SECUTOR Ini 27 February 2014 CAPITAL MANAGEMENT ...SECUTOR CAPITAL MANAGEMENT CORP Value (US$) Value per Share (US$) Cash 2,000,000 0.00 Projects Whabouchi NPV 563,569,922 0.38 NAV

SECUTORCAPITAL MANAGEMENT CORPORATION

27 February 2014

NEMASKA LITHIUM INC

Whabouchi Deposit to be a Strategic Resource

Price:Market Cap:Common Shares:Fully Diluted:52 Wk Range:30 Day Avg Vol:

Source: Stockhouse

$0.12$16.4 MM136.8 MM161.7 MM$0.44 - 0.08149,520

Loca on:Flagship:Ownership:Commodity:Status:Resource:

Catalysts:

Nemaska, QCWhabouchi Deposit100%LithiumFeasibility Stage27.99 Mt @ 1.57% Li₂O (M&I)4.69 Mt @ 1.51% Li₂O (Inferred)Permi ng, Project Financing,Feasibility Study

COMPANY SUMMARY

MARKET DATA

TOP HOLDERS

Chengdu Tianqi Industry Co.Fiera Capital CorpCaisse de Depot et Placement du QCBourassa, GuyMatrix Funds ManagementMarquest Asset Management

14.2 %5.75 %4.48 %1.46 %0.97 %0.91 %

Ini a on of Coverage

Arie PapernickEquity Capital [email protected](416) 847-1220

Lilliana [email protected](416) 545-1015

V-NMX

VALUATION

“Nemaska Powers On”

Value (CAD$)Vale per Share

(CAD$)Cash 2,000,000 0.00Whabouchi NPV 563,569,922 0.38NAV 565,569,922 0.38NAV per Share 0.38

Nemaska has one of the highest-grade lithium projects in the world. Whabouchi is a highly laterally con nuous pegma te deposit where 96% of contained lithium oxide is hosted in spodumene. Therefore, the metallurgy is simple with high recovery rates. Additionally, because the Whabouchi Deposit is hard-rock, Nemaska will be able to react to changes in demand for lithium products more effec vely than the brine producers. It is significant that Rockwood Holdings Inc (NYSE:ROC), one of the world’s largest producers of lithium compounds from brines, acquired 49% of Talison Lithium, the highest-grade producer of lithium from spodumene. The acquisi on provides a secure supply of lithium oxide that can be ramped up or down, and has a known, constant quality. Nemaska’s Whabouchi Deposit also offers these advantages.

Nemaska has developed a unique metallurgical process that grants it a significant cost advantage over both hard-rock and brine producers. It can produce 99.9% lithium hydroxide directly from spodumene economically because the Company does not use significant quan es of soda ash. Soda ash is tradi onally used in the produc on of lithium compounds, however, it is expensive and its price can fluctuate. By using membrane electrolysis, which uses electricity as the main “reagent”, Nemaska can produce quality products at compe ve prices. The Company may also be in a be er posi on to sign off-take agreements than the brine producers since it has a be er handle on its costs and on its produc on.

Nemaska has a powerful strategic investor. The Tianqi Group is the most technically advanced lithium carbonate and lithium hydroxide producer in China. It is the world’s largest hard-rock lithium converter and it owns approximately 14% of Nemaska. It includes Whabouchi as part of its 160+ years of spodumene supply. Tianqi recently partnered with Rockwood on Talison Lithium a er acquiring the Company for CAD$850 million. Addi onally, Nemaska has an off-take and collabora on agreement signed with Phostech Lithium, a Clariant AG Group company (Swiss Exchange:CLN).

Valua on. A NAV per share of CAD$0.38 was calculated for Nemaska based on a DCF model. The Company produces a high-value lithium hydroxide product at a compe ve price. It is working towards releasing its Feasibility Study results by the end of Q1 2014 which should show significant improvements in OPEX and CAPEX based on recent metallurgical tes ng. Nemaska, depending on financing, is aiming to begin produc on in 2016.

