiring a 10% share of the global lithium hydroxide market;

• the deployment of our know-how elsewhere in the world;

• the valorization of our by-products;

• the international investment funds that have become shareholders of Nemaska Lithium for the long-term; and

• our ambition to become the reference in the lithium market.

Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Corporation as of the time of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. These estimates and assumptions may prove to be incorrect.

Many of these uncertainties and contingencies can directly or indirectly affect, and could cause, actual results to differ materially from those expressed or implied in any forward-looking statement.

There can be no assurance that the forward-looking statements featured in this Annual Report will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.

Forward-looking statements are provided for the purpose of sharing information about management’s expectations and plans relating to the future. All of the forward-looking statements made in this Annual Report are qualified by these cautionary statements and those made in our other filings with the securities regulators of Canada including, but not limited to, the cautionary statement made in the “Risk Factors” section of the Corporation’s Annual Information Form dated October 10, 2018, and those made in the “Risk Exposure and Management” section of the Corporation’s quarterly Management Discussion & Analysis.

The Corporation disclaims any intention or obligation to update or revise any forward-looking statement or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law.

02 - Annual Report 2018

Implementing rigorous governance practices

With the arrival of new partners, we have welcomed two seasoned directors to the Board, both of whom bring complementary experiences.

Throughout the year, the Board of Directors, in particular through its Executive Committee, has supported the Management Team in its efforts, at times tedious and often complex, to search for and secure financing.

This critical step in our development having been completed, we have dissolved the Executive Committee and instituted a Human Resources, Compensation and Nominating Committee, as well as a Corporate Governance and Social Responsibility Committee, in addition to the Audit Committee already in place, whose mandate has been expanded to formally cover risk management. All of these actions converge to enable us to implement an optimized governance structure that reflects world-class practices in this area.

In order to maximize our chances of successfully reaching our ambitious goals of building and commissioning both facilities in accordance with the forecast schedule and budgets, as well as our debt financing agreements, we have also put together, in collaboration with our financiers’ representatives, an independent Technical Committee composed of members of the Board, the Corporation’s management and outside experts to closely monitor the project's progress and to report back to all parties concerned.

An outstanding year that has lived up to our ambitions

On behalf of my colleagues on the Board of Directors, I wish to thank Guy and the entire Management Team for the leadership, determination and creativity they have shown in securing the project financing.

I also wish to thank our employees, all of whom have shown their tireless commitment this year once again by continuing to develop the project and operations at the Phase 1 plant, which has provided us with the credibility we needed to convince investors and clients.

Lastly, thanks to all of our long-term shareholders for their support, their unwavering confidence and their persistence, and a heartfelt welcome to the new shareholders who will be joining us as we embark on this new chapter of our great journey.

The fiscal year 2019 is already well underway and all efforts are focused on the commissioning of our operations facilities in order to achieve the ultimate goal we had originally set: to become a world-class producer of lithium salts.

“In the Corporation's brief history, fiscal 2018 will forever remain as the landmark year in which we secured the resources we need to fulfill our ambitions.”


A historic turning point for the Corporation

The fiscal year that ended June 30, 2018 culminated with the securing of the financing that will allow us to complete the construction and commissioning of our operations sites in Whabouchi and Shawinigan, ultimately leading to the commencement of commercial production.

New important shareholders: a sizeable strategic asset

The Can$1.1B balanced financing package we have achieved after over a year-long worldwide effort has provided the Corporation with an advantageous debt-to-equity financial structure and enabled us to bring in new major partners in the Corporation's share capital.

Ressources Québec’s key investment has thus demonstrated the far-reaching scope of Québec's leadership in the field of energy, and more specifically in the lithium sector, with Nemaska Lithium leading the charge forward.

The private placement by SoftBank, a global technology leader that made in our company its first investment into our industry, has solidified an alignment of visions and values with those of Nemaska Lithium.

Lastly, the streaming agreement reached with Orion, a key player in the mining sector, has firmly established our credibility as a future producer of lithium salts on the international stage.

While in the process of securing the financing package, the Corporation entered into a number of agreements for the sale of lithium salts and concentrate, as a result of which approximately 90% of our production capacity for the first five years is already committed, thereby ensuring revenue streams from the moment our facilities are commissioned.

Michel Baril

A Word from the Chairman of the Board


Strategic planning based on three pillars

Taking inspiration from the best practices in order to implement a world-class structure that lives up to our ambitions, we have undertaken an organizational design exercise from which three promising pillars have emerged.

Benefits of our tangible assets: in light of the growing demand for battery-grade lithium hydroxide, we are evaluating the best strategies to take full advantage of our assets, namely the Whabouchi mine's reserves and the outstanding Shawinigan site and its existing infrastructure. Our goal is to acquire a 10% share of the global lithium hydroxide market. With Shawinigan's strategic location, we will be able to increase production either by consolidating projects in North America, purchasing spodumene concentrate on the market or simply by increasing capacity at the Whabouchi mine.

Intellectual property: our proprietary transformation process has high value and can be implemented globally. Thus, we are notably considering the possibility of sharing our know-how through partnership agreements for the construction of electrochemical plants elsewhere in the world.

