Bacanora Lithium PLC (LON:BCN) has agreed conditional strategic investments for a total of US$90mln from the sovereign wealth fund of the Sultanate of Oman and from its Japanese off-take partner, Hanwa Co., and has also launched a proposed placing to raise gross proceeds of US$100mln.
The AIM-listed lithium exploration and development company said the combination of the placing proceeds plus the initial US$25mln drawdown from the previously announced US$150mln senior debt facility with Red Kite Mine Finance will give the company sufficient funds to begin construction on the Sonora Lithium Project in Mexico.
It added that commissioning for Sonora is intended for the first-quarter of 2020.
Bacanora said the placing shares are being offered by way of a bookbuild led by book runner Canaccord Genuity and a further announcement confirming these details will be made in due course.
The group also said its directors recognise the importance of giving existing shareholders an opportunity to participate in the company's ongoing funding should they be unable to participate in the placing.
Consequently, it added, the company intends to raise up to €8mln by way of an open offer to existing shareholders following completion of the placing.
Clear endorsement of Sonora's credentials
The group said the strategic investments comprise US$65mln from State General Reserve Fund of Oman (SGRF) and US$25mln from Hanwa, and are conditional on the full US$460mln construction funding required for the project being in place.
It pointed out that SGRF's commitment is alongside an off-take agreement which, upon completion of the investment will provide the sovereign wealth fund with the option to buy 10,000 tonnes per annum (tpa) of Li2CO3 once capacity at Sonora is expanded to 35,000 tpa of Li2CO3 as part of stage 2 of the project.
Bacanora CEO Peter Secker said: "The proposed US$90 million investments from blue-chip investors of the calibre of SGRF and our existing strategic partner, global trading company Hanwa, is a clear endorsement of Sonora's credentials to become a low-cost producer of high-value lithium carbonate.”
Sonora stands out from the crowd
Secker continued: "We have always believed that Sonora stands out from the crowd. Not only is the Project one of the world's larger lithium deposits but, as the Feasibility Study demonstrates, it is expected to have one of the lowest quartile (Q1) LOM operating costs once production commences in 2020.”
He added: “We continue to talk with other important participants in the lithium space with a view to securing additional high-quality strategic partners, as we focus on entering into the construction phase of what we believe will be the next significant producer of battery grade lithium carbonate."
In early afternoon trading, reflecting dilution from the share issues, Bacanora shares were 3.7% lower at 78.5p.