Nemaska Lithium Inc

SECUTORCAPITAL MANAGEMENT CORP

Source: Company Filings

Whabouchi Project Maps

27 February 2014

The Whabouchi Project Overview Nemaska’s wholly owned Whabouchi Property covers approximately 1,716 ha in the James Bay area of Quebec.It is subject to a 3% NSR, 1% of which can be repurchased by Nemaska for CAD$1.0 million. The Property is roadaccessible via the Route de Nord, which links the communi es of Chibougamau and Nemaska, and is 300 km and30 km away from both of these towns respec vely. Nemiscau Airport is 18 km west of the Property and twoHydro-Quebec electricity transforma on plants are located within 20 km of either side of the Propertyboundary.

The Project is envisioned as a conven onal open-pit opera on running at a mining rate of 3,000 tpd. The minewill yield enough spodumene to produce approximately 213,000 tonnes of 6% Li2O concentrate which will betransported to Nemaska’s plant in Valleyfield, 700 km south of the site, for further processing. The concentrate is projected to produce 28,000 tonnes of lithium hydroxide and 3,700 tonnes of lithium carbonate per year.

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Value (US$) Value per Share (US$)Cash 2,000,000 0.00ProjectsWhabouchi NPV 563,569,922 0.38NAV 565,569,922NAV/Fully Diluted Share (incl. Equity Raises) 0.38 0.38

Summary of the Net Asset Value

Summary of Assumptions Made in the Whabouchi DCF

Source: Company Filings, Secutor Capital Management Corp

Valuation Calcula on of the Net Asset Value

Nemaska’s Net Asset Value (NAV) is based on the es mated 8% discounted cash flow of the Whabouchi Deposit.The es mate was based on the Preliminary Economic Assessment released November 2012 and revised February 2013. However, recent metallurgical tes ng has indicated that the capital and opera ng costs can poten ally be improved.

Parameter Units WhabouchiResourceTotal Tonnes Mined t 19,637,000Total Waste Mined t 59,303,740Mining Rate tpd 3,000Strip Ra o - 3.02Average Lithium Oxide Grade %Li2O 1.53Mine Life Years 19MillingAverage Annual Mill Throughput tpa 1,095,000Average Annual Concentrate Produc on tpa 213,525Average Annual Lithium Hydroxide Produc on tpa 28,094Average Annual Lithium Carbonate Produc on tpa 3,652Total Lithium Hydroxide Produc on t 503,826Total Lithium Carbonate Produc on t 65,497CostsAverage Cash Opera ng Cost per Tonne Lithium Hydroxide CAD$/t 3,308Capital Cost CAD$MM 454,500,000Total Sustaining Capital Cost CAD$MM 54,000,000Project FinancingDebt:Equity % 70%Average Annual Interest ($) CAD$MM 14,531,501Total Interest Paid CAD$MM 116,252,010Average Annual Loan Repayment CAD$MM 50,601,000PricesLithium Hydroxide US$/t 8,000Lithium Carbonate US$/t 6,500CAD:US Exchange Rate - 1.10TaxesIncome Tax Rate % 27%Quebec Mining Tax % 16%Total Tax Losses Used CAD$MM 8,076,704Total CCA Used at 30% Annual Rate CAD$MM 518,065,444Results (A er-Tax)Discount Rate % 8.00%Annual Average Net Cash Flow (LOM) CAD$MM 80,622,518Total NPV CAD$MM 563,569,922Total NPV/Share CAD$/Share 0.38

Nemaska Lithium Inc 27 February 2014

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Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Feasibility StudyPermi ngFinancingConstruc onCommissioning

2014 2015 2016 2017ITEM


Assumed Project Timeline

Lithium Prices

A lithium hydroxide price of US$8,000 per tonne and a lithium carbonate price of US$6,500 per tonne were usedthroughout the model. However, these prices may prove to be conserva ve since they are based on products with puri es of 99.7% lithium. Nemaska is capable of producing products at the 99.9% lithium level.

Project Financing

The DCF Model assumed a 70:30 debt to equity mix. The debt was modelled over a period of six and a half yearsat a 9% interest rate. A CAD$10 million equity financing was modelled in 2014, followed by a CAD$136 million equity raise for project financing, split over 2015 and 2016. Both of these transac ons were based onNemaska’s current share price.

