Bacanora Lithium Group PLC (LON:BCN) said that it now has a “clear line of sight” towards construction at the Sonora lithium project in Mexico.
Pete Secker, chief executive, said it was confident it will soon be in position to finalise the financing package for Sonora and move on to the 24-month construction phase.
Chinese lithium giant Ganfeng recently concluded an agreement to acquire 29.99% of Bacanora and 22.5% directly in Sonora.
That effectively halved the company’s funding requirement for the project, said Secker, and once it secures the rest of the funding building will start.
Sonora’s operating costs “among the lowest in the industry” at US$4,000 per tonne, compared to higher-cost producers such as Zangge, Qinghai, and Tianqi in Australia.
This will enable it to weather the “degree of uncertainty in the nascent lithium market”, which has seen spot prices almost halve in the past eighteen months.
Secker added it is also in discussions to secure €159mln in funding to develop its 50% owned Zinnwald project in Germany.
Operating losses fell by a quarter to US$8mln in the year to June, with its cash balance at US$14.8mln.
The Ganfeng investment, advancement at Sonora, and Zinnwald’s feasibility study were “stand-out milestones” this year, said Secker.
The company holds “two high-value lithium projects with a combined NPV of over US$1.7 bn at the funding stage”, he said.
Shares were up half of a percentage point to 34.2p in early trading.