Valorization of our by-products: the valorization of by-products that result from the transformation process will enable us to considerably reduce our operations' environmental footprint compared to other current methods. The potential for commercializing aluminosilicate, the process' main by-product, for the manufacturing of cement and concrete among other uses, is a shining example of our philosophy of making full use of the resource as part of an eco-friendly approach.

A beneficial financing structure

We started off the year with an ambitious goal: to finalize the financing package required to complete construction of the Whabouchi mine and the electrochemical plant in Shawinigan. We have travelled the world in search of partners and investors who share our vision for development and who are prepared to support the great adventure that is Nemaska Lithium. Our quest has taken us to Europe, Asia-Pacific and, of course, North America. The fruit of unrelenting hard work, an ingenious financing structure of Can$1.1B, was secured in May 2018.

A process and purity that impress experts

There is no doubt that the results of the major bulk sampling operation at the Whabouchi mine in 2017, and the ongoing operations at the Shawinigan Phase 1 plant since February 2017, have supported our efforts to secure

financing and established our credibility on the international stage. We have developed a unique and innovative process that makes it possible to produce lithium salts with a degree of purity that exceeds standards, which has not gone unnoticed among many independent experts who have conducted various due diligence reviews at the request of an even larger number of potential investors.

On track to becoming a reference

Thanks to the many endeavors having led to significant sales agreements and countless discussions with potential partners, we have continued to refine our knowledge of the market's dynamics as well as key players, opportunities, trends and the role Nemaska Lithium can play in this rapidly expanding industry.

Our priority for 2019

It should come as no surprise that THE number one priority for the coming year is to complete the construction of the Whabouchi mine and its concentrator on schedule, for an initial delivery of spodumene concentrate in late 2019. It goes without saying that we will simultaneously continue construction of the commercial plant in Shawinigan and operations at the Phase 1 plant. In the spirit of our values, we continue to draw daily benefits from the Phase 1 plant's operations to deepen our knowledge and make full use of it. From planning procurement, to developing the expertise of our teams of operators, to improving our management tools, practices and production operations, our teams will pursue their tireless efforts to achieve every one of our goals.

Now ready to welcome new colleagues, Nemaska Lithium is positioning itself as an employer of choice, from field to office, from Whabouchi to Shawinigan and Québec City. Nemaska Lithium is especially keen on preserving the local community's social fabric by hiring, at every stage of the operation, the greatest possible number of workers from the Cree community of Nemaska neighbouring the mine, the Mauricie region where the electrochemical plant is located, and the James Bay area.

An unparalleled team

As we near the dawn of a massive hiring period, I like to underscore the quality of the people who, day after day, spare no effort as they tirelessly build our future. Their desire to stand out and to become stakeholders in this project that holds so much promise for Québec and the world is worthy of mention. I wish to extend my warmest thanks to my colleagues on the Management Team as well as the members of the Board of Directors for their support, the relevance of their advice and the depth of their expertise.

Each and every person has brilliantly fulfilled his and her role, enabling us to secure the financing package by which we can now jump with both feet, with no further ado, as we enter this exciting part of our development: the construction of our production assets. Our people have invested an immeasurable amount of effort in the last year, with unrelenting enthusiasm, for which I am eternally grateful.

The year 2018 is one during which Nemaska Lithium has reached several milestones. We continue to assert our place on the global market as we take our first steps in the supply chain of mobility, transport electrification and energy storage, industries in full growth as a result of the most favourable social, economic and regulatory contexts ever seen.

“There is no doubt that Nemaska Lithium is on track to becoming a reference in the lithium market with its innovation, the purity of its products and its vision of production that is respectful of the environment and neighbouring communities. We are well on our way to building a first-rate chemical company and we want to see it become THE industry leader.”

Guy Bourassa

A Word from the President and Chief Executive Officer

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Annual Report 2018 - 0706 - Annual Report 2018

Market dynamics that reflect the complexity of our industry

In the markets, the shares of most lithium industry players have experienced a difficult year in 2018, mainly as a result of the confusion regarding some analysts’ outlook on the market and the prices of certain lithium products.

Although Nemaska Lithium is among the organizations that saw their share price fall in 2018, it is encouraging to see that the financial community’s understanding of the complex workings of the lithium supply chain seems to be improving. We remain confident that the gradual achievement of our objectives will eventually lead to the full recognition of our value by the capital markets as we build our infrastructures and move towards commercial production.

I am also pleased to see that our stock trading volume is continuing to grow. Since the beginning of 2018 and up to November 23, an average of 4.8 million shares have been traded daily on the TSX and other trading platforms, as compared to 2.3 million shares for the full year of 2017, an increase of more than 113%, thereby improving the stock’s liquidity.

The benefit of cash flows in US and Canadian dollars

The structure of the financing package also gives us access to liquid assets in Canadian and US dollars. This now allows us to currently limit our exposure to foreign exchange risk by having the ability to make down payments on certain equipment and to pay debt interest in the currency the transactions were originally made in.

Moreover, since the completion of the financing structure on May 30, the average exchange rate between the Canadian dollar and the US dollar has corresponded very closely to our projections and basic financial models, so far limiting our foreign exchange risk.