Project Timeline

The project meline assumed in the DCF is shown in the diagram below. Nemaska is well advanced in thepermi ng process and expects to obtain all necessary permits by the second quarter. The Company is in thelast stages of obtaining approval from the Federal Government and expects the Provincial Government to holdits public consulta on this spring. Construc on was assumed to begin in 2015, and produc on was assumed to begin in 2017 to be conserva ve. Management an cipates construc on ending in 2015, and produc on beginning in 2016.


4

Resources Category

2014 Tonnage

(Mt)*

2014 Li2O

Grade (%)

2011 Tonnage

(Mt)*

2011 Li2O

Grade (%)

Increase in tonnage

(Mt)

Measured 12.998 1.60 11.294 1.58 1.704

Indicated 14.993 1.54 13.785 1.50 1.208

Measured + Indicated 27.991 1.57 25.079 1.54 2.912

Inferred 4.686 1.51 4.401 1.50 0.285

2014 vs 2011 Mineral Resource Es mate (In-pit)

Cut-off Grade of 0.43% Li2O Source: Company Filings


Whabouchi Deposit: Resources Nemaska recently announced the updated resource es mate for the Whabouchi Deposit. The new compliant resource showed an increase in both tonnage (+11.6 %) and grade (+1.9 %) in the Measured and Indicatedcategory. It will be included in the upcoming Feasibility Study. Only the M&I resource was modelled in the cash flow analysis. Over the 19 year mine life in the DCF, only 60% of the total compliant resource was used.

Next to Talison Lithium’s Greenbushes Opera on, which was acquired by the Tianqi Group for CAD$850 million,Nemaska has the highest grade lithium project in the world. The homogeneity of Whabouchi’s M&I grade withinthe pit-shell is illustrated in the following grade-curve analysis, which demonstrates that the majority of the tonnage, approximately 80%, has a Li2O grade of between 1.3 to 1.9%. The strip ra o of the open-pit shell wascalculated at 3.02 (waste to ore) in the 2012 PEA. It will likely be decreased in the upcoming Feasibility Studywhich should help to lower costs. Addi onally, Whabouchi remains open at depth and the blocks in theresource model located below the op mised pit-shell were not included in the new resource es mate.


5


Measured & Indicated Resource Grade-Curve Analysis



2014 Resource Es mate Resource Blocks


6


Whabouchi: Local Geological Map


Whabouchi Deposit: Geology Whabouchi is a structurally-controlled, lithium-bearing pegma te deposit. The Deposit is located in the northeastern por on of the Superior Province, a part of the Canadian Shield Craton. Champion Lake granitoidsand Lac des Montagnes volcanic-sedimentary rocks underlie the Property. A pegma te swarm is hosted in the Property’s centre and generally consists of sub-parallel and sub-ver cal pegma tes that can be up to 130 m inwidth. In total, the pegma te intrusion extends for a strike length of 1.3 km, oriented along the northeast-southwest orienta on, and is 130 m wide, reaching a depth of up to 520 m below surface. The current in-pitcompliant resource only extends to a depth of 300 m.

Lithium mineraliza on is almost exclusively contained within medium to large spodumene crystals, reachingdiameters of up to 30 cm in size. Lithium bearing spodumene, when pure, predominantly contains 8% lithiumoxide (Li2O) with minor niobium and tantalum. Two dis nct mineral phases make up the Whabouchi pegma tes: a phase containing spodumene, and a lesser barren quartz-feldspar pegma te. 96% of the lithium oxide is hosted within spodumene, resul ng in simple metallurgy with very high recovery rates.


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Mineral Processing The Electricity Advantage

Nemaska developed a propriety process to produce high-purity lithium hydroxide and lithium carbonateeconomically. The process uses electrolysis which almost eliminates the need for soda ash. Soda ash is atradi onal reagent used to produce lithium carbonate. It is expensive at $275 per tonne for Wyoming densesoda ash and its price can fluctuate, resul ng in higher prices for lithium carbonate and lithium hydroxide. InNemaska’s unique process, electricity is the main input cost. In comparison, electricity costs in Quebec aremuch less expensive and prices are compara vely stable.

