logo-loader

Bacanora expects Sonora feasibility study to be completed this year

Published: 17:24 24 Aug 2017 AEST

Tesla electric car
The rise in the popularity of electric cars is expected to increase demand for lithium

Bacanora Minerals Ltd (LON:BCN, CVE:BCN) has told investors that it expects the feasibility study at its Sonora lithium project in Mexico to be completed towards the end of this year.

The explorer is currently targeting first production for 2019/2020 following an 18-month build programme.

READ: Bacanora Minerals: Sonora feasibility study will reflect rise in price of lithium

The study is focused on a two phase open-pit mine and lithium carbonate processing facility with a life of over 20 years.

Phase one will see Bacanora process 17,500 tonnes per year of battery-grade lithium carbonate (Li2CO3) for the first two years. It will then ramp up to phase two where it will process 35,000 tonnes of Li2CO3 each year.

Operating and capital cost work for the project is nearing completion the AIM-quoted explorer said, while flow sheet testwork, focused on optimising production at the project, is also coming along nicely.

The issue of getting energy to the project has been resolved, with five independent proposals being received from local energy and pipeline groups for both gas and electric supplies.

Talks ongoing with regards to financing

Ahead of the completion of the FS, strategic partner and 9.35% shareholder Hanwa is continuing to facilitate discussions in Japan on long-term debt to fund the construction of the mine.

Bacanora added that it has also commenced preliminary discussions with additional debt providers for “more traditional” project financing packages.

Lithium prices continue to strengthen and are up towards US$15,000 per tonne, a considerable improvement from just a couple of years ago when they were languishing around the US$6,000 mark.

Sonora will be a ‘world class operation’

“The FS at Sonora is scheduled for completion by the end of the year,” said chief executive Peter Secker.

“In anticipation of this and assisted by our strategic partner Hanwa, discussions are already underway with long term debt providers with regards to funding the construction of what we believe will be a world class lithium operation in Sonora.

“This is to allow us to commence the estimated 18 month build programme, subject to final Board approval, as we look to capitalise on the anticipated need for new battery-grade supplies of lithium carbonate.”

As Secker hinted at, demand for lithium is expected to go through the roof in the coming years, driven primarily by the growing mainstream adoption of electric vehicles, which require the soft metal for their batteries.

Different roast should cut costs

Shore Capital broker Yuen Low said this morning that he expects a different roast – heating the ore to a high temperature to purify the lithium – to allow Bacanora to cut down on costs.

“We were intrigued to learn that a sodium sulphate roast has been developed (previously, a gypsum roast was envisaged),” wrote Low in his note this morning.

“This should yield cost savings in that there would be no need to import soda ash (aside from at the start of operations), nor to buy in gypsum.”

Don’t forget Zinnwald

The feasibility study at Bacanora’s joint venture Zinnwald lithium project in Germany continues, the explorer said. That is expected to take between 12-18 months.

Approvals for mining a large bulk ore sample have been approved and this should get underway in the next few weeks, while an infill drilling programme is expected to commence in the final quarter.

Encouragingly, initial lab testwork has already demonstrated that higher-value lithium products can be produced from Zinnwald’s concentrates.

SolarWorld – Bacanora’s partner at Zinnwald – recently filed for bankruptcy protection in Germany but Bacanora said it remains confident that the insolvency process will have “no material impact” on its interest.

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