An opportunity to define the market

We recognize the importance of maintaining our efforts to inform and raise awareness in the financial community and among our partners. We take advantage of each available tribune to share our expertise and communicate the distinctive aspects of our products and processes, as well as their importance for our customers.

Finally, I would like to thank our shareholders, our employees and all our past, present and future partners who have trusted and will continue to trust the Nemaska Lithium team for many years to come.

Joining forces with visionary partners and clients

I am particularly proud of the efforts made by our teams to convince the Québec and international financial communities of the lithium market’s highly favourable prospects, and more specifically of Nemaska Lithium’s advantageous position in this sector.

In addition to Ressources Québec, SoftBank and Orion, we can also count on several major international investment funds that have become shareholders of Nemaska Lithium in a long-term perspective. Moreover, Nemaska Lithium has signed various commercial agreements with world-class players like LG Chem, Johnson Matthey, FMC/Livent and Northvolt, a new player in battery manufacturing, further demonstrating the degree of confidence towards Nemaska Lithium. This provides the organization with stability and helps the Management Team make the best decisions for the future.

An optimal financing package, concluded at the ideal time

Despite volatile market conditions, the completion of our financing package came at a very opportune time and allowed us to relaunch construction at both the Whabouchi mine and the electrochemical plant in Shawinigan. Naturally, the structure of the financing package was supported by the new feasibility study that had been recently completed. This study, published via SEDAR in February 2018, is based on the increase in the Whabouchi mine’s life span from 26 years to 33 years, and on an overall commercial project capacity that has gone up 20% as compared to a previous study published in 2016, bringing the total capacity of the electrochemical plant to 33,000 tonnes of lithium carbonate equivalent (LCE) per year.

08 - Annual Report 2018 Annual Report 2018 - 09

Steve Nadeau

A Word from the Chief Financial Officer


Selected Financial Information

SUMMARY OF THE CONSOLIDATED CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

SEPTEMBER 30, 2018 AND JUNE 30, 2018(expressed in thousands of Canadian dollars)

September 30, 2018(Restated)

June 30, 2018 (Restated)

ASSETS $ $

Current Assets

Cash and cash equivalents 421,066 371,193

Other current assets 9,478 12,627

430,544 383,820

Non-current Assets

Restricted cash and In-trust deposits 502,770 44,603

Property, plant & equipment and intangible assets 267,514 186,913

Other non-current assets 5,812 37,317

776,096 268,833

TOTAL ASSETS 1,206,640 652,653

LIABILITIES AND EQUITYCurrent Liabilities

Accounts payable and other current liabilities 30,752 19,728

Non-current Liabilities

Long-term debt 546,166 -

Contract liabilities and other non-current obligations 34,507 32,957

TOTAL LIABILITIES 611,425 52,685

Equity

Share capital, warrants and contributed surplus 680,068 678,677

Deficit (84,853) (78,709)

TOTAL EQUITY 595,215 599,968

TOTAL LIABILITIES AND EQUITY 1,206,640 652,653

SUMMARY OF CONSOLIDATED CONDENSED INTERIM STATEMENTS OF NET LOSS AND COMPREHENSIVE LOSS (UNAUDITED)

THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 AND TWELVE-MONTH PERIOD ENDED JUNE 30, 2018(expressed in thousands of Canadian dollars except for loss per share and weighted average number of shares outstanding)

September 30, 2018(3 months)

June 30, 2018 (12 months)

$ $

Finance income (1,898) (980)

Operating expenses 3,368 16,251

OPERATING LOSS 1,470 15,271

Other items

Finance expense and loss on foreign exchange 21 51

Profit on disposal of mining assets - (7,810)

Change and impairment of the investments recorded at fair value 4,602 4,560

4,623 (3,199)

NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD 6,093 12,072

BASIC AND DILUTED LOSS PER SHARE 0,007 0,028

BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING

846,124,555 428,150,592

“Huge strides were made and major milestones were accomplished as part of a team effort, resulting in significant increases in the total assets by more than $1B in the 15-month period from July 1, 2017 to September 30, 2018. During the year ended June 30, 2018, the total assets increased by $446M and an additional $554M was added to the total assets during the three-month period ended September 30, 2018.”

Steve Nadeau Chief Financial Officer

A Favourable Outlook for the Lithium Market

An analysis of a complex market

The lithium sector is now attracting the attention of the financial community. Although lithium has been used for decades in the pharmaceutical, industrial grease and lubricant, glass, and water purification industries, its role in transportation electrification and energy storage is no doubt behind its recent popularity and the need for new production sources like Nemaska Lithium.

The various lithium salts are privately and directly traded between producers and users. Thus, there is no organized market that reflects the prices these various compounds are sold at. Why? One of the reasons is that users require very precise product specifications for lithium salts, including the maximum acceptable impurity level.

A wide variety of lithium salts

There are nine main lithium salts, the two most important in volume being carbonate and hydroxide. These lithium salts have their own supply and demand ecosystem and are used in the industrial sector as much as in battery manufacturing. In addition, they are sold on the Chinese and non-Chinese markets, which accept different levels of purity depending on their intended use.