FMC, the world’s number one producer of natural soda ash, has said that it is maintaining an “op mis c”a tude for 2014 pricing. The Company is an cipa ng that domes c prices will increase by a couple dollars pertonne this year. Last year, soda ash prices increased 20% between Q1 and Q4. Addi onally, soda ash cannot bepurchased on long-term contracts. This prevents producers of lithium compounds from having certainty overtheir costs, and could poten ally be a factor that discourages them from signing off-take agreements.

Nemaska’s Proprietary Process

The mined Whabouchi spodumene is processed via Dense Media Separa on (DMS) to produce a 6% spodumeneconcentrate as well as a middlings product that is further treated by flota on. The overall lithium metalrecovery for this ini al stage of processing has recently been upgraded to 85% based on the ini al 1,000 hourtest results.

The concentrate is then transported to Valleyfield Quebec for further processing. Here, the concentrate isroasted to transform the crystal structure to one that reacts with sulphuric acid to produce lithium sulphate.This product then undergoes leaching, purifica on, and electrolysis to achieve a high-purity liquid lithiumhydroxide solu on which is then crystallized into lithium monohydrate.

Lithium carbonate is produced as a by-product of the lithium hydroxide monohydrate produc on process. Carbon dioxide is bubbled into the remaining lithium hydroxide solu on to convert it into lithium carbonate.Another reason why Nemaska can produce such high-purity products at a compe tive price is because noimpuri es, such as soda ash, are used in the Company’s metallurgical process. The overall lithium recovery inthis por on of the circuit is 88.6%.


8


Ore is mined from the Whabouchi Deposit

Ore is crushed and ground

Whabouchi Project Simplified Metallurgical Flow Sheet

DMS Middlings Flotation

6% Spdumene Concentrate

WhabouchiConcentrator

ValleyfieldHydrometPlant

Concentrate is roasted

LithiumSulphateSolution

ConcentrateTransported toValleyfield QC

Lithium SulphateRejects from Industrial Processes(ex. Phostech)

ImpurityRemoval(2 Steps)

IonExchange

MembraneElectrolysis

LithiumHydroxideSolution

LithiumHydroxideMonohydrate

LithiumCarbonate



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Recent Metallurgical Tes ng: 1,000 Hour Test

Nemaska recently completed a 1,000 Hour Test, designed to upgrade the accuracy of the economic data for theValleyfield hydrometallurgical plant. The full results will be disclosed in the upcoming Feasibility Study, expectedby the end of this quarter. The tests included studying the effects of varying the current density on the life andefficiency of the membrane electrolysis cells, which are consumables in the plant, to find the op mum balance between these two parameters in terms of opera ng costs. Running a higher current density through the cellstacks increases produc on; therefore fewer cell stacks are required which lowers the capital costs. However, a higher current also decreases the life of the membrane.

Tes ng demonstrated that the overall recovery rate of lithium concentrate from the DMS circuit improved by16.7%. Nemaska is currently awai ng similar test results for the flota on step of the flow sheet. The Companyis expec ng significant improvements in both the opera ng costs and the capital costs from the 2012 PEA to theFeasibility Study, based on the metallurgical tes ng.

The Pilot Plant

Nemaska ini ally wanted to build a 426 tpa Phase 1 Plant, which had an ini al budget of CAD$25 million.However, a substan al financing at recent share prices proved too dilu ve, and the Company opted to do the1,000 Hour Test instead which had a budget of only CAD$100,000.

If financing permits, Management would s ll prefer to operate the pilot plant as a pre-commissioning exerciseto pre-emp vely deal with any poten al start-up issues. For example, Galaxy Resources Ltd (ASX:GXY) has beencommissioning its Jiangsu lithium processing plant since March 2011. As of September 2013, the plant was s ll only running at 60% total capacity due to start-up issues. Management assures that if Nemaska secures ana rac ve financing package to go ahead with the construc on of the pilot plant, in no way will the construc on of the mine, concentrator, or the large-scale processing plant in Valleyfield be affected.

