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AIM:BCN

Bacanora Lithium Ltd

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Market:
AIM
Market Cap:
£65.78 m
Price
29.50 GBX
Change
0.85%
52 weeks high
53.00
52 weeks low
12.50

Bacanora intends to become an international lithium production company with a portfolio of global projects.  The Board’s strategy to achieve this goal involves a number of steps:

Find world class projects that can address the increasing demand for Lithium for Electric Vehicles and energy storage industries.

The Sonora Project has identified its NI 43-101 Measured, Indicated and Inferred Resource of 8.8mt of LCE resources suitable for open-pit mining to ultimately produce battery-grade lithium carbonate.

The Zinnwald project has identified its NI 43-101 compliant Measured and Indicated Resource of 124,974 tonnes of contained Lithium, which is expected to supply battery-grade lithium fluoride to local chemical industry requirements.

Complete feasibility studies to evaluate and quantify the economic potential of its projects.

In January 2018, Bacanora published a feasibility study on a small part of the Sonora Project that showed a pre-tax NPV of $1.25bn, 26% IRR and an operating cost of around $4,000 per tonne.

In June 2019, Bacanora published the feasibility study for the Zinnwald Project in Germany that showed a pre-tax NPV of €428m and 27.4% IRR over a 30 year mine plan equating to less than 50% of the current identified mineral resources.

Complete the detailed design of the mines and processing plants for Sonora and Zinnwald.

Bacanora is finalising its Front End Engineering Design (“FEED”) for the Sonora Lithium Project. The Company has chosen ICA Fluor to complete this work stream, who have extensive experience in delivering engineering projects of this size and scale. Furthermore, Ganfeng will complete a review, within six months, of the engineering design and capital costs of Stage 1 with a view to reducing costs and accelerating the timetable to construction.

Bacanora is currently exploring funding options to finance the exercise of its option to purchase the remaining 50% of DL and support the detailed design work for the project.

Validate the quality of its end product by securing high quality off-take partners.

Bacanora has used its pilot plant, which has been in operation for a number of years to provide regular samples of its Lithium carbonate to prospective offtakers. This initially led to Hanwa, one of Japan’s largest metals trading houses, signing a 10 year offtake agreement for Stage 1 of production and investing in the Company directly. In May 2019, the Company announced that Ganfeng, the world’s largest lithium metals producer by production capacity and the world’s third largest lithium compounds producer, signed a long term offtake agreement for 50% of Stage 1 production and up to 75% of Stage 2 production, as well as investing in the Company at both a Group level and asset level.

The Company has already commenced discussions with potential offtake partners in Germany for the outputs from the Zinnwald Lithium Project.

Complete the funding required to construct its projects.

Bacanora has secured $150m of debt funding from RK Mine Finance and has a commitment for an additional $25m of equity finance from Hanwa. Ganfeng has invested an initial £22m to acquire 29.99% of the Company and 22.5% of the Sonora project at the project level with the option to acquire up to 50% at the project level.  The Company intends to raise the remaining funding requirements required to construct the Stage 1 mining and processing operation in Sonora. 

Bacanora is in discussions with interested strategic third parties in relation to funding the construction of the Zinnwald Lithium Project, which may include a separate listing of Deutsche Lithium.

Construction and commissioning of its Lithium processing plants.

Bacanora is finalizing its FEED work for its Stage 1 17,500 tpa Lithium Carbonate plant. The Company will also work with Ganfeng on further optimization and cost reductions over the next 6 months.

DL intends to commence the detailed design engineering phase of the Zinnwald Project in 2020, during which a detailed schedule for the project development will be completed.

SONORA LITHIUM
With an Measured plus Indicated Mineral Resource estimate of over 5 million tonnes (‘Mt’) (comprising 1.9 Mt of Measured Resources and 3.1Mt of Indicated Resources) of lithium carbonate equivalent (‘LCE’)[i] and an additional Inferred Mineral Resource of 3.7 Mt of LCE, Sonora is regarded as one of the world’s larger known clay lithium deposits.

IMG 5519

For more information please click here 

SONORA PILOT PLANT

MexicoSonora LithiumSonora Pilot PlantMagdalena BorateGermanyZinnwald LithiumSONORA PILOT PLANT

Over the past 3 years, Bacanora has built a lithium carbonate pilot plant in Hermosillo, to upgrade and process ores from the nearby Sonora Lithium Project. Over the past 24 months the plant has been upgraded to include the full metallurgical flow sheet of pre-concentration, flotation, roasting and lithium carbonate precipitation.

In mid 2016 the facility was upgraded to allow it to run continuously on a 24/7 basis.  The plant continues to produce battery grade (99.5%) lithium carbonate, as it serves a key role in training local operators ahead of the commencement of full scale operations at Sonora.