Nemaska Lithium distinguishes itself by the very high purity level of its products and the competitive nature of its projected production costs. Vertically integrated, the Corporation intends to use the quality of the Whabouchi mining deposit and the efficiency of its membrane electrolysis process to generate lithium salts at a production cost low enough to sell its products for all possible applications around the world in the project’s commercial phase.

Evolution of the lithium demand per product from 2016 to 2031E (Roskill, 2018)

Battery-grade carbonate

2016 2021E 2023E 2026E 2031E

72,200150,600 202,100

314,200460,100

Battery-grade hydroxide

2016 2021E 2023E 2026E 2031E

11,700 78,600170,800

549,900

1,605,500


Electric transport, for everyone, everywhere

Companies from around the world, including vehicle and battery manufacturers, are looking to carve out a place for themselves in the long transportation electrification supply chain.

Nemaska Lithium's role in the supply chain

Nemaska LithiumWhabouchi mine(and other deposits)

LiOH-H2OShawinigan Electrochemical plant

Cathodemanufacturers


Jurisdictions committed to supporting change

Several jurisdictions around the world are setting ambitious targets for transportation electrification, either through the adoption of zero emission laws or the outright banning of combustion vehicles.

Volkswagen’s order alone represents four times the annual production capacity currently projected for the Whabouchi mine and for the Shawinigan electrochemical plant.

Insufficient supply

Although several lithium projects are currently being developed around the world, few of them are fully funded and very few are in the battery-grade lithium carbonate and hydroxide delivery stage, as some projects are aimed only at the production of spodumene concentrate. In light of the above, we expect a significant supply and demand imbalance for products intended to the battery market.

Increase in electric car sales worldwide from H1 2017 to H1 2018 (Benchmark, 2018)

90 %

Volkswagen is a telling example: it intends to invest US$7B in electric vehicle production, and to sell some three million electric vehicles annually by 2025. It has entrusted LG Chem, one of our clients, and Samsung with supplying the batteries required to achieve this grand initiative.

Endusers

Batterymanufacturers

Electric vehiclesand energystorage

Ceramics 3.1 %

Glass-ceramics 2.9 %

Polymer 1.2 % Glass 1.0 %

Greases 1.6 %

Primary batteries 0.9 % Others 1.9 %

Rechargeablebatteries

85.7 %

Expected total demand ~1,008,000 tonnesLithium Carbonate

Equivalent

Lithium uses in 2026E

85.7% of the global lithium demand in 2026E will come

from rechargeable batteries (Roskill, 2018)

Metallurgical powders 1.1 % Air treatment 0.6 %

Nemaska Lithium in a good position

Demand is growing and shifting rapidly to lithium hydroxide, a change dictated by the new chemical compositions of lithium batteries.

Current market conditions are thus confirming the direction taken in 2011 by Nemaska Lithium, which led the company to focus primarily on lithium hydroxide while maintaining a certain level of carbonate production. This flexibility, its independence from the Chinese processing market, and the five previously concluded sales contracts are already proving to be important short- and long-term competitive advantages.

What is Nemaska Lithium’s objective? To set the industry standard on three levels: price, quality and environmental footprint.

The demonstration plant (known as Phase 1) has proven to be an undeniable strategic advantage for Nemaska Lithium. Since its commissioning in early 2017, it has facilitated the development and improvement of the Corporation’s electrochemical transformation process, which has in turn been reflected in the commercial plant’s flow sheet.

Completing the vertical integration of the mine and plant

In fiscal 2018, we reached a new milestone by beginning the production of battery-grade lithium hydroxide using concentrate from the Whabouchi mine. With a bulk sample of 10,000 tonnes of ore, our team produced approximately 1,100 tonnes of 6.25% (Li2O) spodumene concentrate during the summer of 2017. This was used in part to produce high purity hydroxide through our membrane electrolysis process. We plan to process the remaining tonnes of concentrate in the winter of 2019 in order to provide our customers with larger sample volumes.

This production has attained the same purity levels as the hydroxide previously produced from the lithium sulfate solution supplied by a client. Most importantly, it has confirmed Nemaska Lithium’s ability to offer a superior product from the mine to the plant, demonstrating the competitive advantage of its vertical integration.

The Strategic Advantage of the Phase 1 Plant

“We are carefully operating the Phase 1 plant in order to validate costs and master all aspects of the transformation process.”

André Bouchard Director of Operations, Shawinigan Plant


Guy BourassaPresident and CEO

Refining our strategy through relevant learning

Throughout 2018, we have demonstrated the effectiveness of our operational know-how, which is based on the multidisciplinarity

of our operations team and on proper process monitoring.

These efforts have allowed us to refine our working methods. All monitoring reports and performance indicators were developed and tested, while the detailed engineering work and the procurement

strategy were optimized for the commercial phase.

The autonomy and versatility of a team that uses participatory management

Nemaska Lithium’s participatory management philosophy is part of the Phase 1 plant’s daily routine. The strategic planning exercise carried out by management and the consultative approach that has been put in place have allowed us to make adjustments to the teams’ independent operations in

order to reduce the new employees’ learning curve with respect to our processes.