Another advantage of building the pilot plant is that it will allow Nemaska to market its products to poten al customers. Marke ng could help the Company secure off-take agreements, thereby helping with projectfinancing. It will also allow Nemaska to iden fy process improvements and poten al inefficiencies before the large-scale plant in Valleyfield is built.


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Strategic Partners Off-Take Agreement with Phostech Lithium Inc

Nemaska and Phostech, a Clariant AG Group company (CHF:CLN), announced an off-take and collabora on agreement in October 2012. Clariant is a large mul na onal focusing on specialty chemical produc on,including ba ery cathode material manufacturing. Phostech, a subsidiary of Clariant, recently opened such afacility near Montreal, Quebec. Phostech agreed to evaluate and purchase from Nemaska the lithium hydroxidemonohydrate to be produced by Nemaska’s Phase 1 Plant. Addi onally, Nemaska’s recent 1,000 Hour Testconfirmed that lithium hydroxide from the reject lithium sulphate that is produced from Phostech’s Quebecplant can be regenerated. This could represent an addi onal source of revenue for Nemaska, either throughlicensing the technology or through a form of “toll milling”.

Chengdu Tianqi Group, a Major Shareholder

Chengdu Tianqi controls Tianqi Lithium, the world’s largest lithium chemical producer that converts spodumeneinto lithium end-products. Tianqi leads China’s lithium chemical industry in regards to technology, scale, andcompe veness. The Group currently owns approximately 14% of Nemaska, diluted down from 20% sinceTianqi has been preoccupied with its Talison transac on. The Group has two directors on Nemaska’s board.

Tianqi ini ally bought 10% of Nemaska in March 2011 a er a site-visit to the Whabouchi Property. In November2011, the Group increased its interest to 20% a er reviewing Nemaska’s proprietary process to produce lithium hydroxide. According to Nemaska’s management, Tianqi’s interest in Nemaska is to partner with the Companyin order to break into markets outside of China, to enter the North American, the European, the South Korean,and the Japanese markets for lithium compounds.

Tianqi was Talison Lithium’s single largest client, and Talison’s deposit was Tianqi’s only source of spodumene.Understandably, when Rockwood Holdings made its CAD$724 million bid for Talison, Tianqi may have been ali le worried that its raw material would be controlled by a compe tor. As a result, Tianqi counteredRockwood’s offer with a bid for CAD$848 million at the end of 2012, which the Group financed with 100% debt. According to Nemaska’s management, Tianqi asked the Company to postpone major investments un l Tianqi could refinance this debt, which it planned to do by the end of the first quarter.

Interes ngly, last December, Rockwood announced that it was buying a 49% stake in Talison from Tianqi, which will have the controlling 51% stake. Evidently, Rockwood hadn’t given up on Talison. As part of the deal,Rockwood will loan Tianqi CAD$670 million at 8% and will give Tianqi the right to purchase 20-30% ofRockwood’s European lithium division, expiring a er three years. The loan likely played a large role in thenego a ng the deal.


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Tianqi’s Plan for Integration

Source: Tianqi Lithium

Here, Tianqi refers to:1. Nemaska’s Whabouchi Deposit2. Cuola Mine3. Rockwood/Tianqi Talison JV

This transac on is important for a couple reasons. Firstly, it likely took some pressure off Tianqi’s balance sheetsince the Company refinanced its debt on be er terms. As a result, the Group may poten ally be morerecep ve of par cipa ng in Nemaska’s future financings, especially since integra ng both up and down streamis Tianqi’s objec ve. Also, it hints at the fragility of the supply side of the lithium carbonate market. Tianqi was relying on a sole supplier, and when a compe tor made a bid, Tianqi might have felt vulnerable. Behind thescenes, instead of pursuing other acquisi ons, Rockwood didn’t quit on Talison. There should be some incen ve for Tianqi to expand and diversify its raw materials sources.