 

 

 

MAGDALENA BORATE


The Magdalena Borates Project, which is owned 100% by Bacanora and covers 16,503 Ha in Sonora State in northern Mexico, represents an excellent opportunity to develop boric acid production to be sold in the domestic Mexican market.

Previous studies have estimated that a low CAPEX cost project could enable the Company to commence production relatively quickly. The project is subject to a 3% royalty to a Rio Tinto subsidiary and a 3% royalty to Colin Orr-Ewing.

The project consists of seven concessions, and to date, three main borate zones have been located on the Magdalena project area: Cajon; Bellota and Pozo Nuevo. El Cajon is the most advanced project with a NI 43-101 indicated resource of 11.06m tonnes at 10.6% grade for 1,170,000 tonnes of boron trioxide (B2O3).

Test pit and boric acid pilot plant testwork is ongoing and to date 930 tonnes from the borates have been processed with samples of 99% boric acid sent to potential off take customers. With these results in hand, ongoing metallurgical testwork based on higher value boric acid will commence in late 2016/2017, focused on developing an operation of up to 50,000tpa of boric acid production for domestic use. Mexico has a market for borates and the project benefits from close proximity to established infrastructure, grid supply, road, water and rail.

GERMANY

Zinnwald

Bacanora has a 50% interest in, and joint operational control of, the Zinnwald Lithium Project, located approximately 35km south east of Dresden in the eastern part of Germany.

Zinnwald represents a strategic asset located in close proximity to a thriving market for lithium and energy products, which is being fuelled by Germany’s electric automotive industry and the rise of renewable energy storage. Therefore, the acquisition from SolarWorld AG complements Bacanora’s existing lithium portfolio of pipeline projects and provides exposure to an exciting new market at both the project and geographic level.

The Zinnwald Lithium Project is located adjacent to the border of the Czech Republic and within 5km of the towns of Altenberg and Freiberg. It is located in a world-class granite hosted Sn/W/Li belt that has been mined historically for tin, tungsten and lithium at different times over the past 300 years.

The project currently hosts a PERC resource comprising 36.4Mt of Indicated and Inferred Resources at a grade of 3,600ppm Li (PERC is the Pan European Reserves and Resources Reporting Committee, which is not NI-43-101 compliant but could be updated to NI-43-101 standard with additional drilling).

RESOURCE TABLE

Bacanora believes that both historic work at Zinnwald and the geological context of the deposit demonstrates its potential for economic extraction of lithium products, as well as potential by-products of tin, tantalum and SOP. Bacanora’s investment and expertise will facilitate further development in order to achieve higher-value, downstream lithium products which command higher prices in the market.

Subject to the successful completion of a Feasibility Study, which is currently underway and is expected to take 18-24 months, Bacanora has the option to acquire the outstanding 50% held by SolarWorld.

United Kingdom & Mexico.

MARK HOHNEN - Executive Director / Chairman

PETER SECKER - Chief Executive Officer, Executive Director

JANET BOYCE - Chief Financial Officer

EILEEN CARR – Non-Executive Director

JAMES STRAUSS - Non-Executive Director

DR ANDRES ANTONIUS - Non-Executive Director

MR. JUNICHI TOMONO - Non-Executive Director

DEREK BATOROWSKI - Non-Executive Director

CHERIF RIFAAT - Company Secretary

Contact: [email protected]

Head Office Address
The Clubhouse
8 St. James's Square
London
SW1Y 4JU
United Kingdom

Advisors:
Gaby Jenner and
Frank Buhagiar
St Brides Partners
Phone: +44 (0) 20 7236 1177

Mexico Office
Calle de Las Galaxias 68
Parque Industrial Hermosillo
Hermosillo, Sonora 83297
Mexico
Phone: +52 662 251 0360

The following table sets out the results of the analysis of the significant beneficial holders of the Company's Ordinary Shares as at 20 March 2019. 

Significant Shareholders (>3%):

Shareholder name Shares held % holding
M&G Investments Funds 13,456,784 10.0%
Hanwa Co Ltd 12,333,261 9.2%
Igneous Capital Limited (1) 9,883,774 7.4%
The Capital Group 6,438,925 4.8%
D&A Income Limited (1) 4,738,030 3.5%

 

Broker:
Canaccord Genuity
88 Wood Street
London, UK
EC2V 7QR

Nominated Adviser:
Cairn Financial Advisers LLP
Cheyne House
Crown Court
62–63 Cheapside
London
EC2V 6AX

Gowling WLG (UK) LLP
4 More London
Riverside
London
SE1 2AU

Macquarie Capital (Europe) Limited
Ropemaker Place
28 Ropemaker Street
London
EC2Y 9HD

Financial Public Relations:
St Brides Partners
3 St Michael's Alley
London EC3V 9DS
United Kingdom