The ramping up of the commercial plant will represent a continuation, and the same approach and team support structure will be implemented upon commissioning.

Continued operation of the Phase 1 plant

The Phase 1 plant will continue to operate throughout the construction of the commercial project and beyond. It will serve mainly as an incubator to perfect

the process that will be used in the commercial plant, but also for future projects, particularly in research and development.

Moving towards the commercial phase

The preparatory work is progressing in parallel: from safety reviews to the evaluation of engineering steps, including development of the start-up plan and recruiting the team, the coming months will be crucial and will shape our commercial

electrochemical processing activities.

“The Phase 1 plant proved to be a major asset as experts from around the world were able to observe and confirm the technical viability of our process in order to conclude our financing package.”

From Construction to Commissioning

The construction was given the full go-ahead as soon as the Can$1.1B financing package was announced on May 30, 2018, followed by the announcement confirming completion of the conditions precedent to the US$350M bond offering on August 29. While some work had already been carried out with the construction of the concentrator building at the mine and the demolition of certain buildings and other facilities in Shawinigan, worksites were quickly put back into action.

Results that meet our expectations So far, construction work is progressing according to plan. At the end of fiscal 2018, we had a perfect health and safety record, with no lost time during the 125,796 hours of engineering and construction work at the Whabouchi and Shawinigan sites. The team is on track for delivery of the Whabouchi mine facilities in the second half of 2019 and the Shawinigan electrochemical plant facilities in the second half of 2020.

Towards commissioning

20212019 2020

Shawinigan Electrochemical Plant

second half of 2020

Whabouchi Mine second half of 2019


Surrounding ourselves with the best: unique expertise in construction and start-up As with the recruitment process to build its start-up team, Nemaska Lithium wanted to surround itself with the best partners to be able to carry out its project as planned.

A meticulous equipment procurement strategy The equipment procurement strategy was also carefully thought-out in order to identify the best business opportunities in collaboration with the project engineers.

To date, all long lead equipment have been ordered: ore sorting equipment, flotation columns, the ball mill and the dry magnetic separator for the Whabouchi mine; as well as the flash calciner, crystallizers, electrolysis equipment and the acid concentrator for the Shawinigan plant.

A comprehensive local labour force development program was put in place to facilitate the contribution of smaller contractors. For example, nearly half of the partners involved in the Whabouchi mine project are Cree companies, while almost all of the companies working at the Shawinigan site come from the surrounding communities.

“We have carefully planned our invitations to tender so that as many local companies as possible could participate.”

“From engineering to procurement and construction management, the varied and complementary expertise of our partners is an undeniable asset for Nemaska Lithium.”

Yves Painchaud Director, Construction Project

“Nemaska Lithium’s information technology experts provide daily support services for the teams and suppliers currently working at our three sites.”

Étienne DesgagnéDirector, Information Technology

Marie-Josée Parent Senior Director,

Supply Chain and Contract Management

Developing optimal technological infrastructure Nemaska Lithium is on the lookout for the best practices and trends in information technology and is already working to develop state-of-the-art infrastructures that will support its growth in the years to come, according to innovative 4.0 Industry concepts. During fiscal 2018, the information technology team's priority was to establish a solid foundation, in time for the commissioning of the mine and plant's commercial facilities. Many departments, including operations, procurement, construction, human resources, environment and finance, have benefitted from the development, deployment and process optimization efforts of our IT team.


Thorough planning of work Construction of the Whabouchi mine facilities is progressing at a steady pace and on schedule. In the first quarter of fiscal 2019, all teams have increased their efforts to complete civil site preparation work, blasting, pouring of a significant portion of the concrete, and to start steel assembling for some of the major buildings and equipment before winter.

Planning today for the coming years In parallel with the construction of infrastructure, engineers are completing the 10-year mining plan, which is the sequence of mining activities that will be adopted for efficient, profitable and sustainable mine commissioning. This plan will also guide the contractual strategy for machinery and equipment maintenance in preparation for the start of commercial operations. Commercial operation planning is also an important part of the ongoing work. Everything from start-up and operation plans, procedure preparation and the contingency plan to health and safety parameters is carefully planned to maximize the success of a project created from scratch by our teams.

The Whabouchi Mine


Laying a solid foundation for a major project Work at the Shawinigan plant is progressing as planned according to the 27-month schedule set from the moment the project's financing package was finalized. The administrative building will be ready for our employees in December 2018. Preparation of the external site is underway, while the installation of interior piles in the former pulp and paper mill buildings to accommodate process equipment will begin soon, as well as installation of the external piles used to support the flash calciner.

A long-term joint effort Over the next few months, the team will prepare the foundations for the major equipment that will be gradually installed in the plant. Detailed engineering will also be finalized, as well as civil works, concreting and the purchase of equipment with short delivery times.

This will then allow the installation of the 100 or so tanks that will form the basis of the electrochemical transformation process. The entire team is motivated more than ever to bring the plant into commercial production on schedule.

The Shawinigan Commercial Plant

Innovating Further to Shape the Future


The advantages of membrane electrolysis

All the technical experts and industry leaders who have shown interest in Nemaska Lithium in recent years have recognized the highly innovative and advantageous nature of our membrane electrolysis process.