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Comparables


Nemaska compares favorably to its hard-rock compe tors, as its Whabouchi Deposit has the highest grade and is of a comparable size. On anenterprise value per tonne lithium carbonate equivalent (EV/LCE) basis, Nemaska appears significantly undervalued when compared tocompe tor Canada Lithium. Of course, Canada Lithium is further advanced as it is entering the commercial produc on stage. Nemaska’sopera ng costs are in line with Canada Lithium’s and Nemaska’s Management expects further improvements in the upcoming Feasibility Study.It is also important to note that Nemaska will be producing a higher-value product than Canada Lithium since it will be producing ba ery-gradelithium hydroxide.


Company SymbolMarket Cap (CAD$MM)

EV (CAD$MM)

Deposit Type Loca onResources

(M+I), Mt LCELi2O % EV/LCE Products Opex ($/t Li2CO3)

Opex net of by-products ($/t

Li2CO3)Stage

Canada Lithium Corp CLQ-T 290.8 391.1 Hard-rock Quebec 0.98 1.19 399.5Lithium carbonate

(99.5%)3,550 -

Commissioning, full produc on Q1

2014

Nemaska Lithium Inc NMX-V 14.8 12.8 Hard-rock Quebec 1.09 1.57 11.7Lithium hydroxide (99.99%), lithium

carbonate (99.99%)3,300 - Feasibility

Western Lithium USA Corp WLC-T 39.3 27.3Sedimentary

rockNevada 1.99 0.78 13.7

Lithium carbonate (>99%), potassium

sulfate, sodium sulfate

3,291 968 Pre-feasibility

Hard/So Rock Averages 115.0 143.7 1.4 1.2 141.6 3,380.3

Galaxy Resources Ltd GXY-AU 68.8 260.6Brine/Hard-

rock

Produc on facility in

Jiangsu, China3.49 0.34 74.6

Ba ery grade lithium carbonate

(99.9%)3,334 -

Ramping up to full produc on

Lithium Americas Corp LAC-T 21.9 24.0 Brine Argen na 10.75 0.13 2.2Lithium carbonate

(at least 99.5%), potash

1,876 1,332 Financing

Orocobre Ltd ORL-T 290.4 258.6 Brine Argen na 6.44 0.15 40.2

Ba ery grade lithium carbonate (>99.5%), op onal

KCL

2,000 1,230

Commissioning, produc on expected to

commence Q2 2014

Brine Averages 127.1 181.1 6.9 0.2 39.0 2,403.3 1,281.0Total Average 131.5 142.8 4.3 0.8 93.5 2,803.4 1,176.7

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Lithium Sources Lithium Suppliers

There are two main sources of lithium: brines and spodumene. Brines exploited in Argen na and Chile by three major producers, SQM, Rockwood, and FMC, account for approximately 66% of global lithium produc on. The majority of the balance is spodumene, sourced from Australia, and processed in China by several major companies including the Tianqi Group, Galaxy Resources, and Ganfeng Lithium.

Lithium Supply by Company, 2012

Source: Fox-Davies, originally signumBox


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Source: USGS, Global Lithium Availability (Paul W, Gruber et. al.)

Comparison of Lithium Sources

Brines versus Spodumene Deposits

In comparison to brines, spodumene deposits are generally smaller in size, are higher grade, have higheropera ng costs, and require lower capital costs. Characteris cs of brines and spodumene deposits aresummarized below. It is worth no ng, however, that potash is a by-product of the lithium produc on process from brines, which helps to lower the operating costs. Therefore, the decline in potash prices has also impactedthe major brine producers’ margins.

A significant advantage of mines versus brines is that, with a mine, produc on is not affected by the climate and the rate of evapora on. Therefore, produc on can be es mated more accurately since it is not based on weather condi ons. Addi onally, produc on can be scaled up or down much more quickly as demand dictates,as opposed to brine opera ons.

