Private Placement of $10.3 Million by the Pallinghurst Grouphttps://www.pallinghurst.com
SAINT-MICHEL-DES-SAINTS, Qubec, April 03, 2019 (GLOBE NEWSWIRE) -- NOUVEAU MONDE GRAPHITE INC. (“Nouveau Monde” or the “Corporation”) (TSX VENTURE: NOU) (OTCQB: NMGRF) (FRANKFURT: NM9) is pleased to announce that it has entered into definitive agreements in connection with a non-brokered private placement with Pallinghurst Graphite Limited, an affiliate of The Pallinghurst Group (“Pallinghurst”) for an amount of C$10,298,875 pursuant to which Pallinghurst has agreed to subscribe to 43,825,000 common shares (the “Shares”) in the capital of the Corporation, at a price of $0.235 per Share (the “Offering Price”) (the “Pallinghurst Placement”). The Pallinghurst Placement is subject to customary closing conditions, including approval of the TSX Venture Exchange (“TSXV”). Upon closing, which is expected to occur before April 30, 2019, Pallinghurst will hold approximately 19.99% of the Shares.
No brokerage, investment banking or similar fees will be paid by the Corporation for the Pallinghurst Placement and the Shares to be issued to Pallinghurst and in the Institutional Placement (as defined below) will be subject to a statutory hold period that extends four (4) months plus one (1) day from the closing of each.
In addition to the Pallinghurst Placement, Nouveau Monde intends to complete a second private placement to selected existing institutional shareholders and other investors which is expected to close in May 2019 (the “Institutional Placement”). The closing of the Institutional Placement is subject to customary closing conditions including the receipt of all necessary approvals, including the approval of the TSXV. The combined proceeds of the Pallinghurst Placement and the Institutional Placement are expected to be approximately C$22,000,000 million (the “Combined Equity Raise”).
The Combined Equity Raise is expected to provide Nouveau Monde with sufficient funding for its next stage of development of the Matawinie project (the “Matawinie Project”), a graphite development project located in the Saint-Michel-des-Saints area. The introduction of Pallinghurst as a cornerstone shareholder in Nouveau Monde is expected to bring added value to the Matawinie Project. Specifically, the net proceeds from the Combined Equity Raise will be used to fund the continued operation of the existing graphite flake plant, the construction of a demonstration plant, the ongoing permitting process for the Matawinie Project and for working capital and general corporate purposes.
Nouveau Monde operational update
Nouveau Monde’s experienced management team continues to advance the Matawinie Project as projected. As reported in January 2019, the Corporation’s progresses include:
- the continued focus on strong community relations, the signing of a framework agreement with the Conseil des Atikamekw de Manawan and the Conseil de la Nation Atikamekw, as well as an agreement in principle with the municipality of Saint-Michel-des-Saints;
- the construction and commissioning of the graphite flake concentrate demonstration plant;
- the completion of a Definitive Feasibility Study, disclosed in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects;
- a significant increase of the West Zone Mineral Resources of the Tony Block; and
- the signing of a license and a collaboration agreement with Hydro-Qubec concerning the value-added product process for graphite.
In the first quarter of 2019, Nouveau Monde has continued to successfully operate its flake graphite concentrate demonstration plant, allowing the ongoing qualification of its product with potential customers. The Corporation has also secured a binding five-year 25,000 tonnes per annum offtake and joint marketing agreement with a global commodity trading and logistics company, Traxys Group, as announced in the February 14, 2019 press release.
Eric Desaulniers, President and CEO of Nouveau Monde commented, “We are proud to secure an investment by The Pallinghurst Group, which brings expertise in developing mining operations and the funding for the development of the Matawinie Project. The introduction of one of the world’s leading mining investors into Nouveau Monde confirms the potential of the Matawinie Project to become a major, world-leading producer of low cost, high-purity battery grade graphite.”
Brian Gilbertson, Chairman of Pallinghurst commented, “Quebec is one of the world’s most attractive mining locations, so I am very pleased about our investment into Nouveau Monde Graphite, a company set to play a central role in the supply of battery materials in North America. Pallinghurst intends to support the company as it builds its mine and realises its full potential”.
Arne H. Frandsen, Managing Partner of Pallinghurst commented, “The electric vehicle and energy storage revolution is upon us. The future demand for battery grade materials – including graphite - is set for explosive growth. The Pallinghurst Group has its exclusive focus on the ethical and sustainable extraction of battery materials. For the past year, we have worked with Eric and his team, developing our understanding of Nouveau Monde, and we are both delighted and excited by the opportunity to invest in a world-class asset with an exceptional management team. Together with existing shareholders, we intend to provide the necessary equity capital and mining expertise to ensure that the Matawinie Project is brought into full production. As the largest graphite operation in the Western world, Nouveau Monde is poised to become the key source of battery-grade graphite for North America.”
Details of the Pallinghurst Placement
In the context of the Pallinghurst Placement, the parties have agreed to the following rights and obligations:
- Pallinghurst has been granted (i) anti-dilution rights in respect of subsequent equity offerings for capital raises and subsequent issuances of securities by the Corporation in order to maintain its 19.99% ownership, which will, subject to certain conditions, continue for up to two years from closing of the Pallinghurst Placement, and (ii) a right of first refusal over additional financings until, subject to certain conditions, the end of fiscal year 2019;
- Pallinghurst is entitled to appoint two directors to the board of directors of Nouveau Monde provided that Pallinghurst retains a minimum ownership of at least 10% of the Shares outstanding;
- As the Combined Equity Raise is expected to provide Nouveau Monde sufficient liquidity to fully fund its next stage of development, Nouveau Monde has agreed that, except for the Institutional Placement, it shall not raise additional equity financing without the prior written consent of Pallinghurst until the end of fiscal year 2019;
- Pallinghurst will not sell its Share for up to two years following the closing of the Pallinghurst Placement; and
- Nouveau Monde and Pallinghurst have agreed to work together exclusively for a 60 day-period from the closing of the Pallinghurst Placement to determine and negotiate in good faith the most appropriate equity funding plan for the entire capital required to bring the Matawinie project into commercial production (for more information on the costs related to the Matawinie Project, refer to press release dated October 25, 2018). The parties are under no obligation to reach an agreement on a funding plan but if an agreement is reached, a shareholder approval will be required.