The operation of our Phase 1 plant during fiscal 2018 has enabled us to improve our know-how and identify, anticipate and avoid a wide range of pitfalls that might otherwise have occurred during the commissioning and operation of the commercial plant. All in all, the performance of our process at the Phase 1 plant suggests a positive outlook for the future, in line with the feasibility study published in February 2018.

Jean-François Magnan Technical Director

“Our process is already attracting interest from many organizations around the world, demonstrating Nemaska Lithium's important role in developing Québec's cutting-edge expertise in green energy.”

Marketing our process internationally

Full control of the membrane electrolysis process is at the very heart of our strategy, to the point where we have made its marketing abroad one of the three pillars of our corporate strategy. We have already begun more in-depth discussions with some interested parties.

Maintaining and protecting our unique intellectual property

Since our process is of strategic importance to the future of Nemaska Lithium, we continued, in 2018, to optimize our patent portfolio, which includes a total of nine families, by expanding it to new countries.

Nemaska Lithium's success depends in part on our ability to protect and maintain our intellectual property rights. We have identified key markets for this and are working hard to keep all our chemical and process patents current.


Thinking about the future without losing sight of our short-term objectives

While our top priority in fiscal 2019 certainly remains to support our engineering, procurement and construction teams to begin commercial production on schedule, we are gradually beginning to identify other areas of innovation for the future.

The first of these projects is undoubtedly to identify beneficial uses for the process' by-products, particularly aluminosilicate, a chemically inert compound that we will need to dispose of at a rate of 204,000 tonnes per year when we will be in commercial production at the Shawinigan plant.

Research undertaken in recent years by various groups internationally, some of which Nemaska Lithium has collaborated with in Québec, has demonstrated a promising use of aluminosilicate as a partial replacement for cement in concrete manufacturing, immediately improving the environmental performance of the manufacture of this aggregate. Thanks to the pozzolanic effect of aluminosilicate, it may be possible to replace up to 25% of the cement used in concrete.

The ingenuity of battery recycling

In the longer term, our research and development experts have also undertaken research with various academic and scientific institutions in the field of battery recycling, a global market that has reached more than US$10B according to some sources and that is expected to grow significantly in the coming years.

Nemaska Lithium believes that, with the gradual increase in the size of lithium-ion batteries and in the amount of lithium that can be recovered, viable business opportunities could arise.

Not only could this be a good opportunity from the circular economy and environmental standpoint, but the recovery of lithium from end-of-life batteries could also be of interest in the future as an input into the company's lithium salt production.

Even if the future looks promising in the lithium sector, Nemaska Lithium's innovation and research and development team remains fully invested in its first and main mission: to make the construction and ramp-up of the company's facilities a large-scale commercial success!


Since its creation in 2009, Nemaska Lithium has managed to surround itself with the right people to turn its ideas into reality. As one thing led to another, the Corporation grew and began to take shape around the Québec, Whabouchi and Shawinigan sites. Throughout this rapid growth, the main ingredient for its success remains the same: the quality of its talent.

As it nears the start of its commercial operations, Nemaska Lithium is getting ready to embark on the largest hiring spree in its history. The team will triple in size by the end of 2019.

A powerful and engaging employer brand

In order to recruit the people who will carry Nemaska Lithium to new heights, a major recruitment campaign was launched on the theme "Take charge of your future". Using the lithium element symbol from the periodic table of elements as its visual signature, the goal of the campaign, which was launched in October 2018, is to draw attention to the wide-ranging appeal of a career at Nemaska Lithium.

Recruitment efforts for the mine will continue throughout winter 2019, whereas a campaign to fill positions at the Shawinigan plant will begin later this year.

Organizational design that carries the greatest ambitions

Growth at such a rapid pace requires the right structure based on the best practices in order to bring in, integrate and develop these new resources within the organization. After having performed a diagnosis with its employees, Nemaska Lithium has undertaken an ambitious organizational design project, the purpose of which is to define and implement a structure that will enable it to achieve its business goals in the years to come.

This is how the roles and responsibilities of the Corporation's major business functions and the systems they require were defined. In accordance with its values, Nemaska Lithium took great care to incorporate its participatory management philosophy at each step of the organizational design process.

A work environment that is safe for everyone

Our team has broadened its efforts, since the launch of its preliminary operations and from the mine to the Phase 1 plant and the administrative offices, in order to make our work environment a safe and healthy place for everyone. We are proud to state that no recordable incident has been reported in fiscal 2018.

This impressive track record is a tangible demonstration of our commitment to instilling a strong culture of health and safety in the workplace across every segment of the Corporation's operations.

Promoting the development of expertise within local communities

From the project's inception, Nemaska Lithium has set the goal of hiring as many workers as possible from the Cree community neighbouring its mine. To achieve this, the human resources team expanded its initiatives to allow these potential candidates to find out about the types of positions available at the mine and, above all, to provide them with training opportunities by giving them the knowledge and qualifications they would need to pursue these career choices. At the same time, structuring social projects were thought up and implemented to help the community enter the labour market, in full respect of its culture.