Parameter Brine Hard-Rock (Spodumene) Share of Global Produc on 66% 26% (8% sedimentary rock) Producing Companies SQM, FMC, Rockwood Talison, Galaxy, Canada Lithium Capital Cost Generally higher Generally lower Opera ng Cost (Li2CO3) $1,230 - $2,500/t $3,300 – $4,000/t Method Solar evapora on Mining Resource Size ~1 – 10 Mt Li ~0.2 – 5.9 Mt Li Grade 0.02% Li to 0.14% Li 0.6% Li – 1.6% Li Impurities Mg, sulphates Generally lower, Fe Poten al By-Products Potash, potassium, boron Tin, tantalum, niobium Impacted by Climate Yes, significantly No Produc on me of Concentrate Slow, few months to a year Fast (daily)


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The Lithium Market Demand for Lithium

Lithium is used in a wide range of technologies because it is lightweight and highly electrochemically ac ve, which allows lithium-ion ba eries to have high energy and power densi es. These proper es are key for electric car ba eries, as well as for ba eries for portable consumer electronics.

Lithium-ion ba eries already have a sizeable market for consumer electronics such as smart phones, tablets, and laptops. Close to 95% of the ba eries used in electronic devices are lithium-based (signumBOX 2012) withthe main component usually being lithium carbonate. However, by far, the adop on of electric and hybridvehicles is an cipated to be the main growth driver for lithium demand. The two main lithium compounds usedin the electric car industry are lithium carbonate and lithium hydroxide. Demand for these products is expectedto increase; however, growth forecasts are highly variable.

Various forecasts have es mated that total lithium demand will grow at a rate of 10-15% over the next decade.According to the USGS, some studies es mate that new lithium producers are expected to supply approximately25% of the lithium required by 2020. Demand for lithium-ion ba eries globally experienced a 21% annual growth rate between 2000 and 2012 (USGS). Navigant Research forecasts that the worldwide market forlithium-ion ba eries used in electric cars will increase from US$1.6 billion in 2012 to almost US$22 billion in2020. Hydroxide material for the ba ery cathode market is es mated to undergo an annual growth rate of 12%to 30% based on various studies.

Lithium hydroxide is growing in importance for the development of high-performance lithium-ion ba eries. Cathode manufacturers prefer to use lithium hydroxide, especially if it is available at a similar price as lithiumcarbonate, which Nemaska can provide. According to SignumBOX es mates, demand for lithium hydroxide will increase from 25,824 tonnes in 2011 to 49,889 tonnes in 2015, to 99,297 tonnes in 2020, and to 183,303 tonnesby 2025.


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Source: Roskill 2013

World Consumption of Lithium by End-Use, 2000-2017 (t LCE)

The Electric Vehicle Industry and Lithium

Most automakers are currently offering their version of an electric vehicle. Currently, there is intenseinterna onal compe on both in vehicles, and in the ba eries used to power them. However, despite the long-term outlook, electric vehicles (EV’s) and their ba eries are unlikely to be profitable for manufacturers in the near-term.

The rate of uptake for EV’s will generally be based on environmental concerns, gasoline prices, electric vehiclecosts, and government incen ves. Long-term, it is expected that electric powered vehicles will take significant market share from internal combus on vehicles, however, it is difficult to say when and es mates vary widely. Some studies have shown concern that the demand for ba ery metals could increase to the point where there is a shortage of the cons tuent metals, especially lithium, since it is the least likely to be replaced by technologicaladvances because of its energy capabili es. According to the Electric Vehicles Ini a ve (EVI), Global EV salesmore than doubled between 2011 and 2012, from 45,000 units to 113,000 units.


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Source: Congressional Research Service

There are some important factors that may impede the mass-adop on of electric cars. Firstly, cost is an issue. Though over the long-term, the cost of owning an electric vehicle is less than the cost of owning a tradi onal combus on engine vehicle, the upfront costs of EV’s are much higher mainly due to the ba eries. Pricing data isconfiden al, however EV lithium-ion ba eries are es mated to cost between US$8,000 to US$18,000 pervehicle alone. To put this into context, in order to travel a similar distance as a gas-powered car on a single tankof gas, about 300 miles, it has been es mated that an energy storage capacity of 100 kWh would be required foran electric vehicle. A 16 kWh ba ery can cost as much as $12,000. Addi onally, greater energy storage capacity means a heavier, more expensive ba ery. Therefore, developing an affordable ba ery that is light and has ahigh energy density will be necessary before electric cars can be adopted by the mass-market.

