viewBacanora Lithium Ltd

Off-take deal a ‘vote of confidence’ for Bacanora, says City broker

Bacanora signed an off-take deal with a major Japanese trading house on Monday which will ‘significantly de-risk’ its Sonora project

lithium batteries
Lithium is a hot topic in the mining industry at the moment

City broker Liberum has reacted favourably to yesterday’s news that Bacanora Minerals Ltd (LON:BCN) has signed an off-take deal with one of the largest traders of battery chemicals in Asia.

Under the terms of the agreement, Hanwa Co will take a 10% stake equity investment in Bacanora, which will raise around £10.2mln through the placement of 12mln shares at 82.5p.

Hanwa will also sign an off-take agreement for up to 100% of the battery grade lithium carbonate (Li₂CO₃) produced at Bacanora’s Sonora lithium project in Mexico.

Unlike most of the aspiring junior lithium producers, Bacanora will mine soft clay ore at Sonora which is cheaper to get out of the ground but has a reputation for being difficult to process.

“Yesterday's announcement is a vote of confidence in Bacanora's production process, with Hanwa executives having analysed numerous bulk samples from the Sonora pilot plant before agreeing the offtake,” wrote Liberum analyst Richard Knights in a note to clients.

Although there are many lithium juniors cropping up all the time at the moment, tangible supply of the silver-white metal is limited, which should stand the company in good stead.

“Bacanora is the only new source of lithium carbonate supply outside of existing producers which has delivered offtake and is theoretically within six months of being financed,” said Knights.

“With off-take in place the company is now in a strong position to deliver debt finance for c.50% of stage 1 capex (c.US$120m), once the bankable feasibility study is complete in Q3'17.”

The analyst has the stock as a ‘buy’ and upped his target price to £1.30 (from £1.20) owing to lower dilution.

Shares in Bacanora were slightly higher at 91.75p at midday on Tuesday.

Quick facts: Bacanora Lithium Ltd

Price: 29 GBX

Market: AIM
Market Cap: £64.91 m

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events


The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

In exchange for publishing services rendered by the Company on behalf of Bacanora Lithium Ltd named herein, including the promotion by the Company of Bacanora Lithium Ltd in any Content on the Site, the Company...


Bacanora Lithium advancing Sonora debt and equity financing

Peter Secker, chief executive of Bacanora Minerals Ltd (LON:BCN) caught up with Proactive's Andrew Scott to update on financing discussions for the Sonora lithium mine in Mexico. Secker says they're still on track to begin production in the first quarter of 2020 and is expecting...

on 13/4/18

2 min read