The Culture of a World-Class Industry Leader



Tailor-made projects to address local needs

This year, Nemaska Lithium created the Training and Employment Committee (TEC), which works under the supervision of the Whabouchi Implementation Committee (WIC). Its mandate is to explore training opportunities and develop a Cree workforce in accordance with the guidelines set forth in the Chinuchi Agreement entered into in 2014, which defines the parameters for cooperation between Nemaska Lithium and the Cree Community. In collaboration with local training organizations, Nemaska Lithium and the TEC are working to have the community become the flag-bearer for these projects and their promotion.

The TEC's first initiative was the Mining Essentials program, which was created in collaboration with the Conseil des ressources humaines de l'industrie minière, the Cree Council of Nemaska, and the Comité sectoriel de main-d'œuvre de l'industrie des mines (CSMO Mines). This 12-week training or work preparation program enables participants to acquire the skills they need to eventually gain entry-level employment in the mining sector.

In addition to the environmental training course launched in the fall of 2018, the TEC is working to implement the Learning Employment and Development (LEAD) program, a 3-year initiative aiming to enable some twenty Cree candidates to learn the fundamentals of mining work. The goal is to launch the LEAD program in early 2019.

Chantal Francoeur Vice President, Human Resources

& Organizational Development

"Our employees are much more than colleagues; they are creators of the future – their own, their community's and the planet's."


New promising academic program in Shawinigan

Nemaska Lithium is fortunate to have in the Mauricie region a large pool of qualified workers and professionals, especially in the chemical industry, thanks to the region's rich industrial and scientific heritage.

In order to ensure that this knowledge is preserved and transferred to the next generation of employees, Nemaska Lithium, in collaboration with the Collège Shawinigan, has developed an attestation of collegial studies (ACS) titled “Opération et contrôle de procédés chimiques” that will host its first cohort in the winter of 2019.

Students will learn the rudiments of chemical work carried out in a plant such as the one operated by Nemaska Lithium in Shawinigan and, above all, prepare themselves to be qualified potential candidates for positions that will need to be filled in the coming months.

Teams working in step towards a single goal: commercial production

As it carries out all of these initiatives, our team is charging full steam ahead towards the commissioning of the mine in the second quarter of 2019. As we finalize preparations for the start of operations, a major training strategy for employees is also being developed.

Starting in winter 2019, the 200 or so people hired to work at the mine will participate in an orientation and training program in which they will become familiar with Nemaska Lithium's equipment, processes and technology. Developed with the Centre professionnel de la Baie-James, this unique partnership will allow new employees to have access to premises, workshops and the necessary equipment for training activities.

At the Shawinigan plant, where important positions have been filled in the last year, we are planning to put the expertise developed by the Phase 1 plant teams to effective use at the commercial facility.

There is no doubt that the quality and depth of the expertise of its human resources will continue to serve as the cornerstone of Nemaska Lithium's success.

Doing More and Better for the Future of our Communities


Our mandate is clear: to build the future with a lithium project that is the most eco-friendly and respectful of the communities. This was a year in which significant milestones were reached in our quest to fulfil this ambition. We thus achieve more, and above all better, for the future of our communities.

A sense of community that matches our values

In both Whabouchi and Shawinigan, we make it our duty to develop and maintain sustainable and mutually beneficial relationships with local governments and organizations. As we undertake each step in our project, we make sure to play a leadership role in protecting the environment, respecting cultures and traditional use of the land, as well as creating promising value for future generations.

Better tools to plan the development of the community of Nemaska

Nemaska Lithium's role is not only to create opportunities for tangible socio-economic spinoffs, but also to provide the leverage required for the Cree community to endow itself with structures and programs that will contribute to its medium- to long-term development.

This is what led us this year to initiate a collaborative community planning project, funded by the Fonds d'initiatives du Plan Nord, that will enable the community of Nemaska to set its own socio-economic development goals.

The results of this consultation will serve to lay the groundwork for a development plan that reflects the community's identity, which they will be drafting in the near future. Nemaska Lithium will then become a front-line actor in the implementation of this plan, harmonizing the opportunities generated by the Whabouchi project and the goals that are dear to the hearts of our Cree partners in Nemaska.

Building a living environment that is conducive to employability

This commitment to exercising a positive influence in our communities is also reflected in our contribution to improving the Nemaska Cree community's living environment.

Last spring, we entered into a partnership with the Nemaska Public Safety Department in order to provide them with a second ambulance, thereby providing safety services for everyone. As a result, should an emergency situation arise at our site located 30 km from the village, the citizens of Nemaska will always have an ambulance available to serve their community.

We also helped create a number of sustainable business opportunities for the Nemaska Cree community to further maximize economic spinoffs. These include an industrial laundry service, a replacement parts distribution centre for the plant, a bus transportation service, and environmental monitoring projects.

Nemaska Lithium also openly supports the community of Nemaska in its residential housing construction project that could reduce, and eventually end, the housing shortage by which dozens of families are still waiting for a place to live today.

In action mode

All of our efforts are now focused on completing the construction and commissioning of the commercial facilities in Whabouchi and Shawinigan, for which all of the required permits and authorizations have been obtained, or will be within the scheduled time frame.