However, ba ery costs are coming down. In 2008, Li-ion ba eries were priced at US$1,000/kWh (PWC). In 2012, the ba ery packs dropped to US$500/kWh (PWC). The industry is now targe ng ba ery prices of US$300/kWh by 2020 (PWC). These cost reduc ons will likely be the result of manufacturing processenhancements, be er technology, and increasing produc on scale, not via cheaper raw materials.

The range of electric cars is also an issue for consumers. For example, the Nissan Leaf can only travel 73 milesbefore recharging, compared to over 350 miles for internal combus on vehicles before they need a refill ofgasoline. Addi onally, infrastructure for charging electric car ba eries needs to be in place and grid-storagetechnology will likely need to advance further. Conversely, improvements in compe ng internal combus on engine technologies could slow the acceptance of electric vehicles.

China and Government Support

Globally, the transporta on sector contributes 23% of world carbon dioxide emissions, and China is the world’slargest energy consumer and emi er of energy related CO2 (SignumBOX 2012). For the first me, there were more electric cars sold in China last year than in the US.

In its latest Five Year Plan, the Chinese Government has made the environment a priority and has set a goal ofhaving one million electric vehicles on the road by 2015. The planned government ini a ves summarized in thefollowing table could substan ally increase lithium demand. Other countries like Japan and South Korea areimplemen ng similar goals.


18


Chinese Government Initiatives for the Adoption of Electric Cars

Source: Tianqi Group, KPMG

Ini a ve Target Year Goal Government EV Plan (2011-2020) 2020 Five million units sold Power density reaches 200kWh/kg 2020 EV costs decrease

Rebate to EV buyers Started 2011 Subsidy ranges from US$9,230 – US$18,460

Government investment 2020 US$586 billion to invest in u lity-scale energy storage market

Tax Incen ves 2011-2020 Tax free purchase, preferen al tax rate for EV company income

Government Car Purchases 2015 Green-vehicles should not be less than 50%

Infrastructure End of 2012 Installa on of 36,000 charging facili es

Fossil Fuel consump on 2015 Non fossil fuels to reach 11.4% of primary energy consump on

Pollu on 2015 Reduce major pollutants by 8-10%

Conclusion High grade lithium hard-rock deposits, such as Nemaska’s Whabouchi deposit, are rare and valuable. TalisonLithium had two bidders that eventually se led on a JV for the opera on because of its value to both companies. Tianqi, which originally bought Talison before Rockwood stepped in, already owns approximately14% of Nemaska and includes Whabouchi as part of its business plan. Addi onally, as evidenced by theRockwood and Tianqi transac on for Talison, a chief concern for these companies is a secure source of rawmaterial supply. Nemaska’s Whabouchi Deposit could certainly increase Tianqi’s supply security as well as geographically diversifying its sources of spodumene. With new projects, access to capital is always a concern.Therefore, having a powerful partner like Tianqi is a huge advantage for Nemaska.

Compe on in the lithium market is heavily based on product quality and on product reliability. The consistencyand reliability of supply is crucial. Nemaska is capable of producing very high purity compounds, includinglithium hydroxide, economically due to its proprietary electrolysis process that virtually eliminates the need toadd excessive impuri es during processing. Addi onally, Nemaska’s Whabouchi Project is a hard-rock deposit,making produc on much easier to es mate compared to brines, and making the Project much more scalable.

The upcoming Feasibility Study should improve the economics of the Whabouchi Project based on the recentmetallurgical test results. With the study results released, the metallurgy completed, and the permit ng inhand, Nemaska should be in a good posi on to secure financing for construc on.


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Documents

SECUTOR Ini 27 February 2014 CAPITAL MANAGEMENT ...SECUTOR CAPITAL MANAGEMENT CORP Value (US$) Value per Share (US$) Cash 2,000,000 0.00 Projects Whabouchi NPV 563,569,922 0.38 NAV