We are also leading a number of environmental protection and preservation initiatives at the same time. At the Whabouchi mine, we have implemented a water management system in order to ensure compliance of the final effluent with all applicable criteria, standards and best practices. The actual site of this effluent was selected in collaboration with the Cree users of this territory, and it was installed in such a manner that Fisheries and Oceans Canada issued an opinion recognizing that the proposed work would not result in any serious damage to the fish habitat.

At the Shawinigan plant, the final terms of the acquisition of the former Resolute Forest Products Laurentide plant were finalized, which made it possible to rehabilitate the site, in collaboration with the Société de développement de Shawinigan (SDS), thereby relieving Quebecers of this environmental liability, in order to prepare the site for our commercial infrastructures.

Nemaska Lithium is also proud to see the City of Shawinigan undertake a major rehabilitation project that will enable the public to enjoy a brand-new municipal marina, located on the portion of the former Laurentide plant property that was ceded by Nemaska Lithium as part of the transaction in 2016.

Ingenious research projects

We make it our duty to seize every opportunity to become involved in research projects that will have a sustainable impact on our environment.

One such project was carried out with a team from Université de Sherbrooke. They developed a method to promote gradual revegetation of the mining site based on symbioses that are naturally present in northern environments.

Simon Thibault Director, Environmental and Social Responsibility

We are also involved in a major study conducted by Université du Québec en Abitibi-Témiscamingue on biodiversity in a boreal mining context, with a special emphasis on wetlands. This initiative, which we instigated in 2014 and in which major Québec industry players are now involved, aims to develop an assessment grid to rate the ecological value of the regional wetlands on the basis of their specific characteristics, which is bound to become an essential tool in ensuring responsible development in Northern Québec.

Sensitive to our impact on tomorrow

With full awareness of the responsibility that we hold by operating in an industry of the future, we are committed to becoming engaged in the major creative and innovative movements it generates.

In addition to our battery recycling and by-product valorization projects, we are actively involved in the current transport electrification boom. As members of Propulsion Québec, the provincial Cluster for Electric and Smart Transportation, we are involved in outreach and innovation projects that will shape opportunities for growth in this industry, in Québec and around the world.

This is how we deploy our daily efforts to share our vision with our communities, one deed at a time.

“Since its foundation, Nemaska Lithium has always shown great respect towards its host communities. We are proud of the positive and constructive dialogue we hold with our stakeholders, and are thrilled with the scope of the social, economic and human legacy we strive to build together day after day."


A Seasoned Board of Directors

Michel BarilChairman of the Board

· Chairman of the Audit and Risk Committee

· Member of the Corporate Governance and Social Responsibility Committee

· Member of the Human Resources, Compensation and Nominating Committee

Paul-Henri CoutureDirector

· Chairman of the Human Resources, Compensation and Nominating Committee

· Member of the Audit and Risk Committee


François BironDirector

· Chairman of the Corporate Governance and Social Responsibility Committee


· Member of the independent Technical Committee

Guy BourassaDirector

· Member of the independent Technical Committee


A Committed Management Team

Guy BourassaPresident and Chief Executive Officer

Steve NadeauChief Financial Officer

Marc DagenaisVice President, Legal Affairs and Corporate Secretary

Chantal FrancoeurVice President, Human Resources and Organizational Development

Patrick GodinDirector

· Chairman of the independent Technical Committee


· Member of the Human Resources, Compensation and Nominating Committee

Shigeki (Sean) MiwaDirector


René LessardDirector


A Vision That Projects Us, Values That Anchor Us

Our vision

Our values

Facilitating access to green energy through our products and processes, for the benefitof humanity.

Commitment3 (Pleasure X Passion X Collaboration)

Our collective success is a result of our individual commitment. Through our deep passion and pride in what we accomplish, through the pleasure we derive from meeting challenges on a daily basis and through the strength of our capacity to work as a team, based on openness and collaboration, we achieve commitment to the power of 3.

AccountabilityWe are transparent, we are genuine, and we are responsible for the actions we undertake both individually and collectively. We develop deep relationships with our employees, customers and communities and we strive toward positive impacts of our actions for each of our stakeholders and for the entire planet.

ClevernessWe are visionaries; we push the limits of everything we do on a daily basis. We combine agility, intelligence and thoroughness. We contribute to the evolution of humanity with our skills and our capacity to call into question and find solutions.

Pushing the boundariesWe constantly set the bar high and keep pushing it up by being curious and efficient. Through perseverance and courage, we build excellence to become a model for the industry.

30 - Annual Report 2018 Nemaska Lithium - 27Annual Report 2018 - 31

Head office - Québec City

450, de la Gare-du-Palais St. 1st floor

Québec, Québec G1K 3X2

Telephone : 418-704-6038

Whabouchi Mine

Km 276 Route du Nord Nemaska, Québec J0Y 3B0

Telephone : 873-208-0055

Shawinigan Plant

101 Chahoon Ave. Shawinigan, Québec G9T 7J1

Telephone : 819-533-0080

[email protected]

nemaskalithium.com

TSX : NMX OTC : NMKEF

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